Good times for air cargo forwarders are finally here

Air Cargo 2015 – the annual industry event staged in New Orleans next month –  promises to yield a great deal of exclusive market intelligence, says Brandon Fried Executive Director, The Airforwarders Association.

“And the timing couldn’t be better,” he adds. “The new commercial environment has become more complex. We hope to bring some clarity to the discussion, and provide people with transactional information.”

According to Fried, shippers are finding it harder to book payloads on freighters these days because there is so much excess belly space in new passenger aircraft.

“That’s just one of the trends we’ll be tracking this year,” he says.

In a recent interview with Logistics Management, Fried shared a few more observations and insights.

LM: Can shippers expect to get a break on rates if fuel prices remain low?

Fried: In time, probably, if prices hold at or around todays levels.  Given that fuel is a proportionally higher cost element in air than other modes, it could help stem some mode shift too.  Many carriers are trapped in high fuel hedging contracts so this could also delay the passing of savings to shippers. Time will tell.

LM: Have shippers migrated from ocean to air as a consequence of port congestion?

Fried: Yes, especially in the eastbound trade from Asia to the U.S.

LM: Will this be a long-term trend?

Fried: Possibly.  Contract issues aside, there appear to be significant systemic issues at U.S. west coast ports that will not be going away simply because new labor contracts are signed. Shippers want confidence in the dependability of their supply chains and the West Coast slowdown has created an element of uncertainty that may linger for a while.

LM: What regulatory obstacles will shippers face this year? Any new security concerns?

Fried: Directly?  Few if any.  Most of what is evolving today more directly impacts forwarder challenges such as ACAS, Export Manifest, etc.  However, since these initiatives have the potential to drive up the forwarders’ cost and impact cycle time, shippers may see indirect impacts.  We are working hard with regulators to minimize these negative impacts. 

LM: Are you seeing any shift in commodities moved by air carriers?

Fried: Not really.  The basic air value proposition continues to be important for high value finished products, componentry needed to keep assembly operations humming, perishables of all types, and of course pharmaceuticals and biologicals.

LM: What advances in the “cold chain” are being made?

Fried: We have seen an increase in airline infrastructure investment to handle cold chain shipments. There have also been significant advances in temperature monitoring technology and unit load device design focusing on the perishable product.

LM: Which geographical region is growing the fastest for air cargo?

Fried: Africa and the Mid-East appear strong.  The economic challenges in Europe are currently a bit of a drag.  Asia continues to show signs of growth.   According to our most recent survey of members, they expect to see modest growth through the first have of the year.

LM: Are carriers doing a better job managing capacity?

Fried: Our primary source of lift continues to be passenger aircraft and by-in-large, space has not been an issue.  The notable exception has of course being the U.S. / Asia trade where port issues have caused demand for air to spike.

LM: How have carrier partnerships and mergers worked out? Do you expect to see any more?

Fried: For the most part, yes.  Oh sure there have been isolated glitches, but nothing of a crippling nature. We hope that the recent mergers rescued troubled airlines and now allow the new entities to succeed as a dependable source of future lift for forwarders. In the U.S. we have probably seen our share of mergers for now but others around the world are sure to occur.