Carriers face toughest time on record

There is no doubt that the airfreight industry will be hit hard by the current economic crisis. The decline in consumer spending continues to make the headlines and the cost of fuel, while falling, remains high. There is little sign of the economy improving, leaving carriers facing one of the toughest times on record. In such uncertain times it is difficult to predict what the next ten years will bring but it is likely we will see some carriers aligning their networks, reducing capacity, or even exiting markets altogether over the coming months, in an effort to streamline business. However, British Airways has always endeavoured to take a long-term view of capacity and customer needs. Maintaining our commitment to customers and continuing to improve the network will be a real challenge in the face of tough economic conditions, but consistency in terms of service, network and product performance will separate the winners from the losers over the coming years. The industry continues to face the challenge of the “food miles” and carbon footprint debate, an issue that we have been monitoring closely over the past 12 months. The impact of airfreight on the environment is still a contentious topic, with carriers remaining a target in the debate on climate change. That said, the argument is being discussed more rationally and with more maturity than before and socio-economic arguments that highlight the positive impact of airfreight on African development have been allowed to enter the debate. While it will undoubtedly be an ongoing concern for carriers in Africa, we are pleased with the direction the debate is taking. But of course it is the seemingly inevitable recession, predicted by some experts to be one of the most long-term that we’ve ever faced, that is currently making headlines. And such a recession is of course likely to have a significant impact on African business. As conditions continue to bite, we are likely to see consumers down-trading – from upmarket retailers to the more budget end of the scale, from out of season foodstuffs to those in season. We are keeping a close eye on consumer behaviour and the impact that this change may have on African airfreighted high-end perishables, and continue to work with our customers to ensure the competitiveness of African airfreighted produce. The cost of fuel will also undoubtedly remain a major issue for the airfreight industry. Fuel now makes up around 35% of our total cost base – a huge leap from the 10% it was at the start of the decade and perhaps surprisingly, as the US dollar has strengthened against the pound, we have not seen as dramatic a drop in fuel prices as might be expected. From our perspective, while customers will inevitably become more value-conscious over the coming years, we expect to see continued African support for our premium products and in particular for Prioritise, our express product. The potential for growth in this market is huge and our long term strategic view is that premium services will continue to be a focus for BA World Cargo as they add value to our customers’ businesses. Over the coming years, successful carriers will be diversifying their product mix and continuing to develop and invest in products that customers need. We’ve also recently seen e-freight become a reality – many will agree that it has been a long time in the making, but good news stories of airlines including our own delivering paperless shipments is something to be applauded.