By Karen E. Thuermer, AJOT
Projections for international air cargo markets indicate impressive gains for the next 10 years while the domestic side of the business is more difficult to assess.
Figures recently released by the Air Transport Association (ATA) indicate that domestic cargo traffic for the US airlines fell to its lowest monthly total in three years in February, slipping 0.6%. The 914.1 million cargo ton-miles the ATA counted on the domestic side was the smallest for the airlines since February 2004 and about even with the cargo traffic the carriers reported in February 1999.
Domestic cargo volumes also fell for the third time in the last six months while overall air traffic was up 0.6% thanks to a 1.7% gain in international air cargo. Robert W. Zoller, president and CEO of Kitty Hawk, Inc., views the market for domestic air cargo services as one in transition with parts experiencing high growth over the last several years and others having negative growth.
‘Overall, air cargo services will continue to rise as international and domestic GDP rise,’ he reports. ‘There is clearly no one answer at the moment with respect to the method (mode) or the path (supply chain) by which cargo will move. As a result, logistic companies, freight forwarders and transportation providers tasked with providing these services are making adjustments along the way.’
Kitty Hawk, Inc. operates a scheduled air network (Kitty Hawk Cargo), a scheduled ground network (Kitty Hawk Ground) as well as a dedicated and charter FAR Part 121 all-cargo airline (Kitty Hawk Aircargo).
Driving domestic air cargo volumes is the increasingly globalization of business and the outsourcing of manufacturing to markets outside of the United States. Consequently, increasing volumes of freight that traditionally was designated for domestic distribution is now more likely to be a combination of international and domestic freight.
‘These trends make certain elements of providing transportation services more critical than in the past,’ states Zoller. ‘We do not see anything that will slow this in the future.’
Shelly Neal, cargo marketing manager of Southwest Air Cargo (SWC) concurs.
‘Domestic air cargo business continues to experience growth year-after-year by offering a variety of air cargo logistic choices to corporate businesses such as integrated and commercial airlines, and domestic trucking,’ she states. ‘A healthy US economy is always a key economic driver of the domestic air cargo industry. If manufacturing is healthy and GDP is strong, then typically air cargo volume increases follow suit.’
In many ways, the domestic air cargo market mirrors that of the international market. On any given day, SWC handles a wide variety of commodities that includes electronic equipment, wearing apparel, printed matter, fresh flowers, live fish, and seafood. With increased use of the internet, carriers servicing the domestic market have seen significant increases in the quantity of business-to-business and business-to-consumer small parcel commerce.
Operating as a passenger carrier, SWC moves packages on its next flights out. While the majority of its freight customers are freight forwarders, SWA works with a host of companies that include wholesalers, distributors, and small businesses.
‘We have more than 3,200 flights per day to 63 cities across the United States,’ explains Neal.
To better serve its customers, Southwest recently raised its cargo per piece weight limit to 200 pounds from 150 pounds.
‘The increase in weight limits creates new opportunities to provide shippers with a one-stop shop,” says Neal.
Also, in response to customer input, Southwest increased its current seafood weight limit from 80 pounds to 175 pounds.
‘This allows Southwest to transport some of the larger seafood commodities such as whole tuna,’ he says.
About one third of SWC’s shipments are transported between 300 to 500 miles. The other two-thirds move between 500 to1,200 miles.