Air-cargo experts see traffic recovering to 2007 peak by end of year

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Apr. 14--After a ruinous decline of more than 20 percent in the global freight business, air-cargo experts spoke optimistically at an aviation-industry conference in Seattle on Tuesday of a possible return to the peak airfreight volumes of 2007 as soon as the end of this year.

That outcome could lift flagging sales of Boeing's new 747-8 jumbo freighter, now in flight tests.

But a Boeing expert cautioned it's still too early to tell whether the recent market surge is a one-time inventory bump or a sustained recovery.

At the annual workshop of Seattle-based Air Cargo Management Group (ACMG), which was acquired in February by Royal Media Group of New York, managing director Bob Dahl acknowledged the market upturn may not be sustained, but said the data so far are positive.

After a strong recovery at the end of last year, airfreight traffic is up 25 to 30 percent for the first two months of this year over 2009, he said.

"The ACMG forecast is that recovery to (the 2007) peak is now expected by the end of 2010," Dahl said.

At the beginning of this year, Dahl said, about 75 high-quality wide-body freighter jets -- including MD-11s, 747-400s and even a few new 777s -- were parked in the desert, idled by the downturn. Those airplanes will likely have to come back into service before sales of new 747-8 and 777 freighters can pick up.

Dahl's traffic projection is optimistic, said Tom Hoang, Boeing's regional director of cargo marketing, who attended the conference.

Hoang said the surge in air-cargo traffic in the fourth quarter of last year was driven by the need for companies to replenish their depleted inventories for Christmas sales.

In addition, he said, the global downturn caused ocean shippers to drastically cut back capacity and service, making airfreight the best option for speedy delivery of new inventory.

This led to a shift from sea to air shipping, he said, which could prove temporary if a broad economic recovery emerges.

"The question is, will this recovery continue?" Hoang said.

Still, when Jason Grant, the chief financial officer of Atlas Air Worldwide, addressed the crowd of about 100 industry experts over lunch, he backed Dahl's projection.

Grant has reason to be bullish. Despite the downturn, Atlas, the largest operator of Boeing 747 jumbo freighters in the world, made a $78 million profit in 2009.

Grant said Atlas sees a longer-term trend toward companies holding less inventory, which favors delivery by air.

He also predicted that Chinese manufacturing will migrate inland from the coasts for lower labor rates, a trend that could also give air transport an advantage over shipping.

Atlas has ordered a dozen 747-8s, which Grant said will deliver "compelling" economics in a market recovery.

Dominic Gates: 206-464-2963 or [email protected]