A. Answer the following questions. Read the text and check your answers.

1. What challenges is air cargo industry facing now?

2. What were the reasons for 2009 recession?

3. What do you think were the impacts of the economic crisis in 2009?

Air Cargo 2009 ^[65]

The air cargo industry now faces an unprecedented fall in demand and revenues. Forecasts made in December predicting a 5% fail in volumes and 9% revenue decline during 2009 now look highly optimistic given January FTK levels of minus 23.2%. Economic forecasts are now predicting the deepest recession since the 1930s. Capacity is being cut and fuel prices have fallen but efforts to shrink the industry's cost base are struggling to keep pace with the contraction in revenues. Recovery is not yet in sight.

With bank losses estimated at US$3.6 trn the new US bailout of US$2 trn has yet to start bank credit flowing again. Moreover, the 5% of GDP US fiscal stimulus is only half the size required to offset the fall in private spend­ing. Deep recession is forecast in the major economies. World GDP is expected to fall -1.9% in 2009.

Air freight volumes collapsed at the end of last year to a level in January just three-quarters of their size a year ago. Weakness is widespread, even across emerging markets. The key ques­tion for the outlook is the extent to which this is cyclical or a structural change, due to what some are calling 'de-globalisation'.

An astonishing 20% rise in inventory overhang led to output and air freight being slashed, as shown in the semi-conductor industry. Forward-looking indicators suggest may have reached bottom but recovery from that weak level requires elimination of the inventory overhang, which will take time.

Cargo yields fell sharply during the fourth quarter of last year to a level 7% below a year earlier. Coupled with the slump in volumes this means a very significant fall in revenues. December forecasts for a 9% fall in 2009 cargo revenues now look optimistic.

Costs are now starting to fall significantly but unevenly across the industry. Dollar appreciation and some hedging contracts are limiting the large fall in fuel costs. Aircraft and labour costs are falling but infrastructure providers are, counter-cyclically, raising their charges.

Airlines are cutting freight capacity in all regions, with the exception of the Middle East. However, demand is collapsing faster than airlines can shrink and so load factors have taken a big hit. The collapse of bulk commod­ity shipping seems to have reached a floor, but no recovery is in sight as yet. Containerised shipping rates are now down 24% on the year, significantly more than air freight rates. Contai­nerised volumes are also falling, but not as fast as air freight.

Cargo profitability, at least in the U.S., held up surprisingly well during 2008 but with revenues collapsing the outlook is very poor. Heads of cargo expect sub­stantial falls ahead for both freight tones and yields.

As further evidence of the unprecedented impact of the economic crisis, the latest traffic report from ACI EUROPE – the voice of Europe's airports, reveals a decrease of-13.6% in the overall passenger traffic at European airports in February 2009 compared with February 2008.

The overall freight traffic among European airports recorded 23.5% less in February 2009 when compared with the February 2008: The overall figure for movements at European air­ports decreased by 13.2% in February 2009 when compared with February 2008.

Rare examples of airports that continue to see passenger traffic growth, despite the current down­turn, when comparing February 2009 with February 2008, include: airports welcoming between 5 and 10 m passengers - Berlin SXF (+4.0%), Toulouse (+1.2%) and Milan/Orio al Serio (+1.0%); airports welcoming less than 5 m passen­gers per year - Ohrid (+12.5%), Brindisi (+10.3%), Liege (+7.9%) and Riga (+1.2%).

 

B. Translate the terms.

revenue	freight
to forecast	capacity
capacity	volume
inventory	output
industry	shipping

C. Match synonyms.

1. forecast	a) cargo
2. revenue	b) profit
3. slump	c) gain
4. commodities	d) predict
5. recovery	e) downturn
6. yield	f) collapse
7. crisis	g) rehab
8. freight	h) goods