After being left out of a recent multibillion-dollar federal aid package for the domestic airlines, airfreight forwarders are now asking the U.S. government for aid to be set aside for their industry in the next economic stimulus legislation.
Specifically, the Airforwarders Association is requesting $1 billion in cash grants be available for the country’s estimated 3,500 air forwarders and their 6,500 trucking partners to help them stay in business through the economic downturn caused by the COVID-19 pandemic.
In addition, the association seeks $1 billion in zero-interest loans available for small and mid-sized air forwarders and related trucking businesses.
“Since forwarders are equally dependent on airline services and provide vital logistics services both ongoing and during the future recovery, we have approached Congress with a proposal designed to keep our industry viable,” Brandon Fried, executive director of the Airforwarders Association, told American Shipper.
The current wording in the airline carveout of the $2.2 trillion stimulus, which was signed by President Trump earlier this month, includes provisions for airline “contractors,” such as ground handlers and caterers, but not for forwarders, since they are viewed as “customers.”
This designation frustrates the forwarder industry, which views itself an integral part of the air cargo transportation process. Without the forwarders operating as the logistics linchpin between shippers and airlines, industry experts say, carriers would not have cargo to load on their airplanes.
“Pallet loads of goods ranging from manufacturing components to finished goods do not move themselves,” Fried said. “It’s a complicated process that requires expertise both in the physical movement but also dealing with myriad government regulations.”
Beating back layoffs
The Airforwarders Association recently polled its members earlier this month and 65% of the responding firms said layoffs are either imminent or underway. The survey also found that the respondents’ revenues are already down 50% or more.
“The sudden reduction in the number of flights due to the pandemic, along with the severe downturn in the economy, have had a negative impact on many air freight forwarders,” said Michelle Halkerston, president and CEO of Chicago-based Hassett Express, who also serves as the Airforwarder Association’s chairman. “It’s a good business decision to help keep these companies healthy, so they can support the shipping needs of many industries as businesses and people get back to work.”
“Many air freight forwarders are financially hurting as their sales have fallen off a cliff because clients have pulled back,” Richard Fisher, executive vice president of BTX Global Logistics in Boston, told American Shipper. “That has happened because their clients have either cancelled or postponed orders.
“We keep asking our clients, ‘when do you see a positive change and ramp-up of orders?’” he added. “The simple answer is no one knows. We need help.”
Fisher said when his firm recently requested air transport service for personal protective equipment (PPE) from China, the all-cargo airlines that are still operating quote astronomical rates.
“To make matters worse, many of the cargo carriers are stipulating payment before the shipment is boarded on their aircraft,” he said. “The impact on cash flow is disastrous.”
The Airforwarders Association appreciated the recent economic stimulus legislation’s $350 billion Small-Business Paycheck Protection Program. According to news reports, the funding for this program is now tapped, but the association hopes the Congress will extend the program in the next stimulus bill.
Even with the proposed re-opening of certain economic regions of the country in mid-May, most forwarders say the federal aid for the industry is still important since the air cargo market will likely be clawing its way back throughout the rest of the year.
“A common experience among most freight forwarders is that we are working even harder to get less volume moved right now,” Halkerston said. “I don’t see that work stopping in May.”