Life after TNT

posted on 3rd April 2018

The sale of the airport’s biggest customer to FedEx has raised some questions over the role Liege will play as a hub within an expanded FedEx European air network. But diversification over the last few years means the Belgian airport is now better placed to weather any potential changes, writes Stuart Todd

Lessening its dependence on TNT Express has been one of the major strands of Liege Airport’s strategy over the past five years, and one that has proved successful to some extent with the arrival of a number of all-cargo carriers, generating new business and connecting the Belgian gateway with the US, Asia, Africa, and the Middle East.

So the announcement in late May this year of the completion of FedEx’s acquisition of TNT − and the uncertainty this has created over the future of the express operator’s air hub in Liege, and in particular its long-haul flights − while significant, is not quite as worrying as it might once have been.

“TNT is by far our biggest customer, accounting for the majority of flights operating at Liege and about 45% of the global cargo traffic handled here annually,” explains Bert Selis, Liege Airport’s cargo development manager.

“We don’t know at this stage what consequences, if any, will follow the takeover. Clearly, we are hoping the long-haul flights will be maintained, but whatever the outcome, we expect to have a very positive future with the combined FedEx-TNT entity.”

Liege Airport handled 650,000 tonnes of air cargo in 2015, up 10% on the previous year, and 2016 traffic to date is up around 6%. “That’s an encouraging performance in the current market context,” Selis adds.

On the announcement of the takeover’s completion, FedEx Europe president and CEO David Binks − and now also of TNT − stressed that the acquisition of TNT was “built on the potential for growth”, adding: “As a result, the major FedEx hubs that we have in Paris and Cologne, as well as the TNT facility in Liege, will all remain significant operations for the combined entity.”

But he stopped short of affirming that Liege will conserve its role as a hub of an inter-continental flight network linking it to points such as Dubai, Hong Kong, Singapore and New York. “Part of the integration planning will be to now to sit down and determine exactly how we use those three primary hubs in Europe − Cologne, Paris and Liege − and how we connect those to optimise the efficiency of the network,” Binks noted. “We have 657 aircraft around the world, and so making one decision really requires that we understand how we fit all that together into a fairly complex network.”

Selis remains positive even if the worst-case scenario following the takeover comes about, of Liege losing TNT’s long-haul flights.

“As things stand at present, it’s business as usual in terms of flight schedules. The only change is that TNT Airways has a new owner and its fleet of aircraft is now operated by ASL Aviation,” Selis says. “ASL Aviation positions itself as a neutral service provider and is not limiting itself to one single customer. It is already working hard to develop more business out of Liege and its recent participation at the Air Cargo China trade show showed an eagerness to further develop.”

Underlining Liege Airport’s reduced dependence on TNT, Selis points to the development of more geographically diversified freighter operations over the past few years and also to the rise in the number of scheduled flights. “Africa used to be the main focus of our all-cargo flight schedules, and while tonnage has continued to grow to and from this region, there’s been a strong increase in scheduled services linking Liege with the US and Mexico, the Middle East, and Asia, which has brought a better balance and stability to our activities overall,” he says.

The main ‘transatlantic’ operators are Qatar Airways (QR), Icelandair, and Israeli carriers C.A.L and El Al, while ‘TNT’ and Emirates have a code share on a daily New York-Liege-Dubai service.

“A more recent arrival is Russian carrier ‘I Fly’, which, using cargo-friendly A330 and B777 passenger aircraft, plies a Liege-Moscow route and onward to ‘secondary’ cities in China − Xian, Tianjin Shenyang, and Taiyuan,” says Selis. “These Chinese cities are not that well served from Europe, making them interesting cargo destinations, offering the potential of reasonable yields.”

Qatar Airways is operating around 10 freighter flights (B777 and B747) a week between Liege and the Qatari capital Doha, which effectively serve as an ‘air bridge’ between Europe and the Middle East.

“QR’s hub in Doha handles cargo originating from or bound for North America and Asia, and Liege taps into this connectivity to major markets. For example, QR’s Guangzhou-Doha freighter service carries Chinese-origin e-commerce cargo, which is on-forwarded to Liege from where it is distributed across Europe,” Selis notes.

But Africa continues to be an important component of Liege’s all-cargo profile, being the European hub for the continent’s biggest freighter operator, Ethiopian Airlines. In addition, GSSA Network Air Services, in cooperation with Allied Air and Astral Aviation, is operating a programme of up to 13 flights a week to and from the region.

“Liege has progressed over the past few years from being a cargo airport in the ‘considerable potential’ category to one where it is a serious player in its own right,” Selis says. “We have evolved from providing basic ‘aircraft-to-truck-truck-to-aircraft’ services to one with critical mass in terms of volume of traffic, combined with growing expertise in certain areas of the market.”

Perceived weakness

However, a perceived weakness is a shortage of major forwarders; only Panalpina, Kuehne + Nagel, and DHL have a direct on-site presence at the airport, their peers being represented via local agents. “But given our scope for expansion, our message to the major forwarders we’re in contact with and to other potential investors, is simple: whatever the size of your project, we have up to 470 hectares of serviceable land available to accommodate it, situated at the heart of several major European markets − Germany, France, and the Benelux,” Selis says.

He highlights the development of Liege’s air cargo and logistics park, Flexport City, with construction of the first-phase − which includes e-commerce and pharma-dedicated facilities − soon to begin on a 28-hectare site.

One project focuses on the construction of a warehouse of around 10,000sqm, which would serve as a pan-European distribution hub for one or several Chinese online retailers. Liege Cargo Agency, a local cargo services company whose services span warehouse management, ground handling, customs clearance, trucking and documentation, is in talks with several potential Chinese customers.

Selis says Liege’s rôle is in “facilitating dialogue and ensuring on-time developments of future facilities at the airport’s logistics park”. But he adds: “We ourselves are in discussions with Chinese operators on other e-commerce-related projects, which we hope to finalise soon. Many Chinese online retailers, who are already moving tens of thousands of shipments a day to Europe, are in need of logistics solutions in order to serve markets across Europe more effectively.

“Liege Airport’s 24/7 opening and proximity to the EU’s major markets are key selling points. Emerging as a major European distribution centre for B2B and B2C goods purchased over the internet is very much within our grasp.”

E-commerce warehouse development

A building permit application for the construction of an e-commerce warehouse was submitted recently, while an invitation to freight forwarders to tender for a pharma-dedicated facility was issued a short time ago too. “We expect to make announcements on these projects by early autumn,” Selis reveals.

Liege Airport is also keen to develop as a centre of logistics excellence for perishable freight. “We already have a strong presence in perishables and are currently handling 300 tonnes of produce on a daily basis, with Africa being the main region of origin,” he notes.

“But while a growing activity, it is one organised on a quick turnaround basis. Produce spends very little time in the cold store facilities we have on-site and Liege essentially serves as a simple transit point for perishables before the on-forwarding of shipments to dedicated logistics centres, for consolidation and pan-European distribution.”

Commenting on the outlook for cargo airports generally, Selis says: “In my view, Liege and its counterparts are benefiting from the increasingly pronounced ‘split’ between where specialised air cargo and general air cargo are handled. Freighters continue to fly to major passenger hubs around the world. But I would argue that cargo airports play an important role for freighter operators to keep their competitive edge and diversify their air freight products at the higher end of the air freight market.

“While more cargo is being transported in the ‘bellies’ of passenger planes than ever before, what they are carrying is principally the less-demanding stuff, which does not require the expert handling or care (of commodities) such as dangerous goods, livestock, and perishables.

“Our experience shows that if you focus on cargo and organise your infrastructure completely around it, you will attract full-freighter operators and, just as importantly, keep them. Carriers that move into a specialised environment like our cargo airport tend to stay. That is a trend in Europe and elsewhere in the world.”

Selis concludes: “And it’s one that ties in well with our on-going strategy, which mirrors that of many forwarders today, where we are not trying to do everything but are rather concentrated on building up a value-added offering in specific parts of the air freight market.”