News / Forwarders and box lines will carry on with their own air networks

© Dipankar Bhakta |

The airfreight market may be soft – but forwarders are likely to retain at least part of their own controlled networks.

Asok Kumar, global head of airfreight for DB Schenker, told delegates at the Air Cargo Handling & Logistics conference last week, in Athens, that while the economics needed constant reviewing, forwarders were still wary of relying entirely on the airlines.

“Having our own controlled capacity was a development that took place because there was a lack of capacity in the market; a lot of shippers were demanding that we had control of the capacity in a greater way than before,” he said.

“But we’ve very quickly seen, in the post-Covid era, the current market situation. I think the economics of all of these trends have to be evaluated. In my opinion, the capacity that the forwarders now control, I think will continue – but not to the extent it was during Covid.”

DB Schenker was operating 64 flights a week during the pandemic  – which accounted for just 17% of its overall volumes. It has cut back considerably, and now operates 26 a week.

“We’re still operating a lot of our own controlled capacity. We will continue to do so because there are still situations where a lot of our customers still need contingency plans in place, or a particular type of capacity on certain key routes.

Like forwarders, shipping lines with air services are also keen to offer a wide range of products to customers, said MSC’s SVP air cargo, Jannie Davel. “Why would you refuse to deal with a customer base that might be using sea freight, who says they want to deal with me directly for air? And it helps us to be a bit more resilient.

“But to do a full end-to-end delivery, you still need working partners, and we will continue on that basis.”

Mr Davel was quick to add that MSC sells its air capacity to forwarders, not shippers, saying: “We wanted to complement our offering, and we are actually focusing more on serving the forwarding community.”

The increasingly blurred lines between some businesses have led to concerns about who is a competitor. Mr Kumar, said one integrated logistics company, which had previously (and famously) eschewed forwarder business, had re-approached Schenker.

“I won’t say the name of the company, but they have approached us. My answer is no, because you’re my competitor. Obviously the current market forces them to start exploring other avenues to fill the blanks. My answer is no, because it’s clear where you want to go.”

However, Mr Kumar said Schenker was happy to work with CMA CGM – despite its ownership of Ceva and Bollore. He said: “In my view, as much as they own one of our major competitors, we still do a lot of business with CMA CGM, both on the shipping side as well as on the air freight side.

“We do it on the basis that they have been very clear that that piece of business is separate from the forwarding side. We even had written proof that they are not treating their forwarding arm in any biased way or with any favoritism, which is critical for us. And they distinctly and consciously did it that way, which then allows us to work with them.”

He said CMA CGM Air Cargo initially did not work with forwarders.

“It took them a month before they realised it doesn’t work,” said Mr Kumar. “They had to really make it distinct. But I think in our industry, with the margins we have now, the economics of scale, it makes it very difficult, except for certain niche areas.

“It’s not easy to operate an aircraft on a weekly basis profitably without having economics of scale and reach to a forwarding base.”

MSC’s Mr Duval was cautious when asked if the privately owned shipping line had investments in forwarding companies.

“The [Aponte] family has some interest in the number of businesses, but it’s not publicly disclosed.”