Chartered air cargo capacity on Boeing 747 freighters allows forwarders such as DSV to guarantee significant amounts of capacity on key trade lanes, despite severe space shortages. Photo credit: DSV
DSV has secured 350 tons of weekly capacity in three new chartered air cargo routes out of Europe and on the trans-Pacific to accommodate heavy shipper demand for limited space.
The Danish forwarder this week launched one of its new air charter services from Luxembourg to Sao Paulo in Brazil that will offer 100 tons every week on the north-south route. On March 1, DSV will provide 100 tons of capacity in a weekly connection between Shanghai and Chicago, and on April 1, the forwarder will begin four weekly rotations between Luxembourg and Johannesburg in South Africa with a combined 150 tons of capacity.
With most of the world’s long-haul passenger fleet and the belly cargo it provides grounded by COVID-19 travel bans and tough quarantine measures, there is fierce competition among forwarders for the limited capacity. Fixed price validity offered by airlines through block space agreements (BSAs) is mostly only available for three months, and forwarders have been turning to the charter market to shore up their access to guaranteed supply.
“We know a lot of customers struggle with a tremendous amount of uncertainty and a general lack of capacity,” Mads Ravn, head of global air freight procurement at DSV, said in a statement Friday. “We see cargo congestion at both seaports and airports around the world, hence it’s crucial that we find alternative solutions.”
The additional space managed in-house by the DSV Air Charter Network will be welcome on all three trade lanes where the available capacity has been cut by at least half. Passenger-heavy routes in and out of South America are believed to have lost more than 60 percent of their available weekly capacity.
The latest series of charters join charter services to New York and Huntsville, Alabama, using less congested airports at each end of the tradelanes to ensure faster turnaround on the ground and to reduce the risk of delays.
No rapid return of air cargo space
DSV CEO Jens Bjørn Andersen also highlighted the lack of air cargo capacity during an earnings call with analysts to announce the forwarder’s 2020 results.
“We don’t believe that belly space will return in the foreseeable future, so we will enjoy a pretty healthy situation in air freight throughout 2021 when volumes will slowly come back into the system, but where capacity will still be constrained,” he said.
The huge demand for air cargo, and the space constraints that are expected to remain a factor for years, has seen forwarders aggressively expanding their presence in the air freight business.
Most of the global forwarders have increased their air charter portfolios, but in the last few weeks there have been other significant moves, including acquisitions and a container shipping company launching an air cargo division.
CMA CGM Air Cargo has bought four Airbus 330-200 freighters that will be operated by Air Belgium, the first two in a weekly service from Liege to Chicago that begins on March 8. Maersk is also building its air cargo presence and as part of its restructuring into an integrated, end-to-end logistics provider, the Danish carrier has brought Damco’s air freight and less-than-container load (LCL) business into the Maersk logistics service offering.
In its biggest ever takeover, Kuehne + Nagel this week announced the acquisition of China-based air freight specialist Apex International Corp., a move that significantly expands the forwarder’s access to e-commerce business in Asia.
DSV also took a giant step into the e-commerce business in October last year, acquiring e-commerce specialist Prime Cargo in a move that enables it to tap into the exploding global online shopping market and expand its coverage of the Chinese retail fashion business.
Contact Greg Knowler at [email protected] and follow him on Twitter: @greg_knowler.
