Panalpina’s Jeannette Goeldi has worked in the logistics sector for about 27 years – mainly in the freight forwarding side of the business and most recently within air cargo – but says she rarely gets the opportunity to speak with cargo ground handlers, despite the huge number of interactions that forwarders have with handling agents on a day-to-day basis.
“We are more facing towards customers, who deliver bread on the table!” she observes.
So, after all this time spent facing the customer, what is it that customers really want, and what can members of the airport cargo handling chain do to help fulfil their needs?
Goeldi says the approach to mastering her customers’ needs can be best described using a three-layer pyramid, in which the top layer – the ultimate type of customer fulfilment – is achieved through genuine partnership with the customer, and in which the supplier is able to offer a particular USP to this client. The middle layer is the fulfilment of the requirements of specific industry verticals (IVs). This layer places a higher level of visibility demands on the supplier, is likely to contain different cost and speed considerations, and requires the supplier to demonstrate certain other specific capabilities that meet the needs of the specific industry vertical or customer in question.
And at the very bottom of the pyramid sits the basics. “These basics are not rocket science – it is moving the shipment from A to B, having it there in time, delivered at the consignee, but also supported with the respective documents,” she says. “But when I say supported with the respective documents, I don’t mean pouches and air waybills; I am speaking more about them being supported by electronic documentation.”
As this last observation suggests, the basics that customers have come to expect has changed and evolved in recent years.
“One of the basics our customers now also expect is proactive communication,” Goeldi explains. “They expect us to let them know in advance when something happens with the shipment, but they also expect us to deliver shipment status transparency. Not too many years ago, the customer was happy when he knew that the shipment had flown off and got delivered to the consignee. Nowadays that is not fulfilling them any more. We are facing customers who place demands for 17 to 21 milestones, delivered, I would say, probably within six hours of the event time happening.
“So, these are the basics today; this is nothing very special.”
She says these basics are not determined or differentiated according to the industry vertical of the customer. “The basic is what everybody needs,” she says.
She describes seven general differentiators in air freight handling that are important to customers – in addition to one key condition: compliance. These seven differentiators are: costs; staff; infrastructure; IT interfaces; value-added services; security; and lead time – plus another differentiating factor that is under the control of the airline: frequency.
Within compliance, key factors include conforming to anti-corruption rules and the relevant export controls and standards, along with expected codes of conduct. Staff factors include 24/7 availability; continuous training for staff in the relevant issues such as dangerous goods, security, or the handling of active containers; plus an appropriately qualified QHSE (quality, health, safety and environment) manager. Infrastructure includes the necessary storage areas, facilities that are designed to meet the requirements of today’s processes, along with equipment such as submersible pallet build-up stations.
According to Goeldi, IT interface priorities include the ability to manage Cargo 2000 messaging requirements, readiness for e-Freight, plus readiness for other technologies such as RFID and temperature monitoring. Value-added services include customs clearances and DG checks, while security differentiators include access control, CCTV, and screening equipment such as x-ray scanners and decompression chambers.
Lead-time factors include low congestion, short physical distances, and the ability to service multiple customers, while cost factors include economies of scale, productivity, and personnel expenses. And frequency factors include international flights, availability of freighter versus passenger capacity, and the road feeder service network.
Goeldi also compares these differentiators for all-cargo and mixed freighter-passenger airports, observing that freighter-only airports tended to be lower cost with less congestion than mixed airports, and more capable of providing value-added services and high security, although they tend to be weaker when it comes to flight frequencies.
“If we then go one step beyond that and look into specific customer requirements or the requirements of specific industry verticals, then we can start to look at the specific processes required for the cool chain, or hanging garments,” she says.
For example, cost tends to be a key factor for the chemicals sector, fast fashion, and the hi-tech and telecommunications sectors, whereas lead time is of critical importance for spare parts in the automotive and manufacturing sectors, plus high fashion. She observes that staff training and the appropriate infrastructure are critical factors for dangerous goods and outsize shipments, with specific infrastructure also key for high fashion and temperature-controlled healthcare products. Meanwhile, the appropriate IT and security are essential for all industry verticals and customers, along with certain value-added services.
“On top of the basics, we need to fulfil these customer-specific processes,” says Goeldi. “And then when we master that, we might be able to fully penetrate the customer and reach the level where we all want to be: locked into our customer’s supply chain.”
She adds: “What we see is that we all focus very much into delivering a unique selling proposition to the customer, delivering tailor-made products. We almost go to the extent of over-engineering to fulfil the customer, and by having so much focus on the top of the pyramid we forget to do the basics. For example, for 92% of all our irregularities that we face as a freight forwarder, the root cause is within the basics – meaning the wrong invoice, weight discrepancies, cargo that is damaged, and so on.”
Among the problems taking care of the basics, she particularly identifies issues related to messaging quality and consistency as a major contributing factor.
“How difficult is it to get transparency?” she asked the Air Cargo Handling Conference in Lisbon late last year. “If you send out an FWB, you do expect to get statuses back for that specific shipment. If you look into the communication flow, of how fragmented our system really is today, that probably has to pass about eight different validations in the system. Most likely, all of the parties within the communication implement their own validations according to what they want to have. Some reject messages because of discrepancies, and some let it through.
“So what we see as a main point right now is that the industry is still fragmented when it comes to that infrastructure; you are talking about XML, but you still have carriers on FWB 6 and some on FWB 16 and some on FWB 9. So we do see an urgent need here. Increased transparency will come if you have standardisation of formats.”
Dirk Schmitt from LuxairCargo welcomed and agreed with Goeldi’s observations on the basics.
“I think we need to innovate, but in real life this is such an uphill struggle to get 100% messaging performance – and we are no different from anybody else. We are doing our own MIP (message improvement programme), and it is so difficult to get correct information – and that is for everyone in the chain,” he says.
“This is not finger-pointing – we would like to have the information stable and we know that the next step ahead or behind has problems getting this information too. So I think this really is a point that would be really worthwhile working on, especially by a unit of forwarders, airlines, and cargo handlers, to really consider are we getting the basics in Cargo 2000 – or e-Freight: it is the same topic; are we getting this right today?”
Schmitt continued: “My personal feeling and our experience is that on the inbound – and we are not much better on the outbound – we need to set the milestones and have the triggers. And if I then see that even the basics are beyond those four or five milestones that we have today, then I am really worried – because I know that even for our operations we have a struggle uphill to get those five points 100% punctual, reliable, and in the correct quality all the time. And so we see that even the basics then are beyond our scope of vision!”
He questioned also the levels of penetration in initiatives to improve messaging performance – a challenge also facing e-Freight.
Schmitt continued: “We can move ahead and innovate and create a world-leading pharmaceutical centre, but if I don’t get my milestones for Cargo 2000 for the pharma healthcare, then I am no better than before. So my question is, where is the initiative to also drive this? Are we ground handlers getting the right messages? Are we sending the right messages? And where is our version of the MIP?”
Lothar Moehle, former regional director for Cargo 2000 and now director of air freight security standardisation at DB Schenker, commented: “The answer is most likely in what Jeannette has said: going and taking care of the basics. I have a little experience in Cargo 2000, and it is a great tool to measure the quality of the messaging. But then, once you have the results, what are you going to do with them? And there the basics kick in straightaway. People have to go back and say: ‘Why am I not sending an FWB message to a carrier? Why is the RCS message not arriving in time and complete?’ These are basics – and sometimes it is as simple as training the people.”
Goeldi commented: “If I can throw in some numbers to illustrate what I mean: looking at arrival messages, we currently have an automation of 62% to 75%. When it comes to manual status updates provided to our customers, it is around 174,000 manual status updates a month in our system – and we still lose customers because we are not doing a good enough job! So this is to give you an idea of what we freight forwarders have to offer because we are not getting standardisation.”