A renewed call to action at AirCargo 2015

NEW ORLEANS – In the next few years, changes in the world of airfreight – in the form of e-commerce, staff turnover, competition and belly capacity – may be coming faster than shippers, forwarders, carriers and airports are prepared for, said speakers at yesterday’s AirCargo 2015 conference session, “Regulatory and Policy Issues for Air Cargo Development.”

Stan Wraight, the executive director and co-founder of Strategic Aviation Solutions, said during the discussion that he is deeply disappointed and concerned about the lack of interest current supply chain professionals are showing for training the next generation.

One of the most important innovations for which we are largely unprepared is e-commerce business, most of which is going to the integrators, Wraight said. In some places, such as Shanghai, e-commerce facilities are located on airport turf, with a scheduled airline in the mix. Dubai might follow, he added.

“Get involved – please, please, please join in the debate; the effect of e-commerce will affect your operation,” Wraight implored the audience.

IATA’s objective to reduce the shipping process by 48 hours was too little, too late Wraight said. “The six-and-one-half-day process that IATA wants to change is more like eight and one-half days.”

He said efficiency in getting freight off an aircraft is ludicrous when handlers can get passenger bags off an aircraft and processed – first by the airline, then the airport, then the regulatory agencies and lastly by the passenger – in an hour, and often they are carrying nastier goods than any cargo.

“Why can’t we handle air cargo with some of the same efficiencies?” he asked.

Warren Jones, the president of CNS and IATA, said shippers don’t like change, but if the industry doesn’t start making some changes and bringing new people in, it’s in trouble. “Airports have got to be the leaders in this,” Jones said. John Parrot, the airport director at Ted Stevens Anchorage International Airport agreed that everything has to happen through the airport.

The hot topic of open skies, and recent attempts by American carriers to limit them, also came up during the session. Stephen Alterman, president of the Cargo Airline Association, said open skies are an absolute necessity. He said open skies keep more and more people flying where the freight needs to go. Wraight said the Middle East carriers aren’t growing because of subsidies, but rather their growth is because of cargo.

The carriers are not the problem the panel agreed. The airports need to start talking to TIACA, freight forwarders, ICA – every entity, because the airlines are dealing with a crisis in air cargo, Wraight said. “TIACA is a great platform for this discussion since they include airlines, airports and forwarders.”

Excess capacity is another long-term problem that must be addressed, the panel said. “Totaling up the backlog of production freighters, we find 230 wide-body freighters coming on stream in the next four years,” Wraight said. “Using a modest market growth level of 3 percent as a basis, it looks as if there will be 9 percent excess main-deck capacity in the market by 2016.”

Passenger growth has increased steadily since 2008, a huge part of that from the rising middle class in Asian countries, which will add to the demand for even more aircraft with belly capacity, Wraight said. The widebody aircraft on order now will add belly space that is equivalent to 450 777Fs. Anywhere from 40 to 70 percent of most European legacy carriers would not be profitable without the contribution of cargo.

Wraight said the ultimate effect of these trends appears to be the inevitable bankruptcy of more all-cargo carriers and the exit from main-deck freighter business by others. “Bellies are the future, freighters are the past,” he added, “except for the integrator.”

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