SPRING 2024

144
THE DISTRIBUTOR’S LINK
CHRIS DONNELL LOGISTICS AND SUPPLY CHAIN AT A GLANCE from page 104
This increase again is contributed to the timing of
the CNY as well as importers adapting routings initially
bound for the east coast to rail from the west. This trend
should continue as long as issues with both the Panama
and Suez canals persist. As for the United States inland
rail terminals, most aren’t experiencing any type of
congestion or service-related issues; however, for export
cargo, there are some locations reporting equipment
shortages, especially with regard to 20’ft (TEU) units.
Air Freight And Ground Handling
The air freight industry has continued to surge due
in large part to the service disruptions of the ocean
market and the holiday season. Rates steadily increased
over the last quarter of 2023, hitting a peak in the first
week of December. Importers were able to see a steady
decrease in costs leading up to early January, but rates
quickly rebounded upward including additional 14% in
increases occurring in the week leading up to the Chines
New Year celebration. Congestion at the world’s busiest
airports is being held in check but the smaller secondary
air markets are reporting issues related to congestion as
they typically don’t have the resources or infrastructure
to handle the surge.
As for global air cargo tonnage, figures released for
the month of January 2024 show an increase of around
15% year over year (YOY) which represents the highest
increase since the start of the Pandemic back in 2020.
For tonnage to the United States from China, that figure
swells to over 25% compared to the same time last
year. This increase is being contributed to the timing of
the CNY compared to last year but as well as the traffic
disruptions currently plaguing the ocean import markets.
With the surge in demand come issues with delays at
airline terminals for truckers trying to retrieve cargo.
There are reports in multiple national terminals of slightly
elevated delays which are resulting in costs incurred by
truckers to the cargo owners. This seems to be isolated
and should not last much past the CNY holiday.
There are a couple of things happening in the air
freight market that importers should keep an eye on.
The first is the restructuring of multiple airlines as they
try to become leaner and more profitable. We’ve already
seen multiple airlines and service carriers such as UPS
start their restructuring process. For UPS that included
terminating roughly 12,000 jobs, many at the managerial
level. We’ve also seen multiple staged strikes with
airline ground handlers, pilots and operational workers
world-wide which has led to increased costs to both the
airline and consumers. At the time of this article, the
Frankfort International Airport in Germany is currently
going through such an event with is ground handlers.
With each event, cargo and ticket prices increase. Don’t
believe me? Try and book your next flight and you’ll see
airlines have increased their average ticket prices by
more than 20% compared to the same time last year.
Another item of importance is the clean air mandate
from Congress which is pushing airlines to reduce their
carbon footprint in the marketplace. These mandates
typically are long drawn-out processes but result
in increased costs as the mandates are followed.
Additionally, if you’ve flown anywhere over the past year,
you’ll notice that the airports you’re flying into and out of
are under some type of construction. This revitalization
of airports comes on the heels of our government
extending grants to airport infrastructure development.
Construction means more costs incurred for the airport
which is passed along to the airlines by way of increased
gate fees which then is passed down to the consumer.
In the end, we get a more appealing airport but at what
cost?
Trucking
Another industry which is going through a transitional
stage is our nation’s trucking industry. This industry
includes drayage (ocean container), over the road
(OTR) and short and long-haul cargo. We’re seeing in
many sectors where available capacity far out-number
the available loads which is resulting in costs taking a
significant tumble.
CONTINUED ON PAGE 145