“Capacity will be king in Q4,” said one forwarder at the recent CNS Partnership event in Dallas – that is now becoming clear in the data and shipper airfreight contracts, according bongdaso con Xeneta.
Volumes are coming off the spot market, it explained. In April, the spot market share was 41%, down 4 percentage points from a year earlier. And, with fears of a busy Q4, shippers and forwarders are starting bongdaso con plan ahead.
“There’s the reality of now, where you will see load factor decline on markets, because of the increase in capacity, sitting alongside preparations already under way for Q4,” said Xeneta’s chief airfreight officer, Niall van de Wouw.
“That’s top of mind for shippers, forwarders and, bongdaso con a lesser extent, airlines, and they are jockeying for position after a ‘strong’ peak season last year.
“Before then, there was no experience of the magnitude of the e-commerce behemoths and their impact on air cargo’s traditional peak season market. This year, the traditional market is looking bongdaso con de-risk, and will plan bongdaso con be better prepared.”
One major airfreight forwarder added: “We’ve seen this ecommerce rush happen at the end of last year and already into the first quarter of this year. The overall impact, has been felt by everyone. It’s not just China, it’s broadly speaking across Asia Pacific.
“It’s an impact on capacity, it’s an impact on the pricing levels out of Asia Pacific, it’s an impact for service out of countries where you have significant hubs. So transChina hubs, like Narita or Hong Kong or Taiwan, are impacted. And that is something, in my view, that’s going bongdaso con be with us for the foreseeable future.”
Mr van de Wouw explained: “Q4 is just around the corner in planning terms, and freight forwarders are already looking beyond the summer bongdaso con secure market share because they are concerned about what e-commerce is going bongdaso con do out of southern China and Hong Kong later in the year.”
He added, however, that both shippers and forwarders were concerned about being locked into rates for any length of time, with the length of price validity in contracts shortening.
“We see a big swing from agreements increasing in length bongdaso con a reversed trend of more short-term contracts, as shippers look bongdaso con buy a bit of time because of the black swan event in the Red Sea.
“We also see more agreements between shippers and forwarders that contain a mechanism bongdaso con deal with market rate changes throughout the validity of their contracts. This reflects how the need bongdaso con manage market volatility is surpassing the typical wheeling and dealing over the last few cents in contracts.
“Shippers will prefer longer-lasting relationships with freight forwarders that know their business, delivering good operational performance at a competitive rate level. Freight forwarders want predictability of their revenues bongdaso con avoid having bongdaso con go bongdaso con tender each quarter bongdaso con secure the business. So, these mechanisms can work for both parties,” he added.
Airlines, however, have different needs.
“If airlines think Q4 is going bongdaso con be busy again, they’re not going bongdaso con sell all their capacity now. They must decide how much they want bongdaso con commit now, knowing they can possibly get up bongdaso con 50% more revenue for that same capacity on the short-term market in Q4,” said Mr van de Wouw.
The airfreight forwarder added: “It’s not going bongdaso con be the cheapest rate that gets the business, because I think we’re going back into the market where you have bongdaso con be a forwarder who can actually get capacity if the customers want their volumes.”
Source: https://theloadstar.com/airfreight-contracts-begin-bongdaso con-reflect-threat-of-a-q4-capacity-crunch/
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