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Air Freight Losing Ground to Other Modes

March 21, 2014
A modal shift to sea and surface is costing air freight 2 percentage points of annual growth, report finds.

Air freight’s share of total global containerized or unitized cargo transported declined from 3.1% in 2000 to 1.7% in 2013, according to research by Seabury Group and the International Air Transport Association (IATA). Around one third of this market share loss is due to ‘modal shift’ from air to sea or surface transport. Commodity mix factors and value effects were the other main causes the study identified.

While the shipment of raw materials and perishables was affected most by modal shift, fashion, high-tech and machinery parts shipments 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 minimize 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.

“Mode shift has eroded a significant portion of air freight growth and is expected to continue to do so, albeit at a moderate rate,” said Gert-Jan Jansen, head of Seabury Cargo Advisory. “Annual global air freight volumes would be 15.2 million tons higher if air freight had retained its 3.1% market share, and over the past 13 years, 5.4 million tons have shifted from air to ocean—an average annual loss of more than 400,000 tons 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 minimize 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.”


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