Saturated Skies: Air Freight from Europe to the USA

Most of us use this mode only in case of extreme emergencies.

We call them expedites or premium moves and these typically move by air freight.

If you have had any expedites over these past few weeks, then we have probably shared the same experience: delays, frustration and much higher costs than usual!

The cause for the bottleneck has been attributed to an increase in cross-border e-commerce, the launch of the new iPhone (for the Asia-to-USA lane) and an increase in emergency shipments.

Our odyssey started on Monday, November 13th, which is the day we expected our 4 crates to be picked up from our Italian supplier and flown to Texas. The expected arrival to El Paso was Monday, November 20.

We had gone out for quotes and awarded the business one week prior at a cost of $3.58 per kilo. That was for the standard (STD) service level, which provided a 7 calendar day transit time. That was just the timing that our folks at the plant required; we didn’t need to upgrade to the expedite (EXP) service level as that would have cost $7.59 per kilo.

Then came the e-mail from our selected logistics service provider on the day that they were supposed to pick up the 4 crates: “My EU teams (Italy, Germany, France) are continuing to check earlier departure. At the moment, our current routing option is ETA Houston on November 24th and door delivery to El Paso by Sat/Sun (Nov 25-26).”

My colleagues at the destination plant were not at all happy with this timing. They could not understand how our logistics company could have reneged on their commitment.

I pushed and demanded, but there was no way that the logistics company could secure the initial space, timing and cost.

It was at that time that they advised us about the tight capacity coming out of Europe into the USA. All airlines, freighters and hubs were overcapacity and trying to load cargo from days before!

I pushed and demanded more!

They committed; they promised to deliver in that timing and at that cost.

That’s when they directed me to the fine print in their quote: “rates are subject to change based on availability at the time of booking.”

Damn…they had me!

All the yelling and screaming and threatening was going to get me nowhere. And, besides, this was one of our best logistics providers. They knew all the ins and outs of the industry. They had come through on countless occasions. Hand-holding, repackaging, covering our sins; they always provided top-notch service, but this time, it was just not possible, because there was no solution. Even their EXP service was no longer available!

Back to the drawing board.

We started checking on our own with air cargo companies and then with the big integrators: DHL, FedEx and UPS. Two of them immediately advised that our oversized crates would not fit on their planes.

One said that they were 99% sure that they could do it and maintain our timing for a delivery by Monday, November 20th!

The cost went up to $8.01 per kilo.

My team at the plant was in shock when I provided the new cost. The program lead asked “is this a joke?”

I explained the situation and they gave approval for the higher cost. We waited for confirmation of our booking.

And waited.

The e-mail finally came on Thursday, November 16th: “We cannot move this shipment through our network.”

Back to the drawing board.

We had the act quickly and be prepared to pay even more. We finally found a service that would deliver on Saturday, November 25th for $11.28 per kilo!

The week was a roller-coaster of emotions and the costs were always going up!

Although we can never predict when we will have these one-off air freight shipments, it is important to know that the end of the year is particularly vulnerable to tight capacity and ever-increasing rates.

We have some lanes that are in expedite mode through the end of the year, so you can bet that we sent out a notification to all of our plants to advise them to provide forecasts of their expedite needs for the remainder of the year and insist that our logistics companies confirm that the space has been booked in advance to avoid the issues we experienced with these 4 crates.

About Lenny

Many years of experience in a Fortune 1000 companies, especially in the logistics and I.T. areas of manufacturing companies. Through process improvements and the use of many of the tools mentioned here, I have been able to identify and implement savings opportunities worth up to $10 million. I hope that some of these real-life stories, suggestions and tools can help you!
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