Why shippers pick air or ocean – and it's not always on price

   Release date: 10/11/2023     Hits: 3666    Comment: 0    
Note: Shippers have a particular set of criteria which determines whether to use sea or air; and price is not the key driver u

Shippers have a particular set of criteria which determines whether to use sea or air; and price is not the key driver usually assumed.

According to Niall van de Wouw, head of airfreight for Xeneta, the price ratio between sea and air is less crucial than other concerns.

“Airfreight was around 10 times more expensive than sea freight in 2019, but it went to 21 times the price. That won’t impact the need shippers have for airfreight. It will impact budgets, but it won’t influence their decision.”

Instead, he argued, shippers had other considerations. He pointed to Apple’s drive to cut emissions by using ocean instead of air, explaining: “Apple feels the need to reduce the impact of transport. Shippers want to change and reduce the impact on the environment.”

“But ocean is not always an option,” he added.

During the pandemic, shippers flocked to airfreight, in large part owing to the lack of schedule reliability of ocean carriers.

“There was a correlation between the mess in ocean and the growth in air,” Mr van de Wouw told delegates at Tiaca in Brussels this week.

“In April last year, ocean was at its worst ever,” he said. Since then the reliability has improved,  which had dampened the need for airfreight on the affected tradelanes.


Something else that might impact the reliability on the oceans is the ending of the Consortium Block Exemption Rule (CBER) by the European Commission, which will see shipping lines have to rethink alliances.

“There is a lot of uncertainty about what the market will look like from April. Some niche markets could be under-served, which could spark some airfreight demand. This could impact airfreight in 2024,” he said.


 
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