Tag Archives: Cargo News

Cargo News, Ignazio Coraci

What can the industry learn from KLM’s new air cargo e-commerce strategy?

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The pace at which we all respond to the demands of our customers is critical – and recent investments made by some of the world’s leading air cargo operators suggest that the industry is finally getting the message about e-commerce.

Prime position

The sector is booming within the air cargo industry and KLM Cargo have now invested in a combination-carrier-operated sorting system at its Amsterdam Schiphol airport site that is able to handle package-level air freight. It’s been designed specifically to handle post, express and pharmaceutical cargo.

That means that KLM Cargo should now have the systems in place to fully take advantage of the growth in e-commerce traffic. Marcel de Nooijer, executive vice president of KLM Cargo explains: “E-commerce is a fast-growing branch in the cargo industry. This innovative system allows us to keep pace with the rapid increase in post and express consignments. The system is faster and smarter, allowing us to offer better service to our customers.”

Same-day revolution

KLM Cargo have described the new facility as a world first, and it’s clear that it should now allow the business to make more use of its air freight capacity. KLM Cargo have teamed up with Netherlands-based Parcel International to run 12Send, a new same-day delivery service for Europe. They’ve already piloted the service on routes between Amsterdam and Barcelona, and have held successful trials in London, Madrid and Stockholm.

A lesson for the sector

Ignazio Coraci comments: “This is a sign of things to come. No industry can afford to ignore their customers. The investment made at Amsterdam Schiphol is an indication that businesses are slowly beginning to listen to changing customer needs, and I feel that we are starting to move in the right direction. This kind of investment is essential if carriers want to survive as new markets develop.”

Cargo News, Ignazio Coraci

Hong Kong sees a surge in growth for first half of 2017

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It has been a truly impressive start to the year for Hong Kong International Airport (HKIA), with growth in traffic right across the board. In terms of air cargo business, HKIA has handled an impressive 2.3 million tonnes of cargo already this year in the first six months to June – that’s up a remarkable 11.3% on the same period last year.

Booming exports

So what has been behind HKIA’s great start to the year – and more importantly, do the experts think it will be sustained? Well, in the latest figures from June, 410,000 tonnes of cargo passed through the airport, up 11.4% on 2016 – and there are indications that a 17% year-on-year increase in June exports from the airport led to the high growth in cargo tonnage for that period. That bump in export figures has certainly contributed then to the airport’s positive performance in the first half of 2017, but HKIA has also benefited from an improved global outlook. And with the Asian markets leading the way in air cargo growth, HKIA is in prime position to take advantage of a global economic performance that is looking positive in terms of consumer and business confidence.

Investing for the future

HKIA isn’t standing still, with work starting last August on a third runway to help accommodate future growth. The airport is also making further investments to ensure it meets the needs of customers.

“On the cargo front, HKIA continues to develop its ability to serve fast-growing segments of the high-value cargo business, such as fresh produce and temperature-sensitive pharmaceuticals that require specialised handling,” says an airport spokesperson. “The airport authority and local industry stakeholders are working closely together to pursue the IATA Centre of Excellence for Independent Validators in Pharmaceutical Logistics (CEIV Pharma) accreditation on airport community basis and HKIA is expected to be recognised as an IATA CEIV Pharma Partner Airport by the third quarter in 2017.”

A sustainable future

Ignazio Coraci comments: “Clearly Hong Kong is an important site for both our ASC Cargo and SW Italia businesses, and so the news that air freight handling is continuing to grow there is great to hear. I’m also really encouraged by the investment in infrastructure that is being made at HKIA – it will go a long way towards making sure that the performance we’ve seen so far this year is sustained.”

Cargo News, Ignazio Coraci

Is blockchain technology the answer for air freight?

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We’ve talked in this blog before about the need for the air cargo industry to begin to move away from the paper-based systems that so often clog up many of our processes. As our customers become accustomed to services that deliver more responsive, flexible solutions and with the higher service expectations that have grown out of the increasing use of mobile technology, we need to respond quickly.

First steps

The International Air Transport Association (IATA) have already made a number of steps towards doing this, not least through their support of the e-freight digital process transformation programme.

“Our customers are telling us that they expect more,” said Alexandre de Juniac, IATA’s Director General and CEO. “Complicated and convoluted paper-based processes that are basically unchanged from the 16th century are still being used in air cargo today. Our customers pay a premium to ship by air and they rightly expect modern processes and high quality services.

“Shippers today want responsive services based on intelligent systems able to self-monitor, send real-time alerts and respond to deviation. Technologically speaking, this is totally possible. The key to this and other innovations is using data efficiently and effectively. Finding solutions to unfulfilled (or even unrealized) expectations creates value for customers. And that propels a business forward.”

Is blockchain the answer?

Blockchain is often talked about as being just the kind of innovative technology that supports these aims. But what is it, and how can it be assimilated successfully into the processes and systems of a 21st century air cargo industry?

Well, simply put blockchain technology uses a shared digital ledger to record transactions across a number of computers. The advantages for users are that everyone can see any changes made to public blockchains, creating a more transparent process. Every single transaction made on a blockchain is also immutable – so it cannot be altered or deleted by anyone. A blockchain also creates a single ledger, seen by everyone, that any new transactions are added to – cutting down on any complications and removing the need for lots of different ledgers.

Air freight applications

So what would this potentially look like in an air freight operation? Using blockchain technology within this context creates a cloud-based system that is essentially more secure way of recording shipments. And because of the way that blockchain technology works, it’s also secure from hacking – as well as being a permanent record of transitions that is shareable between multiple users.

While blockchain has yet to really be tested thoroughly within an air cargo setting, it’s already made an impact with marine shippers. Here’s what Jody Cleworth, CEO of British freight forwarder Marine Transport International Limited (MTI) has to say: “Blockchain has the ability to empower our industry into a true digital age,” he said. “The sheer volume of containers processed per year means that safely decentralizing the management of these containers will radically reduce the complexities of shipping.”

Time to invest

Ignazio Coraci comments: “Blockchain technology is precisely the sort of innovative solution to age-old problems that we should be applying within our own industry. It’s important that other sectors aren’t allowed to steal a march on the air freight industry by adopting innovations that will serve customers in a way that we can’t offer yet – the time to act is now.”

Cargo News, Ignazio Coraci

Business continuity

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Cyber attacks by hackers are becoming a huge problem in our increasingly connected and technology-driven world.

A growing threat

Recent examples include the global ransomware attack back in May that disrupted many critical systems – not least in the UK’s National Health Service, which was badly affected for a number of weeks, severely impacting patient care. Closer to home in – terms of the air freight industry at least – was the attack on marine container shippers AP Moller Maersk, that saw a large number of their critical IT systems hit by the so-called ‘Petya’ operation.

One of the key phrases that is usually heard in the aftermath of such attacks is the need for a more robust procedure around ‘business continuity.’ But what does this really mean, and what steps has the industry already taken to lessen the impact of similar attacks – or even global IT system failures such as the one that recently hit British Airways – in the future?

Plan B

A new system that has been implemented in the UK might give some clues as to the future shape of our industry’s response to this issue. The ‘CCS-UK Fallback’ system is intended to allow the UK air cargo industry to continue running in the event of any prolonged problems with the HMRC’s vital CHIEF (Customs Handling of Import and Export Freight) system. The new system means that traders will be able to continue processing Customs export declarations even with CHIEF down, and it has been designed to run for 30 days. The system’s development is a great example of collaboration between the private sector and government to safeguard an industry that’s worth billions.

“We have recently seen the horrendous impact of major IT system failures in aviation, and this cannot be allowed to happen to the UK air cargo industry which provides essential support to UK trade and industry, helps maintain our competitiveness on the world stage and supplies urgent commodities that are sometimes a matter of life and death,” says Steve Parker, DHL’s Head of Customs for Europe and Chairman of the CCS-UK User Group.

Safeguarding our customers

Ignazio Coraci comments: “The CCS-UK Fallback system is a real step forward, and I think it could be used as a model right across the sector. The service that we provide as an industry must have effective protection and we should all have business continuity plans in place – it’s the least we owe to the millions of customers who rely on us.”

Cargo News, Ignazio Coraci

The outlook for 2017

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The air freight industry has made an encouraging start to the year – at least compared to 2016 – and while the picture isn’t completely rosy it’s clear that the outlook for the coming months is looking healthy.

A positive forecast

We’re basing this on a couple of key pieces of information – IATA’s air cargo stats for the three months ending in April, and recent comments made by IATA’s director general at their annual general meeting in Cancun in June. But how about those figures? Well, all of the key indicators that suggest a more buoyant market are heading in the right direction. The seasonally adjusted figures saw cargo yields rose by 4.5%, while Freight Tonne Kilometres (FTK) were up 10.5%. Add to that the news that air freight now has an increased market share and the signs are there that we’re currently on the upward portion of this particular economic cycle. Other indicators such as consumer confidence, export orders, trade, silicon and semi conductor sales are also looking good, suggesting an industry in good shape.

Improved profits

IATA director general Alexandre de Juniac made his comments in the light of overall airline industry figures that suggest expected profits of $31.4 billion for 2017 – that’s $1.6 billion better than the $29.8 billion IATA projected in its last forecast of the year ahead. Discussing the new projections, de Juniac pointed to the more robust recent performance of the air freight industry.

“Strong demand is driving profitability,” he says. “That includes air cargo, which has awakened from a six-year coma. 7.5% growth is being powered by e-commerce and pharmaceutical shipments.”

Clouds on the horizon?

So far so good then. But there are a couple of caveats to the positive outlook for the rest of the year which are worth bearing in mind. The first is the threat of rising costs, while the differential in profitability between regions is also a cause for concern.

“Margins are being squeezed by rising costs for fuel and labour,” says de Juniac. “Moreover, profitability is not equally spread across the regions. Half the industry’s profits are being made in North America. Asia, Latin America and Europe are generating sustainable profits, but only just. And Africa and the Middle East are struggling.”

A chance to prepare

Ignazio Coraci comments: “The outlook for the rest of 2017 is certainly encouraging, especially compared to last year. It’s great news – however we also need to be mindful of how we will maintain the standards of service we currently offer in the light of any rising costs to come.”

Cargo News, Ignazio Coraci

Solid growth continues in Asia in May

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The news from Asian markets shows once again that the industry – in that region at least – has got off to a very positive start to the year. New figures were recently released by the Association of Asia Pacific Airlines (AAPA) and reveal that the region’s airlines are still enjoying the robust growth in international air cargo demand that has been sustained over the first five months of 2017.

Capacity is up

Measured in freight tonne kilometres (FTK), growth was up 12.2% compared to May last year. And with freight capacity across the region going up by 4.3%, the average international freight load factor also rose quite considerably – up 4.7% to 65.6%.

These figures come on the back of a strong start to the year for the air cargo industry in Asia, which has already seen an impressive 10.5% surge in international air cargo demand through to May.

A better outlook for the global economy

So what are the reasons behind this encouraging trend? And does the longer term outlook seem as positive as the current figures suggest? Andrew Herdman, AAPA Director General, hints that it does – but is also keen to add a number of caveats.

“The ongoing pick-up in the global economy, accompanied by increased consumer and investment spending has provided a boost to both international air passenger and air cargo markets. Asian carriers are major players in the global air cargo market, and continue to benefit from the upswing in trade growth.

A challenging environment

“The outlook for both air passenger and air cargo markets remains positive, supported by broad-based expansion across sectors. However, airline profitability remains constrained by competitive yield pressures and higher operating costs. Fuel prices, in particular, have risen by 38% to average US$53 per barrel during the first five months of the year. Given the still challenging operating environment, airlines remain focused on disciplined cost management efforts throughout the business, whilst pursuing further growth opportunities.”

Focus on the basics

Ignazio Coraci comments: “Although the figures out of the Asian markets are encouraging and fit into the wider picture of a more positive global economy, it’s important that as an industry we remain focused on getting the basics right. The growth will only remain sustainable if we put customer needs at the heart of our operations and invest in the technology required to be agile enough to meet their expectations.”

Cargo News

What next for Amazon and air cargo?

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Amazon is nothing if not ambitious. The online retail giant has made great strides in recent years into new business areas – spreading its influence and using its huge leverage to build new revenue streams in areas as diverse as fashion, loans, drone technology, physical shops and groceries. And when Amazon brings its influence to bear on a particular industry, the existing companies operating in that area need to take notice. So, is air cargo and logistics next on the Amazon wish list? And if so, how should the rest of the industry respond?

Strong  signals

Amazon’s recent moves in China, which reports suggest include developments in its air forwarding operation, certainly have interesting implications for the rest of us in the air cargo industry. While the extent of Amazon’s new investments are not yet clear – for example whether this freight forwarding offering is actually the start of a process that will end with Amazon ultimately flying its own air cargo between the US and China – it can certainly be seen as a sign of the US giant’s growing ambitions in this area.

A striking trend

Amazon has been growing its influence over its logistics operations in recent years. It has recently invested heavily in facilities in the US, with a new centralised air cargo hub at Cincinnati/Northern Kentucky Airport costing around $1.5bn. Amazon will base a proposed fleet of 40 aircraft at the hub and the huge investment fits with a growing pattern of Amazon’s increasing interest in air cargo, logistics and forwarding.

A challenge for the industry

Ignazio Coraci comments: “Amazon’s investments in freight forwarding services in Asia and its plans for Cincinnati/Northern Kentucky Airport are ambitious, as you’d expect from a company known for its innovation and readiness to push into new areas. However these initial moves suggest that long haul air freight isn’t their immediate focus – rather it may be that they’re looking to save on domestic deliveries. Whether this changes in the future is hard to predict – but it’s a challenge that the whole industry must be ready for.”

Cargo News, Ignazio Coraci

Service matters in an automated future

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We’ve spoken before about the need for an investment in technology to bring the air cargo business into the 21st century. But it’s also worth considering what kind of changes that technology will bring to the industry, and how it will impact possibly the single most import aspect of all the work we do – the service we give to our customers.

A look ahead

So how different will the air freight industry look in five years’ time? What impact will an increasing investment in cutting technology have had on the way we all work? And what opportunities do the trends in the industry present for those companies looking to get ahead of the competition?

An automated future?

A recent survey by online booking portal Freightos of nearly 70 freight forwarders has provided some intriguing answers. Many of the respondents asked – 75% – thought that future of air cargo looked very much like the revolution that has transformed banking. The model for many banks today is build on a high degree of automation, with a personal touch when it matters. Many of the freight forwarders suggested that processes will become largely automated, and that much of the physical process of actually moving goods from A to B will be handled by technology like automated stowage and self-driving forklifts.

It’s a picture of an industry that’s very different from today – but one that holds many opportunities.

Service will define us

Ignazio Coraci comments: “As our industry becomes increasingly digitised and automated, those real-life touchpoints between the customer and the forwarder will become ever more critical. Good customer service will be a key differentiator for people choosing between different air cargo operators – and that is a real opportunity to gain a business advantage for those companies who invest wisely.”

Cargo News, Ignazio Coraci

A positive outlook for the US

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While this year has been a politically volatile one for the US – with a new president and jittery markets – the North American air cargo industry has got off to an encouraging start in 2017. There are some caveats to the good news, with indications that cargo demand rates haven’t improved as rapidly as last year and that revenues per cargo tonne have taken a hit – but overall the picture is encouraging.

Top performers

Take the performance of the three major US carriers, United, American and Delta. A snapshot of their numbers shows that they’ve seen rapid increases in cargo demand in April. with the largest of the three – United – showing an impressive 19.5% year-on-year increase in demand during April with 265m cargo ton miles (CTM).

The global picture

The positive start has been matched by global growth overall in the industry, hailed recently by Alexandre de Juniac, the International Air Transport Association (IATA)’s Director General and CEO.

“It’s been a good start to the year for air cargo. Demand growth accelerated in January, bolstered by strengthening export orders. And that outpaced the capacity growth which should be positive for yields. And, longer-term, the entry into force of the Trade Facilitation Agreement (TFA) will cut red tape at the borders for faster, cheaper and easier trade. The onus is now on the industry to seize the opportunity to accelerate the modernization of processes to make air cargo an even more compelling option for shippers.”

A platform for growth

SW Italia’s Ignazio Coraci comments: Clearly, the US market is one that is very important to our business. It’s encouraging to see that the numbers bear out what we’ve experienced so far this year – a positive increase in cargo and a great base to build on for the rest of the year.

Cargo News, Ignazio Coraci

A threat – or an opportunity?

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It’s been called the ‘New Silk Road’ – a massive infrastructure programme, led by the Chinese, that will bring together the economies of the Asia-Pacific region through new roads, pipelines, ports, high speed rai links and fibre optic cables. The project – formally known as One Belt, One Road (OBOR) – is set to transform the region and create a new economic powerhouse.

A growing pattern

It’s within this context that DHL’s recent addition of another rail connection to Belarus and the establishment of the first regular connection between Shenzhen in China and Minsk has important implications for the air cargo industry. The new route follows a pattern of investment in rail services between the Far East and Europe over recent years, and will make use a rail system that now connects a number of cities in China with Europe. So what does this mean for the air freight business?

A threat to air cargo?

Clearly the new boom in rail links poses a threat to the air cargo industry: rail is quicker than shipping, and can be around 80 per cent of the cost of air. There will be a growing challenge to the air cargo industry in the coming years as customers see the opportunity to take advantage of the lower costs but slower transit times of rail versus the higher costs but faster turnaround of air freight.

An opportunity for all

ASC Cargo‘s CEO Ignazio Coraci comments: “As an industry, we should see vast infrastructure projects like the OBOR as an opportunity for everyone. While it’s clear that the growing capability to move freight by rail could be seen as a threat to the air cargo industry, I believe firmly that there will still be a role in future for the fast turnarounds and efficient service that air cargo offers. The growth that projects such as this will bring to the region with its booming economies, will ultimately benefit everyone – our industry included.”