Hopeful
Sign 2015... American Airlines expands cool-chain,
adding advanced capabilities in its new Cool Chain
Center in Philadelphia earlier this year. |
|
In recent months FlyingTypers has found it
hard to find bulls in the air freight market amid the
welter of negative sentiment from economists, trade
experts, and transport demand analysts.
Cathy Roberson, who recently
founded her own think-tank, Logistics Trends & Insights
LLC based in Atlanta, Georgia, is not exactly a bull
on air freight.
But unlike many of her peers,
the ex-UPS executive and leading consultant with some
15 years’ experience in freight and contract logistics
markets can see multiple positives.
Her optimism is grounded in
observations that take into account factors other than
just the recent performance of airline yields, volumes,
and trade values.
“Despite the concerning
IATA statistics, I believe there are some bright spots
– ecommerce, pharmaceuticals, and food/perishables,”
she told FlyingTypers.
“Cross-border ecommerce
appears to be growing, [and] there’s a lot of
interest in this from logistics providers such as UPS
and FedEx, who each acquired companies with specialties
in this field.
“In addition, airlines
such as United Star Express Airlines, a JV comprised
of Okay Airlines and Air Transport Services Group, are
focusing on e-commerce.”
She also noted that this summer
American Airlines opened a new 25,000-square-foot temperature-controlled
facility at Philadelphia International Airport and expanded
its cold-chain routes from the U.S. to Beijing, Buenos
Aires, Shanghai, and Narita.
Roberson also listed a raft
of other indicators as reasons to be upbeat. “According
to WorldACD data, for the first half of 2015, air cargo
volumes for perishables were largest to the Middle East
and South Asia, up 59 percent, and Asia Pacific, up
35 percent,” she said.
“In
pharmaceuticals, the Asia Pacific noted a 74% increase,
and the Middle East and South Asia had a 66 percent
increase for the same period.”
However, despite the positives
evident in some niches, Roberson told FlyingTypers the air freight business faced a supply-demand mismatch
that had only been partially bridged in the first half
of 2015 by the increase in demand due to the U.S. West
Coast port labor stand-off and resulting equipment chaos
and congestion.
As the year had progressed
and ocean backlogs had been cleared, the subsequent
slowdown—albeit one broken by a few spikes, such
as the iPhone launch in September and China’s
October Golden Week holiday—had been long and
would likely continue through the end of this year,
and probably into January before the lead-up to Chinese
New Year factory closures.
“While ecommerce, pharmaceuticals,
and perishables have benefitted air cargo volumes, rates
remain a problem,” she added.
“Similar to ocean freight,
capacity is a concern. Combined with weak demand, this
has seen rates fall.
“High inventory levels
in the U.S. are also keeping demand down as retailers
such as Target work on reducing levels.
“Meanwhile manufacturing
levels in Asia are in decline and its economies are
in a slump.”
Until global trade picks up,
demand for air cargo would be selective, spiking for
certain events such as Alibaba’s 11.11, the Christmas
Season, and perhaps the couple of weeks leading up to
the Chinese New Year, she said. “A few commodities
such as pharmaceuticals and perishables will benefit
air cargo as will the demand for cross-border ecommerce,
but the general market will only see major gains on
a seasonal basis or due to major logistics difficulties
affecting ocean freight, such as the West Coast ports
dispute,” she concluded.
Sky King
