US airports banking on China to lift revenue


With US domestic air cargo traffic down for 10 months in a row, year-on-year, the industry is scrabbling harder to get more business from Asia, especially China. Regions that until a few years ago were comfortably feeding off local and coast-to-coast traffic, have had to wake up to a new era.
One of these is Pittsburgh, which for nearly a century was the centre of steel and related industries.

Those days are gone and the city is the centre of the Rust Belt. The regional airport authority recently visited China to promote the airport to 11 airlines and officials said they would be returning for a more detailed and aggressive sales pitch.

Two thousand miles away in Oregon, Portland is spending almost US$4 million on subsidising Delta airlines flights to Tokyo from September to May, banking on the route returning to profitability during summer next year.

In southern California, the high desert town of Victorville is canvassing Chinese and other foreign businesses to invest in a $100 million logistics park. The city and area is known by airlines throughout the world for being the aviation version of a retirement home - scores of unwanted aircraft are stored there, safe from rust.

So bad is the domestic aviation scene that some analysts are now predicting it will become untenable, despite a turnaround in the economy, with most goods being moved by road. This has prompted a leading logistics executive to lay the woes of the industry largely at its own door.
Julian Keeling, chief executive officer of Consolidators International, said: "The difference in attitude between domestic and international airlines is stark. International carriers promote their cargo divisions with men, money and marketing. US carriers have a far different and often derogatory attitude toward their cargo departments, with the divisions being treated like stepchildren.

"Domestic carriers have reduced their cargo staff almost to the vanishing point. They have closed cargo offices and outsourced freight operations to general sales agents."
Keeling noted that 30 years ago, forwarders earned returns of up to 30 percent but, because of greater competition, this is down to two percent - while airfreight generates only two percent of intercity traffic.

Domestic carriers are also guilty of not keeping customers informed, he said, and change aircraft types with no notification. Carriers also suspend flights because of dwindling passenger numbers, without realising that the cargo on those services is making a profit, he added.
"Air is generally the most efficient and productive method of transport. Air's higher rates translate into greater yields for forwarders. You can't make money moving merchandise by truck at 10 cents a pound," Keeling said.

Despite such strong arguments in favour of the domestic industry, courier services and parcel companies - probably the biggest growth segment - know which way the wind is blowing.
FedEx Trade Networks has opened new forwarding offices in Asia, with facilities in Singapore and Taiwan as well as in Qingdao, Beijing, Guangzhou and Shenzhen.

DHL now offers a link from Malaysia's Port Kelang to Los Angeles, adding to its Bangkok route. The service is also being offered from Kelang to Shanghai for distribution within China. Since the start of 2009, the company has added 17 direct services from China, Thailand, Japan, India and Malaysia to key cities around the world.

TNT has opened a 3,000 sq m facility in Ho Chi Minh City, Vietnam.

Source: cargonewsasia
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