Shippers look to air cargo while shipping lines absorbed with slow-steaming

WITH shipping lines embarking on super-slow steaming in a bid to cut fuel costs, shippers appear to be more open-minded to send their goods by air, according to London's Loadstar.

Six Asia-Europe strings are now adopting super-slow steaming and are going slower than the 19th century tea clippers. Although it's a win-win for shipping lines - absorbing capacity while cutting fuel costs, the average rotation of Far East to Northern Europe loops is now 10.5 weeks - in 2007 it was 8.2 weeks, the publication pointed out.

The gap between sea freight and air freight is widening and for shippers who don't want inventory - and thus working capital - tied up for long periods, super-slow steaming isn't always their first choice. Equally, they don't want to pay top dollar for their goods to arrive in just two or three days. They want something in between.

Loadstar's shipper readership, for example, shows an interesting trend with a wide range of suppliers and manufacturers saying that they are interested in all transport modes with a few limiting themselves just to sea freight.

Cas Pouderoyen, SVP global ocean freight at Agility, speaking at the TOC Container Supply Chain event earlier this year said: "Lots of businesses can't live with a 40-day transit time, but can cope with 25 days." For the struggling air cargo industry, there surely must be an opportunity here. Of course, it has always been the emergency option for everyone. But a more constructive look at deferred cargo should be on the cards.

SBS Worldwide, working on contingency plans in case of an US east coast port strike, has struck a deal with airlines to deliver freight in 20, rather than 30-40 days, for a rate barely higher than the sea freight rate.

Carriers already offer it, but not as a product in itself. Dave Shepherd, head of global sales for IAG, said British Airways does have a deferred service, trucking freight in the US, for example, to fill gaps in capacity. "Customers are always on the look-out for a lower cost option. Freight doesn't need to go on the most direct route available, and we can offer competitive rates as we are filling up capacity that wouldn't otherwise be full."

Mr Shepherd added that the sea-air option has always been a useful way to cheapen and slow down air freight. But while air freight rates on Asia-Europe are currently low, demand for sea-air has been negligible. "It doesn't always suit the end customer, but they are certainly getting more used to a longer logistical cycle," he said.

But Sean Smith, director southern region for Kerry Logistics, doesn't believe the demand would be sufficiently strong - unless the rates were significantly lower. "It would come back to 'what is the cost?' If you offered a 20-day transit from Asia-Europe, the airlines would be pitching themselves against sea-air alternatives, which over the last few years have not been of great interest to many, especially the 18-20 day option. However, if there was a significant saving to be had, then it would be looked at for sure."