Cargo handled at Baltimore-Washington International Thurgood Marshall Airport -- and by U.S. airlines nationwide -- has slipped to its lowest level in at least four years, yet another tangible result of an ailing economy and skyrocketing fuel costs.
The decrease is part of a general falloff in domestic cargo volume, whether by air, rail or truck, as consumers reduce spending and businesses ship fewer finished goods and buy less equipment and materials.
Because cargo is a key barometer of economic health, a downturn could influence the Federal Reserve as it ponders whether to further cut interest rates to spur growth at a time when inflation pressures are rising.
"Economy activity is so closely tied with transportation activity," said Curt Grimm, the dean's professor of supply chain and strategy at the University of Maryland's Robert H. Smith School of Business. "When those volumes are down, that's a very good signal -- there's no question that we are in a slowdown."
The decline also threatens revenues and jobs at such shipping behemoths as Federal Express and United Parcel Service as they contend with rising costs.
On top of reduced consumer spending, all-time-high oil prices could further depress the air cargo business, the least fuel-efficient mode of transport. Crude oil continued climbing yesterday, hitting nearly $114 a barrel.
The government also reported yesterday that inflation at the wholesale level, driven by energy and food costs, rose 1.1 percent last month, much more than expected and the second-biggest one-month jump in 33 years. Jet fuel rose 10 percent in the one-month period.
As freight transporters pass costs on in the form of fuel surcharges, more customers are foregoing premium air service.
Another major cause of the erosion: Cargo airlines are diverting shipments away from fuel-guzzling jets and sending more freight by truck and rail, especially between East Coast destinations, Grimm said.
At BWI, cargo traffic dropped nearly 7 percent in 2007 from the previous year, a trend that accelerated into 2008. January cargo was down 8.1 percent compared with a year earlier, as oil prices crossed the $100-a-barrel mark.
FedEx, UPS, DHL and Southwest Airlines, the four biggest cargo airlines at BWI, all recorded a drop-off in overall cargo. UPS fell the most, with air cargo nationally down in the 20 percent range in the first two months of the year.
