Bring Back Better: ACHL Conference Report

posted on 9th December 2021
Bring Back Better: ACHL Conference Report

The 13th annual Air Cargo Handling Logistics Conference successfully took place again this year as a digital event, with CAAS providing an in-depth report on the Customer Focus session

The 13th annual Air Cargo Handling Logistics Conference successfully took place again this year as a digital event, with thousands of online views since the event went live in October.
Entertainingly moderated by air freight industry veterans Chris Notter and Stan Wraight, the conference opened with sessions examining the ‘State of the Global Aviation industry’ and the ‘State of the global air cargo industry’, featuring insights, respectively, from ICAO and WorldACD.
A session on ‘Industry collaboration’ explored what key associations such as IATA, TIACA, AFA and ASA are currently doing to improve the value of air cargo for stakeholders, looking also at questions such as: What have we learned to do differently, better, or faster since the start of the pandemic? How can we build on that? How can associations help the industry meet the new challenges to be competitive?
‘Up in the air’ examined how airlines have been adapting to the extraordinary changes in cargo demand and capacity restrictions – for example, including widespread use of ‘preighters’ and new charter businesses. Asking what has worked well, and what lessons have been learned, the session concluded by looking at what happens next, and what do carriers need now from their suppliers to meet clients rising expectations?
The session on ‘Airport challenges’ discussed how airports have been adapting to meet extraordinary changes in cargo demand patterns and operations.
Further sessions included: Digital and automation developments; E-commerce; Developments in ULDs; Sustainability; Safety & Security; Leadership training; and The importance of proper airport handling equipment.

Customer Focus: Full Report
To provide a flavour of the content, CAAS has decided to take a deep-dive approach and provide an in-depth report on one of the key conference sessions from ACHL: Customer Focus.
Featuring senior executives of major freight forwarders, airlines and cargo handling agents, the discussion focused on how forwarders, carriers, airports and GHA are adapting to meet their customers’ changing air cargo needs in a highly volatile and constricted capacity environment. For example, with capacity short, expensive, and difficult to guarantee, forwarders and e-commerce shippers have been expanding their own-controlled air freight networks. But what are the implications of these, and other recent changes, operationally and commercially? And what more can the sector do to support them?
Conference chair Chris Notter highlighted that the title of the conference this year is ‘Bring Back Better’, acknowledging that although this is also an overused term, amid the chaos and misery that Covid-19 has created, “lots of good things have happened. This whole pandemic, and the impact on our business, has stretched us now a lot further than most people knew” (was possible).
One outcome currently is that “now, things are going well”, commercially, for many in air cargo: “rates are high; everybody wants space”, notes Notter. “But are they (customers) really getting customers service? And what is customer service in the time of crisis?”
Room for improvement
Peter Penseel, chief operating officer for air freight at Ceva Logistics, acknowledges that when it comes to communication with customers “there’s room for improvement, especially when it comes to negative feedback. Because I also believe that together with your customers, you can find a solution even by telling them a negative story, rather than not telling them anything – because I think it’s a joint effort; and yes, capacity sometimes is an issue.”
Robert Fordree, executive vice president for cargo at handler Menzies Aviation, acknowledges that the impossibility of delivering good customer service at all times in the current disrupted environment has been having a negative effect on some handling staff, noting: “We’ve got some outstanding people that have got their own mission to deliver the best possible customer service. And what we’re seeing across some of our stations is those people getting really frustrated – because we’re seeing congestion in some ports, we’re seeing excessive amounts of cargo, for which in some cases we’re unable to deliver exactly what we want to be able to deliver.”

Resource challenge
One challenge is that the resource pool available “is much smaller than it ever was before”, noting: “We are seeing a number of people move away from working in the handling side. There’s lots of competition out there for the resources, and being able to attract the right people is challenging.
“And now we’ve got overstretched and very busy teams that are frustrated that they can’t deliver the level of customer service that they want to, at the same time as having to coach and support and train new entrants into the business as well. So, not quite a perfect storm, but certainly a few different challenges.”
Thomas Mack, executive vice president for global air freight at DHL Global Forwarding, says the recent staff shortage “is not only on the ground handler side, but also on the forwarder side, on the trucking side, and so on.” Reasons for that include other industries increasing their wages, “so that we have more competition today, if we are hiring people – particularly in blue-collar, but also on the white-collar side.”
Other reasons include the extraordinary circumstances and volatility of the past 18 months. The initial slump in volumes meant “everybody adjusted their infrastructure. And then we had a dramatic spike in volumes – and that puts a constraint on the infrastructure, that is still of course, with significant shortcomings in capacity.”

Understandable frustration
He continues: “So, the delays we see – be that on the ground handling side, the carrier side, and also on the forwarding side – are adding up. And if you compare that to the rates that are in the market today, I understand a certain frustration on the customer side.
“Understanding it is one thing; fixing it is another thing. And that will definitely take some time – to improve our infrastructure, improve staffing, and so on. But we are working on it. I think the whole industry is working on that.”
Dennis Lister, VP for cargo commercial development at Emirates Airlines, agrees the sector is still recovering from 2020, when aviation and “the entire supply chain came under a massive attack”.
He continues: “However, I would say talking to customers and partners has allowed us to adapt and evolve and change to this difficult time. Particularly from a carrier or Emirates perspective, it gave us an opportunity to redefine ourselves very quickly.”
From a cargo perspective that meant going from a passenger operation with some freighters to a pure cargo operation. “We learned a lot,” notes Lister. “We made mistakes, but within 100 days (of Emirates’ entire fleet being grounded) we were flying to 100 destinations.
“We still see capacity constrained today. I think it’s about really working with our customers and trying to ensure that customer satisfaction and service remains in place. But it is challenging – specifically now as we get into the peak of this year.”
Forwarders’ own air capacity
Conference moderator Chris Notter observed that more and more freight forwarders have been securing or operating their own freighter capacity, questioning “what are the main reasons you’re doing that”?
Penseel responds: “It’s not that we want to have our own capacity. But we also have commitment to our customers, and when our carriers cannot support (the level of demand), for whatever reason, we needed to make sure that we have our network available for our customers. It’s driven by the market and the commitments we gave to our customers.”
Mack says: “If you lose 40% of your capacity on the passenger side and you maintain the same volumes, then you need to do something and that means you go over to the freighter side. And because you have a significantly higher demand for the freighters, it’s relatively easy to fill that up. And of course, we are in obligation to secure the capacity for our customers. So, we take the whole freighter in order to control it and offer our customers solutions.”

Value versus volume products
Notter questioned how the importance of value products and volume products has changed due to recent developments and how operators think that’s going to pan out now as the pandemic starts to ease off.
Lister notes: “All customers want the best service at the best rate. But there is only a finite amount of capacity. So, if we have a commitment or a BSA with a certain customer, there will come a time when you don’t always have sufficient capacity to carry everything. So, there is a process of triage, to some degree, where you have to decide what trade lanes are we going to operate? And working with customers to decide the higher priority (cargo), the stuff that is critical.
“And if it’s general cargo, e-commerce, or volume cargo, versus carrying a premium product, that needs to be worked out. But it’s not a discussion in isolation within the carrier. There are multiple conversations, multiple parties involved, to decide what takes priority in the aircraft.?

Better conversations
Notter asked whether there’s a recognition by carriers and the industry as to what the GHA does when it comes to volume and value, and the pricing that can be achieved from that.
Fordree responds: “We’re having much more transparent and honest and open conversations than we ever did before, largely as a result of the pandemic. Certainly, with some of our more global customers, we’re having very sensible conversations about what can be achieved, what they’re looking for, what sort of service we’re able to deliver, what sort of timelines we can work on, and that kind of thing.
“We’re having the opportunity to talk to them about schedules – that if you’re scheduling a freighter, or a passenger freighter, there isn’t the same degree of focus on arrival and departure times as there would be a passenger aircraft with passengers on. So, we are seeing flexibility with carriers working with us on optimum flight schedules and reducing peaks of operation as well.
“So, the dialogue and the engagement is significantly better than it has been before, and a very sensible approach from most.”
Systemic changes
Notter asks if there is now an opportunity to really change the old patterns of companies protecting their own interests and blaming others for failures in the air logistics chain – to instead focus on what is important to improve the whole air logistics chain.
Fordree responds: “There’s always opportunity to do that. And we’d love to. It would be much easier if we were able to sit in a room collectively with representation from each part of the logistics chain and say: ‘let’s work this out together’. The reality is, it’s very challenging to do that.”
He offers an example where some change has been possible by focusing on a particular lane – China to the US – where there had been particular challenges due to Covid outbreaks leading to backlogs of cargo in some of the gateways coming out of China. “For example in Dallas and Los Angeles, we are now seeing massive influxes of cargo. We’ve gone from maybe two or three freighters a week to 10 or 12 freighters. And that’s adding huge pressure on the warehouse capacity that we have available to us, pressure on the trucking partners, pressure on forwarders to collect cargo as quickly as possible. And some of the forwarders are saying ‘my facility is full; I’ve got nowhere to collect that and move it to’, leading to some of the facilities becoming logjammed.
“And so, working closely with the carriers and the forwarders in Los Angeles, we’ve tried to streamline that process,” Fordree continues. “So, we’re doing deliveries on certain days; some forwarders are able to collect from the aircraft even. And that alleviates the pressure that’s put on the whole logistics chain.
“Now, that’s just one route and two origins and destinations across the whole global logistics chain. We’re working closely with the people that we’re able to engage with. But there are 1,000s more trade lanes and opportunities out there as well. And we simply can’t get to all of those to manage them as effectively as we are with some of the ones that are much more high profile.”
Fordree concludes: “So, yes, we could do a lot more in working much, much closer together. But at the same time, the complexity associated with that makes it very, very challenging.”

Favouring pro-cargo airports
Notter asks whether forwarders are, therefore, now looking more at pro-cargo airports to alleviate some of these problems.
Mack responds: “Los Angeles is a perfect example. There is very inefficient infrastructure; that airport has not invested in infrastructure for probably the last 20 or 30 years. And the ground handler can only use the infrastructure that is provided by the airport.
“Other airports that are focused on cargo do invest. So yes, we will focus on airports that are investing in infrastructure, geared to cargo, in order to take the pressure off infrastructure that you have, for example, in Los Angeles. Almost out of desperation, we are looking for and using alternatives.
“And I honestly don’t think we will switch back once we have it established; we will maintain at these airports. So that is not only a short-term solution, but it will be a longer-term solution where we will use infrastructure that is more geared towards the cargo handling. And that also makes the life easier for a ground handler.”

Optimising freighter capacity
Penseel says this is particularly important where forwarders are operating their own freighter flights, as they increasingly now are. In the case of commercial air freight capacity, he says “often freight forwarders are selecting carriers on (the basis of) the contract they have with the ground handler”. But even then, the handling facilities they have available to them – or the availability of other key factors such as Customs – is often still inadequate.
“And that’s why there is now a separation in our decision making,” he notes. “If we operate our own freighters, we can be flexible to operate to airports we believe can make a turnaround of two and a half to three hours for a big aircraft, rather than to wait 5, 6, 7 hours before he even starts offloading our aircraft. And that is becoming more and more critical, if you operate your own scheduled network, like we are doing now, and a lot of our competitors are – the aircraft need to be in the air for at least 15 hours a day, to make money and to serve the needs of our customers. So yes, the need to make the right decisions when it comes to an airport and handling facility will be bigger and bigger.”

Better conversations with airports
Fordree agrees, adding: “We’re having much better conversations with airports than we’ve ever had before. There’s a number of airports that have woken up to cargo. If we look at the traditional cargo gateways, (it’s a) different situation. But there are lots of airports, particularly in the US, that are making warehouse capacity available. It’s suboptimal at the moment, but they’re certainly making warehouse capacity available to help.”
He continues: “And then longer term, we’re working with a number of developers on newbuilds in effectively a new airport. And I cannot disagree with Tom and Peter: We’re seeing congestion in some of the major gateways – cargo handling in general, not just Menzies aviation. But when you have import cargo that is taking longer to be retrieved by the customer than it takes to fly from the origin to the destination, something is wrong in terms of the logistics chain.
“And that’s exactly what we are trying to manage through at the moment, which is why other airports, I think, will have a really great opportunity to pick up the volumes – which I don’t see reducing for some time.”

Investment payback
Lister says his experience in Dubai indicates that “investments do pay off”, although sometimes you don’t see those benefits for “a year to two years, maybe even sometimes five years. We’ve made significant investments here in Dubai in various products, whether it’s sea-air or pharma, and we and our customers have seen the benefits.
“We are in this end-to-end supply chain, so you’ve got multiple partners in there. Therefore, you could have different points which can create a breakage or an area of weakness, so I think it’s important that we work together.”
But he highlights a situation where the payback can come much more quickly for a relatively small investment of time or resources, in this case from working with stakeholders at Dubai’s port of Jebel Ali to help streamline the sea-air product.
About a year and a half ago, it was taking up to 48 hours from the time the vessel arrived to the point of getting cargo ready for departure by air. Working with the different stakeholders to find out why it was taking so long, “we managed to get it down from 48 hours to 180 minutes, basically just simplifying a very old process”.
Lister continues: “That simply comes from working with different partners, putting in things like a bonded truck as Emirates – so we can say to our customer, ‘you don’t need to put a truck in anymore; we will create a bonded customs solution corridor between Jebel Ali port and the airport. So, there’s some very practical things we can do to try and create efficiencies. It does require investing time with people, not just the infrastructure, but also creating solutions.”
He believes those kinds of examples “can be spread across the world in different solutions for different airports with different GHAs. In some cases, you will gain a lot; in some other cases, some airports won’t change for a long time. But there is a need for people to want to work together.”

Digitalisation’s role
He says this also leads to the whole topic of how “digitalisation can act as an enabler – finding ways to get data to the customs authorities and those sorts of those entities, to ensure that we can have faster clearances, faster time to customer. Those are the things we need to be thinking about. I don’t think there’s enough attention on that.”
Lister continues: “We’ve been talking about e-airwaybill for the last 20, 30 years and we’re talking about it today. So, how do we actually get beyond that? I think there’s work to be done on the digital front, not just on the operational and the real practical aspects, so there’s a combination of both of those aspects coming together.”
Notter questions why the air freight sector cannot set a date to switch completely to e-AWBs, after which anyone not complying will be heavily penalised.
Mack agrees this is a good question, but says one reason is “because we have so many parties involved – not only the airline and the ground handler; it is also customs that is involved. It is the regulations you have in every country. If you’re looking at 150 different countries, you’re looking at 150 different (sets of) customs regulations. And let’s say 300-400 forwarders, 120 airlines, so there is a significantly higher complexity (compared with) an integrator doing that on his own” and setting up “a special arrangement with customs”.

Investment throughout the chain
“Another reason is the investment that you need on all ends. And every forwarder, airline and ground handler works with different software. So, the complexity is significantly higher, and that is something that we need to overcome.”
Mack continues: “And that would be one of the wishes that I have in the future, the seamless information flow. And if I use the example from Robert, if you have now 20 freighters or 10 freighters coming in to LA, normally that should not come as a surprise to him. He should have that at least a day in advance from the forwarders, the notification that we are getting ready to send an aircraft. Then as soon as we have the aircraft departed, he should get the final loading manifest.
“So, he should know what is on that aircraft. And he should also know where is it going to. Is it going to stay in LA? is it going to be distributed by truck, and so on. And that is today not happening.
“And that is something definitely that we need to work on. And that is one of the lessons we learned out of the crisis. That is the information that needs to go mandatory, not only to the airline, but also to the ground handler in order to do the staff planning – and then also the infrastructure planning, for the truck, and so on.

Massive room for improvement
“And there is definitely a massive room for improvement. And that is something where we will focus this year and next year – the seamless information flow and digitalisation of our industry.”
Notter and Penseel both note that the sector could benefit from a single “conductor” to coordinate this and make it happen, although that remains absent.
Fordree highlights that “for every DHL or Ceva there is a ‘mom and pop’ forwarder who’s got one or two employees that have been doing the same thing for many years, earning a good return and don’t want to change. And for every Emirates that is driving digitalisation, there are a number of other carriers who don’t have cargo representation – they just use GSAs; then there’s “nobody to engage with within that carrier to say, we want to digitise the process”.
Although this process of change has been very slow, he believes it will now “happen over a much shorter period of time – the reason being, we have a number of employees who are reaching the end of their careers who’ve done the same thing for many years very successfully.
Recruitment factor
“And we’re struggling to attract new people into our business – they’re looking at other industries; they’re looking at other logistics providers; and that’s largely due to the fact that when they come into one of our warehouses, because of some of the customers that we’re looking after, they’re given a pen and a piece of paper, not a mobile phone. And it’s completely an alien concept to them.
“So, if we are not going to be embracing technology and digitalisation, we’re not going to be able to attract the people that we need for the industry in the future anyway.
“It is a big challenge. But equally, it is changing, and will continue to change over the coming months and years as well. But for the better.”

Top priorities for change
Asked to list their top priorities for industry change, Mack highlighted “the seamless information flow between all the parties that are involved, and that goes into the digitalisation of enhancing the way we operate”; the growing importance of the sustainability”; and “to keep people safe and protected”.
Penseel highlighted “that we start to share our knowledge to the younger generation” in order to “give them a career path” and encourage people “choosing to be part of our industry in the future”. A second priority is to “make sure that we will start to share data as an industry. I believe that data sharing is the key driver in our industry for the future as well.”
Lister highlighted the need to “look at what’s really come through in the last two years, to start embracing the way we operate today”, including productivity improvements from “Zoom calls and using Teams across the network”.
Fordree highlighted “flexibility, more planning, and more understanding of each other’s needs”; accelerated development of cargo facilities around the world”, including in some cases “that we find immediate solutions, whether they be temporary facilities before the development is completed”; and “looking after our people”, including digitalisation, which he says is “about supporting the new generation and accelerating the process”.
Fordree concluded: “Looking after our people is the most important element. We are so reliant on really key individuals. And it’s not about looking after their wellbeing or their mental health; it’s being able to support them to get the job done.”