Sub-continent shippers and forwarders switch to bulkers to stay profitable
As container pricing and related supply chain challenges mount amid wild demand swings and capacity ...
Swiss WorldCargo has had to run hard to stand still this year following the shock rates revaluation on 15 January which saw the Swiss franc appreciate 20% in value against the euro.
The carrier kept load factors close to 85% in the first quarter, in line with the figure for Q1 2014, despite the sudden increase in the price of Swiss exports.
“It was like standing in front of an oncoming truck,” said Ashwin Bhat, VP and head of global area management. “Some customers of Swiss companies have changed their supply chains or, if they can’t do so, are transporting to ”Euroland’ [principally Frankfurt] by road to control their costs.
“Fortunately, Switzerland has global champions in industries such as watches, banking and pharmaceuticals. There’s a high degree of specialisation, which means it isn’t always easy to switch manufacturer, and customers have tolerated higher prices.”
In industry sectors such as these, which Swiss WorldCargo serves “intensively”, its market share continues to rise. Mr Bhat added that special cargo such as express shipments, mail and valuables – an important part of its cargo mix – still attract a premium.
He said: “Quality of business is the challenge and there is pressure on general cargo. Europe is still weak, despite the low value of the euro, and the textile market slowed down a week or two earlier than usual in March this year.”
The fall in fuel prices has benefited Swiss as an airline, but not the cargo division because of its contribution mechanism.
“The reduction in surcharges affects us,” said Mr Bhat. “There’s now every kind of pricing model out there and we’re evaluating our position.”
With Swiss expecting delivery of six B777 aircraft over a six-month period from January 2016, the carrier’s focus is not on adding destinations but deploying extra capacity. The new aircraft will carry 23% more cargo than the A340s they replace.
Once pilot training is completed, they will go into service on the longest routes Swiss serves, to the US west coast and the Far East.