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   Vol. 19 No. 43
Wednesday May 27, 2020
Forwarder Dilemma Post COVID-19
Keshav Tanna Forwarder Dlemma

“Air cargo, a most affected service commodity under the COVID-19 pandemic, is facing unprecedented challenges ahead,” Keshav Tanna, Director at Links Forwarders Pvt. Ltd. (Mumbai India), told FlyingTypers.
     Keshav, who also devotes much time and effort to FIATA as an Extended Board Member & FIATA Chairman - Airfreight Institute (AFI), declares:
     “Airlines are bleeding, and airport cargo terminals are congested with uncleared cargo.
     “Customs are working at skeletal capacity in many parts of the world and the highly time-sensitive nature of airfreight shipments is making the situation challenging.
     “Capacity depletion during the past months is close to 45 percent as airlines have been grounded and belly capacities have disappeared overnight.
     “Freighter capacities are being utilized to the fullest on routes that can afford the rocketing freight rates.
     “Until very recently, many airlines would have bumped off cargo in order to accommodate passenger baggage.”

Minus Seats Nets Cargo Freighters?

     “Now airlines are compelled to replace passenger seats to accommodate cargo, and it may have born some new language as aircraft become ‘P’reighters?
     “One would think, why not a combi situation on the same deck, as long as a piece of cargo is safely transported from origin to destination and is delivered safely to the end customer, freight does not care where it sits!
     “Plus, a flight attendant in a haz-mat suit will not be required during the flight!” Keshav smiled.

Lockdown Dilemma

     How trade will move in the near future, and which economy will normalize first, is anyone’s guess.
     “Aviation without surface connectivity is meaningless.
     “Hence, how governments are preparing to phase out local lockdowns and return to near normalcy will have a huge role to play in the allocation of current knee-jerk capacity placements into more permanent ones.
     “However, the biggest question mark is which trade lanes will pick up first, and whether airlines and the entire industry would be geared to move in that direction and how quickly,” Keshav said.

Forwarders Must Accelerate Readiness

     “Freight forwarders pride themselves as being the most versatile of the lot, hence we must be quick in adapting to an ever-changing market.
     “Airfreight transports essential commodities such as pharmaceuticals, vaccines, medicines, and various perishable and non-perishable food products amongst others.”

Playing Second Fiddle

     “Airfreight has always played second fiddle to the passenger travel business as well as the massive ocean freight industry.
     “We have already seen ‘cargo in the cabin’ (CIC), but considering the urgency of shipments which can be expected in times to come, are we ready to service customers who unlike earlier times might want to choose the airfreight option first?”

multimodal transport

Oceans of Change

     “Historically,” Keshav declares, “ocean freight has carried 99 percent of EXIM cargo in volume terms.
     “Is airfreight poised to see itself transform to a larger piece of the pie?
     “The answer, to me is a definite, yes!”

Time for Forwarders to Think Smart

     “Once trade picks up and economies creep back to normalcy, airfreight could become the first choice for certain sensitive and perishable commodities, if the price is affordable.
     “Even the current freighter capacity could prove to be insufficient.
     “Just like our airline colleagues’, forwarders need to be in a state of preparedness to decongest piling warehouses as swiftly as possible.
     “Like the airlines, many of the forwarders have either downsized temporarily or cut overhead to the minimum.
     “Some now find themselves in a state of limbo as there was and perhaps is no clear vision in sight.
     “All this could change swiftly.”

Government Can Lean in Here

     “Governments worldwide should consider such initiatives to protect their vital export sectors during this unprecedented period of reduced air cargo capacity, and to recognize that each outbound aircraft provides similar in-bound capacity.
     “This provides a multitude of options for governments, international traders, forwarders, and airlines to work in unison to ensure commercial air cargo efficiently utilizes available capacities in a cost-effective manner.”

Count the Money

     “One very important issue that COVID-19 has brought to the forefront is that of finance.
     “Freight forwarders will need to exercise extreme caution in how they finance their customers going ahead in these unpredictable times where shipments are lying uncleared for weeks on end, orders are cancelled, shipments are abandoned as ancillary charges have mounted, and so on.
     “The cost of doing business is no doubt going to increase and forwarders might need to realign their charges.
     “Customer segregation for credit lines could be a way ahead.
     “This is an individual call each forwarder will have to take for themselves,”
Keshav Tanna said.

If You Missed Any Of The Previous 3 Issues Of FlyingTypers
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