Drive costs down to minimize losses. This has been the motto of most commercial airlines since the collapse of their passenger business caused by the Covid-19 pandemic. Despite these dire times, there are opportunities for most airlines to ease their financial woes by outsourcing their ULD business, Jettainer’s ULD manager believes.
There are about 900,000 unit load devices out there, used by airlines day after day. Around two-thirds are managed in-house by the carrier’s own staff. The remaining 30% are controlled and operated by companies such as Unilode, Jettainer, or a few other specialists. A highly complex task because the right type of containers, pallets, and other loading equipment such as nets or straps, must always be available in sufficient quantity and proper condition at the airports where they are needed to transport baggage or cargo shipments.
Advantages for airlines
Under the outsourcing scheme, airlines no longer have to worry about the availability of containers or pallets. A cost relieving step on many levels, with operational benefits on top. Service partners such as Jettainer + Co manage the complex task with higher efficiency due to scaling effects based on their customer mix, network synergies, and concentration on the core. Airlines thus get to enjoy savings on their operational costs, reduced tied-up capital in assets, cash-in from the sale of existing assets, and savings on future ULD purchases – plus operational stability.
Managing Director, Thomas Sonntag of Jettainer, speaks of the substantial savings that airlines can achieve when they outsource their ULD steering. Airlines’ cost reductions, especially for small- and mid-sized carriers, amount to around 20% compared to their current expenses when managing pallets and containers themselves. And even legacy carriers such as Emirates, Qatar, or United, are able to drop their costs by 10% to 20%.
In view of these figures which are backed by statistics, the question arises as to why not more airlines have long since jumped on the ULD outsourcing bandwagon.
Here are the answers: Whilst ULD management is not a core activity for airlines as such, it is of relevance for their core service delivery: transporting passengers and their luggage as well as cargo as planned. Another reason is force of habit. Things have been satisfactory up to now. Changes bring unrest among organizations. This may explain a certain hesitation to outsource.
For state-owned airlines, especially Chinese ones, outsourcing is something of a dirty word. They fear losing control over a sector that is of paramount importance for the transport of air cargo. They shy away from data transparency and do not want to risk loss of control. Instead they prefer to forego efficiency gains.
Then there was the case of a major airline that invested millions in new software to manage its ULDs more efficiently than in the past. In this situation, opting for an outsourcing model would not have been financially viable. So its top deck opposed changes, turned down an attractive outsourcing offer, and opted for a ‘business as usual’ solution.
Win - win
Despite the persistence of many airlines, Jettainer CEO, Thomas Sonntag believes in the normative force of the factual, which is clearly in favor of outsourcing ULDs. He emphasizes that both partners, carrier and ULD manager, benefit from substantial efficiency gains, and more and more airlines realize the value of professional service delivery. “We steer each customer individually, and work with dedicated customer fleets, so every customer can rely on a fleet optimized – and service priced – to exactly their needs. Thanks to our global network, the unique combination of our expert teams and AI-based control software, and the possibility to make use of our smart pooling approach, we are able to guarantee the availability of ULDs where and when they are needed. And give airlines the peace of mind to focus on their core business.”
Further to this, his company works in close partnership with 47 independent repair shops around the globe and is available 24/7/365 with expert repair steering solutions. Maintaining and repairing containers or pallets is otherwise the costliest single item in ULD operation alongside the total loss or complete disappearance of entire units.
Transparency and efficiency campaign
For a single airline, it is extremely challenging to measure its own ULD management performance compared to the delivery service of providers. The industry lacks objective measurement standards and various airlines have been asking for benchmark figures to judge operational performance. In cooperation with the international interest group ULD Care, Jettainer is for this reason driving a transparency and efficiency campaign. The goal is to establish a set of industry-wide key performance indicators starting, for example, with a benchmark for the “ULD loss rate”.
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