The UK’s biggest airport is finally taking cargo seriously, with a long-term strategy, a £180m upgrade, and a dedicated cargo manager with a mandate to lead, co-ordinate, and lobby on behalf of the airport’s cargo community, writes Will Waters
Heathrow Airport’s attitude to cargo has been a topic of much despair and derision over the last 20 years, but it seems that things are now finally really changing for the better.
It may be no coincidence that the airport’s sudden interest in developing a strategy and investment plan for cargo comes at a time when it needs the business community to lobby on its behalf over the politically difficult issue of a third runway at Europe’s busiest international airport.
But Heathrow’s air cargo community has little interest in why the airport’s interest in cargo has come now, argues head of cargo Nick Platts, but is instead universally enthusiastic for its £180 million investment plan to “revolutionise” its cargo facilities and processes.
“The companies here that I have been talking to for the last three years, and prior to that when I was involved in the industry with one of integrators, are all supportive of what we are trying to achieve,” he says. “They are glad that we have got a strategy and what that strategy includes; they like our ambition level, to be that leading airport in Europe for cargo. They want us to be that, and want us to have quicker throughput times, and streamline processes.”
This new vision to overhaul the airport’s cargo facilities was formulated after working closely with the airport’s cargo stakeholders, including freight forwarders, exporters, and airlines, via two consultations led by Platts. The blueprint includes proposals to develop better infrastructure and smoother processes to reduce congestion and halve average processing times from 8-9 hours to 4 hours. An air-to-air transit facility located on the airfield would also shorten connection times from a current average of more than 6 hours.
Plans to become 100% ‘e-Freight ready’ involve working with businesses, airlines, IATA, HMRC and the Department for Transport (DfT) to fully implement e-Freight, making Heathrow one of the first airports to become 100% digital. Other plans include building a specialist pharmaceutical storage area and a new secure truck parking facility for over 100 vehicles.
Platts has a reputation for getting things done and joined Heathrow Airport in January 2012 as head of ground handling, a role that also included cargo. That followed four and a half years as FedEx Express’s senior operations manager at Heathrow, when he was also on the board of Courier Facilities Ltd, including latterly as non-executive chairman, overseeing the operation of a vendor-neutral bonded airport transit shed that facilitated the movement of express courier shipments between courier companies landside and commercial airlines airside. He took on the role of Heathrow’s head of cargo in May.
“I was progressing on cargo and it got to the point about two years ago where it started to gain momentum in the business,” he says. “In 2014 we started work on a cargo strategy. So we have been working on this for over 12 months now.
“Since May, we have accelerated work on the programme. We again engaged with the stakeholders. We had focus groups, interviews. I went out and met with businesses. I also went and visited other airports. We concluded that at the end of September. I spent October going back to the industry and saying ‘this is the strategy that we are looking to adopt – what do you think’?” He says he got positive feedback from everybody that he spoke to.
“So, we have got this strategy; we have not had one that I can find in over 20 years. Fundamentally, I’m on a mission here now to make Heathrow one of Europe’s leading cargo airports – so it is right for our airlines, our businesses – and we will invest millions over the next 15 years in revolutionising cargo so that we do become that leading airport.”
All this depends on first getting clearance from the UK Civil Aviation Authority (CAA) to spend the money, which will only come if it is approved by the airport’s airlines. “Because we are in a regulated environment and our settlement with the CAA is every five years, we have got to work in those five-year cycles.”
Starting the governance committee consultation and engagement on 16 November should result in a decision by October next year to proceed and spend the money. “So, provided the business case stacks up and the airlines support it, we will get the green light to go ahead next year, and all of the initiatives I’m talking about – I have got five things to do this ‘Q6’ period – should be landed by 2017.
“As we get into next year, I will also start writing the business cases for the next regulated period, 2019 through to 2025 (‘H7’), and in there we will be looking at the bigger-ticket items, because I haven’t planned for these things in this Q – the capital isn’t there – so we will plan it for the next Q. And again, provided that the airlines and the regulator support us, then that funding will be available in H7. And the sort of things that we are looking at there is the pharmaceutical facility, centralised customs facilities, whether we need to build any additional sheds, all of those sort of big-ticket items will begin to appear post-2020.”
Independent from third runway
Platts insists all of these initiatives are not dependent on Heathrow getting permission for a third runway.
“That period finishes in 2025, so all of that activity is happening independently of a third runway. What the third runway gives me is much better scale, much better scope and connection. So if we get the third runway, I can add 40 long haul destinations to the network; I can grow the capacity, the ability to carry the belly freight cargo; I can connect UK businesses better with the world. We will have more direct connections and – just like a passenger – a box likes to fly direct. So, opening up that network, getting penetration, higher-frequency, is just going to make cargo at Heathrow far more attractive.
“But, whether or not we get the third runway, I need to make the processes slick, I need to halve the throughput time, I need to make sure that the whole system here at Heathrow is ready for the capacity and the traffic that is coming. So, that is why we are going to invest millions of that ten-year timescale, to revolutionise cargo, become that leading airport in Europe, halve throughput times, streamline the process, make it easier to do business here, and to get those modern, clean, quiet aircraft here as well.”
He says the ambition for 2030 is to be the leading airport in Europe for cargo in terms of timely and predictable cargo processes, hence the halving of throughput times. “And streamlining processes is about predictability,” he explains. “The shippers and the forwarders want predictable gateways, predictable hubs, and that is what we need to deliver, to become the preferred gateway in Europe.
“So, between now and 2025, we do all that heavy investment in technology, process improvement, and in infrastructure, and then from 2025 to 2030, we are then in a world of continuous improvement. So we are then into just tweaking here and there and refining and continuing that innovation and that process improvement, to get us from being one of the best to being the best.”
As part of his research, he sought out best practice at other airports, “to look at who we should measure ourselves against. Everyone in the industry told us that in Europe Schiphol is the best at the moment, and globally it is Hong Kong. So we have had a look at what Schiphol is doing, and I met with Enno (Osinga). He has been very helpful, and he explained the journey that they have been on, and it is similar. It took him 10 years to take him where he was when he retired. So, it is that kind of timescale to make improvements.
“So, 10 years to get that in play, that is 2025, and then we absorb the additional volume if we get the third runway, and then by 2030 we should be gunning for number one.”
Doubling cargo volumes
The cargo investment plan includes a target to double cargo volumes at Heathrow to 3.1 million tonnes by 2040, although with the airport currently operating at close to capacity in terms of slots, that target would only realistically appear achievable if the airport’s plans for a third runway go ahead.
“Having completed the strategy work we then commenced a forecast, and we have now created a model that we can use over time and update our forecast,” says Platts. “So I can play with two-runway scenarios, three-runway scenarios, macro economic indicators, and it will give me a forecast out to 2040. So, we are forecasting round about 3.1 million tonnes in 2040.
“Again, there are huge macro economic variables in there, most notably China. But also load factors globally, and what the airlines do with their load factors, because globally that is declining, although here at Heathrow we have much better load factors than the global average.
“The commitment we have made under a third runway is to double throughput by 2040. If we don’t get a third runway then quite clearly you are not going to deliver 3.1 million tonnes, and I will have to rerun the calculations once I have that decision and we know for sure what is going on.”
However, he then also argues that it could still be possible to reach 3 million tonnes even without a third runway, although this argument seems to be more theoretical, in a world of much higher cargo load factors.
“What we are seeing is that even in a two-runway world, the up-gauging of aircraft types that we currently have, with the new generation aircraft coming in with a significant increase in capacity, we will have enough capacity, belly hold capacity, to run 3 million tonnes of cargo.
“So, from an aircraft capacity point of view, we have plenty now, there is plenty coming. But the utilisation of that capacity is not as good as it could be. So, on some routes we are capacity constrained, and on some routes we are not. And I think as the aircraft change, with the A350 coming online, the new B777 coming online, and later generations that are very much belly freight friendly, they are ideal for this hub; we are a passenger hub and those aircraft are fantastic. We want them to come here, so I need to provide the right processes and infrastructure and make it attractive for the airlines to bring those aircraft here, and for the forwarders then to fill it.”
Although Heathrow’s average cargo load factors are significantly higher than the global average – and on some routes over 90% – there is room for improvement on other routes. “There is spare capacity in the existing system, so we can absorb some growth with the existing fleet, and as that fleet changes, more capacity will be available,” Platts asserts.
European competition
“The question for the forwarders is how much are they going to send our way. They control which gateway the freight goes through – not me, not the airline. So, we can provide the network, which we are doing; we can provide the aircraft capacity, which the airlines are doing. It is now up to the forwarders to stop diverting UK exports to the continent by truck and drop it into Heathrow – and we’ll connect it to the world for them.”
He says not all of the freight diverted from Heathrow requires main-deck capacity, which is currently limited at the airport. “We don’t have a huge amount of data, but the conversations we have had with the forwarding community as part of this strategy development is that there is a percentage of freight currently trucked to the continent that could come through Heathrow. So we need to make Heathrow more attractive to forwarders so they do use Heathrow,” he argues.
Although some of Heathrow’s cargo facilities may not be perfect, there is no evidence of airlines not sending the latest high bellyhold-capacity aircraft to Heathrow because of inadequate cargo infrastructure.
“One of our airlines only recently told us they are up-gauging the aircraft because of the cargo demand on that lane,” Platts observes. “I also know from another airline that they run a narrow-body aircraft on one particular route and they have an airframe available that could carry more cargo and they would like to bring it to Heathrow, but there is not the demand for cargo at that time of day. So, it is difficult to generalise, but I have not had an airline complain that they could not bring a bigger aircraft in because the cargo facilities couldn’t cope.”
Cargo consultation outcome
Turning to the key messages of the consultation, Platts says these are reflected in the strategy and investment plans. “All the things I have talked about in the Q6 and H7 are what the industry wants us to spend money on,” he explains. “If you go back to last year’s consultation, through that process we identified 12 or 13 things the industry said they would like us to pay attention to.
“We took that list to the focus groups this year before the summer and said ‘this is the big bucket of all the things you told us last year that you would like. Which would you prioritise which would you de-prioritise?’ And through that process, we identified seven high and medium priority things, and it is those seven that we are focusing on.”
He says the others – the lower priorities – haven’t gone away. “We will deliver all of them – in fact, some of them could come online before the high priorities – it is just that the low priority will happen as I can get to them. We have got to focus the priority, both financial and time, on those high and medium priorities. So, what you see in the strategy is exactly what the industry told us they wanted, and the priorities they apportioned to them.”
Of the top priorities, redeveloping ‘the horseshoe’ – the notorious, highly congested U-shaped truck access road consisting of Shoreham Road East and Shoreham Road West – was number one; number two was the control-post process; and number three was a facility airside for aircraft-to-aircraft transshipment.
“Now, I can’t do a lot about the first one because I don’t own the horseshoe, but I will work with the landlord and all the stakeholders in that space to make it as good as we possibly can, and that conversation has been going on for some time and will continue,” Platts says.
“Heathrow’s experience is in collaboration and bringing together different groups to achieve a common goal, and I will continue to do that on the horseshoe development. But only one third of our traffic goes through the horseshoe – the rest goes through other estates.
“The second priority, the ground control post processes, absolutely we can do something about that. I’ve already had conversations with my security colleagues about what we can do, and I’m using technology to reduce the paperwork. Because, actually, it is not the control post staff that is slowing it down; it is the handlers presenting incorrect paperwork that is slowing the process down.
“So we need to work out how we can eliminate those errors and speed up – and hopefully eliminate the paperwork altogether and do it electronically. But I need DFT support for that, because there is an aviation security element, and I will need customs support because there is a customs and excise element. But we will definitely do something on that one.
“And the airside facility is very much within my gift. The airfield is very tight for space, but it is looking like I’ve got some space around the old T1 campus, so it will be in a central area. So that will allow airlines to tranship without having to go back to the cargo area.
“So they are my first three, and I’m working on those.”
The fourth priority identified is the new truck parking area and call-forth facility. “I’ve got to find 6 to 8 acres of land, and I’ve already been speaking to people about where we might put that.” Another priority is a “fast track”, although Platts says that is linked to the control post processes, and is already moving forward.
And another request is putting stillage into the cargo area, the racking for the ULDs. “The baggage handling guys have it near the baggage halls, so it is only right and proper that we have an area for cargo,” Platts argues. “All of these things are what the industry asked us to do.”
Perceptible changes
Although some of the changes will take more time to achieve, Platts argues that the airport’s new investment in cargo is already delivering results. “We have invested time and money in developing a strategy. We have listened to the stakeholders as to what they want. We have developed a shared ambition. We are working with lots of external agencies, so I’m already working with IATA on how we can go to e-freight.
We are working with UK DTI on how we can support UK exports.”
Community coordinator
And it seems that he has also effectively taken on the role of coordinator for the Heathrow air cargo community, with regard to e-Freight and other initiatives.
“Through the consultations last year and in the focus groups this year, the industry has asked us to take a lead role in cargo,” he explains. “So, I’ve asked them what they mean by a ‘lead’, because to me ‘leadership’ means decision-making.
“They don’t want us to make decisions, but they do want us to promote Heathrow, to lobby government and other organisations to improve the cargo service offering that we have. So, we are moving into that role, by invitation. It is a complex world, but we have negotiated complex issues on the passenger front for years. We will use that experience and those skillsets to bear on the cargo space.
“But we can’t fix everything, because it is not down to us – we are largely divorced from the process: we are not a forwarder; we are not a shipper; we are not a handler; we are not a landlord. So, the things that we can directly influence are limited.
“But I am happy to facilitate and coordinate on behalf of the industry. I’m planning a couple of sessions a year to bring all of the stakeholders together so that we can debate the issues and work out and agree what we are going to do. IATA is happy to support that, and I am really pleased that they are on board with that.”
He says Heathrow’s airlines are now really keen to understand what he is trying to achieve, acknowledging that he also needs to get out and speak with forwarders and shippers, “to make sure that what we are providing at Heathrow meets their needs, and not just the here and now – I’ve got to think five or 10 years ahead”, he notes.
“But they have asked us to take a lead role, to coordinate and lobby on their behalf, and I’m happy to do so. It will be a great result at the end of the day, and really drive us towards that top position of being the best cargo airport in Europe.”
But despite this bullishness, he also downplays the idea that Heathrow could now finally have the makings of the kind of cargo community-led approach that has been so transformational at an airport like Schiphol.
“You know how slow the air cargo industry is to change,” he notes. “Cargo 2000 is still not fully implemented; e-Freight is still not fully implemented; we are still using paper air waybills at a time when passengers are checking in on their phones and do not even print a boarding card. So, the cargo industry is slow to change; there is a lot of investment required – I appreciate that. And it is not my role to tell forwarders or airlines what to do.
“However, I can point out the benefits of switching to e-Freight, for example, and that is what I will do – I will highlight the benefits, and hopefully convince people that it is the right thing to do.”
