Air Cargo and Supply Chain Management: Part II

By Patrick Burnson, Executive Editor
March 12, 2014 - SCMR Editorial

Editor’s Note: When the Air Freight Forwarder’s Association (AfA) stages its annual conference later this month, the focus will be “closing the deal.” Here, in the second part of an exclusive interview with AfA president Brandon Fried, supply chain managers are given an overview of some of the main issues on the agenda.

SCMR: Do you see the greatest growth coming in “cold chain”?

Fried: While there are many areas of growth in forwarding, “cold chain” services are standing out in their rapidly growing popularity. This niche usually applies to several verticals including pharmaceuticals, bio-med, perishable foods and other items requiring constant temperature control and monitoring. While potentially lucrative, forwarders considering offering these services should remember that specialized expertise is essential.  There may also be a need for technology such as refrigeration, monitoring systems and customized trucking suitable to handle these commodities. And of course, depending on the area of the world, additional education and licensing may be required.

SCMR: How about the so-called “emerging markets”?

Fried: As wage pressure in China increases, we are seeing a shift of manufacturing to countries including Vietnam, Indonesia and Cambodia to name a few. Of course, there are infrastructure issues surrounding the ability to move cargo quickly between manufacturing sites and ports, but we expect these issues to be addressed over time. We are also seeing an interesting shift of manufacturing back to North America to places like Mexico and even the United States. Lower transportation costs and quicker market access are certainly factors driving this change.

SCMR: Can you describe the worst-case scenario for a shipper just getting started in air cargo?

Fried: For a forwarder just getting started in the air cargo business, inadequate capitalization and the lack of essential knowledge are potential reasons for failure. Your carriers and vendors are going to demand fast payment, sometimes before shippers pay you. Not understanding essential regulations and cargo handling procedures could lead to delays that will cost you and your customer money and that will inevitably lead to losing the business.

SCMR: Finally, what are transport partners and middlemen doing to assure shippers of adequate risk management?

Fried: While forwarders are often considered the miracle workers of freight transportation, creating realistic expectations through customer education in a competitive market is key. If your forwarding company does not adequately understand how to handle a specific commodity to an obscure destination, perhaps additional education and experience is needed beforehand. If not, perhaps the forwarder may not be the best option for that shipment.

The forwarder also has an obligation to inform the shipper of ways to mitigate the risks of shipping including insurance coverage, packing requirements and security rules. Good forwarders not only provide this education but create opportunities for their customer as well, helping to deliver more success in the process.



About the Author

image
Patrick Burnson
Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review magazines and web sites. Patrick is a widely-published writer and editor who has spent most of his career covering international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. You can reach him directly at .(JavaScript must be enabled to view this email address).

Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Seasonally-adjusted (SA) for-hire truck tonnage in March was up 1.1 percent on the heels of a revised 2.8 percent (from 3.1 percent) February decline, with the SA index at 133.5 (2000=100). This is off 0.3 percent from the all-time high for the SA of 135.8 from January 2015 and is up 5 percent annually.

Intermodal volume was up 8.1 percent annually at 280,016 containers and trailers. This outpaced the week ending April 11 at 270,463 and the week ending April 4 at 271,127. AAR said this tally marks the second highest weekly output it has ever recorded as well as the first time container and trailer traffic was higher than carloads for a one-week period.

Ocean cargo carrier service reliability across the three core East-West trades hit a five-month peak in March with an aggregate on-time performance of 64 percent, according to Carrier Performance Insight, the online schedule reliability tool provided by Drewry Supply Chain Advisors.

The Airforwarders Association, which represents more than 360 companies that move air cargo through the supply chain, today applauded an agreement reached by Congressional leaders to advance legislation giving the President authority to conclude key global trade agreements.

Despite great opportunity for growth, the logistics market in Latin America is lagging behind other emerging markets thanks in part to its notoriety for corruption, violence, poor infrastructure and government bureaucracy.

About the Author

Patrick Burnson, Executive Editor
Patrick Burnson is executive editor for Logistics Management and Supply Chain Management Review. Patrick covers international trade, global logistics, and supply chain management. He lives and works in San Francisco, providing readers with a Pacific Rim perspective on industry trends and forecasts. Contact Patrick Burnson

Comments

Post a comment
Commenting is not available in this channel entry.