Plot a (Positive) Course For Air Freight Rates... if You Dare
19 June 2023
Amidst the economic doom and gloom, with claims of a looming recession in the US, voices in air freight are pointing to signs that suggest the year may go out with a (positive) bang.
Using present rates to determine the year, executive director of the Airforwarders Association Brandon Fried said, paints a distorted picture of the true state of play, with rates “artificially” low on account of carriers adding extra aircraft to prepare for a summer passenger surge.
“This will benefit freight forwarders in the long run because airlines want to tailor pricing to attract business,” said Mr Fried.
“It also indicates departure from the traditional freighters we saw during Covid, and we can expect some of the older freighters to be phased out. Now’s the time for forwarders to really show their creative strength because they’ve to anticipate what’s coming around the corner.”
And according to Mr Fried what is coming around the corner is not only a surge in passenger demand but a surge in freight capacity demand driven by an uptick in consumer confidence.
His comments may be somewhat counter to what has been heard to date but data from both the UK and US suggests there may be something in this with consumer spending seemingly once again on the climb.
US Department of Commerce data shows retail purchases by value up 0.4% – the first rise of 2023 – while the UK has seen four consecutive months of climbing consumer confidence.
“We’re coming down from the lofty volumes seen during the pandemic, which we all know were not sustainable long-term, but we’re not crashing, we’re normalising,” said Mr Fried, speaking on the Freight Buyers Club Big Air Cargo Debate podcast.
“We need to be bullish in the second half; consumers are still out there spending, and passengers are flying.”
This sense of faith in a second half rebound is not ubiquitous across the industry though, with some forwarders far more circumspect on what can be expected as we get closer to the final months of the year.
Cautioning against Mr Fried’s optimism, director of pharma and government relations at Brazil-based AGL Cargo, Jackson Campos, said he did not share the vision.
“When I look at the market, I am not seeing this cargo around, I mean sea freight is on the downward trajectory because of a lack of cargo and I do not see air freight going up only because of increasing passengers,” Mr Campos told The Loadstar.
“I believe some try to predict the market increasing and then if they’re wrong will explain why but I predict a calm and stable rate situation for the next couple of months.”
By Alex Whiteman