FedEx expect a rise in volumes

FedEx Express believes the drop in air transportation volume has bottomed out and hopes volume will pick up later in the year.

FedEx Express believes the drop in air transportation volume has bottomed out and hopes volume will pick up later in the year.

FedEx vice-president of legal and regulatory affairs Steven H. Taylor said the company currently did not see as big a cargo volume decline as it did earlier in the year.

“Similar to the aviation industry’s forecast, we are anticipating lower volume this year but we hope to see an increase as the year progresses.

“This year, we are not optimistic of recording the kind of volume we experienced a couple of years ago.

“And the volume contraction in our domestic market (in the United States) is much smaller than the contraction in our international market,” he said.

Taylor was speaking to StarBiz at the International Air Transport Association (IATA) AGM and World Air Transport Summit.

IATA forecast that global air-cargo demand would decline 17% and airlines are expected to carry 33.3 million tonnes of cargo this year against 40.1 million tonnes last year.

Air-cargo traffic started to decline in June last year and had dropped by 23% year-on-year in December. The air-cargo industry moves about 35% of the value of goods traded internationally and is a leading economic indicator.

“The current economic environment is the main driver of the plunging demand,” Taylor said.

As a result of the contracting demand, he said FedEx had cut its capacity globally and strategised to phase out its old aircraft, which would be offset with its fleet renewal programme.

“We are phasing out our old Boeing 727 and replacing that with 757 in the United States.

“For our Asian operations, we have ordered a number of Boeing 777s, the first of which will be delivered by the year-end and the rest on a staggered basis over a couple of years,” he said.

The biggest express carrier in the United States would also to continue with its Asian operations, as the region is the largest market for its international business.

“We will continue with our operations in Asia where we have our second largest hub in Guangzhou, China.

“Here in Malaysia, we fly into Penang. We also fly into Singapore, Hong Kong and other major cities in Asia,” Taylor said, adding that FedEx was among the top three express carriers in Asia together with DHL and UPS.”

On the exit of competitor DHL from the US market due to the global economic downturn, Taylor said it had been an advantage to FedEx but DHL was still a formidable competitor in Asia.