Freight forwarder DSV has highlighted shifting trade lanes and limited incoming widebody freighter capacity as key air cargo trends to watch at its capital markets day.
The Denmark-based forwarding giant’s head of the air and sea division, Frank Sobotka, said that airfreight demand is this year expected to grow at around 3% in line with global GDP expectations.
He said air volume growth isn’t on a “super high pace” but it is still a “good outlook”.
The drivers of the demand growth will predominantly be “thriving” high-tech cloud computing and e-commerce from Asia Pacific.
However, he added that the ending of the de minimus exepmtion in the US during the first quarter of last year had shifted e-commerce growth away from the transpacific corridor to the likes of Europe, Latin America, the Middle East and Africa.
On the capacity side of the supply/demand equation, Sobotka warned that “there is hardly any full-freighter capacity coming in”.
He explained that the next-generation Airbus A350F and Boeing 777-8F programmes have been delayed, although he added that the supply of bellyhold capacity will not come under the same pressure as passenger aircraft will continue to enter the market.
However: “To move larger volumes, you also need larger freighters, and this capacity is quite limited due to the fact that the manufacturers cannot satisfy the market,” he said.
DSV has its only charter freighter network that handles about 10% of its air cargo volumes.
The other trend mentioned was ongoing uncertainties. For instance, the impact of the Middle East conflict on rising fuel prices which has a “huge, huge impact” given that fuel accounts for somewhere in the region of 40-50% of aircraft operating costs, depending on the lane.
IT shift
Meanwhile, Sobotka confirmed that the company would move away from CargoWise transport management system to Tango, a proprietary system built by DB Schenker, which was acquired by DSV last year.
The company is currently investing in the Tango system in order to scale it and make it “even more productive than CargoWise ever was” and enhance it with AI tools.
DSV has been using the CargoWise system for the last 15 years and is hopeful Tango will provide it with a USP that is not dependent on a third-party vendor.
He pointed out that 25% of DSV’s current volumes are handled through Tango.
On AI, Sobotka said there are several use case studies underway.
This includes spot quoting enhancement to enable instant calculation and improved customer engagement; further automation of workflows to improve productivity and data quality; automation of standard processes to free up resources; and AI-powered automation for customer support, shipment updates, predictive ETA and enhanced tracking.
Elsewhere during the presentation, DSV said that by 2030 it is expecting to generate a further Dkr9bn in savings on top of the Dkr9bn already generated through DB Schenker takeover synergies.
Dkr6bn of this would be derived through leveraging AI and migrating to the Tango and Star TMS systems, while a further Dkr3bn would be saved through network optimisation – largely road and logistics facilities – as part of the DB Schenker integration.
In its first quarter results, DSV continued to benefit from the acquisition of Schenker, while demand for technology and semiconductor shipments also helped improve airfreight performance.
