Inbound Air Freight Impacts to Importers
The Future of the Inbound Air Freight Industry
What should you do?
Spot market price increases and capacity that continues to dwindle… seems to be a theme in the shipping world right now. This article focuses on the impact it has on smaller to mid-sized importers, and is especially true with air cargo originating in Europe and the Transpacific Eastbound markets. Why? Airlines are now looking for volume. And smaller to Mid-sized importers may not have the volume that larger importers have, therefore, causing their cargo to be pushed to the back of the line.
Why volume?
Airfreight carriers are gravitating more and more to the ocean carrier style of filling capacity. Traditionally ocean carriers will build the base of their cargo volumes through larger Beneficial Cargo Owners (BCOs), and back fill their remaining slots through NVOCCs and smaller importers. Recently there has been a surge of larger shippers essentially chartering their own flights by purchasing all of the slots on the aircraft. This is done at a higher cost per slot but guarantees space, which in turn amplifies spacial constraints to the small shipper. If these trends continue, buying air freight on the spot rate market will become more difficult than in the past. This will be especially intensified during Peak Season Shipping seasons, such as the upcoming Chinese New Year.
What does Scarbrough Recommend?
Review how you are buying with your vendors, and anticipate your weekly volumes. The more accurate you can forecast your vendors’ production schedules, the more options you will be able to utilize. Air freight space for deferred services will likely still be available to smaller importers at longer transit times via passenger flights and other means. These services can be utilized the more precise you can sink up your production schedule to your needs. With that in mind, the high cost of air freight will still apply.
To really reduce costs and improve efficiency, the optimal service option would be to take advantage of direct LCL consolidations. In fact, Scarbrough offers a direct consolidation service catered to companies importing into the Midwest. Scarbrough’s Import Consolidation Service comes direct to one of our US Customs Bonded warehouses, decreasing transit time nationwide from conventional LCL services that breakdown in L.A. by 7-10 days. Our clients’ freight can then be delivered within 1-2 days from our American-centered distribution and fulfillment centers, at a fraction of the cost than air freight. Total transit time averages 23-25 days from origin port. Imagine paying 60% less than you would with an air freight shipment and getting your shipment within 2 weeks of the original air freight destination date.
Scarbrough’s LCL Consolidation options also have inventory benefits. If our clients are also using our U.S. Customs brokerage service, they also have access to some very valuable data that will help to make internal decisions, increase compliance, and house all past shipment information. The consolidations run on a fixed weekly schedule with set CY cut offs and sailing dates, which allow for our clients to mirror production schedules with sailing schedules to optimize the amount of time saved at origin. Scarbrough is always expanding our consolidation services, and looking for more candidates. We offer base load discounts for larger CBM volumes. If you have weekly to monthly shipments from a certain origin, even if it isn’t already offered by Scarbrough, don’t hesitate to talk to us about obtaining a discount and customized program for your company.
Remember, it is our job to make your job easier. Let’s do this together.
Scarbrough is the only Kansas City-headquartered U.S. Customs Broker to offer this service and has a large reputation for our boxes out of Shanghai, Shenzhen/Yantian, Ningbo, UK, Hamburg, Germany, and more. If you would like someone to reach out to you to discuss solutions, please email Chris Hapka at chapka@scarbrough-intl.com or call 816-584-2455.
Here’s how it works.
Watch this quick 3-minute video to explain how our Midwest Consolidation service is a vital solution to so many of our clients.
