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UPS Airlines is a major global freight carrier headquartered at UPS Worldport in Louisville, Kentucky, USA. The company is part of Georgia, USA-based United Parcel Service, Inc. UPS Airlines integrates small packages and heavy freight in its daily network of more than 500 aircraft and nearly 1,700 daily movements that reach more than 700 destinations in over 215 countries and territories worldwide.
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UPS believes now is the time to seize an opportunity to buy TNT Express to significantly bolster its competitive stance in Europe. UPS assures despite Europe’s shaky economic state, the continent is a growth vehicle for the company, and believes it can capitalise on TNT’s vast European road network. UPS also gains key access to the powerhouse of Brazil, and remains confident of TNT’s success in turning around its operations in the country.
The proposed USD6.8 billion purchase of TNT by UPS is the largest acquisition in its 105-year history, and pairs well the recent investments UPS has made in expanding its Worldport hub in Louisville, Kentucky; completing a USD200 million expansion project at is Cologne, Germany hub set for completion in 2013; the 2010 opening of its intra-Asia hub in Shenzhen and the 2008 opening of its Shanghai hub, UPS CEO Scott Davis tells investors. TNT Express’s air hub is located at Liege, Belgium.
Airlines and airports are feeling the impact of the current global economic weakness and declining consumer spending in Europe, which is having a noticeable impact on air cargo volumes. Cargo traffic, which generated USD66 billion in revenue in 2010, has declined every month since May-2011, according to IATA upon the release of its Oct-2011 traffic results, with a 4.7% year-on-year reduction in cargo demand in Oct-2011 amid reduced manufacturing confidence and businesses switching to slower modes of transport.
“Cargo is the story of the month. Since mid-year the market has shrunk by almost 5% and this is far greater than the 1% fall in world trade. Air freight is among the first sectors to suffer when businesses confidence declines,” IATA director general and CEO Tony Tyler said. Meanwhile, Boeing CEO Jim McNerney separately stated the company has seen a softening of freight demand in recent months, describing the freight market as a “watch item”.
Delta Air Lines became the world's largest carrier by traffic in 2010, according to IATA, with Southwest Airlines remaining the largest domestic carrier and Ryanair still the largest international carrier by passengers. Delta’s consolidation with Northwest Airlines boosted Delta past Southwest and American Airlines based on combined international and domestic passenger numbers.
EMIRATES AIRLINE HAS ANNOUNCED PLANS TO BUY European aircraft manufacturer Airbus. A spokesman for the Gulf carrier, which boasts a massive order book with Airbus of more than 90 A380s and 70 A350s, said: “We believe this will be a sound move for all concerned."
Shenzhen Airport recently stated it aims to become Mainland China’s fourth largest once its expansion project, which includes construction of Terminal 3 (T3) and its second runway, is completed. Work on the CNY8.5 billion (USD1.3 billion) project is progressing well after commencing in 2009. As of 30-Jun-2010, total investment in the project reached CNY330 million (USD49.7 million).
With China’s GDP surging in the first half of 2010 in response to a stronger global economy, it is no surprise that the Chinese air freight market is going from strength to strength, as the country’s manufacturing sector recovers at a cracking pace following the global financial downturn. But the Chinese air freight segment, still in its formative stages, is highly fragmented. At the beginning of the year, the CAAC stated it would focus on the development of the country’s cargo industry and encourage cargo airlines to undergo mergers and acquisitions, restructuring and business cooperation. Furthermore, in its Development Strategic Plan, the CAAC stated it plans to develop at least one internationally competitive airline company and one internationally competitive cargo airline by 2030. In this article, we review the most recent developments of China's air freight market participants.
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