Forward freight agreements could end risks from volatility in air freight market
The air cargo market could see significant disruption in the way capacity is bought and ...
The sea-air sector is enjoying a healthy resurgence, as high air freight rates, disruptions in sea freight and new pricing transparency have combined to make multimodal transport more attractive.
The most popular tradelanes are from China and South-east Asia, via Dubai, to Europe and the US.
“There is a recovery in the sea-air mode, although I doubt it will go back to the volumes of yesteryear,” said Riszard Rzepa, managing director for International Transport Services in Dubai.
“It’s very much connected to higher air freight rates out of Asia – when pure air freight rates hardened, we saw an increase in interest. And the disruption in shipping has been a contributor.”
Robin Knopf, CEO of sea-air specialist SAT Albatros agreed. He said: “The primary tradelane driving this appears to be China, in part because of the latest sea freight disruptions caused by issues such as the Maersk cyber attack, as well as tightened air freight capacity.”
He cited the recent Alaska ash cloud, which triggered a decline in transpacific capacity.
“Bangladesh is also seeing sea-air numbers strengthening as pure mode delays continue, with port congestion and double scanning [at the airport].”
It has been reported that containerships have faced two-week delays at Chittagong port since May, due to poor weather and equipment shortages. Meanwhile air cargo from the country has had to undergo stricter security checks.
Mr Knopf added: “We are seeing a significant rise in demand for our services, with many clients looking to secure allocation from large single shipment loads, through to wide-scale onward freight dedication right across Europe.
“This is shown by both a surge in business from current clients, as well as a major rise in new customers globally.”
According to Mr Rzepa, rising demand can also be attributed to more transparent and easy-to-find quotes. International Transport Services is listed on the Agree Freight booking platform – a move which has doubled its bookings, he said.
“Being able to digitise our pricing and booking has helped the re-growth, as we just have a much lower overhead,” he explained.
“It also gives us a larger coverage. For example, many sea-air movements start out as sea shipments, but if there is late delivery from the factories, people search on the Agree website for the next and quickest sailing.
“If they can’t find one to arrive at the destination in time, rather than pay for pure air cargo they click on to us, book and still meet their deadline, while saving up to 50% of what they might have paid for air cargo.”
He denies the common perception that transparent rates equals lower profits.
“Being transparent means we don’t need any salesmen or people to issue quotations,” he said. “It saves time and offers the client instant information on rates, sailing dates, bookings and arrival, so it saves them time and money as well.
“Yes, many people want to negotiate, but the price offered by us is the one for the service we provide – just like if you want to book a flight from London to Dubai. Each airline tells you its price on say, Expedia, and then it’s the customer’s decision.
“We don’t negotiate. We would have to employ people to do that. If the customer wants a price lower than what we offer, the booking is not for us.”
Mr Knopf added that shippers were increasingly seeking transport options that cut back on supply chain emissions.
“With sustainability rising swiftly up the agenda, we are also seeing a strong need for low-emission shipping solutions, particularly for expedited freight. It’s an area we cover very well, with solutions up to 50% greener than air freight over the same route.”