Capacity crunch

SUDDENLY the first flickers of smiles are appearing on the faces of cargo airline executives as the peak season out of Asia provides a bonanza of bookings and a rate escalation that has at least helped partially stem the haemorrhaging of cash.Yet the unpredicted demand does not signal the beginning of the end of the financial problems besetting the industry. Shippers are crying foul as rates ex-Hong Kong have exceeded US$6 per kg and delays of up to seven days have been experienced. Mainland China, Thailand and Malaysia are among a number of other Asian countries experiencing serious backlogs in airfreight.Yet the shippers and forwarders that have been a major force in driving airfreight rates down to unsustainable levels, cannot complain as airlines have scrambled to remove capacity from the market.The sudden lack of capacity and build-up of shipments waiting for transportation highlights the disjointed nature of the air cargo supply chain. That airlines and apparently forwarders too were taken by surprise reveals that the nature and volume of shippers demands seems almost invisible to the rest of the supply chain.The backlogs in Asia should disappear by the end of the peak season, but capacity is going to remain a headache for forwarders and shippers. Airlines will cut back further in the coming year, which will push them increasingly towards alliances, predicted Gary Schultheis, vice-president of airfreight, the Americas at DHL Global Forwarding.Pressure on yields in a soft first quarter will keep the lid on capacity increases and induce airlines to cut back more, he reckoned. “The carriers cannot afford to operate with equipment that does not make any money,” he said.
For the full story read the latest issue of Air Cargo News, dated 18 December. To subscribe, click on ‘Subscribe’ above.

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