News / ACS expands: an unstable market, but there's still a need for speed

Air Charter Service (ACS) is expanding its footprint: last month the UK-based air charter broker opened offices in Montreal and Milan; its time-critical division, which offers door-to-door services, added a leg in North America with an office in Houston.

More will follow, said global cargo director Dan Morgan-Evans.

These moves point to a robust sector. Last year the market appeared to have settled into a “new normal, post Covid”, with steady demand in the key verticals like oil and gas, automotive and humanitarian traffic. These conditions prompted ACS to sign some long-term contracts.

However, recent steps by the US government have unsettled what looked like a settled market and made for poor visibility going forward, said Mr Morgan-Evans.

“If you ask me what the year brings, I have no idea,” he added.

The automotive sector has softened in recent months, causing firms to adopt a wait-and-see stance for the time being, he noted. This has not been helped by the spectre of tariffs, combined with the uncertainty of if and when they may be introduced, and at what levels.

Cuts to human aid budgets do not augur well for humanitarian charters, and the changed US position on the Russia-Ukraine war threatens to take a further toll on this segment, as European governments try to unlock money to boost military spending. That increase in the UK comes out of the foreign aid budget, Mr Morgan-Evans noted.

The short-lived move by the US administration to remove de minimis exemption from e-commerce imports from China last month prompted the cancellation of a spate of cargo charters.

After the suspension of the measure until US customs have the capability to clear vast numbers of parcel shipments and collect duties, the tide of freighters hauling parcels across the Pacific resumed, but Washington – and to a lesser degree Brussels as well – appears bent on getting a tighter grip on the influx of e-commerce from China. This points to a diminished role for air cargo once those planned obstacles are in place.

“It’s difficult to figure out how long this will last,” said Mr Morgan-Evans. He noted that Temu had been courting American sellers as well as moving inventory by ocean carrier to US distribution centres.

However, he does not think that moves to control e-commerce will bring about the end of dedicated freighter flights for the sector.

“There will be a period of disruption while people figure out what’s going on, but the overall long-term trend will continue in terms of freighter capacity for e-commerce,” he said. “We’ll see what that does in the short term. I think that’s going to be the major issue.”

ACS has kept a cautious stance on e-commerce contracts. The terms are not very favourable to carriers, and there is always an element of risk of sudden cancellation of contracts, he said.

For the moment, e-commerce demand continues to gobble up freighter capacity, while the entry of widebody freighters into the market has slowed to a trickle, owing to the supply chain woes of the aircraft manufacturers.

Mr Morgan-Evans is not concerned, though, saying aircraft availability for charters is still okay.

“I don’t see a massive squeeze at the moment,” he said, adding that “operators tend to be able to extend the life of old freighters”.

Meanwhile, ACS has been expanding beyond the charter market. ‘Next flight out’ has been a major growth area, he reported. This is primarily used in the automotive market, but it can be used for any type of airfreight.

“We get so many enquiries from our customers, and not all of them are in a position to charter an aircraft, but the necessity for speed is still there,” he said.