Airfreight

Airfreight (Source: Freepik)

 

Airfreight shippers have been advised to delay their 2025 tenders until after what is expected to be a turbulent peak season.

In a series of recommendations on how to manage current market conditions, Xeneta’s chief airfreight officer Niall van de Wouw said companies should ensure terms and conditions (T&Cs) are strengthened, avoid air hubs that are sensitive to the e-commerce boom, take advantage of the lack of return demand, use data and delay tenders to avoid the upcoming peak season.

“Current market sentiment influences both sides of the negotiating table and vendors will understandably use the peak season turmoil to paint a gloomier picture for 2025,” he said on the latter point.

“Recency bias gives greater importance to the most recent event, so both shippers and vendors discussing the market in 2025 are going to be influenced by what is happening around them in the here and now.

“As long as you have your T&Cs in place, you can bide your time and wait out the storm. The market may look very different in early 2025 and you will be much better placed to enter negotiations with clarity and decisiveness.”

On terms and conditions, van de Wouw said that if these are agreed and applied, it will avoid “moving goalposts” and allow both sides to work together to weather the expected peak season storm.

He added that ignoring the threat of e-commerce is one of the biggest mistakes shippers can make.

“Where possible avoid the airfreight hubs most sensitive to any e-commerce boom,” he said. “For example, when flying cargo between Southeast Asia and North America, try to avoid the Hong Kong and South China airfreight hubs.”

However, he added that the e-commerce boom is also an opportunity, explaining that the situation has exacerbated the imbalance between outbound and inbound shipping.

Shippers with inbound volumes can use this to their advantage in negotiations to secure better access to capacity and rates in the outbound (key shipping) market.

“Do not underestimate your hand at the negotiating table – in many respects, the volumes you can offer a vendor on a backhaul is even more valuable than the fronthaul because it is harder to come by and vital to achieving overall profitability,” he said.

Overall, Xeneta painted a bleak picture for the peak season. “Storm clouds are gathering as the air freight market heads towards what is expected to be an extremely challenging year-end peak season,” it said.

“The storm has been building since Q4 2023 when a surge in demand resulting from the Red Sea Crisis and massive growth in e-commerce in China took shippers by surprise. Since then, the market has witnessed spiraling freight rates in many Asian air cargo corridors – even during the traditionally slacker summer period.”

The data provider points out that the dynamic load factor – a measure of Xeneta’s capacity relative to the cargo carried – is already 4 percentage points higher than in 2023, with freight rates from Asia Pacific rising 25-40%.

 

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Source: Phaata.com (via AirCargoNews)

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