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Air cargo share of market slips

By Adina Solomon on March 13, 2014
tagged wcs, seabury

Airfreight’s share of the market is slipping, said Gert-Jan Jansen, executive director of Seabury Group, at the World Cargo Symposium.

“Air cargo has lost a lot of ground to ocean,” Jansen said.

This is due to factors such as modal shift and growth in demand for products that are more likely to be shipped by ocean.

Jansen said modal shift is a longer-term phenomenon that started in 2007.

“Why didn’t we see it before?” he asked. “I think honestly because world trade was going pretty well.”

During this period, raw materials and perishables experienced the most modal shift, though fashion and high-tech weren’t far behind, Jansen said. Trade lanes in Asia have seen the strongest shifts.

In a survey conducted by IATA and Seabury of large shippers and forwarders, a majority experienced a mode shift to ocean in the past few years, especially between 2010 and 2013.

In a poll of the WCS audience, the greatest share – 27 percent – said “multi-modal solutions” could be used to reverse modal shift in air cargo. Meanwhile, the greatest share of the shipper and forwarder survey respondents said airfreight rates need to be decreased.

Following Jansen’s speech, Enno Osinga, senior vice president cargo at Amsterdam Schiphol Airport, moderated a panel discussion on modal choice.

In the discussion, Cristo vd Meer of FloraHolland said a large portion of the cost of flowers comes from air cargo. Without airfreight, the company can cut 30-40 percent of costs, said FloraHolland’s senior consultant supply chain development and operations manager flowers and sea.

Meer pointed out that air cargo doesn’t always maintain the cool chain, saying that it was lucky to receive cargo under 15 degrees Celsius (59 degrees Fahrenheit), whereas that is not an issue for oceanfreight.

Maria Dorazio, head of cold chain logistics at Swiss pharma company Novartis, said airfreight regulations need to be simplified.

“The concern on our side is how to manage these regulations,” Dorazio said.

Michael Blaufuss, senior vice president airfreight at Agility Logistics, said E-freight is another area on which air cargo must concentrate. Forwarders and regulators must work together on it, he said.

“There is no way we can continue to do business the way we do today,” Blaufuss said.

Blaufuss mentioned that Agility reduced its carbon footprint – without modal shift – by changing its packaging.

James Woodrow, director cargo for Cathay Pacific, said over the last five years, the number of freighters a company needs has changed. Cathay had thought it would need 30 – but it turns out the carrier only needed 20, Woodrow said.

“More and more of our cargo will be carried in bellies in the future,” he said.

When Osinga asked the panel what effect 3D printing would have on air cargo, all four panelists remained quiet for a moment. Only Blaufuss answered.

“I don’t foresee an effect on air cargo,” he said.