Alaska bypass
Anchorage, Alaska, is the world's fifth-largest cargo airport, but recent developments are combining to reduce freight volumes and its role as a transshipment and refueling center on long-haul flights between Asia and North America.
Alaska's local fuel supplier reduced production last year when the recession led airlines to decrease freight flights. Now Anchorage is experiencing a shortage of fuel due to the swift recovery in air freight demand in 2010, according to Air Cargo Focus, the quarterly newsletter published by Cargo Network Services Corp. CNS is part of the International Air Transport Association.
Freighters are now either limited to how much cargo they can carry or have to pay for fuel that has been brought in by tankers.
And the situation doesn't get any better because the fuel supplier plans on closing one of its fuel units in October, during the peak shipping season.
But all-cargo airlines are increasingly able to bypass Alaska altogether as they modernize their fleets with more fuel-efficient aircraft. FedEx and UPS, for example, have been buying Boeing 777s, which can fly directly from China to the United States and speed up transit times compared to older freighters such as the 747-200. Atlas Air has 12 Boeing 747-8s. The 747-8 has an additional range of 1,400 nautical miles at less than full load or can carry up to 22 additional tons of cargo. Cargolux and Nippon Cargo Airlines also have orders for the new plane, which is in the final stages of initial production.
Kevin Starling, an analyst for BB&T Capital markets, noted in a client bulletin that fewer transpacific freighters are stopping in Anchorage to refuel these days.
The ability to shorten supply chains gives FedEx, UPS and Atlas a competitive advantage over other carriers and heightens the contrast with ocean shipping, Starling wrote.
New Zealand alleges forwarder price fixing
New Zealand's Commerce Commission has filed charges of price-fixing and collusion against a number of air freight forwarding companies, according to wire service reports.
The commission alleges that subsidiaries of the Deutsche Bahn Group, Kuehne + Nagel, Panalpina, EGL and Geologistics 'had colluded to fix the implementation and application of fees for freight forwarding.'
The commission said it had reached settlements with EGL and Geologistics. Kuehne + Nagel denied a case has been filed against it, according to a report in Dow Jones Newswires.
The probe began in 2007, when the commission began investigating arrangements to keep prices for air freight into and out of New Zealand artificially high. Some of the alleged agreements date back to 2001, the report said.
The top global freight forwarding companies have faced a barrage of European and U.S. probes in recent years over similar price-fixing allegations.
United, Continental merge gets U.S. go ahead
The U.S. Justice Department has closed its investigation into the proposed merger of UAL Corp., parent of United Airlines, and Continental Airlines, effectively allowing the merger to proceed.
The decision by United, the third-largest U.S. carrier, and Continental, the fourth-largest, to transfer takeoff and landing slots and other assets at Newark Liberty Airport in New Jersey to Southwest Airlines alleviated concerns about concentration of power in that market, the Justice Department said.
United, with $16.3 billion in revenue last year, and Continental, $12.6 billion, said May 2 they planned to combine and form the world's largest airline.
Analysis by Justice's Antitrust Division indicated the two airlines had mostly complementary networks with a limited amount of overlap where they offer competing nonstop service. The largest such routes are between United's hub airports and Continental's hub at Newark, where Continental has a high market share and there is limited availability of landing and takeoff rights, making entry for other airlines difficult.
Southwest previously had limited service in the New York metropolitan region and no Newark service.
Several state attorneys general are also reviewing the impact of the proposed merger.
Rep. James Oberstar, chairman of the House Transportation and Infrastructure Committee, called the decision 'regrettable.' He had asked the Justice Department to reject the deal, claiming consolidation paired with international alliances will leave consumers with little choice and higher fares.
Oberstar said future merger reviews need to extend beyond the narrow antitrust criteria used by the Justice Department. He called for assigning broader authority over mergers to the Transportation Department to consider such factors as the merger's impact on service to communities and customers.
The Minnesota Democrat said large carriers would refrain from seriously competing in markets dominated by one or the other carriers.
He also suggested Congress should consider reregulating the airline industry 32 years after deregulation in order to improve service and competition.
Thinning the herd?
Small, independent freight forwarders continue to have a tough time going head-to-head with integrators like FedEx and UPS, writes Julian Keeling, chief executive of Consolidators International in Los Angeles.
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The large freight management and delivery companies are gaining market share, despite having higher rates, as shippers reduce the number of transportation providers to gain more control of their inventory.
Schenker, Panalpina, Kuehne + Nagel, Expeditors, UTi and CEVA Logistics are the only independent, global forwarders that can directly compete with FedEx, UPS and DHL, Keeling said. He predicted the number of small and mid-size forwarders will shrink in the near future.
The CII founder noted that FedEx and UPS have become increasingly 'stingy' in selling space on their aircraft to outside forwarders.
'Some 20 years ago, FedEx sold $700 million worth of space to independent forwarders. Today, that figure has shrunk to $50 million,' he said.
CII, which estimates a 40 percent increase in volume for the full year, has been successful by targeted niche freight markets in the South Pacific, particularly Australia and New Zealand, according to Keeling.