Shippers have been urged to secure space and make contingency plans as the air cargo market is facing capacity shortages out of key Asian markets during the peak season, according to speakers on a webinar from Xeneta and Tiaca.
Speaking on the webinar, Xeneta airfreight analyst Wenwen Zhang pointed to statistics showing that dynamic load factors - factoring in weight and volume - from Asia Pacific to Europe were at 86% and to North America were at around 88% in July - in what is supposed to be a quieter point of the year.
The capacity situation is expected to get tighter during the peak due to the usual rise in general cargo volumes, the ongoing surge in e-commerce and the continuing disruption to ocean shipping.
Niall van de Wouw, chief airfreight officer at Xeneta, highlighted that due to the Red Sea crisis only around 49% of ocean shipping services from Asia to Europe were on time in June, compared with a rate of around 70% a year ago.
This has helped push up ocean rates and narrow the cost differential between the two modes to make air around four times more expensive than ocean, compared with 10 times more expensive pre-Covid.
Tiaca director general Glynn Hughes pointed out that there is also the potential that US east and Gulf coast port workers could go on strike when their current labour deals runs out in October.
He said if the east coast ports shut down, cargo would need to be re-routed through the west coast, which would add time and cost, or shippers would need to switch to air cargo.
Summing up the outlook, van de Wouw said: "We see that flights are already full on many lanes, we see elevated rates. If we look at the strikes that might be heading our way on the port side, there is no resolution in sight on what is happening in the Middle East, the reduction of belly capacity towards the end of the fourth quarter, and you add it all together, you have a toxic mix of overheating towards the end Q4."
He said that many shippers were discussing the situation with their forwarders and urged those that haven't already held discussions to do so.
"I would recommend anybody who hasn't done that yet to do so, because many were caught out in Q4 last year."
To mitigate the situation, he said that shippers were securing longer term deals, blocking space, using index-linked contracts, securing rates and planning for different eventualities.
From an operational side, shippers and forwarders are looking to avoid hubs that could be worst hit by a surge in e-commerce demand, taking alternate routes to market such as over the Atlantic for US volumes.
Hughes added that this year, unlike the unexpected e-commerce demand surge in 2023, there was at least the chance to plan.
He added that it was encouraging that shippers and forwarders were negotiating longer term deals to move towards a relationship built on loyalty.
Hughes also urged companies to plan with their forwarder partners for various scenarios - for example, what they will do if the port strikes do take place.
