Not many analysts admit to being happily surprised by the markets they cover.
      But U.S. veteran Charles ‘Chuck’ Clowdis has been telling it how he sees it for decades and mold breaking is not something he fears.
      He told FlyingTypers that after years of same-same predictability in cargo markets change is, quite literally, in the air.

Something To Talk About

      “I’ve been pontificating about air cargo rates for the last eight or nine years, so let me preface this by saying that if I sound more enthusiastic this year, if I have a little more spring in my voice, it’s because for the first time we have something interesting to talk about,” Chuck said.

Ditch The Charts

      “If I went back and looked at the last eight or nine years, I abandoned doing charts and graphs about six years ago because they were all flat, they were all static.
      “Pie charts didn’t move.
      “The lines didn't move. Some of the things that would cause a jump were a new iPhone or port congestion on the West Coast, but by and large it has been a so-so air cargo market for the last 8-9 years.”

Markets 2016 Finish Way Up

      “But this year, I have something to be excited about.”
      According to Chuck, a prominent transport consultant since the 1980s and current Managing Director of Transportation at IHS Markit Economics, air freight markets ended 2016 with “a fine finish, like a horse that goes into the last furlong with a burst of speed” and momentum has been maintained in 2017.
      “Yields were up for the entire industry in the final quarter of last year,” he said. “Asia to Europe increased 30 percent, August to November, Asia to North America was 25 percent—it’s something that we didn’t necessarily anticipate.”

Loosened Purse Strings Driving Things

      This year he said consumers have further loosened their purse strings and confidence remains high.
      Although the industry still suffers excess capacity—“we’re not in danger of running out of air cargo capacity anytime soon”—Chuck said IHS Markit was receiving more enquiries about cargo space at airports, not only at international airports but also some domestic U.S. airports.
      He forecasts freight rates will improve over the course of 2017 by around 3-5 percent across global trade lanes compared to 2016.

e-commerce Driver

      “The growth in e-commerce, especially grocery and food items, will see fast growth for air cargo temperature controlled commodities,” he said. “Exotic meats and fish will drive the demand for air transport as well. And of course, changes in all things technological continue to drive demand.
      “So, given the strong indicators of increased consumer confidence and spending, we’re cautiously optimistic.”

Ready Rates Going Up

      “I think,” Chuck Clowdis assures, “that a shipper, a buyer of air cargo services, can expect to have a dialogue opened by his air cargo representative asking for some rate increases.
      “This is where we see 3-5 percent in 2017.
      “Perhaps we’re being modest on this, but that’s how we are seeing things at this particular juncture.
      “Depending on capacity, depending on the economy. We are cautiously optimistic.”

Buyers Need To Be On Their Toes

      “Air transport service buyers should keep a close eye on exactly what they’re agreeing to purchase as rates rise,” Chuck advises. “Our forecast is for base rates,” he added. “But buyers of air cargo services should always keep a close eye on ‘value-added charges.’
      “Every large buyer should read their contracts and agreements closely or, better yet, prepare their own agreements and submit them to the carrier...if they have the volumes to do so, that is.”

Disruptive New Entrants In 2017

      Changing tack, he also said 2017 would see traditional air freight players face more disruption from new entrants, not least by Amazon.
      “Amazon Air will truly be the 8,000-ton gorilla in the air—no pun intended—and a force to be reckoned with.
      “The ‘Big Guys’ can cavalierly ignore what Amazon can and likely will do, in not only air, but most transport modes. But they will do so at their peril.
      “Whether through new competition or just the loss of revenues, Amazon’s movements and testing of land, sea, and air transport should not be ignored.
      “Amazon is now a force to be reckoned with and it’s a force that we need to keep our eye on.

Keep A Weather Eye

      “We’re telling shippers that this is something that you need to look at. “Obviously if you’re selling, you’re a supplier to Amazon.
      “Most of us are buyers from Amazon. Amazon transport, whatever mode that turns out to be, will change the way almost every other mode operates.
      “The fact is like it or not there’s another player in town and they certainly have the ideas. Something they do will have an impact on what we do.”
SkyKing

Vol. 16 No. 37
Landmark United & Lufthansa Cargo Alliance
Chuckles for April 19, 2017
From Rags To Riches
Vijay Grounded
Too Cool McCool Honored