Airlines, forwarders invest in online exchange

By Staff -- Logistics Management, 6/1/2000

A number of air carriers and freight forwarders are lending their support to the development of an online airfreight marketplace. The Global Freight Exchange (GF-X) will provide a forum for forwarders to exchange information on airfreight capacity and pricing with air carriers.

At least nine airlines and eight forwarders are taking part in the GF-X pilot. They are American Airlines Cargo, British Airways World Cargo, Cargolux Airlines, Continental Airlines Cargo, DHL Aviation NV, Emirates SkyCargo, Japan Airlines Cargo, Korean Air Cargo, and Swisscargo. The eight forwarders are Circle International Group, Danzas AEI, Emery Worldwide, Fritz Cos., Kuehne & Nagel, MSAS Global Logistics, Panalpina, and Yusen Air and Sea Service.

The pilot is designed to expedite the booking process as well as test the feasibility of buying and selling airfreight capacity online. In the past, forwarders and airlines generally conducted business by telephone or fax.

GF-X has said that its site would consist of a "neutral" wholesale marketplace, which will support the broad range of transactions between forwarders and carriers, an Internet-based cargo-reservation system, and a database of transactional information. Changes in pricing or capacity will be instantly communicated online to exchange members.

Backing GF-X with cash investments are a number of major air industry players. They include British Airways, Panalpina World Transport, SAirLogistics, Deutsche Post World Net, and Lufthansa Commercial Holdings.

Consultant Brian Clancy praises GF-X's approach to the marketplace. "Of all the competitors in the freight-exchange space, they are doing it the right way," says Clancy, president of MergeGlobal in Arlington, Va., a consulting firm specializing in airfreight transportation and logistics. "The model conforms to the industry's structure today," he adds. "They're trying to automate the information flow between carrier and forwarder."

Nevertheless, Clancy has some concerns about whether the exchange can gain enough market share to reward its investors. "The value of GF-X to its owners will be a function of its ability to control the airfreight order flow in the market," he says.

The consultant adds that many forwarders already have established contractual relations with airlines, and these forwarders could work directly over the Internet with an airline and thus avoid GF-X's fees. "The Internet allows cheap linkage to the big customers," he says, "so you don't have to pay the GF-X tax to serve the largest customers."