Strong demand for freighter services has brought new opportunities for cargo airlines and cargo-specialist airports, although a variety of Covid-related changes has led to operational challenges for carriers, airports and their cargo handlers, reports Ian Putzger
Continuing major restrictions on passenger air services and cargo bellyhold capacity combined with surging demand has led to further exceptionally strong demand for freighter services in North America, as in other regions, bringing opportunities for cargo airlines and some cargo-specialist airports. But a variety of Covid-related changes – including the mix of aircraft and the cargo they are carrying – have brought certain operational challenges for carriers, airports and their cargo handlers.
Rickenbacker has been adding freighter links at a rapid clip. In mid-May Turkish Airlines started flights with A330-200 freighters from Sri Lanka via Istanbul to the Columbus, Ohio all-cargo airport. The service kicked off less than a month after a B747 freighter of Silkway West Airlines made its first appearance at the airport.
Bryan Schreiber, Rickenbacker’s manager for air cargo business development, reports that the airport had seen a record number of planes hauling in lots of freight. Besides all-cargo carriers – the airport’s staple clientele – Rickenbacker has also seen a large number of passenger freighters, by April handling its 500th such flight.
Airports that concentrate on cargo, such as Rickenbacker or Rockford, have fared well over the past couple of years. A recent study published by the Chaddick Institute for Metropolitan Development at DePaul University found that the major 14 US airports in that category had average growth of 31.4% in domestic US tonnages in 2020, with seven of the largest ten growing 18% or more.
A lot of the recent flight additions have been driven by forwarders that have signed up for dedicated lift, notes Schreiber. The latest entrant at Rickenbacker is flying on behalf of Trinity Logistics. Likewise, Rockford has garnered transatlantic freighter flights contracted by Senator Logistics and DB Schenker.
In some cases, this changes the game. Schreiber recalled a recent 747 flight that brought in auto parts. Some 12 boxes from that flight were put on a business jet to ferry their contents of urgently needed parts to a production facility. The operation was co-ordinated on the ramp with the forwarder. “The airline didn’t have to do anything,” he says.
In part, the rapid growth of cargo-focused airports is due to the volumes that are overwhelming the major gateways. Schreiber said that a chunk of Rickenbacker’s traffic is overflow from large gateways.
“Customers come to us – forwarders and shippers. They tell us: ‘We can’t use these airports’,” he reports.
Chicago O’Hare, the busiest of the US hubs, registered 14.8% higher throughput last year, with freighter flights going up 25%. In conjunction with outdated terminals and the absence of a truck management system to cope with landside congestion, the ensuing challenges prompted some operators to shift to Rockford.
“Volumes are now at a historic peak, to a point where warehouse and ramp capacity are the limiting factors at airports,” remarks Peter Kohl, COO for cargo USA at Swissport.
“At the bigger gateways like Chicago or Atlanta, demand has reached such levels that existing infrastructure – not only at Swissport, but all the other players – is really at the limit and players are operating beyond capacity of the warehouses,” he explains.
The volatility that characterised the early months of the pandemic has abated, which has made planning easier, but resources are more frequently stretched by the larger number of freighters that compensate for the dearth of belly capacity. For the handlers, this means larger volumes to be handled over shorter periods of time.
At Miami International Airport, freighter operations were up 23% in March, ahead of a 19% increase in overall cargo operations. “Belly cargo was transferred over to freighters,” notes Emir Pineda, manager of aviation trade and logistics at the Miami-Dade Aviation Department.
Passenger freighter challenges
Passenger freighters have been another challenge, given the constraints of having to load and unload the cabin space through passenger doors. Rickenbacker has developed a home-grown solution whereby portable roller conveyors are brought into the cabin and tilted to facilitate the movement of boxes. This has speeded up the process and reduced manpower needs, Rickenbacker’s Schreiber notes.
“We now have two of these sets. We can do two aircraft simultaneously,” he adds.
Although it lost international passenger flights, Edmonton International Airport saw 8% growth in cargo throughput last year, thanks to a 16% rise in freighter landings by operators from Asia, the Middle East and South America. The surge in freighter traffic has fuelled a need for additional warehousing for express and fast-moving packages, says Alex Lowe, the airport’s manager of global network development.
Swissport has boosted capacity in some US stations through the installation of caster decks. “In the absence of available on-airport warehouse space, that’s the next-best thing,” says Kohl.
In Miami Pineda has some ideas about capacity increases, but in the near term he faces budget constraints. “A lot of capital programmes have been pushed back. The airport is still not doing as well as before,” he says. “Probably next year, we’ll look at additional infrastructure development for cargo.”
One development he is looking forward to is a plan for a new perishables fumigation centre that will serve both the airport and the port of Miami. The facility may or may not be built on airport land; but in any case, it will result in lower fumigation costs, he says.
In May Swissport was nearing completion of a 65,000 sq ft (6,000 sqm) warehouse off airport in Chicago. The idea is to truck imports there for handling to alleviate the pressure at O’Hare.
But one element that has made a massive difference in coping with these challenges has been an unprecedented degree of collaboration between various players.
“Congestion at the hubs has been tough on us and tough on the handling companies,” said Jan Krems, president cargo of United Airlines. “We found ways we can help each other.”
In some cases, this involved switching staff, as some stations had little cargo, he says.
In some situations when Swissport could not take on more freight, the company has worked with ramp handlers to move cargo to off-airport locations. “This type of collaboration was not seen before,” says Swissport’s Kohl.
Landside, there have been various initiatives with trucking firms. At some airports, Swissport has started trucking yards to manage traffic flows better. It has also been collaborating with truckers to channel incoming cargo to alternative locations.
In some markets trucking companies, ramp and ground handlers and the airport authorities came together to make things possible that otherwise would not happen, Kohl reports.
Changing mix of cargo
In addition to space constraints to handle record volumes, operators are also facing challenges from shifts in the mix of cargo they deal with. Jessica Tyler, president of cargo and vice-president operations innovation and delivery for American Airlines, noted that hard freight, the traditional bread and butter business for airlines, is being replaced by loose shipments that are not pre-built. This forces players to do things differently, she says.
United’s Krems comments: “Added value is the name of the game. First quality, then added value. If your customer base is 50% speciality products and you can offer the quality and service, with the other 50% general cargo you have the right balance.”
Pharma and e-commerce targeted
Not surprisingly, pharmaceuticals and e-commerce are often the chief categories targeted. Miami handled over 15,000 tonnes of pharma cargo for the third consecutive year in 2020. Covid-19 vaccines should give another boost to this segment once the US starts exporting these, reckons Pineda.
Miami-based Amerijet expects to carry some of this traffic. The carrier has CEIV accreditation, which is used primarily on the routes to Brussels and to San Juan, but it also came into play in recent work for the United Nations, such as flying vaccines from India, says CEO Tim Strauss.
He expects to move some vaccine traffic to the Caribbean. “In some cases, we’re the only airline that flies there,” he notes.
Rickenbacker is getting ready to start work on a dedicated pharma facility with 10,000 sq ft of space. It will build out an existing warehouse and install temperature control equipment.
“We’re looking for an operator now,” says Rickenbacker’s Schreiber. “We’d like them to be GDP certified from the beginning. In the RFQ, we’ll require that the operator will become CEIV certified.”
Brazilian e-commerce example
Under a special scheme with the Brazilian authorities, Miami is a designated gateway for a programme that allows Brazilians to buy online from overseas merchants. This traffic is funneled through Miami and pre-cleared, so it can be treated as domestic shipments upon arrival in Brazil. The pandemic has slowed this to a trickle, but Pineda is confident it will recover. Several other countries in Latin America have expressed interest in similar undertakings, he says.
Swissport handles e-commerce in four US locations and has registered robust growth. This is welcome, but it does bring new challenges.
“E-commerce is very different from traditional handling,” says Kohl. “It’s a lot more labour-intensive and space-intensive. You have a condensed operation. Nothing is in the warehouse before and after the flights. You get tremendous peaks, which are very labour-intensive.”
Swissport is looking to use more automation to handle this business, although this requires a holistic approach. “This is not for one station to do something. We have to look at it as a company,” Kohl reflects.
The need for automation across the industry is reinforced by the shortage of labour, which has become a serious headache for management.
Kohl notes: “Manpower is the biggest challenge right now – probably for everybody in the industry. It’s incredibly difficult to hire staff now, and there is incredible inflationary pressure on wages. At some airports, we’ve had three, four wage increases of the past 12-15 months, and there is no end in sight.”
The pandemic has exacerbated the situation, especially at smaller companies like Amerijet, where COVID-19 outbreaks have had a disproportionate impact.
“If one person gets it, it could affect eight to ten people, who will have to quarantine,” says Strauss. “If you lose a crew of six, it sets you back. In some cases, the airline had to close smaller stations for a day or two.”
In response to the pandemic, the Columbus Airport Authority, which runs Rickenbacker and the other airports of the city, took out certification under the Global Biorisk Advisory Council programme. “This helps protect our workers and our passengers and cargo partners at a very high standard during these pandemic times,” says Schreiber.
One secondary effect of the pandemic has been its widespread boost for digitalisation, including within air cargo. American is pushing hard on this front, having installed the final element of its new iCargo platform last August. According to Tyler, this has brought massive improvements. For instance, the platform could be used to model operations of cargo flights with widebodies and the ramifications of different mixes of freight and pricing strategies.
The underlying theme of American’s push of digitisation and the use of artificial intelligence is to leverage data differently and better than before, Tyler says. “It is not just about innovation; its also cost management,” she stresses.
For all the headway that the industry has made with digitisation over the past year, most operators feel this has not gone far enough.
“There’s still a gigantic stock of paper on every plane that comes in – in triplicate,” remarks Schreiber.
Krems concurs: “This is still a paper industry, but a lot of things changed over the last six or seven years.” He points to the digitisation of scanning procedures or moving elements like claims or bookings online. However, what has been implemented to date still does not go far enough, he concluded.
Kohl remarks that companies have been moving at different speeds, employing different tools and platforms. “We need to be able to interface the systems and get data flowing between them in a seamless way,” he comments.
The Miami-Dade Aviation Department has been promoting the establishment of a cargo community platform, similar to recent initiatives at Atlanta and Dallas/Fort Worth. “I hope this will be the year to launch it,” says Pineda.
A CCS is also on the horizon at Edmonton. “We’re committed to bringing in a CCS in the coming years,” says Lowe.