CAASWIN18

Infrastructure fit for today

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Recent strong growth, the demands of e-commerce customers and the expanding capabilities of the integrators present fresh challenges to traditional air freight operators, senior industry speakers tell this year’s Air Cargo Handling Conference in Brussels

The welcome surge in volumes over the last two years has put pressure on air cargo handlers and airport freight facilities around the world, particularly at peak times, highlighting some of the infrastructure and capacity challenges at key major airports, particularly in Europe. And with air cargo volumes set to surge further over the next decade, including new requirements from emerging customer sectors such as e-commerce, these developments underline the need to invest further in new cargo infrastructure and airport capacity.
That was the backdrop for the Air Cargo Handling Conference 2018, this year held in Brussels. And the location of the event this year at Brussels Airport turned out to be particularly well judged, in part because of some of the initiatives taken by the airport and its cargo community to build collaboration and improve the efficiency of the wider air logistics chain – best-practice initiatives that the airport is keen to share throughout the sector. Indeed, the success and potential of some of the initiatives within the BRUcloud programme, including its game-changing slot-booking app, were a key theme of some of the discussions at this year’s ACH conference – a selection of which have been included within this report and have been featured more widely in this issue of CAAS.

Long-term infrastructure
While quick-fix solutions such as slot-booking apps may provide some improvements in efficiency and productivity, this does not eliminate the need for longer-term investments and capacity solutions, however. Historically, the air cargo sector has complained that investment in cargo infrastructure is seldom enough of a priority at airports around the globe. Although some airports are taking a more positive and proactive approach to cargo, change doesn’t happen overnight – particularly at airports, key speakers confirmed.
Rogier Spoel, air freight policy manager at the European Shippers’ Council, highlighted to delegates the importance to cargo owners of investment in airport cargo infrastructure and capacity, “because there are certain circumstances that are challenging us for the future”. He continues: “Infrastructure is, of course, very much a means to a certain goal – moving cargo via the airport or through the air. And the challenges that we face include, first of all, congestion. Volumes are rising, which means pressure on the road infrastructure, and also ground-handling infrastructure, and in some cases a lot of investments are being done to relieve congestion.”
But wider airport capacity is also a key issue, he notes, highlighting the challenge recently faced at Schiphol, in terms of slot restrictions, and congestion at other airports as well. Within 10 years, IATA has predicted that a lot of other airports will hit restrictions, “and if nothing changes we will have the same threat (elsewhere), especially for full freighters”, which are vulnerable to being forced out of major airports, Spoel says.
It’s also a battle for growth, he notes. “Aviation is growing very fast, faster than some airports, especially in Europe, can accommodate for the future, and there’s somewhat of a battle between, on one hand, cargo, especially full freighters, and the rise of low-cost carriers.” That is a challenge for cargo because, under EU 80-20 rules governing slot maintenance, the low-cost carrier generally wins.

Collective approach
In terms of infrastructure improvements, he says shippers believe a collective approach to solutions would be better, involving “all the parties in the chain, because this is a logistics challenge; it’s not really a competition between parties, to improve infrastructure”.
He acknowledges that the challenges for airports will be very different. “Some will have issues in the air, capacity or slots, some will have congestion on the ground,” he notes. “The great thing is to have airport communities like Air Cargo Belgium, Air Cargo Netherlands, the Frankfurt air cargo community, to come together and decide what are those critical infrastructure needs and to put a decision in place, because in the end they need to make a decision on that.”

Soft infrastructure
In addition to physical infrastructure, he highlights the importance of “soft infrastructure” like sharing data and cooperation throughout the chain, but also employment. “We have a shortage of truck drivers. Where do we get the people at the warehouse? We have many issues…
“My advice would be if these are issues hurting your position in the future, to reach out to the various international European or national bodies like IATA or TIACA of Clecat.
“Longer term, we also need to think about cargo getting to and from the airport, what kind of multi-modal options are there to develop; and sustainability is also a key factor.” If the sector can create a more sustainable air cargo infrastructure, policy makers will be much more eager to support you; it can’t be on the basis of economic factors alone, Spoel argues.
He continues: “We do not get our message across enough about what air cargo has to become… in terms of employment, in terms of innovation, and technology. And obviously if you’re not at the table; if you’re not interacting with the decision makers, they’re going to make decisions for you. And if they don’t understand the market, then it’s going to hurt you.”

Necessary influence
Robert Fordree, vice president for cargo development at Menzies Aviation, says airports still don’t give air cargo handlers the necessary influence on the infrastructure needed to serve the needs of the cargo handling marketplace.
“The short answer is no; there is too much focus on car parks and retail,” he says. “The long answer is that it’s a mixed response from airports around the world. There are some airports where the focus on cargo is very high, for example here in Brussels.”
But too often, that is the exception rather than the rule.
“To give a small example, we were engaged with an airport very recently whose carrier customer approached them to say their single cargo warehouse was insufficient for the airline’s needs, they need to do something about it so we were in discussion with that particular airport,” he notes. “What they (the airport) offered to us was an old aircraft hangar which was on the opposite side of the airfield to the existing cargo facility. They were marketing that facility to non-cargo entities as well.
“At the least cost they were looking for meant it was impossible for us to actually make that business work. So it was something we couldn’t get into at all. So I don’t believe that supported cargo, and that’s one of the examples that we see across the network.”
He continues: “I think most people are aware that the major challenges in the big cargo gateways across the world, and the congestion issues. So the result of that, what we’re starting to see, and what we’re starting to get involved in, is a shift to some secondary airports. They’re much more cargo-friendly, they have much better access to the airfield as well, and that helps with service and performance measurement, and much, much quicker processing. So I think that’s a trend that we will start to see.
“But no, we’re not involved as we would like to be in the (decision) process.”

E-commerce developments
Hans van Schaik, sales manager for SACO Airport Equipment, shared some observations about the recent development and management of e-commerce shipments in the last four years, chiefly by the integrators. “We have been involved in a lot of hubs, for example for DHL and FedEx in Europe, for the past four years, and what we’ve seen is unprecedented; volumes have increased tremendously,” he notes. “We’ve seen not just the typical packages for the integrators − the small packages − but we’ve seen that the consignments are increasing in weight. We’ve seen not only packages of 100kg but 500kg, up to 1.5 tonnes, 5-tonne pallets… everything seems to be going through their hubs, and things are increasing enormously.
“So, I think it’s about time for general air cargo to look at what’s happening in these express parcel companies. I think a lot is going to change in the next three or four years. For example, what is important for the e-commerce − speed, efficiency, seamless transfer, tracking and tracing − is not the normal practice for the general air cargo sector, but it is the normal day-to-day practice for the integrators.
“We’ve seen automated sorting systems for large and heavy parcels, pallets, everything, with automated elements of ULD build-up,” including the introduction of robotics. “This is not typical practice for the general air cargo sector,” he adds. “So I think it’s about time for us to wake up and see what’s happening.
“The integrators are handling the large and heavier goods as if they were small packages. They go seamlessly through the networks where the typical air cargo industry has a problem to align it with their supply chains. E-air waybill is an issue that is troubling everybody within the air cargo industry, but it is absolutely not a problem for those guys.
“If they can ship a parcel from Guangzhou to Amsterdam, why not ship a pallet? Why not ship something heavier through the same network, through the same IT systems? It’s not a problem.”
He highlighted the scale of some of the integrator handling facilities, including about 700 pallet-building work stations at Leipzig, “which is incredible”, and 300-400 work stations in Brussels, and in Liege also around 400 work stations, “with similar things happening all over the world – in the US and China”.
He says things can happen very quickly, and while air freight is still thinking about digitalization of e-air waybills, he suggests that the sector “needs to stop talking about this if this is not already part of your daily business; I think e-commerce is going to be a challenge. How are we going to handle this?
“Robotics in warehouses… this is happening now, not in the future: Alibaba, for example, in China; Amazon, in the US. And this is not just going to be at the distribution centres; it’s going to be at the airport as well.
“So I think the business is going to change dramatically; this is what is ahead of us.”

Legacy issues
Chris Notter, head of cargo operations at Saudia Cargo, acknowledges that the needs of the e-commerce sector and the capabilities of the integrators present a challenge to traditional air freight operators. “It’s the speed; that’s the key thing,” he notes. “A lot of us still carry a rucksack of legacy problems, of reasons why not, and challenges; and that’s the difference. Now, if newcomers or people that have got a ‘blank canvas’ are able to do things seamlessly, irrespective of whether it’s large or small cargo, that’s what we’ve got to worry about. We’ve got to be much, much leaner, and much, much faster, and have much more vision.”
Henrik Ambak, SVP for operations at Emirates SkyCargo, questioned whether cargo handlers are still waiting for airlines to ask for the kind of handling capabilities required by the e-commerce sector, or whether they are proactively proposing solutions to airlines.
Fordree responded: “From our perspective, in many locations we are trying to look after everybody and everything, and it’s very difficult to do that. Everybody seems to be talking about e-commerce, which I have described as ‘express products on steroids’. But it’s not as if e-commerce is completely different to a traditional express product.
“And when we talk about what an air cargo handling facility needs for the future, if we were designing a facility right now, we would need to take into account pharmaceutical handling and e-commerce solutions − and whether that would be some kind of sorter system or just a big open space where we can handle lots of small packages.
“And then we need to probably build pits for maindeck capacity. Then you start to fill up your facility, and if you don’t get the right customer mix, then you’ve got the wrong handling solution for the wrong customer, and it becomes very difficult to manage that effectively.”

Airports’ role
Ambak suggested, therefore, that airports also have a role to play in trying to make sure that the necessary development takes place.
Steven Polmans, head of cargo at Brussels Airport, responded: “I think we should take part of the responsibility. We are trying to do it, but I am also experiencing the difficulty in ‘talking to the airport’; I sometimes myself feel in between cargo and the airport. But I think the airport should be more active operating the whole game.”
But airports making proactive investments on behalf of cargo customers is difficult because different carriers often want different things − and don’t want to pay for those they claim not to need, he notes. And airports don’t like risk. “Risk mitigation is basically our core business,” he jokes. “But you can’t do risk mitigation all the time and at the same time develop and participate in the whole process.
“So I think that’s the legacy airports have: to be very, very long term, while handlers have urgent needs. You will want a new facility and our real estate people will start talking to you, and in five years you’ll have a facility. And you say: ‘The contract starts in three months; by the time you develop the warehouse, I would be about to renew the contract.’ But for an airport, five years is fast, it’s really fast. You (handlers) have fast and really fast, and we have slow, and really slow − and standstill,” he jokes. “That is in the genes, the DNA, and that is the challenge.” nnn

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