Rethinking Air Cargo Operations

Can it be that many airlines have now reached the point whereby they are seriously having to rethink their air cargo operations and the future financial viability of such? A recent Reuters report highlighted many of the facts that may well be leading the industry in this direction.
Whether they are all valid, or will come about, remains to be seen during the next couple of years. CargoForwarder Global would like to comment on the issues mentioned and give its own views on this.

Soon out of service? One of KLM operated Boeing 747-400 freighter aircraft  /  source: hs
Soon out of service? One of KLM operated Boeing 747-400 freighter aircraft / source: hs

Is there really a trend back towards moving more air cargo by sea?
At some of the many air cargo related conferences held this year, exactly this point was being brought to our attention by various speakers.
It was Karl-Ulrich Garnadt, then CEO of Lufthansa Cargo, who made a point in a Stockholm conference that average air freight transit time from factory to purchaser is now up to 6.5 days. Lufthansa claims that this is double the time compared to the 1960s.

Another factor which adds to this possible movement is that electronics and high value shipments, which are traditional airfreight commodities, have now become much smaller in size, need less space for transporting them and maybe do away with the need for dedicated freight aircraft to carry them.
Air freight is, or was, often very bulky and needed a certain amount of dedicated so called “all freighter” aircraft to get it to its destination.
If the above were to be the trend for the future, then the need for freighters would become less and less.
A subject which has been bandied around many airline boardrooms for the past one or two years already!
Results so far have been that some of these all freighter fleets have disappeared from the market and carriers such as Air France-KLM are seriously considering placing all their freighters on ice.

Don’t let us be misunderstood!
Air freight is still big business. It’s annual value lies in the region of almost $7 trillion, represents however 35 percent of all international trade, but still only just over a half a percent of total volumes.

The above mentioned trend in pharmaceutical, high values shipments and so on  becoming smaller is pushing large producers of these commodities to rethink the transport by sea as a viable and long term means of transport.
This move will definitely affect the need for carriers to have dedicated freighters on their books. The massive explosion of passenger travel worldwide has brought an influx of new long range passenger aircraft such as the Boeing 777, Airbus A330 and new generation aircraft (A350/B787) onto the market. These all have belly space capable of moving up to 30 tons or more per flight depending on sector ranges flown.

Glyn Hughes
Glyn Hughes

IATA’s new cargo boss, Glynn Hughes made an interesting statement lately which said, “the industry needs a structural redesign.”
What would he mean by that?
It is clear that IATA has seen the writing on the wall and is proclaiming that the industry must drastically reduce transport times down to a maximum of 4 days instead of the present statistical 6.5 days.

 

Easy to say! - but how to do it?
Less paper, simplified procedures, less regulatory hick-hack and a better awareness of the problem at hand.
We live in an ultra-modern day and age, but as far as airfreight documentation goes, we are still in the caves.
E-AWB’s were positioned as being the way to cut down paper documentation and speed up transport modes.
This has been proclaimed for some years already, but to-date not even 15 percent of all air waybills issued on an annual basis are electronic.
Oh yes! - this will change, but how long will the process take and are carriers as well as shippers and agents really taking the time factor seriously?


Glyn Hughes went on to say that “as an industry we’ve been pretty much doing the same things for 50 years, and I think anything like this is a sizeable change.”
Glyn is right! - but we don’t have the luxury of another 50 years to change what is necessary in order that air freight can remain as a mode of transport that is attractive pricewise and timewise for shippers and consignees.

Sea transports have become a challenging option to air freight…  /  source Hapag-Lloyd
Sea transports have become a challenging option to air freight… / source Hapag-Lloyd

It would seem that many carriers are only focusing on reducing unnecessary capacity, with the emphasis of freight fleet reduction.
Probably understandable in today’s environment, but are they losing track of what air freight should mean for their companies - namely contribution to revenues and bottom line results.
Even the best made new era passenger aircraft cannot operate positively financially without those bellies being loaded to the top with good paying cargo.

 

Seafreight has set its sails anew and is offering better products and transit times.
Even the long range cargo train services from the Chinese mainland to Europe are starting to attract more interest.
And - there is now the fuel price issue. The recent troubles in the Ukraine and Russia as well as developments in the Middle East, are starting to push fuel prices through the roof. This will give many a shipper a good excuse to rethink moving by air if carriers are forced to have compensation for rising fuel costs.
Whether the fuel issue remains as a temporary curse, remains to be seen.
If not, then there is another large stone standing in the middle of the road.

….so are trans Eurasian trains running between China and Europe  /  source: DB
….so are trans Eurasian trains running between China and Europe / source: DB

So! - time for the airfreight industry to seriously tackle the problem at hand and ensure that air cargo remains as a preferred means of transport.
New, fresh and young thinking persons are a must for our industry in order to rethink and restructure itself for the future!
But - we can’t just leave it up to the new generation. Time for the present generation of air freight managers to wake up and lead the way!

John Mc Donagh

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