Seattle, WA (PRWEB) September 26, 2012
In a newly-released study, Air Cargo Management Group (http://www.acmg.aero) shows that the US air freight and express industry is not immune to the stagnancy affecting the global air freight sector, although revenue totals for the market increased substantially in 2011.
The overall cargo traffic volume recorded for intra-US services by express, all-cargo and combination carriers was down 1.3% in 2011 to 12.117 billion ton miles (for domestic freight and mail, combined); however, the number of express shipments increased 0.5% to reach 5.416 million per day in the fourth quarter of the year. More encouraging was the total revenue taken in for US domestic air freight and express services by industry participants, which totaled $28.01 billion in 2011, reflecting a 7.4% increase from year-earlier results.
“We take encouragement from the revenue numbers from the sector,” said JJ Hornblass, Chief Executive Officer of Seattle-based ACMG. “It’s a positive sign that should not be lost on the industry.”
“Of course, the US market is clearly a duopoly controlled by FedEx and UPS,” noted Robert Dahl, ACMG’s Managing Director. “The revenues in this market for these two companies now represent 85% of the industry-wide revenue for all participants in the US domestic air freight and express sector according to ACMG’s analysis. The revenue from freight and mail services by non-express carriers pales by comparison.”
The industry-wide 2011 revenue of $28.01 billion, while up over the prior year, remains well below the peak for the US segment of $32.8 billion in 2007. In fact, the 2011 revenue figure is at roughly the level the industry recorded in 2000/01. The RTM-traffic and express package-volume metrics are no higher than performance achieved in the mid-1990s.
“In other words, the US air freight industry, once characterized by rapid double-digit growth, has gone through 10-15 years with no net expansion,” said Dahl. “Part-year data for 2012 shows flat traffic versus 2011, so the chance of any significant rebound this year in traffic volume appears remote.”
ACMG’s longer term outlook indicates that the US air freight market is unlikely to expand any faster than the growth in US GDP.
In the scheduled freight segment, the legacy passenger carriers play a relatively minor role as suppliers of cargo lift in the domestic US market today, due in part to the fact that their domestic operations consist mostly of narrowbody aircraft that have little belly space for freight. In fact, since the year 2000 peak, ACMG finds that US domestic cargo traffic reported by the major combination carrier group is down a staggering 67% over an 11-year period. During that time, the freight traffic for these carriers dropped over 55%, and the mail traffic dropped more than 80%.
As a group, the legacy passenger carriers took in nearly $900 million in revenue from the carriage of freight in the US domestic market in 2011. That figure may sound impressive (it was up about 10% versus 2010), but it loses much of its luster when one considers that the same group of airlines took in over $2.7 billion in US domestic baggage fees last year. In other words, the baggage fee total equates to three times the amount of revenue taken in by this group of carriers from hauling US domestic freight.
These observations, and many others, can be found in ACMG’s newly-released Air Freight & Express Performance Analysis 2012, Volume 2, US Domestic (nineteenth edition). ACMG’s report provides the only comprehensive quantitative and qualitative independent analysis of the $28 billion U.S. domestic air cargo industry, including:
The ACMG report also provides coverage of more than two dozen specialist all-cargo airlines based in the US, such as Atlas Air, Kalitta Air, Southern Air, Amerijet, National Airlines and Evergreen, which operate transport-sized freighter aircraft. As a group these airlines operate nearly 200 transport-category freighters (approximately 12% of the global freighter fleet), and they generated $7.3 billion in system-wide revenues in 2011, up 9% for the year. Niche operators such as these play an important role in the air freight business, so it is disturbing to find that one in three of these carriers reported a loss last year.
ACMG doesn’t foresee any major changes in the US air freight and express industry in 2012, however there are some interesting developments unfolding. FedEx, for example, has announced it will accelerate the retirement of older freighters, and says it will announce details of further changes in its US express operations in October.
Elsewhere, the BAX Global network closed down at the end of 2011, and the US Postal Service says it will seek competitive bids for the huge contract covering the carriage of Express and Priority Mail currently held by FedEx. Finally, we note leadership changes have taken place this year in the cargo departments at both American and Delta, which could impact the cargo strategies of these legacy combination carriers.
Further conclusions from ACMG’s research appear in the new edition of the “US Domestic Air Freight and Express Industry Performance Analysis,” which is available for purchase at http://www.acmg.aero. A teleconference highlighting ACMG research on the topic will take place on September 27 at 12 p.m. EDT (16:00 GMT). To RSVP for that teleconference, please visit http://www.cargofacts.net/events/us-domestic-air-cargo-market-teleconference-exploring-revenue-gai.
ABOUT ACMG: Founded in 1978, ACMG is a specialized aviation consulting firm, which focuses on freighter aircraft and all aspects of the worldwide air freight and express industry. ACMG is owned by New York-based Royal Media Group, a leading information services media company.
To obtain more information about the report, visit http://www.acmgreports.com or call 1-206-587-6537 ext 108.
Robert Dahl, an aviation analyst for more than 20 years, is available to provide expert commentary to the media on the results of this report and on the air cargo industry in general. Mr. Dahl can be reached at rdahl(at)acmg.aero or 1-206-587-6537 ext 109.