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Australian forwarders fret over capacity crunch and higher rates

Australian forwarders fret over capacity crunch and higher rates

FREIGHT forwarders in Australia are concerned that they could face air cargo capacity shortages and higher rates if a government subsidy programme ends in September as planned, reports London’s Air Cargo News.

The Austrade International Freight Assistance Mechanism (IFAM) was set up earlier in the Covid outbreak to support airlines’ air cargo operations and keep supply chains moving given the loss of bellyhold operations.

The programme offers financial support to airlines to maintain flights and also grants to shippers of between 30-35 per cent to help offset higher airfreight costs.

The International Forwarders and Customs Brokers Association of Australia (IFCBAA) said that while passenger operations – and therefore bellyhold capacity – are increasing, it has concerns for airfreight capacity and rates when the current IFAM programme concludes in September.

The association said that there was already “too much freight fighting for too little space” on the import side, given surging e-commerce demand and ocean shipping congestion.

On exports, the IFCBAA warned that the loss of subsidies for shippers could result in becoming too expensive for them to continue exporting freight.

Prices will in effect immediately increase by between 30-35 per cent for shippers using the scheme because of the lost subsidies, which could make it too expensive for many to continue exporting.

In turn, with lower export revenues, airlines could withdraw capacity and this could push up prices further.

The association said that since IFAM commenced in April 2020, there have been 13,726 supported flights serving 67 destinations from nine locations, with an expected cost of AUD800 million (US$621 million) by September.

Over 1,000 of these flights have been pure IFAM freighter flights and 475,000 tonnes of product worth over AUD6.8b billion has been airfreighted under the programme.

The government launched the programme last year when the Covid outbreak saw commercial passenger flights drop by more than 90 per cent almost overnight.

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