By John McCurry
The mood among freight forwarders attending the AirCargo 2013 conference in Las Vegas this week was decidedly upbeat, even as the industry is dealing with issues such as regulatory compliance and security.
Paul Butler, president and CEO of Miami-based Four Star Cargo, says U.S. exports are starting to pick up with lots of opportunities in the Caribbean and Latin America. He says increased interest in the annual conference is indicative of industry confidence.
“The exhibition hall sold out this year, which it hasn’t done the last few years,” Butler says. “Last year in Miami, it was a fairly light show. This year, there are a lot of forwarders here. There’s a lot of interest in regulatory compliance.”
Butler says November’s presidential election seemed to put a big boost into the U.S. economy and also brought confidence to the global market for U.S. exports. He also cites the positive mood among some in Congress about upcoming international trade deals.
Four Star Cargo is off to a good start business-wise in 2013 with quarterly sales ahead of last year, Butler says.
Conversely, the first two months of the year are traditionally slow for Boston-based forwarder Falcon Global Edge. Successfully navigating those months provides room for optimism for the remainder of the year, says Richard Fisher, the company’s president, who is also chairman of the Airforwarders Association. He believes business will pick up during the second half of 2013, barring a major global economic shock.
“March is sort of our vector month where we begin to take off,” Fisher says. “We are upbeat and positive. We don’t want to see any hiccups. In many parts of the world, air cargo rates have come down to the point where there are realistic options between surface and air carriage, but any hiccup could upset that.”
Falcon Global Edge specializes in niche markets, including garments and other products ultimately destined for big-box retail stores.
“We tend to be a boutique forwarder with highly specialized customers,” Fisher says. “If the general level of the economy picks up, it will be good for us. Our customers are innovating and looking to sell new products into, for example, Brazil, which is a very hot market right now. All of South and Central America will be hot spots for export growth from the U.S.”
Fisher says the addition of Airports Council International-North America to the AirCargo conference’s partners has been a big boost.
“Adding the Airports Council to the mix is something we should have done years ago,” Fisher says. “We are natural partners, and we need to know more as forwarders about what the airports are doing.”
Robert Mauro, president of Team Worldwide, a forwarder based in the Dallas suburb of Winnsboro, says there is some concern in the industry about how the U.S. government will handle financial issues, but the industry has had four years of continuous growth – and opportunity for growth remains. He says his company has had a strong January and February and he is “cautiously optimistic” about the remainder of the year.
“Our challenges include security issues and how they are handled regarding screening of cargo,” Mauro says. “There is also a matter of what the money market does because durable goods is what drives our industry. It has that trickle-down effect. Lift in the past has been an issue, but I think we have learned ways to deal with that.”
David Beatson, an industry veteran whose career includes stints as CEO of Emery Worldwide and vice president of cargo sales and marketing for American Airlines, now heads Ascent Advisors, a management consultancy and delivered the conference’s keynote address. He emphasizes the importance of embracing technology.
“Technology is evolving rapidly, and the pace of change is accelerating. IT will continue to play a large and increasing role in our industry,” he says.
Beatson offers a theme of optimism tempered with regulatory obstacles and potential threats. He says he believes companies that find niches and serve them well will be “winners and survivors” that provide more specialize services. He notes that there is a long ling of private equity firms and strategic buyers looking to invest in the industry.
“The industry’s profitability will likely continue, especially as we continue to emerge from the global recession,” Beatson says.
One of the biggest uncertainties in the sector is the expanded health care costs required by the Affordable Care Act, which offer the industry’s highest potential costs, he says.
Beatson warns that the industry must also deal with an array of threats including theft, cyber attacks and terrorism.
“If there ever is a major cargo problem in a belly, our whole industry will have to be reinvented,” he says.