Today, more and more freight forwarding companies are providing more reliable services to their customers through commercial air cargo. Under this competitive pressure, global freight logistics giant DSV is further expanding its long-term capacity.
Based on Panalpina's legacy freight network, DSV launched the Globetrotter service
This winter will be another peak season for air freight, air capacity will tighten again, and freight rates will continue to rise. This trend has attracted many freight forwarding companies to charter flights to provide air freight services. For example, our previous article "Air freight rates continue to rise, high profits attract GEODIS to rent aircraft to enter!" IATA: Long overdue attention to freight" mentioned, freight forwarding company Qiaoda has this kind of action.
Not to be outdone, DSV has leased an additional aircraft and launched the Globetrotter freight service – for existing air freight customers who need long-term stable freight services in volatile markets.
Mads Ravn, vice president of DSV's maritime and air division, which oversees DSV's charter network, told him that DSV has expanded the self-controlled freight network left over from the acquisition of Panalpina.
Globetrotter Services is the latest expanded version of the company's industry-leading air cargo charter program. The service connects four continents, stopping at Liege, Istanbul, Zhengzhou, Hong Kong, Chicago Rockford And Viracopos airport in Brazil, providing hub services and connectivity to DSV's existing charter services.
(Source: aircargonews.com)
Ravn said they signed a one-year lease with Turkey's ACT Airlines to increase capacity by 100 tons twice a week. With airports around the world still facing cargo congestion and customers still suffering from insufficient capacity, DSV is confident that the service will enter the market at the best opportunity.
Speaking of Panalpina, this established logistics company will be a thing of the past. In 2019, after DSV acquired Panalpina for $4.1 billion, it retained the name of its former strong rival, changing the group name to DSV Panalpina A/S. Some time ago, when the industry circulated that "DSV wants to acquire DB Shenker", some people quipped: "The name of the group will be changed to DSV Panalpina DB SCHENKER A/S." ”
(Source: ship.sh)
But based on the final decision of the most recent board of directors, DSV said goodbye to Panalpina once and for all and decided to change the company name back to DSV A/S. Perhaps this name change is really to avoid too long the full name of the group, in preparation for the acquisition and expansion activities after DSV?
Uncertainty in the Asian market
Shanghai Pudong Airport, a key cargo hub in Chinese mainland, is slowly resuming cargo services after being heavily guarded against COVID-19 infection. Ravn expects international cargo services at Pudong Airport to resume at the end of this month. "The situation in China is improving, which will alleviate a range of congestion problems that we've seen in Asia," Ravn said, adding that in Ho Chi Minh City, Vietnam, a runway at the airport is being repaired, which has also led to congestion.
He also explains: "We saw Boeing 747 freighters take off at 50 percent load, with a cargo capacity of about 50 tons, and the number of aircraft flying was limited. But happily, air cargo in Hong Kong remains stable for now, despite the fact that all flights have moved from Chinese mainland to Hong Kong. ”
DSV believes that the Asian market will reach equilibrium in October, although the current uncertainty in the air and sea market across the asian region is so high that it is difficult to predict. This uncertainty is likely to have an unstable impact on the upcoming peak air freight season. The current maritime market is too chaotic, with long queues of container ships in ports, unreliable schedules, shortages of available containers, and shippers and cargo owners are reportedly "scrambling to move their cargo to air freight".
Ravn said the backlog of sea freight is getting worse again, so much so that on the West Coast of the United States, the situation is worse than the initial congestion: "At Long Beach, we now have as many as 42 boats parked at anchorages, and even more. There are over 80 ships on the West Coast, so it hasn't improved at all – which leads us to believe that this will continue for at least six months. ”
As a result, Ravn asserts that Globetrotter is the best option for reliable cabins that can be offered to DSV's existing customers.
While Globetrotter serves More in Europe, the United States and "popular market" Brazil, Ravn added: "We are working hard to meet the needs of Zhengzhou and Hong Kong in China, and when Pudong Airport opens again, our route will extend to Liege instead of taking the trans-Pacific route." ”
Air freight on the Trans-Pacific route is ridiculously high, and for some products that are not of high value, it is more cost-effective to take the Europe-Brazil-Us route.
(Source: jctrans.com)
"In terms of the capacity and fares offered, the Chinese market has always been like a roller coaster. We still believe that now is the right time for Globetrotter to serve China," Ravn added.
One-year lease
DSV leased the freighter for only one year, taking into account the uncertainty of the market. At the time, some of the freight forwarding companies that were their competitors had signed three-, four-, or even five-year freighter lease contracts to increase their long-term capacity.
In response, Ravn explains, "Campers usually seek long-term lease agreements, but we like to weigh the risks against the rewards. We didn't want to lease this freighter for longer than we could foresee. The state of the market over the course of a year is something we can now foresee and we believe the market will remain very strong until the summer of 2022. Based on this factor, we might argue that the timing of the Globetrotter is perfect. ”
Ground handling restrictions
Asked if DSV was considering adding a second freighter for the Globetrotter program, Ravn replied: "I can answer 'yes' or 'no' because we have to be objective about the actual processing power of our ground crew, and in the current situation, even the smallest airports have to maximize their processing capacity."
"Processing capacity is limited, whether it's ground handling or other functions of the airport. It would be nice to be able to run one or two freighters a day. Even if you need it, you can't run 15 freighters at once. ”
Despite DSV's long history of operating freight networks and extensive experience managing relevant ground infrastructure, these limitations remain.
"We have to limit ourselves to our capabilities, or the quality of our existing services will also decline," Ravn stresses.
"The whole point of this air freight automation network is that we can make a commitment to our customers on the timeliness of transportation, and the efficiency of transportation will be actually improved, because we can finely control the details of the air freight process."