Airfreight Rates Expected to Shoot Up
What Can a Shipper Do to Limit Their Airfreight Cost Increase?
Posted: August 27, 2020 |
Rates are expected to increase slowly through August and then accelerate in September according to industry logistics managers. We see several causes for this as rates accelerate upward as air freight prices face the perfect storm however, we can manage through this.
Looking into the crystal ball for the next several months, airfreight rates are destined to rise. We are seeing several factors working in concert that will push rates up. The combination of the Covid19 supply chain disruption and reduced airfreight capacity are the primary drivers. In other words, the available Airfreight capacity getting stretched and shippers seeking more airfreight to sustain their business will drive rates up.
Why are rates trending upward?
- Sony, Apple, Samsung, and several consumer product companies will be shipping large quantities of new product releases. This will occupy a large percentage of freighter capacity.
- In Europe, borders have been reopened, however, passenger flights have not matched the increase in demand.
- China’s manufacturing capacity is down and some airlines have pulled back freighters -reducing capacity.
- Reservation backlogs are rising and blocking airfreight space. Shippers must book two weeks or more in advance
- Covid19 screening procedures for aircraft crew is cancelling scheduled flights.
- The holiday shopping season is almost here.
The several factors mentioned above reveal difficult times ahead for shippers. However, shippers can manage the challenge by finding creative ways to overcome the challenges. Shippers with proper planning and partnerships can mitigate the shortages by planning and contracting with freight forwarders with block space agreements.
For instance, the shipper can engage a freight forwarder to initiate a block space agreement to reserve space on the air cargo carrier. This allows for a continuous reservation for space at one or more flights and date combinations.
Air carriers are looking for these opportunities make the best use of their aircraft flying at reduced passenger capacity. Naturally, carrying freight will keep the carriers flying despite passenger volume reduced over the past several months. Air carriers will work to increase capacity as they push to stay solvent and contribute to the county’s economy. With the assistance from the US government with the Cares Act and improved economy that will come, we believe the carriers will deliver.
CPC has the proven expertise to partner with the industry experts that will bring you the savings and improved efficiencies that will overcome the rate increases during these difficult times. Let CPC perform a free diagnostic to ensure you have the best transportation program. There is no obligation to hire us, but we believe this is a totally unique time as rates trend up in the marketplace to add incremental cash flow to your bottom-line. Call CPC for expertise and guaranteed savings.