Will Increased Air Freight Demands Put a Strain on Capacity?
Closing out the end of a record-setting year in terms of air freight demand, the industry now approaches peak season in anxious anticipation. Experts have continuously proposed that air cargo demand will shift, and a downward trend will emerge. So far, those suggestions have been just that – mere suggestions.
Rate reports derived from various carriers and market analysts have been variably scattered and inconsistent. Typically, peak season creates capacity restrictions and increases load factors, both justly opening the proverbial gates for higher shipping fees and freight rate surges. Another factor in subsequent rate increases is proposed to come from the uncertainty in the trade relationship between the United States and China, respectively. The current imposed tariffs on both imports and exports to and from China and the US have not yet affected the supply chains of businesses involved in international trade from China, however the presumption is that amplified costs are impending. Many companies are anticipating this rise and thus increasing their shipment volume to beat forthcoming tariff implementation.
Freight capacity has been reaching maxed volume thresholds all year. Which means, a sudden uptrend in air freight demand will essentially be placed on waiting lists. With E-commerce revolutionizing the way consumers purchase product, the fundamental result generates a year-long peak season and not simply one singular spike in the fourth quarter. And if presiding years are any indication, this fourth quarter is trending towards record breaking numbers. “A lot of forwarders have warned shippers that the fourth quarter [may not be] quite as robust as last year, because last year was phenomenal. But if the second and third quarter are any indication, holy cow – let’s face it… the fourth quarter is always busier. And two and three were very, very busy.” [Fred Ruggiero, VP of Cargo at Cathay Pacific]
In conjunction with the continuous pontification of air freight surges, the industry stands a chance to adequately prepare for outpourings in expedited cargo shipments. In an interview with JOC.com, Sebastiaan Scholte, CEO of Jan De Rijk Logistics, goes on record stating, “Last year the sudden surge in volume in the second half caught many off guard. This time the market is better prepared, and capacity has been secured through additional charters and block space agreements. Therefore, we expect capacity to be more in line with demand than last year.”
Peak Season Shipping Tips:
Plan in advance
Prepare yourself for extra shipping / storage fees and higher rates
Work flexibility into your schedule
Organize your Customs documentation in advance
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