Post-DB Schenker jolter – dissecting DSV, Kuehne & DHL GFF
Something to think about
Global forwarder DB Schenker believes India presents opportunities for air cargo growth, as Covid has driven growth in pharmaceuticals and manufacturing.
“There is a growing opportunity for charter services in India as it helps in keeping the movement of commodities stable, especially during critical times like this pandemic,” Vivek Chopra, acting CEO of the cluster India and Indian Subcontinent at DB Schenker, told The Loadstar.
However, he said, capacity remained a major concern because of the uncertainty created by Covid-related events.
According to him, the return of long-haul passenger travel to pre-pandemic levels is unlikely any time soon, truncating cargo capacity available to scheduled freighters and ad-hoc or regular charters.
While the peak season delivered record volumes for DB Schenker India in Q4 21, Mr Chopra said the company saw a substantial drop in its regular capacity levels – ranging from 20% to 40% – from major gateways in the country.
“Strict Covid restrictions across various countries warrant additional crew positioning or double crewing, which makes it more complicated for scheduled freighter operations,” he explained.
He added that, at the height of the pandemic-induced lockdowns, the company faced serious challenges meeting customer demands, especially those engaged in the pharmaceutical and healthcare verticals, prompting it to beef up its global weekly charter connections from India.
“Passenger capacity was reduced to zero, as well as the industry experiencing widespread schedule cancellations of cargo freighters during the time,” Mr Chopra explained. “We also continued to experience abrupt disruption to freighters out of China, which impacted our capacity ex- China to India.”
According to Mr Chopra, capacity became the biggest challenge for the industry as the pandemic took its toll on supply chains. He said air cargo demand gathered pace in the middle of last year as ocean transport networks plunged into turmoil due to vessel space and equipment shortages, as well as facing port congestion issues.
“To meet production schedules and customer demand, there was a conversion from ocean to air, increasing in the second half of last year,” said Mr Chopra, adding that air cargo rates continued to move northwards and the same trend would likely remain in the short term.
“The global demand for exports has been recovering and we believe it will further increase this year.”
As airfreight forwarders eye further growth opportunities, the highly transmissible Omicron variant seems to have dealt another blow for the industry hoping to see international travel business return at scale.