Some volatility in demand is expected as competition increases
London, UK (PRWEB) April 05, 2013
The Freight Air Transport industry includes businesses that provide air transport of commercial and private cargo, on either scheduled or non-scheduled routes, domestically and internationally. Industry performance relies on demand for transporting time-sensitive goods and valuable items. The industry's services are the fastest, but often the most expensive way to move freight and mail. Speed is a luxury that freighters can sometimes go without. According to IBISWorld industry analyst Andrew Johnson, “demand for industry services declined with economic conditions in the five years through 2012-13”. World trade volumes, particularly those of high-value goods, have struggled over the five-year period, damaging industry demand.
A significant contraction occurred during 2009-10, when revenue fell by 6.5%. This happened during the heart of a recession, as businesses ran down inventories and trade plummeted. The uncertainty of the recovery in the UK economy and instability within the eurozone has hampered the industry's recovery. Industry revenue is expected to fall at a compound annual rate of 2.3% over the five years through 2012-13 to £943.8 million. A return to growth of 0.9% is expected in 2012-13, helped by strength in key markets and improvements in demand for goods by UK consumers. The five years through 2012-13 have posed challenging trading conditions and enterprises are expected to have declined at a compound annual rate of 6.4%. Those enterprises that remain have been able to contain costs effectively and expand as others have failed. Ongoing cost cutting by major players will contribute to a healthier average operating profit margin in 2012-13.
Over the next five years, broadly the recovery is expected to strengthen driven by improved world trade and economic conditions at home. However, the growth of the industry is not expected to be smooth, with some volatility in demand expected. Industry revenue is forecast to return to modest growth over the five years through 2017-18. Johnson adds, “the growing volume of express parcels generated by online retail is expected to support industry growth as mail volumes decline”. A surge in demand will encourage sales for the first few years, and this is likely to have a positive effect on profit. After this prosperous time, competition should increase through growth in capacity by existing operators and strengthening competition from foreign airlines. International environmental regulation is expected to constrain the industry over the coming years.
The Freight Air Transport industry has a high level of market share concentration, with the top four players accounting for 83% of total revenue. Major companies include British Airways, Deutsche Post (DHL Air), Virgin Atlantic Airways and Global Supply Systems.
For more information on the Freight Air Transport industry, including latest industry trends, statistics, analysis and market share information, purchase the full report from IBISWorld, the nation’s largest publisher of industry research.
IBISWorld industry Report Key Topics
The industry includes businesses that provide air transport of commercial and private cargo, on either scheduled or non-scheduled routes, domestically and internationally. It also 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
Globalisation & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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