Problems need to addressed in industry for growth to be sustained

posted on 10th May 2018 by Justin Burns
Problems need to addressed in industry for growth to be sustained

Lufthansa Cargo chief commercial officer (CCO) Alexis von Hoensbroech says the air cargo industry is performing strongly but warns there are problems that need to be addressed before the current levels achieved can be sustained in the future.

He was speaking in a keynote address to delegates at CNS Partnership Conference, which took place in Palm Springs, California from 6-8 May.

Von Hoensbroech will be leaving his role on 1 August after three years in the position to become chief executive officer at Lufthansa Group subsidiary carrier Austria Airlines, and looking back at his time at Lufthansa Cargo, he noted challenges still remain such as the continued reliance on paper air waybills (e-AWBs) and the slow uptake of electronic air waybills (e-AWB).

He said this combined with these factors have made it difficult to predict freight rates to customers accurately and as cargo is “too dependent on external factor to make predictions”.

Von Hoensbroech did have room for optimism though and hailed progress with Cargo XML and the steady increase on e-AWB adoption across the supply chain.

He said the industry is full of good ideas, but the industry is lacking “implementation” of these things and feels airlines have to do a better job on the quality of delivering shipments, adding: “Strong innovation spirit, but poor implementation. We are lacking the ability to implement these technology initiatives. eFreight will pay off only, if we take further steps.”

The CCO also added automation such as blockchain, robotics or artificial intelligence, could increase efficiency of transactions by 70 per cent, telling delegates “You have to decide, ‘Is this your opportunity or your threat?’”.

Speaking in the ‘Trends, Challenges and Opportunities Shaping the Industry’s Future’ panellist Phil Coughlin, chief strategy officer of Expeditors said one of the biggest issues with e-commerce is it is going to continue to change the way the world buys, sells and transfers.

He also added a major challenge will also be how the supply chain copes with e-commerce in urban areas as there is currently limited capacity at airport and driver shortages.

Digitization was also discussed, and Cathay Pacific vice president of cargo, Fred Ruggiero, who was also a panellist, told delegates that it was all about efficiency, explaining that e-AWBs is a way of reducing costs.

He also talked about the disparity in the technological developments between the passenger and cargo sectors, questioning why this was the case and said cargo was “slow and frustrating”, but e-AWBs is the first step and we cant do anything else until we establish the use of them.

As to why the industry has been slow to go digital, the panel said a single entity in the supply chain was not to blame and Delta Cargo vice president, Shawn Cole said all stakeholders need to “trust each other to create value”.

Also speaking at CNS was Airlines for America vice president and chief economist, John Heimlich who said e-commerce is changing the landscape and said he sees no reason to believe gains the industry has achieved will not continue.

He noted the biggest change to business from e-commerce was in the express business, where the likes of UPS and FedEx are shipping more than ever and all kinds of cargo that was never moved.

In Heimlich’s view, the U.S. Postal Service (USPS) will start seeing more dramatic changes over the next five years and by 2022, e-commerce will represent more than half of USPS revenue but only eight per cent of its volume.

As for Amazon he forecasted due to the growth in tonnage, the online retailer will likely add more freighters for its Prime Air fleet, and may look to buying Boeing 777Fs for international shipments or narrow-body freighters for domestic business.