Airfreight exports still a buyer’s market

The airfreight export market is still a buyer’s market, says Mike Todd, vice president for Africa of the Kempton Park-based Air Menzies International (AMI). “It’s a combination of the stressed world economy and too much export capacity. The lure of passengers and import cargo has seen more carriers entering the South African market,” Todd says. The result has been not enough cargo to fill the export flights. Airlines looking for freight are driving the rates down. “There have been some casualties. Air Malaysia withdrew flights in February and Jet Airways will stop flying in June,” Todd told FTW. Airlines have different philosophies when it comes to filling aircraft, he said. Some have a management system that determines a minimum yield required but when others carry cargo at less than economical rates, it makes it difficult to maintain that yield system. “This is driven down further when the bargaining power of the rate buyer exceeds the ability of the airline to maintain the rate. The fuel price remains the biggest threat to airlines. In most cases the fuel surcharge exceeds the actual freight rate. If fuel stays where it is something has to give. Either rates must increase or there will be more airline casualties. This is not a South African phenomenon, it is worldwide problem,” Todd said. For a wholesaler of air cargo space, the past year has been competitive. “AMI is a neutral wholesaler, offering competitive rates to freight agents only. As we operate at the top end of the market, our volumes allow us to negotiate competitive contracts with airlines. We can buy and sell and still offer our clients a competitive rate. That is the function of a wholesaler. The South African export market is difficult to penetrate for the small agent,” he said. “To operate you need multi-million airline guarantees to access all airline services and CASS payment terms are also very strict. AMI offers access to every airline operating out of South Africa and with a more flexible approach to payment terms,” Todd explained. AMI warehouses are section 108 accredited and, Todd said, “We make our clients’ cargo ‘known’ at no additional cost. What AMI has successfully done is to provide our agent clients with options – either airport to airport or an allinclusive service from door to door including packing, fumigation and customs documentation.” The terminology of being an airfreight consolidator is a little dated, he noted. “Although we do consolidate to the busier destinations, a large portion of our business moves on direct air waybills. We would rather think of ourselves as the agent’s agent,” he said. Caption: Mike Todd … ‘Volumes allow us to negotiate competitive contracts with airlines.’