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Wait until 2013 for pick up, says OAG
In its latest cargo forecast OAG, part of UBM Aviation, says it may well be 2013 before airfreight volumes return to 2007 levels.
According to study author Marty Graham, former Northwest executive now aviation consultant, "The good news is that as the global economy begins to recover and return to normal growth levels, airfreight is likely to once again be a leading indicator of future economic activity."
In its 10-year forecast, OAG projects a slow pick up in airfreight flows led by slow economic recoveries in both the U.S. and Europe.
U.S. GDP is projected to grow less than two percent per year in both 2010 and 2011 (after 0.4 percent and -2.4 percent GDP growth in 2008 and 2009, respectively) while Europe GDP is expected to remain essentially flat through 2010 and then grow a "pedestrian" 1.8 percent a year over the remainder of the forecast period.
OAG notes that overall airfreight traffic has decreased 15 percent in 2009 (following a soft 2008) and the industry has aggressively tried to rationalize capacity but thus far is finding profitability difficult to achieve. With oversupply in some markets and demand weakened, the yield environment remains "very challenging" says the author.
As corporations are squeezed to reduce costs to remain profitable, OAG suggests a growing concern is a modal shift from air to ocean. "Shippers are more willing to accept slower transit to gain the cost advantage maritime or ground shipping offers over air cargo," explains Graham. "Thus air cargo operators must overcome not only a slowdown in global shipment volumes, but also a modal shift caused by shippers looking for ways to reduce logistics costs," he adds.
Source: http://www.aircargoworld.com/News/Wait-Until-2013-For-Pick-Up-Says-OAG
Europe's air freight falls 14 percent
Slight decline from August to September shows persistent weakness in expedited demand
Cargo traffic for Europe's air carriers fell at the slimmest rate in almost a year in September, the Association of European Airlines said in a mixed report that showed the downturn in expedited freight demand slowing down but not improving.
Overall freight traffic fell 14 percent in September compared to the same month a year ago, the AEA said, the smallest year-over-year decline since November 2008.
But the traffic also slipped 0.5 percent from August, the second straight month-to-month setback, which suggested the steady improvement in demand had peaked heading into the fall shipping season.
Traffic across all of the European carriers' major trade lanes was essentially flat from August to September and air freight traffic to and from the Far East was down 21.2 percent compared to a year ago.
For the first nine months of 2009, the AEA said freight traffic was down 19.8 percent from the same period a year ago, with Far East and Australasia lanes off 26 percent in the period.
Source: http://www.joc.com/node/414810
LAX sees busiest month of 2009
August decline of 5.1 percent is slimmest for key gateway in 16 months
Los Angeles International Airport, in a new sign of improving stability in Asia-Pacific shipping, reported its busiest month for freight in nearly a year in August and the fourth straight month-to-month improvement in cargo business.
The airport, North America's largest gateway for trans-Pacific air trade, still saw freight tonnage fall 5.1 percent in August compared to the same month a year ago. But even that decline was the slimmest Los Angeles has recorded since April 2008 and the seventh consecutive month of decelerating declines for freight traffic.
The 136,089 metric tons of freight LAX saw in August was slightly better than the July total, but also 28.3 percent ahead of the airport's total at the bottom of the downturn in February.
Hit hard by the collapse in exports out of Asia early in the year, LAX freight tonnage through the first eight months was down 16.2 percent from the same period a year ago, far worse than the 9 percent drop in passenger traffic over the same period.
The August total still leaves Los Angeles on track for its fourth straight annual decline since 2006, a span that has seen the airport's cargo and mail tonnage slide by more than a quarter.
Source: http://www.joc.com/node/413613
Transport jobs fall in September
Trucking, warehouse sectors decline as key customer groups cut back
Freight-related transportation jobs fell moderately in September, the Labor Department reported, but falling employment levels in key customer groups could signal more trouble ahead for the shipping sector.
Trucking shed about 4,400 jobs from August, leaving total employment at 1.3 million, Labor said. The warehouse and storage industry shed 2,700 to end the month with 637,200.
These are the actual industry employment numbers, not adjusted for seasonal variations based on normal behavior in past years. Many economists say the economic shocks of 2008 and 2009 have distorted the seasonal formulas. But these are also preliminary figures; Labor usually revises them for two months after the initial reports.
Across all industries, the U.S. jobless rate rose to 9.8 percent of the labor force last month from 9.7 percent in August. Labor said employment fell in manufacturing, construction and the retail sector; those are all important shipper groups for freight carriers, and fewer jobs among those customers could reflect weakness in demand for their products.
Employment in rail transportation -- which includes the major freight railroads, short lines and commuter trains using heavy-gauge track systems that are often shared with freight trains - was unchanged from August at 212,400 after falling mildly from July.
A separate report by Class I carriers to the Surface Transportation Board earlier showed the major cargo lines trimming employment from mid-July through mid-August. (http://www.joc.com/node/413492)
One transport area enjoyed a surge in job growth for September. Labor said jobs at transit and ground passenger systems, which include buses and subway trains, rose to 411,000 last month from 342,000 in August. That could partly reflect a large increase in federal aid for mass transit, much of it from this year's stimulus law.
In other areas that include freight and passenger transportation, air industry jobs fell by 1,900 last month to 465,100, and water commerce transport jobs shrank by 900 to 58,000.
Source: http://www.joc.com/node/413760
In search of lift
Demand spurt dries up air freight capacity, brings double-digit rate hikes
Tightening lift is forcing shippers and their air cargo agents to shift gears. Price is no longer the chief criterion as forwarders scramble to secure cargo space on flights, particularly out of Asia.
"Our first concern is to have enough space for what we need. We can concern ourselves with pricing after we have secured space," said Gary Schultheis, vice president for airfreight in the Americas at DHL Global Forwarding.
After double-digit declines in volume and overcapacity in the first seven months of 2009, airfreight volumes from Asia to North America have been rising since early September. Airlines are enjoying strong loads for the first time in a year. "Our flights are choc-a-bloc full," said Neel Shah, vice president of cargo at Delta Air Lines.
Chinese exports have been the strongest driver behind the surge in demand for airfreight space from the region, but forwarders and carriers also reported tight supply in Hong Kong, Taiwan, Korea and Japan. "We have certainly seen a significant surge out of China, and to a lesser extent across the region," remarked Steve Dearnley, chief executive for the Asia-Pacific region at DB Schenker.
The scarcity of available lift is a combination of rising demand and reduced capacity. With volume and yield down more than 20 percent in the first half of the year, airlines have taken freighters out of service and whittled down schedules. The remaining surplus capacity dried up quickly as demand built up.
"The situation is definitely a combination of both a recovery in demand and capacity reductions," said Shawn McWhorter, president for the Americas at freighter operator Nippon Cargo Airlines.
So far, the situation has not created serious bottlenecks or backlogs at Asian gateways, according to forwarder reports. Nevertheless, Asian airports have seen a flurry of charter flights in recent weeks. Delta has run 13 charters out of Asia since the build-up began, and Nippon Cargo has contracts for 20 or more for the remainder of this year, McWhorter said. DHL Global Forwarding alone organized more than 12 charter flights within two weeks.
"We have so far avoided any severe backlogs but have done a few charters to both the U.S. and Europe. These have all been customer-specific, either to handle new product launches or last-minute conversion from ocean to air, rather than general charters to ease any kind of backlog," Dearnley said.
Last year, the anticipated peak season surge out of Asia failed to materialize, frustrating forwarders that had lined up charter flights to cope with bottlenecks. As a result, most did not sign charter contracts for this fall.
Carriers already are starting to show the benefits. Freighter operator Atlas Air reported a $14.7 million net profit in the third quarter, nearly triple what it reported a year ago. Improving demand and "strengthening charter yields" were behind the gain, the airline said.
In addition to organizing charters, DHL Global Forwarding has signed several block space agreements with airlines to secure space. According to Shah, forwarders have shown stronger interest in long-term capacity arrangements. This marks a departure from the situation earlier this year, when agents and shippers avoided longer-term commitments, both out of uncertainty about their business outlook and to take advantage of aggressive spot pricing as airlines struggled to fill their planes.
Airlines wasted no time in turning the tight capacity to their advantage and boosting their pricing. "Typical peak season rates are being applied. We're close to 2007 peak season rates this year," McWhorter said.
By the end of summer, several leading airlines had signaled double-digit price hikes, arguing recent price levels were unsustainable. "I think the price increases we're seeing are here to stay," Schultheis said. "Carriers originally announced 15 to 25, 30 percent. They won't get that in the first round, but there will be another round," he said.
According to the International Air Transport Association, airlines have parked 227 freighters, about 12 percent of the global freighter fleet, in response to the downturn. The latest rise in demand may tempt them to bring a few of the idled aircraft back into service, but this is unlikely to happen, McWhorter said.
"At this point, it takes too much time and money to resurrect a plane. It takes two to four weeks, and you have to spend about half a million to a million dollars, plus you have to make sure you have crews and maintenance in place. I don't think they would pull them out to fly them for a month," he said.
Source: http://www.joc.com/node/414429
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