The industry clearly ‘appears’ to be turning the corner on the disaster named ‘2009’, but like a freight train, some carriers are further out ahead with others still making the corner and some yet to turn. But what is interesting to watch is just how the different players come through after making that turn. Some come out looking much worse for the wear, whereas others like Lufthansa (the subject of this issue’s cover story) are emerging smelling like proverbial roses.

Clearly this traumatic experience will help separate the ‘boys from the men’, as the saying goes and we’ll see what this all means for the industry going forward. It’s interesting to see also, the differentiation in recovery between the air and ocean freight industries. Air is always the first mover, so it’s natural to expect a lag before the shipping lines experience a full recovery. Interestingly enough, global ocean container rates have been falling, an apparent counter to any recovery. The theory is that in order to retain business following the end of the peak season, shipping lines have begun slashing rates, a foible of not only the air cargo industry apparently.

For now the air cargo industry seems to have little to fear from the competitive threat of ocean shipping, which has been an ongoing concern for a number of years, whether truly warranted or not, it’s not clear. But the recently released survey of air cargo executives by consultancy firm Oliver Wyman raises this issue saying customer buying preferences and patterns have permanently shifted, as a result of the global economic crisis last year.

“Customers will continue to be highly price-sensitive and will evaluate alternative transport modes to meet their shipping needs for segments with slower supply chain requirements,” the report noted, reflecting the sentiment of industry chiefs. A recent and stunning example of this was the announcement by computer giant Dell, that it would be shifting the majority of its shipments from air to ocean in order to maintain its competitiveness. That will be an interesting situation to watch.

But the biggest threat to profitability identified by the study was commoditisation, which 84 per cent identified as the number one issue. The issue is certainly not new and indeed 14 per cent of respondents have reduced their portfolio complexity to adapt to the trend seemingly viewing it as inevitable. Most have taken the opposite tack, however, seeking ways to differentiate their product with 68 per cent planning to boost their premium product lines.

Overall, the executives surveyed – across the top 50 air cargo companies during Q1 this year – indicated they were cautious about projected improvements in 2010, but virtually all foresee a return to 2007 levels within 1-3 years.

The study concluded with a piece of advice for the air cargo industry: Air cargo carriers need to be more flexible – financially, in terms of capacity planning and also in terms of diversifying risk across markets and products. They should also pursue closer relationships with forwarders, who will continue to be the dominant controlling force for supply chains in this industry, the report highlighted.

All reasonable sounding advice, but like a bitter pill it may be hard to swallow by some and for others, there may be no water left in the glass to wash it down. The industry has consistently shown itself to throw rationality to the wind, but maybe after last year, the attitude has become more pliable. As an old saying goes: “A goodscare is worth more to a man than good advice.”