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Air freight may be project cargo’s most volatile move

Air freight may be project cargo’s most volatile move

As Hurricane Harvey bore down on Houston, a 4,647-pound diesel engine was being trucked up Interstate 45 to the Dallas-Fort Worth airport for loading onto an AirBridgeCargo Airlines freighter to Amsterdam, Liege, Lagos, and eventually Douala, Cameroon.

Peter Rasborg, operations manager at forwarder Texas International Freight, was rushing to evacuate his warehouse when he got a call from the engine’s shipper.

“The eight-day routing from DFW to Douala was not quick enough,” Rasborg recalled. “I was told, ‘Get it there faster.’

“The hurricane was two days off the coast, but we turned the truck around, repacked the engine on its side, slipped it into the belly of a United Airlines 747 at Houston Intercontinental bound for Paris Charles de Gaulle, and unloaded in Cameroon four days later,” Rasborg said. “We bypassed a 72-hour flight delay in Dallas and two other stopovers. We also beat the storm.”

Even without the threat of natural disasters, the shipment of outsized or heavyweight air freight has always demanded agility, speed, and quick thinking from forwarders, charter brokers, and carriers. The inherent complexities, coupled with economic and market forces, make project air freight possibly the most volatile, challenging, and least understood niche in global logistics.

Air freight often is reserved for emergencies or mistakes by shippers who try to use cheaper ocean freight where possible. But routing considerations and tight deadlines require use of air freight for some project shipments.

The market for heavyweight shipments by air has slumped along with ocean freight amid sluggish demand driven by protracted weakness in oil and gas prices. “The general outlook for outsized cargo is not brilliant, and has not been for the last four years,” said Pierre Van Der Stichele, group director for cargo operations at Chapman-Freeborn Airchartering in London. “Oil production has dropped, and demand has declined in oil and gas construction projects.”

Air freight rates have been soft, reflecting the overall slowdown in project shipments and an oversupply of widebody belly lift on international air transport services. That’s been good for shippers, but forwarders’ profit margins are being squeezed. One forwarder told The Journal of Commerce of a complex, heavyweight freighter move that netted out a 1 percent yield and generated just $2,000.

“With demand off and so many forwarders, brokers, and carriers going at it, the competition for outsized is at an all-time high and prices are lower,” Van Der Stichele said. Prices to charter an Antonov 124 freighter for a 10-hour flight to move an 80-ton shipment can range from $400,000 to $800,000, he said. Three years ago, that same plane for the same move would have cost $500,000 to $1 million, he noted.

In North America, “shippers have all the leverage today,” said Michael Jensen, Los Angeles cargo manager at Emirates Air, which markets extensive air freight belly lift in addition to its large freighter  fleet. “They see there are too many forwarders, not enough freight and too much capacity, and they’re playing the forwarders against each other, forcing down freighter rates.”

Chapman-Freeborn has a special internal group dedicated to outsized oil and gas cargo and has a solid core of existing clients, “but it’s difficult to get new oil and gas shippers aboard today,” Van Der Stichele said.

One bright spot has been emergency shipments, including oil companies’ movements of capping units — “basically a giant cork to block potential leakages,” he said. These units include tools, materials, and spare parts that require assembly, and a Russian-built Antonov 124 jumbo jet freighter, with its 120-ton payload, to haul it.

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