Air freight: The sky’s the limit

Fast fashion players like Zara, H&M and Topshop already rely on speedy deliveries by air for certain routes, and to ensure customers get their hands on the must-have dresses and coats of the season.

Now supply chain experts are forecasting air freight will become more widely used in the future as a means of boosting sales volumes. So what can air freight offer high street fashion retailers, and how can the issues of cost and carbon be overcome?

Boeing’s influential Air Cargo Forecast claims world air cargo will expand at 5.8% annually over the next 20 years, with worldwide air freight traffic tripling by 2027. Yet the industry has lost business because aviation fuel prices are up and competitive sea freighting routes and services have improved greatly in recent years.

Meanwhile, many manufacturers and retailers have such slick forecasting and planning systems in place that ocean-going transport often suffices to meet demand. And where high-tech products such as smart phones, flatscreen TVs and laptops were worthy of travelling by air a few years ago, many such products have now been downgraded to longer lead-time commodity goods, consigned to more leisurely sea freight routes.

So air freighters and onward logistics providers have seized on young consumers’ insatiable appetite for fashion clothing and accessories as a potential revenue stream in the coming years. Large global freight operators such as Kuehne + Nagel and DHL believe they are particularly well placed to help the serious fashion players whose commercial strategy is to bring catwalk looks to stores at lightning speed, and then maximise volumes on the hottest sellers.

Faster fashion

“Some fast fashion retailers are choosing ocean freight for their new season’s launch pack, but then cherry-pick lines that are selling well and bring them in by air,” says DHL Global Forwarding key account manager for fashion and apparel Simon Parker. “If you are relying solely on ocean freight, with transit times of 20 to 25 days from India or China, for example, you’re not going to be able to react to demand. Also air freight can allow you to introduce freshness into stores, with regular new arrivals mid-season, that young fashion fans expect to find today.”

He says one popular option is combined sea and air freight; transporting goods from China to Dubai by boat, for example, then forwarding it on to Europe by air, which brings a degree of speed at manageable cost. “Shortening lead times also helps retailers keep inventory under control,” says Parker. “Often clothes coming in by air can be sold at full price even before the vendor is due to be paid, which is great for cash flow, and takes an element of risk out of the supply chain.”

Kuehne + Nagel general manager for retail Sarah Humphrey says the recession is putting fashion buyers under increased strain, which air freight can ease. “Imagine the pressure on fashion buyers in these turbulent times,” she says. “If they can hold off ordering until the last minute, they can reduce risk considerably.”

Advanced UK Fashion Logistics has just set up a new freight-forwarding operation that will arrange air freight for clients, anticipating increased demand for such services. Business development executive Joe Rotherham says: “Historically air freight has been used by fashion retailers when sea freight-contracted product has been running late - perhaps because of problems in production or overbooked factories. Fashion retailers have been able to say: ‘You’d better send it by air at your own expense instead Mr Supplier, or we’ll cancel’.” Certainly, when Primark lost stock in a warehouse fire in 2005 it turned to air freight to fast-track product into stores and avert disaster.

But Rotherham says more clothing retailers should be considering properly planned air freight deliveries for their best-selling lines to maximise sales. “If early sales feedback shows a new cut of jeans are in demand, it is worth flying the next 6,000 in at a cost of £7 a pair, compared with £5 by boat, to guarantee those sales - even if the margin is reduced,” says Rotherham. “Too often when sales take off for popular items the slow lead time of a further sea shipment means the selling window is closed by the time they eventually reach stores. Taking a hit to margin is worth it if you make those big volumes of sales. The alternative is no sales at all.”

Delivery by air can slice three to four weeks off the time it takes to transport from the Far East but at a significant cost premium. While logistics experts say fast fashion operators use air freight to gain competitive edge, no one wants to talk about it, as such practices are clearly commercially sensitive. There are also jitters around what young, eco-conscious customers would think about the environmental impact of air-transported tops and trainers. Arcadia, New Look and Primark all opted out of discussing the subject for this feature.

A spokeswoman for George at Asda says they don’t use air freight, as it conflicts with their extreme value model. “We’re bringing stock in from places like China, Turkey, Bangladesh, but we control costs very tightly to ensure the lowest prices for customers, and that means we transport by boat,” says a spokeswoman.

Rotherham wonders whether other value retailers like Tesco, Sainsbury’s and Matalan would rule out lower margin sales wins, particularly as they are all moving to a more fashion-led offer, and are aggressively looking for growth. With Tesco chief executive of UK clothing and hardlines Terry Green aspiring to develop the Florence & Fred brand into the world’s biggest clothing brand by volume, could air freight for hot lines be on the agenda?

Zara and Bershka parent Inditex is eager to clarify that road transportation is the primary way it sends product to stores. “Air transportation is only used for the stores outside Europe and for European countries far away from our logistics platforms in Spain,” says a spokesman. “Road transportation accounts for more than 80% of the total due to the strong group presence
in Europe.”

Inditex arranges competitive deals with more than 20 different air carriers. “They are able to provide us with a very regular, frequent and quick service. The aim is to guarantee that all the stores worldwide receive products at the same rhythm, no matter where they are located.”

Inditex declined to comment on future intentions, but referred to its Strategic Environmental Plan, saying that new eco-stores will offset carbon emissions. Inditex aims to reduce greenhouse gas emissions associated with logistics and distribution by 2% by 2020, which suggests increased use of air freight might not suit its corporate social responsibility objectives.

A costly quick fix?

West Country fashion chain Seasalt calculates that by opting for sea freight it uses 95% less carbon than transporting by air, and the company markets itself as responsibly anti-air freight, curbing costs on the way. Production manager Adam Cotgreave says that with strong and accurate planning the need for air-freight could be reduced.

He adds: “But in the highly competitive, fast fashion market the need to react to market changes is paramount so quick lead times and more frequent use of air freight is inevitably relied upon as the most convenient fix.

Seasalt does not have these pressures with our current model.”

The carriers are acutely aware of air freight’s high-cost, high-carbon reputation and are working to bring prices and emissions down, such as updating their fleets to the most fuel efficient models. Meanwhile logistics specialists such as DHL carefully look into the best value options for retailers based on their transport routes and selling seasons. Fuel prices will always be high and the green issue isn’t going away, but for many fashion players, quietly and selectively using air transport makes perfect commercial sense.

Measure your footprint

Deutsche Post DHL has launched an online tool called Disco2ver Station that allows retailers to compare carbon emissions on shipments to and from different cities around the world. You select an origin and destination city, enter a shipment weight and choose a mode of transport. Then you can see a calculation of carbon dioxide emissions for the trip.
www.dp-dhl-gogreen.com/go