International Air Cargo Transport Procurement Category Market Research Report from IBISWorld has Been Updated

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International air cargo transport has a buyer power score of 2.9 out of 5, indicating moderate buyer power due to a combination of positive and negative factors, including the benefit of substitute services and the hindrance of heightened demand. For these reasons and to help procurement professionals make better buying decisions faster, business intelligence firm IBISWorld has updated a report on the procurement of International Air Cargo Transport in its growing collection of procurement category market research reports.

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Rising aircraft costs and greater cargo volumes will keep driving price growth; however, more significant declines in fuel costs will result in a more subdued rate of price growth during the next three years

International air cargo transport has a buyer power score of 2.9 out of 5, indicating moderate buyer power. Demand for air cargo transport has grown slowly compared with increases in cargo volumes during the past three years. “Many shippers have been priced out of this market due to recent rate growth, which has made airfreight, already far more expensive than other transport modes, less cost effective. As a result, many shippers have increased their usage of surface transport modes such as container ships and trucks,” according to IBISWorld business research analyst Hayden Shipp.

However, not all shippers can use these substitutes, because their goods are time sensitive and must be sent by air. Airfreight's moderate price growth has curbed such shippers' buyer power. Further hampering buyer power is the market's high level of concentration; the dominant players operate with only a moderate level of competition. The market's three largest carriers (FedEx, UPS and DHL) are freight integrators, meaning they are vertically integrated door-to-door carriers. “Their ability to provide integrated cargo services (e.g. freight forwarding and truck transport) insulates them from the higher level of price-based competition that occurs among passenger airlines with cargo operations, which simply carry goods between airports,” Shipp says. Although passenger carriers have consolidated, their market share remains relatively low, improving negotiating power with these carriers.

For passenger carriers, cargo has declined as a share of revenue from about 11.0% in 2011 to about 8.0% in 2014, according to the International Air Transport Association. This decline, alongside the segment's higher competition, signals an opportunity for shippers that intend to ship through six-month contracts (the industry standard) and grow as a portion of a carrier's freight business. Airfreight in general will become more attractive in the next three years because price is forecast to grow at a relatively subdued pace due to declining fuel costs. Buyers should note that shipping through a passenger carrier typically requires going through a third-party freight forwarder; freight integrators can be contacted directly, easing the process for those that ship irregularly. For more information, visit IBISWorld’s International Air Cargo Transport procurement category market research report page.

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IBISWorld Procurement Report Key Topics

This report is intended to assist buyers of scheduled international air cargo transportation. Such transportation, also called airfreight transportation, involves moving parcels, letters and perishable goods on regularly scheduled routes that either originate or end internationally. Buyers of the service are also 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
Quality Control
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Competitive Environment
Market Share Concentration
Market Profitability
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 or call 1-800-330-3772.

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Gavin Smith
IBISWorld Inc.
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