Airfreight forwarding a better bet than ocean for investment this year
Forwarders more focused on airfreight will fare better this year than those with a higher ...
© Banol2007
By Ian Putzger
Forwarders have been running in high gear, often getting nowhere.
“Capacity and space is a disaster, and we are seeing massive swings in rates from five- to 20-times the normal level. We have made bookings and then been advised the flights are cancelled,” said the chief executive of one mid-sized Canadian forwarder.
The rapid implosion of lift on one sector after another has brought much aggravation and frustration.
“We’ve been through four major space contractions, the last one when Japan announced a 14-day ...
Comment on this article
Dave Jenkins
April 12, 2020 at 12:51 pmInteresting comments to see coming from Forwarders and shippers concerning airfreight capacity, reliability and rates. Of course they complain about flight reliability. However when flights are cancelled there is always a very good reason when we (airlines) are being called upon by governments to provide relief flights.
Reliability
Let’s look at Forwarders reliability under ‘normal conditions’. Airlines typically endure a booking reliability of between 45-70% and very rarely above that upper end. This also has airline staff ‘running around’ and even leaves the airlines with empty, unpaid for positions. Therefore maybe forwarders will better understand the everyday reliability environment that airlines face all of the time at their hands.
Rates
Airfreight is one of the purists form of economics. Capacity is ample and forwarders will ‘take advantage’ of the situation pushing rates down to variable cost level and below if they are allowed by airlines that don’t follow their cost structure well. Now the capacity is extremely scarce on some lanes, why are the very same forwarders screaming about ‘taking advantage’. It’s not taking advantage at all. It’s market conditions, same as always.
Airlines are trying to survive right now. Why would airlines artificially hold the prices down now when demand dictates otherwise?
Shippers and forwarders are more then happy to ‘take advantage’ under normal conditions and yet they complain very quickly when the capacity dynamic moves in the other direction.