Air cargo picture brightens

According to IATA, Asia-Pacific carriers are expected to post a $5.2 billion profit.
image

IATA is an international trade body, created over 60 years ago by a group of airlines. Today, IATA represents some 230 airlines comprising 93% of scheduled international air traffic.

By Patrick Burnson, Executive Editor
September 22, 2010 - LM Editorial

The air cargo industry has made unexpected gains in recent months, but analysts are not predicting that the trend will continue into 2011.

The International Air Transport Association (IATA) revised its 2010 industry outlook and is now projecting a profit of $8.9 billion (up from the $2.5 billion forecast in June). In its first look into 2011, the Association estimates that profitability will drop to $5.3 billion.

“The industry recovery has been stronger and faster than anyone predicted,” said Giovanni Bisignani, IATA’s Director General and CEO in Geneva. “The $8.9 billion profit that we are projecting will start to recoup the nearly $50 billion lost over the previous decade.”

This observation was mirrored in comments made earlier this week at Oracle OpenWorld in San Francisco, where supply chain software developers said 2010 promises to be a better year for everyone in the global logistics industry.

In his address on key trends in logistics, James Taylor, vice president of software applications maker, CSC, noted that a rebound was in order.

The high-tech industry is heavily reliant on air cargo for premium distribution services, particularly on the Pacific Rim.

And according to IATA, Asia-Pacific carriers are expected to post a $5.2 billion profit.

This is better than the $3 billion recorded during the previous peak in 2007 and double the previously forecasted $2.2 billion. The strong improvement is based on strong market growth and yield gains.  Renewed buoyancy in air freight markets has been particularly important for airlines in this region, where it can represent up to 40 percent of revenues. The 23.5 percent improvement in high volume intra-Asia premium traffic reflects another significant trend.

“But a reality check is in order,” cautioned Bisignani. “There are lingering doubts about how long this cyclical upturn will last.  Even if it is sustainable, the profit margins that we operate on are so razor thin that even increasing profits 3.5 times only generates a 1.6 percent margin. This is below the 2.5 percent margin of the previous cycle peak in 2007 and far below what it would take just to cover our cost of capital.”

 



About the Author

image
Patrick Burnson
Executive Editor

Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

The truck driver shortage is worsening, threatening the trucking industry’s ability to serve the nation’s supply chains. The shortage will almost certainly cause fleets’ costs to increase and shippers’ rate to continue to rise.

The Agriculture Transportation Coalition has asked the Administration to bring in a federal mediator to help resolve the negotiations, and if a strike or lockout occurs, the AgTC advocates the rarely-invoked Taft-Hartley Act.

While U.S. manufacturers and retailers have been bemoaning the ongoing labor/management crisis at West Coast ports, the situation is becoming increasingly dire for U.S. agriculture and forest products exporters.

Express delivery and logistics services provider DHL recently announced it has rebranded the name of its DHL Global Mail group to DHL eCommerce as part of a move geared towards providing customers with new services and solutions for new markets as e-commerce continues its rapid expansion within supply chain and logistics.

October truck tonnage showed strong momentum in advance of the holiday season, according to data issued by the American Trucking Associations (ATA) this week.

About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review. Patrick covers international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. Contact Patrick Burnson

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA