Sure, the frost is not yet on the pumpkins,
but with the Christmas rush being the next big thing in air cargo, it
is about time to look ahead and wonder what the holiday season and the
future months will bring.
With U.S. unemployment hovering around the
10 percent mark, housing sharply lower than that, an anemic stock market
and manufacturers just marking time, air cargo will show little growth
for the remainder of the year.
Retailers are taking their cue from shoppers'
reluctance to open their pocketbooks and have become very miserly in building
up their inventory.
Airfreight has enjoyed a sharp increase
in volume during the past number of months, but much of that growth, in
hindsight, can be credited to restocking of inventory and not to sales
to the ultimate consumer.
The supply chain seems to have snapped at the retailer's warehouse.
We note that airlines are becoming cautious
about the next few months, as their rates are remaining flat.
Carriers seem content to keep their fuel
charges in effect rather than raise rates.
Cargo volume also will be handicapped by
the slowdown in U.S. exports.
Chinese expansion is moderate as are other
Asian nations' economies. Surprisingly, Europe, which had been given up
for dead as a trading partner, is showing unexpected liveliness. Germany,
in particular, has become one of the most powerful export nations in the
world, with an actual shortage of workers.
Airfreight is participating in this Teutonic
growth, particularly to the Middle East and Asia.
One development, however, should benefit
airfreight, particularly for last minute ordering of goods. It is the
decision by many of the ocean lines to continue "slow steaming,"
aka, taking longer times between ports.
Maersk Lines recently announced it would continue slow steaming indefinitely.
Since most other shipping lines follow Maersk's lead in lockstep, air
freight will be needed in many instances to move merchandise in time for
Looking ahead, there is not a particularly
bright future for the independent forwarder in international trade.
The integrators, particularly FedEx and UPS, continue to gain market share
as shippers reduce the number of their suppliers.
The two integrators have built up their
infrastructures in Asia at enormous cost, but this expenditure seems to
be paying off.
They are providing excellent service and
shippers seem willing to pay their higher rates in return for this service.
Expect a dwindling number of independent
forwarders to participate in global trade in the months and years ahead.
There are now only seven independent, multi-national
forwarders of any significance.
They include DHL, Schenker, Panalpina, Kuehne
& Nagel, Expeditors, UTI and Ceva.
Smaller forwarders will have to be content
to get crumbs from their tables.
FedEx and UPS, as their market share continues
to grow, have become increasingly stingy in selling space on their aircraft
to outside forwarders. Some twenty years ago, FedEx sold $700 million
worth of space to independent forwarders.
Today, that figure has shrunk to $50 million.
Despite a gloomy economic outlook, Consolidators
International continues to expand.
We expect a 40 percent jump in CII volume
for all of 2010, with a corresponding increase in profitability. We
are sticking to our knitting as we have for the past sixteen years, concentrating
on the South
Pacific, particularly Australia and New Zealand, both being strong markets
for both air and ocean trade.