Handling trends: North America

posted on 3rd April 2018

John McCurry examines what airlines, cargo handlers, and airports are doing to improve quality and efficiency, collectively and individually

Pace-setting e-AWB penetration rates, major cargo infrastructure projects, and efforts to recruit better handling personnel are among the measures being taken within North America’s air cargo sector to boost efficiency and improve the quality of the products they offer.

Perhaps the most publicized metric is the effort to ratchet up e-AWB penetration rates for airlines. On that account, many North American carriers are meeting or exceeding IATA’s annual target rates, which have been elusive for the industry as a whole.

Progress continues to be made, especially in the US, which has been among the geographic leaders in this initiative. Implementation levels for major US airlines as of the end of 2016 were: FedEx − 73.2%, Delta Air Lines − 72.6%, United Airlines − 70% and American Airlines − 61.4%. And towards the end of January, Delta’s rate was approaching 80% and Air Canada ended 2016 at 52%. Overall, IATA has a current year-end target rate of 62% for 2017.

IATA also reports these year-end statistics for US airports: ATL − 54.5%, DFW − 55.9%, JFK − 34.9%, LAX − 38.5%, MIA − 23.5%, ORD − 46%, and SFO − 41.6%.

Glyn Hughes, IATA’s global head of cargo, is pleased with e-AWB results in the US, which has ranked first in volume and penetration since August 2015 and stood at 49.3% in January.

“Moving forward, now that we have hit almost 50% e-AWB penetration, we not only want to focus on increasing e-AWB adoption, but also on improving the quality of the data that is being transmitted,” Hughes says. “The only way to truly leave paper documents in the past is to provide accurate and efficient electronic information and ensure it is in compliance with and meets the requirements of government agencies.”

Quality counts

IATA’s Cargo iQ initiative currently has 11 members in North America. Ariaen Zimmerman, head of Cargo iQ, notes that the organization will have its technical working group on the continent in the second half of this year. “We are hoping to present a demo of our new Smart Data self-service portal for industry and member performance metrics in America later this year,” Zimmerman says.

Delta Air Lines continues to improve on its industry-leading e-AWB rate, after topping 80% by late January. Delta Cargo is now under the leadership of Gareth Joyce, a native of South Africa who came to Delta last May from Mercedes-Benz Canada.

For Joyce, who has the title of president of cargo, it’s been a fast-paced year with a steep learning curve. He’s travelled the globe, visiting as many of Delta’s locations as he could schedule, and meeting with partner airlines and joint-venture partners. He’s also held countless “town hall” meetings with employees to make sure everyone is on the same page.

“It’s been a great year; much has been achieved, and it went by in a flash,” he says.

Delta Cargo has embarked on a transformation journey at a rapid pace with a strategic plan for the next five years and the building of a team to execute that plan. Joyce notes that Delta Cargo’s primary objective is achieving operational consistency throughout its global network. The big push is toward ensuring predictable quality.

“The air freight business is all about getting the product to the right place at the right time with a customer-focused mindset, and all of our investments are going toward achieving that,” Joyce says.

Planned systems upgrades include installing a new revenue-management system that will allow Delta to have visibility of all of its capacity across its network, to better plan for movement of goods. Delta Cargo is also piggybacking on an RFID system from the passenger side that tracks movement of goods throughout the journey, using proximity scanning rather than traditional barcode scanning. Other initiatives include developing a standard processes blueprint for all warehouses and the launching of a GPS tracking product for high-value cargo that allows Delta to know where the product is at any given time.

Infrastructure improvements

Infrastructure improvements also play a big role. The largest, now in the planning state, will be a complete rebuilding of Delta’s cargo warehouse at Atlanta Hartsfield-Jackson International Airport. A new concourse at the airport will require Delta to move the warehouse in a project set to begin in 2019 and be completed by 2022. Joyce also notes that Delta will benefit from terminal improvements either underway or planned at airports where the airline’s core capacity has developed, such Los Angeles, Seattle, Salt Lake City and New York LaGuardia.

Delta has long been among the leaders in e-AWB penetration. Joyce says Delta is 100% committed to the effort and sees multiple benefits. Like many new developments, it has the early adopters, the followers and the late adopters, he says, and eventually, those that aren’t using e-AWB will be at a competitive disadvantage.

“We are number one in volume and penetration among the big carriers in the US, and we continue to push the envelope,” Joyce says. “It brings operational efficiency to us and a higher degree of accuracy in documentation. It also brings improved security. Through an electronic medium we can build in checks and balances.”

Both domestic and international mail continue to be a source of growth. Joyce says e-commerce is driving growth in small package shipments. Pharma, cosmetics and fresh produce and fashion are also growing. He says electronics remains strong, but is slowing down.

North of the border, Air Canada Cargo ended 2016 with a 52% e-AWB penetration, falling short of the carrier’s target rate, but an improvement over 2015. The 2017 target is aligned with IATA’s 62% rate. Lise-Marie Turpin, Air Canada’s vice president for cargo, believes this rate is achievable, considering that countries with large volumes of traffic are now e-enabled. She notes that Air Canada was successful in implementing 100% e-AWB for all of its domestic shipments last spring.

Turpin says Air Canada has experienced rapid cargo growth over the past two years and focuses on the basics when it comes to quality and efficiency. That includes ensuring that employees have a clear understanding regarding commitments to customers.

“Work is being done to simplify processes and to use technology wherever possible to automate and digitize transactions,” Turpin says.  “An area of heavy investment on our part has been the implementation of RFID, which directly contributes to improved quality and efficiencies. Change management will be an essential part of its success.”

One of the biggest changes over the past year has been the launch of a freighter programme. Through an agreement with Cargojet, Air Canada has main-deck capacity between its Toronto hub and Atlanta, Dallas-Fort Worth, Bogotá, Lima, Mexico City and Frankfurt. Turpin notes that while there have been growing pains, she is satisfied with the programme overall as it has allowed Air Canada to seize opportunities in underserved markets.

Major merger

Mergers and their aftermath are the overriding newsmakers related to cargo handling in the US. Chief of these events happened in February 2016 when Worldwide Flight Services (WFS) acquired Consolidated Aviation Services.

WFS now serves 54 stations and 63 airlines across North America following the merger with CAS. Its largest cargo operation is at JFK where it serves 57 airlines in seven facilities. WFS is building a new 325,000-square-foot (30,000sqm) facility there, which will support value-added services like handling active and passive shipments of pharma products.

Ray Jetha, senior vice president for sales and business development for North America, says WFS is focusing cargo services growth on pharmaceutical handling capabilities at its gateway stations like Miami, JFK, DFW and Seattle. He anticipates that the company will receive CEIV certification from IATA early in 2017.

Another area for expansion will be in the express cargo market due to the rapid growth of e-commerce. WFS currently provides services to ABX Air, which has an agreement with Amazon at several North America stations.

“Most North American airports have old facilities at major gateway stations, which lack up-to-date equipment and specialized cargo equipment to improve quality and efficiency,” Jetha says. “Another challenge is the lack of land availability and permitting requirements at airports that do have expansion capabilities. This is one of the reasons why we are building our new facility at JFK, which will be equipped with the best equipment and technology.”

WFS’ most recent cargo contract was an extension of its partnership with China Airlines at Chicago O’Hare. The carrier has partnered with WFS at several locations in North America over the past 20 years and Jetha cites mutual trust, respect and shared goals between the two organizations.

Pinnacle Logistics re-entered ground handling last April and now operates at DFW, Rockford (Illinois), and Houston. Peter Weir, the company’s senior vice president for sales, says the company has focused on setting up operations in proximity to its trucking networks. Its first big contract came last September with Air Transport Services Group (ATSG) to handle three jets in Rockford for the Amazon Prime air account.

“It’s been a great pleasure working with Rockford,” Weir says. “I think it’s the best-kept secret in the US.”

Quality differentiator

Home base is Dallas, where Pinnacle has more than 72,000 square feet (6,500sqm) of warehouse space. Weir says Pinnacle seeks to differentiate itself from other handlers by building better infrastructure and offering better quality.

“It’s well-documented that the quality of ground handling in the US is poor,” Weir says. “When Tom [Wheeling, president and CEO] started this business, we decided we needed to be different and focus on quality. We have built all of our standard operating procedures and all of our training with transparency in mind.

“Our sole purpose and focus is that we want to show freight forwarders that we are different. None of this is new; it’s available in Europe and other places around the world.”

Weir says there is no room for error in cargo handling and Pinnacle is investing heavily in anti-collision equipment and the newest loaders. He believes Pinnacle’s customers will be the beneficiaries of this investment of nearly $5 million during the company’s first eight months. It’s allowed the company to raise the bar, quality-wise, he asserts.

Weir says Pinnacle plans to invest in new equipment and is taking steps to combat the handling industry’s traditional attrition problems in the US: Pinnacle is paying warehouse personnel $14 per hour, which is $4 above the standard rate in Texas. That’s allowing Pinnacle to attract better workers, he says.