Higher input costs have put the squeeze on consolidators who are increasingly under pressure in the current volatile and uncertain economic environment.As input costs have increased, many consolidators have been forced to review their traditional rate mechanisms in an effort to find some relief.According to Groupair managing director Vernon Lines, some of these mechanisms have been in place for at least three decades and are now having to change to accommodate the higher input costs.“Warehouse handling and the cost of shuttling cargo to the airport have increased dramatically during the past year,” he told Freight News. “In the current environment, which is extremely volatile, we have unfortunately had to pass some of the expense on to our customers.”He said the industry was still struggling with capacity. “Airfreight capacity into and out of South Africa is way below what is in the market to move. The limited capacity creates extended transit times. If cargo is urgent, it has become the norm to upgrade to express or even more expensive options that the airlines have to of fer.”He said the industry was also struggling with airlines continually upselling rates. “Considering the limited capacity, in addition to the continual increase in fuel surcharges, rates remain high. Export rates are also constantly changing – and in many instances rates offered last week are no longer valid this week.”He said in this extremely uncertain market, consolidations remained a popular choice for many shippers and the company had seen reasonable growth year-on-year during the first quarter of the year. This, said Lines, augured well for the rest of the year. “Besides kilograms and turnover being up, our number of shipments has increased too. We feel that maintaining high service levels is resulting in increased volumes.”He said there was no denying, however, that consolidators' risks had increased substantially since April 2020, especially when linked to higher airfreight rates and a higher rate of exchange. “The risk and reward ratio has definitely shifted against the consolidators,” said Lines.
