OCR 2880 (ACE) - Air cargo and the economic slump

If anyone doubted the impact of the recession on the airline industry, then the recent figures issued by BAA (Britain’s leading airport operator) should be required reading.

According to The Times, air cargo volumes have slumped in the first part of 2009. BAA said that its total UK cargo shipments had fallen by 21.4 per cent during February 2009 compared with the same month a year ago to 119,984 tonnes.

Some airports fared much worse than this average. Cargo weight (on which cargo fees are charged by airports) at Gatwick and Glasgow fell by over 50%.

The reason? Leaving aside the bad weather in February 2009, quite simply the reason is the reduction in global demand for freight. Retailers, wholesalers and other distributors in the UK are reducing the quantity of stocks held in the supply chain (destocking = fewer goods imported using freight) and exporters are finding that demand from customers outside the UK has fallen.

The statistics illustrate how an economic downturn can result in significant changes in the physical flow of goods around the economy. Bad news for airports, freight forwarders and the myriad of other businesses that make their living from handling air cargo.