Changing the ‘Air’ Mindset

  • JJ Hornblass
  • October 26, 2010
  • Archive

Over the years, modes of shipping change seemingly with the seasons. One quarter sea is hot; another air traffic bumps higher.

But underlying these shifts in modal preference is a mindset among freight forwarders that might be worth attempting to change. That mindset was synopsized in the third quarter earnings conference call of Forward Air Inc., a facilitator of air freight.
QUESTION: Todd Fowler – KeyBanc Capital Markets: Well, and I guess does it feel like you’re picking up some share (the company reported 17% revenue growth from the previous quarter) from some of your competitors as they change their business models or their approach to the market or do you think that there is maybe a little bit of a fundamental change in what’s going on in shipment patterns as people are trying to be more cautious with inventory levels, you know just kind of any thoughts on those trends.
ANSWER: Bruce Campbell — Forward Air: Yes, what we’ve been seeing probably for a year now. First of all, we have competitors and like to think we know what’s going on there, but it’s very difficult to identify, did we take this away from so and so with few exceptions, that’s just difficult to do.
On the general transit, we’ve said in the past, we believe a change occurred in the industry where a year to a year and half ago and two years ago the only thing that mattered to any shipper or freight was how low could you get the price, And then the other thing that mattered was they had to get their inventory levels as low as possible. In some cases they risk as well know stock outs.
Well, when you get the inventory levels as low as they are today and even with some rebuilding there’s still what I consider to be record low levels. Then when something has to be replaced it can’t just ride on a truck to get there sometime next week, it has to be put into an expedited system. It has to arrive; if it’s scheduled to be there on Tuesday that’s when it has to be there.
And the other side of the equation is people say, “Well, wouldn’t they use more air freight?” Well, some air freight yes. But there’s a good friend of mine, he runs a very large logistics department and a very large company says, “Anytime they put something in the air they regard that as a mistake.”
So we believe expedited trucking, time definite trucking whatever you want to call are product line offerings is absolutely the right place to be in this economy.
A “mistake”? This from a company that thrives on air cargo. What a damning mindset to the air cargo industry, made all the more pointed by the growth of time-definite trucking.
It seems to me that in the coming years the air cargo industry will need to address this mindset. That is if the air cargo industry wants to take real — not seasonal — share away from other shipping modes.
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