Global airfreight hits capacity crunch
Current IATA data shows peak season airfreight demand in 2017 has far outpaced previous seasons, with the short fall on capacity in combination with rising jet fuel costs having a knock on effect in total airfreight cost. Whilst global airfreight capacity is on the increase, it is not keeping pace with airfreight demand. Global capacity for 2017 has increased over 5% but has fallen short of the double digit cargo growth seen in most key markets.
The outcome of this is a continuous under-supply and backlog of air cargo, threatening global supply chains, with the worst affected areas being the transatlantic and trans-pacific routes across the northern hemisphere.
Australia has not been immune to the capacity challenges, with supply chains that rely on ‘just in time’ inventory strategies suffering from inadequate cargo capacity through November and into December. The outlook for Australia is for continued capacity pressure through to Christmas. We should see the constraints ease through the new year then continued demand to Chinese new year in mid-February.
We are pleased to announce that the airfreight product strategy executed at Rohlig has assisted in minimising capacity impact for our customers in comparison to industry. We will continue to monitor demand, adjust capacity where necessary and communicate to our customers to ensure continued delivery of these positive results.
Most recently we’ve had an increase in fuel costs for airfreight. The current outlook for crude oil prices in 2018 is to stabilise at approximately USD62 per barrel and as a consequence, Aviation fuel should also stabilise. We will continue to monitor these rates and communicate with customers as the need arises.
Airfreight Product Manager
Massive year in Container Shipping
2017 has experienced one of the biggest movements in container shipping history with mass acquisition and mergers the new trend. Economy of scale is now the key to survival in container shipping and SIZE is everything!
Maersk has acquired Hamburg-Sud, COSCO merged with China shipping and purchased OOCL, Hapag-Lloyd merged with UACS, CMA CGM acquired APL, and from April 1st 2018 Japanese shipping lines NYK, MOL and K-Line will merge to become Ocean Network Express (ONE).
In addition to carrier consolidations we have seen a recovery in the global economy which the International Monetary fund predicts will expand to 3.5% this year in comparison to 3.2% in 2016. Industry consolidation, blank sailings and an improvement in global demand has contributed to escalating global freight levels.
Australia has experienced unprecedented space constraints this year as we continue to be in midst of the biggest Asia to Australia peak season in the last decade. South East Asia vessels are booked until the end of Jan 2018 while North Asia vessel utilisation is expected around 98% through the month of December. As a result rate levels have reached record highs in 2017 and we expect further increases announced in the coming weeks for South East Asia. The Europe and USA markets are more stable with vessel utilisations in the mid 90’s representing a healthier balance between supply and demand. We are seeing more pressure on the direct services from Europe with many importers preferring to avoid the congested transhipment ports in South East Asia.
Rohlig Australia will work to minimise delays for customers by leveraging longstanding relationship with shipping lines, offering flexible routings and working on early booking forecasts. In 2018 we will continue to evolve our strategic procurement to ensure we offer customers the most competitive price, space and solutions in the market.
Head of Ocean Product and Project Logistics