Hi-tech turbulence in the skies
Air-cargo operators are feeling the pinch from a shift in the shipment of smart electronic devices to sea freight
Smaller and lighter mobile phones and tablet computers may be welcomed by consumers, but not by air-freight operators. Along with a shift in the transport of such high-technology products to sea freight, the more compact and lighter devices are eating into air-cargo revenues.
"Supply-chain management is much cleverer now, and electronic products don't necessarily go by air for their entire product life," said Mark Whitehead, chief executive of Hong Kong Air Cargo Terminals Ltd (Hactl).
That is partly why Hactl will report a slip in air cargo this year to 2.7 million tonnes from 2.77 million tonnes last year. The decline will be the company's first since 2009 when the global economic crisis dented demand.
The dip is the result of falling consumer demand in Western economies and a shift by exporters from shipping products by air to sea.
Air freight might now be used to cover no more than the first 10 days of sales of new products, Whitehead said. The remaining shipments throughout the short six-month product life of smartphones or personal electronic products, on average, will go by sea.
Importers might resort to air-freight orders again only if they were hit by delays in production or sales that exceeded expectations, and this trend could explain why the peak season for air freight had become shorter and the seasonality had flattened out over the past two years, he said.
"Margins of certain smart devices are being squeezed, and so logistics as a percentage of their total costs must come down, which means turning to sea freight," said Kelvin Leung, chief executive for Asia-Pacific at DHL Global Forwarding.