Cargo Chat: DSV on forwarder-led cargo charter networks

[caption id="attachment_92173" align="alignright" width="448"] Mads Ravn, Vice President and Head of Global Air Freight Procurement at DSV[/caption] In the early days of the now global COVID-19 pandemic, countries trying to halt the spread of the virus quickly instituted travel bans and countrywide lockdowns that subsequently left most passenger flights grounded. To bolster the global airfreight network left short of grounded bellyspace capacity, some of the world’s largest freight forwarders have since expanded preexisting or launched new chartered freighter networks to guarantee airfreight capacity for their shipper customers. DSV Panalpina was among the earliest to do so, utilizing its then-chartered 747-8 freighter, operated by Atlas Air, for service between Shanghai (PVG) and its hub in Huntsville (HSV) three times per week. To learn more about how DSV has since scaled up its chartered freighter network to support cargo capacity during the pandemic, Air Cargo World spoke with DSV Vice President and Head of Global Air Freight Procurement Mads Ravn. ACW: DSV significantly expanded charter operations during the summer, with several of the expansions covering the trans-Pacific trade lanes and providing capacity to Latin America. What has demand been like for DSV in these markets? MR: On the trans-Pacific lane we had a huge demand, particularly in the beginning of COVID, so starting in March we decided to pull one of the planes we were operating in trans-Atlantic service and send it into China over Korea. We were flying three times per week as of the first week of March up until the second week of July, which gave us a 1,500-tonne capacity to and from China during probably the most crucial time ever out of that particular market, so from a timing perspective we definitely hit it right. We also pulled out at the right time, I believe. It would have been nice to have again now but we are now covering other aspects of that market by adding more capacity from commercial carriers. What we have done is, instead of flying three times a week into Shanghai from Huntsville, we have now diversified and added charter capacity from Hong Kong into Europe, also full capacity from China into Europe and into Huntsville. Instead of putting everything in on trans-Pacific, and this is related to the fact that we pulled out of four times a week rotation on the trans-Atlantic, we now also have a need into Europe, and that we have replaced with capacity coming in from Europe as well, into Huntsville. So we’re just making it up in a different way than what was done in the past. Talking about the Latin American market, it’s very much tied into what we decided to do on the trans-Pacific during the last five months. A lot of it we’re connecting in through the legacy Panalpina hub in Huntsville and we’re connecting on a tail-to-tail basis over Miami and into Latin America, with Brazil being the primary destination for us there. ACW: Does that relate to the decline in the need for personal protective equipment (PPE) from Asia? MR: That is correct. In the first three months, it was very much related to the PPE. We ended up serving our customers’ needs on the PPE more than the general PPE market, but our intention was always to help the supply chain of our existing customers. In the beginning of May we started shifting our focus away from PPE somewhat, and also related to the regulations that constantly changed in China, but also the fact that we were starting to see some manufacturing coming back from our regular customers. We wanted a bit of mix [in commodities] on the aircraft as well. ACW: From your perspective, has the market normalized a bit, or is there still a definite shift from a year ago in how trade lanes are operating? MR: It is starting to normalize somewhat on the trans-Pacific, where we’re seeing a more regular flow — capacity is not as constrained as it was just a couple of months ago. The peak season will be more constrained than we anticipated a couple of months ago, but it will be a short-term peak season. We expect it to hit off here mid-September and ending again in mid-December. ACW: Along with DSV, several of the large 3PLs have introduced regular charters. Do you foresee this being the trend this peak season with so much belly capacity still unavailable? MR: That is definitely the trend. There is a lack of charters out there, we’ve seen the charter price go up significantly and as a result of that as well, charters are no longer available on only a short-term basis for the peak season. Charters want long-term contracts, and that could be six months or 12 months. So carrying into 2021, where we are really looking into unknown territory. And that’s a little bit of a constraint right now in balancing something where we simply don’t know where the demand is going to be in Q2 and Q3 of 2021. This Cargo Chat appears in the September/October 2020 issue of Air Cargo World . View the full issue in our digital issue archive .

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