Consultant Insight: Mixed results from Memphis and Louisville express hubs

[caption id="attachment_69752" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo World columnist[/caption] By all accounts, it appears UPS will enjoy a positive first quarter in terms of domestic air volumes. Louisville Muhammad Ali International Airport (SDF), home to the UPS Worldport, has published March data that show strong year-over-year gains. On the other hand, FedEx volumes from its global hub at Memphis International Airport (MEM) disappointed. January and February volume combined was down 5.1%, with January down 8.9% and February down 1.0%. During the quarter, UPS domestic parcel volumes in pounds increased by 8.3%. January was the strongest month, up 11.6%, probably due to after-holiday returns and inventory replenishment. Jan. 2 was UPS’ “National Returns Day,” during which it expected 1.9 million packages to flow through its network, a 26% increase from 2019. For the rest of the quarter, February parcel volumes were up 7.8% and March volumes increased 5.6%. There’s no denying that Amazon is also playing a role in the UPS YoY volume increases. While March numbers from MEM are not yet available, January and February data for FedEx indicate a struggle. In terms of domestic total freight — parcel, cargo and mail — FedEx domestic volumes in pounds have declined 7.6% thus far in the calendar quarter. January volumes were down 11.6% while February was down 3.2%. UPS international volumes for the quarter were disappointing, with volumes down 5.2% at the Louisville Muhammad Ali International Airport. The biggest monthly YoY decline was in January, down 7.7%, followed by a 5.8% decline in February volumes, and a 2.5% decline in March. Turning to FedEx’s lower volumes, the slowdown in the global economy, Chinese Lunar New Year and delayed reopening of Asian manufacturing due to the coronavirus all were contributing factors. Through FedEx communications and service announcements, we find that the carrier was active in February supporting humanitarian aid organizations, including Direct Relief and the International Medical Corps, by transporting critical items such as masks, disposable medical protective clothing and gloves. This humanitarian aid that began in China quickly expanded in March and April to other parts of the world, as both FedEx and UPS announced participation in the U.S. Federal Emergency Management Agency’s Project Airbridge to move critical COVID-19 relief supplies into the U.S. Looking ahead, April international volumes for FedEx and UPS could possibly turn positive as both carriers have expanded flights. UPS added more than 200 company-owned and chartered cargo flights to support Project Airbridge and other healthcare-related missions. A majority of the new flights will move products from Asia to the U.S. and Europe. Meanwhile, FedEx added 150 flights in April to carry PPE, medical supplies and other essential items from Asia to the U.S. According to FedEx CEO Fred Smith, the company is flying more direct flights into Illinois, Arkansas and Alaska. UPS is doing the same so data from the Louisville and Memphis hubs only tell part of the carriers’ stories. FedEx announced it would reactivate aircraft that had been removed from service earlier this year to handle the increase in cargo volumes due to both pandemic-related medical supplies and e-commerce packages. So far, according to Air Cargo World’s sister publication Cargo Facts , FedEx brought an A300-600F (789) out of Victorville and sent it to Piedmont Triad International Airport (GSO) on April 14. Details are unknown on the other 10 FedEx planes that were parked during first quarter. Meanwhile, as of October2019, Cargo Facts notes that UPS took delivery of 10 planes for the year. In addition, it dry-leased four freighter-converted 767Fs from Cargo Aircraft Management (CAM), Air Transport Services Group’s (ATSG) leasing arm. As long as global air capacity remains tight and demand continues, FedEx and UPS will benefit. Both carriers and many others are to be commended for the service that they are providing, moving much-needed medical equipment and supplies to fight the coronavirus pandemic. However, when the pandemic eases, will the international demand remain? How will the express and air cargo market adjust to meet post-pandemic needs?

Consultant Insight: Mixed results from Memphis and Louisville express hubs

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