By Karen E. Thuermer, AJOTAs go the global markets, so go rates for airfreight, although freight forwarders try their best to reel in prices. With most air cargo being generated for the airlines by their premier customer—the freight forwarder, forwarders are completely focused on their buy rates on carriers. And these days, those rates are going up, up, up thanks largely to surcharges air carriers must place on their service for increases in fuel prices and security taxes. After all, everyone is paying much more for gasoline and petroleum products these days. Fuel now eclipses labor as the No. 1 expense for many airlines. “The whole global economy is feeling the pinch right now,” says Nigel McCallum, director of Export Operations for Baltimore, MD-based Samuel Shapiro & Company, Inc. “This will continue until we realize stabilization in oil prices. There is nothing an individual shipper or we, as freight forwarders, can do about this.” Higher fuel prices also means higher prices for passenger flights, which makes flying less affordable. If there is a significant reduction in passenger travel, carriers could reduce the size and number of aircraft they utilize and eliminate certain flights. This would translate into a reduction in cargo capacity available to forwarders and their shipper clients and could result in fewer flights. These scenarios also bump up air cargo rates due to increased demand for less available space. Another problem for air shippers occurs when passenger baggage fills up aircraft. In this case, less cargo goes. Fuel considerations also have an impact, especially if more fuel is needed due to strong headwinds. “The only thing we, as airfreight forwarders, can do about this is maintain a good relationship with carriers so that we can guarantee to our customers that we will get their cargo on board to the best of our ability.” TRADE PATTERNSAnother major factor at play is the weakness of the US dollar, which is playing havoc with today’s financial markets and undermining confidence in the Greenback. “But the flip side of that is the affect this is having on the changing flow of goods,” says McCallum. “Whereas the United States used to be predominately the world’s biggest consumer of imported goods, things are changing. We are now experiencing stronger exports, and imports are now much more expensive.” Consequently, airlines have an opportunity to realize more balanced loads inbound and outbound, particularly across the Atlantic in the North America-Europe trade lane. McCallum warns there could be a fall out in shipping rates because of this. While inbound rates have traditionally been more expensive due to more competition for space, outbound has been fairly cheap. This has been the case especially on routes across the Pacific to Asia. Since the explosion of imports from China, air carriers have been scrambling to fill their aircraft with North American exports. For passenger service, in particular, air cargo is good business that adds income to a carrier’s bottom line. Other factors are at play. With many airlines today introducing new aircraft that offer more cargo space, carriers are anxious to capture more of the business. “Carriers are begging us for more business,” states McCallum. “Many are now offering us export rates.” McCallum warns that this practice could only increase export rates again. SEASONAL FACTORSSeasonality also plays a huge factor in rates, especially in the Asian market. Peaks seasons usually fall around the holiday season and can be influenced by the type of commodities being flown. Clothing for the next season is a good example or flowers for Valentine’s or Mother’s Day. Whereas the peak season associated with the holiday used to begin in August-September and run to the just before the end of the year, now that season has been pushed up to June or early July due to the sheer volume of merchandise coming from Asia then and year around. This too puts a strain on capacity and impacts r