Current Events in Air Cargo Economics

Current Events in Air Cargo Economics
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Current Events in Air Cargo Economics
Robert Bowman’s article: Air-Cargo Carriers, Losing Market Share, Face a Moment of Truth, talks about how the economic recovery is driving higher freight volumes but not for air cargo. Economic observers are concerned how air cargo is steadily losing market share to ocean carriers since the beginning of the 21st century yet ocean is significantly slower than air. Robert Bowman notes that air shipment gets priority treatment as sea shipment shares space with thousands of huge vessels making it unsuitable yet air cargo still lose market share to ocean carriers. According to Robert, the situation is not easy to deal with owing to the fact that traditionally sea freight services lower prices have been attractive (Bowman, 2014).
The biggest challenge facing air cargo carriers are the integrators including FedEx and UPS, which operate their aircraft acting as freight forwarders dealing directly with shippers. These integrators have been handling increasingly heavier shipment cutting further into the airlines market share (Bowman, 2014). I agree with the authors recommendations that air cargo carriers need to reduce the transit times to remain competitive in the cargo business. These are some of the recommendations that would make a difference to their value proposition to enable the industry seize the shift from ocean cargo and bring about new efficiencies to the air cargo business. This is the same view being emphasized by Desmond Vertannes, head of The International Air Transport Association (IATA) (Bowman, 2014).
In my view, a faster delivery time is the only way of attracting more shippers. Air cargo needs to cut the average end- to –end transit times by up to 48 hours from the current six to seven days. If the air cargo industry needs to benefit from any economic upturn they need to improve on areas of efficiency, security and sustainability by committing the entire in...