Colography Group predicts solid 06 for U.S. transport

by Canadian Shipper

ATLANTA, GA — The U.S. transportation industry will enjoy another year of strong performance in 2006, paced by gains in the resurgent trucking sector, The Colography Group concludes in its annual projections for the $98 billion U.S. expedited cargo market.

By contrast, activity in the domestic air market will be muted in 2006, with shipment volumes rising by only 1.2% over projected 2005 activity. The U.S. air export category, influenced by a different suite of demand drivers, will record a 7.3% increase in year-over-year shipment levels.

The ground parcel and the less-than-truckload categories are projected to show shipment growth of 5.1% and 3.8%, respectively, over 2005 levels. The categories combined will account for 86% of new U.S. expedited shipment growth in 2006. Just over 250 million new shipments will be added to U.S. expedited commerce in the coming year.

The weakness in air activity will be most pronounced in the domestic overnight-delivery segment, with paltry gains in package and freight shipments, and a year-over-year 0.6% decline in overnight letter shipping. Pressured by the growth of e-mail usage and the migration of airfreight traffic to surface transport, and hurt by the absence of the stimulus afforded it by the mortgage refinance boom of 2003-04, the domestic letter market will continue to shrink in volumes and relevance.

In a trend not seen for several years, non-integrated air carriers (forwarders, combination airlines and other intermediaries) will grow their domestic air shipments at a faster clip than their integrated carrier rivals. In addition, the non-integrated carriers will gain domestic and export shipment share in 2006, albeit slightly. Still, the integrators are projected to control 61% of the domestic air market and nearly 70% of the export market.

The secular factors driving traffic off airplanes and on to trucks will remain intact in 2006, said Ted Scherck, president, The Colography Group. Businesses are increasingly reluctant to pay a premium for overnight air service, and continue to build their inventory and distribution models around more economical, time-definite deliveries moving in ground parcel, LTL and TL (including renewed interest in private fleets). It is revealing that the fastest growing segment of air transportXprojected at 2% year-over-year shipment growthXis in the second-day air package category.

Among the key findings in The Colography Groups U.S. Expedited Cargo Market Projections For 2006:

h The gains posted by the non-integrated air carriers will coincide with a continued rebound in the U.S. Postal Services Priority Mail product, particularly in the rural residential market where commercial carriers are raising their rates the most.

h The continuing high cost of crude oil will force carriers to maintain fuel surcharges and will become an increasingly important factor in supply chain decision-making. As jet fuel prices are more pronounced and volatile, this trend will have a disproportionately adverse impact on air activity to the benefit of the surface sector.

h Revenue from LTL shipments is projected to rise 11% in 2006, due in part to the impact of escalating fuel surcharges. Revenue for the average LTL shipment is projected to rise 7%, more than double the projected rate of revenue increases for domestic air, air export and ground parcel. In all, U.S. expedited revenue will reach $97.9 billion in 2006, up 7.6% from projected 2005 levels.

The Colography Group, Inc. ( delivers primary research, strategic planning and new program development services to businesses looking to identify and capitalize on growth opportunities in the global time-definite, or expedited, cargo market, as well as to governments worldwide.

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