Modal shift: Real or imaginary?

The last twelve years have been a wild roller coaster ride for the air freight industry. Every time there has been any sign of a return to the steady increase in demand once considered normal, a new crisis has hit the world. 9/11. SARS. The war in Iraq. The global economic meltdown. Recession. And each of these has directly hit the air freight industry,

But while these crises have gradually faded or been overcome, there has been one negative force that has been constant: Modal shift.

Or at least so goes the accepted wisdom. Perhaps the most commonly expressed concern in the air cargo industry in the last decade has been modal shift of air freight to ocean. Most in the industry accept that demand for air freight rises and falls in response to economic cycles and natural or man-made disasters, but there is also a widespread belief that the base level of demand is falling as shippers increasingly choose to move products traditionally shipped by air to ocean. But how real is this shift?

In the closing presentation at the Cargo Facts Asia event in Hong Kong last week, Boeing’s Regional Director of Cargo Marketing Jim Edgar argued that the fear of modal shift to ocean was unfounded. Using data gathered from the US Department of Commerce on the top twenty categories of goods shipped by air on the trans-Pacific lane, he demonstrated that the percentage (by weight) shipped by air has remained almost constant.

As the chart at right shows, in 2000 air cargo tonnage on the trans-Pacific lane accounted for 2.0% of the total tonnage. In the following years this percentage has varied from a low of 1.7% in 2006 to a high of 2.5% in 2010, and in fact was higher (at 2.2%) in 2011 than it was in 2000.

Mr. Edgar acknowledged that the air cargo industry currently faces many problems, but in his view, modal shift is not one of them.