Air freight services recover slower than expected, says Beroe

Date Added: 30 December 2022

With a strong presence in the airfreight arena through our subsidiary Davies Turner Air Cargo, we note that the Beroe Group,  a software as a service (SaaS) procurement intelligence and analytics provider, suggests that the demand for air freight services is lower due to a combination of factors such as the Russia-Ukraine war, China's old zero Covid policy, high inflation rate, and the looming threat of recession.

The industrial, automotive, and agricultural industries are expected to drive the demand in North America and Europe, while in Asia, the electronics segment would be a key driver, followed by the consumer products, such as garments and apparel, Beroe added.

These reasons combined have forced air freight operators to rethink their pricing models, said the Beroe report.

"Operators are responding to the demand and supply structure of the freight market by cutting down on freight rates, optimising routes and flights, restructuring the pricing models, adjusting load capacity, etc," said Beroe in its press release.

"The net supply still noticed a growth in single digits in the past months and is expected to grow at a meagre 0.04 per cent in the following months leading to the year-end. The demand, however, is expected to grow marginally by 0.8 per cent.

"The rising inflation rate also saw around a 40 per cent increase in jet fuel prices with declining export orders. All these factors combined have led to softer demand in the past months.

"While most countries are recovering from the Covid scare, the fear of recession looms. These factors have led to a noticeable slowdown in global trade, softening the air cargo market. Moreover, a labour shortage is becoming prominent throughout western Europe and America.

"The global market size was around 58.58 million tons in 2021. North America and western Europe were the high-maturity markets, followed by India, China, the Middle East, Africa, New Zealand, eastern Europe, Brazil, and South Africa as the medium-market maturity regions, it said.

"The rising inflation is also severely impacting the air freight industry as consumers will become conservative in their spending habits. Increasing demand for high-tech products, retail, and food items will offer relief. But manufacturing activities in several advanced economies will take a hit," concluded the press release.

In the IATA/CASS league table for 2020, Davies Turner Air Cargo was the UK’s highest placed independent freight forwarder, measured by CASS airline tonnage.

For more information about the Davies Turner group’s global air freight forwarding and logistics services, please contact air@daviesturner.co.uk or visit https://www.daviesturner.com/air-freight



 

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