Dive Brief:
- New product launches, flight cancellations and peak shipping season e-commerce growth have inspired freight forwarder Flexport to charter independent cargo flights from Hong Kong to Los Angeles, according to a company blog post.
- The first flight departed Hong Kong on November 19, carrying 375 pallets of cargo. A 747 400 plane was chosen for the maiden voyage.
- The company expects to continue with this offering beyond the 2017 holiday season. The service will become permanent come 2018, providing fresh revenue for Flexport, which opened for business in 2014.
Dive Insight:
Flexport advances into unchartered territory with its decision to ferry its own air freight.
The increase in air cargo freight is generally attributed to the rise in cross-border e-commerce trade, but whatever the reason, the numbers tell the story, with one source citing a 10.4% increase in the first six months of 2017 alone. The increase in manufacturing has also impacted air freight growth, as has a rise in exports.
Given these circumstances, it's easy to see how an innovative freight forwarder well versed in technology would make the leap into piloting its own transport planes. And while peak season may not be the ideal time to undertake a new venture, relieving shippers under pressure to move goods will earn Flexport both loyalty and significant added income. Freight forwarders do not always serve as carriers, but Flexport has consistently shown a willingness to think outside the usual logistics box.
The further issue of Flexport's choice of route reflects the fact that China is currently the United States' largest trading partner, evidenced by the $578.6 billion value of goods traded during 2016 alone. The company is both accepting a risk in becoming a freight carrier, yet playing it safe by choosing the most profitable and popular route to take in its initial venture.
