TPM22: shippers turn to airfreight as part of a longer-term business model

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© Sang Lei

Fed up with congestion at major container gateways and low liner service levels, airfreight is starting to attract shipper customers who previously used it only as a last resort.

Damon Willis, senior director of logistics and trade compliance at U.S. medical equipment maker Drive DeVilbiss Healthcare, told delegates at this week’s conference YCW TPM Conference in Long Beach his experience operating an air cargo supply chain during the pandemic had led him to consider continuously diversifying his use of transportation modes.

“Our business model has been built around sea transport and we would only use air freight as a last resort, but we have seen our schedule at ports double as congestion has built up.

“Some of our relationships with our customers are so critical that these goods could not be blocked in ports, and we began to fight fires to obtain air cargo space wherever we could and moved them to customers at a loss.”

And even as huge Covid-led demand for healthcare products began to recede, the company decided it wanted to continue to keep the air freight option open.

“Over the last six months we have taken a more strategic approach and started to leverage some of the space our freight forwarders had secured, and this has now grown as part of our business model.

“We have come up with a formula that suggests that some of our higher margin SKUs that have high turnover rates can be flown – we fly them regularly and will likely continue to do so once port congestion eases. will be attenuated.

“It’s no longer a transactional part of our business, it’s part of our strategy,” Willis said.

However, with shippers unable to book air freight shipments directly and freight capacity as limited as container ships, he warned shippers that they would have to rely heavily on their freight forwarders to make such a strategy work. .

“But I would also add that when the pandemic hit, we had a very strong relationship with our freight forwarders and they were able to develop the solution that allowed those goods to move,” he said.

Neel Jones Shah, Global Head of Airfreight at Flexport, added: “Working with your freight forwarder is absolutely key to making this a success, as airfreight should be a central part of shippers’ supply chain strategy. , but they need to make it strategic and get out of the transactional.

“If you’re only going to use air freight reactively when the ocean gets rough, it’s very difficult to partner with a freight forwarder. But if it’s part of a supply chain strategy, it becomes much easier to partner up and develop that strategy,” he added.

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