Even With Soaring Diesel Prices, Other Methods Are A LOT Cheaper

There's no doubt about it... continuing spikes in oil prices have hit everyone hard. From the gasoline we put in our cars and planes, to the oil used to heat our homes, it's clear -- petroleum costs dough.

One area you may have overlooked, though, is the impact those same high fuel prices have had on the air cargo business. The aviation branches of shipping giants FedEx and UPS have also felt the sting, and have seen their business decline accordingly.

The Portland (OR) Business Journal notes air shipments through Portland International Airport (PDX) have fallen off over the past three years... as more and more customers decide that, for the price, their shipments don't necessarily have to be there the next day.

Rising oil prices affect every aspect of the shipping industry -- just ask over-the-road truck drivers how much they're paying for diesel fuel. And just as OTR haulers have passed the costs on to customers, so to have air freight operations. To combat jet fuel prices that currently hover around $160 per barrel, FedEx charges its customers a 20 percent fuel surcharge on all air shipments... a figure slated to climb to 34.5 percent soon.

For some products -- transoceanic shipments of perishable goods, for example -- air freight is the only game in town. But for other, non-time-critical items, many customers have opted to accept the added time it takes to send shipments via ship, truck or rail, in exchange for a lower freight bill.

"Part of this is just a mode shift. As the price of air cargo goes up per kilo, for some people they just look at it and go, 'You know what? I can do this by truck,'" said Bill Wyatt, executive director of the Port of Portland.

That's bad news for PDX. FedEx reports cargo shipments through the airport have declined 3.6 percent through June. UPS shipments have fallen 4.4 percent... affecting not only that operation, but also smaller freight outfits that handle regional deliveries for the larger companies.

"What it boils down to is if they lose business, then we lose business," said Steve Rozell, division manager for Burbank-based regional hauler Ameriflight LLC.

FMI: www.flypdx.com, www.fedex.com, www.ups.com, www.ameriflight.com