IAM quality quest
24 / 06 / 2008
IAM, reported a market-eating performance in 2007 for the 14 airlines it represents. But the weak US dollar, over-capacity to China and Ireland’s loss of some hi-tech manufacturing, are already creating a mixed picture for 2008.
In 2007, IAM’s total tonnages were down less than one per cent against 2006, despite the overall Irish airfreight market shrinking by 14 per cent. Star performances came from American Airlines (up eight per cent), El Al (up 29 per cent), Kuwait Airways (up 29 per cent) and South Africa Airways (up 14 per cent). Traffic to Japan remained stable against 2006, despite a market fall of 45 per cent.
But the picture is far more polarised in the first quarter of 2008, with the weak US dollar severely damaging exports to Ireland’s largest market. While Kuwait Airways traffic is almost quadrupled, traffic to Japan is almost doubled, MNG is doubled, Jet Airways is up 450 per cent against its first comparable month of 2007 and South African Airways is up 22 per cent, falls on routes to North America and China have marred IAM’s overall results.
Further evidence of the fragility of the Irish export market was provided by a 25 per cent fall in traffic to Ireland’s top eight export destinations in January and February and the fact that the country’s top eight freight agents alone posted a six per cent fall in business over the same period.
IAM managing director, Ian McCool, said: “As fuel surcharges increase, the cost of moving goods by air is getting higher. Many multinational manufacturers have switched to ocean freight or moved production to lower cost countries, and this trend seems set to continue for the immediate future.”
Although Ireland continues to enjoy considerable inward investment and substantial expansion in some indigenous companies, McCool predicts an uncertain outlook for the next year, largely due to the weak US economy and currency. “The USA is still Ireland’s largest air export market, but the first quarter of 2008 shows exports down 28 per cent due to slowing demand in the USA and products being sourced from lower-cost regions. The weakness of the dollar is killing Irish exports.”
China too, has been a difficult market as return freighter capacity from Europe has increased substantially over the past three years, vastly outstripping demand. As a result, rates in Ireland are now lower than the trucking cost to the European gateway, so some carriers are effectively subsidising their airfreight rates with surcharges. At the same time, yields have fallen by up to 22 per cent.
But it’s not all doom and gloom said McCool. “Some markets such as Africa, Australia and South America are holding up well, with rates remaining stable over the past year. We even see rates rising at the end of each quarter period as demand outstrips supply. Quality of service continues to be a key factor in IAM maintaining its dominant position in the Irish market, as freight forwarders battle to hold each account. Quality carriers combined with our highly-trained and customer-focused team ensure that shipments booked with IAM are handled with the utmost care, and are monitored from origin to destination. We also employ more staff per airline than any other Irish GSA.
“Many shippers with a well-defined supply chain recognise the need to strike a balance between economising on freight costs and achieving consistent delivery performance. Getting product to market consistently on time creates more financial gain for exporters than a 10 per cent saving on the airfreight rates in return for an inconsistent service.”