Boom in air freight the flipside to ailing retail sector
DHL has just doubled the frequency of its wide-bodied freighter connections between Australia and the US from two to four days a week.
It has also introduced to its fleet two new Boeing 767-300ERF wide-bodied freighters. "The first one arrived last night," senior vice-president of DHL Express Oceania, Gary Edstein, said on Thursday.
Economists say two of the biggest winners from the high exchange rate have been wholesalers and global air freight companies.
Chris Richardson, from Deloitte Access Economics, says two things have happened in the past two years: the high exchange rate has made it a buyer's market for Australian consumers, and the channels by which they shop have become more direct.
"We often hear about the losers from the high exchange rate, such as the big retailers, but there are winners too, like the air freight companies," Mr Richardson said. "And the wholesale sector is now bigger than the retail sector. Consumers are cutting out the 'bricks and mortar' retailers a lot of the time."
The growth in the volume of consumer goods flying into Australia has forced DHL to replace the two 747s it was using on its US-to-Australia route with two new 767s.
"It's a massive change for our operation because it adds an extra 50-tonne capacity to our global network," Mr Edstein said.
Things have changed for the air freight business since the financial crisis.
DHL's competitors, UPS and Fed-Ex Express, have both been expanding as shoppers migrate online. Fed-Ex Express has 660 aircraft in its global fleet, making it the largest express transportation company. UPS now has a global fleet of more than 500 aircraft.
A few years ago, DHL was using the belly of commercial aircraft to ship cargo into Australia. Then 12 months ago it started using its own 747s.
But the continued growth in volumes in recent years, driven by the surge in online shopping, has seen it add the new 767s to its fleet.
Its new Boeing 767s increase its global fleet to 250 aircraft.
Frequently Asked Questions about this Article…
The boom in air freight is being driven by Australians buying more—and cheaper—goods from overseas after the Australian dollar hit parity with the US dollar. That stronger exchange rate, combined with a surge in online shopping, has increased the volume of consumer goods flown into Australia.
Economists say the high exchange rate has created a buyer’s market for consumers, helping wholesalers and global air freight companies while putting pressure on many big bricks-and-mortar retailers. The article notes wholesalers and air freight operators have been among the winners as consumers cut out traditional retail channels.
DHL doubled the frequency of its wide-bodied freighter connections between Australia and the US from two to four days a week, introduced two new Boeing 767-300ERF freighters (the first of which recently arrived), and replaced two 747s it was using on the route with the new 767s to handle higher volumes.
According to DHL’s Oceania senior vice-president Gary Edstein, the addition of the new 767 freighters adds an extra 50 tonnes of capacity to DHL’s global network on the relevant routes, helping the company manage the increased volumes driven by online shopping and imports.
After adding the new 767s DHL’s global fleet totals about 250 aircraft. By comparison, FedEx Express is the largest express transport company with around 660 aircraft and UPS has a global fleet of more than 500 aircraft, according to the article.
The growth in online shopping has increased cargo volumes and pushed air freight companies away from relying only on belly space in passenger aircraft. DHL moved from using commercial belly capacity to its own 747s about a year ago and has now added 767 freighters to expand dedicated cargo capacity.
The article explains that consumers are increasingly buying directly from overseas suppliers—cutting out bricks-and-mortar retailers—which boosts demand for international air freight and benefits wholesalers. For everyday investors, that shift highlights sectors (like air freight and wholesale) that have seen growth while traditional retail faces headwinds.
Yes. The article cites Deloitte Access Economics’ Chris Richardson saying the wholesale sector is now bigger than the retail sector, reflecting consumers’ tendency to buy more directly from overseas and bypass physical retailers.
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