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Economic Expansion Increases Air Freight Rates - How the Right Logistics Partner Can Save You Money

June 1, 2018

 

 

Economic expansion is defined as the phase during a business cycle when the economy begins to peak from a preceding decline or recession. Overall business activity surges and Gross Domestic Profit expands to heightened levels. This “expansion” is also known as an economic recovery. Improvements regarding any monetary issue with the economy reigns heavy with high praise and positive affirmations, but this can also mean a hard hit on your wallet and company budget.

 

Whenever there is growth in the economy, the wealth of the individuals working and investing in the economy likely increases. A rise in spending then ensues in conjunction with these newly padded pockets. When the spending goes up, so too does the demand, which raises prices, ultimately causing inflation.

 

We not only see inflated prices on common goods, but on the supply chain managing the shipment of these goods, both domestic and international. Simply put, when consumers have more money to purchase commodities, money is then theoretically less of a factor. Not only does the cost of the goods go up, but the rate of shipping, warehousing, handling, and receiving inevitably coincides. The demand for global air freight cargo increases. The demand for freight capacity goes up and jet fuel prices surge with increased energy rates.

 

Derik Andreoli, Economic Research and Forecasting Director at Mercator International, predicts oil prices rising above $70 within the next couple of months. Sara Johnson, of IHS Markit reports that, “…the underlying momentum in the economy is strong, and we forecast real GDP growth of… 2.5% [this year] …” While this type of expansion is globally beneficial, it can wreak havoc on your supply chain.

 

The overall price of shipping or receiving cargo has exponentially increased. Transport and trade analysts predict an increase in rates across all modes of freight forwarding. We are coming off what some say was the best worldwide growth rate since 2010 with no signs of dropping. In fact, IATA predicts a 5% growth in air freight this year. Half the increase of 2017, but the staying power persists.

 

It is important to find a logistics partner that has the wherewithal and knowledge to save you or your company money where money can be saved. Some of the more specific benefits of partnering with a global logistics company are as follows:

  • The ability to leverage multiple global networks

  • The professional expertise to stay current on best practices, training, and efficiency

  • Seasonal work flow scalability, prediction, and adjustments

  • Flexibility

  • Supply chain optimization via data analytics and trend predictions

Finding the right freight forwarder could mean the difference between spending or saving thousands of dollars in unwarranted regulatory fees. A qualified logistics partner will show versatility, adaptability, and creativity when it comes to handling shipments. When searching for a freight forwarder to move your company’s imports and/or exports, make sure they fully understand the customs clearance process. Find an air freight forwarder willing to negotiate lower terms with carriers. Understand that forwarders have incentive to grow your business – this in turn means more business for them. The right logistics partner brings an advanced level of customer service coupled with current knowledge of the industry without any termed contracts to deal with.

 

If you have any questions regarding air freight or global logistics in general, feel free to reach out to us HERE.

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