© Khunaspix Dreamstime.

This week’s TOC Container Supply chain event in London has thrown up a few interesting titbits for the troubled airfreight industry. Notably, that shippers are deeply unhappy with shipping lines.

Modal choice is becoming critical to the airfreight market. With just 2-2.5% of all transported volumes carried by air (IATA figures state 0.5%, but that includes bulk which will never be carried by air) airfreight only needs to catch a tiny percentage of market share to make a tangible difference.

Its problem, of course, is cost. At roughly ten times the price, airfreight needs to prove its advantages. And reliability and service are clearly two of them – in comparison with the box shipping lines anyway.

The biggest problem shippers have with the lines appears to be slow-steaming, the cost-cutting exercise that can see ships take up to 47 days to get from North China to Europe. Shippers have complained of longer lead times and increased inventory levels needed to cope with slower ships.

Cas Pouderoyen, senior vice-president of global ocean freight at Agility Logistics, called for a greater range of transport options.

“We think there is an opportunity for more variety in the business. When I look at using either a 40-plus-day transit versus air freight, which is ten times more expensive, I can’t help but think there must be a happy medium somewhere,” he said.

The global shipping industry was expecting 5% growth in traffic, but slow-steaming has triggered shippers to near source and change their procurement strategies – not a good sign for air freight, which tends to benefit from emergency inventory requirements.

Other delegates at the event complained about shoddy service levels. One SME luxury fashion designer, speaking to The Loadstar on the sidelines of TOC, admitted that she would not send anything by sea.

“Goods – especially high-end ones – get held up at the ports. I never know if the shipments will arrive, or whether they will be held by Customs or just lost.”

Her company, based in the UK, sources its materials in Morocco, Portugal and Scotland, and sells goods on to the Middle East.

“We truck everything, which is expensive, but I just don’t trust sea freight,” she admitted. “I’ve come here to find out how I can limit my transportation costs as I would prefer to spend money on the product. It’s very frustrating.”

Other shipper complaints surrounded cancelled sailings, increasingly large ships which can’t access many ports, and poor communications and customer service. One shipper, Neville Scowen, international transport manager for International Paper, said that shipping lines reminded him of low-cost airlines. But, he added: “However badly they treat customers, 90% of their flights arrive on time.” He also said there had been very little innovation from the container lines.

While the airfreight industry is used to hearing shippers complain, it would appear that customers are more angry with the airlines’ seafaring rivals. And for those few industries, such as pharmaceuticals, perishables and hi-tech, which look to both sea and air, and seek reliability  –  airlines can argue that their communications, customer service and schedule reliability more than makes up for the high costs involved.

Comment on this article

You must be logged in to post a comment.
  • Nico

    June 27, 2014 at 2:56 pm

    Great article Alex.

    It is clear that there is a market for both transport modes in the industry and decisions will be driven by cost and service expectations.

  • Ed Kerwin

    June 30, 2014 at 6:37 pm

    The comment about an intermediate option between all ocean and all air begs the next question, where is sea-air these days?

  • SAT Albatros

    August 05, 2014 at 12:00 pm

    Dear ED KERWIN

    ALBATROS Sea-Air Service is here!! reliable, cost effective and with direct customer service. trust our 30 years of experience and contact us thru [email protected]

    Find our latest schedules and more informaiton about us here