Philippine airfreight industry grows 20% in 2010

The Philippine air freight industry posted an estimated 24 percent growth in 2010 compared to 2009.

 “Although it is difficult to predict a trend, the industry has been volatile for the past years. Due to the global economic crisis in 2009, the demand and movement of goods were minimal,” said Rosemarie Rafael, president, Airspeed International.

“Buyers do not like to hear the word ‘airfreight’ and would avoid it as much as they can as a norm.”

“To the buyers, airfreight is done only when production is late or goods are needed at a fast interval such as electronics or perishables.”

Rafael noted that when economic trading is high, distribution and forwarding of goods are also high. “It is directly proportional. For us, we are pretty much dependent on the economic trends of the countries we do business with.”

“For 2010, stores have to replenish their inventory and the demand for goods and services have grown from the 2009 levels.  As such, the airfreight Industry had also experienced growth and a slight recovery but still not to the level of 2008.”

Security is one of the major challenges of the airfreight forwarding industry. As a result of attacks on 9/11, airlines all over the world had immediately implemented very strict security measures which do cost time and money – there is now what is called “security surcharges” to cover the costs of these security measures, said Rafael.

Other challenges would include cost of airline fuel. Fluctuation of the fuel price had to be addressed by the airline industry so much so that there is now what is being called a “fuel surcharge.”

The implementation of fuel and security surcharges had made air cargo very expensive. Shippers and consignees now resort to move most of their cargoes via ocean or thru multimodal transport to make the landed cost of their goods affordable to the market.

Industry leaders are now challenged in ensuring that with all the recent developments, the impact on the forwarders, shippers, importers and other stakeholders in the industry will be controlled and minimized, considering that the volume of transactions had gone down and margins are minimal, said Rafael.

“The government could assist the industry by eliminating or minimizing corruption within their ranks especially government agencies involved in this industry.”  

“This will allow the industry to minimize their cost of doing business.  Second, the government can work on being able to attract more airlines to come in and thus providing more options and airline space for the airfreight forwarders.”

On the  global arena, John Manners-Bell of Transport Intelligence (Ti) noted that the global logistics industry saw a strong bounce-back in 2010 as it emerged from recession.

Air, road and sea freight sectors recovered dramatically in 2010. “Although this growth moderated as the year went on, many metrics suggested that the industry had recovered to pre-recession levels.”

Bell said the upturn in freight volumes and the measures which carriers had taken to reduce capacity had a significant effect on freight forwarders’ gross profits although the extent to which this occurred varied from sector to sector.

“Air freight capacity was particularly tight and rates have continued to rise throughout the year whilst sea and road transport markets have been much softer.”

Bell said the industry was buoyed by economic expansion in China and South East Asia and if it hadn’t been for concern about the ailing economies of the eurozone and the massive deficits of other Western powerhouses, such as the USA and UK, confidence surely would have been higher still.

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