Ground to a halt: The third-party handling problem

Brandon Fried is the executive director of the U.S. Airforwarders Association.

While it is possible for a box to be flown from London to Chicago in only about eight hours, it can take another nine hours for a forwarder to actu­ally get his or her hands on it at O’Hare Airport.

O’Hare is in the crosshairs right now, due to some nasty traffic backups, with two to three dozen trucks waiting to access a limited amount of dock doors at the handling facilities (see story, page 24). Accordingly, many trucking companies now assess a US$20 “congestion surcharge” and require 24 hours advance notice for shipment recoveries at O’Hare’s freight terminals. Once inside these warehouses, forwarders and trucking companies encounter inconsis­tently trained personnel, rude customer service, improperly maintained facilities and a lack of urgency in retrieving or processing shipments.

Okay, I know there was a strike on at the West Coast ports. And, yes, I understand that this had an impact in causing congestion at a number of airport facilities. But I will bet that as the lingering effects of the strike fade further away, we are still going to find that we have widespread problems to address.

According to my forwarder colleagues and their trucking partners, higher costs and deteriorating service are wide­spread and ongoing, much of the blame rests with some of the ground-handling companies hired by the airlines.

Third-party ground handling companies are now a fact of life at busy commercial airports all over the world, where they now handle more than half the cargo that passes through them. The percentage is expected to grow as more airlines seek to realize the financial benefits of outsourcing various operational tasks required on the ground. And, to be sure, most of the outsourced ground-handling companies are efficient, well-run enterprises providing airline opera­tional support for services ranging from cargo handling to passenger check-in, baggage handling and refueling.

That said, as the ground-handling industry has increased in size, so has the challenge of airports providing space for the competition. Airport industry expert Dan Muscatello says that having too many handling firms and their ground-service equipment at an airport can result in obstructions on the apron and numerous safety problems. In a number of instances, he has seen where the overall value that can be created by competition is subsequently lost through a race to offer the lowest price, which often results in poor service and high staff turnover for the handling companies. Muscatello believes that performance standards should be developed for handling companies, plus penalties for unsat­isfactory service.

Today’s airlines often have thousands of people in hun­dreds of airports who are working for them but are not on their payroll. This arrangement ends up complicating the task of delivering excellent customer service in a cost ef­ficient and friendly manner. Unfortunately, it appears to us that many carriers are allowing their outsourced cargo ground handlers to operate unchecked with little regard for cargo customers. A number of our members recently men­tioned to me that while service has been poor in the past, it has further diminished in 2015.

What needs to happen to turn this around? First, airlines need to accept some measure of responsibility for the cost-controlling measures that their vendors are implementing, particularly those that have cut operational staffing and have resulted in overworked employees and high worker turnover. They can do this by imposing documented pro­cesses, metrics, rewards and penalties for their handling partners. Establishing comprehensive service-level agree­ments, which clearly define expected outputs and results, need to be in place and audited by airlines on a frequent basis. Since airline computer systems often say freight is on hand and available when the handler cannot find the cargo, more needs to be done to improve communication so that forwarders and truckers are not wasting money waiting at the airport for freight that hasn’t yet arrived.

Airlines and their handling partners also need to think of ways to reduce congestion while picking up or drop­ping off freight. Perhaps 24-hour terminal access should be considered in places where long truck lines and limited hours are an issue. Making sure that trucks and other equip­ment owned by the handler are clear of dock access doors is another way to improve efficiency to accommodate more customers. Maybe IATA should initiate a task force target­ing airports worldwide, where ground-handler-related cargo delays have been an issue reported by forwarders and their trucking partners.

Finally, airlines need to take full responsibility for the con­duct of their handling agents. A carrier strives to maintain good reputations for customer service and cannot afford to have its brand image tarnished when its customers are exposed to rude employees and substandard facilities. Since airlines, handlers, truckers and forwarders are stakeholders in this process, perhaps now is the time for all to begin dis­cussions on ways to improve the situation before it further deteriorates.

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