The proliferation of regulation and compliance will be one of the greatest challenges for the air cargo market and freight forwarding as a whole, says Eric Martin-Neuville Executive VP Freight Forwarding at Geodis in an exclusive discussion with CargoForwarder Global. He is convinced that customs brokerage will become a fourth independent mode besides air, ocean and projects.
CFG: Mr Martin-Neuville which are in your opinion the greatest challenges air freight forwarders are confronted with today?
EMN: I think there are three. First there is the present market volatility, which is expressed in the declining growth rates. Then there is the freighter vs passenger belly capacity, resulting in belly capacity offered at a lower price compared to main deck carriage of goods. Last but not least there is the increasing complexity of regulations and compliance, making our business more complicated day after day.
These factors lead to a change of processes and an adaption of systems. They cover all sorts of issues: the U.S. border, hazardous materials like lithium batteries, export controls within the ‘rogue states’, to name but a few.
Doesn’t sound very optimistic
We have to face reality. And the immediate situation is that the growth of the air freight market, by and large, has come to a halt. I would even say that we are facing a recession in some parts of the world.
Turning to our company I can confirm that the markets where we are still growing are both the U.S. and the Middle East. In the U.S., we took over OHL in 2015 which now pays off.
In contrast to this, Chinese trade is going south as a reaction to the trade war between Washington and Beijing but also because of lacking industrial incentives from the EU, particularly the automotive industry. This also impacts our business.
Where do you then see future opportunities?
Mainly in customs brokerage. Every large company in the world needs customs brokerage. They feel a growing pressure coming from shippers and also authorities to intelligently manage the complicated compliance regulations which are constantly changing. In this specific field there is a growing demand for tailored solutions expressed by shippers.
As a matter of fact, we at Geodis experience a need for a high level of proactive and advisory services. We think that customs brokerage may well evolve into a 4th independent mode besides ocean, air and projects in addition to our traditional air, sea and project activities.
Our acquisition in the U.S. was partly prompted by wanting to develop a market for customs brokerage. If you look at the state of the transportation market you see that every large company in the world needs customs brokerage. They feel a threat because of the compliance regulations that are constantly changing. There is a growing demand from the large shippers for solutions in this respect as a stand-alone business.
I experience a need for a high level of proactive and advisory services. We think that customs brokerage may well evolve into a 4th independent mode besides ocean, air and projects.
What else is impacting the market?
Things are moving away from the U.S. If Trump tweets, my supply chain is disturbed!