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Sadly, bullish outlook on demand does not automatically translate into robust profits for freighter operators.
The problem is not growth. The intercontinental freighter fleet will grow dramatically because passenger demand, and thus belly capacity, will not expand as rapidly as cargo traffic, so freighters will have to make up the shortfall.
Nor is the problem that the integrators will 'take over the world', putting freight forwarders and conventional airlines out of business.
To be sure, in their quest for new sources of revenue growth, the global integrated carriers will continue to push into international air freight markets. But there is a long-term need for freight forwarders and nonintegrated airlines and those players are an integral part of the air freight industry's future.
Rather, the problem is that air freight yields have been in long-term decline and it appears that this will remain tree even though the industry's cost structure will inexorably creep upwards as freighters account for a progressively larger share of global airlift.
Shippers are squeezing both transport and logistics costs. As the economy continues to grow, absolute spending on both transport and logistics continues to increase. But logistics spending as a percent of GDP is in clear long-term decline, although the decline is much steeper in total logistics spending due to inventory reductions.
The good news/bad news for the transport industry is that transport spending has suffered a relatively small decline. But the reason for this is that most freight transport was commoditized long ago, and the industry has little margin left to give.
Reflecting the long-term squeeze on transport spending, air freight yields, expressed in terms of revenue …