The Global Air Cargo Report shows that shippers are planning for medium term contracts in 2021, while a focus will also remain on the short-term.
With so much change in the air freight industry over the last 12 months, what are the latest views on the current status and future outlook? In these uncertain times, it can be difficult to know what to believe. As one of the most accurate market intelligence sources in the industry, you can rely on Transporeon and Tim Consult for transparency on best practice and up-to-the-minute reports.
Tim Consult recently surveyed 48 air cargo shippers to bring shippers an accurate view of current state of play and plans for the future. Here are the findings on the impacts on contract terms, tendering and mode shifts in the air freight space:
Please share your air cargo contract situation (Pre-Covid Period vs Covid Period vs Planned Period).
Key findings: Spot purchasing is still crucial and short-term agreements are still predominant, however they are trending to longer, mid-term durations. This is still far away from pre-Covid agreements in terms of contract length. Mid-term agreements are becoming more common practice, helping to provide a level of stability for shippers and providers.
Insights into development of contract duration over time (2019 – 2021).
Do you have clear plans to tender in 2021 or did you tender already?
Key findings: 58% of air cargo shippers have specific tender plans for 2021. More than 20% launched a tender in Q1 2021 and 35% intend to launch in Q2 2021.
Are there major mode shifts within your network compared to pre-pandemic times or to your previous strategy?
Key findings: 62% had not seen a mode shift in their network relative to pre-pandemic times or their previous strategy. Some have seen shifts from Ocean to Air because of capacity bottlenecks, conversely, others have seen shifts from Air to Ocean due to elevated freight levels.
Participants are optimistic that growth is expected in Q2, however the results indicate they plan to proceed with caution in the short term, with no sign of long-term contracts returning yet. Spot purchasing still remains crucial and whilst new contracts are seldom agreed for 12+ months, the intention is to work towards re-establishing longer-term agreements.
For more exclusive market intelligence insights from the Air Cargo industry, stay tuned for part two in this series – coming soon.