NORTH
AMERICA
The diversification game
The slowing market momentum is prompting a stronger focus on premium offerings -
but airports are still under pressure to ramp up capacity. A survey from Ian Putzger.
When American
Airlines’ top brass
announced the results
for the first quarter in April,
the mood was less upbeat than
a 1.8% increase in revenue
might suggest. Much of this
was due to the grounding
of the carrier’s B737 MAX
aircraft, which is expected
to cause a US$350m dent in
the carrier’s pre-tax earnings;
but cargo results did not offer
much cause for joy either,
having declined 4% from the
first three months of 2018.
Like American, Delta Air
Lines also reported a rise in
overall revenues for the first
quarter, but cargo revenues
were down 5%. After more
than two years of robust
growth, the momentum of
major US carriers has shifted
into reverse in the first quarter
of this year.
To the north, Air Canada
also saw business slow, but
it still managed to eke out
modest growth. “We’re in
positive territory,” declares
Tim Strauss, Vice President of
Cargo. “Everybody is down
some. It comes down to how
well and diverse your portfolio
is.”
Alaska Air benefited from
the introduction of its threestrong
B737-700 freighter
fleet last year, as well as from
the integration with Virgin
America, which added a slew
of transcontinental routes
to its network. Yet still, the
momentum has slowed. Jason
Berry, Managing Director
of Cargo, says that business
started to soften in November.
threatened implementation of
additional tariffs on Chinese
goods. In addition, there is
much soul searching among
US companies about shifting
some of their sourcing from
China to other countries.
Bob Imbriani, Executive
Vice President International
at Team Worldwide, reports
that many of the forwarder’s
clients have asked about the
logistics aspect of a possible
move to source from the
likes of Vietnam, Malaysia or
India. “They work with us to
determine what the landed
costs are,” he says.
Outbound, some US
exports have been hit from
the tariffs imposed by China.
One commodity that has seen
a pronounced impact is that
of lobster and seafood traffic.
After some signs of new life
in January, February was soft
again, followed by growth in
March.
There is broad consensus
that 2019 is unlikely to show a
strong resurgence in demand,
although North America has
fared better than most other
regions in the world, notably
Asia and Europe. “Latin
America is still doing quite
well for us. Europe is okay,
Asia is weak,” remarks Strauss.
Trade disputes and
outsourcing
The trade dispute between the
US and China has exacerbated
the weakness on the trans-
Pacific sector. Inventory levels
in the US are relatively high,
after importers rushed to
build up stock ahead of the
12 June 2019 www.airlogisticsinternational.com
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