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Australian Air Freight Services industry worth $3.3bn

Australian Air Freight Services industry worth $3.3bn article image

Revenue for operators in the Air Freight Services industry in Australia has grown at a compound annual 3.2 percent over the past five years, to be worth an estimated $3.3 billion in 2014-15, according to latest industry data.

A new report from IBISWorld found the industry has continued to recover from poor conditions, following the financial crisis, which rocked the global aviation industry and suppressed demand for freight services.

In 2014-15, industry revenue is expected to grow by 2.8%, aided by strong inbound freight volumes.

The industry includes businesses that provide domestic and international airfreight services for freight and mail.

“The majority of industry activity relates to international freight and mail services,” says IBISWorld industry analyst Ryan Lin.

“Over the past five years, the industry's performance has strengthened due to increased global trade volumes, supported by successive global and bilateral trade agreements,” Mr Lin says.

Also, advances in communications technology have expanded the scope of international trade in goods and services. Both trends have led to shifts in demand for industry services.

Consumers in Australia are taking to the Internet to purchase a large range of goods, many of which require air freight services for delivery, the report found.

Favourable conditions for importers

Inbound freight services have performed the strongest, due to favourable conditions for importers.

Outbound freight exports have stagnated, as “the high Australian dollar limited the ability of Australian exporters to compete in overseas markets,” says Mr Lin.

The industry displays a medium level of market share concentration. Major players include Qantas Airways Limited, Singapore Airlines Ltd, Emirates Group and Cathay Pacific Airways Limited.

The industry is sensitive to macro-economic drivers, such as the trade-weighted index.

As the Australian dollar weakens, the focus of industry activities is expected to swing back towards outbound freight services. The weakening of the dollar is also expected to put pressure on industry operators over the next five years, as changes in exchange rates affect the price of aviation fuel.

Additionally, the world price of crude oil is expected to increase. The extent to which fuel prices can be passed on to clients in the form of a surcharge will vary by operator.

As fuel is the industry's most volatile area of expense, this is likely to put pressure on profit margins over the period.

In the five years through 2019-20, the Air Freight Services Industry revenue growth is expected to continue, as total demand for airfreight services expands.

For more information, visit IBISWorld’s Air Freight Services industry in Australia report page.

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Previous Comments Leave A Comment
seansimons15
09 Jun 2015
I am not surprised that the Australian freight industry has benefited from increased global trade volumes. If you think about the geographical location of Australia as a country, it is obvious that, in a global economy, there is going to be a high demand for freight services. I believe what is most interesting about this articles is that the import business is even stronger than the export business. I would be interested in reading more about the reasoning behind that.

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