Special Report: Outlook 2020

posted on 10th February 2020
Special Report: Outlook 2020

As it has every year since 2012, CAAS invited a select group of air freight industry stakeholders to give their views about the year ahead – whether about the market, developments and innovations, or their own business plans.

Predicting the year ahead is tough under most circumstances, but even more so than usual this year, following a difficult 2019, a continuing but unpredictable trade conflict between the US and China that has threatened to spread to other markets, and renewed and heightened tensions in the Middle East. And then just as the magazine was going to press, the seriousness of the Coronavirus began to emerge – including as a possible threat to China’s economy this year, to international supply chains, and potentially also to global GDP growth.As ever, our thanks go to those who have been willing to stick their necks out and make predictions and forecasts for the year.

2020 vision

IATA’s head of cargo Glyn Hughes has ‘fresh hope’ for a new year and decade – that increased investment in technology and innovation, growth in special cargo, and the continued expansion of cross-border e-commerce will meet a better global trade environment

2019 was a very challenging year for the air cargo industry, with 12 consecutive months of contracting volumes, increased number of dangerous goods incidents arising from non-compliant shipments, and a challenging global business environment.

On the positive side, we did see an increased amount of investment in technology and innovation, a growth in special cargo, and the continued expansion of cross-border e-commerce.

Therefore, as we enter 2020, we do so with fresh hope. The signing of the US-China Phase 1 trade deal should see a calming of tensions between the two global economic superpowers, with commitments on both sides which should be beneficial to global trade. Although heavily focused on agriculture it will hopefully pave the way for a renewed spirit of partnership-based trade.

In addition, cross border e-commerce continues to provide growth prospects, as the global market place is becoming increasingly more accessible to the next generation of connected consumer.

We also anticipate further growth in the area of specialised supply chains, covering pharmaceutics, fresh and perishable commodities.

In order to achieve success in any of these areas, the industry needs to continue down the path of technological innovation. During the past year, we were very encouraged by the increased level of investment in technology by all supply chain partners.

Significantly more so than in recent years, the climate is right; the desire and willingness are there now; we just need the partners to plug in, connect, and exchange the vital information which is critical for the industry to move forward with high-quality solutions.

Air cargo transports 35% of global trade by value, worth around US$6 trillion of goods each year, so it’s imperative to embrace the latest technology whilst moving these goods around the globe. These investments, together with a renewed focus on innovation, should start to bring rewards in terms of industry efficiencies and enhanced customer service.

Sustainability challenge

Another area expected to play an increasing role during the upcoming year is sustainability. Therefore, we expect the industry to place a higher focus on ‘People, Planet and Performance’ as we all seek to reduce our environmental impact, enhance opportunities for all within the industry, and create an efficient and robust industry best positioned to serve the evolving high demands of the customer.

Supply chain safety will always remain the industry’s top priority, and we expect this to continue as we collectively seek to eradicate non-compliant dangerous goods shipments. IATA launched a DG incident alert programme during the end of 2019, and this has already started to demonstrate great results.

Anticipated growth for air cargo during 2020 is moderate, around 2%, as the challenges continue regarding the international trading environment. But if we collectively embrace the opportunities and successfully address the challenges, then this figure could be exceeded.

It’s also important that the industry has a great vision for the future – most pertinent considering this year is 2020!

Accelerating transformation

Online bookings via third-party platforms will grow exponentially in 2020 to more than 10% of all air freight bookings in Europe, believes cargo.one founder Moritz Claussen, opening up new opportunities for collaboration, efficiency and connectivity – including between the system providers that serve the air freight sector.

2019 marked the beginning of a transformational process for the air cargo industry – mainly driven by digitalization. Anyone not paying attention was caught off guard by Softbank’s $1bn investment into Flexport. And even people that followed the space were surprised by the sheer size of that bet. A bet significant enough to not only put Flexport very much on the map, but also to allow the company to drive more cash into their user-friendly product than any of the largest global forwarders ever could.

Another strong indicator was the rise of digital bookings. Air France KLM announced that it processed north of 20% of their bookings online, and with cargo.one the online distribution market was democratized, enabling any cargo carrier to serve customers in a more customer-centric and efficient way.

At cargo.one, we believe that this trend will only continue in the new decade and accelerate at a rate never seen before. It is difficult for the human brain to comprehend exponential growth, and as such we are often unable to imagine the next big thing and its impact. One thing is clear, however: demand for user-friendly, easy-to-use and efficient products will continue to rise, leaving players that resist change and development behind. It is no longer a question of whether fundamental change will happen in the air cargo industry, but rather how fast it will ripple through the industry and who it will leave behind.

We have identified a couple of trends that we believe will shape the air cargo industry in 2020:

The penetration of online booking platforms

Firstly, the share of online bookings will grow exponentially. We expect that by the end of 2020, online platforms will be processing more than 10% of all air freight bookings in Europe. This development will be driven by a large group of airlines – the early majority – joining digital platforms. Many airlines were convinced by the successes of early marketplace adopters in 2019 and many more are upgrading to more connected core systems and introducing their own online distribution channels. Airlines will be looking to bolster the ROI on these projects by using the same technologies to connect to an already relevant and growing marketplace segment, while at the same time significantly driving customer satisfaction in doing so.

Unlocking the power of collaboration

Secondly, we will see an increasing number of partnerships and initiatives to share data freely. Collaboration and partnerships between technology providers in air cargo will strengthen and begin to form a network of service providers that are used to working with one another and thus, increase their power. We predict that this will include core system providers, revenue management providers, marketplaces, and other players. We are still a long way away from the developer-friendly and publicly well-documented environments that we see in other technology spaces, but 2020 will show technology players working together in a much-accelerated fashion.

Leveraging the core business with the help of new technology

Thirdly, airlines will begin to embrace strategic freedoms brought on by a new era of technological enablement in air cargo. This means that airlines will take advantage of the fact that in 2020, freight forwarders will be the most well-informed they have ever been. Airlines that support their employees capable of tying together capabilities from across functions to bring the best offering in front of the customer will benefit. Especially as marketplaces are likely going to be neutral channels for distributing capacities, smart airlines will (continue to) build their marketing capabilities to spread the word about their work, advertise their brand, and educate forwarders more specifically about their products. If they haven’t already done so, their sales and pricing teams will begin to find that there are no longer technical barriers to steering complex pricing and distribution initiatives, other than the creativity of the sales and pricing team themselves. Airlines as a whole will increasingly find highly capable technology products accessible to them that will support their teams in providing forwarders a customer-centric user experience. In using those technologies, airlines will be able to better focus on their core business and to introduce and iterate new air cargo products.

System providers setting new standards of connectivity

Lastly, core system providers – such as IBS, Accelya, or CargoSpot, for example – will start to open up their systems to third parties and become platforms, rather than technology silos. Those providers that do not follow will die in the medium term. Smart system providers will race to provide readily accessible and well-documented interfaces (APIs) for other players to connect to. How well they do this will influence the landscape of relevant core system providers quite significantly. Those that have worked to keep their systems closed and inaccessible to the outside world will fall behind, as they will not be able to keep up with technological advancements and customer requirements, leading customers to churn to the competition.

A better environment

Although the operating environment will remain challenging in 2020, Cathay Pacific Cargo is cautiously optimistic that a more benevolent macro-economic environment will help drive global trade, says James Conlin, head of global partnerships

2018 was a record year for Cathay Pacific Cargo and this set the bar very high for 2019. A combination of weaker macro-economic sentiment and geopolitical tensions weakened the air cargo market in 2019 resulting in a decline in worldwide volumes (tonnage fell by 6.1%).

While we anticipate that our operating environment will remain challenging in 2020, we are cautiously optimistic for a better performing air cargo market. Upcoming contract negotiations with our partners will yield greater clarity on the outlook for 2020, but at this moment we expect a more benevolent macro-economic environment to help drive global trade. We foresee continued momentum in particular product verticals, riding on tonnage growth observed in 2019 for Fresh Lift – our perishables solution – and Live Animal Lift. Similarly, we expect e-commerce to continue its relentless growth in 2020, following record-breaking shopping holiday volumes in 2019 which saw a number of dedicated e-commerce charters requests.

Geographically, our expansion into South America through our interline partner networks has continued to deliver results, culminating in our very first charter to Santiago at the end of 2019. We hope to see this positive growth trend continue across our offering of offline destinations, extending our global reach and increasing choice for our partners.

2020 will see the introduction and progressive rollout of ICAO’s 100% screening requirements in Hong Kong – a significant change for our customers, with certain cost implications. We are supporting our Hong Kong export customers by introducing a Terminal Charge concession to help maintain Hong Kong’s competitiveness and status as the world’s leading air cargo hub.

Digital focus

Another important development in the broader air cargo industry is air cargo’s digitalisation. This trend has been driven by evolving customer needs in areas such as distribution capability, bolstered by our inherent requirements for innovative and transformative digital solutions to improve our customer experience, generate internal efficiencies and reduce costs.

A major focus for us in 2020 is to develop our digital capabilities to position us at the forefront of a rapidly evolving market. We are particularly excited about the full project rollout of our blockchain-based ULD management solution, next generation, end-to-end track and trace capabilities, and an upcoming mail solution for Post Offices.

Responding creatively

Airforwarders Association members have expressed increased positivity about 2020, says AfA executive director Brandon Fried

Creatively responding to change has always been the foundation of the freight forwarding industry, so we view today’s reduced volume and world trade challenges as an opportunity. Forwarders provide solutions to complex logistical problems using a variety of transportation modes. Airforwarders Association members look forward to assisting shippers with transportation solutions adhering to all budgets and requirements. In addition to overnight shipping, many will be offering more economical deferred air cargo to retain tonnage and, in some cases, other options that may not include air freight.

Regardless of the current softening seen throughout 2019, a recent survey of Airforwarders members indicates increased positivity for 2020. This optimism comes from the e-commerce megatrend continuing its significant impact on the air cargo industry as the need for faster delivery continues to grow. Also, there is the hope – and now some indication – of the US reaching a trade deal with China and more favorable global economic conditions prevailing the upcoming year.

We continue to see vast opportunities in cold-chain transportation, including pharmaceutical and perishable item shipping. In addition to advances in packaging to keep food and drugs fresh, the air transport sector now employs technology to monitor shipment temperature and location throughout the transport process. The speed and efficiency of air cargo is not only helping to save lives but continues to assure that fresh fruit and vegetables remain available throughout the winter, in even the coldest cities.

US forwarders remain concerned about increasing airport truck congestion, poor road infrastructure, the impending excessive governmental regulation, the new maritime low-sulphur fuel requirements, anticipated changes to US export regulations, and lithium batteries shipped by companies not adhering to existing (dangerous goods) laws and manufacturing standards.

Lithium battery concerns

While those participating in the freight forwarding, airline industries, and airport operations should receive lithium battery awareness training, depending upon the commercial sector to solve the issue alone is unsustainable. Governments throughout the world must increase manufacturing oversight and enforcement so that improperly manufactured batteries are not introduced into the supply chain and never reach the airport.

Since air cargo usually begins, ends or primarily involves the use of a truck, the US highway and airport road infrastructure also concerns our industry. While there has been no progress on any significant funding legislation, we look forward to working with lawmakers in Washington in explaining how the 200,000 miles of major highways and 47,000 bridges in poor condition slow shipments and threaten our primary value proposition of speed.

But despite industry and global economic concerns, freight forwarders are seeing more customer demand for faster order processing and vendor flexibility. Both continue to be the primary deliverables within our business. As a result, our members are increasingly investing in significant financial resources in technology development to provide more efficient customer experience and increased information transparency.

The United States has seen nine straight years of economic expansion since the Great Recession, and freight forwarders have benefited as a result of this prosperity. Now, as the economy begins to shift, we look forward to thriving on its changes and continuing our industry success.

Another ‘VUCA’ year

In an increasingly volatile and complex world, the only thing certain about the future is that it is uncertain, says Alex Driesen, co-entrepreneur at IT and data-sharing specialist Nallian

The only thing certain about the future is that it is uncertain.

For some time, we have been living in an increasingly ‘VUCA’ world: a world which is Volatile, Uncertain, Complex, and Ambiguous. Multiple changes are not only happening at the same time, but also often swinging – which results in unpredictable, non-linear outcomes. Trade wars; geopolitical tensions in general; technology hype (remember how blockchain was going to solve world peace and famine?); changing attitudes on climate change; and the energy transition are just a few examples.

2020 is not going to be any better. What does this mean for businesses? Where should our improvement initiatives be focused?

In a predictable world, focus can be on improving internal strength; focus on doing more of what we already do, and better; focus on robustness. In a VUCA world, that doesn’t fly. Such a world asks not only for continuous corporate renewal, but also for continuous reconfiguring of the overall value system, across company borders.

Antifragility

Whereas in the past it was logical to design for resilience and robustness, today we need to design for ‘antifragility’. Antifragility, as Nicolas Taleb defines it, means structures that get stronger when put under stress. Which brings us to networked, fluid, open, adaptive value systems instead of siloed fortresses.

And that is what we see happening in air freight too. We see businesses adapt. In the past, businesses in air freight have been focused primarily on optimising internally, within their own four walls. Today, we see an increased awareness and focus on building the networked processes – not rigidly, but in easily reconfigurable, antifragile ways. We see that with thought-leading airports, but also increasingly with airlines, handlers and even some enlightened forwarders. Often based on sharing data and on collaborative applications, collaboration and communities are becoming the new normal.

In a VUCA world, it is the only logical response. Is it mandatory? As a wise man from Lufthansa Cargo once said: “Nope, it is not mandatory. But then, survival isn’t either.”

Transformation journey

TIACA’s key challenges for 2020 will be to deliver an ambitious sustainability agenda, help drive improvements in safety, sustainability, digitisation and quality, contribute to making air cargo attractive for the younger generation, and listen more closely to the association’s members, says Steven Polmans, chairman of TIACA and director of cargo and logistics at Brussels Airport Company

The air cargo industry faces a lot of challenges: the issue of rogue lithium battery shipments that could endanger aircraft; the trade tensions and the slowing economic growth affecting air cargo volumes; eagerness to accelerate the digital transformation of the industry and realities that make air cargo a relatively slow industry to adopt new technologies; the exponential customer demands for more visibility, reliability and convenience; the risks of not being attractive enough to get and retain the talents we need to transform this industry for good; the pressure from the general public, customers, regulators and employees themselves to reduce our environmental footprint.

TIACA is in a unique position to represent and unite air cargo players towards common goals and work with industry partners – both in private and public sectors – in the areas of safety, security, trade facilitation, digital transformation and sustainability.

The world is changing; our industry is evolving; and so should TIACA. With vice-chair Sanjeev Gadhia, the board, and the TIACA team, we embarked on a transformation journey to modernise the organisation. The objective is to ensure TIACA remains relevant, attractive, financially healthy and strong enough to take up the challenges requested and needed by our members in the long term.

Sustainability, partnership, talents, value

In 2020, TIACA’s key words will be Sustainability, Partnership, Talents, Value.

We want to deliver our ambitious Sustainability agenda through our newly formed Sustainability Working Group. Expect to see a vision paper on air cargo sustainability with industry goals, an industry survey, the second Air Cargo Sustainability Award and hopefully a global commitment towards a sustainable air cargo industry signed by all relevant players.

We want to strengthen relations with other industry associations and regulators to drive concrete improvements in the areas of safety, sustainability, digitisation and quality.

We want to contribute to making air cargo attractive for the younger generation and offer training and development programmes.

We want to be closer to our members, listening to them and having them contributing actively in the strategy of their Association. This is why we are launching an annual Member survey until the end of January.

And 2020 will be also the year of our first Air Cargo Forum organised with Messe Munchen. We are working hard to make this event the great show and business platform for all to learn, network, strengthen existing relationships, and open new opportunities.

Positive outlook

The tough market conditions last year were an opportunity to review Emirates’ core offering to customers, says Nabil Sultan, senior vice president for cargo, who expects a modest recovery for the air cargo industry in 2020  

At the start of a new decade, Emirates SkyCargo is geared up to facilitate global trade and cargo movement in 2020 and beyond through a combination of innovative product development and investment in ‘fit-for-purpose’ infrastructure.

The global air cargo industry witnessed what was a very challenging year in 2019. Economic uncertainty, tensions in global trade and unrest in key markets negatively impacted cargo volumes. However, the tough market conditions were an opportunity for us to review our core offering to our customers and ensure that we remained market leaders with our specialised product offering, superior capabilities and infrastructure as well as our agility in responding to customer demand.

The outlook for 2020 is more positive with the air cargo industry set to post a modest recovery thanks to improved economic activity and trade growth. With our commitment to ‘deliver as promised’ backed by a global network covering over 155 destinations centred in Dubai, our modern fleet of all wide-body aircraft and our state-of-the-art EmiratesSkyCentral terminals, Emirates SkyCargo is well positioned to support trade and economic growth in line with the Dubai Silk Road Project. With Expo 2020 Dubai also set to kick off in October 2020, we will see a surge in movement of goods to and from Dubai and we are working with our partners to provide specialised air freight services for this once in a lifetime event.

Air cargo evolution

In 2020, we can afford less and need to do more, says Cargo iQ executive director Ariaen Zimmerman

As we head into the new decade, the air cargo industry is facing a challenging time, driven by many factors that are outside of its control, such as global trade and political uncertainty.

We have to be responsible and – as always – must adapt to the reality of our ever-changing market requirements. In ‘up cycles’ this means making sure that we have the right amount of relevant capacity at the right place to meet demand, and in ‘down cycles’ this often means the same.

These cycles are our life, have a huge impact, and the way we deal with them sets successful companies aside from the rest. The underlying advantage of the air cargo industry stays the same: we are a system of specialised companies that are all working together to deliver an expensive, complicated product in the most efficient, economical way possible.

To be ready for this and future cycles means we need to be flexible and ready to grow or reduce our worldwide presence quickly with reliable products. For that, our industry needs to have standards in place for cooperation between our various specialised companies across the supply chain, so that we can align quickly and reliably.

Embracing opportunities

It also means we need to embrace the opportunities that digitalisation offers, so we can be even more efficient and effective as an industry. We must have products with demonstratable delivery that our customers are willing to pay for, that address their various wants and needs.

As we start 2020 and move into the new decade, Cargo iQ will continue to address these challenges. We will be more reliably measuring all the shipments of our members and allow for monitoring the progress of all of them. We will extend our successful pilot initiative for small and medium enterprise (SME) forwarders that was launched last year, into an SME service.

We will also work with IATA’s ONE Record to make sure we can digitalise the different products of our industry in a meaningful way, as well as offer their planning and control solutions, for instance for time-defined versus flight-specific products. And last but not least, we will offer an open standard for true end-to-end planning and control for shipment care.

Getting ready for an ever-changing future will remain our core responsibility as an industry, and Cargo iQ will be at the forefront of the evolution of air cargo.

Cautious optimism amid persistent headwinds

Lim Ching Kiat, managing director for air hub development at Changi Airport Group, is hopeful of a moderate recovery of the semiconductor sector this year and continuing growth in key air cargo segments such as cross-border e-commerce and pharmaceuticals

2019 ended on a low note for the air freight industry, with the air freight volume performance in 2019 expected to be the worst since the global financial crisis, according to IATA. This is amid a challenging environment with ongoing trade protectionism, the EU and China economic slowdown, and cyclical downturn of the semiconductor industry. Changi Airport’s air freight throughput also suffered from these developments; in the first 11 months of 2019, our cargo throughput declined by 6.8%.

Looking ahead for 2020, we remain cautious as persistent headwinds like trade protectionism are creating uncertainties for global trade. On the other hand, there is some optimism in the moderate recovery of the semiconductor sector, with ongoing developments in 5G telecommunications and artificial intelligence (AI) fields. In addition, we expect key cargo segments such as cross-border e-commerce and pharmaceuticals to continue to be the growth drivers of the air freight industry.

Global cross border e-commerce sales are expected to continue to grow, with Asia Pacific as the dominant market. eMarketer forecasted that retail e-commerce sales worldwide will grow to almost US $4.9 trillion in 2021, with cross-border e-commerce expanding to about 20% of total e-commerce sales.

Based on Seabury’s analysis, the pharma sector has withstood much of the softening in global trade, with modest growth in 2019. With the growing and aging population, coupled with the rising middle class, pharma research organization IQVIA has forecast industry sales to grow 4-6% annually between 2019 and 2023, with sales expected to surpass US $1.5 trillion by 2023.

At the same time, we recognise that the air freight industry is facing fast-changing demands by shippers and consumers requiring speedier deliveries and higher transparency. Business models are also changing rapidly. Community collaboration has become more important than ever, especially in the area of deepening handling capabilities, increasing supply chain visibility, and improving operational efficiency.

Considering these, Changi Airport is taking a different approach for our air cargo development. In the coming year, we will pursue IATA CEIV standards with Pharma and Fresh status as a community. We hope to also take the Global Pharma Tracker – a common digital data-sharing platform – to the next phase with Pharma.Aero and global airport communities. In addition, Changi will be pursuing new digital projects with our community, capitalising on the latest technology and innovation.

Surprising times

The main themes for 2020 are climate change, technology and uncertainty, says Jason Breakwell, commercial director at European RFS operator Wallenborn Transports

2019 certainly gave us some surprises and 2020 is also proving very difficult to read. This is a cause for concern, as aviation and air cargo are heavily impacted by macro-economics and geopolitics but also need certainty to support capital investments.

Multiple uncertainties underline the need to be nimble and also make us realise how crucial a healthy air cargo ecosystem is and how we need to focus more on collaboration, innovation and continuous improvement.

China and the US seem to be closer to resolving their trade war, but the tech war will likely escalate and weigh on global trade.

We still don’t know how Brexit will play out, notably in terms of the UK’s future trading status and especially for services which are so crucial to the strength of the UK economy.

The implementation of the EU Mobility Package will directly affect my sector – European road freight – in the coming years, but it’s still not clear what the pros and cons will be.

The air cargo industry needs to quickly demonstrate to its customers and wider communities that it has a plan to combat climate change. Major shippers who were historically big users of air cargo are switching to other modes because air cargo is unable to meet their zero-carbon ambitions. I think there is a mistaken tendency within some industries to downplay the need to address climate change because of the inability of major polluting nation states to set or respect carbon reduction targets. Mounting natural climate disasters are changing both investor decisions and popular sentiment, and this could quickly put freight companies in very tricky positions.

We continue to benefit from the high speed of technological developments which are helping us to improve productivity, break down barriers and discover new opportunities. I expect more and more start-ups will cross over to the logistics sector in 2020 and as well as improving transparency and agility, this will make our industry younger and more diverse, reduce entry barriers, and strengthen relations between service users and providers.

 

Embracing digital potential

Digitisation is a great opportunity – for example, to streamline the logistics behind e-commerce, including the handling of customs processes, says Simon Linder, sales director at DAKOSY

The growing importance of e-commerce and its special requirements for logistics was an important driver of the air freight industry in the last years. In my opinion, this trend will continue in 2020. E-commerce requires highly efficient logistics processes with shipment volumes of small parcels, which in the past have been unimaginable in traditional logistics businesses, thus requiring automated processes wherever possible.

The business potential for logistics providers is huge, but also calls for new ideas and concepts, including a new thinking of customs processes. As a basis to handle this load of parcels in an efficient and highly automated manner, the logistics behind e-commerce must become even more digital in 2020. This includes, in particular, the digital handling of customs processes. In practical terms, this means that the flight manifest data (FFM) for all expected shipments must be sent consistently to customs software systems via electronic interfaces. In 2020, ground handling agents and logistics providers will be in particular demand to make their processes more efficient and transparent.

Transparency is also extremely important in another area of air freight: the handling of dangerous goods. The dispatch of dangerous goods is highly complex, which is why it is standardised in the Dangerous Goods Declaration (DGD). In order to bring the DGD into the digital age, a transparent, digital standard is required that provides an update on the current processes. The eDGD, short for Electronic Dangerous Goods Declaration, is the digital successor to the standard DGD of the International Air Transport Association (IATA). eDGD can thus streamline the processes in the air cargo supply chain and simplify the transport of dangerous goods for all parties involved.

With our digital shipper portal INFr8, we give the market the opportunity to address the issue of eDGD. Following the positive response in 2019, I hope that eDGD will continue to be a major topic for shippers in 2020.

Digitisation is not a trend. It is here to stay and a great opportunity – we should have understood this in 2020. Especially in an internationally operating industry such as air freight, digital solutions can save costs and enable faster processes. These will remain the driving forces in 2020. The development and spreading of digital standards are important steps towards a more transparent supply chain. The ONE Record initiative from IATA that DAKOSY will support with different pilot projects in 2020 is, in this context, leading the industry into the right direction. Companies that position themselves here at an early stage can help to bring the air freight industry into the digital age.

Adapting to the ‘productisation’ of air freight

Cooperation is the way forward, as cargo community clouds develop from local platforms to international networks, says Steven Verhasselt, VP commercial at Liege Airport

For 2020, we don’t see big changes in the trends of the second half of 2019. The market conditions did not really change yet; uncertainty concerning Brexit and the trade war(s) are still there. Still, 2020 should bring clarity in these and other issues. So, we do have an optimistic outlook.

For the market, the industry will need to adapt to the ‘productisation’ of air freight. The general cargo is, of course, still there, but it is being repackaged as a new product that comes with its own requirements. LGG is working hard to make sure the products flying freighters want to be in Liege. Investments in real estate, digitalisation – and, more importantly so, in staff and training – are key. That should help to make sure that we can keep meeting the requirements of our customers, old and new. ​

Cooperation is the way forward; the tools are there, as cargo community clouds are developing from local platforms to international networks. We are very much looking forward to see the development of the digital government initiatives (Belgian Customs BeCargo, Belgian Food and Drug Administration).

Flexibility will remain key, and thanks to giving full priority to freighter operations, we will be able adapt to ever-changing market conditions. The LGG Cargo community is looking forward to 2020.

Standardising the business

Menzies is focusing this year on better training, innovative technology, and deeper relationships with its customers, as carriers seek higher-yielding products and regional or global solutions, says cargo EVP Robert Fordree

The challenges associated with cargo volumes in 2019 have been well documented. Menzies Aviation’s approach has been to continue to engage with our key customers, growing closer and deeper relationships that allow us to understand their specific expectations of today as well as tomorrow. With this close working relationship we can invest in handling solutions safe in the knowledge that we are aligned to our customers’ requirements.

We have continued with our vision to standardise our global cargo business and have signed a long-term agreement with Hermes Logistics Technologies for our next-generation operating system that will commence rollout this year.  We see technology and innovation as fundamental to support the evolution of the traditional air freight model and in conjunction with Hermes, our facilities are increasingly evaluating and testing automated solutions, whilst ensuing they maintain a level of flexibility supporting all customers and product requirements.

Global training programmes

We have also implemented new global training programmes, the first in conjunction with ULD Care and aimed at ensuring appropriate and safe handling of ULDs across our network. The second is a new ‘Introduction to Air Cargo programme’ aimed at both new entrants to the industry as well as a refresher for existing employees. These training courses further support our drive for standardised service delivery throughout our network.

We are also focusing on leadership training programmes for our cargo teams in order to deliver better productivity, improved employee retention and ensuring our supervisors and managers of the future are equipped for the job.

Across the market, we are seeing carriers increasingly seeking regional or global solutions from handlers. We are able to support this with our global network and are also putting in place innovative and creative solutions for network expansion. Many of these carriers are also focusing on product development and through our engagement with these customers, the expectation is that they will continue to develop their higher-yielding products, particularly time- and temperature-sensitive, although this may be much more related to particular origins and destinations as opposed to across entire networks.

A revised cargo approach

Continuing to operate under slot-restricted conditions this year, Amsterdam Airport Schiphol is focusing on its processes – including digitalisation and optimisation initiatives for reducing paper, encouraging collaboration, and improving data sharing and transparency, says Maaike van der Windt, director for aviation marketing, cargo and customer experience

As we enter 2020, we are feeling optimistic about the year ahead at Amsterdam Airport Schiphol.

Over the last two years, we have been operating under slot-restricted conditions, which has affected full freighter movements and led to a rethink of how we conduct our business. This has also resulted in a revised cargo approach for 2020.

Our main focuses in 2020 are to protect full freighters and an increased focus on sustainability, to ensure the future of cargo at Amsterdam Airport Schiphol – and also to maintain and grow our existing cargo network, and there are several ways in which we are approaching this.

We are seeking a structural solution to allocate a fixed number of slots to maintain full freighter flights and we are utilising maximum capacity on planes, ensuring they are as full as possible.

Smart Cargo

We are also continuing to transform Amsterdam Airport Schiphol into the smartest cargo hub in Europe through the Smart Cargo Mainport Programme (SCMP) – such as digitisation to become more sustainable and future ready.

Projects such as ‘Automated Nomination’ and ‘Landside Pickup & Delivery’ are part of SCMP digitalisation and optimisation initiatives for reducing paper, encouraging collaboration, and improving data sharing and transparency.

Another focus in 2020 will see us work with partners on ongoing projects – such as the Ideal Flowerbox, which is a concept from the Holland Flower Alliance to reduce wastage and optimise capacity in the flower supply chain through the use of a standardised box and pallet. Pilot results already show a promising average extra load of 15% of flowers when using the same aircraft capacity.

For the period after 2020, we intend to reach a new agreement to enable moderate sustainable growth in balance with the environment and the local community.

Sustainability is fundamental for the future success of Amsterdam Airport Schiphol and with the revision of the SCMP, plus the support of our partners, we are confident we can reach our goal of becoming the smartest and most sustainable cargo hub in Europe.

Finally, as digitisation and data become increasingly more important, we are also aiming to take more control and ownership of Cargonaut to ensure our ambition will be fully supported.

A major challenge for us in 2020 is to improve data sharing within the Schiphol cargo community, which is also project within SCMP.

In 2020, the main trade lane that we are looking to grow cargo volumes to and from is China. Vertical-wise, Africa (such as Kenya) will be the main target lane for the movement of flowers; and we are also looking to grow pharmaceutical traffic to and from global markets.

By working together and taking a proactive approach to a challenging situation, we are looking forward to 2020 as we continue to implement our revised cargo approach.

Opportunities in a lacklustre market

Targeting both infrastructure and processes, the air freight sector has to make further efforts to raise its efficiency, says Patrick Tschirch, CEO of LUG aircargo handling, Frankfurt

 

 

In close collaboration with our airline customers, as well as selected forwarding agents and shippers, we are developing additional services that will hopefully bear fruit in 2020 or the year after. However, I don’t think 2020 is going to be an easy year. Despite IATA forecasting growth, I fear 2020 will remain lacklustre.

 

The economic outlook for Germany and globally is not buoyant, and this has put the brakes on air freight growth. German exports have been in decline more or less throughout 2019 and are expected to decline further in 2020. Experts predict growth of German GDP of 0.5% in 2019 and 1.1% in 2020. But the estimate for the coming year might be overambitious. Looking at air freight only, IATA is not very optimistic either.

For LUG, effective January 15 we are happy to serve a new customer in Frankfurt: Delta Cargo. We have had Delta Cargo in our customer portfolio in Munich for more than five years; all this time, we worked hard to win over the airline for the Frankfurt station too. Delta is expected to increase our annual throughput in Frankfurt considerably.

E-commerce boom

E-commerce will continue to boom. I don’t think it will peak in the next few years yet. Cross-border e-commerce, B2B, B2C, and C2C continue to drive sales and has a positive effect on air freight.

The pharmaceutical sector is still strong. The US economy is in good condition. The Chinese and Indian economies are still growing, even though at a much slower pace. The air cargo handling sector profits from these trends. Thus, I am very confident that our long-term prospects are good. But in the short term, the sluggish export growth in Germany are worrying.

Trade wars and tariffs

Trade wars and tariffs will not rob me of my sleep. But we have to work harder to remain viable. Targeting both infrastructure and processes, we have to make further efforts to raise our efficiency. We are firmly committed to digitalisation. We are not only part of the FAIR@Link air cargo platform in Frankfurt, but also in Hamburg. We are looking at all new tools from AI to robots, self-drive forklifts, and sensors to track digitalised ULDs. There are ever-stricter safety and security regulations by governments and industry organisations. The demand for speed, quality, transparency, and cost reduction continues to challenge the handling sector.

Competition remains tough in Germany. The success of an air cargo handler depends on many factors. First the shipper has to decide whether the products are to be sent by air or sea and if by air with what airline. Secondly, we need to have a service contract with the appropriate airline so that we can profit from the shipper’s orders. There is considerable competition for these contracts among the different handlers at any airport. Finally, in our case, the freight needs to be routed via Frankfurt, Munich or Hamburg.

Cooling demand rising

Reliable and specialised temperature-controlled solutions for air cargo will continue to increase in importance as the need for healthcare logistics goes on growing, says Andreas Seitz, MD of container specialist DoKaSch

In general, we are quite optimistic about our development in 2020. While air cargo in general is clearly struggling due to weak economic development and trade wars, the demand for pharma logistics is rising continuously. In turn, highly reliable and specialised cooling solutions for air cargo will become even more important than they are now. That is why we expect further growth in 2020 and are not worried by the current trends in air freight.

2019 has been an overall successful year for DoKaSch Temperature Solutions and it provides a solid foundation for our development in 2020. The approval of our Opticooler RAP for five euro-pallets by the Federal Aviation Administration in the USA was an especially important step, which allows us to start cooperating with the big US airlines and Air Canada. Talks with several carriers have already begun and we expect positive results soon. Overall, this will further improve our already strong position on the important US market and provide our clients with even more transport options. We also expect the Opticooler RKN for one euro-pallet to be approved by the FAA during the course of 2020. Since the pharma market in the US is the most important in the world, our strong presence there is highly beneficial for our clients and an important factor for our positive development.

Another field we are looking at is India. The country has an important pharma market and still offers unused potential. That is why it is relevant for further expansions and we will explore our options there.

All things considered, 2020 is most likely to bring positive developments for DoKaSch and will provide many opportunities for expanding our operations around the world.

Moving forward on sustainability

Arnaud Lambert, CEO of CHAMP Cargosystems

2020 must be about moving forward. Not only technologically, but also socially. It is our duty to ensure a way forward for our environment and our world.

I am proud of the work undertaken by TIACA and CHAMP to set up the Sustainability Programme and Award. I would again, like to congratulate this year’s winners, Wings for Aid. This is only the beginning. This partnership should be a mere starting point to a long road ahead. We are proud of our own development and hope new technologies and systems are created to lower the carbon footprint of the wider air cargo industry.

Most importantly, we all have a role to play. It is not a moment to be selfish as our future is surely at stake. Together we can make a difference so that sustainability is on the radar and becomes a priority for all the actors of the air cargo industry.

A year of further transformation

Focus areas for 2020 will include digitalization, compliance and sustainable development, says Adrien Thominet, CEO of ECS Group

of our Total Cargo Management (TCM) offer; digital transformation, to strengthen the quality of services offered to our clients and to improve performance – the creation of in-house business intelligence and track and trace tools, in particular; organisational transformation, to enhance business development – backed by the recruitment of our top-grade chief commercial officer, Robert Van de Weg, clearly marking a new stage in our group; network transformation, with the opening of an office in Portugal and the acquisition of Wexco in Australia and New Zealand.

The major orientations that we will develop in 2020 are a continuation of the transformation efforts made in 2019.

First, in terms of digitalisation, we will continue to develop our digital tools and work on new solutions to cut the process costs of the airlines we represent. These solutions already exist within the framework of TCM contracts (messaging solutions, fuel cost management, etc.). We are also working on the design of webportal solutions for e-booking as well as e-quotes solutions, again with the aim of simplifying and facilitating the exchange of information to improve efficiency and performance. As a key aspect of a transformation to become more efficient, more productive and more agile, we are also planning to implement system integration in 2020.

Compliance and sustainable development

2020 will also give us the opportunity to continue our compliance and sustainable development actions. Integrity is a baseline value that already prompted us to establish in 2018 a code of ethics and good professional conduct, combined with training for all our employees, giving everybody the opportunity to assimilate the established rules. Also, by complying with the flourishing international regulations in this area (Foreign Corrupt Practices Act, UK Bribery Act, the so-called ‘Sapin II’ Act, etc.), which we welcome, we will continue to pursue our proactive policy in the group.

We will also continue our efforts in terms of sustainable development, which began with the adoption of our group’s sustainable development charter, aimed especially at reducing our carbon footprint.

In 2020, ECS Group will, of course, continue its external growth policy worldwide, with special focus being put on acquisitions in America, Europe and Asia. Developing our network to offer ever more connections and opportunities to our customers has always been and will continue to be a priority for us.

Finally, at head office, thanks to the transformations we have carried out, we have a totally solid, sustainable and agile structure that will enable us to carry out all these projects in 2020, to boost our commercial dynamics – the DNA behind our group.