Steven Wang: Currently, air freight rates remain high, particularly in 2023, where freight prices have continued to rise, coupled with tight air transport capacity, putting significant cost pressure on many e-commerce platforms and dedicated freight companies. How to control air transport costs has become a key consideration for major companies. This not only affects the market competitiveness of end-to-end products but also directly impacts whether a company can provide stable fulfillment capabilities to meet customer demands.

Many companies are striving to make air transport procurement costs more stable and controllable. From this perspective, it is essentially a matter of strategy. Since the air cargo capacity structure is hierarchical, companies can start from the highest tier. The ideal solution is to own transport capacity, either by purchasing aircraft or leasing them for the long term. This typically requires long-term strategic cooperation with leasing companies or cargo airlines, through which companies can ensure stable capacity and gain partial ownership and usage rights of the aircraft. While this approach requires significant capital investment, it effectively controls air transport costs for the entire year.

If owning transport capacity is not an option, the second choice is to sign long-term charter agreements with large cargo airlines or aircraft owners. These agreements typically last 3 to 5 years, rather than being short-term (e.g., six months or one year). Compared to temporary charters, long-term agreements offer more controllable unit costs and greater competitiveness. For example, the cost of a temporary charter is about $500,000 to $600,000 per year, whereas a 3- to 5-year long-term charter agreement may reduce costs to $400,000 to $500,000 per year. Long-term agreements, therefore, can effectively reduce per-flight costs and provide greater price stability. These prices are usually set by different tiers and reported on an annual basis, ensuring overall cost control.

Another strategy is to sign fixed BSA (Cargo Service Agreements) with airlines, either for domestic or international routes. By locking in certain capacities, this ensures that some of the transport capacity has relatively stable pricing, avoiding excessive fluctuations. Further down the spectrum are temporary charter agreements, and some companies may also use foreign exchange strategies to further optimize costs. During peak seasons, companies may opt for temporary charters, which are more expensive, but the main purpose is to meet urgent customer needs and ensure fulfillment capability.

Therefore, current air transport procurement strategies should focus on a combination of mid-tier resources, balancing them to maintain overall cost control, ensuring stable transport capabilities for customers. For large clients, the primary focus is on the controllability of costs and price stability. Thus, the combination strategy and means of acquiring upstream resources directly determine market competitiveness and influence the types of clients a company can serve.

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Public Account: Cross-Border E-Commerce Logistics Baixiaosheng