News #81 - Air cargo charter brokers report rising demand as port strikes continue

Charter broker Air Partner has reported a pick up in demand related to strikes at US East and Gulf Coast ports, while Air Charter Service is expecting major airlifts if the strikes continue.

Air Partner executive vice president for group charter and cargo Jon Corbi told Air Cargo News that it had seen a “huge uptick” driven in anticipation of the strikes.

He said the strikes come at a time when there is already an increased need for medical shipments due to natural disasters and global geopolitical instability.

“The highest demand has been for goods that can’t afford to be delayed by the port strikes—such as medical supplies, life-saving equipment, and temperature-controlled pharmaceutical shipments,” he said.

“Luxury items and high-value goods which can absorb the increased transportation costs are making the switch from ocean to air. Due to e-commerce gobbling up capacity, we are also seeing a big demand from customers, including shippers, co-loaders and forwarders in Asia who are struggling to find space on scheduled services.”

ACS Group cargo director Dan Morgan-Evans also said that there will be major airlifts in the coming weeks if the strike is not resolved in the next few days, as manufacturers could attempt to keep production lines running.

“The strike causes real headaches for shippers, particularly from Europe. Unless President Biden changes his mind and steps in, the delayed cargo and the backlog will have to be flown in.

“Scheduled freighters will get booked up extremely quickly, so the charter industry will need to step in to help. We are already receiving enquiries, and we expect the first few to book soon, as some cargo shipments simply cannot wait.

“During the West Coast port strike in 2012, we saw a huge amount of charter flights to, but mainly from, Asia, both during and after, to ease the backlog.”

Corbi added that charter prices were also on the rise, although this isn’t only caused by the port strikes.

“In fact, prices are approaching extremely high levels we haven’t seen since the Covid-19 pandemic,” Corbi said. “Back then prices were largely driven up by supply chain issues and the decrease in the availability of passenger flights for cargo shipments.

“Now, we can attribute the rising prices to a combination of many global disruption factors even beyond the strikes, which couldn’t come at a worse time for shippers as we enter our traditional busy peak season time.”

He added that companies switching from sea to air were also having to adapt their supply chains as goods were arriving in a matter of days as opposed to the 30-40 days it can take when using shipping services.

“We’ve been diligently working with our clients to help ease the strain on their logistic teams and are committed to ensuring that crucially needed goods and materials make it around the world as efficiently as possible.”

While much cargo can switch from sea to air, Angel Rodriguez, president of logistics firm ASF Air, pointed out that this isn’t always practical.

“A complete supply chain mode shift from ocean to air isn’t always a practical solution,” he said. “Apart from the associated costs, there are various other factors to take into consideration that differ from shipping via ocean.

“However, a portion of your production can, and should be, considered as ‘shiftable’ in mode to create the necessary safety stock.

“Many of our ASF Logistics ocean customers are thoroughly analysing their demand needs and what it would ultimately cost to not have safety stock in place. In many instances, there’s still time to reroute or change the mode of transportation to still meet the need date.”

More than 45,000 members of the International Longshoremen’s Association (ILA) began strike action at 14 ports as an agreement could not be found with port bosses.

In an update issued last night, port body the US Maritime Alliance (USMX) indicated that talks had broken down.

Data provider Xeneta’s chief airfreight officer Niall van de Wouw said yesterday that rates on certain trade lanes could rise quickly in part due to the strike action.

“We could see rates rising very quickly on some trade lanes because of the fear-of-missing-out effect as air cargo capacity leaves the market for the winter, US port workers go on strike, and conflict is escalating in the Middle East, potentially bringing further Red Sea disruption for ocean freight.”

He added that supply chains could take four-six weeks to recover from just a one-week US ports strike, which would mean disruption continuing into November.

“It’s a difficult situation. Covid was worse but this is an accumulation of many events and things can change very quickly,” he said.

Source: https://www.aircargonews.net/services/charter-company/air-cargo-charter-brokers-report-rising-demand-as-port-strikes-continue/

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