Here is the Seattle Times' take on the Cargo Facts Symposium which ended today at the Sheraton Hotel with the Gala held at the Museum of Flight. Must be late, but I read this to mean that my thread premise is wrong and that things are not picking up after all. At least not for another 3 to 5 years.
The air-cargo business has suffered a "lost decade" as demand this year dropped to levels last seen in 2000 — and recovery is expected to be slow, experts said at an aviation conference in Seattle Wednesday.
That doesn't bode well for the broader economy, since air cargo is typically an indicator of how other sectors will fare, they said.
Government requirements that kick in next year for security screening of air cargo will deepen the industry's challenges, increasing costs for U.S. air shippers and likely forcing some cargo to move on trucks instead.
Air-cargo traffic is down 20 percent so far this year compared to 2008, according to Seattle-based Air Cargo Management Group, host of the annual Cargo Facts symposium, which drew about 375 executives and managers from air-freight carriers, passenger airlines and aircraft-leasing companies.
That decline is a shock for a business that for decades saw steady growth averaging 6 percent per year, tracking the growth of global economic activity. Air Cargo's managing director Bob Dahl said the past few months have seen some improvement to the dismal picture of early 2009, offering some hope that the business has hit the bottom.
Still, speakers didn't foresee a quick rebound.
"It could take three to five years to get back to 2007 levels" of air-cargo traffic, said David Sutton, FedEx's managing director of aircraft acquisition and sales. "We see a very slow recovery."
The price of fuel is the No. 1 concern for all-cargo airlines.
But Neel Shah, vice president of Delta's cargo business, said his primary worry is the August 2010 deadline by which all cargo carried in the belly of passenger jets must be prescreened for security threats.
Air freight typically arrives for loading into an airplane on pre-packed pallets, which are often shrink-wrapped at the shippers. But a 2007 federal law requires that starting next year, each piece must be separately screened.
To avoid breaking up those pre-packed pallets at airports, shippers will have to do the screening before they are packed and then secure the integrity of the supply line to the airport.
To comply with the law, shippers and airlines will have to set up secure facilities with trained and vetted staff.
Doug Brittin, manager of air-cargo programs for the Transportation Security Administration (TSA), said that machines capable of inspecting large loads are simply not available.
Based on 2007 air-cargo traffic figures, Britten said the law will require screening of about 1 million boxes daily.
He conceded that the law is an "unfunded mandate," meaning that the costs must be borne by the shippers and the airlines. He said the requirement will inevitably increase costs for the industry and divert some cargo to other modes of transport, such as trucks.
Although the purpose of the law is to stop potential terrorist threats, an unintended consequence will be to impose a burden on U.S. business greater than that on foreign competitors. The law applies only to air freight originating in the U.S. and not to cargo inbound to the U.S. from overseas.
Britten said the U.S. government cannot impose its regulations on foreign carriers and airports, so it is instead working with the International Civil Aviation Organization (ICAO) to implement common security standards.
"We don't expect the industry can get 100 percent screening [of international inbound cargo] by August next year," Brittin said. "We're working with ICAO. It's a much longer process."