Glyn Demands Air Freight to Hurry Up

A mere 6 months after stepping into the shoes of Des Vertannes IATA’s new Head of Cargo Glyn Hughes gave an industry update on the occasion of Air Cargo Netherlands’ (ACN) annual meeting at Schiphol Airport. His key message to the attendees: “We need to take 48 hours out of the end-to-end transportation time.”

Glyn Hughes addressing ACN at Schiphol Airport  /  source: ms
Glyn Hughes addressing ACN at Schiphol Airport / source: ms

As an opening remark Glyn reminded its audience that they represent a value of 6 trillion USD of goods transported by air globally. For the last few years the industry has found itself in dire straits more often than not, but since this summer growth has started again, so it appears. “Unfortunately, the yield picture is still not as we would like to see it. On the other hand, both the load factor and freighter utilisation are on the increase as well.”


Speaking about cargo revenues, the story is altogether a different one, as the levels have been at the 2008 low for the last 6 to 7 years, amounting to some 62 million USD in 2013. “For the last 4 years, we have had to accept a decrease of some 5%”, said Glyn. The brighter side of the picture is the fact that consumer confidence is seems to be making a come-back. “In China consumer confidence has been rather stable over the last few years. Both in the US and Europe it has reached a 7-year high.”

BALI

The ups and downs of the air cargo industry are very much under the influence of the antics of world trade. “So when in 2012 over 500  protectionist measures were taken, they all had an impact on the
air cargo growth rates. Therefore, as IATA, we strongly plea for the worldwide implementation of the Bali Agreement to take effect. Because, today, FTK is still not growing at same pace as international trade.”

As for capacity, most of the freighters that were parked during the on-going years of crisis, seem to remain where they are, so that even with the entry of new aircraft, freighter volumes appear to be static. On the other hand, the new wide-body aircraft entering the business offer substantial belly capacity which, again, has an impact on the yield.

Glyn guided its audience through various projects and challenges the industry has to carry out and/or overcome. As from 1 January 2015, lithium batteries will have the CAO-status.” Issues of this kind have to be approached through raising awareness with consumers, manufacturers, trade associations and trade councils”, he said.


Another matter, security, must be seen through the eyes of the regulators to whom al freight is regarded as potentially dangerous. “We at IATA keep on supporting a multi-layered approach, inclusive of the availability of shipment data and trusted shipper programs. Higher risk cargo must be subject to additional screening.”


Technology is gaining ground, even not at the pace the cargo industry would like it to have. ‘E-AWB penetration is on the rise, but the story does not end there. The obstacles are gradually being removed”, Glyn thinks. Glancing quickly at IATA’s 3 pillar map, in which the automation of all related documentation is the final stage, Glyn pointed out that research carried out by Cathay Pacific and Kuehne + Nagel has shown that the completion of scenario 3 would lead to productivity gains of 48%.
“But, compared to the passenger business, where the ‘paperless ticket’ was in fact a shift of the printing process from the airline desk tot the consumer’s printer, the challenge for air cargo is much larger. Freight has to answer a lot of questions.”


PERFORMANCE NEEDS UPGRADE


But the slow advancement of the electronic environment is not the only challenge still to address, Glyn Hughes felt forced to admit: “Air cargo performance has not improved much in the last decades. The average end-to-end transportation time between leaving the shipper’s premises and the arrival of the merchandise in the wholesale system, is still 6 days. We need to take 48 hours out of this time and we think the integrator model is the best example. To achieve this, we need to forge new relationships. The forwarders are no longer agents. We must not, however, neglect the shippers, who demand more transparency. Together with FIATA we are working very hard to take the Cargo Agency Modernisation Program further.”


Marcel Schoeters in Brussels

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