By Appointment to Her Majesty The Queen Supplier of Aircraft Charter Air Partner plc Gatwick, West Sussex An official WCA Charter Partner of the independent Every time. On time. On budget. Call +44 (0)1293 844 873 or email freight@airpartner.com www.airpartner.com/freight NOVEMBER 2011 SERVING THE INDEPENDENT FREIGHT FORWARDING COMMUNITY No.005 London Dubai Paris Istanbul Tokyo Cologne Fort Lauderdale Hong Kong Smoke and Mirrors A Dutch freight forwarder is claiming that its new online booking portal spells the end for traditional freight forwarders. But behind the The idea of shippers booking directly with airlines has been around for decades and, to a very limited degree, has been happening for many years. Yet, sections of the logistics media in recent weeks worked itself into a frenzy on the back of a range of outlandish and unsubstantiated claims by a small Dutch-based ‘self-service’ website, called aircargoshop, that claims to offer direct booking with carriers at reduced costs. With pronouncements that the website will “be the death knell of freight forwarders” and with ‘RIP forwarders’ looming large as new concept that would change the way the logistics chain operated forever. What we found, however, was an online freight forwarder, offering little in the way of service to its customers, but expecting up-front payment and a host of additional charges for every service a conventional freight forwarder offers for free. The headlines were prompted by a publicity offensive by the founder of the website in an attempt to gain free global advertising for the scheme. Voice of the Independent has investigated the claims made by the website and talked to shippers, forwarders and airlines to garner their opinions. Firstly is the claim that the website is a portal for shippers to book direct with airlines. However, even in its own publicity it admits that it is a freight forwarder, not a portal. Do shippers pay airlines direct or do they pay the online forwarder? Would an airline have the manpower and ability to cope with dealing with hundreds or even thousands of individual shippers. Is an airline geared up to deal with complaints/enquiries from shippers as to the status of the shipment, especially in unforeseen circumstances? It appears that the payments are not only made to the online forwarder, but also have to be paid for up-front. This would have a massive impact on shippers used to the 30 days plus credit extended by freight forwarders. Secondly the website claims neutrality in the booking process. Yet shippers have to use the ground transport provided by the company, no alternatives are offered. This is far from the transparency and choice it proclaims. Thirdly it claims savings of up to 50 per cent grounding in reality. The added costs to the shipper in taking on all the extra administration, Customs clearance, export documentation, transport at destination, warehousing, security arrangements etc would wipe out any savings. The extra manpower needed alone would exceed any savings for all but the biggest shippers. Of course the online forwarder can provide some of the services to the shipper – but all at additional cost. In addition, the claim that a forwarders margin is some 50 percent on general cargo shipments is utterly refuted by every freight forwarder we interviewed. Fourthly, it claims to offer online rates that are the cheapest available. This has been dispelled by three cargo executives from European airlines that readily admitted that its best prices were rarely, if ever, placed online. The truth remains that a forwarder through negotiation and its buying power will always achieve the best rate for a particular shipment. It should also be considered that the portal only offers the customer transport to the airport of origin. Once the shipment lands at destination there is no support. Customs clearance and problems, warehousing and onward transportation, all has to be arranged, monitored and paid for by the shipper. If there for the service and it is a third party that is contracted to take your freight. Your cargo double paying. Airlines also seem less than enamoured at the prospect of having to deal with hundreds or even thousands of individual customers. A senior executive of a European based airline said: “We just are not geared up to support and deal with so many inexperienced customers. We do not have the resources or expertise. We hugely value our relationship with forwarders as they deal with any problems and enquiries for the shipper and deliver the freight to us ready to go.” shipper will need to be available 24 hours a day to resolve the issues. What happens also if your shipment is not quite ready when the pre-arranged transport arrives at the factory? You have paid up-front continued on page 3 3 General average The Rena disaster shows the importance of insurance 4 Forward thinking Shippers need forwarders to help drive their costs down 5 Changes to security Industry pressure is causing a rethink of security rules 8 Container lines in crisis Ocean freight rates have plummeted in 2011 VOTI_05.indd 1 11/23/2011 2:50:02 PM