Forwarders' trend to pre-book air freight space wanes

FORWARDERS are not expected to block book as much airfreight space in 2019 as last year

18 January 2019 - 19:00
FORWARDERS are not expected to block book as much airfreight space in 2019 as last year. Currently engaged in contract renewal talks with the airlines, both parties still anticipate similar levels of supply and demand this year as last and more ad hoc bookings, particularly at times of market uncertainty.

Speaking to UK's The Loadstar, Volga-Dnepr sales executive vice president Robert van de Weg said: 'I foresee less appetite for forwarders to take on the same magnitude of blocked space. For both parties, it may mean less booked space as a percentage than last year.

'The risk profile of the market is very different from last year, with tariffs, Brexit and economic uncertainty,' he explained. 'Some customers will see it differently from others, depending on their customer base.'

Last year forwarders block booked half of the capacity they required, with one forwarder cited as saying: 'BSAs (blocked space agreements) are simply a form of hedging. You split BSAs versus the spot market and, if the market looks tight, you will want BSAs. In 2018 the spot market didn't go up like it did in 2017 and we probably locked in about 45 per cent of our deals.'

He added that he couldn't see 2019 as 'being a stunning year,' believing that 'people are holding back.'

Many existing airline contracts with forwarders expire either before the summer schedule at the end of the first quarter or during the latter part of the year.

'This year there seems to be more dis-alignment between forwarders and airlines over the level of commitment versus last year,' said Mr van de Weg.

He also predicted that the industry would also see fewer charters booked this year.

'Charters are like large BSAs with even less flexibility. Last year there were a lot of forwarder pre-booked year-round charter programmes, at least 10-15 (B)747s a week, both to Europe and the US. My prediction is that this will go down substantially.'

Although pre-booking may seem less appealing, pricing is likely to remain at similar levels to last year.

'Supply and demand are quite stable,' added Mr van de Weg. 'We see some ups and downs over various destination markets ex-China - some markets have dropped a bit, some have improved but overall the situation is quite steady.'

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