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The freight and logistics industry appears to be in for a very difficult year, with the end result likely to be rising vacancies in warehouse and distribution centers throughout the world. Reports from a number of sources paint a stark picture of steeply declining freight volumes around the globe, with only a few bright spots standing out.

To begin with, the global slump in air cargo demand has continued into 2009, according to the most recent report from the International Air Transport Association (IATA) in Zurich, Switzerland. Following what the organization labeled an “alarming collapse” in December, it reports year-over-year demand experienced a further 23.2% drop in January. Asia Pacific carriers, which represent more than 40% of the market, led the decline with a 28.1% year-over-year drop. European carriers followed with a 23% decline, while North American carriers recorded a 19.3% drop.

The Association of Asia Pacific Airlines (AAPA) in Kuala Lumpur, Malaysia reports a slightly smaller drop for its region at 23.6%, but AAPA director Andrew Herdman nonetheless calls the operating environment extremely challenging. “The collapse in world trade is having a severe impact on air freight demand, forcing airlines to temporarily ground a number of dedicated freighter aircraft,” he says, noting that Asian-Pacific airlines have grounded planes accounting for more than 50% of the world’s total air freight capacity.

Additional reports from individual airlines indicate the decline continued into February. According to Lufthansa Cargo, freight traffic in February tumbled 24.9% from a year ago as the deepening global recession slashed shipments on its Americas and Asian routes, while British Airways reported freight traffic declined 20.7% from February ’08. Air France-KLM, Europe’s largest airline, also saw February cargo volume fall, dropping 18.5% from a year ago due to steep declines on key Asia-Pacific and Americas routes.

“Alarm bells are ringing everywhere,” says IATA director general and CEO Giovanni Bisignani. “Every region’s carriers are reporting big drops in cargo. The industry is in a global crisis and we have not yet seen the bottom.”

The picture is no better in the conventional shipping industry. London-based Drewry Shipping Consultants Ltd. estimate ocean-based freight income could plunge by more than $65 billion after recording barely $8 billion in profit in ’08. Maersk Line, the world’s biggest ocean carrier, laid up eight vessels in the 6,500-20-foot equivalent unit (TEU) category in December and announced plans to idle as many as 25 medium-sized container ships in ’09. According to Paris-based AXS-Alphaliner, the amount of mothballed container tonnage across the world grew by 50% in January to 450 ships or 1.35 million TEUs.

Freight transportation analyst Edward Wolfe of New York City-based Wolfe Research LLC says he is sharply cutting his ’09 volume and earnings estimates for freight companies. He forecasts average rail, trucking and express volumes worldwide to fall by 13%, 12% and 7%, respectively this year. But in a rare positive note, he expects a mild bounce next year, with two of the three categories to grow by less than 1% and the third to stay flat.

Wolfe also points out that freight traffic trends in the past few months for overall US rail, air, truck and ocean imports have shown modest improvements on a year-over-year basis, even though figures have been down at many individual ports, particularly on the West Coast. In addition, a report from UK-based Transport Intelligence indicates logistics tenants serving the fast food and pharmaceutical and medical industries and the sector of the retail industry dealing in basic household consumables are doing well and may even grow in ’09.

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