The early results are in, and what is clear about the year 2011 in the air freight industry is that nothing is clear. My crystal ball is so cracked and foggy that it’s hard to make sense of the past, let alone look into the future.
The first question to ask about industry performance in 2011 is what does one compare it to? 2010? That’s a tough one, because 2010 saw demand leap more than 20% compared to 2009. But then, 2009 was also a crazy year, in which we saw demand swing from a decline of 25% at the beginning of the year to a gain of 25% at the end of the year, for a net drop of 10%. And so on back at least through 2008.
To illustrate how tough it is to draw conclusions about 2011, compare the performance of the biggest cargo handler at the world’s busiest cargo airport, with that of one of the world’s biggest cargo airlines: Hactl, which handles over 70% of the cargo at Hong Kong International, today reported that its total handle for 2011 was down 6.3% from 2010. On the other hand, Lufthansa Cargo, one of the world’s top three international carriers, today reported 2011 cargo traffic up 6.5% for the full year to a new record.
Overall, it now seems likely that total worldwide cargo traffic for the year will be down about 1% compared to 2010. But 2010 was up over 20% from 2009, which in turn was down 10% from 2008, which was down 4% from 2007. In fact, 2007 has become the standard by which we now measure air freight demand. It was the pre-recession high point, and the end of a long period of relatively predictable growth in demand.
Compared to 2007, we believe cargo traffic in 2011 will be up about 4%, reflecting an average annual demand growth rate of close to 1% – a far cry from the old standard of almost 6%. Looking ahead, those industry leaders who will talk about it all are predicting more of the same – relatively flat demand – in 2012, followed by a return to more normal growth patterns either late in the year or early in 2013, but we point out that prediction has become something of a losing endeavor in recent years.
What happens if the euro zone crumbles? What happens if the US recovery comes to a halt, or reverses into recession? What happens if Iran carries out its threat to block the Strait of Hormuz? And just as interesting, what happens if none of those bad things comes to pass?
We’d love to hear your thoughts, on both the year just finished and what lies ahead.
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