CargoForwarder Global (CFG) spoke exclusively with Michael Hoppe (MH), Chairman of the Board of Airline Representatives in Germany (BARIG), about the status of the cargo industry from the carrier’s perspective, following its unparalleled triumph in the Covid-19 phase. Here are his assessments. The association’s chairman will present and explain his view in detail at the upcoming Frankfurt Air Cargo Community conference. The event will take place from 06-07SEP23, and will be attended by leading cargo and aviation representatives.
CFG: Michael, the cargo hype during the Covid-19 pandemic has vanished. Meanwhile, air freight once more is only playing the third or fourth fiddle in aviation, as it mostly did before. How do you explain this demotion?
MH: I see it less dramatically because there are always ups and downs in this industry. Skyrocketing growth during the pandemic was followed by lower demand coupled with expected consolidations in cargo. But what is even more important: We see that cargo and logistics companies are open and committed to change and are transforming their business processes, enhancing their supply chains, and upgrading their business models. Crises, as bitter as they may be, are always a brilliant time for birthing new ideas and business approaches. Here, creativity and sometimes the courage to do things differently are helpful elements in driving things forward. Therefore, and especially with a focus on cargo, BARIG works closely with AI and IT experts. And we have a lot of great platforms for the exchange and transfer of knowledge, such as the Air Cargo Conference in Frankfurt you just mentioned, but also our BARIG Cargo & Logistics Committee, and the Innovation & Technology Committee.
CFG: What influence does the growing trend towards re- or near-shoring production have for the supply chains of goods? Any estimate?
MH: Post-pandemic recovery in Germany is among the lowest in Europe, and still way behind 2019 levels. The overall charges and fees imposed by German authorities, the federal states, and especially the German air navigation provider, are extremely high. During the pandemic, there were only a few flights, so the collected charges were limited. The official administrative authority process now forces the airlines to pay very high fees as they are held responsible for covering the deficit that arose during the pandemic. They call it the “carry-over effect”. Costs exploded for airlines using or even crossing German air space. The same goes for terminal charges and other services rendered. Simultaneously with the price hikes, demand plummeted as a result of the general economic and financial downward trend. Ups and downs have always existed, but following the massive hiccups during the pandemic, we believe as BARIG, that the business needs a gradual transformation and should partially reinvent itself. Near-shoring production might affect some trade lanes, but we as an airline association, are convinced that globalization is here to stay. Due to the latest trends, trade lanes and supply chains might need some assessment and some fine-tuning, but the general need to transport industrial produce, food, perishables or valuable goods will hardly change.
CFG: AI, Digitalization and robotics are helpful and are increasingly playing a useful role in air freight and aviation. But who will do the physical work if the shortage of personnel cannot be overcome? What’s BARIG’s recipe?
MH: Indeed, we are facing a massive shortage of skilled personnel in various fields. To attract new colleagues, we have to push and renew the image of cargo and logistics in order to convince youngsters to start their career and stay in this interesting industry. BARIG is, for example, part of the BVL (Bundesvereinigung Logistik e.V.)’s “Wirtschaftsmacher” (Business Enablers) initiative, which is a new tool to reach out to the public and explain what logistics is all about and that our society depends on it. BARIG also has new joint approaches with air cargo and logistics partners to further intensify the network with the Air Cargo Community Frankfurt (ACCF) and other relevant partners engaged in this field.
CFG: Finally, isn’t the net zero prediction by IATA, FIATA, and others, just a sedative pill to appease the broad public, including policy makers? What’s BARIG’s position? Does your association really believe that aviation will achieve net zero by 2050?
MH: The aviation industry and airlines are fully committed to climate protection. Airlines really strive and work hard to be a part of a solution and not be part of the problem. Therefore, we always address politics in Germany as well as EU policy makers in Brussels, to set marks and push for significant investments in measures such as SAF production or other steps to reduce CO2 emissions. SAF is still a rare and also expensive fuel with limits in usage. In this respect, we definitely need higher production volumes combined with economies of scale. The faster, the better. But even so, airlines in combination with their logistics partners are jointly trying to conduct as many flights as possible with SAF. However, due to its tremendous costs compared to traditional fuel, SAF powered air freight shipments are very costly. That again means less buyers, less turnover, less demand, less production, less production. It’s a vicious circle that can only be stopped with powerful and decisive political and financial investments by governments. Economies of scale leading to affordable market prices for climate friendly SAF or other energy sources such as hydrogen with little or no greenhouse gas emissions, are indispensable. Governments, regulators, and the entire aviation industry must join forces to achieve fast and sustainable solutions. If this gets done, net zero could be achieved by 2050.
CFG: Michael, thank you for your time and input.
Interview: Heiner Siegmund
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