Air cargo groups set to disappear as industry plans shake-up
The air cargo industry will see a major shake-up over the next year which could ...
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Shippers have lambasted the air freight industry for failing to engage with their ultimate customers. One large manufacturer, which spends about $450 million on air freight each year out of a total transport budget of some $2.8 billion, told The Loadstar: “We have never had an airline knock on our door. All they do is complain. We would like to deal with them directly, and I simply don’t understand why we can’t.”
Speaking under anonymity for internal company policy reasons, the ...
Comment on this article
Peter Walter
October 04, 2012 at 11:38 amI would have thought the answer is quite obvious (why airlines will not deal with shippers) 1. Forwarders control 99 percent of the market 2. Carriers have tried and failed to by pass forwarders numerous times. 3. The vast majority of airlines are not able to offer all the add on services an average shippers will need.4. Any carrier brave enough to by pass forwarders will be instantly penalized.
5. For most carriers air cargo is not core business
Alex Lennane
October 04, 2012 at 12:06 pmBut there is no question of bypassing the forwarders. This is simply about forming relationships between shipper and carrier – not the booking itself.
David Woodward
October 04, 2012 at 2:56 pmWe applaud the sentiment of this Shipper and would dearly liked to be involved in more direct relationships with the ultimate customer , as long as it is done on a tripartheid basis with the shippers chosen Forwarder. Where we are included in such relationships it has been very successful and resulted in better understanding and a smoother flow of business. The reason they are not more common is mainly down to a resource issue in finding the ultimate customer (volume of Exporters to Forwarders) combined with lack of invitations from the Shippers/Forwarders. The Shippers needs to reach out to the airlines and invite them to sit down with their Forwarder , it really is beneficial for all parties !
Ed Kerwin
October 04, 2012 at 6:40 pmThe air cargo industry has evolved over the last 30 years driven by a relentless effort to reduce fixed costs. As an airline sales rep 30 years ago, I called on shippers directly. The call was positioned as a relationship call and did not try to usurp the role of the forwarder. The real purpose was to try and keep the business if the shipper changed forwarders. Forwarders, who are non-asset based companies, were always wary of other companies calling on “their customers”. Ultimately, the cost to the airline of making that sales call exceeded its percieved value and they were eliminated. As Peter mentioned there was a time when airlines tried to adopt a similar stance to the ocean carriers. However, I believe that it was the cost that ultimately had the biggest influence. Now airlines don’t even call on the forwarders as much, they have outsourced that to GSA companies. This again in an effort to align costs with volume and revenue. It would take a significant change in now to reverse this trend.
Raemdonck Eric
October 09, 2012 at 1:53 pmIn addition to getting the job done, logistics is about relationships where the shipper calls the shots. I can’t see what prevents this shipper from including air carriers in his process when it is done to obtain greater transparency and more predictable costs. On the other hand there are plenty of commercial events where he can meet carriers. He can also get involved in industry working groups where shippers advice is always welcome and there are challenges galore…
Mukesh Mudholkar
October 11, 2012 at 10:30 amWhenever an airline tries to reach out to the shipper, even as a tripartate engagement, the forwarder clearly spells out the terms of engagement which leaves out any discussion on the rates. The incentives / discounts offered by airlines do not always get passed on to the shipper. There is no transparency. The airlines need to focus on maintaining their load/revenue factors, however they cannot discuss this openly with the shipper.
massimo
October 14, 2012 at 5:56 amDear all,
shippers that want to deal directly with the airlines are more than welcome. Always have been.
Airlines are open to it, but let us also consider why a direct agreement is difficult to reach:
1) Airlines generally provide airport to airport transportation: only few shippers are able to manage all the operational portion of the chain before and beyond those points (road feeder, custom clearance, delivery transportation,etc.)
2) Few shippers are aware of the massive requirements in terms of palletisation, dangerous goods regulations and safety of cargo (forwarders, at least in principle, do)
3) Documentation, paperwork provided and utilized from the shipper, is often not in line with what an airline requires. (Also, the issue of an AWB, if IATA certified, may still be a constraint.)
Nevertheless, I am certain that a direct liaise with the shipper is the only way to benefit from those costs savings that airlines have performed for years, that were passed only to the freight forwarders, but the shippers needs to prepare themselves from a regulatory standpoint.
In short, I think BOTH parties need to move on in order to meet, not only the airlines.