With international air cargo expected to grow 7 percent a year, a number of players are scrambling for a piece of the action.
They range from old-school forwarders and freight carriers to super-slick, service-oriented express services, which take care of pick-ups, deliveries and all the particulars in-between.
The express services, also known as integrated operators, include Federal Express Corp., United Parcel Service of America Inc., DHL Airways Inc., and Airborne Freight Corp., which does business as Airborne Express.
Express services captured only 6 percent of the market in 1997, but that’s expected to expand to 36 percent by 2017, according to a study by Boeing Co.
“Integrators are growing faster than anybody else because they offer a superior brand of service,” said Walter Johnson Jr., chairman of the education committee of the International Air Cargo Association. “They are more expensive than traditional forwarders, but customers are happy to pay more in exchange for speed and convenience.”
Federal Express, the single largest cargo handler at LAX, last year transported 18.1 percent of all freight in and out of the airport. “Even though we’re best known for our envelope business, we do a very substantial share of large business-to-business shipments,” said company spokesman Jess Bunn.
The fast growth of these integrated operators is bad news for traditional freight forwarders and carriers.
Air Express International, Fritz Cos. and Expeditors International of Washington are all multibillion-dollar companies with large L.A. operations that still control 85 percent of all international shipments, according to Hoppin.
“They don’t sell just airfreight anymore; they’ve been busy adding other services as well,” he said. “Also, the top 20 forwarders have been buying up smaller players and these alone control 50 percent of all international trade. They can use their clout with the carriers to keep prices down and be more competitive with integrated operators.”
In fact, many forwarders contract for space on airplanes operated by FedEx and UPS, much to the chagrin of the passenger and cargo airlines that have served as their traditional carriers.
Besides large forwarders that dominate the trade, there are numerous small, local forwarders that offer specialized services.
“There will always be a niche for small operators because they can fill their role better than the big conglomerates,” said Johnson. “It is the in-betweens that are at risk as the industry consolidates. Air Express International is the No. 1 forwarder in the U.S., and in the past four years alone acquired 13 to 14 companies.”
And while FedEx may lead the pack among all cargo carriers, passenger airlines like United, Korean Air, American and Delta are important players as well. Freight carriers have more room in their aircraft than passenger planes, but they fly less frequently. As a result, more freight is transported by passenger lines.
