Air Cargo Management Group’s (ACMG’s) newly-released International Air Freight and Express Industry Performance Analysis 2009/10 confirmed what has been clear to all participants in the industry, that it was the most difficult year ever for the industry.

Recession-induced double-digit declines in air freight traffic first appeared in the fourth quarter of 2008, and continued for a full twelve months. “Indications are that international air freight for 2009 will show a decline of nearly 15 per cent compared to the results for 2008,” said Robert Dahl, ACMG managing director, “making 2009 by far the worst year ever for the industry in terms of year-over-year performance.”

But Dahl noted that even the express companies have not been immune to the negative impacts of the recession, but the 6.9 per cent decline found by ACMG in the volume of international express shipments was much less severe than the overall air freight/express industry contraction.

Key recovery signs
But he goes on to note that there is growing evidence that the air freight market has started to recover as traffic levels have rebounded from a low point in the first quarter of 2009. “Traffic levels early in 2009 were no higher than they had been in 2000, suggesting that the industry had lost a full decade of growth,” noted Dahl.

“However, sequential improvements in the second and third quarters of2009, in which absolute traffic levels increased on a month-over-month basis,indicate that the industry is recovering,and will begin 2010 in better shapethan first thought, with traffic at a levelcomparable to 2003 or 2004.”

Moving forward, ACMG expects that air cargo traffic will grow 7-10 per cent in 2010, and “there is a good chance that we will recover to the pre-recession peak by 2012,” Dahl says.

The report notes that despite the downturn at the end of 2008, combined annual revenue for participants in the international air cargo market — airlines, forwarders, and express companies — remained at US$87 billion for the full year. But it also cautions that this total is expected to decline significantly when full-year 2009 results are assessed, as air freight yields have also been down by double-digit amounts due in part to significant reductions in fuel surcharges in 2009. As a result, many airlines are reporting drops of 35-40 per cent in freight revenue.

“It is too early to say for sure whether the recovery is sustainable, and whether globalisation trends so important to the international air freight industry will resume their historic growth pattern as the world’s economy rebounds,” said Dahl. “We will be monitoring these factors closely in the months ahead, as they will determine how quickly the international air freight industry returns to its 2007 peak.”

Market share
Other key findings of the report include the fact that international express volumes slid into negative growth for the first time in nearly a decade with a 6.9 per cent drop in 2009, year-on-year to 1.997 million shipments per day. Growth in this sector has averaged 8.5 per cent per year since 1992, but a less impressive 5.1 per cent per year since 1997.

UPS now has the largest share of the international air express market at 25.2 per cent, followed closely by FedEx and DHL, with TNT and the Express Mail Service of the Universal Postal Union rounding out the top-five.

Despite gains by the express companies, airlines and forwarders retain control of 88.6 per cent of the tonnage of air cargo handled in the international market, according to ACMG.

On a revenue basis the non-express carriers in the combination and allcargo groups together have a 47.6 per cent market share — worth nearly $41.4 billion — with freight forwarders having an additional 17.6 per cent share ($15.3 billion). Leading airlines in Asia generate nearly one-third of their revenue from cargo.

ACMG also found that about 15 per cent of the global fleet of freighter aircraft was taken out of service during the 2009 downturn; most of the parked freighters are older units that will not return to service.

The availability of excess belly space in passenger aircraft also contributed to the weak freighter market. However, despite the market contraction there were few cancellations of freighter orders.

More extensive coverage of the performance of the express companies, all-cargo and combination carriers, and freight forwarders that serve the international air freight market, is available in the 250-page ACMG report.