Forwarders locked into “sky high” rates

One air cargo stakeholder is “fearful” of the rates that freight forwarders began to pay to secure capacity during the recent period of high air cargo demand.

Speaking exclusively to Air Cargo News, Etihad senior vice president global sales & cargo Martin Drew said a key issue is the length of time of contracts that forwarders have with operators for capacity that effectively lock them in at “sky high” rates.

Drew said: “Now with market conditions normalising they are still being locked into contracts for two, three years etc.

“You fear for them. You really do. Because I’m aware of some of the rates that have been paid. It’s three-four times that of the pre-Covid rates.

“It’s not only freight forwarders. Shippers have done deals direct with these operators as well. But now are ultimately locked into a contract where they are paying a massive amount above market.”

During an IATA WCS 2022 panel discussion about new entrants from outside the industry to the airfreight market during the industry’s boom period, Dorothy von Boxberg had said that dedicated airfreight capacity may become less attractive to freight forwarders when rates drop.

“It’s a lot more complicated to make the business profitable throughout the cycle of market ups and downs. It requires a lot of knowledge systems and investments,” she said.