In the U.S., air freight forwarding is on the decline. According to the International Air Transport Association, the global demand for air freight declined by 3.8% in Q3 of 2019.
Growing Capacity, Falling Demand
The cost of a typical cargo plane is around $200 million. Shippers don’t invest in new aircraft without extensive research and planning. Like many capital investments, businesses plan these purchases years in advance. Unfortunately, global economics operate on a much tighter schedule. Between 2009 and 2014, global exports ballooned, prompting many shippers to order new aircraft. Now, as shipping has declined, FedEx, UPS, and Amazon are taking delivery of aircraft ordered three to five years ago. This has put increased pressure on the entire air cargo industry.
Continuing disputes over global trade imbalances have driven an overall downward trend in global trade. Chinese imports are a good barometer. According to the U.S. Census Bureau, we are importing nearly 9% less volume of cargo from China in 2019 compared to 2018. The reduction is equivalent to nearly 100 fewer cargo flights every month.
Even as US unemployment has declined to historic lows, consumer confidence remains shaky. The Conference Board reports that after nearly two years of relative stability, consumer confidence has fallen. They reported a 9% decrease for the month of September 2019.
Alternatives to Air
In terms of speed, air freight wins hands down. However, speed isn’t the only consideration. The fuel costs for air freight make it too expensive to be economically viable for everyday shipping.
Despite the decline in the U.S. air trade in recent years, shippers are continually pursuing ways to make the process more efficient in terms of time, labor, and fuel costs. The trends are clear:
- The unstable price of fuel is driving aircraft manufacturers to improve efficiency.
- Technology is improving the management, loading, and operation of cargo aircraft.
Global trade isn’t going away. Once the current trade disputes and other negative aviation trends blow over, consumers all over the world will again demand the inexpensive consumer goods that only global trade can deliver.