Forwarders anticipate typical peak season amid global challenges

Freight forwarders are anticipating a relatively normal peak season despite supply chain challenges and other global issues. “There will always be a peak. It used to be almost seasonally related, but now it’s more related to the different situations, like the lockdown in China, the geopolitical situation and so on,” Yossi Shoukroun, chief executive at Challenge Group, told Air Cargo World . “Uncertainty and abrupt changes in recent years and months make it difficult to predict what the environment will look like tomorrow, even in the near future.” Indeed, cargo stakeholders anticipate that there will be a peak season, although — yet again — it may look different from previous years. Some predict this year’s peak will be stronger overall than in recent years, despite slowed demand due to low manufacturing activity, Evan Rosen, global chief commercial officer and president, Americas region at Sri Lanka-based EFL Global, told Air Cargo World . EFL Global typically transports retail and apparel-related shipments. [caption id="attachment_86777" align="alignright" width="437"] Photo courtesy of Air Partner.[/caption] “In the third or fourth quarter of 2021, you saw a tremendous amount of … customers buying full charter flights and spending anywhere between $1.5 million and $2.5 million for flights,” Rosen said. Even if that may not be the case for 2022, stakeholders are still expecting there to be significant demand. “I know everybody’s saying that the retailers’ … inventories are high, but that doesn’t mean they’ve got the right inventory,” he said. “So, when it comes to holiday time and holiday season, and being able to have the right fashion in place for the seasons that are upcoming, I believe that there’ll be a turn for the positive and that the airfreight market will return to what would have been a normal peak season.” Some industries slower to recover However, a potential recession alongside supply chain difficulties and overstock may indicate that some industries and commodities will not see as significant a peak season as in past years, Bob Imbriani, executive vice president of international services at Team Worldwide, told Air Cargo World . However, overall peak season should be stronger than the past few years, he noted. Indeed, some members of the airfreight community anticipate a softer peak season. During the peak, airfreight demand typically spikes when retailers need fast inventory replenishment, Cathy Roberson, president of Logistics Trends & Insight and an Air Cargo World columnist , told Air Cargo World . But that might not be the case this year due to already high retail inventories, she added. “This year, I expect the peak season to be a bit more muted compared to the last couple of years,” Roberson said. “Consumers have returned to stores as well as taking advantage of BOPIS/curbside pickups. However, I think inflation is going to play a role: Consumers will spend more but probably on less items which will equate to lower parcel volumes.” Business as usual for some carriers However, some carriers are still anticipating a peak, nonetheless. Cathay Pacific, for one, recently resumed its full freighter schedule in June and operated roughly 56% of the carrier’s pre-pandemic cargo flight capacity in May, according to a July 15 release. Tonnage from mainland China has improved, as well as cargo traffic from the Americas and Europe, the carrier further noted. In June, overall tonnage increased 13% month over month, albeit still below June 2021 levels. Cathay Pacific attributed this to reduced consumer demand from both North American and European markets due to supply chain disruptions. “In terms of cargo, we are anticipating that demand will pick up as we step out from the traditionally slower summer months and into the usual peak cargo season,” the carrier noted in the release. “Notwithstanding the various operational challenges that will be involved in preparing for this increased demand, we target to be operating about 65% of our pre-pandemic cargo flight capacity by the end of this year.” Past peaks The last few peak seasons have deviated from traditional elevated periods . Historically, peak seasons saw higher prices and rates around the holidays, whereas now airfreight rates have continued to stay high since the start of the pandemic in 2020 , paired with climbing fuel prices . Since the start of the pandemic in early 2020, peak season has started earlier in October versus November, mainly due to carrier capacity constraints, Roberson said. This early start to the peak can be traced to those constraints along with strong e-commerce sales as customers have remained hesitant to return to stores; an earlier start ensures deliveries are made on time. In 2020, airfreight rates peaked in May instead of the typical October-December period, due to lockdowns and travel bans. Meanwhile, last-mile carriers like UPS and FedEx implemented peak season surcharges in October. Demand shifted in other ways, as well. In fact, express operator DHL Express saw a “second peak” in the U.S. in the summer of that year. While not necessarily a “peak,” some European cargo airports in 2021 saw ongoing increases in cargo demand in August, despite it being a historically slow month for cargo volumes . Indeed, the pandemic has continued to affect traditional cargo patterns into 2022, as COVID-19 lockdowns in China hinder manufacturing activity and cargo volumes, which have yet to fully recover . Charter capacity, season outlook Capacity lagged behind cargo demand in 2021 , compared with 2019 and even 2020, and this has led forwarders to look toward charter capacity , including own-controlled networks, to bridge the gap. In fact, many customers secured peak capacity earlier in the season to avoid challenges. While it is difficult to gauge the state of the airfreight market and available capacity at the point peak season rolls around, it may once again heavily utilize charter capacity to meet demand. In turn, the peak may be “extremely busy” with tightened capacity and elevated rates , Pierre Van Der Stichele, vice president of global freight at charter broker Air Partner, previously told Air Cargo World . Currently, clients have been securing charter capacity six to 12 months in advance, a time frame expected to continue through 2022 to the end of 2023, Simon Watson, director and co-founder of CharterSync, previously told Air Cargo World .

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