26-29 September 2010 Hong Kong APR 5 2010 SERVING THE INDEPENDENT FREIGHT FORWARDING COMMUNITY No.008 Venue: AsiaWorld-Expo Smoothing out the spikes Yet the peak season for airfreight was surprisingly strong, leading to recordbreaking rates out of Asia and delays of up to eight to nine days from the key Asian hubs such as Hong Kong and Shanghai. These massively high rates the airlines commanded were passed on by the major forwarders to their shipper customers. Ocean freight also unilaterally raised rates to help the haemorrhaging of cash and reduced capacity to bring higher rates to the market. Shippers are, however, still seething that their transport costs have been so volatile and unpredictable and that planning their needs has proved impossible. “Our major multinational forwarder has charged us both the highest and lowest rates we have ever paid – in the space of six months,” said the managing director of a major shipper in Hong Kong. He added that planning is impossible in such volatile conditions and that more transparency between the shipper, forwarder and airline was needed if this situation is not to be repeated. Tim Scharwath, head of Kuehne and Nagel’s northwest Europe region, admitted that shippers were less than happy with the situation. “Yes we are aware of the shippers dissatisfaction and we are talking to them to see how to best resolve this in the future.” However, shippers INDEPENDENT forwarder partners offer a panacea to the volatility in rates that have so badly hit international transportation 2009 saw unprecedented peaks and troughs in the amount charged by both ocean and airfreight carriers and therefore by forwarders – a situation that has been condemned as “unsustainable” by both multinational and independent shippers around the world. It is true that shippers benefited hugely from the near zero rates on offer in early 2009 and the free market forces in a recession saw shipping lines and airlines suffer unprecedented downturns in yields and volumes. Earlier in the year shipping journal Lloyd’s List said brokers in Singapore were waiving fees for containers travelling from South China, charging only for the minimal “bunker” costs. Container fees from North Asia also dropped US$200, taking them below operating cost. This story was repeated across much of Asia. Industry sources said they had never seen rates fall so low. “This was a whole new ball game,” said one trader. In addition it became difficult for the shippers to obtain routine letters of credit at the height of financial crisis over the autumn, causing goods to pile up at ports even though there was a willing buyer at the other end. Airlines suffered a similar fate for the majority of 2009. Record low rates and weak demand decimated their balance sheets and led to bankruptcies and a hasty withdrawal of freighter capacity. dealing with smaller independent forwarders have expressed that they feel a partnership approach has worked. A shipper of electronic circuit boards from Hong Kong said: “We used to use a top European headquartered forwarder to meet our transport needs, but we found that as we were not one of their biggest clients we had difficulty in coming to an agreement about our annual transport needs. “We have switched to using two local independent forwarders and not only do I feel we work as a team to meet our specific requirements, but also we plan to avoid any spikes in rates allowing us to budget our transport costs more effectively.” It is this partnership approach that independents offer for medium and smaller shippers, that the multinationals cannot match. By working hard on a transport plan and adapting this rapidly as market conditions change, shippers see less of the violent swings in rates and availability and can manage costs and stock more effectively.