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Update air freight market situation
International air freight market can hardly cope with demand. What are the consequences?

The air freight market is experiencing such a strong period that many freight forwarders are currently no longer sure that their freight can be transported without BSAs (Blocked Space Agreements). Airlines cheer that May / June 2017 are their best months for years, but the market is very concerned about air freight rates and available space - especially in view of the peak season of the fourth quarter of 2017.
In particular for air freight from China, Hong Kong, Southeast Asia and the ISCR, we must anticipate less space at higher rates, so much is clear. With this news update, we would like to inform you about the situation and forecasts in the air freight market.

Dennis de Wit
Managing Director OTX Logistics  
Media Overview:
Below you will find a selection of English and Dutch news articles that provide insight into current developments in the air freight market:
'No BSA, no way' say carriers, as forwarders report tight space and strong air freight rates'

The British "Loadstar" describes in its article at of June 1st, how supply and demand currently lead to a strained situation in the air freight market and lists some factors that underlie this.
Read full article here
'eCommerce retail boom for Asian air cargo triggers imbalance in ULD supplies'

The same "Loadstar" writes on 31 May about how eCommerce is also putting pressure on the air freight market in the field of available equipment. In addition, the growth of the Chinese consumer market forces air carriers to other business models
 Read full article here> 
'Airspace growth figures go sky-high'

'Nieuwsblad Transport' writes that air freight has its best months since the crisis years. Growth rates jumped up as a result of a cargo shift of ocean freight services and the launch of new consumer products. European exporters have already struggled since the start of this year with a lack of shipping space for export cargo to Asia, which is driving pressure on the already overloaded air cargo market
Read full article here

The pick-up in air freight volumes over the past nine months has been set against an upturn in global economic and trade conditions. Business surveys point to another quarter of robust annual FTK growth in Q2. Official IATA statement shows air freight market development in full detail: what are the market drivers? What are capacity, costs and yields?
Read full article> 
'Asian airlines post healthy volume growth, reflecting strong exports'

On an article is posted about the significant growth of global air freight, and in particular the freight movement to and from the the Asian market.  It is said that air cargo often sees a boost in demand at the beginning of an economic upturn as companieslook to restock inventories quickly.    Read full article> 
What can we expect in the coming summer period? What should we anticipate in Q3 and Q4?

The market should take into account that the freight volume in 2017 is considerably higher than in 2016, 13.4% and 8.5% in March and April respectively. It is expected that this trend will continue throughout the year, with higher rates as a result. This is evidenced by analyzes from the International Air Transport Association (IATA) of which we have included the article in our media overview.
In recent years, we all could often benefit from sharp spot rates, but this year the air cargo market does not seem to provide these opportunities. The airlines indicate that demand has already begun to exceed supply.
In addition
we expect the peak season to be launched early in 2017, partly because of the release of new consumer electronics like the iPhone and Xbox that is scheduled in September this year. The traditional peak season in the fourth quarter is expected to be heavier than last years, with little available freight space and thus higher rates.

Demand for freight space is growing faster than has been the case in the last six years and the reasons for this greater demand for freight space are varied. Due to the global economic recovery and growth in consumer confidence, stocks are being increased. The enormous growth of eCommerce cargo strongly supports this.

In addition, oil prices rose again in 2016 after the substantial decline in the end of 2014. Fuel costs are thus higher for airlines, and some of them have again introduced a ‘Fuel Surcharge’ after the airlines switched to all-in rates 2 years ago. Most airlines still hold the 'all-in' formula yet, but eventually they will want to charge the higher fuel costs.

Pauline Warning
Business development manager
Planning and preparation:
In the coming period, OTX Logistics will strictly monitor developments in the market. We will investigate back-up options to provide our customers with alternative transport options if the crowded airspace increases even further. We look at sea-air opportunities, explore rail services from China to Tilburg and are currently negotiating with airlines on closing charter flights.

Your input
Concrete information about your cargo-ready dates and your delivery schedules are essential in this situation. Our advice: Prepare this input! We will be happy to discuss with you the best freight solutions. Having questions already? Feel free to contact us:
Dennis de Wit
Pauline Warning
Email us
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OTX Logistics · Rijnlanderweg 766F · Hoofddorp, NH 2132 NM · Netherlands

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