Find Air Shipping Success Despite Uncertainty in Today’s Air Market
In the past, air shipping has been somewhat predictable thanks to reoccurring annual events like the holiday season. But recent events have disrupted the typical peaks and valleys we’ve come to expect. Now more than ever you’ll need to find the right strategy to handle out of the ordinary events as well as the typical seasonal patterns we’re used to seeing. Your strategy should start with a clear understanding of the historical air market patterns and potential disruptors.
Air freight follows a seasonal pattern
When shipping volumes rise during peak seasons, prices increase because space on airlines becomes more sought after. Of course, the opposite is true, too. When shipping volumes decrease, space on airlines is readily available and the prices deflate.
The holiday shopping season is also the season of peak demand for air freight. It’s one of the busiest shipping periods of the year worldwide, and accordingly air service will be included. But there are other, not quite as significant, peaks and valleys in demand to keep track of as well.
Recent air market disruptors
We’re more than halfway through 2019 and there are new disruptions in the market. These differences have created more uncertainty than we’ve seen in the past. A couple of the top disruptors include:
China and U.S. Tariffs. Like many industries, air shipping is greatly affected by the ongoing trade war this year. While earlier tariff changes did not make a huge impact on air shipping, demand for air freight shifted significantly when enough shippers preemptively repositioned inventory prior to the June 1, 2019, deadline. On May 31, 2019, the United States Trade Representative (USTR) announced the deadline would be extended to June 15, 2019.
High-tech + e-commerce expectations. The growing popularity of e-commerce shopping and high-tech gadgets quickly coming to market, air freight is becoming the go-to mode of transportation for many shippers looking for speed. E-commerce’s convenience combined with the promise of two-day shipping, air shipping is often the only way to meet customer demands.
Why now is the best time to adjust your air freight strategy
Airfreight volumes are lower than we’ve seen since the 2008 recession. Even if you’re happy with your existing strategy as it works in today’s market, now may be the ideal time to update your airfreight shipping strategy. After all, if we know anything about the transportation market, it’s that it will change.
Lower inventory levels. When applied properly, air freight can be a strategic way to lower inventory levels in the United States. You’ll need the right expertise to help you find a balance between inventory costs without sacrificing customer delivery expectations.
Overcome tariffs. Be sure to consider that while air freight rates are low, you could make up the difference (at least in part) of the added tariffs on Chinese goods. Often working with a provider who can offer both customs brokerage and trade compliance services and global air freight logistics services can help you identify the greatest opportunities.
Plan on a quarterly basis. The uncertainty in today’s air freight market is likely to continue for some time. To best deal with this complex ecosystem, you may want to consider a quarterly planning strategy to avoid a long-term commitment when you don’t know what’s coming. When working with an outside provider, like a third party logistics provider, be sure they have people you can trust to help with your business needs.
What will happen to air freight in the future?
If inventories in the United States remain high, it’s likely that air shipping volumes will remain low. The best way to prepare your company, your relationships, and your reputation from today’s uncertainty is to stay flexible. Adapt quickly to ensure you can take advantage of soft markets while still buying appropriately during peak seasons.