The Cost Factor: How Freight Forwarders Optimize Air Freight Expenses with Pelicargo

Imagine a world where air freight is not just a hassle-free process but also significantly cost-efficient. A marketplace full of activity where shipments are quickly passed through various stopgaps to ensure all clients and customers receive their goods on time and in good condition. Seems like a pipe dream, right?

With the rapid changes in the air cargo market, every forwarder's dream is to match with airlines and get the best rates seamlessly. This saves time and complexities by streamlining operations and lowering expenses for every business involved. The only challenge is finding the perfect balance that improves air freight forwarding cargo operations.

Enter Pelicargo, an innovative digital marketplace poised to revolutionize the industry. Read on to explore the financial challenges in the air freight sector and how advanced technology combined with human expertise can solve them.

What is the State of Air Freight?

Like it or not, the air freight industry has undergone significant changes over the past decade, often with neck-breaking fluctuations on a daily basis. In the early 2010s, the market experienced a phase of somewhat slow momentum. However, this inertia was followed by a remarkable surge, with the global air freight volume reaching an impressive 65.6 million metric tons in 2021. This figure indicated a bullish trend, as the sector anticipated volumes to reach 57.7 million metric tons in 2023. 

With an ever-expanding global economy and increased demands, the air freight industry has been pivotal in bridging gaps and ensuring goods reach their destinations efficiently – especially in a post-pandemic environment.

By 2019, the global air freight market was evaluated at $270.2 billion, with projections hinting at a future value of $376.8 billion by 2027, reflecting a compound annual growth rate of 5.6%. Further attesting to the industry's recovery and resilience, recent data from CLIVE Data Services in February 2023 spotlighted that air cargo capacity had rebounded and surpassed pre-pandemic benchmarks. 

This resurgence, however, is balanced by the fact that the volume in February 2023 remained 7% below pre-pandemic levels compared to 2019. All said and done, we are looking at a rapidly expanding need for more efficient air freight systems to ensure the global supply chain. 

What Common Financial Challenges Exist?

Air freight comes with its own set of intricate challenges. There is no 100% surefire book of instructions to follow. While some industry standards must be integrated into daily operations, innovation, and the spirit to adapt to external forces must be addressed for a company in the air cargo business to survive. Some of the common challenges these businesses face include:

Increase Complexity of Expanding to New Markets: Many online businesses are fueling expansion into new global markets. That requires navigating multifaceted regulations, understanding local consumer behaviors, and managing risks associated with political and economic uncertainties. These complexities often deter freight forwarders from exploring untapped markets.

Rapid Growth of Ecommerce: The surge in ecommerce demands faster and more frequent deliveries. This industry had an 18% share of global retail sales in 2020, marking a massive shift in consumer behavior. As leading companies like Amazon, Walmart, and eBay shift delivery patterns, forwarders are pressed to scale up operations without compromising efficiency, further straining financial resources.

Globalization of Supply Chains: A modern product might have components from multiple continents. Look at any smartphone, and you’ll find various manufacturers and suppliers. While beneficial for production, such integrated global supply chains mean that forwarders are deeply interdependent. A delay or problem in one region can have cascading effects, leading to intricate and costly logistics challenges.

Difficulty of Tracking Shipments: Information is power. To stay competitive, you must offer real-time tracking of global shipments. Inaccuracies, delays, or lapses in tracking systems can result in customer dissatisfaction, lost goods, and additional costs to rectify mistakes.

Rising Costs of Essential Materials: The prices of essentials like fuel, technology, and workforce constantly fluctuate. Without a state-of-the-art procurement system or predictive analytics in place, forwarders can find themselves at the mercy of these unpredictable expenses, directly impacting their bottom line.

Potential Mismanagement of Forwarding Operations: Without an efficient operational strategy, there's room for inefficiencies and errors. This can range from overbooked flights to mishandling shipments. Mismanagement not only leads to financial loss but also erodes trust and reputation in a highly competitive market.

Unpredictable Weather Patterns: The increasing unpredictability of global weather patterns, amplified by climate change, can throw a wrench in the most meticulously planned operations. Unforeseen weather events can delay flights, lead to damaged goods, and result in logistical nightmares, escalating operational costs.

Strategies for Optimizing Air Freight Forwarding

With challenges come opportunities, innovation and modern technology allow businesses in the air freight realm to take advantage of these challenges and turn them into competitive advantages. It does require some out-of-the-box thinking and collaboration but can redefine the profit margins of air freight providers and their forwarding partners. Here's how forwarders can optimize costs:

Ship on Off-Peak Days: Forwarders can benefit immensely by timing their shipments on non-peak days. Air cargo makes up over 35% of airline operating revenue, so you know they will be happy to work with your needs. With lower demand, airlines often offer competitive rates, reducing shipping costs and maximizing profit margins.

Work with Consolidation Programs: These programs group multiple shipments bound for a similar destination. By consolidating cargo, freight forwarders can leverage volume discounts and optimize space, leading to significant cost savings.

Develop Partner Relationships: Building strong partnerships with airlines and other forwarders allows for negotiating preferential rates, access to priority bookings, and the flexibility to meet clients' diverse requirements.

Increase Delivery Lead Times: By expanding delivery lead times, forwarders can opt for economical routing options and avoid premium charges associated with expedited shipments, ensuring cost-effective operations. The belly capacity of most airlines has increased YOY by 57%, with many airlines resuming international routes.

Reduce Dunnage when Possible: Dunnage is all that additional padding used to protect goods that tends to increase the mass of all the items being shipped. By optimizing and reducing unnecessary dunnage, forwarders can decrease weight and consequently lower shipping costs.

Offering Later Pick-Up Times: Later pick-up times can align more with airline schedules (especially given the recent increase in delays and cancellations), reducing waiting times and ensuring cargo moves swiftly without incurring additional storage fees.

Consolidating Shipments: Grouping multiple shipments for a single client or destination ensures that cargo space is utilized efficiently, reducing costs per unit, and creating more competitive client offerings.

Establishing Transit Hubs: Using strategic transit hubs allows for streamlined operations. By routing shipments through these hubs, forwarders can minimize delays and manage shipments more effectively, reducing overheads.

Integrating TMS Software: Modern TMS software empowers forwarders with real-time data, automation, and analytics. By integrating these systems, forwarders can anticipate challenges, make informed decisions, and drive operational efficiency.

How Pelicargo Can Help

Let’s face it, the air cargo world is getting harder to achieve strong business results. Where the need to increase revenue by 80% is becoming more than just a lofty goal, Pelicargo emerges as a beacon for freight forwarders. Using machine learning and artificial intelligence, Pelicargo replaces monotonous and time-consuming tasks, catapulting the air freight booking process into the future.

The innovative approach of Pelicargo ensures that even small to medium-sized freight forwarders can tap into a digital marketplace that guarantees the most competitive rates, often 35% lower than the market average.

Our state-of-the-art procurement, backed by MIT technology, doesn't just end with offering low rates. When forwarders find themselves needing an account with a particular airline, the complexity of establishing one can be daunting. But with Pelicargo, there’s no room for such worries. 

Our extensive network, working closely with over 80 airlines, means we don’t just procure but also facilitate bookings on your behalf. If you don’t have an account? No problem. Pelicargo steps in seamlessly, establishing the required accounts and ensuring an uninterrupted flow of operations.

The fusion of advanced technology combined with human expertise is where our air freight solutions genuinely shine. Our concierge team of air freight experts stands ready to assist, ensuring forwarders always have a personalized touch to their digital interactions. We provide competitive pricing delivered within a mere 15–30-minute timeframe, negating the need for an airfreight procurement expert. With Pelicargo, efficiency, savings, and superior service become the cornerstone of every transaction.

FAQs:

Can Pelicargo help with real-time tracking of shipments?

Absolutely! Our advanced technology, combined with human expertise, ensures real-time tracking and timely updates.

How does Pelicargo ensure the rates are competitive?

Using machine learning and artificial intelligence, Pelicargo analyzes market rates in real time, ensuring the rates offered are always competitive.

Is there a specific size of freight forwarder that benefits most from Pelicargo?

While Pelicargo is designed for small to medium-sized freight forwarders, businesses of all sizes can reap the benefits of our platform.

Conclusion

The future of air freight is here, and it's digital. The need for a streamlined, cost-effective solution is evident, with complexities growing. Pelicargo stands at the forefront of this transformation. So, isn't it time you explored a future where air freight is not a challenge but an opportunity?

Ready to embark on an efficient air freight journey with rates that defy industry norms? Connect with us for competitive rates and witness the future of air freight.