Catalyst for a major re-set

posted on 4th March 2021
Catalyst for a major re-set

The accelerated growth of e-commerce means it really is time to change air freight’s traditional working methods, abandon paper-based processes, and embrace supply chain digitisation, says Wilson Kwong, chief executive of Hactl

The events of 2020 left a huge mark on the global economy, and badly dented expectations for the air cargo industry. Some markets were more badly impacted than others: Hong Kong came through more positively than most, buoyed by traffic re-routing from China, and as a result of large volumes of urgent PPE. These are subsiding now, while general cargo gradually recovers.

The distribution of vaccines will be our next big challenge, but this will also make up for the temporary loss of our normal markets. The accreditation Hactl undertook for WHO GDP and CEIV Pharma has proven very worthwhile – as it led us to re-engineer our facility and processes, so that we are now fully ready to play a key role in the global vaccine airlift of 2021.

For Hactl, the biggest impact of COVID-19 – apart from learning very quickly how to function effectively with a largely home-based workforce – was the sudden loss of so much belly capacity, to be replaced by freighters and cargo-in-cabin flights. We were ideally-placed to respond to this seismic shift in our market, given our experience in handling very large volumes of all-cargo flights, our highly-automated and very productive terminal, and our recent investments in streamlined IT and systems.

Freighter revival
It is interesting that, only two years ago, many were predicting the demise of much of the global freighter fleet. We now understand that more and more carriers are taking a fresh look at freighters and P2F conversions. I am sure there is also some discussion in airline board rooms and aircraft manufacturers about the viability of abandoned concepts such as quick-change and combis. If 2020 taught us anything, it was that an airfreight industry that relies heavily on passenger aircraft bellies is a vulnerable one. The air cargo industry needs to be able to respond more quickly and effectively, in the event that there is ever another pandemic.

For air cargo, COVID-19 was a huge challenge – but certainly not all negative. Rates had previously reached unsustainably low levels, and COVID-19 provided the catalyst for a major re-set as demand outstripped capacity, and shippers were compelled to reappraise the value of the industry. Some of the current rate levels will not persist as capacity returns, and that is probably as it should be – but we will hopefully end up with a healthier level of rates that provides the industry with the margins it needs for future investment.

Another positive was that air cargo finally came to widespread public attention in 2020. For the first time, people saw our heroes on TV, loading aircraft with desperately-needed supplies. Next time somebody asks you what you do for a living, you probably will not need to explain what air cargo is!

E-commerce wins
The big winner in all of this has been e-commerce. Locked-down consumers around the world were forced to look online for the goods they had previously bought on the high street. The logistics industry and postal authorities have done a remarkable job in responding to the resulting huge overnight growth. We in air cargo are part of that, and at Hactl we are investing in a new e-commerce fulfilment centre that will enable our customers to compete more effectively for this business.

Although e-commerce will clearly continue to grow, we cannot afford to be complacent. Consumers are now in the driving seat, and they demand reliable, fast and visible supply chains. The lesson we must all learn is that it is really time to change our traditional working methods, abandon paper-based processes and embrace supply chain digitisation. If any of us stand in the way of this progress, we will simply make ourselves redundant.