Air Cargo Industry Faces Long-Term Overcapacity, Says Industry Executive
The air cargo’s current woes are signs of structural changes in the air cargo industry that will likely result in overcapacity for years to come, said Oliver Evans, chief cargo officer at Swiss WorldCargo, in a blog post Nov. 4. Although some await the air cargo industry’s return to the steady growth that characterized the last 25 years, the “awful truth” is beginning to sink in that the industry faces more than a manageable downturn, said Evans. “It is a structural change, or a combination of changes, that runs deep down to the foundations of our industry, threatening all who turn a blind eye to it.”
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According to Evans, three key trends are making life difficult for the air cargo industry. First, the size of consumer electronics products is quickly shrinking, cutting freight volumes even as the sheer number of transported devices increases. Second, many shippers that tried ocean freight to save money during the 2008-09 downturn found it to be a viable and alternative to air freight, and haven’t switched back. Finally, rapidly expanding demand for passenger aircraft has resulted in a glut of new planes with huge cargo holds, “gnawing away at yields and revenues like hungry birds,” said Evans.
The convergence of these factors means that, although the world is recovering from the global downturn in terms of consumer demand and trade, the air cargo industry’s tribulations will continue as it confronts overcapacity, Evans said. To be successful, the industry will have to reassess its business models and embrace new opportunities, and most of all acknowledge that current problems are “not a blip,” he said.