transportation & logistics council · transportation & logistics council march 24, ......
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Shipping by Air Parcel and Air Freight Transportation & Logistics Council
March 24, 2015
“Each day $18.5 billion of goods travel by air –1/3 of all world trade by value. Aviation Delivers.” Source: International Air Transport Association
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State of Logistics: Growing Inventories, Increased Warehouse Costs
Recap of Inventory Carrying Costs • Inventory carrying costs were up 2.8 percent in 2013 • Interest dropped 22.6 percent as rates fell from 0.11 to 0.09 percent from 2012 to 2013 • Total business inventory levels rose 3.0 percent in 2013 • Taxes, obsolescence, depreciation, and insurance increased 1.9 percent in 2013 because of
the growth in inventories • The cost of warehousing was up 5.6 percent in 2013 Source: CSCMP Annual State of Logistics Report 2015
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Global Air Freight Hit Hard by Recession
Source: Boeing World Air Cargo Forecast 2014-2015
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World Air Cargo Traffic Expected to Double
Asian, North American Airlines are World Leaders in Cargo Services
Source: Boeing World Air Cargo Forecast 2014-2015 6
U.S./Canada: Sustained Growth in U.S. Domestic Market
Source: Boeing World Air Cargo Forecast 2014-2015
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U.S./Canada: Canadian Air Freight Industry Sees Steady Growth
Source: Boeing World Air Cargo Forecast 2014-2015 8
U.S./Canada: 4.4% Growth Forecast for Cross Border Air Services
• U.S./Canadian government efforts to promote under-utilized Canadian airports
• Increased passenger service between U.S. and Canada
• Increased presence of U.S. retailers in Canada, both in terms of eCommerce sales and physical stores.
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Freight Service Categories
• Scheduled Freight - 88 percent (worldwide)
• Charter Freight - 8 percent
• Mail - 4 percent
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Different Service Options/Price Points within Air Freight Category
• Expedited • Next Flight Out • Charter
• Overnight
• Consolidated
• Deferred
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Cost to Transport
Air freight costs: 4-5 times the cost of road transport 12-16 times the cost of ocean transport Source: The World Bank
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What’s Traveling by Air?
• Electronic and Other Electronic Equipment
• Computer/Technology Products
• High Value Finished Products
• Pharmaceutical Products
• Precision Equipment
• Automotive Suppliers – Parts/Components
• Aerospace – Parts/Components
• Retail Industry – for coordinated launches, product rollouts
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Air Freight Tends to be High Value
Transportation Mode Value Per Ton Air $85,000 Truck $1,226 Water $550 Rail $246 Source: U.S. Department of Transportation
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Key Benefits of Air Freight Service
• Speed to Market
• Lower Inventory Management Holding Costs
• Dependability
• Higher Order Fill Rates
• Better Customer Experience
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