In the last month, we have seen the second wave of the Covid-19 pandemic hit many countries. These countries are in so-called "lock-down" or extensive restrictions that impact our everyday life. Tomorrow is Black Friday and the trade is moving online with the distribution of products and home deliveries as a result. You can say that the pandemic has accelerated the transition to online sales for many companies, which places new demands on delivery to customers.
At the same time, volatility in freight prices continues to be high, especially for air and sea freight. In ocean- and air freight agreements, many companies are now starting their work of procuring their agreements for next year. They realize that in many trade lanes, as a consequence of the lower capacity available on the market, prices are higher than normal. How should you then act to keep prices down and to be competitive in the market?
In general, it can be said that our customers are thinking a lot about this right now, and the answer varies depending on the transport modality and the region you are in. For ocean and air freight, we know that more customers than normal use short-term contracts, and air freight is often on spot basis, to an even greater extent than normal. Quarterly or tertial contracts are starting to be more common.
Despite a sharp drop in the volume of freight transported by road in Europe, reinforced by the 2nd wave of the pandemic, road transport is in the short term torn between the repercussions of costs linked to an imbalance of flows - filling rates, empty mileage, sanitary measures - and the need to consolidate or gain new market share.
Depending on each area and type of flow, if short-term forecasts show price stability or a slight increase, 2021 could be an opportunity for economic catch-up linked to the gradual rise in volumes as well as the possible disappearance of the most fragile players.
These general trends in the market can be seen as indicators, but how you should act now is depending on your company's unique situation, business requirements, priorities, and risk mitigation. As a customer, you can always talk to your customer success manager. If you are not yet a customer, please reach out to me and we can set up a call with a transport analyst from our team to talk about what is the best approach for you and your company in this uncertain market situation.