The International Freight Forwarders and Customs Brokers Association of Australia (IFCBAA) has raised concerns that the end of a government subsidy programme in September may result in air cargo capacity shortages and higher rates.
The Austrade International Freight Assistance Mechanism (IFAM) was launched in April 2020 in response to the coronavirus outbreak. With commercial flights dropping by more than 90% almost overnight, IFAM was set up to support airlines’ air cargo operations and keep supply chains moving. It offers financial support to airlines to maintain flights, as well as grants to shippers of between 30-35% to offset higher airfreight costs.
IFCBAA said that there was already “too much freight fighting for too little space” on the import side due to rising e-commerce demand and existing sea freight congestion. Meanwhile, loss of subsidies may make it too expensive for some shippers to continue exporting.
The loss of subsidies will effectively increase costs by 30-35% for shippers using the scheme. In turn, lower export volumes mean airlines could withdraw capacity, resulting in even higher prices.
Since its launch, product worth over AUD6.8 billion has been airfreighted under the IFAM programme.
Source: Shipping Gazette