High Capacity
Spiral
Conveyors
Save space and increase
throughput with Ryson
high capacity spiral
conveyors. They are in
response to our customer’s need
to go higher and handle more
weight. They can handle double
the weight capacity of our regular
spirals and still only need one drive.
Most units ship fully assembled
saving on installation costs.
Quality and service come first at
Ryson. We are the number one
spiral manufacturer in the USA.
For application assistance or more
information, give us a call or visit
www.ryson.com.
300 Newsome Drive • Yorktown, VA 23692
Phone: (757) 898-1530 • Fax: (757) 898-1580
VERTICAL CONVEYING SOLUTIONS
sown. Brian P. Clancy, a partner at consultancy Logistics Capital & Strategy, says
the industry’s dynamics mirror those
of the high-tech business, which at air
freight’s peak in the 1990s accounted for
about half of the weight carried aboard
an aircraft. Since the late 1990s, the
relentless shrinking of electronic goods
has reduced both product weight and
cubic dimensions, thus cutting the tonnage and revenue that air carriers generate, Clancy argues. Yesterday’s desktop
and laptop are today’s smaller and lighter
mobile devices, and a growing number
of functions once requiring hardware
that had to be shipped are now being
executed with cloud-based software that
doesn’t, he says.
At the same time, stiff competition and
rapid product obsolescence have caused
producers’ selling prices to plummet.
To bolster profit margins amid these
headwinds, they have turned to cheaper
modes of transport to drive down costs,
Clancy says. The conversion to sea freight
is a symptom of a bigger issue rather than
an issue in and of itself, he argues.
Today, air freight is mostly relegated to so-called unplanned use, such as
shipping emergency consignments like
spare parts to maintain production lines,
Clancy says. Back in the 1990s, airfreight
use was split between what Clancy called
“planned and unplanned” users. “The
planned users have changed their plans,”
he says.
Gene Ochi, executive vice president
and chief marketing officer for forwarding and logistics giant UTi Worldwide
Inc., says the shift took hold during
the Great Recession when airfreight volumes collapsed. As air shippers worked
through the aftermath, they began using
their optimization tools to, in Ochi’s
words, “reset the predictability” of their
deliveries. They discovered that some
portion of their air freight could be
potentially converted to sea without
compromising their delivery schedules.
Just as important, according to Ochi,
was the dramatic drop in interest rates
that reduced businesses’ cost of capital
and, by extension, their tab for carrying
inventory. No longer was it critical to
move goods by air to compress inventory
cycle times because the cost of carrying
the product had become so low, Ochi
says.
At present, there is a tug-of-war of
sorts between businesses that have shifted to sea freight and have grown comfortable with it, and those who are riding
the wave of cheap borrowing and will
jump back to air freight should interest
rates normalize, Ochi says. “I do know
that if the cost of capital rises, airfreight
use will rise with it,” he says.
Air usage should also revive once businesses gain more confidence in the global
economic climate and their ability to
trade, Ochi says. “However, that confidence is not there right now,” he says.
As mentioned previously on these
pages, for all its challenges, air freight
remains a critical part of global commerce. About 35 percent of the value of
worldwide cargo, an immense $6.4 trillion, moves each year by air. In addition,
few companies will convert all of their air
freight to the sea. And there will always
be bullish cycles. Seasonal demand for
high-end summer apparel and more
high-tech consumer goods should boost
activity and rates for part of the spring,
Drewry reckons.
Shawn Boyd, executive vice president–
marketing and sales for freight forwarding behemoth DHL Global Forwarding,
a unit of DHL, says customers just don’t
pick up the phone and tell his staff to
shift 20 percent of their product mix
from air to ocean. “It’s more complex
than that,” Boyd says, noting it requires
a detailed analysis of a customer’s shipping characteristics to determine where
conversion makes the most sense.
Boyd says air freight is thriving in
fast-growing regions like Latin America,
which has a broad enough geography
to justify the use of the mode. As more
global economies rebound and companies are in stronger positions, demand
for air will accelerate, he predicts.
For now, however, air freight growth
remains a slog for Boyd’s company. In
its most recent fiscal reporting year,
air tonnage declined 4. 8 percent from
the year-earlier period. Ocean freight
tonnage fell 1. 2 percent over the same
period. N
