Brussels Airport (BRU) could be a substitute for Frankfurt, London-Heathrow, Amsterdam, and Paris-CDG. This is one of the conclusions of the doctoral dissertation ‘Air Cargo Competitiveness and European Airports: Markets and Strategy’, presented at the University of Antwerp. The dissertation earned Thomas Van Asch the degree of Doctor of Applied Economics.
For an airport to set up such a strategy, four different components must be considered: territory, cargo marketplace, airport operations, and product differentiation. Only the first of these
cannot be altered, said Dr Van Asch.
For the period 2018-2027, growth is forecast to come mainly from niche markets like perishables, pharmaceuticals, and e-commerce. To attract e-commerce, efficient customs services are of the utmost importance, combined with the possibility to pre-clear goods. Another key factor is the availability of land for expansion, both on the landside and the airside.
Freight forwarders are the most powerful actors
According to Dr Van Asch, the freight forwarders are probably the most powerful actors in the air cargo market. “They decide not only with which airline the cargo is flown to its final destination, but also which airports will be used.”
In his dissertation, Dr Van Asch has classified the 40 largest airports in Europe into 8 clusters, 5 of which play a significant role in cargo. Cluster 1 consists of Frankfurt only as The European Cargo Star. Thomas Van Asch: “It seems that the strategy of FRA is working. One can say the same of LHR, the airport is very profitable. On average – FRA is scoring the best on a wide-variety of factors when considering the cargo segment."
Two airports make up Cluster 2, Major European Hubs: Paris CDG and Amsterdam. London-Heathrow has Cluster 3, European Long-haul widebody hub, all to itself. Leipzig-Halle, Luxembourg, Cologne, Liege, Milan-Malpensa, East-Midlands, and Bergamo form Cluster 4: European Cargo Airports.
The importance of belly cargo
Brussels Airport pops up in Cluster 5: European Freight Potentials, together with Munich, Zurich, Stansted, Manchester, Orly, Dusseldorf, and London-Gatwick. The European Freight Potentials are airports that could potentially attract more cargo and achieve varying levels of success in this regard.
The difference between the Freight Potentials and the Cargo Hubs of Cluster 4, is that the former also accommodate important passenger segments, often operated by widebody aircraft on intercontinental destinations. These bring in a significant volume of belly space.
Thomas van Asch emphasizes: “Airport management has little to no impact on factors related to its geographical location, the local labor market or the accessibility of an airport. However, airport management can really make the difference on other factors. For instance, by trying to actively attract companies to the airport, such as airlines, forwarders, integrators, etc.”
He adds to this: “Also, regarding airport operations, management can play its role. Finally, the influence of some more soft factors is often underestimated. Airport marketing initiatives, focusing on a positive reputation, are in direct control of the management.”
Mr. Van Asch further points out that dedicated cargo airports rely heavily on integrators and express freight. But air cargo is more than just the express segment, he stresses. “A lot of long-haul destinations are only profitable because of the belly hold cargo capacity offered to the market.” Such flights will not be operated through dedicated air cargo hubs because there are no travelers. Hence, the full-service airports keep playing an important role for cargo throughput and the transfer of goods from intercontinental to short-haul flights, respectively vice versa.
The potentials of Brussels Airport
Brussels Airport has an excellent location within the so-called ‘Blue Banana’, the most densely populated and economically strongest region in Europe stretching from Greater London over the Benelux and Northern France, the Rhine-Ruhr and Rhine-Neckar to Basel/Zurich and Geneva/Milan. As such, it could be a good substitute for Frankfurt, London-Heathrow, Amsterdam, and Paris-CDG, should they not be able to accommodate further growth.
In its cargo strategy, BRU is precisely targeting the niche markets prone to growth: pharmaceuticals, perishables, and e-commerce. Especially in pharmaceuticals, the airport is performing very well, doubling the share of these products in the total cargo output (tons) from 4.21% in 2015 to 8.27% in 2019.
As for e-commerce, one should not forget that Brussels can still boast one of the largest regional DHL hubs. Belgian national post operator Bpost also distributes international mail items via BRU. Dr Van Asch advises the airport management to safeguard and improve the strategic position of these companies.
Since last year, the local customs organization has been operating a dedicated e-commerce system, also allowing for pre-clearance. Other items to consider in this respect are land and warehousing capacity, which BRU has been expanding over the last few years. This will allow for further growth.
Dominance of DHL
The strong presence of the Top-25 of the business may indicate that the airport has great potential in the air cargo segment. On the other hand, DHL Global Forwarding has a market share of nearly 30% in the airport’s forwarding sector, which may be a point of concern. Dr Van Asch notes that the leakage from DHL’s forwarding to its integrator segment could be detrimental for the other freight forwarders as less business is available for competitors.
Dr Van Asch’s recommendations to BRU for a ‘winning’ air cargo strategy are based on the expansion of airlift capacity towards the global e-commerce hubs in Asia-Pacific and the U.S., attracting more full freighter flights to facilitate growth in the forwarding market, ensuring warehousing capacity, focusing on the niches mentioned above, lobbying for political certainty regarding noise regulations, and enhancing the cargo community.
Steven Polmans, Director Cargo & Logistics at Brussels Airport, said that Dr Van Asch’s research had confirmed what the airport has been working on over the last few years.
Marcel Schoeters in Antwerp
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