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Bearing all

Falling fuel prices, growing volumes and pre-holiday sea freight chaos gave the industry a newfound confidence towards the end of last year. Can it last? Airline Cargo Management asked what you think about the market, the industry and its future

The fourth annual survey for Airline Cargo Management has provided a generally cheerier set of responses than normal – and has revealed a new direction in which the industry is heading, albeit at a glacial pace.


The questions were sent out in December, with the survey closing in the third week of January, shortly after what was generally seen as a pretty good last quarter for 2014.


The west coast ports of the US were in chaos, with congestion deepening from the summer onwards. A combination of the perfect storm of union and management tensions during contract negotiations (along with claims of a port worker ‘slowdown’), driver and truck shortages, coupled with increasingly giddy Thanksgiving and pre-Christmas shopping, meant shippers were looking to other modes to guarantee delivery – and air freight stepped right up. Charter brokers and providers were generally upbeat all year, but broke records in October and November, leaving much of the industry with a generally good taste in its mouth as the year came to a close.


As a result, 50% of our respondents enjoyed a “traditional peak season”. (Chart 1)



According to IATA and Seabury figures, industry growth last year was forecast to be between 4 and 4.5%. In their own businesses though, people tend to be more upbeat. For 2015, although more respondents predicted about 3% growth, many foresee it being between 5 and 7%. (Chart 2 – in previous years the survey only asked about growth of 5% or more – this year it included 6 and 7%.)



Not too much has changed in the way companies plan to achieve that growth – although acquisition plans have shrunk from 7% of respondents in 2013 to 1% this year, while finding and marketing new products is a higher priority this year than it has been in the past.




While fewer companies than last year said that most growth would come from new markets, there was a clear majority, 78%, eyeing Asia (Chart 5). An improved and more stable economy in the US appears to have boosted confidence there too, and while South America has undoubtedly been disappointing for some, with Brazil not making good on its potential, there remains considerable interest in the region from the air cargo community. Something that is perhaps surprising is that companies still see growth potential in Europe – more than in Africa. But that growth may in fact be attributed to the Middle East, rather than Europe.



The interest in Asia could perhaps be related to the focus on the express and parcels business, as demonstrated in Chart 6. Worldwide, business-to-consumer e-commerce sales were expected to grow about 20% last year. According to eMarketer, alongside other data, Asia Pacific is forecast to fill up to 40% of the global e-commerce market this year with its heady growth rates. The focus on pharmaceuticals has also been noticeable this year, with airlines and airports investing significant sums in compliance and quality programmes, as well as infrastructure and equipment. The focus on this is clearly going to continue in 2015.



Respondents aren’t particularly confident about this year for the industry – but there aren’t the sharp differences recorded in 2013. It is possibly more depressed than the forecast figure of about 4%, with just under 60% of respondents seeing industry growth at just 2 to 3% – and only 14% predicting 4%.





But growth is less important than profit to most businesses and yields are always interesting. Better still – despite industry forecasts predicting much the same level this year as the last – 45% reckon they will be better. >>

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