How airfreight forwarders help shippers cope with volatility
Airfreight forwarders are using flexible rate and routing strategies to help insulate clients from the effects of market volatility, says Damco executive.
For many years, airfreight purchasing behavior was driven by the calendar. You could safely assume rates on certain lanes would go up in August and drop again at the end of December. But now, that "classic'' seasonality in air freight is gone, says Horst von Kanel, senior director airfreight North America/Latin America for the global logistics service provider Damco Inc. As a result, he says, airfreight forwarders have had to become more flexible and agile to help their clients navigate a market where unpredictability has become the norm.
One way forwarders are doing that is by focusing more on short-term, opportunistic transactions rather than locking in long-term rate commitments with carriers, von Kanel says. The current market volatility suggests there is little or no advantage to making long-term rate commitments, he explains. With the current capacity situation, moreover, the average wait for spot requests has dropped considerably, and forwarders are on the lookout for opportunities for their shipper clients.
Shippers might see today's sluggish airfreight market as a chance to lock in low rates, but this can be a double-edged sword when capacity is tight, von Kanel warns. Higher-paying cargo may receive priority status, while lower-rated freight remains grounded, resulting in transit delays and late arrivals.
Another way airfreight forwarders are responding to a volatile market is by developing alternative routing options. For example, when air export capacity is unavailable from the West Coast of South America to Asia or Europe, fruits and vegetables might move by ocean container to a hub location, such as Panama or Miami, and then by air to their final destinations, von Kanel says.More articles by DC Velocity Staff
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