Part 2 – Short-term ULD leasing: Unilode’s answer to fluctuating demand

Managing the flow of unit load devices according to the carrier’s transport demand has always been a complicated and complex task. This is mainly because of the constant market fluctuations, the diverse types of products to be transported by air and changing seasonal demand. Short-term leasing solutions might be an option for airlines to secure their transports despite market fluctuations, says Mario Holzer, Managing Director Short-Term Leasing & Corporate Development at Unilode Aviation Solutions, with whom we spoke.

CFG: From an airline’s perspective: why not simply sign a general ULD management agreement with Unilode or any other ULD manager, instead of opting in favor of short-term leasing solutions?
MH: ULD Management and short-term leasing are very much complementary products. ULD Management allows a customer to fully outsource its entire ULD fleet to us over a multi-year period. On the other hand, short-term leasing serves to cover peak demands or special occasions. It is a flexible solution that can be tapped into with little lead time, geared mostly for ad hoc requirements of certain ULD types.

Your current leasing network covers 10 stations. And Unilode says that further stations will be added soon. Which ones and when?
We are in the process of expanding our network to additional locations which form part of our extensive MRO network – and beyond, reflecting the demand of our customers. The key success factor for short-term leasing is providing our customers with asset availability and flexibility, anytime and anywhere needed. That is our strategic ambition.

Are there typical peaks / lows in ULD market demand depending on seasonal issues; more need in fall, less in summer, for instance?
Yes, indeed. The air cargo market is characterized by seasonal supply and demand patterns driven by globalization, international trade and the overall macro environment. To name a few examples: Oct/Nov/Dec ahead of holidays is the main cargo peak season, characterized by a significant increase in trade flows, especially out of the APAC region. Beaujolais Nouveau launch in November usually comes with strong volume from Europe to APAC. And Feb/March is flower season with increased volume flown out of Africa and South America.

What does it cost customers to lease a – say – LD-3 container for the duration of one month?
Leasing rates are ultimately supply and demand driven and depend on volume leased, lease duration and ULD type leased. I can assure you that we offer competitive rates.

How do you manage and control the flow of your ULDs data-wise?
We currently use our bespoke system that we initially developed to support our ULD Management business. However, we plan to implement a dedicated system over the course of next year to facilitate further scaling, and plan to also enable direct customer access so that they stay on top of all their leasing activities with us in real time. And, as CargoForwarder Global recently published, we are in the process of digitizing the asset of our ULD Management fleet and plan to do so also with our short-term leasing assets, enabling even better visibility.

Have you got your own ULD stock or do you resort to the ULD pool managed by Unilode?
We manage our own dedicated stock to facilitate stock management, traceability and end-of-lease extraction for which we use the IATA suffix C6. In special situations, we can also support with pooling equipment in agreement with our ULD Management customers.

There are competitors out there, for instance market aggressive ACL Airshop. What’s the difference between your business model and theirs?
Based on the feedback we got, one of the biggest concerns for carriers today when renting ULDs is excess cost resulting from difficulties in returning units at lease end. It can take them weeks or even months to return all units. While such situations can never be fully avoided with short-term leasing, our competitors do not necessarily have a reputation for supporting customers with the return process.
We take a different approach as we strive to support our customers in returning units on time and actively help them to manage their lease costs. 
In summary, we want to become the go-to alternative for short-term leasing, enabled through global asset availability, transparency and attractive pricing and a customer-centric mindset which is very much part of the overall Unilode DNA.

Interview: Heiner Siegmund

Swiss national Mario Holzer started out at PwC as a Corporate Finance/M&A Advisor before joining Bain & Company where he held the position of an Engagement Manager and supported clients in various European and Latin American markets. After consulting, he worked in eCommerce for eBay Europe before joining the Executive Leadership Team of Unilode, initially focusing on PMO & Strategic Projects. Since 2019, Mario is Managing Director of Unilode’s Short-Term Leasing business and drives the global expansion and growth agenda of that exciting venture.

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