SME forwarders must adapt to airfreight market dynamics or lose business
5 January 2024
The soft airfreight market has seen small and medium-sized forwarders gaining market share, but they will need to improve in some areas to retain that share.
Fiata chairman Turgut Erkeskin told delegates at the ACE air freight forwarding event in Abu Dhabi today that the market offered prime opportunities for smaller forwarders that can specialise in niche areas – “Standardisation is a killer for forwarding,” he said.
WorldACD data for September showed smaller forwarders had a 15.6% share of the market, up 14.9% from the previous year, while large forwarders, while still claiming a 27.1% majority share, saw a 1.3% decline from the previous year.
Mr Erkeskin said SMEs “respond better to the changing dynamic of the market”, but if they can’t keep up with industry changes – such as regulations and digital solutions – “they will be losing their share of the market”.
One area that smaller forwarders could concentrate on is sustainability, he said.
“Larger forwarders are adapting more to the changes. SMEs don’t produce emissions reports, and so haven’t concentrated on it. But clients are starting to ask for company environmental reports, and if you don’t have one, you will lose business. We need to train SMEs to produce reports.”
Another problem is accessibility: working with larger airlines was described as a “real challenge for small and medium forwarders”, by Aircon Airfreight CEO Chris Condon.
Elodie Berthonneau, VP of cargo network planning at Qatar Airways, said: “We are seeing a small change in the level of our cargo handled by SMEs and some individuals.”
But she added that SMEs sometimes did not have the financial capacity that affords them to work easily with larger airlines.
Airlines are looking to digital solutions to make booking capacity more accessible to small forwarders and individuals, and “ee are trying different ways to provide direct access to all customers”, she said.
Etihad’s Cargo’s director west cargo commercial, Soufyan Mouaniss, told The Loadstar the carrier “liked a healthy balance of forwarders”, adding: “It’s important to focus on big accounts, but it’s also good to talk to SMEs. They might be the only ones present in a market.”
Glyn Hughes, director general of Tiaca, agreed it was good for the industry to have a diversity of forwarders.
“It’s a healthy position for the industry to have smaller, specialised forwarders as well as the mega-forwarders with global networks.”
Data provided by WorldACD shows the chargeable weight for general cargo has declined by 14% from 2019, but that niche markets have been on the rise. Since 2019, the chargeable weight for express had risen 33%, pharma by 11% and hi-tech by 19%.
“These are the areas where freight forwarders and airlines can create special products for their clients,” said Mr Erkeskin.
By: Charlotte Goldstone