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Repeated failure by purchasing managers to understand the post-pandemic market looks set to ignite bumper demand for Q4 airfreight capacity.

Shipping advisor Dr Walter Kemmsies decries popular reports that western economies, especially the US, were facing recession, and noted the latest US jobs report, indicating some 1.8 vacancies per unemployed person seeking a job.

“This isn’t usually a sign of pending recession; also, the world has undergone a series of changes and I am not entirely sure we understand the inflation,” Dr Kemmsies told The Loadstar.

“Retailers inundated supply chains with commodities during Covid, but as countries came out of lockdowns, I believe they failed to consider how this would lead to less spending on consumables and more on services.

“Rather than acknowledge this mistake we saw CEOs, of poorly performing businesses, talking the US into recession by claiming consumers were not spending; in reality it was a reversion to pre-pandemic spending.”

“A recovery to normal spending patterns began in January 2021, but despite indications of more being spent on services, purchasing managers continued to order excess consumer goods,” said Dr Kemmsies.

Given that there is generally considered to be a seven-month lag between orders being placed and arriving at ports, failure to properly understand the trend left many shippers holding excess stock – then the Russian invasion of Ukraine saw new cost spikes.

Dr Kemmsies said: “Inventories reached surprisingly high levels and have not come down much, despite strenuous efforts, but they are likely to do so in the near future. However, purchasing managers haven’t looked beyond that and have yet to place orders for the seasonal end-of-year holiday peak, despite clear signs that people will have money to buy presents and spend in traditional sales.”

And he noted the behaviour of some airlines: “When Covid hit and passenger services were grounded all over the world, we saw carriers early-retiring pilots, but when it all began reopening, they realised they did not have replacements lined up.

“Come Q4, I think they may regret this, as purchasing managers will begin begging their suppliers to send goods in two months rather than the usual six or seven.

“What this means is there will only be one route to market, ocean may be able to compete on the rates, but it just will not be fast enough. As such I do not think it would be wild to suggest the repeated ineptitude of purchasing managers may lead to an end-of-year airfreight boom.”

To hear more about the longer-term air cargo market, listen to this clip from the latest Loadstar Podcast of Peyton Burnett, MD of the TAC Index.


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