The response from Boeing to rival Airbus when they announced they were moving forward with the A 380 was to upgrade the 747 to an 800 series. As of this month there were options on only thirty-two of the passenger version but seventy-six for the freighter configuration, almost making it a loss making venture for Boeing. It is interesting to note that some freighter operators, led by Cargolux, are looking at ensuring any replacement aircraft are new rather than conversions. With possible cancelations on the passenger 747-800, it looks like the 747 will go the way of the MD 11. In the last five years of MD 11 production all aircraft delivered were freighters.

I started in the business about the same time as Pan Am started flying the 747 to New Zealand. I have always been in awe that such a huge machine could actually fly. It is sad that starting with the “new” JAL, a mega international carrier, that the 747 will slowly fade from the skies because most carriers will undoubtedly follow Air New Zealand’s choice of scrapping the redundant aircraft rather than find buyers. To think it was 747 which transformed the airline business to move passengers in “bulk” which in turn led to pricing that allowed working class families to enjoy overseas travel at Greyhound bus prices.

So in the last fifteen years with the leading economies moving from a manufacturing to a services base, we have seen airfreight change from a position where there was some form of equilibrium of trade between most sophisticated countries to one where it has become virtually one way. In the good old days where export and import volumes were 50-50 this allowed many indigenous forwarders to obtain great market share in their home countries. As the pendulum started turning the other way and exports started shrinking and imports growing, multi-national forwarders quickly started swallowing up the market share leaving local forwarders fight for the scraps. Nowhere better to illustrate this change than to look at what has taken place in Australia over the past twenty-five years. In the early eighties publicly listed transportation companies Mayne Nickless, Brambles, TNT and several privately-owned forwarders Fliway, CH Cargo Handling, VIP, and Simpac more than held their own against the might of the multinationals. Today these companies no longer exist. TNT lives on as a Dutch company in name only. As air imports grew all were acquired by their foreign competitors. Today few of the larger trading countries exist where a local forwarder commands any market share. This has set the stage for the new era where the top five forwarders control over 80% of the global airfreight market.

During the course of 2009, 227 freighters have been taken out of service and we are not talking vintage aircraft like the DC 8, DC 10 and 727. Most are 747’s and MD 11’s, with many of the 747’s being the latest 400 series. What trade were most of these aircraft assigned to? Yes, you’re right China. There is such a glut of capacity that even with the parking up of so many aircraft yields are still continuing to decline. Air France/KLM have just announced they are getting back to their roots and handing their freighter fleet of 21 747’s and MD 11’s over to their subsidiary Martinair and now will only offer belly space. The combined airline since merging has been losing over $1 million per day from its freighter operations. The stage has been set for a far smaller market for airfreight to emerge from this global recession.

Why will this be so? Two things; the days of rampant consumerism as it has culminated into two years ago is over never to return and as trade starts to grow once again, ocean freight will play even a bigger role. Example; Polo Ralph Lauren pre-2009 relied upon airfreight to handle the bulk of their needs. Boss, Ralph Lauren, when hit by a shrinking market, studied areas of further cost-cutting and discovered by changing modes that he could cut his transportation costs to a fraction of what they were. Even though Polo is a premium brand, most of their goods are procured from China. Earlier this year Ralph Lauren issued the instruction all imports were to now move by sea and air was only to be used in an emergency. His decision has so far produced savings in the $millions. Others will, or already have followed suit.

Presently most of the large multinational forwarders, especially DHL, are fighting for their lives and are restructuring for the changing times. The industry has been turned on its ear. The fairy tale of exponential growth in air cargo over the next twenty-five years that Boeing forecasters continued to predict even as late as last year have turned them into laughing stocks. For airfreight forwarders to be relevant in the new era that is dawning upon the industry they will have to ramp up their ocean freight departments. The golden age of airfreight is now consigned to history.

Please be patient with us.