Charter brokers report growing number of calls from forwarders about cargo aircraft availability as UK lurches closer to disorderly exit from EU
Air charter brokers are receiving more and more enquiries from freight forwarders about securing air cargo capacity to offset the potential repercussions of a ‘no deal’ Brexit on the supply chains of their shipper customers.
Pierre van der Stichele, director of cargo operations at Chapman Freeborn: “With the Christmas and New Year break over and people back to work, firms seem to have woken up to the proximity of a potentially ‘hard’ Brexit and the need for contingency planning on the logistics side, and this is reflected in the growing number of calls we’re getting about cargo aircraft availability.”
He revealed that Chapman Freeborn already had agreements in place with two major forwarders, one of them for their clients in the automotive field, the other in phamaceuticals, to supply two narrow-body freighter aircraft, respectively ? a 20-tonne capacity AN12 and an 8-tonne capacity ATR72 ? for renewable 12-week periods from the end of March 2019 when the UK is scheduled to leave the EU.
“These aircraft would be based at specific airports in the Benelux region and have dedicated crews on call and basically fly on demand for the forwarders’ clients,” he said. The shippers in question operate to ‘just in time’ production cycles and their normal logistics provision focuses on transporting freight by truck to and from the UK using cross-Channel ferries and Eurotunnel.
“In booking air freight capacity well in advance, they are looking to minimise the risks associated with a ‘hard Brexit’ ? the likelihood of long queues of trucks at Channel ports and of production lines grinding to a halt for want of essential parts and supermarkets running out of certain foods,” van der Stichele added. “But obviously such contingency measures come at a price.”
While the shippers could well benefit from a ‘get out’ clause with these contracts if it became clear in the next few weeks that a ‘soft Brexit’ looked set to prevail, such positive (contractual) terms would very likely change as the deadline for the UK’s withdrawal from the EU approached, van der Stichele explained.
“Tying up aircraft and crews represents a considerable outlay in fixed costs for airlines and lessors, which would have to be recovered even if the planes ended up not being used at all. We’ll probably see more and more shippers opting for this kind of pre-emptive action on air cargo capacity if the uncertainty over the terms and conditions of Brexit continues,” van der Stichele, predicted.
Fellow broker Air Charter Service (ACS) has also seen a rise in enquiries and has set up a special team to focus on projections for air cargo demand in the event of a ‘no deal’ Brexit.
“Of course, there is still uncertainty surrounding the conditions under which the UK will leave the European Union and we’ll know more about this following the parliamentary vote on the government’s withdrawal agreement with the EU later this month,” a company spokesperson told Lloyd’s Loading List. “So we are not at an operational stage yet where shippers are coming to us with firm requests for aircraft, but we are getting a good number of enquiries as to the air freight options open to them.”
Most of the enquiries appeared to be coming from shippers who were familiar with using air as a mode of transport, the spokesperson noted.
According to a report this week by Bloomberg, the board of UK automotive manufacturer Aston Martin Lagonda has authorised contingency planning for Brexit that includes shipping car components via air freight. Quoting a company spokesperson, it said the luxury carmaker was signing deals with its logistics supplier, DHL, to allow for the use of ports other than Dover and had given the nod to its supply chain team to make bookings for cargo planes.
However, contacted by Lloyd’s Loading List, Aston Martin gave a more nuanced response: “We haven’t confirmed we would use air freight as an option ? this would be a last resort. We do, however, have plans in place to source parts through alternative ports to Dover.”
The company added: “Like all responsible businesses, Aston Martin is undertaking a considerable programme of work aimed at managing the negative impacts of Brexit for its business. This work includes looking across the supply chain and logistics programmes and ensuring that we have contingencies in place in the event of holdups at the UK border.”
Asked if the air cargo charter market could accommodate a surge in demand if a ‘worst case scenario’ over Brexit did materialise, van der Stichele replied: “Over a sustained period, the answer is very defintely ‘no’. There’s not much slack in the market and what is often ignored is that, in addition to the capacity absorbed by the integrators, there is the operation of a sizeable number of overnight cargo flights on a more-or-less scheduled basis, using small aircraft such as Metroliners and Shorts 340s on Europe-UK routes, carrying time-critical parts and components for individual shippers.