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Belly trouble? Depressed yields? Too many freighters? Association confusion? Whatever the worry, our readers have shared it all in Airline Cargo Management’s third annual survey – which reveals that the industry is expecting a better year in 2014

Flat revenues, lower yields, a few more tonnes: that’s the year IATA is predicting for the air freight industry. Revenues, it believes, will match the $60 billion forecast for 2013, while the downward pressure on yields – which were expected to fall 4.9% last year – will be down again this year, albeit less dramatically, at 2.1%. Freight tonne kilometre growth, meanwhile, will edge up 2.1% compared with last year’s 1%. That’s what IATA thinks, anyway.


So what do you think? Airline Cargo Management has just completed its third annual survey and, once again, our readers have been pretty bullish. Move aside, IATA, with your gloomy figures, because 38% are expecting to see 5% growth or more this year, 18% are forecasting growth of about 2%, while only 7% are expecting negative growth. This optimism is up on last year’s survey, when 35% expected growth of 2% or less and 35% expected growth of more than 5%.


As with last year, most readers this year expected the industry average growth rate to be about 2% it was actually 1% in 2013 (see chart 1).


See how last year's results compare: ALCM 2013 industry survey


There is little-to-no appetite for growth through acquisition – even less than last year. Fewer than 2% will be feeling for their wallets in a bid to get bigger; last year, perhaps surprisingly, nearly 7% thought their growth would come via acquisition. This year, more than 45% think organic growth is likely, while last year it was a more modest 31% (see chart 2).


There is no getting away from it. The problems for the industry don’t look like they are going to change, with the single biggest concern for this year, unsurprisingly, being the continued imbalance between capacity and demand as more bellies tout for business (see chart 3). Some 42% of respondents see this as the big challenge, while a further 30% have taken this one step further and see the real problem as the consequently low yields. Competition pips fuel prices to third place, at just over 10%. Compared with last year, fuel is much less of a concern. Is the steady influx of more efficient aircraft making itself felt against an increasing number of older aircraft being retired early? Possibly.


Over the next 10 years, though, fuel prices will be a consistent and continuous worry (see chart 4) although, when compared with last year’s survey, fuel was easily the highest-ranked challenge of the decade, followed by security – which barely features at all this year. Maybe those industry associations are doing something right, after all? Interestingly, last year, there were fewer long-term worries about overcapacity, but it would seem that now everyone has learned the new market conditions are here to stay, the trick is no longer about keeping afloat until everything goes back to normal; instead it is about learning how to operate in the new environment.


Rate cards
Over the past two years, while yields have not just been languishing but diminishing, there has been something of a blame game across the supply chain. Is it pressure from shippers that has forced rates to be continually low, or is it overcapacity? Should airlines have kept the faith, kept rates high and shrugged off pressure from the forwarders? Airlines and forwarders bore the brunt of the blame last year, while this has shifted slightly to airlines and shippers this year (see chart 5).


So, is it time for cargo airlines to look over at their passenger-carrying siblings and join them in simple web bookings? ‘Yes’, say 53% of you, while only 30% say ‘no’ – a 10% drop from last year (see chart 6).


And what of the future for air freight rates? At last year’s World Cargo Symposium in Doha, a speaker from NYSE Euronext explained to delegates the potential advantages of a rate index for the industry, which could then be used for financial tools such as derivatives. Support for this was strong in 2013 and has edged up further this year (see chart 7). >>

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