Consolidators Intl says gateway decline may be tip of the iceberg
- Friday, 09 February 2007
Both San Francisco (SFO) and Los Angeles International (LAX) have reported declining volumes of air freight in consecutive years and the falls, although less than five per cent, appear to contradict industry talk of a generally robust market.
Keeling says he is very sensitive to trends in air freight traffic to the South Pacific and Asia because much of his forwarding business moves to those markets from West Coast gateways.
“Airport officials at both airports are scratching their heads trying to figure out why volume is down while over-all trade is growing with Asia, particularly China, and to South Pacific nations like Australia,” said Keeling.
He believes the answer lies in the enormous growth of ocean shipping between west coast ports to destinations west of the International Dateline.
“The ports of Long Beach, Wilmington and San Pedro; which make up the southern California seaport complex, have enjoyed boom times with cargo volume during the past few years,” said Keeling. “This contrasts sharply with the declines in volume at LAX and SFO at the same time.”
Customer feedback from forwarders indicates they are moving less of their shipments through LAX citing traffic choked highways leaving the airport, a freeze on new cargo construction at LAX and often inconvenient airline schedules for freight.
“However, SFO — with less congestion — is also witnessing a less cargo traffic.”
Keeling fears the international transportation business is changing, and not to the benefit of air. “While a number of shippers are switching from expensive air to less costly sea, the reverse rarely happens. We almost never hear of a large or even small company announcing a switch from sea to air.”
Adding to the pressures affecting air freight is a substantial increase in new container ships entering service in 2007. Keeling believes the increase in tonnage will invariably lead to a drop in container rates fuelling the already worsening market share.
“Traffic managers may well be thinking, ‘air is the ideal transport mode to meet our just-in-time production demands, but sea is so much cheaper, let’s save some real money and go with ocean.”
He believes forwarders should not waste their time in futile attempts to persuade the airlines to lower their fuel surcharges but try and find new ways to attract customers to air.
