The US domestic express market is flying towards a major decline this year after a volume fall in2008, according to an in-depth new report.
Revenues for the overall US domestic air freight and express industry dropped about 3% to$31.9 billion in 2008 from the record revenues recorded by market participants in the previousyear, the annual ‘US Domestic Air Freight & Express Industry Performance Analysis’ fromconsultants Air Cargo Management Group (ACMG) found. But volumes were down 9.7%, as measured inrevenue ton miles (RTMs).
“The slim decline was impacted in a positive way by high fuel surcharges in 2008, which maskthe fact that traffic volumes declined by nearly 10%,” pointed out Robert Dahl, managing directorof Seattle-based ACMG.
The US domestic express market was worth $28.5 billion in revenue terms last year, which wasmore than 89% of the overall market, according to the report. In volume terms, the express marketaccounts for about 65.7% of the total US domestic air cargo industry. Air freight transportationrevenues totalled $3 billion and revenues from mail transportation (excluding the FedEx-USPScontract) were $300 million last year.
Not surprisingly, the full-year 2008 results showed a significant decline in the second halfof the year, following a period of modest year-over-year gains in the first half, ACMG commented.The drop in 2008 was felt across the full spectrum of industry participants, with significantdeclines in both the express and general freight sectors. For example, the number of shipmentsmoving through the major express networks in the fourth quarter of 2008 was 14.3% lower at 5.650million per day than one year before.
The outlook for 2009 is poor, Dahl commented. “First-half data for 2009 gives little hope ofany near term turnaround, as industry-wide ton-mile totals were down about 18% for the first sixmonths of 2009, and ACMG estimates that express volumes are down about the same amount thus farthis year.”
In terms of US domestic express market shares, FedEx remains the market leader with a 44.8%share of daily express shipments in Q4, 2008, with UPS close behind with a 42.5% share, the reportfound. In revenue terms, FedEx’s domestic express revenues of $14,160 million (including its USPScontract) represent a 49.6% market share. UPS, with domestic express revenues of $10,380 million,had a 36.4% share. The shares of both will pick up three or four percentage points in 2009 based onDHL’s withdrawal, ACMG noted.
DHL Express ended 2008 with a US domestic express market share of 8.3%, based on revenues of$2,380 million. “As recently as the second quarter of 2008 DHL had about a 16% share of US domesticair express shipments, but continuing losses following the acquisition of Airborne Express in 2003led to DHL’s decision to abandon this market,” said Dahl. “By the fourth quarter of 2008 DHL’sshare was under 9%, benefitting both FedEx and UPS which gained customers which had left DHL.”
The other two major express market players are USPS and Schenker/BAX Global, according to thereport. USPS had Express Mail revenues of $910 million in 2008, representing a 3.2% market share,while Schenker/BAX Global, with revenues of $713 million, had a 2.5% market share.
In the general air cargo market, US passenger airlines had air freight and mail revenues ofmore than $1.5 billion, and air cargo airlines a further $832 million while freight forwarders hadrevenues of $910 million, the report found. Many of the more than two dozen specialist US all-cargoairlines, which together operate nearly 300 freighters, under extreme pressure due to the currentmarket circumstances that combine extremely weak demand with fuel prices that are above historiclevels, and which are on the rise once again, AMCG noted.
The 180-page study also contains market trends, statistical analysis, strategic review of themajor companies, and analysis of freight aircraft usage. Founded in 1978, ACMG is a specialisedaviation consulting firm, which focuses on freighter aircraft and all aspects of the worldwide airfreight and express industry.
