Cargo Trends

Cargo Trends By Michael A. Hodges & Randy Bisgard, Airport Business Solutions January/ February 2001 The state of air freight and where it's headed There is no question that cargo is one of the hottest segments going for...

Cargo Trends

By Michael A. Hodges & Randy Bisgard, Airport Business Solutions

January/ February 2001

The state of air freight and where it's headed

The global cargo industry has been growing at record rates, demonstrating a 6.2 percent increase in 1999, while domestic air cargo has grown at an average annual rate of over 7 percent for the past ten years. Since 1970, the global air cargo industry has grown at a rate 2.5 times the growth rate of the world's Gross Domestic Product (GDP). In 2000, it continued to expand, with growth exceeding most expectations.
Currently, over 20 percent of all commerce transits international borders. Within the next 20 years this is projected to reach nearly 80 percent. Competition for jobs and industry has been increasing across borders, which has had direct positive impact on the flow of air freight. With the growing impatience among consumers in the marketplace, air transportation is becoming an important alternative to long-distance shipping. Exports of just in time commodities and high tech electronics has spawned rapid growth at several airports.
Another important factor in this growth is the explosion in e-commerce. The Internet has changed the way the world does business, allowing diverse opportunities for businesses to communicate and conduct transactions with other businesses and the end consumer.
Also, the realization by many of the world's leading air carriers that air cargo is a viable revenue resource has been a driving force behind growth. Air cargo is estimated to account for 13 percent of revenue of passenger airlines.
Cargo growth is being experienced at virtually every airport worldwide, but the top 30 airports handle 59 percent of all air cargo volumes. The U.S. is the most developed air cargo market, leading the world with 60 percent of all air freight moving to, from, or through it. The U.S. includes three of the top five cargo airports in the world (Memphis, LAX, and JFK), and five of the top ten (Miami and Anchorage).
However, the U.S. is not the largest true air freight market because of the trucking component. Intra-Asia, which includes shipments within Asia, the South Pacific, and India, is considered the largest true air freight market.
In the U.S., integrated carriers (FedEx, UPS, DHL, Emery, BAX Global, etc.) account for slightly more than two-thirds of total cargo tonnage, while passenger airlines and air-oriented trucking companies carry the balance. It's projected that the airlines will continue to experience positive traffic growth, but will steadily lose market share to the FedEx's and UPS's of the world due to the latters' ability to more readily modify their business practices and operations in response to customer demands.

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