Air Cargo Forwarder News

Volume and rates on the Asian export corridors to the US and Europe have been high all year and online shopping promotions in November are further stoking the market.

The recent rise in volume to Europe contrasts sharply with China-to-US tonnage that in the second half has fallen far below year-over-year levels following greater scrutiny by US authorities on e-commerce imports.

Jens Lund this week emphasized the earnings potential of the takeover, pointing to greater scale and a wider portfolio of services that would increase the combined entity’s reach.

Rising competition and tough negotiations with customers are believed to be behind the narrowing profit margins that were plainly displayed in the financial results of the two forwarders.

A year of disruption has been on-the-job training for air freight shippers that are now battle-hardened and prepared for a tough end-of-year peak season.

Deutsche Bahn’s supervisory board approved DSV’s $16 billion acquisition of rival forwarder DB Schenker despite opposition from union members on the board.

The integration of two large companies in similar industries is “particularly challenging,” according to Tobias Meyer, who withdrew DHL’s interest in DB Schenker earlier this year.

While there are still regulatory hurdles to clear, a spokesperson for DSV told the Journal of Commerce the combined company “will continue under the DSV brand” going forward.

Eight straight months of double-digit volume growth and a massive increase in trans-Pacific and Asia-Europe e-commerce volumes, mostly shipped from China by air, has left air cargo capacity in short supply.

Sustained demand for air cargo on the trans-Pacific and Asia-Europe trades and the promise of rising rates through the end-of-year peak are encouraging airlines to pull capacity from less-lucrative lanes.

Still, the buoyant mood of carriers contrasts with global forwarders that have low levels of exposure to e-commerce shipments and are under pressure to find capacity for traditional customers.

Eight straight months of double-digit volume growth in global air freight markets has kept freighters full and flying at peak utilization, and continued demand is expected to outstrip available capacity through Q4 and beyond.

The extent of the disruption to air freight schedules is not yet apparent, but the loss of the belly cargo space, even for a short period, comes at a particularly inconvenient time.

Chinese online marketplaces have hit on a rich vein of business-to-customer volumes, with the current boom in international air freight driven by cross-border e-commerce rather than a recovery of traditional manufacturing.

Peak season has come early to air freight markets and with ocean shipping disrupted and e-commerce filling planes out of Asia, the demand is set to extend through the second half and beyond.

More than 70% of air cargo space controlled by Kuehne + Nagel subsidiary Apex has been presold for the third and fourth quarters.

Jens Lund believes the supply and demand balance on the major trade lanes is being restored as front-loaded shipments make their way through the supply chain.

Kuehne + Nagel’s Stefan Paul presented a sunny outlook for the rest of the year, saying he expects strengthening air and ocean yields to turn around declines reported across most of the forwarder’s financial metrics in the first half.

The carrier wants a third of its air cargo volume to be handled within an owned and controlled network as part of its integrated logistics strategy.

Shippers that have not yet arranged air freight capacity out of Asia for the fourth quarter could be in for an expensive ride, according to Xeneta.

Chinese online platforms were not specifically mentioned in an open letter to the European Commission, but the groups noted that government subsidies made competition with Asia-based e-commerce platforms difficult.

With more than 80% of e-commerce transported as air cargo, there are growing safety and transparency issues given the minimal view provided of what is actually inside the parcels.

The state-owned rail operator believes it can leverage soaring demand for China-Europe rail freight to develop a multimodal service offering underpinned by a strong air cargo network.

Cargo owners battling to find space on ships filled by an unseasonal demand surge are taking all available air freight capacity out of Asia, the Middle East and India, with rate levels rising accordingly.

The forwarder says it has been “conditionally” restored to CBP’s so-called Type 86 program and has filed a complaint against the agency to get reinstated without conditions.

Growth in the use of a low-value shipment rule has attracted critics, who say the de minimis program provides a loophole for e-commerce companies abroad to evade duties.

Underpinning strong volume growth is booming demand for Chinese e-commerce in the US and modal shift from ocean to air in South Asian countries to mitigate Red Sea disruptions.

Group CFO Melanie Kreis would not comment on the near-term freight rate outlook or the likelihood of a modal shift from ocean to air or sea-air caused by supply chain disruptions, including the ongoing vessel diversions to avoid the Red Sea.

Given the huge volumes involved in ocean freight, even a small percentage shift in transport mode from South Asia shippers is enough to keep air cargo demand and rates buoyant.

Chinese e-commerce marketplaces are rapidly expanding their global reach as strong demand from online shoppers in the US and Europe drives up air freight volumes and keeps transport capacity tight.

The top end of the global 3PL sector is populated by companies that see a down market as a chance to focus on higher-yield customers and those that see a chance to build market share.

The acquisition will add significant volume of air and ocean cargo to the MSC subsidiary and extend its reach into European markets.

Dubai continues to be one of the more popular destinations for European importers with time-sensitive cargo, with the airport able to covert ocean freight to air cargo in 24 hours.

Maersk’s integrator strategy has encompassed more access to air freight capacity, including a new tool for shippers in India to digitally price and book specific flights.

A seasonal push to get shipments out of Asia before factories close for the Lunar New Year may be masking a switch to air from disrupted ocean networks.

With an amended merger agreement, months of contentious litigation are behind the companies, clearing the way for their combined forwarding and LTL operations. 

Online shopping in North America and Europe has generated huge air freight volume out of China, with demand expected to continue past the Lunar New Year in February.

But rising air cargo rates on the major Asian export trade lanes do not portend a peak season this year with analysts pointing to poor economic conditions exerting strong downward pressure on consumers in the US and Europe.

A month ago, no one was predicting a peak season for air cargo on the trans-Pacific, but finding space from China to the US has become difficult as e-commerce demand heats up.

Shipments are getting smaller over time, driven in part by e-commerce growth, but also by a market that is disentangling cargo previously handled through air or ocean consolidation.