There has never been such an accumulation of individual crises in our current history as there is at present, and these are leading to gloomy market outlooks. This uncertainty was highlighted in many presentations and speeches during the 7th Frankfurt Air Cargo Days, held on 08-09SEP22, moderated very professionally by Joachim von Winning, and attended by a record number of roughly 330 participants. Yet, besides critical perspectives, there were also many optimistic signals delivered by high-ranking industrial experts.
To start with, here are the encouraging topics presented and discussed at the event: They range from the evolution of intelligent and autonomously operating vehicles that will take over many of today's labor-intensive activities on aprons and inside cargo terminals, to robotics and the infusion of Artificial Intelligence (AI) into processes, as well as the development of avatars to make operations more visible through kiosk solutions or interactive showcases. And this is not just theory, as demonstrated by the development of smart vehicles such as remote operated forklifts and other innovations, illustrated by logistics professor, Benjamin Bierwirth, in his overview of technical developments in air freight spanning from the 1970s until today.
Leader of the pack
Another manager who is positive by nature, is Lufthansa Cargo Board Member, Dietmar Focke. He not only delivered visions but presented facts showing that Lufthansa Cargo is on the way to becoming the world's most customer centric, innovative, and sustainable freight carrier. “We are constantly developing customer-oriented solutions to improve the quality and convenience of processes, and we are now among the world's leading cargo airlines when it comes to environmental protection measures,” he claimed. As practical examples, Mr. Focke mentioned, among other steps, new, environmentally friendly washing processes for aircraft turbines, the application of Shark Skin to the fuselage of Lufthansa Cargo’s freighter fleet, increasing use of Sustainable Aviation Fuel thanks to agreements with DB Schenker and other customers, and projects to compensate for CO2 emissions. “Considered individually, these may only be small measures, but taken together they significantly reduce our carbon footprint,” he summarized.
Policymakers must set clear guidelines
… this was the consensus at the event. Voluntary agreements no longer suffice, speakers warned. What is badly needed is a binding transnational legal framework, recording CO2 emissions data from production to delivery of a shipment, and gradually making greenhouse gas emissions increasingly more expensive. Mr. Focke summed up the requirements: “New tax regulations are needed. Taxiing a flight from - say - Frankfurt to Istanbul, Doha, or Dubai, is not sufficient if shipments transit there and the second part of their journey to their final destination in the Far East, Australia or Africa is not environmentally taxed.” Moreover, this would be a considerable competitive disadvantage for European carriers. Therefore, what is needed in terms of environmental and climate protection, is a universal system that would enable cargo carriers to compete on a level playing field.
The enormous efforts still lying ahead were shown by this comparison from Charles Schlumberger: “85% of worldwide transportation is still based on oil; in air it’s nearly 100%. A flight Zurich-Lisbon and back, accounts for emissions that equal those of an electric car driven over a period of one year,” illustrated the Swiss national and Lead Air Transport Specialist of the World Bank.
Overall, the market expert painted a rather restrained picture of the current air freight development. Latin America is the only growth region, while all other markets are contracting. This is also due to the fact that maritime traffic has picked up again, leading to shifts from air to sea. He also criticized market distortions caused by Russia's attack on Ukraine, followed by sanctions imposed by the EU, Japan, USA and others. In contrast to carriers from these countries, Chinese passenger and cargo airlines can still fly across Russian air space on their way to Europe, giving them a competitive advantage due to shorter flight times and lower costs. Here are Mr. Schlumberger’s main findings:
- global Air Cargo benefitted well during COVID 19, but it is receding and the risk of over-capacity rises.
- Passenger traffic, including belly hold capacity, is picking up, but depends on economic realities (GDP, stock market, inflation).
- The economic outlook is gloomy and uncertain: Will global trade and demand for air cargo continue to rise?
- Pressure to implement environmental measures for air transportation is growing and will increasingly affect the global transport industry.
Ground handling limitations
Besides market outlooks and environmental issues, another hotly debated topic tabled at the Frankfurt Air Cargo Days was the challenges resulting from insufficient ground staff. This was emphasized by Xeneta executive, Niall van de Wouw, who stated: “The limitations are not in the air any longer, they are on the ground!” Germany lacks almost 80,000 truck drivers and 47% of apprenticeship positions are unfilled, illustrated Timo Stroh, Head of Air Freight at logistics agent, Dachser. The number of staff at airports and ground handling agents is still 20%lower than pre-crisis levels, leading to operational hiccups and delays. “German airports still lack more than 7,000 employees,” he said. In Amsterdam, London, and at most other European cargo hubs, the situation is not much better. Job reorientation took place during the pandemic, leading to a serious loss of workforce as people left the industry seeking their fortune elsewhere. This is coupled with a poor image of the air cargo industry, Mr. Stroh concluded. A return of these people is not to be expected.
Food for thought
Finally, a panel outlined global correlations affecting the air cargo industry. Here are key statements delivered by speakers:
“Germany is still offshoring industrial production due to cost reasons, but mainly to places other than China, such as Vietnam or Portugal. Meanwhile, most enterprises have a Plan B or even C in the drawer. They don’t put their eggs in a single – Chinese – basket any longer.” Dietmar Focke, Lufthansa Cargo.
“Onshoring / offshoring has become a main topic for many companies. However, I fear that most will stick to their habits unless something drastic happens like Russia’s war on Ukraine.” Niall van de Wouw, Xeneta.
“Russia cannot replace the west. Its economy is smaller than that of Italy in comparison. And if China rocks the system, it will implode.” Charles Schlumberger, World Bank.
“China needs the western consumers. The new ties with Russia will not substitute the grown links with the west. But we have our own internal problems. One in four inhabitants in the UK is close to poverty. We are going through tough times.” Niall van de Wouw, Xeneta.
“Back to China: They might try to dictate the rules.” Timo Stroh, Dachser.
“China needs to continue their political and economic model based on a bond between people and politics. If this bond disrupts, Beijing will have a huge problem.” Dietmar Focke, Lufthansa Cargo
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