Forwarders confront European slowdown
Logwin moves around 170,000 tonnes of airfreight per year, and saw a 4-percent increase in volumes in the last quarter of 2011 when compared with the same period form the previous year. However, this was driven mainly by intra-Asia business, reflecting both the underlying strength of this market and Logwin’s investment in Asia over the last three years. “Europe did not participate in this [final-quarter increase] and more or less showed zero growth,” Sonntag says. “The slowdown in consumption means that volumes from Asia — and from other regions — to Europe have been rather weak, but they are not declining.”
There is some evidence among Logwin’s top 20 Air + Ocean customers of a shift toward oceanfreight. “But across the entire business, this is not the main factor. Demand is weaker across the board,” Sonntag says.
Logwin continues to pick up new customers in Spain, including the Anjara García fashion label. The company consolidates garments from production facilities across China at its warehouse in Shanghai before transporting them by sea and air to a Madrid facility, where they are picked for final delivery to retailers throughout Europe. Overall, however, it is southern Europe that has seen the most severe slowdown for forwarders. Sonntag comments that Germany’s retail and fast-moving consumer goods markets, together with those of other countries in Europe’s central belt from Austria to Belgium, have held up reasonably well in comparison, with a positive influence on airfreight activity.
Sonntag sees a difficult year ahead for airfreight forwarders and logistics companies, and paradoxically, an improvement on last year’s non-existent peak season may not help. “If we’re honest, the first three trading quarters of 2011 were manageable and airfreight yields were OK. It was not very exciting, but it was ‘safe.’ Later this year, the cost of air capacity could explode, affecting long-term rate agreements with customers,” he says.
“We have seen some forwarders in the past attracting customers with rock-bottom rates,” Sonntag continues. “They have been prepared to take the hit and sell below cost, aiming to recover their losses in peak season. Rate negotiations may have to be rather different in the future.”
Markus Derndorfer, product manager, airfreight, Europe, at Gebrüder Weiss, concurs. “The last quarter of 2011 was difficult on most airfreight trades globally. We saw a small decline overall, and Europe was no worse than the global trend. Indeed, Asian imports were even a bit higher than in the last calendar quarter of 2010,” he says.
Some customers, however, switched to oceanfreight last year for imports from the Far East to Europe. “Supply chains on certain products have changed as part of cost-reduction programs. Companies have seen how it works out and are unlikely ever to change back,” Derndorfer says.
Gebrüder Weiss works on a joint-venture basis with Germany’s Röhlig Logistics in Asia. The partners, which operate at a total of 37 locations in seven countries, see Japan as a potential bright spot as it recovers from last year’s earthquake.
In January, Weiss-Röhlig Japan took over Osaka-based air and sea freight shipping company JHB Express to give it a second operation in Japan, alongside its main Tokyo base. Joe Lässer, director, air and sea, at Gebrüder Weiss, said at the time that “in addition to strengthening our intra-Asia traffic, our major trading partners in the U.S. and Europe will benefit from this expansion.”
Serge Tripet, Dubai-based regional airfreight manager at Damco with global responsibility for sea-air business, has witnessed a sharp slowdown from the recovering volumes seen in 2010 and early 2011. The company forwarded less than 300 tonnes of sea-air traffic via Dubai in January 2012, compared with 13,000 tonnes in full-year 2010. “Retail customers are under no pressure to manufacture just-in-time so they can ship all the way from Asia to Europe. There has been a big increase in ocean traffic,” Tripet says.