Bruce Barnard | Sep 06, 2011 9:42AM EDT
Air cargo is losing market share to container shipping as high air rates and falling ocean freight rates widen the price gap between the two transport modes, said International Air Transportation Association.
Container shipping has been the major beneficiary of recent world trade growth while air freight volumes remained flat, the air industry association said.
“The world trade surge boosted containerized shipping and road transport, not air. However the capital and consumer goods being shipped should lead to a further rise in air freight,” Geneva-based IATA said in its second-quarter survey of the air cargo market.
Air cargo is stagnating with international traffic shrinking 0.4 percent in July from a year ago as capacity ran ahead of demand, according to latest IATA figures. Ocean container traffic, by contrast, is expected to grow by about 10 percent this year.
“A 20 percent decline in container rates versus a single digit rise in air freight rates does little to close the large gap between the costs of shipping by air compared to ocean,” IATA said. “However, at the margin this may be one driver behind the loss of market share by air freight in the past year.”
Consumer demand for electronics remains relatively strong, particularly in booming non-Japan Asian economies, pushing more cargo onto planes. However, IATA said falling semiconductor prices have pushed more shipments to ocean carriers.
Heads of cargo surveyed in April were less optimistic about growth in volumes over the next year, although a majority still expects the market to expand further in 2011.
Expectations over yields have diminished substantially over the past year. There were a slightly larger number of airlines expecting an increase in yields in the survey, a reflection of the sharp increase in fuel costs.
“Economic growth is slowing but it is expected to remain more robust than it did following the 2008 oil price spike, which suggests that cargo markets and cargo profitability will be squeezed further but should be able to stay in profit this year,” IATA said.
-- Contact Bruce Barnard at brucebarnard47@hotmail.com.
