Growth will take off due to expansion in newly industrialized economies
Los Angeles, CA (PRWEB) December 04, 2012
The Global Air Freight Logistics industry primarily transports commercial cargo as well as time-sensitive freight and mail. Because the industry moves goods throughout the world, it is dependent on the level of international trade between countries. Total revenue is expected to grow at an annualized rate of 2.4% over the five years through 2012 to reach $72.0 billion. During the global downturn of 2008 and 2009, demand for goods and services weakened around the world. “The low demand led to a fall in production activity from manufacturing giants, like China, and a drop in the quantity of goods traded,” says IBISWorld industry analyst Lauren Setar. Overall, demand for air freight declined considerably because of poor economic conditions in 2009. As a result, the industry's revenue plummeted 24.6% in that year. However, companies around the globe replenished their stock in 2010, causing a dramatic rise in demand for cargo. This restocking enabled revenue and profit margins to rebound in 2010. Due to greater freight volumes and higher prices, the industry has returned to a more sustainable growth rate, including an increase of 2.8% over 2012.
The industry has low profit margins, which weakened in the past five years to an estimated 1.3% in 2012. Nonetheless, the weak margin is still an improvement on 2008 and 2009, when losses shook the industry. Extremely high fuel prices pushed many airlines into operating losses in 2008. A sharp contraction in demand then followed during the worst of the global downturn in 2009. Operators experienced more favorable demand conditions in 2010 as manufacturing levels strengthened. However, rising fuel prices have eaten into profit margins since then. Revenue is expected to rise over the five years to 2017. Faster growth is expected mainly due to expansion in newly industrialized economies. According to Setar, manufacturing output in China and other Asian countries is anticipated to increase over the next five years, which will contribute to growth in freight volume transported during this time. Demand for merchandise is expected to increase considerably in newly industrialized economies and continue to grow across developed countries, boosting demand for air freight logistics. Freight service providers will likely also increase the average fare for their service, which will also add value to sales.
The Global Air Freight Logistics industry has a low level of market share concentration. In 2012, the four largest players account for an estimated 22.6% of industry revenue. Government regulation is the biggest factor behind the industry's fragmentation because regulation limits the takeover of domestic airlines by foreign airlines. Airlines attempt to bypass this limitation through code sharing and alliances. Concentration is also low due to the high costs associated with operating aircraft and the capital required for technological advances. Market share concentration has fallen over the past five years. Large players were more sensitive to the poor economic conditions in developed markets during the downturn. The smaller but rapidly growing players, particularly ones based in emerging economies, gained market share as air traffic grew at steadier rates in developing economies. For more information, visit IBISWorld’s Global Air Freight Logistics industry report page.
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IBISWorld industry Report Key Topics
The industry includes businesses that provide air transportation for commercial and private cargo, on either scheduled or non-scheduled routes. It includes air transportation that is part of a national postal system, but excludes door-to-door courier services.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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