《空中交通运输系统》（英文版）chapter 6 cargo econmics

MIT ICAT Air Cargo Economics Prof, john-Paul clarke 16.886 Air Transportation Systems Architecting February 24, 2004

MIT ICAT MIT ICAT Air Cargo Economics Prof. John-Paul Clarke 16.886 Air Transportation Systems Architecting February 24, 2004

MIT ICAT Lecture Outline Air Cargo Industry Types of air cargo and air cargo carriers Largest air cargo carriers Demand for Air Cargo Services Drivers of air cargo growth Constraints on growth Recent Trends in Air cargo Traffic and tariffs Industry structure Impacts of recent recession and 9/11 Breakdown of cargo revenue and cost

MIT ICAT MIT ICAT Lecture Outline • Air Cargo Industry – Types of air cargo and air cargo carriers – Largest air cargo carriers • Demand for Air Cargo Services – Drivers of air cargo growth – Constraints on growth • Recent Trends in Air Cargo – Traffic and tariffs – Industry structure – Impacts of recent recession and 9/11 • Breakdown of Cargo Revenue and Cost

MIT ICAT Air Cargo Industry Air Cargo Categories Express/time definite: small packages (less than 100 Ib Heavyweight freight shipments(greater than 100 Ib Mail transport Participants: All-Cargo Airlines Integrated Express Carriers(expresssmall packages; door to door service) Non-integrated Freight Carriers(heavyweight freight shipments work with freight forwarders, etc .) Passenger(Combination) Airlines Can carry air freight, express packages and mail in passenger aircraft belly or on"combi"aircraft Also can have dedicated freight aircraft

MIT ICAT MIT ICAT Air Cargo Industry • Air Cargo Categories – Express/time definite: small packages (less than 100 lb.) – Heavyweight freight shipments (greater than 100 lb.) – Mail transport Participants: • All-Cargo Airlines – Integrated Express Carriers (express/small packages; door to door service) – Non-integrated Freight Carriers (heavyweight freight shipments; work with freight forwarders, etc.) • Passenger (Combination) Airlines – Can carry air freight, express packages and mail in passenger aircraft belly or on “combi” aircraft – Also can have dedicated freight aircraft

MIT Top Air Cargo Airlines Worldwide in 2000 ICAT Total Freight and Mail(Int'I+ Domestic) Carrier Ton-miles(millions 1. Federal Express 7,466 2. Lufthansa german airlines 4.995 3. Singapore airlines 4.188 4. Korean air 3,873 5. Air france 3.553 6. Japan Air Lines 3,226 7. United Airlines 3,153 8. KLM Royal Dutch Airlines 2,969 Source: Aviation and Aerospace Almanac 2002

MIT ICAT MIT ICAT Top Air Cargo Airlines Worldwide in 2000 Total Freight and Mail (Int’l + Domestic) Carrier Ton-miles (millions) 1. Federal Express 7,466 2. Lufthansa German Airlines 4,995 3. Singapore Airlines 4,188 4. Korean Air 3,873 5. Air France 3,553 6. Japan Air Lines 3,226 7. United Airlines 3,153 8. KLM Royal Dutch Airlines 2,969 Source: Aviation and Aerospace Almanac 2002

MIT Top U.S. Air Cargo Airlines in 2001 ICAT Total Freight and Mail(Int'I+ Domestic) Carrier Ton-miles(millions 1. Federal Express 7,565 2. UPS Airlines 4.081 3. United airlines 1919 4. Northwest airlines 1918 5. American Airlines 1,813 6. Delta airlines 1,269 7. Atlas air 1,072 8. Polar Air Cargo 892 Source: ATA Annual report 2002

MIT ICAT MIT ICAT Top U.S. Air Cargo Airlines in 2001 Total Freight and Mail (Int’l + Domestic) Carrier Ton-miles (millions) 1. Federal Express 7,565 2. UPS Airlines 4,081 3. United Airlines 1,919 4. Northwest Airlines 1,918 5. American Airlines 1,813 6. Delta Airlines 1,269 7. Atlas Air 1,072 8. Polar Air Cargo 892 Source: ATA Annual Report 2002

MIT ICAT Selected Cargo Carriers 2001(Source: ATA) Carrier Number Air Cargo cargo of Ton-miles Revenue Operating Aircraft(millions) (S million)Revenue FedEx 320 7,609 $6,948 458% UPS Air 258 4.094 $2,624 966% United 543 2390 $704 43% Northwest 440 2,161 $715 7.5% KLM 132 2,512 $882 155%

MIT ICAT MIT ICAT Selected Cargo Carriers 2001 (Source: ATA) Carrier Number of Aircraft Air Cargo Ton-miles (millions) Cargo Revenue ($ million) % of Operating Revenue FedEx 320 7,609 $ 6,948 45.8 % UPS Air 258 4,094 $ 2,624 96.6 % United 543 2,390 $ 704 4.3 % Northwest 440 2,161 $ 715 7.5 % KLM 132 2,512 $ 882 15.5 %

MIT ICAT Demand for Air Cargo Services Like demand for passenger air travel, demand for air cargo shipment is a“ derived” demand Primary drivers of air cargo demand include: Economic growth and trade(especially imports/exports) Relative prices of air cargo versus alternatives-ocean, truck, rail Difficult to quantify demand/supply accurately: No comprehensive sources of data on air cargo traffic and pricing Lack of published schedule data( unlike passenger airlines) Vertically integrated air cargo operators (like Fedex and UPS)only publish limited schedules for selected flights All-cargo carriers tend to operate flexibly based on daily/weekly demands Combination carriers provide joint supply of cargo and passenger capacity

MIT ICAT MIT ICAT Demand for Air Cargo Services • Like demand for passenger air travel, demand for air cargo shipment is a “derived” demand. • Primary drivers of air cargo demand include: – Economic growth and trade (especially imports/exports) – Relative prices of air cargo versus alternatives – ocean, truck, rail • Difficult to quantify demand/supply accurately: – No comprehensive sources of data on air cargo traffic and pricing – Lack of published schedule data (unlike passenger airlines) – Vertically integrated air cargo operators (like Fedex and UPS) only publish limited schedules for selected flights – All-cargo carriers tend to operate flexibly based on daily/weekly demands – Combination carriers provide joint supply of cargo and passenger capacity

MIT ICAT Drivers of Air Cargo Growth in 1990s Overall economic growth(especially world trade Historically, 2 to 2.5% increase in world trade with each 1%increase in total gDP Air freight trade has been growing even faster due to regional differences in economic growth Since 1993, average 7-10% annual growth in world air freight traffic ·G| obalization Increasingly integrated and interdependent national economies Liberalized(free) trade and reduced protectionism · Lean Inventory Strategies Reduced order-cycle times: just in time "and"make to order Less stock on hand to avoid production shutdowns, retail stockouts Air freight shortens delivery times to customer

MIT ICAT MIT ICAT Drivers of Air Cargo Growth in 1990s • Overall economic growth (especially world trade) – Historically, 2 to 2.5% increase in world trade with each 1% increase in total GDP – Air freight trade has been growing even faster, due to regional differences in economic growth – Since 1993, average 7-10% annual growth in world air freight traffic • Globalization – Increasingly integrated and interdependent national economies – Liberalized (free) trade and reduced protectionism • Lean Inventory Strategies – Reduced order-cycle times: “just in time” and “make to order” – Less stock on hand to avoid production shutdowns, retail stockouts – Air freight shortens delivery times to customer

MIT ICAT Constraints on Air Cargo Growth · Economic recession Reduced production demand for goods, international trade · Trade barriers Tariffs or protectionism designed to limit free trade Aircraft regulations Air cargo operators have used older aircraft that are most affected by new regulations on noise emissions and safety For example, noise hush-kits reduce cargo payloads Modal competition Air freight has tremendous speed advantage for long distances, but is highest-cost option Trucks very competitive for short haul (1000 miles, overnight Development of new"fast ships"for ocean cargo

MIT ICAT MIT ICAT Constraints on Air Cargo Growth • Economic recession – Reduced production, demand for goods, international trade • Trade barriers – Tariffs or protectionism designed to limit free trade • Aircraft regulations – Air cargo operators have used older aircraft that are most affected by new regulations on noise, emissions and safety – For example, noise hush-kits reduce cargo payloads • Modal competition – Air freight has tremendous speed advantage for long distances, but is highest-cost option – Trucks very competitive for short haul (1000 miles, overnight) – Development of new “fast ships” for ocean cargo

MIT ICAT Recent Trends in Air Cargo Rapid growth in demand for air cargo Intra-Asia is the largest true air freight market Even during Asian economic crisis air freight traffic grew Forecasts for continued traffic growth at 6% per year Falling real yields (revenue per ton-mile) Average 2.5% decline in yields (CPl adjusted) Growth in international trade has increased trip length, associated with lower tariffs per mile Wide-body aircraft have unused belly capacity, viewed by passenger airlines as virtually“ costless” Passenger airlines have become price leaders in air freight Regulatory liberalization has spurred price competition Lower tariffs further stimulate demand but also cause airlines to focus on lowering unit costs

MIT ICAT MIT ICAT Recent Trends in Air Cargo • Rapid growth in demand for air cargo – Intra-Asia is the largest true air freight market – Even during Asian economic crisis air freight traffic grew – Forecasts for continued traffic growth at 6% per year • Falling real yields (revenue per ton-mile) – Average 2.5% decline in yields (CPI adjusted) – Growth in international trade has increased trip length, associated with lower tariffs per mile – Wide-body aircraft have unused belly capacity, viewed by passenger airlines as virtually “costless” • Passenger airlines have become price leaders in air freight – Regulatory liberalization has spurred price competition • Lower tariffs further stimulate demand, but also cause airlines to focus on lowering unit costs