Panalpina says it has taken early steps to secure the right amount of air freight capacity for this year’s peak season after the experience of last year.
The freight forwarder explains that air freight rates remain around 15-20 per cent higher than in 2017, and it expects the industry will see further increases as it moves towards quarter four, although the increases vary by trade lane.
Panalpina says it is continuously reconfirming allocations and ensuring additional capacity across the world while Mexico, Brazil, and South Africa are some of the hottest markets.
But securing capacity will not be enough in the months ahead, according to global head of air freight, Lucas Kuehner. He said: “It’s not just about capacity this year, now we’re significantly increasing our focus on execution on the ground.”
“We’re informing airlines and their third-party handlers of our shippers’ requirements. Time to market is critical and you have to be able to execute, not promise and have the cargo stuck for three days in someone’s warehouse,” adds Kuehner.
In 2017, Panalpina transported 995,900 tonnes of air freight, the highest volume in the company’s history.
The forwarder says capacity constraints will cause delays and they could worsen if operations on the ground, such as trucking, warehousing, ground handling and customs clearance, can’t deal efficiently with the high cargo volumes.
Panalpina warns problems on the ground at airport terminals in Europe struggling with a surge in volumes is something likely to happen again in the autumn.
And some airports in Asia-Pacific could be in for a surprise, too the forwarder says, as the current global trade tensions could cause a shift of cargo flows or even the manufacturing base in Asia-Pacific.
Panalpina notes products could be routed from China to countries like Malaysia, South Korea, Vietnam and the Philippines, relabeled and repacked, and then flown to their final destination from there, causing capacity crunches and putting a strain on airport infrastructure.
Kuehner says: “This year, we are not only in close contact with our customers and airlines, but we are also talking to ground handlers and truckers to look at possible bottlenecks. We are even drawing their attention to specific arrival dates and times for incoming cargo from different airlines so that they can prepare accordingly.
“This includes providing tonnages and special handling requirements. All our preparations at this stage have one goal – to successfully use the capacity we have secured for our customers during peak season.”
And in 2018, more than ever, Panalpina said that will depend on a clean execution on the ground, but “capacity is king”, but it “alone” is “worth nothing if everything else falls apart”.