Freight yields have declined at an average rate of 4.2% per year over the past 20 years.
Continuing profit challenges at passenger airlines have focused airline attention on opportunities to earn lower-hold cargo revenue. On average, cargo revenue represents approximately 15% of total air transport revenue, with some airlines earning nearly 40% of their revenue from cargo. Declines in yield for cargo and passenger services reflect productivity gains, technical improvements, and intense competition. While declining yield creates pricing pressure on all industry segments, it also helps stimulate growth for the industry by enabling lower shipping costs for the consumer.
Averaged over the past two decades, freight yield has declined 4.2% per year. The most recent decade saw a slight yield increase of 0.9% per year, compared to the 9.0% average annual decline recorded in the preceding decade.
Freight yield diverged from the 20-year downward trend between 2002 and 2008, increasing approximately 4.1% per year during that 6-year period. Much of the increase is due to fuel and security surcharges that began to rise in 2003. In 2008, significant fuel surcharges imposed in response to the fuel crisis helped push yields up 15.4% compared to 2007. Although the global economic downturn drove freight yields down 22.1% in 2009, yields rose steeply by 11.9% when cargo traffic rebounded in 2010. In 2011, total cargo capacity increased while demand stayed nearly flat, holding yield growth to slightly more than 1%.
The higher cost of shipping by air held world air cargo traffic growth to only 3.7% averaged over the past 10 years-well below the historical trend. Industrywide freight yields are expected to return to the historical downward trend as more efficient airplanes enter the market, helping to stimulate market growth.