Air Cargo

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.

The service comes as air freight rates out of Hong Kong have stabilized but are still approximately 20% higher than this time last year, according to the Baltic Air Index.

A flood of duty-free shipments from Asia has upped the ante on brokers having broad knowledge of the upstream supply chains used by their importer clients.

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.

Not even the widespread disruption to global aviation from the Microsoft IT outage in mid-July could derail resurgent air freight markets.

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 second half of 2024 is not likely to bring rate relief for shippers forced into the air by geopolitical events and trade tensions between the US and China.

The air freight division of ocean carrier MSC now has a fleet of five branded Boeing 777 freighters that the carrier has deployed across major routes.

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.

Regulators in the US and Europe are placing online shopping marketplaces under increasing scrutiny as huge volumes of e-commerce packages, imported mainly from China, fill aircraft on trade lanes out of Asia.

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.

The airline industry is pinning its hopes on sustainable aviation fuel providing a long-term path to net zero, but there will not be enough biofuel to go around, European climate campaigners Transport & Environment have found.

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.

It is a good time to be in the freight transport business with air cargo and ocean shipping on the trade lanes out of Asia seeing sustained demand and robust rate levels.

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.

US package shippers are shifting from air to ground and from premium-priced to deferred services, UPS says, boosting its SurePost volumes by 10%.

Demand that began to build at the end of last year spilled into the first quarter and K+N says its forward bookings indicate the positive volume development will continue as the year progresses.

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.

With Asia-Europe services already served by 12 weekly flights out of Paris, the addition of an Asia-US network will fill a crucial gap in the airline’s global coverage.

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.