Switch to sea freight continues as air cargo deflates

Time:2009-08-07 Browse:26 Author:RISINGSUN

THE air cargo sector could lose more 35 per cent of its trade as hard-pressed shippers shift to sea freight to cut costs - a situation that may well be permanent, say forwarders according to London`s International Freighting Weekly.
While the weight forwarders polled agree, Continental Airlines product development chief Mark Mohr did not.
"Ocean shipping requires a pretty predictable level of inventory management. With consumer demand being volatile, it would indicate more ad hoc air moves when inventory levels weaken," he said.
"Once consumer demand picks up, the uncontrollable nature of fuel costs is going to force companies to move operations closer to end-user markets as the costs will destroy any advantage that lower-cost, long distance modes currently enjoy," said Mr Mohr.
But forwarders surveyed see perishable, pharmaceutical and hi-tech shippers are adapting supply chains to include sea freight where ever possible.
"We see this trend increasing. We have seen about 27 per cent make the change," said New York`s Associated Global Systems vice president Bob Imbriani. "We monitor this, which is why we can give this precise number.
Mr Imbriani said that the trend could take in 35 per cent of the traditional air cargo market at the present rate of growth.
Said Kuehne + Nagel VP Peter Ulber: "A number of commodities have switched to sea freight, including technology. We are now seeing laptops and PCs go by ocean - no-one would have done this a couple of years ago. And the pharmaceutical industry is now sending quite expensive goods by sea freight. There`s a real effort by our customers to redesign their supply chains. "
Panalpina air freight chief Robert Frei said the goods are unlikely to switch back to air in the event of an upturn.
"The shift to ocean freight has been substantial and due to the cost pressure many former users of air freight such as hi-tech and telecom have adapted their supply chains accordingly - so we do not believe this freight will come back to a great extent to air."