Air Cargo Transportation Services Procurement Research Report Now Available from IBISWorld

Significant growth in the price of air cargo transportation services has hampered shippers' buying power during the past three years; while demand rose sharply early in the period and helped boost price, the high rate of price growth mainly stems from rising fuel costs. To help procurement professionals make better buying decisions, business intelligence firm IBISWorld has added a report on the procurement of Air Cargo Transportation Services to its growing collection of procurement research reports.

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Slower growth in fuel prices will taper the rate of airfreight price increases in the three years to 2016.

Los Angeles, CA (PRWEB) January 09, 2014

Air cargo transportation services have a buyer power score of 3.0 out of 5, where a higher score represents greater buyer power. "Air transportation is used for time-sensitive and high-value goods that are shipped over long distances," says IBISWorld business research analyst Hayden Shipp. "Air cargo constitutes just 2.0% of all tonnage transported, but comprises more than one-third of the total value of international trade." This is in part due to the disproportionately high value of the goods shipped by air. Shippers' negotiation power is therefore limited by the lack of satisfactory substitutes for air cargo transportation for shipping certain goods. Additionally, steep barriers to entry for new carriers and the high market share of dominant players limit buying power.

Additionally, shippers' buying power has been hampered by significant growth in the price of air cargo transportation services during the past three years. While demand rose sharply early in the period and helped boost price, the high rate of price growth mainly stems from rising fuel costs. While shippers can typically negotiate base rates downward through volume or a reliable shipping record, fuel surcharges (which are figured into the aforementioned price growth rate) are generally nonnegotiable. "Although surcharges are intended to create transparency, the past decade's string of surcharge price fixing cases and many airlines' plea deals have shown that they can be used to generate revenue beyond the costs they recover,” says Shipp. “As such, surcharges are not always completely transparent."

However, price growth for airfreight transportation is forecast to decelerate in the three years to 2016. Price growth will still exceed the rate of fuel cost increases during the period, elevating carriers' low profit margins. Waterborne carriers encroached on air carriers' business during the past three years due to air carriers' steep rate hikes; however, slowed fuel price growth and higher profit margins in the forecast period will give carriers more room to discount as they attempt to win back shippers. Also, major shippers with high volumes and consistent shipping needs will continue to benefit from long-term contracts during the forecast period. Major vendors include AMR Corporation, Delta Air Lines Inc., FedEx Corporation, United Continental Holding, United Parcel Service Inc. and US Airways Group Inc. For more information, visit IBISWorld’s Air Cargo Transportation Services procurement research report page.

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IBISWorld Procurement Report Key Topics

This report is intended to assist buyers of scheduled air cargo transportation, including domestic and international air transportation. Such transportation, also called airfreight transportation, involves moving parcels, letters and perishable goods on regularly scheduled routes. Buyers of the service are called shippers in this report; suppliers are cargo airlines and are also called carriers. This report does not cover passenger air transportation or nonscheduled air transportation.
Executive Summary
Pricing Environment
Price Fundamentals
Benchmark Price
Pricing Model
Price Drivers
Recent Price Trend
Price Forecast
Product Characteristics
Product Life Cycle
Total Cost of Ownership
Product Specialization
Substitute Goods
Regulation
Quality Control
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Imports
Competitive Environment
Market Share Concentration
Vendor Financial Benchmarks
Switching Costs
Purchasing Process
Buying Basics
Buying Lead Time
Selection Process
Key RFP Elements
Negotiation Questions
Buyer Power Factors
Key Statistics

About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.


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    IBISWorld
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