WorldCity Business Magazine

Miami cargo takes off

by Joachim Bamrud

As Mother’s Day approached, Tampa Cargo was banking on the increasing thoughtfulness of sons, daughters and husbands, which would be good news for the Colombia-based airline that specializes in importing flowers to Miami.

“We expect Mother’s Day to continue the St. Valentine trend,” said CEO Fred Jacobsen during a recent interview.

Through Valentine’s Day period, the all-cargo airline’s volume grew 9 percent year-on-year to 362,000 boxes of flowers, while total sales for the 14-day February period was $9 million, also a 9 percent growth.

The trend he sees is an annual increase of about 20 percent, after a strong 2004 made it the fourth-leading cargo airline operating out of Miami International Airport, one of the world’s busiest for international air cargo.

MIA is a critical link in the flower industry, the airport of choice for about 85 percent of all freshcut roses and other flowers that enter the United States. Most of those come from Colombia, though Ecuador is increasing in importance.

But it’s not just flowers that are pushing MIA toward what is shaping up to be the first year ever for it to eclipse 2 million tons of cargo. And it’s not just Tampa enjoying the rebound in air cargo.

Volume increases are in full swing for a host of all-cargo airlines as well as passenger airlines that carry cargo in their bellies. Trade is up.

The new No. 1 ranked airline is LanChile, which surged from the No. 4 slot and passed previous kingpin UPS. LAN, the darling of the Latin American aviation industry, “has done everything right in terms of Miami – and systemwide air cargo,” says Bobby Booth, the leading analyst on Latin American aviation and the host of their CEOs at an annual convention this month in Miami.

It is the only airline in the world that generates close to 40 percent of its total revenues from air cargo, both lower deck and all-cargo capacity, he said.

“The main reason is the Cuetos,” he says, the family that took control of the airline after it was privatized in the mid 1990s. “They grew up in the air cargo business in Chile and have learned the passenger business while still placing tremendous emphasis on the importance of air cargo,” Booth says.

And unlike most combination passenger/cargo airlines, management really understands air cargo. “In most cases, it is the other way around and passenger management kind of “look down” on air cargo as something supplementary,” he says. “At LAN, air cargo is vital.”

Air cargo is also vital to UPS, which is sandwiched between LAN and American Airlines.

UPS, which acquired Challenge Air Cargo in 1999 and added considerable facility space at MIA since then, noted only a slight increase last year, according to the airport. Yet, it still has the largest air cargo and express operation in Latin America.

American Airlines increased its tonnage by 7.7 percent, according to MIA. Argentina and four other Latin American markets drove growth, according to American Airlines spokeswoman Martha Pantin.

“As Argentina’s economy continues to rebound, the impact has been positive for cargo. Exports and imports in the country grew strongly in 2004,” she says. “While the entire Latin American region remains strong, we can highlight Brazil, Chile, Colombia and Peru as particularly strong and growing cargo markets, accounting for the majority of the growth.”

In terms of products, the key drivers for traffic from Latin America were leather goods, automobile parts, shoes, fruits and vegetables. “The demand in the U.S. and other international markets for Latin American products continues to grow,” Pantin says.

American expects this year will surpass the 2004 total, partly due to good growth in the first two months this year, she says.

Among other noticeable results last year: Cielos del Peru posted the highest growth in percentage terms 81.3 percents among the top 10, while Arrow Air was the only one to see a decline of27.6 percent.

Cielos del Peru is growing primarily from providing “wet lease” service, where it provides the aircraft, crew, maintenance and insurance to other carriers who need capacity, which is particularly important on a seasonal basis, according to Booth, the aviation analyst.

The decline for Arrow was somewhat misleading since the company actually managed to come out of Chapter 11 bankruptcy protection in June last year and has added five DC 10-30s to its fleet, replacing aging DC8s.

“Arrow is doing fine,” says Booth. “The reason for the decline in 2004 is a combination of being in chapter 11 for half the year and the need to regain height and speed during the second half.”

And MIA will also likely see another strong year, predicts Booth. The outlook is better than last year, he says, pointing to recent strong economic growth in Latin America and the Caribbean.