Salmon fly commercial and airlines reap rewards of air cargo growth
A small part of the airline business is growing: picky and impatient customers who don’t complain about legroom.
Passenger airlines are filling their bellies with more cargo, thanks to e-commerce and demand for perishable goods from asparagus to salmon to roses, and other temperature-sensitive products like medicine, carriers told CNBC.
One factor is that trade is growing globally. The International Monetary Fund on Tuesday said trade volumes would likely expand 4.2 percent in 2017, almost double the growth rate of 2016. Demand for shipping products by air is now bouncing back after declines as ocean freight rates fell in 2015 and 2016.
In the first half of 2017, air freight grew at the fastest clip since 2010, according to the International Air Transport Association.
While FedEx, United Parcel Service and Deutsche Post DHL might be more familiar shippers to consumers, commercial airlines that ship cargo on board passenger planes are enjoying higher revenues as they stuff planes’ bellies with cargo. Their regular schedules and dedicated space below the plane make them attractive couriers. They even carry packages for the more traditional shipping companies.
Christmas in July
Delta Air Lines said cargo revenue rose more than 11 percent in the third quarter to $187 million.
A day earlier, United Airlines forecast cargo revenues of between $245 million and $265 million in the quarter ended in September, 14 percent higher than the year-ago period and ahead of the busy holiday season.
United and other U.S. carriers said demand for fruits, vegetables and other short-shelf life products like fish, is growing. For example, a United spokesman said the airline transported 3.2 million tons of cherries in 2017, 54 percent more on the year, with its largest markets in Osaka, Tokyo, Shanghai and Hong Kong.
An airline spokesman said United’s cargo operation transported 3.2 million tons of cherries in 2017, 54 percent more on the year, with the biggest markets in Osaka, Toyko, Shanghai and Hong Kong.