What does the future hold for air freight demand?

Having spent much of the last two weeks traveling, first to our own Cargo Facts Aircraft Symposium, and then to the Air Cargo Americas event, I haven’t had much time to update this blog. But I’m back in our Seattle office now, and I’d like to take up a subject that was very much on everyone’s mind at both the Cargo Facts and ACA events: What does the future hold for the air freight industry?

 

The problem, of course, is how to interpret the events of the last few years — are they just an unfortunate series of one-time events, or do they represent a fundamental change? Historically, demand for air freight grew at an annual rate of close to 6%. There were occasional ups and downs, but it never took long for demand growth to return to its long-term average. However, the oil price spike of 2007, the world-wide financial crisis of 2008/2009, the astonishing rebound of 2010, and the apparent stagnation of 2011 have made predicting air freight demand growth almost impossible, and many people are now wondering if volatility is the new normal.

 

After listening to the presentations and discussions at the two recent events, and sorting through everything that was said, I think the common theme was that the volatility will subside and that regular growth will return — but not next year, and not at the historical 6% level. While not every speaker agreed on the details, the general consensus seemed to be that after a very modest and very short peak season at the end of this year, demand growth in 2012 would be positive, but quite low, and that post-2012 average annual growth in airfreight demand would probably settle at somewhere around 3% or a little higher.

 

Since many of you attended Cargo Facts or the ACA (or both), I would be interested to hear your thoughts, both on what you took away from the events, and also on the subject of current and future demand. Are you seeing a bit of a peak developing as we move toward mid-November? What about 2012? And what about the longer term: Will we see a return to some kind of regular growth pattern? And if so, will it indeed be much lower than in the past?

 

Just scroll down to the “Comment” box below, and give us your opinion.

 

And by the way, we’ve posted a photo gallery from the Cargo Facts Symposium. Check it out here.

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3 Comments

  1. Hold on to your hats, demand is one thing, over capacity is another. Also the shift in carriers who will lead will change, so for some carriers there will be growth and for others it will be stagnant or worse. I expect casualties in 2012-13, and some real surprises

  2. jonathanlesieur says:

    Beyond the actual growth in FTKs or tonnage, I think a very close look should be taken at the revenue that these FTKs actually generate. A 3% growth with yields on the uprise seems like a more pallatable offering than 6% growth with downward yields. Or will we be faced with 3% growth with downward yields?

  3. Good points. What happens regarding demand is less important than how cargo revenue transfers through to the bottom line — and some carriers will manage that better than others.

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