The timing of the potential US East/Gulf coast ports strike and the
launch of various high tech gadgets from Apple, Samsung, Amazon, Microsoft and others,
make for interesting times for those shippers, forwarders and transportation
providers operating in the US market. Capacity concerns are rising as rates are expected to increase.
According to news sources, on September 21, the new iPhone 5
is expected to ship to the US, UK, Canada, France, Germany, Australia, Japan,
Hong Kong and Singapore. Another round of shipments will occur on September 28th. In its earnings call with analysts, Uti
Worldwide noted there are over 70 air charters already committed for “some of
the high-tech activity”. Many industry commentators expect DHL and Atlas Air to
benefit the most from these movements.
Combine these high tech launches with a potential port
strike come Oct. 1 and headaches are ensured for shippers, forwarders and
transportation providers as many work on alternative freight movement plans. The
majority of these plans appear to include diverting cargo to US, Mexican and
Canadian West Coast ports. However, surcharges that ocean carriers plan to
implement in case of a strike, concerns of capacity, the amount of tonnage
expected and quite possibly a labor “slow-down” at the US West Coast ports in
support of the striking ports may create such a backlog and added costs that
many shippers are reviewing other options including airfreight.
This airfreight option, however, presents another problem
for shippers. Because of the current global economic situation, may air cargo
providers have reduced capacity. UPS
reduced its Asian air network by 10% while FedEx retired 24 jet freighters to
reduce capacity in its U.S. domestic express segment and cope with sagging
volumes.
Still, a potential port strike and high-tech launch presents
good news for air cargo providers. According to BB&T Capital, the average
airfreight rate is expected to increase to around $5.00 per kilogram. Drewry
Shipping Consultants Ltd. noted the average airfreight rate per kilogram in
March when Apple’s iPad was released was $4.44.
This may all come to naught as it appears shippers may be
stockpiling inventory in advance. As ports begin to report August TEUs, the
East Coast ports of Savannah and those in Virginia reported double-digit growth
while West Coast ports Los Angeles reported declines and Long Beach reported
only a modest increase. Still, if a strike is to occur - and this is still a
big if, particularly as talks are set to resume this week - it may be difficult
for shippers to utilize airfreight if need be.
