Mr. Barnes: Air freight, logistics, truckload, less-than-truckload, railroads.
TWST: Where is the transportation industry right now?
Mr. Barnes: I think you have to think about it sector by sector. It's easy to say that the economy is clearly getting better - that's the one thing you can take away. We've gone through earnings seasons; it almost doesn't matter in terms of which industry you're talking about, freight volumes have clearly gotten better. You must look at each individual sector to begin thinking about pricing improvement, improved profitability on a year-over-year basis, that kind of thing.
TWST: Let's begin with the air freight sector. What's going on there?
Mr. Barnes: Air freight has seen a massive improvement in volumes internationally and to a lesser degree domestically in the U.S. In the fourth quarter, we saw the first real peak shipping season associated with the holidays that we have had in three or four years. In the fourth quarter, you had a nice combination of much better volumes compounded by an exodus of a fair amount of capacity. Probably 15% to 20% of their international air freight capacity had left the industry because they were inefficient aircraft, given the cost of operations, the cost of fuel and that type of thing. So we saw a material increase in the charter rates for those aircraft. Even companies like UPS and FedEx were seeing a material uptick in business as a result of just an improving international economic backdrop. The air freight space has been by far the most explosive in terms of the recovery and certainly has been one of the strongest in terms of improvement in profitability.
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