Freight forward thinking
Amid any crisis, it can be challenging to see a clear way through, no matter what your line of business. As the air cargo sector boldly navigates through a global pandemic, Brexit challenges and the ongoing ramifications from the Suez blockage, it reveals an industry that is resilient, agile and robust.
Industry reports quote that demand for air cargo is up 1% on last year, yet capacity is down 18% over the same period. With fewer carriers available, the global air cargo market is under unprecedented levels of stress, forcing rates up to new highs. Inevitably this is having a knock-on effect for customers who must do what it takes to maintain their supply chains.
At Priority Freight, we are witnessing an increase in demand of about 10% over pre-pandemic levels, which is a testament to the unwavering commitment and focus across the company. By approaching this crisis with a growth mindset, we have embraced the changes that have been forced upon us by this culmination of world events and have made some rapid and decisive changes in order to ensure that we provide continuity of service to our clients.
As a working example of how we have met customer needs, despite the current market challenges, we have been working closely with operators who provide ‘preighter’ capacity (passenger aircraft with the seats removed for freight use). This affords us the unique position of being able to offer the broadest range of time-sensitive solutions at the most competitive rates available in the current market.
As more carriers invest in temporarily converting their passenger aircraft in this way, and increasing investment in pure cargo fleets, there are some positive outcomes for the industry as a result of the pandemic.
The industry is already creating ways to overcome the capacity issue but the challenges of Brexit are still presenting huge difficulties for many freight forwarders. Companies that began planning for Brexit early by recruiting and training expert customs staff are the ones who are thriving now despite the pandemic. For example, accreditations such as Authorised Economic Operator Full (AEOF) status affords logistics providers, such as Priority Freight, access to quicker customs procedures and allows the movement of goods into temporary storage between different member states. Furthermore, we can offer customs clearance on behalf of customers and deliver the freight, which puts our service well ahead of the standard offering currently available.
WHAT DOES THE FUTURE LOOK LIKE FOR THE AIR CARGO SECTOR?
As different countries begin to emerge from lockdown at various times, supply chains globally continue to be affected. Capacity is currently scarce in both air and ocean cargo which presents an unusual problem. Usually, the lack of capacity in one form of logistics transport can balance out the other but, with fewer passenger craft in the air and the scattered distribution of shipping containers around the globe as a result of the Suez Canal blockage, the sector is facing a huge imbalance in supply and demand. If this volatility in the market continues, spot market pricing will reign as carriers look to take advantage of a market under stress and leverage as much revenue as they can get. In the last 12 months, for example, prices frequently spiked (and fell) in line with demand.
There is no doubt that there will be some ‘levelling off’ of such pricing fluctuations in time but the market conditions remain unpredictable in the short-to-medium term. We will certainly see long-term contracts playing a part in the future landscape of supply chain logistics where large and consistent cargo volumes make this a viable option.
As an industry, we want to see a more stable and predictable market. A market where we have the breathing space to enhance other areas of our businesses, such as implementing new technologies and sustainable logistics solutions.
Certainly, the past year has sped up the adoption of various technologies across the freight industry but we still have some way to go to maximise on this opportunity. At Priority Freight, we have reacted swiftly to the changing client demands and have already implemented a real-time ‘track and trace’ system allowing our clients to have visibility of every step of their cargo’s journey. We will continue to develop such technologies to improve the client experience but also to introduce efficiencies across the logistics solution.
The first air cargo industry sustainability report has just been published, and it’s a challenge the whole industry is facing. We acknowledge that there are inevitable environmental impacts associated with our daily operations. However, the company seeks, wherever possible, to identify opportunities to deliver a net positive impact on the environment, whilst providing the fastest, most cost-effective and reliable door-to-door logistics solutions available. By holding the ISO 14001 (environmental management) accreditation, Priority Freight has shown continual improvement of the systems currently in place, along with compliance for future requirements. The extensive criteria required to uphold this accreditation displays our commitment to effective environmental management and encourages better environmental performance in our suppliers.
As an industry, we have already come so far. We have shown, yet again, that we are resilient and adaptable. Forwarders that successfully manage a safe passage through this current storm will emerge as strong contenders in the marketplace, but those that lead it will emerge triumphant.