Port Backups

A record-breaking number of ships waiting to dock at the Ports of Los Angeles and Long Beach.

A record-breaking number of ships waiting to dock at the Ports of Los Angeles and Long Beach.

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Stranded Containers

A record-breaking number of ships waiting to dock at the Ports of Los Angeles and Long Beach.

 Big retailers chartering dedicated vessels to bring stranded containers of goods over from Asia.

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Price Increases

A record-breaking number of ships waiting to dock at the Ports of Los Angeles and Long Beach.

Cargo prices anywhere from five to eight times higher than a year ago.

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That’s the current state of the global ocean freight industry. Capacity is tight. The backlog is real, and prices are high. As a result, many shippers are looking to air freight as an alternative to keep their supply chains moving and get goods in the hands of customers. If you find yourself in this position, we’ll show you what you need to know. Let’s start with a closer look at the state of the ocean freight market. 

Ocean Freight: Backups, Delays, and Closures Continue  

If you’ve experienced delays with your ocean freight shipments, you’re not alone. In their Global Liner Performance (GLP) report, Sea-Intelligence noted that ocean freight schedule reliability stood at 35.6% in July 2021, which is a whopping 39.7 percentage points lower than reported reliability in July 2020. By Sea-Intelligence’s data, the average delay for late vessel arrivals clocked in at 6.88 days.ii 

So what exactly is continuing to drive these delays?  

A Viable Alternative to Ocean Freight? 

We’ve spoken to a number of customers wanting to discuss air freight as a way to expedite their shipments. In some cases, this mode makes sense. In others, it might not. We’ll run you through a couple of scenarios to help you determine if air freight is right for you. 

Air Freight Remains Expensive 

THE BOTTOM LINE: Air freight is also experiencing high demand and unprecedented volumes. As a result, rates are still high. 

Although many had hoped the market would ease with the restoration of passenger flights, air freight capacity still remains below 2019 levels. Additionally, many businesses have already seized on the possibilities air freight offers. For example, the exercise equipment manufacturer Peloton announced earlier this year that they’d air freight their products from Asia to meet rising demand (and eat the 10x transportation cost)!vi 

Just like we’re seeing in ocean freight, capacity in air freight is tight. Because of this demand, rates remain at higher levels. That said, air freight still holds two distinct advantages over ocean freight: 

  1. Unlike ocean freight’s myriad line-item charges and port minimums—all of which can add up—air freight is subject to a flat $20 handling fee. In some cases, that can save you some money. 
  2. Turnaround time can be much shorter. If you’re used to LCL ocean freight, you might know that you need to drop your cargo a week in advance and you might not receive it until a week after the ship is unloaded. With air freight, many shipments can be dropped off the day before and can be picked up the day after they arrive, saving you critical days on both ends. 

Situations in Which Air Freight Makes Sense 

THE BOTTOM LINE: High-value goods with high margins continue to be a good fit for air freight. 

If you’re interested in utilizing air freight, there are two scenarios in which air freight makes all the sense in the world:  

  1. High-Value Goods: Items with sufficient margins to absorb the cost of air freight continue to be a good choice for this mode. Electronics qualify (think: computers, televisions, and other consumer electronics). So do luxury items such as high-end clothes and accessories. 
  2. Emergency Situations: In some cases, getting goods in hand might be important enough to pay for air freight. For example, let’s say one of your team members made a mistake that might cost you a long-term, high-value client. A short-term investment in an emergency air freight shipment might save the relationship—and the account in the long term. 

Items You Shouldn’t Ship by Air Freight 

THE BOTTOM LINE: Heavyhigh-volume, and low-value goods are still best for ocean freight.

If you’ve never shipped via air freight before, you might not realize that both weight and volume matter when it comes to pricing. As a result, if your shipment is 1) very heavy or 2) very large, it’s going to be prohibitively expensive for air freight. 

Additionally, low-value items usually don’t prove cost-effective for air freight. We spoke with a client recently who had several containers stuck in Asia. However, when we priced out the cost for air freight, it came out to more than 20 times the cost of the actual goods—an obvious no-go.  

What About Air Freight Consolidations?

Like ocean freight, air freight has a consolidation option. It works much the same way, with different shippers bundling smaller shipments to create a full load. That said, because of the capacity crunch, it’s not as attractive an option as it used to be. Your shipment might take two weeks to get into an air freight consolidation, whereas it would likely take around a week to move otherwise.  

Finally, if you’d like to move forward with investigating air freight, we have one last piece of advice for you. 

Look to an Experienced Freight Forwarder 

In a challenging market like this, a freight forwarder with significant experience will be your best ally. If you don’t already have a forwarder—or you’re considering shopping around—here’s what to look for: 

When it comes to freight forwarders, bigger isn’t always better. Some of the largest freight forwarders in the market are beholden to set contracts and allotments, which means they can’t always be as flexible. Instead of looking exclusively at size, ask a potential forwarder about the airlines and routes it has access to. You might uncover a more creative partner who can be more nimble to fill your needs in this market. 

Freight forwarders who are accredited by the International Air Transport Association (IATA) have access to a large network of airlines not accessible to non-certified partners. Additionally, a forwarder that has gone through the effort of becoming IATA certified marks them as an experienced provider—and a valuable partner in this market. 

A good forwarder will want to become a partner, someone who will help you make the right business decisions around your freight. A complimentary consultation can offer you the opportunity to take a more holistic view of your business, and it will give you a glimpse of how that forwarder will handle any ongoing freight shipments you send its way. 

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Navigate Air Freight Like a Pro 

Want to better understand air freight pricing? Check out our article, “Air Freight 101: Five Concepts and 21 Terms You Need to Know.”  

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Staying Flexible in Changing Circumstances 

In this challenging market, it’s important to investigate your options. Even if you decide not to make a change, you’ve set yourself up to make an informed decision, one you can make with greater confidence. It’s also important to ensure that you’ve got a partner in your freight forwarder or 3PL. Together, you can navigate this challenging market and run the real-world numbers that will reveal the freight modes right for you. 

Need some assistance navigating the current freight market? Our experts would be happy to help! Simply reach out for a complimentary consultation to get started. 

i https://www.freightos.com/freight-resources/coronavirus-updates/; https://splash247.com/more-than-40-ships-waiting-outside-la-and-long-beach-setting-new-record/; https://www.cnn.com/2021/08/23/business/global-supply-chains-christmas-shipping/index.html

ii https://www.sea-intelligence.com/press-room/92-schedule-reliability-continues-to-be-low-in-july-2021

iii https://www.cnn.com/2021/08/23/business/global-supply-chains-christmas-shipping/index.html; https://www.bloomberg.com/news/articles/2021-08-23/ships-resume-berthing-at-ningbo-s-halted-port-terminal-in-china

iv https://www.freightos.com/freight-resources/coronavirus-updates/

v https://www.governing.com/now/our-ports-have-a-problem-they-can-solve-it-if-we-let-them

vi https://www.bicycleretailer.com/industry-news/2021/02/05/pelotons-solution-delivery-delays-fly-its-bikes-asia#.YTbMsp1KiUk

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