WESTERN retailers are rejecting air cargo and returning to ocean freight where prices are low and reliability has improved, reports London's Loadstar.
Too much stock and too little consumer demand has seen volumes from some retail customers fall 90 per cent, said one European forwarder.
'Many retailers are now trying to reduce or completely eradicate air freight,' he said.
'The 'repair' mode for critical demand-driven shipments has fallen off the proverbial cliff. Retailers are either sitting on unsold stock, or simply decisions are made not to use air freight and potentially lose sales. Retail air freight volumes are down 90 per cent with some customers, year on year, especially with the fashion/garment-focused ones,' he said.
One forwarder said: 'Questions are being asked about supply chain costs and why budgets are being blown. This can often result in a blanket ban on air freight, or higher cost solutions. There is pressure on logistics departments for reductions in freight costs in ocean, air and often overland. A little knowledge can be dangerous - and this is further pressuring retail logistics.'
Air freight rates have been falling - the TAC Index shows rates from China to Europe sank nearly 10 per cent in the past week, to levels some 35 per cent below last year. While the index shows a slight uptick in rates from China to the US, these are 52 per cent lower than last year.
Niall van de Wouw, chief air freight officer for Xeneta, agreed modal shift was underway. 'It is fair to assume that, even if consumers in Europe and North America were to buy exactly the same amount of goods in 2023 as in 2022, which is unlikely, then a higher portion of the transport is likely to move by ocean as a response of the higher reliability returning.
'Air freight received a boost in the past two years because of the incredible mess on the ocean side, but shippers are now likely to feel more comfortable moving back to ocean, from a reliability point of view.'
SeaNews Turkey
Too much stock and too little consumer demand has seen volumes from some retail customers fall 90 per cent, said one European forwarder.
'Many retailers are now trying to reduce or completely eradicate air freight,' he said.
'The 'repair' mode for critical demand-driven shipments has fallen off the proverbial cliff. Retailers are either sitting on unsold stock, or simply decisions are made not to use air freight and potentially lose sales. Retail air freight volumes are down 90 per cent with some customers, year on year, especially with the fashion/garment-focused ones,' he said.
One forwarder said: 'Questions are being asked about supply chain costs and why budgets are being blown. This can often result in a blanket ban on air freight, or higher cost solutions. There is pressure on logistics departments for reductions in freight costs in ocean, air and often overland. A little knowledge can be dangerous - and this is further pressuring retail logistics.'
Air freight rates have been falling - the TAC Index shows rates from China to Europe sank nearly 10 per cent in the past week, to levels some 35 per cent below last year. While the index shows a slight uptick in rates from China to the US, these are 52 per cent lower than last year.
Niall van de Wouw, chief air freight officer for Xeneta, agreed modal shift was underway. 'It is fair to assume that, even if consumers in Europe and North America were to buy exactly the same amount of goods in 2023 as in 2022, which is unlikely, then a higher portion of the transport is likely to move by ocean as a response of the higher reliability returning.
'Air freight received a boost in the past two years because of the incredible mess on the ocean side, but shippers are now likely to feel more comfortable moving back to ocean, from a reliability point of view.'
SeaNews Turkey
