Supply Chain Brain - March 2010

Solutions. On the air-freight side, about 15
percent of freighter capacity was removed
from the market last year. Whether or not
those planes stay parked in the desert “is
going to be a significant factor in determin-
ing where the price is going to be.”
Cocci sides with the industry consensus
in his expectation of a steady but modest
rise in freight volumes as the year wears on.
Demand for airfreight could rise as manu-
facturers roll out new consumer-electronics
items and begin to replenish exhausted
inventories, he says. The pricey mode will
continue to be hampered, however, by the
shift of some goods to lower-cost ocean.

Some experts are predicting a 7- to 10-
percent increase in the air freight market by
year’s end, Cocci notes. Assuming carriers
don’t bring their parked capacity back on
line too quickly—and he believes they
won’t—the result should be a marked
increase in rates. In place of freighters, carri-
ers will rely on combination craft and belly
space in passenger planes. Before service
providers reactivate idled equipment, “they
want to see sustained growth, not a one- or
two-month spike in the market.”
For LSPs, the trick lies in being ready for
whatever happens. One of UPS’s biggest
challenges is obtaining accurate demand
forecasts from its customers, Cocci says.
The numbers tend to change many times
before being nailed down. In the meantime,
air forwarders find themselves vying for
space based on questionable projections.
For all its advantages, outsourcing puts the
burden of booking just the right amount of
space on third parties.

“This year will be better than last year,”
says Cocci. “That much we know. How
much better is an unknown. We’re cau-
tiously optimistic that we’re going to see
continued growth in 2010.”
To access this article online, visit The Digital
Edition at www.SupplyChainBrain.com.

CEVA Logistics, www.cevalogistics.com
DSC Logistics, www.dsclogistics.com
Menlo Worldwide,
www.menloworldwide.com
C.H. Robinson, www.chrobinson.com
Ryder Supply Chain Solutions,
www.ryder.com
Transplace, www.transplace.com
UPS Supply Chain Solutions,
www.ups-scs.com
Resource Links

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