Posts tagged "air-freight"

Air Cargo Experiences Welcome Change

The air cargo industry would be more than happy to realize that its name does pop up at major events these days. Irrespective of their frittering market share, they are pleased to know that the name dropping comes up in relation to a modal shift.

Shippers using sea freight are facing more than a few challenges these days. The slow steaming, or super slow steaming, which is the current fad seems to be the first problem. Absorbing the excess vessel capacity while massively cutting the fuels is a perfect solution for the hard pressed shipping lines.

It is unfortunate for the customers who haven’t seen the rate getting reduced for this more languid service. Irrespective of the fact that the freight environment in shipping is extremely volatile, the shippers pay the same to be stack at sea for an extra week.

This means they will have to deploy more capital to cover the inventory costs due to extra time without their goods.

There is a tolerance in the supply chain for about 10-15% delays from slow steaming, and the super slow steaming with a 40 day cycle could be a big problem. The shipping lines are suffering just like the airlines from volatile and low rates, and they seem to be crying louder than the submissive airline carriers. They feel that it is no good for the customers either, as low rates make the lines much more reliable.

Shippers including Nestle, M&S and Exxon have been willing to pay sustainable rates, in return for pricing stability. With the high cost and high reliability of the air freight it is not clear that the same would work for them.
It is quite hard to comprehend that there isn’t an effective middle ground, something that lies between 40 days and 48 hours with environment friendly credentials. Whoever comes up first with that formula, will win over the others.