News / Supply-demand imbalance and fuel price still top air freight executives' worry list

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The imbalance between capacity and demand continues to keep the air freight industry awake at night, according to a survey soon to be published by Airline Cargo Management magazine.

Just under 45% of people cited this as their single biggest problem, while its inevitable consequence, low yields, is the most popular concern for 27% of respondents.

And as the passenger fleet continues to grow, nearly half believe that as a result, freighters will only survive as part of a combination carrier’s fleet.

But, perhaps happily, only 15% think freighter-only operators will leave the scheduled market altogether.

The industry thinks the imbalance problem is not going to go away, and will continue to plague the industry for the next ten years – as well as the price of fuel, which actually tops the list of worries for the decade. Security and modal shift follow as the third and fourth biggest challenges.

On the subject of rates and pricing, meanwhile, blame for the dire straits the industry is in is evenly spread across the board between airlines, shippers and forwarders. But there is a move to change the way the system works.

More than 50% of respondents feel that airlines should publish their rates freely on the internet, and follow the passenger model for distributing capacity. And a significant 68% think the industry would benefit from air freight rate indices and financial tools such as a derivatives market. Only 14% think that would be bad for the industry.

Interestingly, for the leading industry associations, there is still much work to do. Some 60% of respondents still don’t know what the Global Air Cargo Advisory Group (Gacag) does, while 67% haven’t noticed any difference at The International Air Cargo Association (Tiaca) in the past two years. Perhaps more comfortingly for the new guard, the next biggest group, 16%, said it was doing a better job than before – and more than 50% think there is a need for both Tiaca and Gacag.

Recent in-fighting hasn’t helped the cause: to the question “What do you think Tiaca should be doing?”, one respondent wrote “Don’t get me started… current format is all politics”. Another wrote: “Tiaca should be trying to lead rather than fight its own internal battles.” While yet another commented: “Air freight, not politics. Stop trying to be all-inclusive.”

But in general there was wide support for what Tiaca is intending to do. People backed plans for lobbying and industry advocacy, while another suggested it should support local associations. One added his voice to the pressure from others that Tiaca should look at the industry-wide surcharge issue.

The best news is saved for the end. For all the challenges – the lack of cash, low yields, unequal playing fields – only 10% would rather be in a different industry, and only 9% would prefer the passenger side. A heartening 81% like working in air freight – there’s a good news story.

If you’d like to participate in the survey, it is open until Tuesday next week, and you can participate here. Full results will be published in the March issue of Airline Cargo Management.