Increasingly, Payload’s editorial contributors and I, find ourselves writing about the migration of cargo from air to other modes. In Asia, TNT for instance, has been busy building its pan-Asian road network, specifically targeting a vast market it believes will jump at the chance to move goods faster than sea, but cheaper than air.
And others too have their eye on this multi-modal shift. DB Schenker, with its obvious European rail strength was all set to launch its unique China to Europe rail cargo product, until the global economy went belly-up. The nascent trend was already established prior to the downturn, spurred on in part, by the increasing efficiency of supply chains and other modes of transport, like the liner shipping industry. And to be certain, the crisis has given the multi-modal concept a swift kick forward.
All of this is certainly not good news for an air cargo industry, struggling to stay aloft. But not everyone views the developments with the same trepidation. Dubai, for instance, with its port and upcoming cargo megacity are actively pitching the air/sea option as part of their competitive advantage, as is MASkargo in Malaysia. And speakers at the recent air cargo conference in Shenzhen suggested a similar strategy to compete with Hong Kong.
The multi-modal option, like TNT’s pan-Asian road network, will also help to enlarge the cargo pie, not simply steal cherries from it.
Since 2001, air has lost only four per cent of its weight to sea as most products that shifted from air to sea were replaced by successive waves of new products. Much of this was driven by the consumer electronics boom of the last decade.
The change in air penetration also varies by commodity group, according to Seabury Aviation & Aerospace. For products like fashion apparel and accessories, air has been losing out for years. And even some perishable commodities, such as flowers, are being moved by sea as shippers turn to new refrigeration techniques and better supply chain planning methods. A few commodities, including machinery parts and high technology products such as laptop computers, have shown modestly positive penetration in air freight’s favor.
While high-tech was less than 19 per cent of air weight in 2002, it now makes up more than 21 per cent, hitting up to 22 per cent in 2012, Seabury says.
Working in air freight’s favour is the fact that high-tech products typically have short life cycles, meaning they are very dependent on the rapid introduction of new models. We need only look to the rapid succession of iPods, iPhones, and video games.
There is no doubt there will always be a shift from air to other modes, but at the same time, there will also always be replacements, there will always be cargo thatmust get there fast. The modal shift is not going to go away and unfortunately for the air cargo carriers, the current economic crisis has thrown the spotlight on its benefits, attracting some shippers who otherwise would not have considered it. The air cargo industry must adapt to this modal change and see it, not simply as a potential threat, but as an opportunity too.
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Payload Asia is pleased to announce we are introducing a new human interest section from this current issue. The new ‘Personality’ feature will run on an ad hoc basis and will feature prominent individuals, giving readers a more personal insight. We kick off this new page with a well-known personality from India, founder of Air Deccan, Captain G.R.Gopinath. Enjoy!
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