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US forwarding chief predicts end-of-year upturn

[ May 22, 2023   //   ]

The air cargo industry should expect a strong peak season in the fourth quarter despite lower Q1 volumes, said executive director of the US-based Airforwarders Association (AfA), Brandon Fried.

According to World ACD, global air cargo chargeable weight flown in Q1 2023 was down 11% compared with a year earlier, but Fried attributes recent lower volumes to post-Covid normalization rather than decline.

“We’re coming down from the lofty volumes seen during the pandemic, which we all know were not sustainable long term, but we’re not crashing, we’re normalizing,” said Fried. “We need to be bullish in the second half; consumers are still out there spending and passengers are flying.”

Overall tonnage in Q1 dropped by 16% for Asia Pacific and 18% for North America.

He added that current freight rates are artificially lower than supply and demand would dictate because airlines are operating more aircraft than necessary in anticipation of an uptick, he said, and to accommodate swathes of passengers waiting to fly.

“This will benefit freight forwarders in the long run because airlines want to tailor pricing to attract business,” said Fried.

“It also indicates a departure away from the traditional freighters we saw during the pandemic, and we can expect some of the older freighters to be phased out.

“Now’s the time for freight forwarders to really show their creative strength because they have to anticipate what’s coming around the corner.”

Fried urged the same fighting spirit to contend with ongoing labor shortages and union negotiations, which have been casting a shadow over US supply chains and global trade flows.

Fried expects air and ocean freight demand to improve in 2024. “We have a new baseline, and we need to stop comparing to before the pandemic.

“It’s a new world, we’re seeing a new geopolitical order: the war in Ukraine, rising labor costs, Chinese manufacturers moving out of China to elsewhere in Asia, South America, Mexico.

“Manufacturers are diversifying, and we can expect to see regionalizing of supply chains in the US and globally.

“A different political structure will have a significant impact on supply chains.”

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