Despite adjusting volumes, demand for air freight services remains strong among Airforwarders Association members, says AfA executive director Brandon Fried – who expects an uptick after the first half of 2023, as warehouse inventories deplete amid sustained consumer demand, especially in e-commerce
Market expectations in 2023
While the freight shipping industry is seeing less volume compared with this time last year, 44% of Airforwarders Association members say that their business is up significantly or that they’re seeing an increase. Despite adjusting volumes, demand for our industry’s services remains strong. We still see our shippers and consignees making solid plans, especially in charters and booked space commitments, despite the normalising of trade flows. E-commerce has been the trend for the past several years, and we don’t expect this to change.
We expect capacity, especially out of Asia to the United States, to increase as passenger flights resume in the wake of discontinuing China Covid lockdowns. The increased cargo space should result in a favourable rate environment for shippers.
Our expectation is for an uptick in volumes after the first half of 2023, as current full warehouse inventories deplete amid sustained consumer demand, especially in e-commerce. The reliance on “on-demand” ordering of goods, especially in the consumer products arena, continues at a strong rate, still creating air cargo demand. Unless last-mile delivery costs increase considerably, and consumers no longer wish to pay for that convenience, that shouldn’t change significantly.
Challenges and opportunities
Our most significant challenge is finding suitable talent to work in our offices and freight facilities. The pandemic idled many workers, who have yet to re-enter the workforce, so staffing continues to be a struggle for many of our member companies.
Of course, we remain concerned about recent flight interruptions, especially because of the FAA’s technology failure a few weeks ago. Our members and their customers depend on reliable and efficient flight scheduling, so we hope the U.S. federal government avoids a recurrence of that recent incident. Fortunately, the freight forwarding business model allows for elasticity since most of our members do not own the planes used to fly their freight. As world events unfold, including the war in Ukraine, and economic uncertainty prevails, this flexibility will help us to quickly respond to changing shipper needs.
Unfortunately, infrastructure in the US remains challenging, with outdated and often cramped facilities in and around airports. Our Airport Congestion Committee has taken on that topic and is aggressively following this issue and advocating for solutions. We worked with our legislative partners to ensure that this issue (not only airports, but their surrounding infrastructure) was understood and addressed. The resulting Bipartisan Infrastructure Law that Congress passed, and the President signed last year, will go a long way toward improving this challenge for all of us.
New technologies, better connectivity
Airforwarders Association members continue to invest in technology and process automation at unsurpassed levels. We expect this trend to continue as shippers now demand ease of use, shipment transparency, and access to status information in managing their supply chains.
Our industry continues to rely on strong partnerships with the airline, ocean carrier, trucking, and rail industries. These relationships are built on solid communication and connectivity of automation systems. However, there are instances where this conductivity can be a struggle. We are, therefore, delighted to see more development in the Artificial Intelligence space, allowing these hurdles to subside and different technology platforms to communicate more effectively. Hopefully, we will see this cooperation continue in the future.