Damco’s Simon expects some recovery in 2020

Stephanie Simon, Head of Airfreight, Americas Region, Damco’s outlook for 2020

What are your predictions for the air freight market in 2020; what will it be like compared to 2019?

Simon-It’s an election year, which has a tendency to spill over into the market.

The new trade agreement that we are expecting to come into place has the potential for some recovery vs 2019, so we may see an uptick closer to 2018.

We are seeing a movement towards more sustainable supply chains and a focus on ocean freight or near sourcing over airfreight solutions.

We continue to see our customers looking to source out of South East Asia and other non-traditional tech markets with Vietnam being very much in demand right now.

There has been limited traction on actually shifting production, which we all recognize come with a heavy cost of change.

We had a relatively harmless peak in 2019 for airfreight with just some small bumps in the market, much of it driven by high tech to market strategies and capacity reduction in China.

Amazon closed their most successful 4th quarter ever this year and we believe that more and more US consumers will look to fulfil their Q4 needs through e-commerce.

It is a shift away from brick and mortar browsing to searching Amazon and the likes of Etsy, both for bespoke products as well as the convenience of getting through traditional Black Friday and Holiday shopping opportunities at the convenience of the consumer.

Which verticals do you predict there will be growth/contraction in?

Simon-We predict further growth globally in perishables as we move sourcing of produce closer to origin and pharma.

Which regions & trade lanes are you focussing on - why?

Simon-There is no escaping a continued focus on our more traditional markets.

China – US trade, despite taking a dip from the trade wars, is still a dominant market for us but we are expanding our focus to North-South as well as US Export to less traditional markets.

Will the China/Trump trade war continue to affect the market?

Simon-There is no doubt that it will affect the market, although the consumers to a large degree will be absorbing the incremental cost introduced by not being able to shift production elsewhere.

This primarily impacts technology consumer products as well as components. I would be hesitant to move my production until the election has concluded in 2020.

As we know, this is incredibly disruptive to a supply chain and comes with many pitfalls.

The markets that are picking up traffic from the trade war will need continuous focus and investment in infrastructure to truly support a transition from production in China as a long-term approach.

What is Damco doing to invest in air freight & why is Damco investing in air freight?

Simon-We are looking at an industry that has not had a major disruption in decades. We are looking to partner with suppliers that can enable an edge in the market.

Whether that comes in the shape of automation or Advanced Analytics, maybe even a spot of AI – that is really interesting to us.

We are ultimately looking to support those organizations that are building the supply chain of the future and will continue to develop our digital capabilities, online booking options, and rate availability to rapidly adjust to the needs of our customers.