Air Freight Volume Management

Air Freight Volume Management – The Key Success Factor in 2021 and Beyond

Since the onset of the corona pandemic, the air freight sector has faced a temporary new normal. Passenger aircraft are still on ground while cargo transportation is driven by freighters. Market forces have changed, the balance shifting definitively to carriers and forwarders. Elevated rate levels and volatile services keep dominating daily business. Capacity constraints further challenge all shippers. Access to capacities at the right time, i.e. secured service, and at the right price is the critical success factor in 2021. 

Crucial to successful air freight operations is volume management. Predicting how much air cargo will be shipped at what time allows all parties to contract and fill capacity and optimize yield resp. minimizing rates paid and streamlining processes. In this light, volume forecasting evolved from "nice to have but hard to guess" to "must have and needs to be valid."

The community collaborating in the world’s leading Global Air Cargo Market Intelligence Initiative consists of world-class shippers from many industries. Representing the cutting-edge of strategic innovation in air cargo procurement, most members are working on improved volume management solutions – and are consequently reaping the benefits first. 

In the second half of June 2021, market experts from Tim Consult conducted a survey within the shipper community to evaluate the situation for shippers. In a 17-question survey, participants provided details and received feedback from their peers. After detailed response analytics in a validation process and follow-up interviews with a small panel, 41 validated responses from industrial shippers lead to an insightful picture.

Key findings:

  • 80% of survey attendees consider air cargo volume forecasts important for daily business.

  • Expected benefits include optimized internal operational processes, better access to capacities in this tough market, and significant advantages when it comes to air freight rate levels.

  • Air cargo volumes can hardly be forecasted on an accurate level for most shippers. For many shippers, air is an emergency or alternative mode. The usual business forecasts cannot be translated to air freight volume forecasts, according to 80% of survey attendees. The challenges in general are volatile changes in sales and production as well as mode of transport shifts.

"Shippers consider the importance and beneficial relevance of forecasts," said Christoph Bruns, Project Manager at Transporeon and Head of Tim Consult’s Global Air Cargo Market Intelligence Initiative, "but when it comes to the forecast itself, many face the lack of a solid base to do so."

When asked about requesting parties, shippers reported that internal logistic units and operations demand valid air cargo volume forecasts. Christoph Bruns continued: "But also, every second survey attendee reports that external partners like air freight forwarders request regular and detailed forecasts. Therefore, demand planning should be high on the agenda. Survey participants learned from their peers and discussed which approaches might be successful to implement and/or to improve during the webinar."

Asked who is responsible for execution, the survey response is clear: Supply chain and supply chain planning units. 

A further aspect of the survey highlighted the changed market conditions – both in the aviation sector and also in the economical and specifically corporate context. 

"Even in normal times an air cargo forecast can hardly be called ‘accurate’ for a time horizon of more than six months," said Christoph Bruns. "In this context it may not be a surprise that 69% of survey attendees report they can forecast only up to one month to a degree that can be defined as ‘accurate’."

Overall, the survey provided insights to industrial shippers and proved what a lot of shippers felt. Other aspects might lead to internal reviews. 

In an interactive live webinar, the survey results and key findings were discussed, followed by a discussion with the two leading air freight forwarders, DB Schenker and Hellmann Worldwide Logistics. The forwarders reported on their own strategies approaching the volume topic and how shippers can make themselves attractive to forwarders. 

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