Julian Keeling CEO of major US air freight wholesaler Consolidators International (CII) dispelled what he said was "more myth than reality" ofthe theory that a signifi cant portion of the world’s economies were "decoupled"from the US’.
"The American economy easily remains the single most important market for other nations’ exports, particularly from Asia. A slowdown in America means a slowdown in the export-driven economies of Asia," Keeling said bluntly.
Describing the current US economic slowdown as possibly the worst the country has experienced since World War II, Keeling said air freight is "facing the armies of the night". These armies include he said: "Th e endless war in Iraq draining our economy of $1 trillion, a housing wreck costing banks billions and foreclosures to millions, and continuing losses of high paying manufacturing jobs."
On top of this is the "catastrophic" price of oil, which is impacting every aspect of American life, "weakening the ability of both consumers and businesses to spend and invest".
Th e resulting impact on the global air cargo industry is obvious he said, although he concedes its severity is differentiated globally versus US domestic. "Domestic cargo is a basket case," he said bluntly. "The high price of fuel combined with the increased ability of truckers to penetrate the air cargo market is bringing ruination to domestic freight," Keeling warned. "Ironically, domestic air freight which started after World War II primarily as a method for moving emergency shipments, may be returning to its roots specialising in overnight ‘must get it there’ shipments," he said.
International picture brighter
"International cargo presents a brighter picture, although the years of 10 to 15 per cent annual growth are gone, perhaps forever,"
Keeling said, adding that he foresees a more modest growth of about 3 to 5 per cent going forward. Keeling believes as the recession drags on this year and into next, "tonnage will decrease because of reduced import demand. All-cargo carriers, which have sprung up like weeds after a rain, will shrink their fleets with some going out of business as import demand from Asia falters. Also reducing their freighter fleets will be the combination carriers like Korean Air and Lufthansa, who are major players in the cargo market."
And playing to widespread air cargo industry fears, Keeling said he sees an "ominous trend" in the rising competition from containerships. "Steamship lines no longer are content to leave high value, just-in-time types of freight to the airlines. The shipping lines with new, huge 6,000-TEU (20-foot containers) container ships coming on line, are fighting for every scrap of freight," he warned.
Focusing on his freight forwarding audience, Keeling said: "I believe we will do relatively well, particularly the mid-sized forwarder, even in our current sluggish economy.
"We are tough, resourceful and can turn on a dime; abilities the large, multi-national forwarders do not share."Keeling believes personal service to customers will be a far more important consideration than ever before.
"In an uncertain environment, shippers will require more of the human touch. It is the mid-sized forwarder who can provide that touch," he said.