Air Cargo 101

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Air Cargo 101

  1. 1. Introduction to the Global Air Cargo Market<br />
  2. 2. Agenda<br />Air Cargo Industry Overview<br />U.S. Domestic Air Cargo Market<br />International Air Cargo Market<br />Industry Outlook<br />
  3. 3. Air Cargo Industry Overview<br />
  4. 4. Air Cargo Industry Overview<br />Services<br />Providers<br />Express<br />Air Freight<br />Mail<br />Air Cargo Industry has three major segments – Air Freight, Express and Mail.<br />
  5. 5. Represents 75% <br />of world traffic<br />130,776 FTKs<br />Top 30 Airlines Transport 75% of the World’s Air Freight <br />Systemwide scheduled<br />C – Passenger and freight operator<br />F – All-freight operator<br />I – Integrated services operator<br />Source: IATA and direct reports<br />
  6. 6. Busiest Air Freight Airports are concentrated in Europe, Asia and North America<br />Asia<br />( ) – World Ranking<br />North America<br />1. Hong Kong (2) 3,402,247 <br />2. Tokyo-Narita (4) 2,239,930<br />3. Seoul-Incheon (5) 2,120,542<br />4. Shanghai (8) 1,842,474<br />5. Singapore (9) 1,833,721<br />6. Taipei (13) 1,692,447<br />7. Dubai (18) 1,281,050<br />8. Bangkok (19) 1,130,298<br />9. Osaka (22) 840,235<br />10. Beijing (23) 782,066<br />11. Guangzhou (25) 726,356<br />12. Tokyo-Haneda (27) 672,464<br />13. Kuala Lumpur (30) 653,654<br />1. Memphis (1) 3,592,570 <br />2. Anchorage (3) 2,553,937<br />3. Los Angeles (7) 1,858,277<br />4. Louisville (10) 1,813,859<br />5. Miami (12) 1,718,076<br />6. New York –JFK (14) 1,585,253<br />7. Chicago-O’Hare (16) 1,443,348<br />8. Indianapolis (20) 979,042<br />9. Newark (21) 868,265<br />10. Atlanta (26) 725,446<br />11. Oakland (28) 667,806<br />Europe<br />1. Frankfurt (6) 1,864,398<br />2. Paris-CDG (11) 1,767,260<br />3. Amsterdam (15) 1,449,855<br />4. Heathrow (17) 1,305,976<br />5. Luxembourg (24) 742,342<br />6. Brussels (29) 654,316<br />Source: Airports Council Int. 2005<br />
  7. 7. The Freighter Fleet Is Grouped Into Three Payload Size Categories<br />Commercial Jet Freighter Fleet Summary (1559 Total Units)<br />Standard-body <br />(less than 45 tonnes)<br />Medium widebody<br />(40 to 75 tonnes)<br />Large widebody<br />(more than 75 tonnes)<br /> 626 Units<br /> 440 Units<br /> 493 Units<br />DC-10-30/40<br />MD-11<br />747<br />777<br />A340<br />767<br />A300<br />A310<br />A330 <br />L-1011<br />DC-10-10<br />A350<br />787<br />BAe-146 707-320C<br />DC-9DC-8<br />737 757-200<br />727 MD-80/-90<br />A320<br />* Excludes parked aircrafts.<br />Source: ACMG, 2009<br />
  8. 8. U.S. Domestic Air Cargo Market <br />
  9. 9. U.S. Domestic Air Cargo Revenue Share<br /><ul><li> 2008 total Industry revenue is estimated to be $32B.
  10. 10. FedEx and UPS together controlled 77% of the market in 2008. FedEx and UPS gained more market shares after DHL exit U.S. Domestic market in 2009.</li></ul>Source: Air Cargo Management Group, 2009<br />
  11. 11. U.S. Domestic Air Express Market<br /><ul><li> FedEx and UPS together controlled 87% of the U.S. Domestic Express market in 2008. FedEx and UPS gained more market shares after DHL exit U.S. Domestic market in 2009.</li></ul>Source: ACMG estimates, 2009<br />
  12. 12. U.S. Domestic Express Shipment Growth<br />The 2008 shipment total is up only 19% from 1994. That increase reflects 6% growth per year between 1994-2002. The market size changed little from 2002 to 2007, before falling 14% in 2008.<br />Source: ACMG estimates, 2009<br />
  13. 13. Emerging Trend in the U.S. Domestic Air Cargo Industry<br />The integrated express carriers FedEx and UPS continue to dominate the U.S. market.<br />The U.S. domestic express market underwent dramatic changes near the end of 2008 in response to DHL’s exit from U.S. domestic market. Both FedEx and UPS gained customers left by DHL. <br />The U.S. Postal Service continues to be challenged by the falling demand for its services, including Express Mail and Priority Mail. A major change in postal regulations recently gives the USPS more flexibility to compete with private sector companies. The USPS alliance with FedEx that began in August 2001 remains in effect.<br />Security issues continue to be the principal regulatory concern facing the industry. The main emphasis today for combination carriers is to achieve 100% screening of belly cargo by August, 2010.<br />Source: ACMG estimates, 2009<br />
  14. 14. International Air Cargo Market <br />
  15. 15. Int’l Air Cargo TrendThe Int’l Air Cargo traffic had sharp decline during the recession<br />Year 2009 ended to be the most difficult ever for the global air freight industry; Air freight showed a decline of nearly 15% (in FTK) compared to 2008. About 15% of the global fleet of freighter aircraft was taken out of service during the 2009 downturn;<br />There are encouraging signs entering 2010 that a recovery is taking place, as traffic levels have rebounded from a low point in the first quarter of 2009. ACMG expects that air cargo traffic will grow 7%-10% in 2010, and there is a good chance that it will recover to the pre-recession peak by 2012.<br />Source: IATA Monthly Traffic Report.<br />
  16. 16. Int’l Air Cargo Revenue ShareThree main types of companies involved in the market – express companies, airlines and forwarders.<br /><ul><li> The total revenue for Int’l air freight and express is estimated at $87B in 2008. Industry wide revenues for 2009 are expected to drop at least 30% based on steep declines in both traffic and yields.
  17. 17. Despite gains by the express companies, airlines and forwarders retain control of 65.2% of the revenue and 88.6% of the tonnage of air cargo handled in the international market. </li></ul>Source: Air Cargo Management Group, 2009<br />
  18. 18. Int’l Air Cargo Market by Lane<br /><ul><li> Int’l Air Cargo traffic is concentrated in four major lanes: Asia-North America, Asia-Europe, Europe-North America and intra Asia.</li></ul>Source: Air Cargo Management Group, 2009<br />
  19. 19. Int’l Air Express Market<br /><ul><li>Definition: Cross-border time definite shipments accompanied by value added services such as tracking and money back guarantees.
  20. 20. FedEx, UPS, DHL and TNT are the four major service providers in the Int’l Air Express market.</li></ul>Source: ACMG estimates, 2009<br />
  21. 21. International Air Express Shipment Growth<br />The Int’l Air Express volume growth was steady and substantial from 1992 through 2007 (10% CAGR), followed by a slowdown in 2008 and significant 7% decline in 2009.<br />Source: ACMG estimates, 2009<br />
  22. 22. Emerging Trend in the Int’l Air Cargo Industry<br />Express services are expected to continue growing faster than traditional air freight, which will result in a larger market share for Express in the future. <br />Low cost airlines are taking more interest in air freight, a business opportunity they have largely ignored in the past.<br />Airlines continue to establish broad alliances to extend their market reach and create global coverage.<br />More open skies aviation pacts are signed and benefit the air cargo operation. U.S. leads the way in aviation treaty liberalization, with more than 90 open skies pacts. The most significant development on the horizon is Phase Two of the EU-U.S. open skies agreement.<br />Source: ACMG estimates, 2009<br />
  23. 23. Industry Outlook<br />
  24. 24. Air Cargo Traffic Growth is Strongly Influenced by GDP Growth<br />RTKs annual growth, percentage<br />GDP annual growth, percentage<br />Historically Air Cargo has Grown 2 Times Faster then GDP<br />
  25. 25. Forces and Constraints for Air Cargo Growth<br />Although economic activity is the primary influence on world air cargo development, other factors must be considered.<br />Source: Boeing World Air Cargo Forecast 2008-2009 edition<br />
  26. 26. World air cargo traffic is projected to triple over the next 20 years<br />Source: Boeing World Air Cargo Forecast 2008-2009 edition<br />
  27. 27. Regional Air Cargo Market Forecast<br />Source: Boeing World Air Cargo Forecast 2008-2009 edition<br />
  28. 28. Emerging Markets have Large Potentials for the Air Cargo Industry<br /><ul><li>Emerging markets are countries that are restructuring their economies and growing along market-oriented lines and offer a wealth of opportunities in trade, transportation, technology transfers, and foreign direct investment. They are fast growing economies, contributing a great deal to the world’s trade growth. </li></ul>Emerging Markets<br />
  29. 29. Worldwide freighter fleet is projected to double in the next 20 years, led by large freighters.<br />Source: Boeing World Air Cargo Forecast 2008-2009 edition<br />

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