AIr Transport: 2016: Air cargo’s health is what matters

   Last month, word of Amazon’s next pursuit came down from the Seattle Times, and the report was that the online retailer is finally dreaming big. OK, maybe this is simply a continuation of the company’s lofty goals, some of which will pan out, while others fall flat. The Prime Air drone program is still gaining steam, but that’s so 2013. This year, Amazon will focus on creating its own parcel service.

   Amazon will soon step into this competitive landscape, going head-to-head with parcel providers by purchasing a French package company. This deal will reportedly occur in the first quarter and is something Amazon’s been planning for quite some time. In 2014, it bought a quarter stake

in the company in question, Colis Privé, and now it’s taking a full leap into the business.

   This is a huge deal, but isn’t monumental in of itself. The possibility that this acquisition leads to the purchase of other parcel delivery providers around the world by Amazon is the real development worth following.

   But there’s more. Amazon is also reportedly talking to Boeing about leasing some 767 jets, and representatives have apparently been chatting with leasing companies, as well. Currently, Amazon is undertaking a trial-run cargo operation in Ohio, operated by Air Transport Services Group. Analysts say the online retail giant is tired of seeing shipping inefficiencies from the main parcel carriers, so it will try to go out on its own.

   Will Amazon’s wishes dominate air cargo talk this year? Likely not. Air cargo’s overall health will be the driving focus, as it was in 2015 and countless years before that. According to the latest data from the International Air Transport Association, the air cargo market may have stopped its decline, but the state of cargo is still not anything to celebrate.

   The fact that these results are no longer as terrible as they once were could be reason for optimism, or they could signal a bit of false hope. This most recent IATA data is only from November, but it shows total cargo volumes were higher than the month before. The numbers also point to a steady increase from the low-cargo point in August.

   In a statement, Tony Tyler, outgoing IATA director general and chief executive officer, said a lot is still up in the air for the industry. “The current volatility of stock markets shows how much the health of the global economy—upon which air cargo depends—remains on a knife-edge,” he said.

   In 2016, a change at IATA might provide some disruption to the air freight market, as it strives to regain its luster. Tyler’s departure in June after five years at the top airline agency could signal another issue for the cargo world. During his tenure, Tyler has championed cargo, by all reports paying more attention to the value of air freight than his predecessor. Tyler oversees all of IATA, and it’s important to have that voice for the cargo industry at the top, but the organization’s real cargo boss is Glynn Hughes, who has been doing a stellar job in his role as the agency’s global head of cargo. There was an easy transition to Hughes after the departure of the well-liked and experienced Des Vertannes in 2014, and the cargo arm of IATA hasn’t experienced any growing pains or lack of focus under Hughes’ direction. One can hope Tyler’s replacement continues to keep cargo on the minds of IATA’s leadership.

   Tyler’s replacement might also help boost gender diversity in the industry; reports from the IATA Media Day in December said Tyler briefly ruminated on the likelihood that his replacement would be female. A woman as the head of top aviation organization would certainly help generate momentum toward bringing more women to senior aviation roles. In May 2014, the news site Skift found that fewer than 5 percent of airline CEOs are women.

   During the Media Day in Geneva, IATA related some good news: oil prices are expected to be lower for longer, leaving open the possibility that shippers who switched from air freight to surface modes when prices rose may return to the airlines for their shipping needs. Freight load factors are still on a downward trend, though, and poor international trading volumes aren’t helping matters.

   IATA also continues to hammer away at its e-freight initiatives, which are slowly gathering adopters. It didn’t quite reach its goals in 2015, but there’s hope that this year will bring a new groundswell of support.

   In a survey of cargo bosses at the airlines, IATA found they overwhelmingly see cargo yields and volumes on the decline and are not optimistic about 2016. In this way, it seems like 2016 will be another down year for the industry. As has been reported extensively, there’s no port congestion on the West Coast to bail out the airlines, so it’s up to the economic rebound, increasing consumer confidence and a dedication by shippers to send goods by air to realize air cargo’s success in 2016.

   Ross, a former American Shipper editor, writes about air transport and freight issues. He can be reached by email at jonhross@gmail.com.