Its not our fault

FREIGHT forwarders that were “held to ransom” by airlines in the boom times, are looking on bemused as airlines blame the banks, ocean freight, their direct competitors and anyone but themselves for the massive losses currently being reported by their cargo divisions.

At the FIATA World Congress, held in Geneva last week, the general sentiment among freight agents was that the airlines have created their own downfall, by offering “ridiculous and unsustainable” rates in a desperate attempt to maintain or grab market share.

“From the smaller forwarder standpoint (and previous airline sales for 20 years), these rates are ridiculous!” said a US-based agent. “Just last week we were offered US$0.10 per kg, plus surcharges, by Singapore Airlines from Chicago to Hong Kong.”

Dr Andreas Otto (right), sales and product director for Lufthansa Cargo, said that other airlines had been “too slow in reacting to the collapse in cargo volumes”, and that this had contributed to the overcapacity that had driven rates to the level seen now.

He did acknowledge, however, that his airline had pursued a “tonnage strategy focus” over the last six months. This nominally had success in driving load factors from a low of 54 per cent in January to 66 per cent in August. Yet, this has seemingly been accomplished by following the spiralling rate declines to their current level.

He admitted to Air Cargo News that pushing up its rates by 25 per cent would prove extremely tough as it tries to implement its new “yield management” focus.

For the full story read the latest issue of Air Cargo News, dated 2 October. To subscribe, click on ‘Subscribe’ above.

Share this story