THE WORLD OF AIRFREIGHT

There is talk that if trends for 2009 remain the same through summer and into fall, there will be bankruptcies galore amongst the airlines. Even though competition has been great in keeping prices down over the last twenty years, the simple fact of the matter is there are just too many airlines out there competing. Growth forecasts are being reworked and the prognosis is the world’s fleet will continue shrinking for the next five years at least as demand has irrevocably done likewise. It is not so much the tourist traffic that has impacted upon the industry, but the business traveler. We now live in an age of instant and cheap communications. Large corporations have woken up to the fact that cutting costs in executive travel has not only improved the bottom line but sales have been left totally unaffected. Airlines’ bread and butter may be the coach class traveler, but the cream came from the business and first class seats. Carriers are now working doubly hard at turning the front end of the aircraft to match the back end as they see the change in demand remaining long term rather than short term.

The same can also be said for airfreight. Express freight and airlines obtaining peak season premiums are the dying ends of the business. Express operators FedEx and UPS will have to reinvent themselves or there will be only room left for one player. Already passenger/combination and all cargo carriers are grounding planes as fast as they can and will continue doing so until supply equates to demand.

With the IMF last week proclaiming the recession is over it only re-confirms my distrust for these types of organizations. Either they are living on another planet or their heads remain stuck firmly up their rear ends. I think it is both. The world is continuing to hunker down because everyone knows the party is over. The wealth of the masses all over the western world has shrunk to levels where it will take years just to get back to where they were, let alone move forward to better times. Airfreight and the airline industry and what has taken place over the past nine months is the perfect barometer of where the global economy is and where it is heading. There is no question it is contrary to the views of the IMF.

Tags: AirFreight, FedEX, IMF, UPS