Will Waters reports on some of the highlights from this year’s Air Cargo Handling conference
Discussions at this year’s Air Cargo Handling conference in Paris focused on the need for greater partnership, cooperation and communication between members of the fragmented air cargo supply chain, including a desire to create direct contractual agreements or SLAs between forwarders, handlers and road feeder service providers in order to improve efficiencies.
Conference chairman Chris Notter called for the air cargo sector to be positive and adopt “a team approach” to addressing the challenges, and said that he always looked for proactive handling suppliers.
“We don’t want our cargo handlers to be a victim or to be waiting for th e next knock-back,” he said. Other essential features for handlers include industry best practice performance; business continuity plans to deal with emergencies; accuracy of service records; and flexible value-added services.
He also called on companies and managers to take responsibility for training their teams better, and also to take calculated risks. “If you don’t stick your neck out, you will never know what is possible,” he said.
Myles Nichols from Delta Cargo reminded delegates that the current difficult economic conditions will pass, although there seemed to be crises for the sector every few years. “Hopefully we are learning from this,” he added.
Criticising airports for often treating cargo as an “afterthought”, he said airlines needed help from handlers to deal with all the changes in regulations taking place around the world, such as new manifesting requirements. He also insisted there was a role for loyalty and partnership, and “not forsaking partners that you have worked with for 15 or 20 years in favour of some charter airline that is only going into the market for three months”.
Olivier Bijaoui, president and CEO of Worldwide Flight Services, welcomed Nichols’ appreciation of partnership and loyalty. “Nevertheless, not every airline is like that,” Bijaoui added. He said the only way to satisfy some airline customers was by offering them cheaper services.
“A lot of airlines are putting pressure on handlers, because of pressure from their purchasing departments.”
He said it was understandable that airlines wanted to try to minimise their costs, but wished that the ultimate decisions were taken by the airlines’ cargo specialists, weighing up issues of quality, price, and continuity. “The only answer we can find is consolidation, to rebalance the power between the handler and the airline,” Bijaoui added. He predicted that further consolidation would continue to take place among handlers.
Ross Marino, divisional VP at handler Dnata, agreed that some of the procurement people at airlines were “dangerous when it comes to quality” because they are driven by reducing costs only, and they sometimes prevented more meaningful discussions on a partnership basis that had the potential to take costs out for both the airline and the ground handler.
“With declining volumes and yields for the airlines, the ground handler should not be the whipping boy,” Marino observed. “The ground handler should be working in partnership with the airlines, and whether that’s an airline that demands a high-end service, labour-intensive, high-end facilities, that’s fine, but there is a price for that and that should be respected. If they just want a lesser service, then there is a price for that as well, but it is a different service.”
Bijaoui also criticised many major airports for having little interest in their cargo activities, and speakers including P Balasubramanian, manager for cargo global operations services at Emirates Airline, said that cargo operators needed to do more to persuade airports of the contribution that cargo makes, commenting that many passenger flights passing through metropolitan airports could only be justified by airlines on the basis of the amount of cargo that they also carry.
Winfried Hartmann MD of Fraport Cargo Services, said that airport operator Fraport had been studying this topic and the findings so far indicated that cargo contributed as much as 20%-25% to airport revenues and profits, rather than the 4% that they had previously been thought to contribute based purely on revenues from freighter landing fees and cargo warehouse rents (see ‘What more can airports do?’ article on pages 34-38).
In a session on ‘Working with the customer’, Remo Eigenmann from Damco described how his efforts to set up e-freight operations out of Asia had almost been thwarted due to a lack of interest, information and motivation among local airline representatives, GSAs and handlers, until he spoke with David Ambridge from Bangkok Flight Services, who had helped to set things up. Eigenmann concluded that local handling agents and airline representatives “can play a huge role in guiding air freight into the paperless future” – or not…
Sebastiaan Scholte, CEO of Jan de Rijk Logistics, highlighted the absence of a contractual relationship between cargo handlers and road feeder service (RFS) providers, but also the importance of good communication and a seamless transfer between the two parties, in order to help minimise waiting times for trucking companies and unplanned peaks for handlers.
Handlers and RFS providers said better use of existing systems such as Cargo 2000 could improve exchanges of information and also called for airline SLAs to be harmonised.
“From the handling agent’s perspective we see that airlines have a lot of conflicting SLAs,” said Winfried Hartmann from Fraport Cargo Services, reflecting the views of one of four working groups set up to discuss in depth some of the issues of the conference.
“We feel that there should be SLAs between these parties, but that these should be orchestrated by the airlines,” said Hartmann. “There could be a proposed format from IATA; IATA has a proposed SLA between GHAs and airlines. We will see a big improvement if we all know what we have to do,” he added.
Freight forwarders also commented on the absence of a contract between forwarder and handling agent, and called for communication channels to be opened between them. Peter Penseel from UTi said airlines should be persuaded to bring along their handling agent to some meetings with forwarders in order to develop clear communications. Penseel also suggested handlers could create a key account management programme directly with forwarders to be able to bring added value when talking to carriers.
Leon Jankowski, head of security for Middle East and Africa at DHL Global Forwarding, highlighted growing control needs, increasing regulatory requirements, rising reliability issues and enhanced visibility needs as major challenges facing the sector when tackling security. He said the focus on security was beginning to change from physical screening towards a layered approach, and he highlighted training as “the key to success in security programmes”.
He said the “integrity” of the shipment was not often discussed, and that for freight forwarders, there was a security “shadow area” when the shipment was with the airline or handler, with this shadow area becoming greater and more important for transhipments or transfers.
Bala observed that most shipments from the Far East are physically screened, whereas from Europe, most shipments were not subjected to screening at airports because they came from regulated agents. “But we find quite a few problems with that,” he said. “Although x-rays are for security purposes, they do also provide an opportunity to pick up on things like undeclared dangerous goods,” he explained.
Tommy Pilarp, partner at aviation law specialist Pilarp Law, called for greater harmonisation of security requirements around the world, although Delta’s Myles Nichols argued that the threat was too complex. “Even if we push shipments through the most advanced equipment available, that does not mean everything is safe,” said Nichols. “So there is a need for vigilance and training and different approaches.”
He said the sector was much better at security than it was 10 years ago and the supply chain had become much safer. “But this is a very large and complex issue and it is not down to a few steps, do this and do that,” he added.