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#INTHEAIREVERYWHERE |
| Vol. 22 No. 27 Bulldog Edition | Friday
August 11,
2023 |
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Can Freighters Navigate The Perfect Storm? |
Bill Boesch thinks about life and the air cargo business all the time. A top logistician with deep roots in upper management everywhere, Bill has served, including most recently as a go-to resource in logistics for the U.S. military. Bill was thinking about the state of affairs of the global freighter market. He is not surprised, mind you, of the general malaise of action for freighters in 2023. In fact, the man, who reviewing the global air cargo market once commented that he believes that it has been too long that in air cargo, an industry which is not yet fully defined, innovation has been mostly swept under the rug. “The last truly dramatic and great change in air cargo occurred a half century ago when Fred Smith invented FedEx,” Bill Boesch said. Amazon has also created new markets for air cargo through its shopping network. But the man who led the charge at American Airlines Cargo, Emery and Seaboard into global expansion, and was instrumental in delivering Envirotainer into business is thinking right now about what happened to the U.S. freighter business that has come in for a hard landing this year. “In the movie The Perfect Storm, the fishing vessel Andrea Gail and its Captain Billy Tyne and crew in 1991, finds itself trapped in a situation aboard an ill-fated commercial swordfish fishing vessel, where everybody is lost at sea,” Bill said. “Unfortunately, that movie, which popped up on my TV screen recently raises, at least for me, an image of the present-day air cargo freighter carriers’ situation. “During the pandemic widebody international passenger flights, which traditionally carried 60% of the world's air cargo, were mostly grounded. “As a result, the Air Freight Forwarders and the large commercial shippers had to rely on the air cargo freighter carriers. “These carriers took advantage of this situation by expanding their operations and charging high rates for ACMI (Aircraft, Crew, Maintenance and Insurance) leases to maximize their profits. “When the pandemic ended and the international widebody passenger aircraft returned, a ‘Perfect Storm’ hit these carriers as also at the same time the air cargo market declined. “This 2023 Perfect Storm in the air cargo industry, with the passenger widebody aircraft returning, has resulted in less cargo for the freighter carriers and a subsequent major reduction in air cargo rates. “The other downside driver in all of this is higher wages and higher fuel costs the carriers are experiencing. This coupled with the lower volume and rates has resulted in the freighter carriers operating under extreme pressure on their profits. “Many of these carriers are trying to shed their costs, refinance their debt and are aggressively offering ACMI guaranteed leases for their aircraft.” So can anybody see a happy ending? Bill thinks no one should hold their breath. Add to that higher interest rates for money, which many of these carriers need. The U.S. dollar appreciated over 12% in 2022, hitting a two-decade high in September 2022. The high value of the U.S. dollar has favored U.S. imports. Bill says: “The high U.S. dollar value resulted in U.S. importers relying more on the non-U.S. freighter carriers which are less expensive than those carriers operating under the U.S. dollar. “Some freighter carriers may end up adrift, possibly lost forever as they struggle to reduce their costs to achieve profitability while awaiting either government assistance, which is unlikely, or better weather,” Bill Boesch said. Geoffrey |
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22 No. 24Does Anybody Here Know How To Play The Game? Chuckles For July 24, 2023 Buffalo Jets Into The Future Hema Tanna All In The Family India Cargo Post Covid Slowdown It's A Good Life |
 Vol 22. No. 25 Back To School With FIATA How To Land A Plane |
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 Vol. 22 No. 22 Trifecta For Change Chuckles for June 26, 2023 Ahead To FIATA World Congress Mahindra Logistics Lands In Dubai Me & Jane On A Plane Remembering Gordon Lightfoot |
 Vol. 22 No. 23 Predict The Future By Creating It Chuckles for July 13, 2023 IndiGlo For IndiGo CarGo Sky High Delhi Vaz Hey Friend Do It Again Paris Air Show Happy Returns |
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Publisher-Geoffrey Arend
• Managing Editor-Flossie Arend • Editor Emeritus-Richard
Malkin Film Editor-Ralph Arend • Special Assignments-Sabiha Arend, Emily Arend |
Send comments and news to geoffrey@aircargonews.com
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