air freight

Peak season is upon air freight

Peak season is quickly coming upon the air freight industry. 

Forwarders are reporting limited capacity on Asia-US, with rates from Hong Kong into New York now hitting HK$36 per kg (US$4.58) on major carriers such as Cathay, Cargolux and Asiana. Los Angeles rates are marginally lower, hovering at between HK$30 and HK$35++.

“The air freight market is very busy in China and Asia,” said one Asia-based forwarder. “The rate is increasing every week. But space is still extremely tight, even with high rates.”

He said capacity ex-Hong Kong was particularly in demand, and bulky, loose or dense cargoes were struggling to find space – “It’s very busy.”

Forwarders have a three-day wait to fly cargo out of key hubs in Asia, he added.

Emirates is thought to be full already for the rest of the week, ex-Hong Kong.

Shanghai is also seeing strong demand, and there has been a rise in charter flights to the US, with charter rates increasing apace, and some destinations now not available.

Crucially, November 11, singles day, is coming up and forwarders are predicting higher demand from then through to the end of November.

One EU air freight forwarder said: “The market is going north quickly on air freight inbound flows from Asia. It’s the usual seasonal trend, but the market is tightening up.”

But, he added, he didn’t see the peak being as strong as last year.

“Last year was pretty special. But I reckon there will be some mega peaks and spikes in November,” he said.

“The transpacific market got really busy a week or so back and it is usually two weeks ahead of Europe. European carriers will go for the high dollar rates into the US – and then Europe rates will increase to win back the space. It’s market dynamics.”

Europe too is already seeing movement, but rates are said to be more unsettled, although rising, with some key tradelanes out of Shanghai already busy, with a four-day wait on ad hoc cargo.

Fuel prices are also on the rise, with many carriers raising surcharges, and all carriers out of Hong Kong will raise surcharges from Thursday.

The real question will be if airlines manage to profit significantly – and keep rates high by restricting capacity and selling as much ad hoc space as possible during the peak.

“As airlines went into blocked space agreement discussions this year, their view was that there was too much capacity contracted in 2017, and they didn’t get the results they wanted,” said Neel Jones Shah, head of air freight for Flexport. “So they kept it back this year.”

Another forwarder added: “There are a lot more capacity protection agreements this year that have been signed with the carriers. My gut feeling out of China is that it’s 50%  blocked space agreements and 50% the floating market – we are starting to get two market mechanisms, like you have in shipping.”

The other question is how e-commerce will affect the peak – and for how long.

Speaking at a CIFFA event two weeks ago, Jamie Porteous, chief commercial officer for Canada’s CargoJet, noted: “The peak is explosive, it takes off after Thursday and lasts to the end of January.

“It’s dominated by e-commerce. We have seen a real transition from single digit growth – we’ve now had double digit growth for ten quarters.”

Another UK forwarder added: “The cycle on e-commerce stops much later, people are ordering right up to Christmas. And there is a really early Chinese new year this year, so there will probably be a lot of air freight in January as the Chinese factories won’t have that long.”

Source: The Loadstar

Heathrow Cargo

Heathrow cargo spend set to increase

Heathrow has been given the green light to spend £43m on its cargo activities – but input from carriers could stretch the budget further.

Head of Heathrow Cargo Nick Platts has long campaigned for a freight budget, and now has a five-point plan for the cash.

But one item on his wish list – a “forecasting and insights workstream”, which would give the airport better information on its cargo activities – is actually data the airlines already have.

“It would give us a macro level forecast with forward projections. Then we can identify high-risk days for congestion, and that can be built into the planning model. It’s really about better resource planning,” he explained.

“Leicester University has developed a flight level tool – it looks at aircraft type, destination and tonnage forecast and could help us to establish demand at the control posts. You then look at the landside vehicle movements.

“We need better insight into what’s moving, when and how. All we find out is what has departed or arrived, with no visibility on trucks or transfer traffic. We estimate that about 45% of volumes are transfer traffic – but we don’t know. So we don’t know what facilities to provide.

“We know the US is a big tradelane – but what’s moving on that lane? Do we need special handling facilities? Should we change the terminal design? Should it be biased towards traffic to the US, or Asia?

“All the master planning designs are informed by passenger flows – we need to do that for cargo.”

The carriers already have the data, but Mr Platts said they did not want to share it with the airport.

“We don’t know our trade flows, and we need to know. If the airlines won’t work with me, we will have to spend money – their money in fact – on finding information they already have.”

Another item on his list is an airside transfer facility for aircraft-to-aircraft movements, with a Border Force station.

“Border Force has indicated that it would look favourably at a transfer facility,” said Mr Platts. “And we had one airline agree, and helped choose a spot for it. Then we got caught up in governance and the airline ended up changing its mind.

“However, another airline is interested and we will have more discussions about the building and what facilities are needed.

“It will be fairly basic for now, but as part of the expansion programme we have set aside additional land for screening and will work with airlines on that.”

The initial facility will cost about £1m, said Mr Platts.

Next on the shopping list is a truck park near Terminal 4.

“There will only be space for about 75 vehicles, but it’s a start,” said Mr Platts. “We will have to relocate the existing users, add toilets and showers for the hauliers and we are talking to landlord Segro as to how we link it to the cargo area.”

The park is one of the more expensive items on the list – at about £14m – as the site needs to be cleared.

Next up is a single examination area for Border Force, Customs and a new animal reception centre.

“It will be a more efficient use of inspection spaces and will reduce traffic,” said Mr Platts. “And it will be a much more efficient operational set up. The animal centre needs more capacity; we have identified a site and we have the broad requirements.

“It’s not just a new building, it’s about using new technology and introducing new ways of working.”

The new centre comes with a price tag of £23m.

Heathrow also plans to build a new stillage facility, with racking for empty ULDs.

“At the moment containers are stored on the ground, and we have found that they blow loose – and have even blown towards the runway.”

The rack will hold about 870 ULDS and was once all set to be developed, until the supplier tasked with building it went bust. Heathrow is now looking for a new supplier for the facility, which will cost about £3m.

Heathrow announced last week that volumes were up 1.5% in the first nine months of the year, reaching 1.3m tonnes, which it said was due in part to five new services to China.

Source: The Loadstar

 

Heathrow Cargo

Air Cargo figures start the year strong according to IATA

The International Air Transport Association (IATA) released data for global air freight markets showing that demand, measured in freight tonne kilometers (FTKs), rose 8.0% in January 2018 compared to the year-earlier period. This was up from the 5.8% annual growth recorded in December 2017. 

Freight capacity, measured in available freight tonne kilometers (AFTKs), rose by 4.2% year-on-year in January 2018.

The continued positive momentum in freight growth into 2018 reflects the fact that demand drivers for air cargo remain supportive. Global demand for manufacturing exports is buoyant and meeting this strong demand is leading to longer supply chain delivery times. Demand for air cargo may strengthen as a result, with companies seeking faster delivery times to make up for longer production times.

“With 8% growth in January, it’s been a solid start to 2018 for air cargo. That follows an exceptional year in which demand grew by 9%. We expect demand for air cargo to taper to a more normal 4.5% growth rate for 2018. But there are potential headwinds. If President Trump follows through on his promise to impose sanctions on aluminium and steel imports, there is a very real risk of a trade war. Nobody wins when protectionist measures escalate,” said Alexandre de Juniac, IATA’s Director General and CEO.

All regions reported an increase in demand in January 2018.

Asia-Pacific airlines saw demand in freight volumes grow 7.7% in January 2018 and capacity increase by 2.2%, compared to the same period in 2017. The increase largely reflects the ongoing strong demand experienced by the region’s major exporters, China and Japan which has been driven in part by a pick-up in economic activity in Europe. However, the upward-trend in seasonally-adjusted volumes has paused.

North American airlines’ freight volumes expanded 7.5% in January 2018 year-on-year, as capacity increased 4.2%. The strength of the US economy and the US dollar have improved the inbound freight market in recent years. However, this may be offset by the weakening in the dollar although the recently-agreed US tax reform bill may help to support freight volumes in the period ahead. Seasonally-adjusted volumes are broadly trending sideways.

European airlines posted a 10.5% increase in freight volumes in January 2018. Capacity increased 5.3%. The strong European performance corresponds with a very healthy demand for new export orders among the region’s manufacturers. Seasonally-adjusted volumes jumped 3% in month-on-month terms in January – the largest increase since March 2017.

Middle Eastern carriers’ freight volumes increased 4.4% year-on-year in January 2018, the slowest growth of all regions. Capacity increased 6.3%. Seasonally adjusted freight volumes continued to trend upwards during the first month of the year, however, the region’s carriers remain affected by the ongoing challenging political environment in the Middle East.

Latin American airlines experienced a growth in demand of 8.0% in January. Capacity increased 5.4%. The pick-up in demand comes alongside signs of economic recovery in the region’s largest economy, Brazil. Seasonally-adjusted international freight volumes are now back to the levels seen at the end of 2014.

African carriers’ saw freight demand increase by 12.9% in January 2018 compared to the same month last year. The increase was helped by very strong growth on the trade lanes to and from Asia. Freight demand jumped by 59% between Africa and Asia in 2017 following an increase in the number of direct flights between the continents, driven by ongoing foreign investment flows into Africa.

Source: IATA

Lufthansa cargo

Lufthansa cargo will fine customers for not using an e-air waybill

To boost electronic air waybill (eAWB) adoption the carrier has decided to introduce a 12 euro per paper air waybill fee for tradelines on which they are available. 

E-AWB penetration edged up 0.6 percentage points to 53.2% in January 2018, according to the latest statistics from IATA.

January’s figure compares with 52.6% in December 2017. IATA’s target e-AWB penetration figure is 68.0% by December 2018.

A spokesperson for Lufthansa Cargo said: “With the introduction of the digital air waybill, Lufthansa Cargo has already set the course for the digitalisation of the logistics industry.

“As of April 2, 2018, the airline will introduce a fee to pass on the costs incurred in processing paper-based bills of lading. The Paper AWB Fee is charged for each consignment for which no e-AWB exists. In an introductory phase until 1 October 2018, only a reduced amount will be charged.”

The spokesperson added: “E-AWBs are already well received by many Lufthansa Cargo customers and partners – they simplify document handling, reduce the error rate in data transmission and make processes more effective.

This development is to be further promoted.

“Since 2013, Lufthansa Cargo has been offering the possibility to digitise central airfreight documents and thus switch to e-AWBs, a decision that allows companies to save up to 50% of their document processing time and thus significantly reduces costs.

“In order to ensure smooth implementation, the freight carrier supports the switch to the digital consignment note.”

A spokesperson for the carrier told The Loadstar this programme would initially run until 1 October, at which point the fee could rise.

“With the introduction of the digital air waybill, Lufthansa Cargo has already set the course for the digitalisation of the logistics industry,” said the spokesperson.

Responding to the news, head of Evofenedex, the Dutch Shippers’ Council, Rogier Spoel told The Loadstar it was the right idea – but the wrong approach.

“We’re in favour of a greater push for eAWBs, but this only works if you stimulate parties to use them, not punish those that use paper,” said Mr Spoel.

“This could be achieved with lower rates or other incentives: offer shippers free track and trace on the eAWB, and that will push forwarders to adopt eAWB.”

Mr Spoel was not alone in his stance, with several forwarders echoing his comments, with supply chain business development director at MIQ Logistics, Matt Fullard noting that “many” airlines and airports are yet to participate in eAWB roll-out. And he questioned Lufthansa’s justification in imposing fees as a result.

“Arbitrary charges are never welcomed by MIQ Logistics, or the forwarding community who will always try to protect their customers,” added Mr Fullard.

“The danger for Lufthansa is that those affected by the imposition of this fee will simply select alternative carriers.”

Unsworth Global’s Mario Gomez said there are still many forwarders and shippers that are are unaware of eAWB and its advantages.

“There is still a lot of progress to be made in raising awareness of the eAWB initiative and the airline’s do have a big role in achieving that, but is levying a charge really the best way to achieve this?” asked Mr Gomez

“We believe that eAWB and paperless transactions is the right move for the industry, but instead of a charge for those that still use paper AWB, a reward system could be devised for the forwarders and shippers that implement the eAWB.”

Air freight director at Norman Global Gary Dean acknowledged that he shares Lufthansa’s frustration with the slow pace of eAWB adoption, but we did not support the imposition of this fee.

“Particularly when the primary benefit is on the carrier’s side rather than the forwarder, who has to invest in costly software changes in order to participate,” said Mr Dean.

“Additional charges are always received negatively, rather than levying a surcharge for not adopting eAWB, we would prefer to see a discount, or other reward, for adopting eAWB.”

The carrier did not respond to questions on whether subsidiary carriers Brussels and Swiss World Cargo would also be implementing the fee. However, the spokesperson did say eAWBs were “already well received” by many of its customers and partners as they “simplify” handling and reduce errors.

“It’s a decision that allows companies to save up to 50% of document processing time, and thus significantly reduces costs,” continued the spokesperson. “In order to ensure smooth implementation, the freight carrier supports the switch to the digital consignment.”

Source: The Loadstar /Air Cargo News

Heathrow Cargo

Record breaking figures for Heathrow

Freight travelling through Heathrow reached record levels for the start of the year, as over 133,000 tonnes made its way through the airport in January, with export volumes growing by 10.6%.

The top destinations for cargo growth were the US (1,214t), Spain (1,070t) and China (966t).

Heathrow CEO John Holland-Kaye said:

“Heathrow is off to a flying start, with record passenger numbers and cargo volumes and the start of our public consultation on the third runway.  Heathrow expansion will provide the global trading routes to super-charge Britain’s economy as we leave the EU.”

Heathrow has now launched one of the largest public planning consultations in the country’s history – the next milestone in the airport’s plans for expansion. The 10-week consultation offers the public the opportunity to shape the airport’s plans, enabling Heathrow to deliver the benefits of expansion while the keeping commitments made to local communities.

Heathrow remains the UK’s busiest port by value with over £100bn of goods travelling through the airport each year.

air freight

Air freight volumes at their strongest year of growth since 2010

The International Air Transport Association (IATA) released full-year 2017 data for global air freight markets showing that demand, measured in freight tonne kilometers (FTKs) grew by 9.0%. This was more than double the 3.6% annual growth recorded in 2016.  

Air cargo’s strong performance in 2017 was sealed by a solid result in December. Year-on-year demand growth in December increased 5.7%. This was less than half the annual growth rate seen during the middle of 2017 but still well above the five-year average of 4.7%. Freight capacity grew by 3.3% year-on-year in December.

Full-year 2017 demand for air freight grew at twice the pace of the expansion in world trade (4.3%). This outperformance was a result of strong global demand for manufacturing exports as companies moved to restock inventories quickly.

Industry-wide FTKs grew by 9.0% year-on-year in 2017 as a whole, up from 3.6% in 2016 and the strongest calendar-year of growth since 2010.  Demand grew three times faster than capacity in 2017, which drove a further recovery in the freight load factor. 2017 was also the strongest year of global goods trade growth since 2011.

“Air cargo had its strongest performance since the rebound from the global financial crisis in 2010. Demand grew by 9.0%. That outpaced the industry-wide growth in both cargo capacity and in passenger demand. We saw improvements in load factors, yields and revenues. Air cargo is still a very tough and competitive business, but the developments in 2017 were the most positive that we have seen in a very long time,” said Alexandre de Juniac, IATA’s Director General and CEO.

“The outlook for air freight in 2018 is optimistic. Consumer confidence is buoyant. And we see growing strength in international e-commerce and the transport of time- and temperature-sensitive goods such as pharmaceuticals. Overall the pace of growth is expected to slow from the exceptional 9.0% of this year. But we still expect a very healthy 4.5% expansion of demand in 2018. Challenges remain, including the need for industry-wide evolution to more efficient processes. That will help improve customer satisfaction and capture market share as the expectations of shippers and consumers grow ever more demanding,” said de Juniac.

Airlines in all regions reported an increase in demand in 2017.

Asia-Pacific carriers saw demand in freight volumes grow 5.6% in December 2017 compared to the same period in 2016 and capacity grow by 2.2%. This contributed to a growth in freight demand of 7.8% in 2017 compared to 2016. Capacity increased 1.3%. The strong performance of Asia-Pacific carriers in 2017 largely reflects the ongoing demand for exports from the region’s major exporters China and Japan which has been driven in part by a pick-up in economic activity in Europe and a continued solid performance from the US. This is expected to support demand into the New Year.

North American airlines saw freight demand increase by 5.4% in December 2017 year-on-year and capacity increase of 2.2%. This contributed to an annual growth in 2017 of 7.9%.  Capacity grew by 1.6% in the 2017 calendar year. The strength of the US economy and the US dollar have improved the inbound freight market in recent years. Looking towards 2018, the recently agreed US tax reform bill may help to support freight volumes in the period ahead although this may be offset by the recent weakening in the dollar.

European airlines posted a 5.0% year-on-year increase in freight demand in December and a capacity rise of 3.2%. The strong performance in December boosted cargo volumes for the 2017 calendar year by 11.8% – the largest increase of all regions with the exception of Africa. Capacity in the region increased by 5.9% in the 2017 calendar year. This is consistent with Europe’s manufacturers’ export orders growing at their fastest pace on record. This is expected to support demand into the New Year.

Middle Eastern carriers’ freight volumes increased 6.3% year-on-year in December and capacity increased 4.7%. This contributed to an annual increase in demand of 8.1% in 2017 – the third fastest growth rate of all the regions. Capacity increased 2.6%. However, having not seen the strong upward demand of other regions in the first half of 2017, Middle-Eastern carries’ share of global demand dropped for the first time in 18 years.

Latin American airlines experienced a growth in demand of 4.9% in December and a capacity increase of 11.6%. This contributed to an annual growth in freight demand of 5.7% and a capacity increase of 3.1% in 2017. This was the first increase in annual demand in two years. The pick-up in demand comes alongside signs of economic recovery in the region’s largest economy, Brazil. Seasonally-adjusted international freight volumes are now back to the levels seen at the end of 2014.

African carriers’ posted the fastest growth in year-on-year freight volumes, up 15.6% in December 2017 and a capacity increase of 7.9%. This contributed to an annual growth in freight demand of 24.8% in 2017 – the fastest growth rate of all regions. This is only the second time African airlines have topped the global demand growth chart since 1990. Capacity in 2017 increased 9.9%. Demand has been boosted by very strong growth in Africa-Asia trade which increased by more than 64% in the first eleven months of 2017.

IATA stated that 2017 will be remembered as the best year for growth in air cargo. With growth comes additional challenges, therefore, it is important that the industry continues to transform and embrace new technologies. As Alexandre de Juniac, IATA ‘s Director and CEO says, “2017 was the strongest year for air cargo since 2010. There are several indicators that 2018 will be a good year as well. In particular, buoyant consumer confidence, the growth of international e-commerce and the broad-based global economic upturn are cause for optimism as we head into the New Year.”

To read the full report please go here

 

air freight

Air Freight up 5.9% in October – a strong start for Q4

The International Air Transport Association (IATA) has released data for global air freight markets showing that demand, measured in freight tonne kilometers (FTKs), rose 5.9% in October 2017 compared to the year-earlier period. 

This was a slowdown from the 9.2% annual growth recorded in September 2017 but still exceeded the average annual growth rate of 3.2% over the past decade.

Freight capacity, measured in available freight tonne km (AFTKs), rose by 3.7% year-on-year in October. This was the 15th consecutive month in which demand growth outstripped capacity growth, which is positive for load factors, yields, and financial performance.

Airlines in all regions reported an increase in total year-on-year demand in October. However, in contrast, international freight growth slowed in all regions except Africa.

Asia-Pacific airlines saw freight volumes increase by 4.4% and capacity expanded by 3.9% in October, compared to the same period last year. Demand for freight is now around 3% higher than the peak reached in the post-financial crisis rebound in 2010.

European airlines posted a 6.4% increase in freight demand in October 2017. This was a marked slowdown from the 10.6% growth in demand in September, however it was still above the five year average of 4.9%. Capacity increased 2.5%. Concerns that the recent strengthening of the euro might have affected the region’s exporters have not materialised yet. Europe’s manufacturers’ export orders are growing at their fastest pace in more than seven years. Freight demand remains very healthy on transatlantic routes and is strong on routes to and from Asia – having received a boost in trade from the economic stimulus measures put in place by China.

According to the IATA, freight volumes are still expected to grow in 2018, although at a slower pace than in 2017.

Alexandre de Juniac, IATA’s Director General and CEO said that “Demand for air freight grew by 5.9% in October.  And tightening supply conditions in the fourth quarter should see the air cargo industry deliver its strongest operational and financial performance since the post-global financial crisis rebound in 2010”

why use us air freight

Air Freight – Why use us?

When it comes to international shipping, there are many choices as to how to move goods.  The main decision to make is what kind of transport to use.  Deciding between ocean freight and air freight is an important choice. Here, we give you the reasons why its a good idea to choose air freight.  

Going by air is the most time efficient. Its the fastest shipping method which means that goods can be moved quickly and is usually the more cost effective for smaller cargo.

The routes for air freight are large and diverse.  Most destinations in the world are covered and relatively easy to get to.  Air offers reliable departure and arrival times – a large amount of flights depart daily and this means that the risk of delay is lower than that of sea freight, with container ships usually on a weekly schedule.

Supreme freight specialise in restricted and hazardous goods, and dangerous cargo by air.  These types of goods need more rigorous checks, and with air freight comes a higher level of security generally, airport safety controls are paramount meaning that the restrictions can be difficult to navigate.

We have a team of highly skilled experts at our Heathrow Airport office with a broad range of experience in handling all types of shipments. We can:

Arrange daily nationwide collections

Offer an Air Freight consolidation service

Offer Direct and indirect shipment options

Create house airway bills on your behalf

We offer very competitive rates and we can invoice in USD to avoid any high currency exchange rates.

Why not contact us and see what we can offer?

enquiries@supremefreight.com

02380 337778

golden week

ALERT: Golden week and the implications for shippers

As part of celebrations for golden week, also called National Day, a major holiday is coming up in China from Saturday 1st October for a week, officially ending on the 7th but with effects lasting until the 10th.

It has been celebrated in mainland China and Hong Kong since 2000. The holiday was implemented by the Government to encourage domestic tourism and allow families to make long distance trips. This means that businesses come to a standstill.

All businesses will be closed, cargo flights are cancelled and ports operate on basic crews. Shipping quotes will be hard to obtain as nothing moves in or out.  Vessels are usually under capacity at this time so don’t sail.

Our advice is plan ahead! Contact us as soon as possible for rates and availability to secure your shipment in time. Please also be advised that there will be a back log of orders and freight after golden week which will mean that space will be at a premium.  If a shipment is time critical it is important to be organised before next week.

You can submit an enquiry through our website, send us an email or call us on 02380 337778.

We look forward to hearing from you.

Heathrow terminal 6

Heathrow terminal 6 in jeopardy

It has been decided that plans for a 6th terminal will be halted to keep costs down whilst the 3rd runway is being built.  

Heathrow published its half yearly report last month, which made no mention of the proposed plans.  Instead it stated that further investment in terminals 2 and 5 will go ahead instead, which allows the work to be done over a longer period of time to keep the costs under control. Whilst keeping costs under control, this also means that passengers will not face an increase in air fares despite the building of the 3rd runway.

When terminal 6 was submitted for public consultation it discussed the loss of up to 700 homes in the area, and was scheduled to be built by 2020.

According to the report, over 30% of the UK’s non-EU exports by value pass through Heathrow today. In the six months ended 30 June 2017, Heathrow’s cargo volumes increased 9.1% to 0.82 million tonnes, one of the strongest periods in the last 5 years in terms of year on year performance, with notable increases on North America and the Middle East.

John Holland-Kaye, Chief Executive Officer of Heathrow, said: “Heathrow’s strong start to 2017 is a boon for Britain…more British trade is flying high on new trading links and our expansion plans are on track. The Government set us the challenge to expand Britain’s hub while keeping airport charges close to current levels. Working with airlines, we are making good progress to meet this challenge whilst delivering all our local commitments and the global connections our country needs.”

Earlier this month it was announced that MPs will now not vote on Heathrow’s proposed expansion until 2018, with a final policy statement on airport capacity in the South East being delayed until next year.