Wednesday, March 28, 2012

The US-South America air freight market remains positive despite global trends

The US-South America air freight market remains strong for now as the Miami International Airport, a major Latin American hub, continues to report positive tonnage growth for the first two months of 2012.

The global airfreight market continues to face problems mainly due to high oil prices and over-capacity along certain lanes. However, the US-South American trade lane appears to be doing well for now.
While many US airports reported declines in tonnage in January, the Miami International Airport appears to have bucked the trend by reporting total tonnage increase 2.07% with domestic cargo increasing 14.4% and international cargo increasing 0.35%. While February data is still not available for most airports, Miami has reported its data and it is another month of positive tonnage growth – increasing almost 4% with domestic cargo increasing 19.23% and international cargo increasing 1.83%.

UPS’ South American operations are based in Miami. In February, the company became an all 767 freighter operator in the South American region.  Still, UPS noted in a recent article that it has noticed more shippers routing cargo from Asia over Europe into Brazil versus over the US into Brazil. UPS cited the introduction of increased cargo capacity in Brazil by Emirates SkyCargo and Qatar Airways as a major force in this shift.  Regardless, UPS continues to expand further in other South American locations such as Colombia and Ecuador.
American Airlines Cargo also based in Miami noted plans for further expansion into South America. According to the company, despite the high fuel costs, air transport of such commodities as pharmaceuticals, fruits and vegetables and seafood will continue to be in high demand.

Although the US-South American trade tends to be one-sided, that is, the US imports more from the region than it exports to. Most of these imports are perishables, particularly flowers, seafood and food items. As such, other US airports, in particular the George Bush International Airport in Houston, Texas is vying with the Miami International Airport for a share of South American imports. Whereas the majority of Miami’s cargo is from South America, around 10% of Houston’s total cargo is from South America. Houston is using its close proximity to the Panama Canal and its own central geographic location as key selling points.
The South American airfreight market remains small compared to that of Europe, Asia and the US. However, in 2011, the region’s air cargo traffic grew at 5.5%, second only to the Middle East. As such, capacity continues to be added into the region as many air freight operators look for growth areas in a depressed global market. As UPS noted, the shifting trade lane away from the US will affect US airports such as Miami and to a lesser extent, Houston. These airports as well as others will have to become more competitive in the global market to avoid losing market share.