Julian Keeling, the iconoclastic air freight air cargo executive who speaks his mind when other forwarders and airline executives are cowering behind their bunkers, has sallied forth with his wide-ranging predictions for the year 2001.
The President and CEO of Consolidators International (CII) is not particularly sanguine for the New Year where cargo rates and profitability are concerned. Keeling believes international rates will remain generally flat in 2001, with profitability an elusive goal for many forwarders.
“Rates and profitability are the two most vexing problems for forwarders next year. Neither dilemma will be solved satisfactorily for the majority of forwarders,” said the international freight wholesaler.
Keeling also believes that a number of agreements announced in 2000 between airlines and large forwarders whereby consolidators receive preferred service and rates in return for their business “are not worth the paper they are printed on.” The CII executive asserts that “if a forwarder can find a more convenient flight at a cheaper rate, that airline gets the business. If the airline can generate more revenue on a given lane segment, the forwarder will get dumped,” stated Keeling.
“No matter how often cargo consultants talk about ‘supply chain management’ and ‘total logistics providers,’ forwarding remains a rough and tumble business,” he stressed.
The dot-coms or dot-gones?
The CII chief also believes the dot com companies who rushed in to sell cargo on the Internet during the past year, will be beating an undignified retreat in 2001.
“Like so many other businesses on the Internet which accentuated hype and glib promises rather than sound business plans, the dot com companies will either merge or go quietly out of business. The dot-coms mostly will be dot-gones in 2001,” said Keeling.
The wholesaler also believes that “the consolidation and merger craze among forwarders will end next year. Forwarder executives are looking at the AEI-Danzas merger and the more recent Circle-Eagle hookup and they don’t like what they see. Forwarders that once were great as independents, become mediocre as part of another organization,” said Keeling.
Keeling takes the view that airlines will extend their alliances to cargo sales and operations in the new year. “Carriers will realize that
alliances should not be confined merely to the passenger side,” averred Keeling.
The CII exec next turned his attention to the air freight personnel situation in 2001, a subject rarely discussed when predictions are made.
Keeling believes cargo executives both at the airlines and among forwarders will be playing games of musical chairs based on the consequences of recent mergers and acquisitions. Don’t be surprised,” continued Keeling, “to see the most unlikely senior officials changing jobs and ending up in the most surprising places.”
“Fuel charges will remain in effect even if jet fuel prices decline,” asserted Keeling. He believes that airlines, express carriers and integrators with weak or non-existent earnings like Airborne and BAX Global will utilize these surcharges as profit centers and hope customers don’t notice.
Turning to the economy at large, Keeling says that “old economy” companies will return to favor on Wall Street while “new economy” shares languish. “The hi-tech revolution will be over in 2001,” concluded Keeling.