As air capacity in Europe returns towards pre-Covid levels, airports and their cargo stakeholders are juggling numerous challenges as they adapt to shifting demands and expectations, reports Megan Ramsay
Passenger air capacity has been returning in significant volumes to Europe in recent months, and although it is still around 20-25% below pre-Covid levels at the main European metropolitan airports, the return of some of the lost bellyhold uplift has helped bring overall air cargo capacity back up towards pre-Covid levels. But it comes with additional complications, and airports and their cargo stakeholders have been juggling numerous challenges as they adapt to this latest phase of the recovery.
As Frankfurt Airport operator Fraport’s VP for cargo development Max Conrady puts it: “Everything has been thrown at us at the same time. Keeping all those balls in the air is what drives the industry – though admittedly, it’s driving us quite hard at the moment.”
Take the fluctuations in demand for freighter flights. In May-June 2020, during the first wave of Covid lockdowns and the scramble for PPE, the percentage of cargo that came through Frankfurt Airport on freighter aircraft rose to 95% – up from the pre-Covid level of 60%. Since summer 2021, when international travel destinations began to reopen, belly cargo capacity has increased in fits and starts and is now at its highest level for two years, but it is still significantly below pre-Covid levels, meaning there is still a greater reliance on freighters than pre-pandemic, with the associated greater volatility operationally.
“Freighter flights still account for 70% of our cargo tonnage,” Conrady says. “This is something we have to take into account when positioning aircraft and planning new stands. Handlers are also seeing more peaks in demand as they have to unload the contents of an entire freighter aircraft when it lands, rather than the smaller amounts of freight on board passenger aircraft arriving over the course of several hours.”
Still, a high percentage of freighter cargo has been traditional at Frankfurt and Conrady thinks the current level is here to stay for the next couple of months, at least. One continuing driver of the higher proportion of freighter flights at Frankfurt is that leisure travel has become more important than business travel, and leisure destinations do not correspond as closely as business destinations to freight patterns.
Pandemic hangover
The impact of the pandemic on handling capacity continues, and the sudden increase in demand this summer significantly exceeded many airports reduced capacity and resilience. “We, like other partners, were short-staffed, especially on the apron,” Conrady says. “Some flights were cancelled because of the shortfall in handling capacity, but we still managed to sustain robust operations.”
The war in Ukraine and the loss of Russian airlines from Europe has had mixed effects on European airports. For instance, in the first three quarters of 2022, tonnage at Frankfurt was down 13%, year on year.
“Covid restrictions in China are also affecting our volumes,” Conrady says, “but the effects of Ukraine are most pronounced because of the ban on Russian carriers flying to Frankfurt – especially AirBridgeCargo (ABC).
“ABC was the second-biggest freighter operator here with 5% of the total cargo volume, and Frankfurt was its largest European air cargo station in 2018-19. Airspace closures between Europe and Asia, and the closure of Russian airspace, mean that traffic has to go around.”
This results in a substantial reduction in capacity as aircraft need to carry more fuel for the longer journey, and it also means longer turnaround times. As 40-50% of cargo volumes at Frankfurt are on the Asia sector, the impact is significant there – although the airport has seen growth in traffic via the Middle East, where much of the Asia-Europe has been routed this year.
In general, cargo rates have risen as capacity has fallen because of the various sanctions; and in some cases, carriers are positively benefiting from the Russia/Ukraine conflict. Azerbaijan’s Silkway West Airlines, for instance, is reported to be gaining market share on routes between Europe and the Far East in the absence of its former major competitor, ABC.
Shifting demand patterns
Against this backdrop of shifting patterns of demand, hangovers from the pandemic and closed airspace, some European airports are doing better than others.
At 1.26 million tonnes in the first 10 months of 2022, freight volumes at Leipzig/Halle Airport – Europe’s third-largest air freight hub – were just 3% below last year, when traffic grew 15% to 1.6 million tonnes during the full year. This puts Leipzig/Halle “well above the declining trend in the industry, which is suffering from the effects of the overall economic slowdown and the Ukraine war”, a spokesperson said. “We are optimistic about the future and continue to invest in our infrastructure. Investments of around €500 million are planned in new aprons, logistics and office buildings in the northern and southern sections and the central area of Leipzig/Halle Airport.”
That includes a proposed €300 million expansion of the DHL area. The airport is DHL’s largest hub in the world and is also home to the first regional air cargo centre operated by Amazon Air in Europe, making LEJ is one of Europe’s most important hubs for express and e-commerce shipments. Handler PortGround recently also renewed its IATA CEIV-Pharma certification. Overall, more than 70 cargo airlines fly to the airport from more than 250 destinations.
Freighter versus passenger priorities
Further north, Liège Airport (LGG), with its long-standing policy of giving priority to full-cargo services, has achieved consistently strong growth for several years, although it has been going through something of a transition period this year. Long-term customer FedEx has pushed ahead with the planned relocation of more than half of its LGG flights to its main European hub at Paris CDG. Meanwhile, e-commerce import volumes, which have been a key part of the airport’s recent growth, have reportedly been under pressure over the last year, due to new EU customs rules implemented last July that lifted a VAT exemption on low-value goods imported from non-EU companies into the EU.
LGG’s cargo business has been affected by the loss of Russian airlines from Europe, including major customer ABC, although that has opened up opportunities for other players – for example Challenge Group.
Despite the challenges, the airport expects cargo volumes through Liège this year to match the record 1.4 million tonnes handled in 2021.
LGG’s head of commercial for cargo and logistics, Frédéric Brun, says the re-routing of freighters has actually “helped LGG to keep its Asian traffic volumes”. Most of the ABC flights have been replaced by other carriers, and the warehouse ABC had been using is now operated by WFS, which already provided the handling services for them within that facility.
Brun says the traditional big European cargo hubs “are focusing again on their passenger business, leading to less capacities for cargo traffic and operational bottlenecks and constraints. As a cargo-only airport, LGG is benefiting from this development and an increasing number of cargo airlines are using LGG as a better alternative to these historic cargo hubs.”
Brun says there are no particular warehouse capacity constraints at LGG currently following the opening of new first-line warehouses last year, with a further phase in 2025. Meanwhile, initiatives to improve cargo operations include ongoing “upgrade of warehouse infrastructure in cooperation with the LGG cargo handlers, and further development of airside infrastructure, including dedicated areas for ULD storage and maintenance”.
Next steps at LGG
In the pipeline is a programme by the airport and cargo handlers to enhance handling quality and speed, starting by Q2 2023. And the next steps in the further execution of the ‘LGG masterplan’ include “the development of further substantial first-line warehouse capacities and additional parking stands for cargo aircraft”, by 2025/26, and also the development of LGG’s ‘Cargo City West’, which is 225,000 sqm of second-line warehouses dedicated to forwarders and logistic companies, opening in early 2025.
On the digitalisation side, Brun highlights developments including a plan “to develop a digital twin of the airport”, of which the first step is a live tracking system of cargo flows via LGG that is linked to customs, due to go live in the first quarter next year. Broader plans include the development of the ‘LGG Connect’ airport cargo community, where the aim is to “strengthen all the partners and the ecosystem from the airport”, due to be completed in 2023.
Linked to this is the implementation and development of ‘LGG+’, an open digital cargo marketplace for the entire LGG cargo community, its customers and all the products available, planned for the middle of next year.
Challenges for Amsterdam
But Amsterdam Airport Schiphol has seen its cargo volumes drop significantly this year: tonnages fell by 13.8%, year on year, during the first half of 2022, to around 722,000 tonnes. The airport attributed the drop to “the global decrease of volumes transported and the loss of volumes from a large carrier operating from Russia”, namely ABC. Full freighter flights accounted for 65% of its total.
The airport said the decrease “follows a worldwide trend, with growing capacity on passenger flights, concerns about economic development worldwide, production and transport issues in Asia, and the war in Ukraine”.
Across Europe’s gateways, total freight traffic in the third quarter of 2022 fell by 1% year on year, although volumes were up by 6% compared to the same period of 2019 (pre-Covid). The figures for the first half of 2022 were similar: a decrease of 0.8% over 2021, but still 5% higher than 2019.
The decline in traffic over the course of this year “reflects the wider impact of the war in Ukraine on supply chains, which sent freight traffic on a downward trend” since February, ACI Europe said.
IATA director general Willie Walsh noted in October that with travel restrictions lifting post-pandemic, people are likely to spend less on e-commerce. And increasing recession warnings are likely to have a negative impact on the global flows of goods and services, balanced slightly by a stabilisation of oil prices.
“Against this backdrop, air cargo is bearing up well. And a strategic slow-down in capacity growth from 6.3% in August to 2.4% in September demonstrates the flexibility the industry has in adjusting to economic developments,” he noted.
Unlocking recovery
Heathrow Airport’s head of cargo, James Golding, says air cargo “adapted at break-neck speed to the changes the pandemic threw at us” but now needed to focus again on longer-term challenges. “As we return to business as usual, our task is to look again at how we work together, what impacts we have, and how we can improve processes to speed up operations, while keeping colleagues safe,” he notes.
He says Heathrow has been “working with partners on how to improve our estate”, including “to redevelop older parts of our cargo estate in the medium term, and investing in safety improvements in the short term. We are also investigating opportunities to limit the impact our cargo operations have on our local communities through improvements to vehicle flows and the provision of HGV driver welfare”.
Golding is clear that the key to unlocking recovery is “excellent collaboration” among the 400 companies keeping the airport flowing, noting: “We are doing more to create an open dialogue across the airport and bringing together the cargo community. In October, we held our inaugural Heathrow Cargo Community Forum, bringing together key stakeholders from across our airline, handler, border control post, property partner and government network, providing an opportunity for collaboration and feedback on the development of our cargo strategy.”
Staff recruitment initiatives
The airport has also been working with employers across Heathrow to help connect local job seekers with vacancies, to help reinstate staff resilience, with airline ground handling having become “the pinch point” and “a key focus area”.
Longer term, it is also working with the UK government to remove some of the legacy operating procedures that slow down efficiency. “Rules around who can load and unload from an aircraft, and how we treat transferring cargo at the border, are out of date,” Golding says. “By working with government to try to remove some of these guidelines, we can significantly cut the number of vehicle movements taking place airside, improving efficiency, reducing emissions and speeding up processing times.”
Conrady agrees that the key to a successful future for any airport is to work as part of a community. “The airport is just one player in the supply chain and we have to act together,” he says. “We have to understand the needs of cargo handlers, ground handlers, forwarders and airlines in order to operate successfully, smoothly and resiliently.”
Long-term trends
Other long-term trends include digitalisation, which has been gathering pace and “got an extra push during Covid as people relied on digital tools to provide more information and data exchange regarding the flow of goods”, says Conrady. “All stakeholders are striving together for a higher penetration rate of digital solutions.”
Sustainability is another big preoccupation. Conrady observes: “Environmental issues, especially climate change, are a challenge for us as an infrastructure provider. Like all our partners, we as an airport operator have to do our part. That includes replacing light sources or modernising the vehicle fleet with alternative drives, for example.”
Pushing digitalisation
Initiatives to push ahead with digitalisation at Frankfurt include seeking to provide a neutral platform that allows stakeholders to interconnect and exchange data. Last year, it introduced a platform for imports from outside the European Union that has increased speed, transparency and resilience.
Meanwhile, there is also a focus on hiring more staff and training new recruits.
And on the environmental side, Conrady says that, although each party needs to handle its own performance and reduce its own CO2 emissions, “with a community approach, we finally aim at tracking CO2 at different steps of the supply chain at the airport, so that we have the complete information at a single source”.
He continues: “Our target is to be CO2 free by 2045. We will achieve this by decarbonising our ground transportation (e-mobility), installing smart lighting and by switching to LED lighting on runways, for example.”
Fraport will also start to produce green energy from 2026 through a complete power purchase agreement with European power supplier ENBW for offshore wind energy as it explores the possibility of being powered completely by natural energy. As for SAF, home carrier Lufthansa Cargo, in cooperation with forwarders like Schenker and K+N, has carried out over 150 carbon-neutral flights to and from FRA.
Inter-airport collaboration
Golding says a key component of Heathrow’s strategy “is to grow collaboration with some of our European and global comparator airports, particularly on topics such as digitalisation, which can only be fully impactful if adopted across the end-to-end cargo journey. With this in mind, Heathrow has recently become a member of The International Air Cargo Association.”
In a recent demonstration of inter-airport collaboration, Royal Schiphol Group and Maastricht Aachen Airport recently announced a “strategic cooperation” that will see Schiphol acquire a 40% interest in Maastricht airport for €4.2 million.
Maastricht – which was threatened with closure earlier this year – is the second cargo airport in the Netherlands and the handling of freight will be an important part of its cooperation with Schiphol, the two airports said.
(See Page 28 – Airport Focus: Amsterdam Schiphol)
