Air Transport World

Better for less: speed is out, logistics are in as carriers try to offer more services in the growing air-cargo market, even as yields fall.(includes related article on the future of air-cargo markets)(Cover Story)

HERE WAS A TIME WHEN AIR CARGO was driven by commodities. Shippers paid to get freight carried from point A to point B. The existence was simple, with an attitude of "it'll get there when it gets there." Then came containerization, followed by cost-driven shipping and finally, Fred Smith's "you can have it tomorrow."

Today, however, the movement is toward providing a logistical package that includes the best combination of time vs. cost, plus extended service beyond the movement of the freight itself. Any cargo operator, integrator or nonintegrator, who wishes to stay in business will have to stan providing service that goes far beyond simply carrying the freight. According to Boeing's 1994 Cargo Forecast, the major trends in international cargo are going to be a continuation of failing yields and the rising prominence of international express service. Put another way, the air-cargo industry will be expected to provide better service, while earning less for it.

Yields already have been dropping at around 4% per year and according to William Payson of Arlington, Va.-based MergeGlobal Inc., no matter what is done over the next 10 years, yields will continue to drop around 2-3% per year, despite a decrease in costs and an increase in both traffic and rates.

Worldwide air-cargo traffic is expected to rise 6.5% per annum, according to the Forecast. lnternational growth will outpace U.S. domestic, "exceeding 80% of total RTKs by 2013."

Non-U.S.-airline share of the world cargo market will increase from 67% in 1993 tn 71% in 2013, Boeing said. Biggest growth will be in Asia and South America, accounting for 60% of the world freight market by 2013.

The 1994 figures for ATA member airlines showed an 8.8% increase in domestic revenue ton miles (RTMs) and 12% increase in international RTMS, for a total increase of 10.1%, going from 15.4 billion RTMs to 16.9 billion.

Costs will drop, simply because any company that doesn't reduce its costs will not stay in business. And rates will go up to some extent, causing a rise in dollar terms. However, the increase will be slower than the rate of inflation, causing a drop in real terms, Payson said.

Higher, more realistic rates are viable in some markets. …

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