After a difficult 2023, this year has been one of resurgence for the air market. Unlike a typical year’s air peak season, which ranges from early fall to the Chinese New Year, 2024 has seen an early, extended period of heightened activity. Booming demand for e-commerce from Asia, air diversions from disruptions in the Red Sea, and shippers using air to mitigate the effects of the US East and Gulf Coast port strike have all contributed to the usual peak season. Elevated airfreight demand has carried on for three quarters and shows no signs of slowing down as we near the end of 2024.
As shippers plan for 2025, this extended air peak season has added another layer of complexity as forecasting is less reliable than ever. However, there is much to be learned from this abnormal peak season that can help shippers and whichever direction the market goes.
Three considerations when building 2025 plans:
Diversification is a must – across modes and trade lanes.
No shipper is a stranger to disruption in 2024. Shippers are currently facing ongoing risks from geopolitical conflict, severe weather, labour unrest, volatile consumer demand, and more.
These persistent disruptions have made effective mode diversification a business imperative for 2025. Building multimodal techniques into shipping strategies ensures adaptability in the face of changing circumstances and allows your freight to continue moving even if one mode experiences delays or disruptions.
Adjusting shipping strategies to include flexibility and a mix of modes will continue to be important in 2025. Air forecasting is becoming increasingly difficult, so evaluating the freight that is truly urgent and worthy of air will be critical for risk mitigation and cost savings.
Be prepared for regulatory changes, which could move fast.
A recent move by the Biden Administration to curb low-value shipments entering the US duty-free under the US$800 de minimis threshold — commonly utilised by e-commerce businesses in Asia — highlights the need to keep regulatory and compliance issues top of mind. With the upcoming US election and new security measures anticipated across Europe, more regulatory shifts are likely on the horizon in 2025 and could have an impact on capacity. For example, should the de minimis threshold be lowered, air capacity would likely open as most of the e-commerce freight using air now would be at risk of being held at the border.
Overall, the global regulatory trade landscape is growing more complex. It can have major impact on not only individual supply chains but also on capacity and rates, and shippers should pay attention to anticipate potential changes to their strategy. At least 70 countries have elections in 2024, representing nearly half of the world’s population. As a result, it’s likely that more trade and compliance changes are on the horizon. Working with a global logistics partner will enable shippers to stay informed of regulatory changes in order to make the best decisions for their business and supply chain strategy.
Driving up cost and straining available capacity
Air has long been seen as a safeguard for businesses willing to pay premium rates to avoid potential disruption, and the ongoing uncertainties in ocean shipping have increased reliance on this mode. For critical just-in-time inventory, such as pharmaceuticals and automotive, the preference for airfreight is justified. However, air capacity has increasingly been flooded by non-essential freight that doesn’t need to be moved through air, which is driving up costs and further straining available capacity.
This issue highlights not just a supply chain pressure but a broader industry challenge. Companies need a clearer understanding of which freight is best suited for air transport versus other modes. Accurately assessing the urgency of shipments, calculating the cost of failure, and then choosing the appropriate transportation method is crucial to both maintaining inventory and controlling costs.
By building flexibility into strategies and being prepared for changes, shippers can better prepare for whatever challenges and opportunities may arise when the calendar flips to 2025.
Source: https://aircargoweek.com/key-takeaways-from-the-elongated-peak-season/
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