Forwarder Panalpina is doing what many airlines now appear unable to do: operate a successful global freighter network.
The backbone of the Swiss company’s so-named Own Controlled Network is two B747-8 freighters that it leases on an ACMI basis from Atlas Air. The aircraft are used to make direct calls at 10 airports with a network that now truly encircles the globe. Further MD-11F capacity is chartered to extend the network reach into Africa. The Own Controlled Network now accounts for up to 15 percent of Panalpina’s airfreight movements each year.
Remarkably perhaps, it remains the only global service provider with effectively its own in-house carrier. The seeds of that creation were sown back in 1990 when Panalpina launched its Dixie Jet freighter service between Luxembourg and Huntsville, Ala., in the U.S. It was the first time a freight forwarding company had offered a scheduled cargo service between Europe and North America.
Today, that original Dixie Jet service remains an integral part of Panalpina’s Own Controlled Network.
It is a network that extends from its home base in Luxembourg to Shanghai and Hong Kong in Asia, to Yerevan, Armenia; Abu Dhabi and Dammam, Saudi Arabia, in the Near and Middle East and west to Huntsville and Houston in the U.S., with add-ons to Mexico City and Guadalajara in Mexico with return flights across the North Atlantic calling at Stansted Airport in the UK. This typically east-to-west rotation does not preclude the fact that a transpacific sector is also included between Hong Kong and Huntsville.
In addition, Panalpina charters an MD-11 freighter, with an 80-tonne capacity, from Ethiopian Airlines, which flies every Sunday from Luxembourg to Pointe-Noire, Republic of Congo.
As the name implies, the single biggest benefit of the OCN is the control element, says Matt Frey, global head of OCN.
“This is no more clearly illustrated than when handling temperature-sensitive cargo for health care customers,” Frey says. “They cannot accept or tolerate any temperature deviation of their product throughout its transit.”
Having the OCN in place, he says, ensures that Panalpina is in total control of a shipment on one of its freighter trade lanes during the entire process.
Dubbed “cool planes,” both the Boeing 747-8F aircraft run by Panalpina include temperature-controlled shipping technology. Additionally, both the Huntsville and Luxembourg gateways have dedicated temperature-controlled storage areas.
“As a result of the ability to offer this kind of tight control and monitoring means, that 25 percent of traffic on the OCN freighters between Luxembourg and Huntsville is pharma products requiring temperature-controlled shipping,” Frey says.
A review of the make-up of Panalpina’s OCN route map lays clue to the type of cargo Panalpina is moving on its in-house network. Points such as Houston, Yerevan, Abu Dhabi, Dammam and Pointe-Noire are largely predicated to moving oil and gas equipment. The two points in Mexico service auto parts moving out of Europe, with return flights mostly made up of perishables offloaded at Stansted in the UK. Flights from Shanghai and Hong Kong are dedicated to high-tech goods moving to the U.S. and for beyond shipment to Latin America.
“Panalpina not only controls aircraft on specific routes, but the company also designs and oversees processes on the ground as well, ensuring the best possible control from door to door,” Frey says. “The dedicated network also enables Panalpina to route some of its flights to suit a particular clients requirements, if the cargo volume is large enough.”
But how is the Panalpina OCN overcoming the shortfalls that appear to besetting some mainstream carriers, who are now either diluting or backing away entirely from full freighter operations?
“The airlines are only able to offer point-to-point service mostly between major gateways,” Frey says. “This is not enough for many shippers today.”
He argues that shippers more and more want their shipments to be under the control of a single service provider and not a myriad of add-ons.
“As a forwarder, we can provide the trucking services they require, Customs brokerage and many other service options the airlines cannot offer,” Frey says. “Today, service levels are about delivering the final mile.”
It may be an interesting contrast, but IAG Cargo, with its recent decision to dispense of its long-haul freighter operations, returned its three leased Atlas Air B747-8Fs, while Panalpina more successfully, it would appear, continues to operate its two Atlas Air aircraft.
Frey declines to comment on whether or not Panalpina was offered any additional B747-8F capacity at short notice by Atlas Air in recent weeks.
“We are constantly reviewing our network and capacity requirements,” he says. “But for the moment, we will retain the current operation with two B747-8Fs.”
It is a comment that points to the ethos behind the OCN.
“Integrity of the network is everything to us,” Frey says. “We will never overcommit ourselves, if it means threatening our service levels, that I think is proven by our 90 percent on-time performance.”
Panalpina has proved that point by reining in its B747-8Fs when it felt it was over-reaching itself. At one stage, it flew its B747-8Fs beyond Huntsville to Sao Paulo, but it was a stretch too far and threatened the integrity of the rest of the network.
Similarly, the OCN extension into West Africa was proving a difficult fulfillment. So Panalpina chose to withdraw its B747-8F capacity and instead, opt to charter an MD-11F aircraft from Ethiopian Airlines in order to maintain its commitment to that market.
In point of fact, the weekly service to Pointe-Noire serves as a good illustration of Panalpina’s dedication in going the final mile on behalf of its customers.
In this case, it is servicing the oil and gas industry with a new transit warehouse in Pointe-Noire. From there, cargo is transferred by a Panalpina-operated cargo ship to customers along the West African coast or by a designated trucking service to neighboring Cabinda, Angola.
“The airfreight element will often only represent one-third of a shipment’s transit,” Frey says. “But if we can also control that element, we really can act as a full-service provider.”