In this series of articles disruption is the keyword, and we look at various areas in which the traditional airfreight industry needs to be streamlined and simplified, so as not to be
swept away by something completely new and innovative, as is happening in other areas, where new mobile internet technology is making traditional business models obsolete.
Last Monday, our author Mark Grinsted took a critical look at the unfathomable structure of surcharges levied by carriers. In today’s issue of CargoForwarder Global, he focuses on the vexing issue of overbookings and offloads.
Readers are cordially invited to send their inputs and post comments or make suggestions for additional cargo themes worth to be elaborated in depth by Mark and published on our CFG portal. Enjoy reading!
The purpose and the main strength of airfreight is to move goods as quickly as possible from A to B. The airfreight industry has however manoeuvred itself into a position in which this basic
requirement is regularly not fulfilled. In the traditional airfreight industry, there are numerous factors which cause delays in the movement of airfreight. Let’s look at some of them:
Trucking to other airports
Often the rate structure is such that, from an economic point of view, it makes sense to truck cargo from one airport to another, for example from Frankfurt to Amsterdam, even if there is sufficient capacity on direct flights from Frankfurt. This phenomenon will be treated in a separate article.
Trucking to a consolidation gateway
Here too the traditional rate structure, in this case lower rates for bigger shipments, makes it economically attractive to collect smaller shipments at one central point, and to deliver these as one large shipment to the airline. This trucking to gateways costs time, of course. This too will be treated in a separate article.
Customs and security of course also cause unnecessary delays. This has been a strong focus of IATA and airlines trying to speed up processes ever since the integrators came on the scene several decades ago. But without much progress. This too is a subject for a separate article.
Today’s subject is delay caused by offloads. The nature of airfreight is to be fast, but at the same time unreliable. Some of the unreliability is inherent to the special nature of air transportation: Payload is often dependent on weather conditions along the route, technical problems can lead to the substitution of another type of aircraft than was originally planned, cargo comes in all shapes and sizes so that it is difficult to judge in advance exactly how much will fit in a container or cargo hold. And, a permanent problem on passenger flights, passengers and their baggage normally have priority over cargo, so that cargo needs to be content with whatever space is left over.
However, the most frequent cause of offloads is man-made and the responsibility of all actors in the airfreight industry: Overbooking. Overbooking may be in everyone’s local interest, but the quality of the whole airfreight industry suffers as a result. Airlines are under huge pressure to achieve full flights, and the reservations staff are held accountable for every unused ton or cubic metre. They are forced to overbook to be “on the safe side” in case of no-shows, delays for incoming connecting cargo, or late trucks. Offloads can even be seen as something positive, as a proof that the flight was really completely full, and that everyone had done their job well!
This policy of deliberate unreliability is made all the easier by the fact that forwarders normally do not face any negative consequences if booked cargo is not delivered at all, or not delivered in time. And this is often not the freight forwarder’s fault; he is helpless if the shippers cancel cargo at last minute, as so often happens. Some larger shippers (insiders will have some examples!) are totally unpredictable and can deliver huge tonnages one day without any prewarning and on other days will suddenly have no cargo available despite pre-bookings. And they can do this with impunity, knowing that their market power will ensure that their own cargo will move nevertheless, even at the cost of delays for other, less powerful, shippers.
And the consequence of all this? A sort of fatalism on the part of all the actors in the airfreight transportation chain. Shippers do not feel obliged to deliver as booked as they know from experience that their cargo will often be left behind anyway. Freight forwarders can afford to shop around for better prices, and shift the booking from one airline to another at last minute to save a few cents. They can always put the blame on the shipper if they are challenged. And airlines (and handling agents) get lazy and do not plan flights accurately enough. What is the point in meticulous planning if you do not know whether the booked cargo will turn up?
On a side-note, the express rates, even with “money-back guarantee” offered by various airlines, are not a real solution, not for someone who just simply wants his urgent cargo to move reliably on the next flight, whatever the cost. Getting his money back if the cargo misses the booked flight does not help him at all – the shipment has still not arrived and is urgently needed at destination.
What is the solution? Bookings must be binding on all parties. In the last decades, various attempts by individual airlines to impose cancellation fees, at least for large shipments, have remained isolated; there was always another airline who would not insist on cancellation fees. That must change: Penalties must be applicable for no-show shipments. Airlines must pay compensation for all cargo that does not move as booked or is delayed, just as passengers now have a legal right to compensation for delayed or cancelled flights. This will force reservations and handling staff to take better care when planning flights and avoid overbooking and offloads. All to the benefit of the whole airfreight industry. All actors in the airfreight industry just need to get their act together!