Building an Excellent Air Cargo Infrastructure is no Miracle

There are stunning examples of air freight infrastructure projects which almost remind one of artwork. In contrast, some once highflying plans remained below expectations after becoming operational. Or they have even failed. 
A group of high-ranking experts discussed what it takes to build a state-of-the-art cargo infrastructure during a panel discussion at IATA’s Berlin-held World Cargo Symposium (WCS).

IATA Network Breakfast panelists (l > r): Mike Schmitt, DHL Express  /  Uwe Beck, BeCon Projects  /  Heiner Siegmund, Moderator  /  Christophe Mostert, M2P Consulting  /  Stephan Witteler, Heuking-Kuehn-Lueer-Wojtek  -  picture: Ulf Klose
IATA Network Breakfast panelists (l > r): Mike Schmitt, DHL Express / Uwe Beck, BeCon Projects / Heiner Siegmund, Moderator / Christophe Mostert, M2P Consulting / Stephan Witteler, Heuking-Kuehn-Lueer-Wojtek - picture: Ulf Klose

Planning, constructing and benchmarking air cargo infrastructure sounds easy at first sight. But when having a closer look it often shows that the devil is usually in the detail. So the question is how fundamental errors can be avoided and air freight facilities of flagship status be accomplished? This was the key question debated by the four panelists.
Their common answer at the end of the session: Besides the necessary funds to finance a certain project, it needs predominantly clear design parameters, someone sitting in the driver’s seat with overall responsibility and a precise roadmap to achieve the objectives originally agreed on by stakeholders.

Disastrous BER project
“Don’t let the building ever take the lead,” exclaimed Managing Director Uwe Beck of consulting company BeCon Projects. If so, things are spoiled and extremely hard to get back on track, as demonstrated over more than ten years by the disastrous Berlin-Brandenburg airport (BER) project. A warning example, illustrating all the errors possible. “Before an investments starts, get all shareholders on one table and define clear goals and phases of realization,” Uwe recommended.
At the earliest possible stage and prior to cutting the first sod, the functionality of a facility should be defined from A to Z. For instance, when planning a warehouse containing different sections for storing, consolidating and de-consolidating a broad variety of products ranging from very sensitive goods to standard shipments.

Good will is not enough
From day one, it needs a strong project management for driving and orchestrating the entire process. In case this is not ensured, a project can turn into a nightmare as shown at the newly built airport at Ashkhabad, Turkmenistan. There, a Turkish construction company had decided on the wrong concrete mix when building a large new cargo warehouse. So, some weeks later, once the error came to light after the floor had hardened, they were forced to rip off the entire solid fundament stretching over hundreds of square meters and build the terminal’s surface anew. 

Constant communication is key, as Finnair’s Cool hub shows
How things can be done better is demonstrated by Finnair’s new Cool Air Cargo hub at Helsinki Vantaa airport. Clear and realistic targets were set by both the airline and operator, the users were directly involved from the first day onwards, all stakeholders communicated openly and trustfully from the very beginning, a clear reporting structure was put in place as was budget control together with scheduled supervision and permanent target review. The result up to now: the project is still within budget and fully on schedule. “Because of these and other parameters that were agreed on at the early design stage, Finnair’s Cool Hub is completely in budget and fully on schedule,” resumed BeCon manager Beck. If nothing unforeseen happens, the facility will be operational in the spring of next year. 

Digitalization demands a quantum leap in education
In his contribution titled “IT follows processes” Managing Partner Christoph Mostert of Frankfurt-based M2P Consulting gave an outlook on how digitalization will fundamentally transform the air freight industry during the next decade. The first step a cargo company should take is defining precisely its business objectives by implementing a target operating model. Once done, a digitalization roadmap should be set up for transforming a warehouse or cargo terminal into a “smart hub”. Instead of buying standard applications off the shelf by incorporating and customizing them afterwards, it’s much wiser to purchase best of breed and relevant IT services, Christophe recommended. This way, the staff can build their own IT solutions tailored to the target operating model. Mr. Mostert’s conclusion: “The digitalized ‘next generation cargo hub’, involving the entire infrastructure and not only single departments, is fully connected with every stakeholder and offers a seamless journey of all data and shipments.”

Adjudication beats arbitration
Senior partner Stephan Witteler at Heuking-Kuehn-Lueer-Wojtek, a corporate law firm, took a closer look at the contractual arrangements of air cargo infrastructure projects. “Contracts should anticipate and appropriately manage possible conflicts,” Herr Witteler stated. He advised the participants against accepting any standard form contracts but opt for individually designed arrangements. They are better suited for projects with a large number of participants, particularly where alignments of workflows, coordination and integration are crucial. Negotiating their terms is more time consuming and costly compared to standard contractual solutions but they pay off most of the time because they reflect the specifics of a given project more adequately. Subsequent alteration in projects resulting from ambiguous requirements or the complex nature of the tasks are risks inherent in large air cargo infrastructure projects, said Witteler with reference to a number of dubious cases. To avoid costly and time-consuming trouble he recommended establishing an adjudication board even before any project takes off. Their members are kept up-to-date about the progress of the works and are able to make immediate decisions to avoid any delays. Adjudication is better than arbitration, he said, because arbiters have no contact with the project until something has gone very wrong.

DHL’s Leipzig project has become a success story
Michael Schmitt, Program Director DHL Hub Leipzig delivered an impressive overview over the integrator’s Leipzig activities. Starting from scratch in 2008, the package delivery company meanwhile operates more than fifty freighters at its largest European gateway. They are complemented by AeroLogic’s eight Boeing 777Fs that are covering long-haul routes, as do DHL partners Kalitta, Southern Air and some local capacity providers, covering regional feeder routes.
Since 2014, a second huge sorting center is in the process of being built, enabling DHL Express to up its throughput capacity from 100,000 packages per hour to 150,000 items. An additional 400 staff will be employed, adding to the existing 3,500-plus jobs at LEJ. Each night, almost 2,000 tons are handled by DHL in Leipzig, making the airport Germany’s number two by tonnage after Frankfurt. “Talking about successful infrastructure projects, I recommend taking a tour through our Leipzig facilities and you will be impressed,” stated DHL’s hub Chief Michael Schmitt.  

John Mc Donagh

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