Air Mail Puts Its Stamp on WCS 3
Airmail has accounted for not only drawing the maps of cities served by carriers around the globe in the first place, but also has provided airlines a steady predictable, even vital revenue stream.
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International Air Cargo falls 13.5%
Largest decline since 2001 in the aftermath of the September 11 attacks.
Read MoreInterview: "Posts can profit from parcels growth" – UPU
The world’s Posts can profit from continued growth in parcel volumes driven by e-commerce and benefit from international initiatives to improve interconnectivity, the head of the Universal Postal Union (UPU) told CEP-Research in an interview.
E-commerce and online shopping, in particular, had changed the way supply chains are organised, Dayan said. “Increasingly, these supply chains depend on faster, more frequent and reliable delivery options of smaller consignments over greater distances.”
The picture is more mixed in the express market, according to Dayan. “The differences between EMS, parcels and small packets are not always clearly defined,” he pointed out. According to UPU figures issued this summer, the 149 Posts in the UPU EMS Cooperative increased their express volumes by 23pct between 2004 and 2006, with an average 88pct on-time delivery performance.
Under the new world postal strategy, the UPU will focus on improved interconnectivity to reduce technical barriers between the world’s Posts, governance issues and development activities in certain world regions. Interconnectivity will cover areas such as better end-to-end track-and-trace through a common IT standard, and EDI interfaces with airlines via IATA and customs authorities through the WCO. Payment services and online services will be two other important growth areas.
Read MoreAirlines to lose USD 5.2 billion in 2008 – Slowing Demand and High Oil to Blame
IATA announced a revised industry financial forecast that would see the global airline industry post losses of US$5.2 billion in 2008 based on an average crude oil price of US$113 per barrel (US$140 for jet fuel).
“The situation remains bleak. The toxic combination of high oil prices and falling demand continues to poison the industry’s profitability. We expect losses of US$5.2 billion this year,” said Giovanni Bisignani, IATA’s Director General and CEO.
Fuel
“While there has been some relief in the oil price in recent months, the year-to-date average is US$113 per barrel. That’s US$40 per barrel more than the US$73 per barrel average for 2007, pushing the industry fuel bill up by US$50 billion to an expected US$186 billion this year,” said Bisignani. Fuel is expected to rise to 36% of operating costs, up from 13% in 2002.
Demand
IATA also announced industry traffic data for July which showed a continued slowing of demand.
July year-on-year passenger demand growth fell to 1.9% – the lowest in five years. Capacity increased by double that – 3.8% – indicating that service cuts are not keeping pace with the fall in demand. This pushed the load factor for the month to 79.9%, a drop of more than 1% compared to July 2007. The surprise of July was a 0.5% drop in passenger demand by Asia-Pacific carriers partly attributable to a change in Chinese visa requirements but also showing that economic weakness is spreading to previously robust economies.
Cargo demand in July contracted by 1.9% compared to 2007. Asia-Pacific carriers – the largest players in the cargo market – were hit hard with a 6.5% drop in demand.
As a result of the weaker economic outlook, IATA significantly revised downward its traffic forecast for domestic and international markets combined. Passenger traffic is now expected to grow on average by 3.2% (was 3.9%) and air freight volumes by just 1.8% (was 3.9%). This is only half the pace of expansion seen in 2007 and is boosted by the stronger growth seen at the start of the year. Strong traffic growth allowed the industry to partly absorb the rise in fuel costs from 2003-2007. This is no longer the case.
Regional
“While some regions will show small profits, the negative impact of the industry crisis is universal,” said Bisignani.
– North American carriers are expected to post losses of US$5.0 billion in 2008 making them the hardest hit by this industry crisis.
– Asia Pacific is expected to see profits shrink from US$900 million in 2007 to US$300 million this year.
– European profits will tumble seven-fold from US$2.1 billion in 2007 to US$300 million in 2008.
– Middle Eastern profits will drop by US$100 million to US$200 million.
– Latin American and African carriers will see losses deepen to US$300 million and US$700 million respectively.
2009
IATA announced its initial outlook for 2009. The difficult business environment is expected to continue. Most economies are expected to deliver even weaker economic growth next year, which will negatively impact air travel and freight. With an expected oil price of US$110 per barrel (US$136 for jet fuel) and continued weak growth (2.9% tkp), industry losses are expected to continue at US$4.1 billion. The 2009 fuel bill is expected to rise, as hedging offers less protection, to US$223 billion comprising 40% of operating expenses.
Change
“While we expect the bottom line to improve by about US$1 billion next year, the industry will be US$4.1 billon in the red,” said Bisignani. “This crisis is re-shaping the industry in more severe ways than the demand shocks of SARS or 9.11. When fuel goes from 13% of your costs to 40% in seven years with an increased cost implication of US$183 billion, you simply cannot continue to do business in the same way. Fundamental change is needed,” said Bisignani.
“Airlines have reduced non-fuel unit costs by 18% since 2001. Airports and air navigation service providers must join the effort. Efficiency gains are criti
World air cargo volumes slump in June
World air cargo traffic suffered a downturn in June due to the worsening international economic climate, according to the latest figures from international aviation organisations. The figures follow recent comments by global express operators about weak demand in June.
The figures continue the general downward trend seen over the first half of 2008. The key factors include lower domestic volumes in the USA, lower US imports due to the country’s weak economy, and a partial modal shift from air to sea transport as customers seek to reduce overall logistics costs.
According to the Airports Council International (ACI), representing the majority of the world’s airports, total air freight volumes dropped by 3.2% to 4.6 million tonnes in June 2008 compared to the previous year. Domestic freight slumped by 10.9% while international volumes grew just 0.4%. Half-year volumes were up by just 2.2% at 28.6 million tonnes, with domestic cargo down 2.8% and international volumes up by a more healthy 4.7%, it said.
In regional terms, North America saw a 10.9% volume drop in June, including a 14% fall in domestic volumes and a 3.2% decline in international freight. This left overall volumes down 3.6% over the first six months of 2008. Europe had a 1.3% drop in air cargo volumes in June, including a 1.7% fall in international volumes. Half-year volumes were up 2.9%.
Asia Pacific, the world’s largest air cargo market, saw growth slow to just 1% in June, with international cargo growth at 2.5%. The region had 6.6% overall growth in the first half-year. Smaller markets such as Middle East and Latin America also saw low growth in June.
Separately, IATA, representing the world’s commercial airlines, said that international cargo traffic contracted by 0.8% in June. This was the first monthly decline since May 2005 and followed several months of falling manufacturing sector confidence indicators.
Asia Pacific airlines led the freight contraction with a -4.8% year-on-year decline for June traffic, IATA pointed out. European carriers saw freight demand growth fall to 0.7% in June from 1.4% in May. North American carriers also saw freight demand growth slow to 4.0% in June from 4.6% in May.
Middle Eastern carriers delivered the strongest performance with 12.1% growth (up slightly from the 10.7% recorded in May). Latin American airlines recorded the largest contraction (12.7%) as the region’s cargo sector continues to re-structure its capacity.
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