In response to dramatically dropping prices for air cargo, freight airlines are being forced to do some serious damage control. In addition to cutting fleets, routes and jobs, cargo carriers are seeking new ways of doing business, such as dealing directly with customers, and focussing on high-margin areas like the cold chain.
Lufthansa, Emirates and Qatar Airways are all jumping on this bandwagon, investing in facilities for the safe, speedy carriage of high-value products. This enables the airlines to achieve higher profit margins, and attempt to make up for capital lost in diminished cargo volumes. The pharmaceuticals industry is investing more and more in these sophisticated logistics services, with spending increasing from US$8.4bn in 2014 to US$10.1bn last year.
However it seems that even the growth of this lucrative industry is not a stable enough source of business to keep the air cargo companies afloat. The impressive 85% of pharmaceuticals goods (by volume) that were carried by air in 2013, compared to just 5% by ocean, is expected to plunge to 65% this year, according to market research company Beroe. Ocean freight, by contrast, is expected to increase to a 25% share of pharmaceuticals transportation.
