2019 State of Logistics: Air cargo

Air cargo capacity outpaces demand as carriers regroup

By ·

When the International Air Transport Association (IATA) released data for global airfreight markets this June, it noted that demand fell 4.7% compared to midyear 2018, thereby signaling a negative trend in year-on-year demand that began last January.

Freight capacity, meanwhile, grew by 2.6% year-on-year in June 2019, outpacing demand for the last 12 months.

“Air cargo volumes have been volatile in 2019 due to the timing of Chinese New Year and Easter, but the trend is clearly downwards, with volumes around 3% below the August 2018 peak,” says Alexandre de Juniac, IATA’s director general and CEO, adding that Brexit-related trade uncertainty in Europe and trade tensions between the United States and China have all contributed to declining new export orders.

In month-on-month terms, export orders have increased only three times in the past 15 months and global data has been indicating negative export demand since September. The continued weakness is likely to lead to further subdued annual freight tonnage growth in coming months. “Cost inputs are rising, political tensions are affecting confidence, and global trade is weakening,” de Juniac concludes.

Brandon Fried, executive director of the Washington, D.C.-based Airforwarders Association (AfA), concurs, observing that “the cat is out of the bag” in regard to global trade relationships. “It’s tough to put that cat back in,” he says. “Furthermore, domestic politics here in the U.S. are another complicating concern for air cargo shippers. Our political leaders have to realize that all major passenger airports are also vital cargo hubs, and while we’re encouraged by investment in infrastructure, the federal government can’t do it alone.”

It is also becoming apparent that road infrastructure adjacent to airports is under the control of local governments. “That’s a significant worry too,” says Fried. “In some cases, this is an even bigger issue.”

On a brighter note, Fried likes to point out impressive strides in technology that have profound implications for the air cargo industry. “For example, American Airlines is now experimenting with tag-free baggage handling where optical recognition technology recognizes the passenger luggage, regardless of its labeling or similarity to others,” he says. “If successful and fully implemented, think of its implications and uses within the air cargo system.”

Of course, no discussion of air cargo can be complete without acknowledging the impact Amazon is having on current plans and business practices.

“In the freight forwarding industry, today’s competitor can also be tomorrow’s partner, so we’re eagerly waiting for Amazon’s future to unfold,” says Fried. “However, AfA members are investing in their futures through technology enhancements, increasing global footprints and expanding service capabilities. It’s a big market and many participants will do very well—regardless of Amazon’s plans.”


Read the feature article on the 2019 State of Logistics here.


About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at [ protected]

Subscribe to Logistics Management Magazine!

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your entire logistics operation.
Start your FREE subscription today!

Article Topics

State of Logistics · All Topics
Latest Whitepaper
How to Manage Increasing Labeling Demands
Download the report to learn best practices for managing those increasing label demands.
Download Today!
From the August 2019 Logistics Management Magazine
The staff of Logistics Management (LM) is honored to present the logistics and transportation community with the results of our 36th Annual Quest for Quality Survey
Ocean: Protecting margins in a soft market
Warehouse Voice Technology Speaks for Itself
View More From this Issue
Subscribe to Our Email Newsletter
Sign up today to receive our FREE, weekly newsletter!
Latest Webcast
Creating the ROI for Multi-Carrier Parcel Shipping Solutions
This webinar will reveal how manufacturers, retailers, and 3PLs can utilize their own data to identify and demonstrate ROI for multi-carrier parcel shipping by leveraging state-of-the art business intelligence to increase performance.
Register Today!
EDITORS' PICKS
36th Annual Quest for Quality Awards: Winners in the spotlight
Which carriers, third-party logistics (3PL) providers and U.S. ports have reached the pinnacle of...
State of Logistics in 2019: What’s next?
Tight capacity, high rates, rapid e-commerce growth and a booming economy fueled an 11.45% rise in...

Got labor? How supply chain companies are recruiting talent during a labor crunch
How are companies faring in the race to recruit and train high-level supply chain talent in a market...
35th Annual Salary Survey: Compensation matters more than ever
While job satisfaction remains the primary reason for today’s logistics managers to stay with one...