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            november 18, 2019

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Forwarders foresee a slower peak season


The likelihood of this year's peak season being weak means that freight forwarders do not anticipate that air freight capacity shortages will emerge on the major trades as they did in 2017 and 2018.
Flexport's global head of air freight Neel Jones Shah said that in Greater China and Hong Kong the peak season will see "mini peaks"centred around US tariff increases in October and December, and new product launches. "I don't see yields being anywhere near where they were last year," he was quoted as saying in a report by London's Air Cargo News.
However, he does foresee some capacity constraints in Southeast Asia on the back of airport capacity shortages. "In terms of Southeast Asia, if demand follows current patterns, demand will soon outstrip supply in markets such as Vietnam, and potentially Malaysia and Indonesia.
"On a macro level all signs are pointing towards a global slowdown," he said. "But US consumers are continuing to spend money, which could help salvage this year's peak season.
"It's still a bit too early to tell how much this will impact raw demand for air freight."
On capacity, Mr Shah said that Flexport has secured a number of block space agreements (BSA), while it also offers its own US B747 freighter service out of Hong Kong.
"I do not anticipate that we will sign anymore BSAs or charters for this peak season. Instead, we'll likely procure what we need on the spot market," he added.
Agility Global Integrated Logistics (GIL) senior vice president of air freight Michael Blaufuss told Air Cargo News that he is not anticipating the 2019 peak season to be as strong as that of the last couple of years. "With regards to capacity shortages, we don't expect this to be as prominent as it has been in previous years." He added that there were various reasons for the softness, including the China-US trade war and the protests in Hong Kong."Looking forward we need to be aware that new volatilities emerge all the time," said Mr Blaufuss. "The most recent being the oil attack in Saudi Arabia, and the market is likely to see the consequences of this very soon.
"However, this time next year, we may be in a better market position once the current external, global factors are resolved."
Meanwhile, Dachser Air & Sea Logistics head of global air freight Timo Stroh is predicting a small peak season for imports into the Europe, Middle East and Africa region but "well below the 2018 level". For exports from the region, the company said that hardly any extra capacity will be needed. "We expect lower volumes from automotive suppliers and investment goods producers than in the previous year, especially on the China route," said Mr Stroh.
Tigers president for the Americas Sebastian Tschackert said he was not expecting major capacity shortages on the transatlantic, as it had experienced in 2017, although this could depend on the UK's exit from the European Union. "In the event of a hard or chaotic Brexit then we believe there will be a capacity crunch, in particular going into Frankfurt and Amsterdam, as well as other European Union gateways."
On the transpacific, Tigers is expecting cargo volumes inbound (excluding China) to remain stable with no major capacity crunches. "Demand is quite balanced," he said. "There is an ongoing surge for cross border e-commerce that is changing the industry, and the ongoing US-China trade war is cooling down the China inbound lane."

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