Parting words

posted on 4th April 2018

Enno Osinga has been enormously influential and successful in his nine years as Amsterdam Airport Schiphol’s head of cargo, inspiring others to be proactive in pulling together the various stakeholders at their respective airports to work on mutually beneficial joint projects. And so it seemed only right to get some final words of wisdom from him just prior to his retirement in August.

His achievements at Schiphol alone are far too many to list here, let alone in his 20 years at KLM and five years at DHL Express. And then there have also been his roles on the supervisory boards of air cargo community platform Cargonaut and association ACN Air Cargo Netherlands, and on the executive Board of the Dutch Institute for Advanced Logistics (Dinalog) – not to mention his time as Tiaca vice-chairman.

Admittedly, organisations like ACN and Dinalog – and the fact logistics is taken seriously in the Netherlands and at Schiphol – have been major supporting factors. But in Osinga’s time at Schiphol, he has supported the development of a large number of industry-leading and in many cases still unique innovations designed to improve the efficiency of the airport cargo community and the wider Amsterdam and Netherlands logistics sector – initiatives that have helped to make Schiphol arguably the most advanced and efficient cargo airport in the world.

Examples include Schiphol SmartGate Cargo, in which the airport, air cargo industry, and customs have joined forces to integrate the monitoring of goods entering and leaving the EU via Schiphol, allowing rapid and efficient clearance; integrated cargo control and inspection; shorter lead times and lower costs; and increased reliability, safety and security.

Another recent innovation is the eLink initiative, a pilot scheme operated by Amsterdam Connecting Trade in collaboration with Schiphol Smartgate Cargo, connecting handling agents and forwarders via a “smartcard” carrying data for customs-cleared shipments, in order to reduce customs clearance times and unnecessary paper in the supply chain. Among the benefits, the system automatically allocates a door for offloading the cargo and has already demonstrated 25% time savings in some processes.

Osinga has long argued that air freight globally needs to embrace e-freight with much greater enthusiasm and determination, believing it is in danger of being left behind by other modes if it does not do everything it can to mitigate the delaying effects of increasing security measures – and also to improve its reliability and transparency. He believes this is a job for everyone, but that Schiphol has shown how an airport can successfully act as a neutral facilitator and help the industry to collaborate and move forward for everyone’s benefit.

Controversial decisions

And he has not been afraid to take controversial decisions in the interests of attracting freight forwarders to the airport by making their processes more efficient. For example, since 2009 freight forwarders have been offered airside access at Schiphol, allowing them to better control their handling processes.

Osinga has also argued of the need to take a fresh look at other physical aspects of what happens to air cargo on the ground, believing this is where air freight can achieve the greatest improvements. He organised and chaired an enlightening debate on this topic at Transport Logistic in Munich in 2013 that offered some interesting solutions – including the concept of a central pick-up and drop-off point at Schiphol as a potential means of further streamlining handling processes – something that the airport has followed up and continued to explore. He believes Schiphol has become a model for neutral discussion of the issues, hoping this will eventually result in innovations that will benefit the industry as a whole, as well as Schiphol’s own local community.

Osinga is aware that there is a lot still to be done, but with the digital revolution leading to so many changes in other fields, he believes now is the right time for the sector’s older leaders to make way for new blood – even if it may be difficult to attract talented young people to the sector.

“We have done a great job, but we have also stopped e-freight being implemented in the last 30 years,” he says. “So maybe we should hand over and leave it to the next generation to see how they do it.”

He points out that the really big change in the wider aviation industry in recent times has been the emergence of the low-cost carriers, observing that the background of the founder of easyJet, Stelios Haji-Ioannou, was not in aviation. “And the guys who set up Uber were not taxi drivers,” he adds.

Game-changers

He strongly believes that air freight spends too much time debating with itself and not enough time talking with shippers and potential ‘game-changers’ from outside the sector. “We have this virtual wall around air freight,” he says. “This is why the thinking and the changing process that needs to happen is not happening.”

Osinga has argued that air freight needs to, at the very least, bring in more people from the wider logistics sector or offer a broader training than basic air freight forwarding training offers, in order to increase their appreciation of the wider supply chain. And with a risk from disruptors coming in, he agrees that air freight may also need to bring in talent from outside the industry – for example from the disruptors themselves – if it can persuade them to join the sector.

“That is the challenge,” he says. “We should be explaining to these young people how exciting this industry is and make this industry exciting to these youngsters. One day a disruptor will walk in. Google will one day look at this industry, and our whole model will change, in terms of data sharing, and they will simply take it on.”

Data sharing

He says air freight’s reluctance to share data has to change, acknowledging that airports are often as guilty as anyone at refusing to share all of their data, fearing they will lose some of their commercial advantage. “But this is ‘old-school’ thinking,” says Osinga. “If you sit next to the young generation, they are completely transparent. They will share everything with all the other kids. They are not worried about competition. They say ‘when we share, we learn, and when we learn, we will improve’.

“As an airport we have the same philosophy – we share everything we do with everybody. We present, we publish – we have no secrets. But this is something that the industry is going to discover.”

He believes it is probably primarily the responsibility of freight forwarders and 3PLs to innovate and create solutions that are going to be more attractive – for example to e-commerce shippers – or creating new platforms and ways of doing business, although it is also the role of the airport and the airport community.

“I think it is both, but as an airport in air cargo you are fairly safe, because whatever happens, the cargo has to go through an airport. If you look at the passenger side and what happened there, it was really the agent – which is the equivalent in cargo of the forwarder – that got hit by the change. So, I think that if they (forwarders) do not drive the change, the people that will be driven by the change will be the freight forwarders.”

He observes that currently, freight forwarders can be a barrier to communication between airlines and shippers. “We have had many meetings at Tiaca where shippers are saying to the airlines: ‘This is what we want,’ and the airlines are saying: ‘Well, you can get that,’ and the shippers say: ‘Why didn’t you tell us? Why don’t you talk to us’?”

But he says shippers don’t want 25 airlines knocking on their door. “They are saying to the forwarders: ‘Why don’t we get that information? Why don’t we know that the airlines can offer this? Why are you, in essence, hiding some of the transparency that we want’?”

Osinga recounts an experiment that was set up in the Netherlands a few years ago, where somebody started an e-booking system for cargo that he says ran into “massive resistance from forwarders”. He observes: “Just go back in the history of any industry: people that resist change are successful in doing that for a number of years, and then the change happens around them, and are not part of the change. So, I think the challenge for the forwarders is to be part of it, or run the risk that you are out of it.”

Or least lose part of the business, as they did to the integrators many years ago. “Yes, and you see it happening,” he says, recalling a recent presentation to the World Cargo Symposium by FedEx president Fred Smith. “If you look at the total market share, the integrators are increasing and sea freight is increasing, and in the middle general air cargo is slowly being pushed down,” Osinga says.

Shippers’ role

He is proud of the role that Tiaca has been playing in getting shippers more involved in air cargo, including bringing into the debate technology firm Ericsson – which he believes is now going to be one of the game-changers or disrupters. “In essence, what they’re working on is a cloud solution where all of the data sharing can be done.” Osinga believes a company like Ericsson has the clout – and indeed the cloud – to get this off the ground, although forwarders are resisting the change. “But it is going to happen,” he says.

Nevertheless, he believes there will always still be a major role for the forwarder, because the freight needs to be physically handled and because of the security aspects, for example. “I compare it to the passenger side: you can book directly (with an airline), but the companies that are really successful are those like Expedia,” he observes. “They are still intermediaries and they are still very successful; it is just that they don’t have a travel agent shop in the High Street – it is a different business model.”

He doesn’t believe most shippers would choose to book directly with airlines and pack cargo directly themselves. “But when I go back to my days at DHL, where I ran DHL Express in the Netherlands, one of our significant customers was Yamaha – they had their European distribution centre there. Their dealers, mainly in Spain, Italy, south of France for their outboard engines and scooters, were putting in their orders for spare parts, before 3pm, into their pick and pack system – the parts were in a highly automated warehouse and were collected ready for shipment.

“We built an interface between their system and the DHL booking systems so as soon as the order came in, it already generated an order within DHL; it originated an air waybill within DHL; and by the time the shipment came out of the warehouse, the DHL label was attached to it. At 5pm, we sent a big truck there and filled up the track – or sometimes two trucks – and we didn’t even touch it after that (in terms of packing and labeling).

“So, it can be done, and the integrators do it every day. So why does it work there and does not work for general cargo?” he asks.

Sometimes, of course, the size in the shape of the shipment means that there is a complex process of building pallets. “And consolidation is the role of the freight forwarder; they can build a mixed pallet. If you have huge shipments and you can build full pallets, then you can deliver them,” Osinga says.

Forwarders airside

In some cases, it may be the cargo handler that will need to adapt its role. “We have put freight forwarders on airside at Schiphol so that they can present shipments directly to the airline, or to the ramp handler, and they don’t need to go through the cargo handler,” he says. “Do the handlers like it? No, they hate it. But that is the way the world is going, and it helps the forwarders – allows them to work quicker.”

He repeats the warning about those who resists change, stressing that shippers are always looking for improvements in processes, visibility and efficiency. He also notes that although the freight forwarders that are airside at Schiphol can do their own cargo handling, they are generally still using third-party cargo handlers to do physical handling for them, albeit in a different way. Ceva uses Menzies and DB Schenker is using Sky Link, while Panalpina developed its their own outsourced handling solution – because of resistance from the cargo handlers present at Schiphol.

“When we had a discussion with Panalpina, the handlers said: ‘You can’t do that; it is bad for our business.’ After a while I said: ‘I don’t understand why you spend so much time talking to me, saying I can’t do it, because if I was in your shoes, I would be in Basel talking to them, saying can I do your handling?’

“In the end, an outside handling agent was brought in to do warehouse handling for Panalpina,” says Osinga. “There are eight handlers at Schiphol – they missed the boat!

“So, we will get disruptors, and Ericsson is now working on this,” he continues. “What is interesting now is that Ericsson has taken its logistics guy, Robert Mellin, and put him on the innovation side. So, he understands the shipper requirements and he is now on the innovation side. And in other companies this is happening,” Osinga observes. “And this is what is really exciting.”

Testing lab

And Osinga says this kind of trend is exactly why Schiphol hasn’t gone for the traditional option of replacing him with somebody who has been in a cargo for 20 years. Instead, it has chosen Jonas van Stekelenburg, who was previously director of ‘The Grounds’, a Schiphol Group initiative to work with other companies and knowledge institutes with the aim of developing innovative applications for a sustainable airport – an initiative described as “a driving force, a breeding ground and a testing lab”.

Osinga concludes: “We still have the air cargo knowledge within the team, but we made a change to an innovation and sustainability and future guy, to help the industry out with that business. Is that going to happen in six months? No. But we are way ahead of what anybody else is doing. Whatever happens, Schiphol is going to be ready for it.”

Forwarders ‘must innovate to see off disruptors’

In a discussion at this year’s Air Cargo Europe conference at Transport Logistic in Munich, on the subject of ‘eCommerce in Airfreight: Possibilities and Priorities’, various air freight stakeholders acknowledged that there was a potential threat from new technology-driven companies, particularly those within the e-commerce space such as Uber, Google, or Amazon – or as yet unidentified players – either looking for better transport and logistics solutions to give them a competitive edge or seeing a competitive opportunity to bring new models to the market.

Tim Scharwath, executive vice president for air logistics at Kühne + Nagel, agreed that it was the major freight forwarding and third-party logistics providers within the fragmented air logistics chain that would need to come up with the innovative solutions to see off the threat from new disruptive players and move the sector forwards. He said the company’s recently launched integrated web application for air freight quotations, booking and tracking services, KN FreightNet, had attracted significant interest from customers, particularly among e-commerce shippers.

He said he believed that the larger freight forwarders were up to the challenge, but it would require them to recruit new talent from outside the traditional freight forwarding and logistics sector, including from the “disruptors” themselves. “That is what we did when developing our product,” he told Cargo Airports & Airline Services.

But he said this approach had its challenges, including the question of how to persuade the right talent from within innovative technology companies such as Google to join the relatively unglamorous freight forwarding and logistics sector. There was also the challenge of integrating these individuals and new business approaches within relatively conservative freight forwarding businesses and structures, he added, although it was possible and necessary.

In a debate the previous week at the UK’s Multimodal event about whether there was a skills gap in air freight, Robert Keen, secretary general at the British International Freight Association (BIFA), was dismissive of the suggestion that air freight needed to recruit from other sectors or even provide broader logistics training, arguing that freight forwarding could hold its own and that specific training in air freight was sufficient. He argued that there was no significant skills gap per se, but said there was a challenge attracting school leavers to join the sector at the “ground level”.

Although Keen and Osinga agreed to disagree on whether air cargo needed skills and training from outside the boundaries of air freight, they did agree on one point: that there was a “generation gap” – although Osinga said he was at least encouraged by the number of young people attending the discussion.