Charter brokers evolve to face new threats
21 / 10 / 2015
Traditional cargo charter brokers are developing their services as they face competition from new market entrants and customers increasingly gain direct access to airlines.
Speaking at the Freighters and Belly Cargo Conference in Abu Dhabi, Air Charter Service (ACS) group commercial director Justin Lancaster highlighted some the challenges faced by traditional brokers.
He said that the internet had increasingly allowed clients to contact direct airlines directly. Also, the barriers to setting up as a broker are very low, meaning there were many new entrants to the market.
He added that freight forwarders were increasingly dealing with charters in-house, a trend led by Panalpina, and passenger networks were being expanded.
Lancaster said: “Airlines are operating more passenger aircraft and looking at routes that were traditionally cargo routes.
“This is a big threat for us and has been ongoing for some time. The airlines have to do something with the passenger aircraft that are coming onto the market and more and more they are looking at routes that were cargo charter routes.
“Airlines are taking the cargo side of the business more seriously than they were.”
Connected to this development was the increased cargo capacity of the new passenger aircraft entering the market and also market over-capacity.
“When I started,” he said, “50% of our revenues came in the last quarter driven by the peak season out of the Far East; maybe it was there last year, but for many years before that business had dried up.
“Once the capacity is gone and demand outstrips supply, that’s when cargo charter brokers can come into the equation and put aircraft that aren’t so commonly known into the Far East.”
Other challenges included: a decline in new cargo charter start-up airlines which relied on charter brokers to market the aircraft for them. Some charter industries such as oil and gas were suffering a slowdown, Lancaster said.
To counter these threats and evolve the role of the broker, ACS is investing in people, developing the skills of its people through training, continuing to develop a global reach with regional offices that know the local market and clients. It also provides local currency transactions, offers rapid response, ensures it is trustworthy, has developed its own compliance department and offers insurance.
“People are the key for us. As a broker we don’t have assets. We have people, data and knowledge,” he said.