Handling the capacity challenge

posted on 1st December 2020
Handling the capacity challenge

Europe’s airport cargo communities have coped with this year’s rapid changes and extreme volatility by collaborating more closely than ever, reports Will Waters

With the mass cuts of passenger services caused by the pandemic, airports and their operators and service providers in Europe – as in other regions – have been forced to respond extremely rapidly to the fast-changing environment.

And alongside the collapsing passenger services, cargo operations have adjusted and rebounded rapidly, with higher than normal levels of freighter activities in many cases alongside much diminished passenger operations and the new breed of passenger freighters – ‘preighters’.

The reformulated environment has put immense pressure on airports and their cargo operators, included upon cargo handlers. And it has also led in many cases to an acceleration of cooperation between stakeholders, and new types of cooperation.

One of the many challenges for cargo handlers is due to rapidly changing and uneven demand for handling and warehousing capacity. That challenge of warehouse capacity may be taking place at mixed cargo and passenger airports where overall cargo volumes may be down, year-on-year, but individual cargo handlers are still experiencing higher volumes than normal because of increased cargo activities by some of their airline customers.

Dearth of warehouse capacity
Robert Fordree, executive vice president for cargo at air freight handler Menzies Aviation, explains: “Cargo has been experiencing an increase in volume in many locations and our carefully planned and forecasted handling volumes per terminal have changed beyond all recognition. This has led in many airports to a dearth of warehouse capacity as some airlines have increased freighter activity and of course increased cargo payloads on aircraft which are carrying virtually no passengers. We are also seeing some behavioural changes from the market with an increase in dwell times for cargo within our facilities as consignees delay the pick-up.”

Pockets of challenge
He continues: “It is pockets of challenge. As an example, depending on the customer mix we may have airlines that are not operating at all, so our warehouse is empty. With another handler in the same airport, the carriers that they handle are still flying, they may have increased freighters and they may have pax flights still operating but with a greater cargo payload.”

That may be “because there are no passengers, therefore no baggage, so a greater lower deck payload opportunity for cargo; and they will also in some cases use the main deck of the pax aircraft, either loading on the seats and overhead bins or having stripped out the seats they load cargo on the floor.

“The overall impact on the airport would be cargo volumes slightly below or on a par with previous years. The major issue is massive underutilisation of one warehouse and massive overutilisation of another, depending on the carrier mix.”

Collaboration solutions
To address the capacity challenges, Fordree says “we have joined forces with new handling partners in some markets to consolidate our efforts to support the demand in both warehouse and trucking solutions. We have also grown closer to some forwarders as we work on bespoke solutions for collections and deliveries.”

In terms of overall cargo volumes, Fordree says these are slightly down on 2019, but it differs from region to region. “Volumes in some markets exceed those of the previous year due to significantly increased full and pax freighter schedules, and in others they’re down as flight schedules have not returned,” he notes.
The levels of freighter activities, or all-cargo passenger aircraft flights, are also different from market to market. “But we have seen significant increases in freighter activity on a number of markets,” Fordree notes, including AMS and LHR in Europe.

“A bigger increase has been the cargo carried on pax flights, either as a planned pax freighter with cargo also loaded on the seats, in the overhead bins or in some cases on the main deck as seats have been removed,” he adds. “Where in the past we can expect 5-8 tonnes on an inbound passenger aircraft, we are seeing anything from 15 to 25 tonnes per flight.”

Different times
At Europe’s largest cargo airport, Frankfurt (FRA), in normal times around 40% of freight is flown as on passenger aircraft. Following massive falls in passenger air services and belly cargo capacity in the spring, the airport’s cargo volumes have recovered to around the same level as last year – “currently even on a higher level than last year, despite the missing belly capacity”, notes Max Conrady, Head of Cargo Infrastructure and Development at Fraport.

Indeed, in October 2020, FRA’s cargo throughput grew by 1.6%, to 182,000 tonnes – exceeding year-on-year levels for the first time in 15 months – with cargo-only flights more than compensating for the ongoing capacity constraints for belly freight. The airport attributed this high cargo demand “mainly to the upturn in global trade and the solid performance of the Eurozone’s industrial sector”.

Within these figures, there have also been significant changes in terms of commodity types and origin and destination points.

Although there has been a rise in most commodity types, ‘low-cost’ cargo such as perishables have seen a decline, linked to the rise in many air freight rates. This is also reflected in a decline of traffic from Africa and Latin-America, which are regions with a high amount of perishable transports to Europe, while there is a growth of traffic with North-America and Far East, Conrady notes.

With overall demand for cargo capacity recovering to “extremely high” levels, the missing capacity due to the grounded passenger flights has been partially compensated with higher levels of freighter aircraft and the use of ‘preighters’. Conrady says as many as 40 airlines are using or have used their passenger aircraft for cargo shipments in recent months.

And the number of freighter movements “is considerably higher than last year, approximately twice as high,” he notes. “Also, the number of preighters is rising again, since the cargo volumes are higher than last year and there is a lack of belly capacity.”

Cargo community cooperation
Conrady says that it is thanks to strong cooperation that the FRA cargo community has maintained the flow of goods during what has been an extraordinary crisis this year.

The early months of the crisis were extraordinarily challenging, especially with the huge increase of imported PPE, which led to a major shift in the shape and type of shipments towards small, loose packages and a change from mainly export business to almost only import business.
Conrady said adapting to these massive changes was completed in only 1-2 weeks and required a close cooperation among all partners.

Among the operational challenges earlier in the crisis, the number of collectors of import cargo “increased massively” and many of these were small importers and first-time customers picking up cargo for the first time. Instead of big trucks, there were a lot of small vehicles from all over Europe collecting cargo, with some not picking up their goods at weekends – which resulted in waiting times when collecting but also led to corresponding backlogs and overloads on the apron, the transfer areas and in the handling warehouses.

Situation has stabilised
“As of now, the situation has stabilised,” says Conrady.

But many of the elements of the increased coordination and communication that was essential to get through that period have continued. Those include regular calls with all partners involved, to make sure everything runs smoothly, with securing operations the main focus.

Fraport also started conducting a survey and “asked airlines, handling agents, forwarders, etc. for their experiences to regularly get an overview on what worked and where improvements were needed. At the beginning, the ‘Climate Index’ was published on a weekly basis, now it is published once a month,” Conrady says.

Cross-company support
Similar to the cooperation described by Fordree, this included “mutual cross-company support in the event of overloading in dispatch – for example, ‘load balancing’ of individual flight events between the various freight handlers”.

Conrady notes: “Every company involved adopted to the new situation so that supply chains could be ensured without major disruptions. Also, customs and other authorities reacted flexible and contributed to the successful running of the business.

“Our intensive commitment to building a resilient cargo community has paid off, and the crisis has connected us even more as a community.”

It also led to an acceleration of digitalisation initiatives – for example, in order to limit physical contacts, meetings have been taking place via Microsoft Teams, Conrady notes.

And despite the new challenging situation at the moment, the airport has been pushing ahead with further initiatives to improve processes. “One example is our decision to develop a new data exchange platform, especially for import processes,” Conrady notes.

Amsterdam Schiphol recovery
Meanwhile, Amsterdam Airport Schiphol has also seen its cargo volumes recover in recent months to levels close to last year’s volumes. Although total cargo volume for the first half of 2020 declined by 14.5% compared to 2019, by August volumes were back to 2019 levels. Slipping in September, they recovered in October to more than 140,000 tonnes, around 2.5% below last October’s volumes.

Although an increase in full freighter cargo does not quite make up for the decline in belly traffic, the numbers of full freighter services at AMS has risen steeply since April, rising to around twice last year’s levels between May and August. With some passenger cargo capacity returning since then, freighter levels have dropped back somewhat from their levels this summer but they remain around 60% higher than last year.

While cargo volumes to and from most regions are similar to last year’s levels, give or take a few percentage points, Africa volumes were down almost 10% in October.

Brussels reports growth

Brussels Airport expects cargo volumes this year will be better than last year, despite the big drop in volumes in the first weeks of the pandemic due to the grounding of passenger aircraft.

Steven Polmans, director for cargo and logistics, says that since September the airport had even seen “a double-digit growth in our volumes, and we expect further growth in the months to come”.
With passenger air services still heavily depleted, this growth is due to ‘all-cargo flights’, including on passenger aircraft.

“At the moment, belly volumes are at 50% while full cargo volumes more than doubled. But 31% of the full freighter volumes are currently being transported on board of passenger aircraft operating as freighters,” highlights Polmans.
“In the first peak, this even reached a bit over 50% of the volumes. With more freighters coming into operation and less need for PPE transportation, we had stable volumes of the so called ‘preighters’ in recent months. However, in the last few weeks and days we are seeing a growing demand again.”

There have also been some significant changes in terms of commodity types or origin and destination points.

“In the beginning we saw a big increase of volumes coming from China, driven by all the PPE needs. A second effect was the grounding of all the passenger aircraft and the lack of overall capacity in the market, resulting in certain markets being underserved,” notes Polmans. “Volumes to and from Africa, for example, saw a big drop in April to June. But bit by bit, week after week, we see volumes recovering and getting to a more normal pattern again.”

Alongside the challenges, the Covid-19 crisis has brought some new cargo opportunities for the airport, believes Polmans.

“What I believe is the biggest impact longer term is that suddenly, everybody knows and understands cargo and the importance of cargo,” says Polmans. “So, we are higher on the agenda for different stakeholders. The fact that Covid-19 will bring a lot of extra vaccine transportation needs will help us to further strengthen our position and image as a leading pharma gateway.”

LGG and LEJ benefiting
The Covid-19 crisis has brought some new cargo opportunities for two European cargo-specialist airports, Liege Airport (LGG) and Leipzig Halle (LEJ). The two are also major air hubs for FedEx and DHL, respectively, and increasingly for e-commerce traffic – notably for Cainiao in LGG and Amazon at LEJ.

Head of commercial Steven Verhasselt says LGG has seen unprecedented cargo volumes and continuous growth of the number of freighter operations this year.

“For the first 10 months of 2020, we have a year-on-year increase of about 20%,” he says. “2019 was an all-time record year for Liege Airport; we already surpassed the total cargo volume of that year” by the end of October. For LGG, all that cargo arrives or departs in freighters.

Verhasselt says he is surprised the airport has seen no significant shift in commodities this year, given all the other changes. “The perishables market, for example, is very stable, as is the automotive – and even the live animals business, although we did see a dip in horses as some big competitions got cancelled or postponed,” he notes.

E-commerce growing at a pace
“E-commerce, both B2B and B2C, keep growing at a fast pace. We believe this growth is further enhanced by Covid-19, as e-commerce is the new normal.” He says the logistics processes for these e-commerce flows “will adapt as well”, noting that the combination of air and rail connections at the airport means “LGG is ready to build on the opportunities”.

He says any shift in cargo lanes – the origins and destinations – has also been relatively limited. The airport has worked to keep a balance, “not to be dominated by one region only. The 30-30-30-10 Asia/Africa/Americas/Europe (ratio) is not exactly there any more, but we are still within range,” he notes.

“Asia has increased a bit, but Africa has stayed very strong, and we also have transatlantic growth. The shift there is clearly the result of the shift from belly to freighter, which benefits Liege Airport.”

Operational challenges
The challenges for LGG has been managing this growth and maintaining the quality of services.

“In order to meet the requirements of our customers, the LGG Cargo Community has made a lot of efforts in adding resources, and staff,” says Verhasselt. “The cooperation between the operators at the airport has definitely helped in managing peak demands. The #freightersfirst policy has generated dedicated services and infrastructure, to handle freighters in the most efficient way.
“While the preighters are new for every airport, freighters are not in LGG. Despite operational challenges, and at times depleted numbers of available staff, the airport and handlers and customs and agents and truckers have all been able to keep performing. We managed the increased demand and are ready to keep growing – hand in hand with long-time and new customers.”

New initiatives and infrastructure
He continues: “With the increased operations, new capacity has been key in LGG. In the midst of these challenging times, we opened 25,000 sqm of brand new first-line warehouses: the AirBridgeCargo hub operated by WFS, and the Challenge Group hub, operated by Lachs. Four new widebody parking stands are fully operational now.”

In terms of second line facilities, he says “there is a lot of capacity already added, and a lot more in the pipeline. Both our handlers, as well as agents and freight forwarding community, are expanding their activities in second line.”

He continues: “The connection between first and second line is an important challenge now. The cargo connector at Swissport is operational now, and similar facilities will be added to smooth the physical transition. The digital transition is being secured in track and trace applications on LGG Community level.”

Digital transition continues
Verhasselt says “great steps had already been made” in terms of digitalisation initiatives to streamline processes “before the pandemic broke out, and the implementation has definitely accelerated. Minimising contact points on airport was a clear argument for digitisation; the fact that some services are now taken off site – even dealt with from home – has accelerated that,” he adds.
“The flexibility, and the ability to adapt to change, is a result of digitisation and imagination and goodwill from the staff and the organisations. There is still a lot of room for improvement, but we are a lot further than we could ever have imagined one year ago.”

Peak capacity management
Verhasselt adds: “At Liege Airport, we have been focusing very much on capacity management and peak capacity management. Adding capacity is a combination of adding physical infrastructure and improving the efficient allocation and use of resources, as well as streamlining the processes.

“Stepping back from digitisation is not on option. On the contrary, we want to step it up, and we feel the support of the entire cargo community. The government bodies involved, customs inspections and others, are all pushing for further digitisation to improve the services.

“Implementing change is never easy, especially not in challenging high-demand times like these. But the need has been recognised, and the will is there, to keep investing in new technologies to speed the cargo flow.”

Leipzig’s growth continues
Freight volumes at LEJ, Europe’s fifth-largest cargo hub, have also continued to increase significantly this year, in contrast to the trend elsewhere in Germany. Indeed, the airport set a new monthly record in October handling 124,880 tonnes, 10.9% higher than the previous October’s figure. For the first 10 months from January to October, freight volumes increased by 8.4% compared to 2019 to more than 1.11 million tonnes.

Mario Patyk, Head of Business Development for Cargo and Logistics, says LEJ has consistently demonstrated itself to be one of the world’s fastest-growing cargo hubs, noting that “this growth process has been continuing for more than 15 years”.

Indeed, he highlights that LEJ handled the largest amount of traffic at any airport in Europe on several occasions in April, “which reflects its importance as Europe’s fifth-largest cargo hub”, and also the fact that its main area of business involves all-cargo traffic – which continued to fly even in the lowest points of this year’s Covid crisis.

“While belly freight was unable to take off on board passenger planes at many other places because of the pandemic, the number of cargo flights continued to grow dynamically at LEJ – by more than 5% compared to 2019 to a figure of more than 36,000 between January and September,” he notes.
“With up to 1,000 cargo flights every week, the airport and its customers ensure stable and reliable supply chains. Overall, about 60 cargo airlines fly to the airport and operate a network of routes that involves more than 280 destinations around the globe.”

Patyk highlighted that the airport “acted as a central hub for more than 50 aid flights with medical protective equipment, particularly between April and July”, with goods distributed throughout Germany and to neighbouring countries. Alongside its regular airline customers like the Volga-Dnepr Group and Antonov Airlines, new customers often operating cargo flights using passenger aircraft – also came to LEJ, including Vietnam Airlines and Aeroflot.

“Thanks to the flexible personnel planning performed by our handling company, PortGround, we are able to offer personnel-intensive services to the full satisfaction of our customers at any time. In this case it involved unloading cabins by hand,” notes Patyk.

Express and e-commerce growth
In terms of freight types, he says: “We are currently seeing an increasing number of express and e-commerce as well as pharmaceutical shipments. We have special certification for pharmaceuticals. General cargo volumes are also increasing slightly.”

The greatest operational challenges include “protecting the health of our employees and maintaining airport and freight operations without any restrictions”, says Patyk. “Even though freight volumes at LEJ are continuing to increase significantly, we have managed to handle all the regular and additional freight traffic on schedule. To achieve this, we are working with all those involved, around the clock – from freight forwarders and charter brokers to airlines and even the customs service.”

Handling the large numbers of freight charter flights at times this year, where the timetable often changes at short notice, “requires flexible and slick operations”, highlights Patyk, praising the “excellent cooperation” by the airport’s cargo stakeholders.

Having grown to become “the second-largest air cargo centre in Germany and the number five in Europe”, the airport is preparing for further growth.

“We will continue to invest heavily in order to expand this position,” says Patyk. “We announced an extensive investment and expansion programme amounting to approximately €500 million last year. Firstly, we are planning to extend the apron area near the DHL hub, which is already the company’s largest in the world.

“Secondly, we are planning to build new apron areas, logistics and office buildings in the northern and southern parts of the airport. We are maintaining these plans because of the continual increase in demand and will gradually implement them in line with needs during the next few years.”