The spike in demand for consumer goods and the chaos that has sown in the ocean freight market has led a growing number of shippers to consider airfreight to get their goods from Point A to Point B. (See main story.) That’s especially true for products and that are high value and/or time constrained, such as apparel and e-commerce goods, as well as industrial products like building materials, semiconductors, electronics, automotive and aerospace parts, and pharmaceuticals.
Ocean rates from Asia to the United States were up almost 200% earlier this year, making airfreight more attractive from a cost standpoint, even as those rates increased. With containers scarce, and with the real possibility that things are going to get worse before they get better, it’s worth considering when it makes sense to consign shipments to aircraft instead of waiting for stubborn ocean capacity to become available.
Deciding on airfreight involves balancing speed and costs, but it’s also good to be mindful of the competitive advantages of speed. Being “faster when your competitors are slow or demand is unpredictable could help you triumph,” noted a recent report from Flexport, the San Francisco-based freight forwarder and customs broker.
Flexport points to a few instances where shippers might tolerate higher shipping costs to gain speed and reliability.
- New products. “Quicker cargo arrivals make it easier to stick to launch plans, satisfy the initial rush of demand, and build trust with your customers,” noted Flexport.
- Seasonal products. “If you have a few weeks of allergy season to sell air purifiers, you want your bigger orders on a plane,” the report said. “Then when demand lessens, you might transition back to ocean shipping.”
- Trendy products. Goods like fast fashion, new technology gadgets, and popular kids’ toys “perform best when available ASAP,” noted the report, and “may have unknown windows of opportunity.”
Speedier shipping, Flexport also noted, can help overcome volatility, by “squeezing the most opportunity out of products that are subject to unexpected market conditions.” Companies whose sales spiked during the pandemic shutdowns “might want to capture the last of a good thing,” the report said, “and those waiting for the release of pent-up demand might want to be ready to go when a wave hits.
“Many companies have been on a roller coaster for the past year-plus,” the report noted, “relying on extreme agility to survive.”
Practicing the required agility suggests that companies should not consider air versus ocean as an either-or choice. “You could choose airfreight in the short term, even if you return to the ocean market later,” Flexport advised. “Or book some of your shipments with premium services, like an expedited vessel and transloading to a truck, to split the difference. Put that hard-earned agility to good use by figuring out when and how to shift your transport modes based on your business.”
It’s a lesson that’s likely to remain valuable for some months to come. Experts are now saying that the ocean market may not level out until sometime next year.