6%
4%
2%
0%
–2%
–4%
–6%
–8%
-10%
Having a regional express hub just 20 miles outside the nation’s capital wasn’t quite close enough for FedEx Express.
6/07 7/07 8/07 9/07 10/07 11/07 12/07 1/08 2/08 3/08 4/08 5/08 6/08
Source: Air Transport Association
Domestic Cargo in a Dive
The deterioration of the domestic air cargo business is picking up speed.
Domestic cargo traffic for U.S. carriers fell at its sharpest rate in nearly seven years in June, plunging 8. 5 percent as a faltering economy and rising jet fuel prices pushed expedited shippers away from aircraft.
The decline measured by the Air Transport Association was the worst since December
2001, when domestic air cargo traffic fell 15.1 percent in the industry-crip-pling aftermath of the September 11 terror attacks. The 951 million cargo ton miles flown by U.S. airlines was the small-est total for any June since 2001.
That left domestic air cargo down 1.1 percent for the first half of the year, putting the business on track for the third annual decline in the last four years.
With international cargo up 2 percent in June, the airlines’ overall cargo traffic in June was down 2. 9 percent compared to the same month a year ago. That was the worst monthly showing since May 2005.
Although the move of expedited shipping to trucks has been a long-term trend on the domestic front, forwarders and
airlines say the shift has accelerated as jet fuel prices have doubled over the past year. Jet fuel prices in the United States peaked at more than $4.20 a gallon in the first week of June but they have pulled back sharply as oil prices have receded, and in the first week of August jet fuel reached its lowest point since March.
Many U.S. airlines are scaling back domestic capacity in favor of international business, however, and international cargo was up 6.1 percent in the first six months even after the meager gain in June. Domestic forwarders appear eager to
follow the carriers’ moves outside the United States.
“Right now, 70 percent of our business is domestic, but we see international continuing to grow,” said Cathy Langham, president of Indiana-based Langham Transport. “We can see it going to 50-50 down the road.”
That road doesn’t look terribly promising this year. The International Air Transport Association reported a 0.8 percent decline in freight traffic in June, the first monthly drop in four years, leaving the business up just 1.9 percent in the second quarter.
With postal business now in the mix and a new plane in the fleet, FedEx launched 757 freighter operations into Ronald Reagan Washington National Airport this month. The flight gives the tightly packed airport, located just across the Potomac River from downtown Washington, a rare entry into the all-cargo arena, and it gives the carrier the sort of quick reach to business and government offices that makes DCA a bustling passenger site.
The eight-times-weekly flight will operate just a one-hour truck haul from Washington Dulles International Airport, where FedEx has a full-service sort center and has operated narrowbody and widebody flights for several years at facilities next door to UPS and DHL.
FedEx spokesman Maury Lane said Express Mail from the U.S. Postal Service was a key part of the traffic for the DCA operation and would be sorted at the company’s center in Southeast Washington. The airport is significantly closer to Washington and the flight will cut ground transportation times to the city and the close-in suburban business districts significantly, Lane said.
The service also marks the “ introduction of the 757 freighter to our fleet,” said David J. Bronczek, chief executive officer of FedEx Express. The company expects to introduce 12 757s into revenue service over the next year.
As the replacement for the 727, the 757 offers fuel savings of up to 36 percent over the older three-engine 727, while providing far more capacity per flight. The 757 also is significantly quieter than the 727.
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