Charters rise to the challenge

Singapore freight forwarders – Star Concord

Post-Covid normalisation has brought certain pressures to the charter sector, with fuel prices being a significant impact. The drastic increase in fuel rates has added operational costs for charter flights. Additionally, the reduction in sea freight rates post-Covid attracted some cargo volumes back to maritime transportation as a more cost-effective option. However, airfreight remains indispensable for urgent and critical shipments, reaffirming its role as the primary solution in time-sensitive situations. 

Challenge Group’s demand for charters evolved from initially transporting pandemic-related cargo like vaccines and protective equipment to becoming a versatile ad-hoc and charter series provider. The shift in demand was prompted by the lack of available belly capacity on passenger flights during Covid-19. 

As the company adapted, it established itself as a solution for supply chain crises, reacting swiftly to changing needs. This adaptability and responsiveness contributed to Challenge Group completing its 1,000th charter flight in less than three years.

“Having a diverse cargo expertise is critical for a strong charter business, especially during crises and supply chain disruptions. The ability to handle pharma, out of gauge cargo, live animals, valuables, aerospace, automotive, and more makes the business resilient and preferred for complex cargo,” Edward Micallef, General Manager, Challenge Air Cargo, highlighted. 

“However, expertise alone is not enough; ancillary services like crating, packaging, special equipment, handling and trucking are equally vital to enhance overall end-to-end logistics solutions. This combination ensures the business is adaptable, busy, and a preferred choice for a wide range of cargo needs,” he continued.

READ: Challenge Group appoints David Canavan as Group COO

Filling the void

There are notable regional variations in charter rates, driven by specific factors. In the Far East, there is a substantial increase in demand, particularly before the festive season, attributed to the e-commerce boom. This surge in online shopping has heightened the need for consistent air transportation services in the region.

Conversely, in the Middle East, the ongoing conflicts have led to a lack of capacity and increased demand for charter services. This heightened demand is primarily for basic goods and humanitarian aid, emphasising the critical role of airfreight in responding to urgent needs in conflict zones. The regional dynamics and the types of cargo being transported contribute significantly to the variations in charter rates across different areas.

During geopolitical tensions, the sudden halt in passenger traffic eliminates belly capacity, creating a void that freighter operators and charter brokers are called upon to fill. This situation emphasises the charter sector’s key role in establishing air bridges between countries during critical times, ensuring the transportation of essential goods and aid from around the world to the affected regions. In response to increased demand and the need for humanitarian aid, charter brokers, including Challenge Group, have expanded capacity in and out of the Middle East. 

“These events have highlighted the strategic importance of freighter operators, putting them in the spotlight,” Micallef outlined. “Despite earlier overcapacity, the evolving global situation has shifted the dynamics, presenting new opportunities for charter services due to the heightened demand in response to different disruptions and supply chain uncertainties.”

“The instability in certain regions has indeed changed the nature of cargo being transported by charters,” he explained. “Specifically, there has been a notable rise in humanitarian aid shipments. The conflicts and a high number of natural disasters in the past year have contributed to a significant increase in the need for urgent assistance.

“Furthermore, during times of turmoil, challenges in breeding livestock and disruptions in food supply chains often lead to food shortages. As a result, the transportation of food-related cargo has become another growing vertical in response to these complex situations,” Micallef added. 

READ: Airfreight’s evolving e-commerce landscape

Optimistic outlook

Charters offer control and flexibility, allowing the movement of goods anywhere with minimal risk. In uncertain times, the supply chain values stability, leading to a preference for freighter capacity over belly capacity, reinforcing the charter sector’s strength and reliability in providing secure and adaptable logistics solutions.

“While traditional airlines are expanding into freighter operations, focusing on scheduled services, the charter sector maintains an edge with its specialisation in complex and niche cargo,” Micallef said. “The charter sector’s expertise allows it to excel in specific charters and selected trade lanes, offering tailored solutions and rapid response capabilities thanks to our three air operator certificates, that may not be fully addressed by traditional carriers’ broader freighter services.”

The charter sector has reained robust despite challenges because, since Covid-19, shippers and customers recognised that charters provide stability in the supply chain during turmoil. 

“In 2024, our focus in the charter segment includes continued support for global humanitarian aid. With zoo and circus closures in Europe, we’re seeing a rise in live animals requests, with planned projects for relocating endangered species,“ Micallef explained. “We are actively involved in logistics for music entertainment world tour movements, offering reliable and flexible solutions with specific ancillaries facilitated by our hub assets.” 

“Our commitment is to offer high operational standards for complex verticals and provide efficient and specialised charter services and end-to-end logistics solutions across various industries, emphasising adaptability and reliability,” he continued.

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Author: Edward Hardy