FedEx’s Smith warns on future of air cargo

Speaking at the Opening Plenary of the International Air Transport Association (IATA) World Cargo Symposium 2014 in Los Angeles in mid-March, FedEx founder, chairman and CEO Fred Smith gave a nod to the event’s theme – ‘Transformation through Innovation’ saying it was particularly relevant given that the air cargo industry “is in the midst of a profound transformation that requires new ways of thinking about our future.” Donald Urquhart reports from Los Angeles.


FedEx’s Smith warns on future of air cargo


Delivering a stark view of the future of the airport-to-airport segment of the air cargo industry which faces a difficult macroeconomic climate, “gnawing” competition from both ocean freight and the express sector, along with a crippling rise of protectionism around the globe, he warned that the future is “unlikely to be analogous to the industry’s ‘Golden Age’ of the 1990s and early 21st century.”

“All of us may wish for a return of the halcyon days of double-digit air cargo growth, but we are creatures of much larger forces and the winds are not favourable” Smith warned. This is particularly the case for traditional cargo carriers, who until recently continued to operate large numbers of B747-400 and MD11 freighters that were the “workhorses of the air cargo ‘Golden Age’”.

With a four-fold increase in the price of fuel over the last decade and more efficient aircraft coming on stream – notably the new fuel-efficient, twinengine freighters in the form of the B777F and the A330F which provide airlift with much lower unit costs – Smith noted that 43 B747-400s are now parked in the desert and six have been scrapped while 20 and 4 MD11s respectively, have met the same fate. “To give just one example, a 777 freighter flight from Hong Kong to Anchorage costs $30,000+ less than a 747-400F while carrying almost the same payload,” he said.