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  • Writer's pictureTeam CargoTalk

Forwarders likely to target longer term deals in 2024

Freight forwarders are returning to longer term and fixed-capacity agreements as the air cargo market continues to normalize. Part of this switch to longer fixed-capacity contracts was partly driven by the rise of e-commerce demand, with companies such as Temu and Shein looking to secure predictability in terms of cost and speed, Zeid Houssami, Vice President, Flexport, and Global Head, Air Freight, said, in a market update. Companies have had increasingly utilized the spot market with around 70 per cent of deals being done on an ad hoc basis. “This trend is likely to change next year and start heading back to a more normal split and a shift back to annual and semi-annual rate agreements. The New Year should be much more normalised,” Houssami said. Most forwarders will look to leverage a more stable procurement portfolio of 50 per cent fixed or block space agreement (BSA) and about 50 per cent spot. “As a risk mitigation strategy, freight forwarders will continue to balance both and offset some of these longer term selling strategies on the shipper side,” he added.

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