Modal shift to ocean freight has cost the air cargo sector almost 2 percentage points of annual growth since 2000 and is set to continue at a moderate pace, according to research by Seabury Group and the International Air Transport Association (IATA). The study by the leading advisory services firm highlighted that air freight’s share of total global containerised or unitised cargo transported declined from 3.1% in 2000 to 1.7% in 2013, with around one third of this market share loss being due to ‘modal shift’ – in which a product that used to be shipped by air is now shipped instead by sea or surface transport. ‘Commodity mix’ factors and ‘value effects’ were the other main causes, the study identified. Seabury’s research indicated that the shipment of raw materials and perishables had been affected the most by modal shift, but fashion, high-tech and machinery parts shipments had also experienced significant shifts from air to ocean freight. Trade lanes from Asia have been hit the hardest, the report revealed. Shippers interviewed in the survey indicated that the main factors driving modal shift included transportation costs, increased reliability of ocean freight, and the environment. According to shippers, air cargo could minimise or reverse the effects of modal shift by offering cheaper rates, better air freight products, and closer relationships with shippers, while the most popular suggestions from freight forwarders interviewed were increasing sustainability through fuel efficiency, improving operational reliability and increasing the use of electronic communication. Shippers and forwarders surveyed expected a moderate continuation of the shift to ocean freight in the next few years. In terms of industries, shipments from the automotive and electronics sectors were identified as most at risk of migrating from air to ocean freight in the future. Gert-Jan Jansen, Head of Seabury Cargo Advisory, commented: “Mode shift has eroded a significant portion of air freight growth and is expected to continue to do so, albeit at a moderate rate. Annual global air freight volumes would be 15.2 million tonnes higher if air freight had retained its 3.1% market share, and over the past 13 years, 5.4 million tonnes have shifted from air to ocean – an average annual loss of more than 400,000 tonnes per year. Without this modal shift, the compound annual growth rate for air freight could have reached 4.5% from 2000 to 2013, instead of the 2.6% actually achieved.” Jansen said the air freight sector needs to find appropriate responses to the main development areas highlighted if it wishes to minimise or reverse its market share losses. “While shippers would like to focus attention on air freight rates, there are other aspects at play,” said Jansen. “Forwarders require improvements in terms of fuel efficiency, reliability and use of e-communication, while respondents also highlighted the importance of reduced door-to-door transit times.”