Europe’s cargo airports and their handling agents have been working to accommodate further growth and prevent a repeat of last-year’s fourth-quarter congestion challenges, writes Stuart Todd
The fourth quarter of 2017 was a challenging period for air freight handling at several of Europe’s largest cargo airports, with bigger-than-expected volumes of traffic coupled with a shortage of labour and other complicating factors triggering congestion, backlogs and in some cases, operational chaos.
This has prompted or accelerated various initiatives to increase staffing and improve handling efficiency, processes, and ways of working together to prevent a repeat of last year’s disruptions.
As CEO of Jan Rijk Logistics, one of Europe’s leading road feeder service (RFS) providers operating a fleet of more than 1,000 vehicles, and a board member of The International Air Cargo Association, Sebastiaan Scholte has had a good overview of the challenges.
“We were faced with both incidental and structural factors during the peak months, especially in October and November,” he says. “The ‘incidental’ challenge of having a lot more volume was combined with a ‘structural’ issue focusing on difficulties in finding labour, particularly in cargo ground handling, which led to congestion at the airports. But labour is tight across the freight transport sector in Europe generally, including trucking and warehousing.”
Congestion on Europe’s main road freight corridors was also “a negative side-effect of the solid economic growth in Europe”, he notes. Statistics show that in the Netherlands, in the first quarter of 2018, road congestion increased by 25% compared to Q1 last year.
“Even taking into account that most air freight is trucked during night-time periods, over long distances congestion remains a significant issue,” he says. “Turnaround times are crucial and the longer we have to wait somewhere, the poorer the asset utilisation.”
Turning to those European airports where disruption in air freight handling had been particularly prominent at the end of 2017, Scholte notes: “Frankfurt (FRA) was a very big issue for a couple of weeks and at one point it didn’t make sense to send a truck there at all as it would be stuck for days. Amsterdam less so, but it did have had to cope with the freighter slot restrictions, while London was a bit of ‘blackspot’. But frankly, there were congestion problems at all of the European airports we serve through our RFS network, and this hurt our bottom line.”
He’s hopeful that the 2018 peak season will run more smoothly than last year − if only because he feels lessons have been learned and there’s a greater preparedness in the industry. “Last year, nobody expected a peak of such proportions and were caught out by the scale of it,” he notes.
However, labour shortages, brought into sharp relief during last year’s peak, remain a major challenge for handling and trucking companies alike, and a costly one too. “We are able to find drivers, but it’s a big struggle,” he notes. “Most of the time, you want to have some ‘buffer’, and this is more difficult than in previous years.”
Jan de Rijk is bound, like some other firms, by collective work agreements that make provision for increases in drivers’ wages on an annual basis. Add to that the extra costs associated with attracting more staff at a time when candidates are thin on the ground and the result is significant wage inflation.
“To be able to cater for the continuous growth in air cargo volumes and rising costs, something has to be done on (RFS) pricing,” he says. “There has been some upward movement in road freight rates, but it’s nowhere near the adjustment that has taken place in underlying air freight rates − which increased 10-20% in the final quarter of last year (excluding fuel surcharges) and which have continued to rise. We are an extension of the airline on the road. Costs have been rising quicker than we thought, due to labour and congestion.”
He says the pressure is now on ground handlers and trucking companies more than ever to create or add value to their services as a way of recovering their margins.
“The biggest cost factor for a handling agent is labour and it’s the same for RFS operators,” he observes. “The lemon is squeezed out, so to speak, and instead of only looking to keep costs under control, we should be looking at value creation.”
Scholte argues: “Basically, the value proposition we should be putting before airlines and forwarders is along the lines of: ‘If we can provide a more efficient and quicker service by doing something different on the ground, maybe you should agree to pay a little bit more in return’. One area worth exploring is the development of a time-definite offering, backed by better quality reporting.”
Returning to last year’s peak season, Menzies Aviation’s vice president for cargo development, Robert Fordree, says that in the main, the ground handling group’s European operations “coped extremely well”, noting: “Our operations at London Heathrow, for example, were impacted by the dramatic increase in volume, much like all handlers at the airport. However, our engagement and proactive discussion with all stakeholders helped mitigate the impact on our key customers. Subsequently, we have engaged closely with the airport authority to review and seek solutions for the infrastructure challenges that the wider cargo business at Heathrow faces.”
He says Menzies’ operations in eastern Europe incurred “very little in performance impact”, while in Amsterdam “the size of our operation, alongside some creative use of warehouse space, allowed us to actually deliver an enhanced service performance − particularly for perishable and high-value, high-tech cargo”.
As to the staffing challenge, Fordree says: “In some of our operating locations it is not a pressing issue, whereas in others it is the single biggest challenge we face in being able to deliver a quality service to our customers.
“While we strive for standardisation across our network, in this instance we have to tailor our approach − and recognising this has been one of the primary drivers in the development and deployment of our revised training programme, focused on recruitment, retention and identification of our best talent. Depending on the market we’re operating in, we have had to tailor our reward and benefits packages to maintain the right workforce.”
Menzies’ preparations for the coming peak season focus on “continuous dialogue with our key customers to best understand their forecasts and expected demand”, he notes. “What we are anticipating is an increase in freighter activity and charter operations that will bring significant day-to-day operational peaks. Crucial to maintaining our service performance will be speed of operation and proactive communication with the forwarding community, for timely collection of inbound loads and delivery of outbound loads.
“Where necessary, we will increase labour and seek additional capacity solutions, either through a more creative use of our warehouse space or, where possible, expansion of our existing warehouse footprint.”
He says one possible effect of the projected increase in charter activity could be that freighters fly into airports not currently identified as cargo gateways.
“This would create a requirement to transfer significant loads to airports closer to forwarder gateways, or directly into their facilities,” Fordree notes. “Such a trend will have a significant impact on RFS and would require careful planning to avoid backlogs at newly identified, freighter-friendly airports, which may lack the infrastructure to cope with significant cargo volumes.”
At Frankfurt, one key response to last year’s disruption has been the implementation in May by cargo handling agents LUG and FCS of a mandatory truck loading bay slot-booking system.
“I can only speak for LUG, but we’ve had a good start,” says LUG’s CEO Patrik Tschirch. “When the slot-booking system was voluntary, only 25% of the truckers used it. After it became obligatory, the company registrations with the system rose rapidly and the participation rate climbed to over 60%. There is, of course, still room for improvement, but I am very happy with the development.”
The rapid uptake was supported by “intensive marketing and the many events and meetings we organised with forwarders, truckers, and airlines”, he notes, adding: “We are still on a learning curve. In cooperation with (system developer) Dakosy, the local forwarders’ association, airlines, and other handling companies, we are currently trying to optimise the system further to make it even more user-friendly as well as more cost- and time-efficient.”
Tschirch is optimistic that FRA will be able to handle the peak season more efficiently this year, not least due to progress in digitalisation.
“Communication between GHAs and forwarders has to be digital in future,” he says. “I’m confident that the acceptance of the slot management system among truckers and the use of eAWB, eDGD, and eCustoms procedures by forwarders will increase further. Every step in the digital transformation process in the air cargo community helps to raise transparency along the supply chain and cost efficiency. Digitalisation is gaining momentum and companies start to see the benefits.
“However, a lot depends on external factors too, including local politics. They influence the traffic situation around the airport and the curfew time at the airport. Both add to the bottlenecks.”
At Brussels Airport (BRU), a truck-appointment slot-booking app that went live at the start of the year was being used by 90% of the Belgian gateway’s cargo community by June, says head of cargo and logistics Steven Polmans. The app is designed to streamline the pick-up and delivery of freight at the airport cargo handlers to improve capacity utilisation and minimise peaks and idle times.
“Only one handling company at the airport is not yet participating in the app, Swissport, but in the final quarter of the year it will be establishing a direct link to it through the company’s door-management system, which they use to optimise resources at their different gates,” he says.
“Although problems were limited at Brussels during last year’s peak, with the growth (in traffic) we are seeing and the new (cargo) infrastructure being ready only next year, the app will structurally contribute to a smoother process during peak times.”
And in the third quarter of 2018, a pilot will begin of an app for airport-to-airport movements, further improving transparency and connectivity.
Meanwhile, at Amsterdam Schiphol, within the framework of the cargo community’s data-sharing portal Smart Cargo Mainport Program (SCMP), a feasibility study has led to a ‘blueprint’ for optimising the process of pick-up and delivery, including road feedering.
“The long-term ambition includes a central priority setting of trucks, but also ‘neutral’ trucks for local transport,” explains SCMP manager Teunis Steenbeek. “These will be substantial changes and it will take two to three years for the full implementation.”
As a first step, this year a trucking app will be developed and implemented, similar to that developed at BRU.
Smooth out ‘creases’
One airline to come through the final quarter of last year without any major disruption to its RFS schedules was Cargolux, despite posting a record tonnage performance at its Luxembourg hub. “Thankfully, we managed to smooth out any potential ‘creases’ caused by the exceptional volumes,” the company says. “We did however experience minor hiccups at other European stations such as Amsterdam and Frankfurt.
“This strong outcome was made possible by a number of factors such as: better preparation; improved collaboration in the full Cargolux ‘supply chain’ spanning RFS provision, logistics, and our GHA in Luxembourg; and new supporting tools such as a transport management system
(TMS) for our RFS. This system enabled an increased utilization, up to 25%, of the trailers resulting in relatively less demand for equipment and reduced CO2 emissions.”
Investment in improved IT systems and a history of building long-term relationships with its GHA and RFS partners has also helped. “The collaboration is tight and we saw the beneficial results of these ties in 2017,” a spokesperson says. “It’s all about proper preparation and anticipation; both can only be met through improved analysis and forecasting as well as undivided transparency throughout the supply chain. Cargolux is confident that Q4 2018 will be as plain sailing as last year.”
While digitalisation is increasingly viewed as the key to more efficient and cohesive ground handling and road feedering of air cargo, Jan de Rijk’s Scholte believes that what underpins all of the initiatives being taken in the sector is the quest for better communication, in order to create greater visibility across the supply chain.
“This means that when something goes wrong, be it at the handler, the airline or the forwarder, or wherever, it can be acted upon promptly by the other parties,” he says. “If a handling agent is not ready with the cargo when we are scheduled to pick it up and lets us know in advance, we will put the driver somewhere else. And then we can come back later and have a fast turnaround and still achieve the optimisation of our planning and asset utilisation. And if we expect to arrive late or early with a truck and this is communicated in good time, the handler can plan better with their personnel.”
He highlights Jan de Rijk’s participation in the ‘European green fast lanes’ pilot scheme with Air France-KLM Cargo, Swissport and Kuehne + Nagel, focused initially on faster data processing of air cargo consignments and the enhanced flow of goods between Frankfurt and Amsterdam airports.
“What it highlighted was the benefit that much better communication between the different parties brings,” Scholte notes. “And this is what we should be striving for everywhere.”