Airlines transport over 52 million metric tons of goods a year, which needs to be managed and transported by the Freight Forwarders. Their job is a difficult one which further intensifies with unprecedented occurrences. Over the last couple of years, the overwhelming number of recurring disruptions has not only made the industry realize the importance of freight forwarders but at the same point forced forwarders to broaden their service offerings to remain competitive, digitize and deliver a connected customer experience. In this month’s cover story, we not only explore the importance but the growing need and the right way to opt for the correct forwarder.
About 90% of cargo by volume in international trade is transported by sea and only 0.5% by air. But this minuscule volume of air cargo translates to 35% of world trade by value or USD 6 trillion, according to the International Air Transport Association (IATA). Transporting such volumes of air cargo worldwide involves different parties in the supply chain, making it important to take a look at cargo handling for air transport, which is done by freight forwarders.
A forwarder is a connecting link to multiple events which need to be coordinated for merchandise movement from the factory to its end user site – be it another factory, distribution centre, or a store holding area.
With supply chains becoming more complex by the day, the need to have people who understand every link more precisely increases. This makes forwarders more vital to the supply chains which are measured by speed, safety, efficiency, and lowering inventory costs. While air cargo started as a solution for delayed ocean shipments, it is now a mode of choice for value and time-sensitive commodities, as well as items that need delicate and precise handling.
The last couple of years brought forward the importance of air cargo as medicines, protective kits, and then vaccines had to be rushed across the world to fight the COVID-19 pandemic. At the same time, the reduction in ocean capacity and the challenges around moving any kind of cargo timely and without locking inventory meant an increasing reliance on the air cargo mode.
As per IATA, the effects of COVID-19 on the industry dramatically affected the air industry including air cargo. Available cargo tonne-kilometres fell industry-wide by 21.4% year-on-year in 2020. However, by the end of the year, industry-wide cargo tonne-kilometres had returned to near pre-COVID values.
“The Corona period has clearly shown that air freight is indispensable for absorbing capacity bottlenecks as well as supply chain disruptions, such as the Suez Canal flooding, in times of crisis. The ability to switch to airfreight at short notice was very important last year, especially for time-critical shipments from the fashion or automotive industries, to keep production running and to supply global sales markets,” Jan Kleine-Lasthues, COO of Airfreight, Hellmann Worldwide Logistics said, adding that 2021 was one of the best airfreight years the industry has ever seen.
Citing a similar view, Pratul Shekhar, Senior Director – Air Products, DSV Air & Sea Pvt. Ltd. highlights the exceptional work done by the forwarders in the tough times. He says, “Air forwarders in the last two years had only two priorities – to manage to get space for suppliers and ensure that cargo reaches on time, and only after these two conditions were met, prices came into consideration. Now air forwarders not only have to provide good services but also keep the price in mind. The need of the air forwarder is to find the best possible combination offering – something where the logistic cost comes down drastically,
so air cargo remains viable and provides more options – something that was missing during the pandemic.”
Values added by forwarders are essential to air freight. More and more forwarders are contracting and securing long-term capacity. With changing frontiers, there is a need to find the right solution for customers and to work hand-in-hand with forwarders.
Explaining, Afzal Malbarwala, President, Air Cargo Agents Association of India (ACAAI) says, “With international trade evolving, the need for expertise in documentation, operational compliances, and a common link to multimodal transport requirements is fulfilled by a forwarder. It is an extremely strategic role as well as one which is capable of fulfilling the end objectives of the customer who wishes for delivery on time at the right place and in the right quantity.”
A COMPETITIVE DIFFERENTIATOR
Partnership with a trusted partner with experience in providing high-quality service and competitive rates gives you a competitive advantage both strategically and operationally.
They can keep you informed on the freight market, use strategic solutions to benefit your business, and assist with robust operations ensuring on-time performance and a competitive price.
Malbarwala cites how forwarders can be competitive differentiators. “A forwarder brings multiple skill sets to the table. This is not something that an airfreight carrier or airport operator can take over as the expertise, the agility required and the subject matter knowledge is not vested in one single person. As the scope of operations and solutions required grew over time, even freight forwarders have focused on key deliverables and have attained special status as subject matter experts for specific industry verticals or trade lanes. Bringing these strengths together in multiple facets would ensure the best solutions of the industry are available for the customer to avail of.”
“A digital freight forwarder enables the customer by connecting all the stakeholders to accurately collaborate on data, documents, and tasks. This eliminates the hassles with documentation, poor visibility, tedious tasks of co-ordinating with multiple freight forwarders,” said Satish Lakkaraju, Global Head – Air freight and Pharma, WIZ
“Freight forwarders work with multiple airlines and plan routing and capacity to best optimize service delivery and offer innovative options best suited to customer needs. There can be various pricing points and options for a customer based on transit time needs and commodities. A good freight forwarder takes these into account whilst offering solutions,” said Madhav Thapar, Vice President South Asia Middle East Africa, C.H. Robinson
This is an abridged version of the original cover story published in the November 2022 issue of Logistics Insider magazine. Click here to read the complete story.