In a statement from the International Air Transport Association (IATA) last week, the effect of the global economic slowdown was clearly seen when they announced a 13.5% drop in international cargo movement in November. Air freight moves 35% of products internationally and a 13.5% drop is the largest since 2001.

North American carriers reported a drop of 14.4%, but the situation is worse for Asia-Pacific carriers, who control 44.6% of global freight, reporting a drop of 16.9%. European and Latin American carriers reported reduction in freight traffic of 11% and 15.7% respectively. As freight movements continue to fall a reduction in airline capacity is likely to follow resulting in significant job losses across the aviation industry.

Small businesses appear to be hit hardest in this current economic downturn according to the latest National Employment report by ADP. In December 2008, small businesses, which ADP defined as those with fewer than 50 workers, lost 281,000 jobs out of a national total, for all businesses, of 693,000.

As labor makes up approximately 80% of a small businesses total cost, these figures show that the small business owner is having to make drastic cuts to survive. As the downturn continues, this acceleration of job losses will be seen in medium sized as well as small businesses.

I was surprised to see an item on CNN reporting that the Institute for Supply Management’s (ISM) Non-Manufacturing Index rose to 40.6 from 37.3. The headline was how the service sector was improving. However, when I looked at the detail of the ISM’s Report of Business the overall picture is somewhat less optimistic.

Only one industry showed an increase in business, Retail, which is not surprising with the recent holiday season. Four industries showed no change and 13 were in decline. The ISM’s New Orders Index contracted in December for the third consecutive month and employment activity in the non-manufacturing sector contracted in December for the 11th time in the last 12 months.

Logitech, the computer peripherals company, announced a 15 percent reduction in salaried work force as a result of reduced demand and the continuing economic downturn. With this in mind I am very interested in hearing the top executives who will be speaking at the High-Tech Forecasting and Planning Summit in San Francisco on April 22nd and 23rd. The event is aimed on solutions that will help high technology businesses in this economic slowdown by focusing on innovative strategy, Sales and Operations Planning and business forecasting.

The event is headlined by Bindia Hallauer, the Chief Technology Strategist from Microsoft who will be discussing how the current economic uncertainty can produce new business opportunities. Other speakers include; Karl Braitberg, the VP of Demand Management and Planning at Cisco Systems, Si Gutierrez, VP of Supply Chain at Netgear, Stephen McHenry of Google and Tom Rucker of Intel.

We have all experienced calling a customer service or reservations department and find we are talking to someone in India or the Far East. But this has usually been when we have called a large national or international company. As the US economy tightens and traditionally medium sized companies are required to find new ways to reduce costs, increasing numbers of foreign based outsourcing companies will be offering these businesses a solution.

A recent article detailed how a medium sized US company was outsourcing parts of its procurement process to an Indian research company who offered greater flexibility than in-house employees, at a lower cost. If the US economy continues to be depressed, the pressure on medium sized businesses to reduce costs becomes every greater. Companies in this situation will inevitably consider outsourcing their business processes overseas to survive the latest downturn.

Over this holiday period more companies than ever have extended their normal shutdown. This has left workers with an unpaid vacation but nothing in their paycheck. The big three US automakers have extended their holiday shutdown period up to a month to try to reduce inventory as consumer demand slows. Small and medium businesses across the nation seek to do the same and have asked employees to take unpaid leave or are find themselves furloughed.

US Bureau of Labor Statistics figures show that of the 10.3 million unemployed workers, 12% of those were because of temporary layoffs, the worst figures since 1991. Furloughs can help businesses as they don’t pay salary and aren’t liable for severance pay if employees find other work. Depending on how the economy performs in the next few months, the furloughs could become permanent layoffs.

Germany has been the world’s largest merchandise exporter for the last five years, but due to the fall in Chinese exports to the US, Germany finds itself heading towards recession. The reason behind Germany’s fall from grace is in part due to its significant exports to China and other Asian countries. When the US economy was stronger and imports of Chinese manufactured goods were high, those products contained large numbers of German components.

Now Chinese manufacturers are seeing US orders falling, they have quickly halted imports from German companies. In September manufacturing orders in Germany fell for the first time since German Reunification in 1990. This has led to the German government to wonder if they should assist their economy in the same manner as the US, Japan and China.

As soon as small businesses recover from a mixed holiday season they will return to find that shipping items using FedEx will be more expensive as of January 5th. FedEx announced that it is increasing standard rates for Ground and Home Delivery services by an average of 5.9%. FedEx had already revealed a 6.9% increase in Express rates back in October.

January 5th will see FedEx changing the trigger price at which a fuel surcharge starts, moving to $1.30 per gallon of jet fuel, up from $1.14. This change will offset some of the basic rate increase, but there is no doubt that small businesses are looking at spending more on shipping in 2009.

ERP implementations are not immune to the economic slowdown as this week the Minneapolis based Select Comfort prematurely ended its SAP rollout. The company that makes the “Sleep Number” bed had been implementing SAP’s ERP, Supply Chain Management (SCM) and Customer Relationship Management (CRM) offerings. The SAP project started back in 2006 but had its critics including a major investment group, Clinton Group, who had publically criticized the project as over budget and behind schedule.

Although many ERP projects have problems, the Clinton Group had continued to press the company about poor project management. Their issues with Select Comfort included the use of internal resources for the SAP implementation and spending $20 million in two years of the project. With the termination of the SAP project and the laying off 120 employees, about 22% of its workforce, Select Comfort hopes to see a saving of $15 annually.

As the US auto giants are in financial turmoil, their suppliers are trying to keep afloat and hold on until the government bailout of the industry comes to realization. Both Chrysler and General Motors say they may not have enough money to pay bills through January of 2009. Chrysler has gone further by shuttering all 30 of it plants for 30 days. In addition it says that it has less than $2.5 billion in cash and it has to pay vendors $7 billion every 45 days. Industry analysts estimate that General Motors is in a similar situation.

If the auto giants can’t pay their suppliers in January the knock-on effect will surely affect smaller vendors who will not be able to secure financing. Although larger vendors will be able to rely on credit, their fate will depend on whether Chrysler and GM can stay out of Chapter 11 bankruptcy