question of the month
There has been a dramatic increase in air freight rates as global economic activity increases, but capacity has been slow to catch up with demand. Are carriers managing their carrying capacity to maximise yield?
BRIAN WU Director,
BEL International Logistics
“As a freight forwarding agent, it is difficult for us to judge from the perspective of the airlines and shipping lines. Nevertheless, we have encountered the rate increases because of the lack of capacity since the middle of 2009. “The increased rates were not caused by an increase in demand. Rather, it was because of the space control by most of the carriers – they put their vessels in docks and aircraft in the desert. On the other hand, as the market picked up in late 2009, everyone began to have a positive outlook for 2010 – and I believe that’s one reason why the carriers asked for higher rates at the beginning of this year. “Apart from some new products released in the
“It is the carriers who are the opportunists”
market (especially in high-tech electronics), the market in general has improved towards the middle of 2010. The demand for cargo continued to grow in June, with international scheduled freight traffic showing a 26.5 percent improvement over the same month last year, according to figures from IATA (the International Air Transport Association). “IATA chief Giovanni Bisignani recently pointed out:
‘Volumes remain 6 percent above the pre-recession peak in early 2008. We remain cautiously optimistic. A clear indication of the growing confidence is the over 400 aircraft orders announced at the Farnborough Air Show.’ “Therefore, it is the carriers who are the opportunists
because they are also business players in the industry. It does not matter if the economic recovery is short-lived, or if they are just being cautious about the fluctuating market in the near future – they are trying to gain as much money as they can in the foreseeable future.”
JAY SHELAT Vice president cargo,
Jet Airways
“There has indeed been a dramatic increase in air and ocean freight rates as global economic activity increases. Are some carriers fearful that the recovery may be short- lived or are they being far more careful in managing their cargo-carrying capacity to maximise yield and recoup their losses? “When you look at the
dramatic increase in air freight rates seen recently, there are several factors that need to be taken into consideration. Firstly, the global recovery is still on shaky ground, with no firm indications yet emerging on the global perspective. “Definitely, Asia has seen a robust recovery.
“The air freight industry is not yet out of the woods completely”
However, Europe and North America have not seen a come-back to the extent that will allow most to re-enter the market with additional capacity. In Africa, Australia and Latin America demand has been steady. “Secondly, both of the major airplane manufacturers are adding new lift in the market around the globe this year, with the introduction of more aircraft compared to last year. “Finally, the situation is imbalanced as the yields being achieved by the airlines at the current time are being viewed against those made at the low point of the poor situation we experienced in 2009 – and not in comparison with the good years of 2007/08. “So, I believe the air freight industry is not yet out of the woods completely; hence this cautious approach going forward is what you will continue to see from many suppliers in the marketplace.”
40 AIR LOGISTICSCHINA
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