Air cargo loves strikes elsewhere, but will the US rail shutdown happen?
© Ihor Pavliuk
Air cargo loves strikes, as long as they happen in a different mode.
Remember the US West Coast ports downturn in 2014-2015? Airfreight fortunately picked up the pieces, getting a big boost in an otherwise lackluster market.
This time, however, senior aviation executives do not believe the threat of a US railroad strike will occur.
As The Loadstar today explains that negotiations between the railways and some unions broke down over sick leave – but the Presidential Emergency Council did not address the issue in the compromise it tried to broker. A strike could start as early as December 4.
“I don’t think the railroad strike is happening,” said Neel Jones Shah, executive vice president and head of air cargo at Flexport. “Nobody wants to make headlines about this – the administration is very motivated to make sure this doesn’t happen.
“There would be no air charter rush, there would be a massive shortage, and that would be a problem.”
Amerijet CEO Tim Strauss thought a strike would be welcomed by air cargo players, but also didn’t believe it would happen.
“A strike would spoil [US] economic,” he said. “But it would be great for domestic air cargo.”
But in fact, it might be difficult to find the ability. The US domestic market has not been particularly successful for freight carriers (despite e-commerce) and they are concentrating their operations elsewhere.
“The US domestic market has seen growth in e-commerce, but not in heavy freight,” Strauss said. “Commodity size and a hub and spoke network don’t work. This has been done several times, and not always successfully. Customers would have a one-way flow, but would have to refill the plane on the way back, which would reduce some of the risk.
He explained that GPS on trucks has also changed the US market.
“It has helped trucking companies improve, and they now have very short lead times. The larger traditional trucking companies have all disappeared and modernized carriers have taken over the traffic and created long-haul networks. This changed the dynamics of the market.
The trucking market may be better positioned to take on any additional strike-related work. Spot rates have softened.
“Supply has been increasing steadily since late last year,” said Mazen Danaf, senior economist at Uber Freight. Transportation topics. “Now it’s above what it was before the pandemic.”
Cargo airlines cannot afford to focus much on the US domestic market, Strauss added. He explained that domestic general freight tends to be one-way.
“You can’t run an airline like that. For e-commerce, yes, but not for General Cargo.
Amerijet has a domestic customer, but needs to sell the backhaul for the route, Strauss said, adding, “The other problem is that freight forwarders can’t support it. The big freight forwarders do not play the national game; look at DHL it could only do international to international.
Amerijet, which offers a hub and spoke network from Miami to Latin America and the Caribbean, is however considering new destinations in the United States.
“The next natural flow for us is the Midwest, Columbus or Dayton.”
He said Amerijet, which has about 45% of its operations on scheduled routes, had recently seen more requests for 757s than for its 767s, “in part because of the slowdown.”
The slowdown would mean any rail strike – or the closure of a West Coast port – would help.
“I don’t know if we are at the bottom of the high of the market or at the top of the low. I think we’re up from the bottom, there’s nothing left to do but fall.
“The past few years have been a magical time for [cargo] Airlines companies. It’s not like 2008/9, but there will be some uncomfortable days,” he said.