Here are five key areas that all air shippers should be paying attention to in 2018
By Benno Forster
After experiencing 9% growth in 2017—more than double 2016’s increase of 3.6%–international air freight has kept up the momentum in 2018, according to the International Air Transport Association (IATA).
Measured in freight tonne kilometers (FTKs), air freight volume rose by 8% in January 2018 and is largely being driven by global demand for manufacturing exports and the ongoing need for faster delivery times (to make up for longer production times).
“It’s been a solid start to 2018 for air cargo,” IATA’s Alexandre de Juniac said in a press release. “We expect demand for air cargo to taper to a more normal 4.5% growth rate for 2018.”
Continued Positive Momentum
DB Schenker’s Air Freight division is also seeing continued positive momentum in freight growth this year. In the weeks leading up to the Chinese New Year, for example, there was a significant spike in demand for air freight on both the export and import sides of the market.
With the factories closing in China—and with the rest of the world working 24/7, 365 days a year—this holiday has a major impact on all freight modes. Things got quiet for several days during the actual holiday period, and the freight business in general is now beginning to get back to normal.
5 Trends to Watch
As the freight environment continues to “normalize,” shippers should keep an eye on these five airfreight trends that are taking shape this year:
- Growth will remain stable in the marketplace. If IATA’s numbers and predictions are any indication, air freight growth will remain strong throughout the rest of the year. We’re seeing similar strong growth now that the Chinese New Year is over, and we don’t expect any slowdown anytime soon.
- Europe and Latin America are both booming. Outside of Asia, air freight to and from Europe and Latin America is going strong. Both came off strong years in 2017, and are expected to maintain that growth this year. It’s not exactly like we have to operate charters to meet the market demand, but it’s definitely busy.
- It’s a carriers’ market. The airlines are earning profits again and demand for their services is high. That means they can raise rates—a reality that’s creating somewhat of a carriers’ market for global air freight. The carriers just don’t have a reason to lower their rates at this point. There’s really no end in sight because there just isn’t enough capacity on the market.
- Charters are helping to fill in the gaps. When commercial planes are at or near capacity, charters start to look pretty attractive for shippers that are dealing with time-sensitive goods and orders. Take Brazil, for example. With few airlines operating in the country on a regular basis, even expensive charter options are attractive for shippers that are operating there. DB Schenker has a number of charters going there because commercial carriers lack the space needed to be able to move all of our freight. We expect this trend to continue through the rest of the year.
- Good planning still pays off. The cornerstone of efficient logistics management lies in the planning process and leads to minimal chance of failure or a breakdown in the supply chain. By planning well in 2018, and by addressing any potential issues and possible contingencies, shippers can effectively eliminate the possibility of any supply chain delays while also running a more efficient, streamlined supply chain. It also leads to better forecasting that, when shared with logistics providers, also helps to ward off potential issues and ensure that the goods get to their destinations on time.
By following these market trends and taking the time to plan their logistics’ strategies in advance, shippers will be well prepared to deal with any shifts or disruptions that impact their supply chains. The more accurate forecasts that we can get from shippers, and the more “partnering” we can do with them to prepare for both opportunities and contingencies, the better we’re able to manage their supply chains.
Benno Forster is Senior Vice President and Head of Airfreight USA, for Schenker, Inc.