New rules for a new era

AIR cargo has and is continuing to fundamentally change, following the collapse in trade that began just over a year ago – according to analysts presenting their findings at the annual Freighters World Conference.The historical link associating air cargo growth with global GDP growth appears to have been broken and growth rates are likely to be much lower than predicted in Airbus and Boeing 20 year forecasts, according to Marco Bloemen, vice-president, Seabury Aviation and Aerospace.“The industry has worked on the assumption that air cargo growth grew two times faster than global GDP. In fact throughout the 1980s and 1990s it generally grew even faster than this ratio. Since 2001, however, the ratio has rapidly declined by over 50 per cent and in 2008 air cargo actually grew slower than GDP. Conventional belief that air cargo will grow at five-six per cent over time does not seem to hold when analysing the new relation between GDP and air cargo demand.”With worldwide GDP expected to grow at only two per cent in the medium term, the prospects of the return to high single digit air cargo growth look bleak.Bloemen also warns that a quick return to healthy growth and improved yields is unlikely due to some permanent model shift and the ongoing increase in belly capacity.“Driven by passenger demand, belly freight capacity is expected to increase considerably in the short- and medium-term. A compound annual growth rate of some eight per cent in belly capacity will outstrip the likely growth in air cargo. This will result in even more excess capacity and pressure on yields and rates. Capacity has been reduced in 2009, but needs drastic further action in 2010 to meet the drop in demand.”For the full story read the latest issue of Air Cargo News, dated 13 November, 2009. To subscribe, click on ‘Subscribe’ above.