Air freight must adapt, or lose out to the integrators

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The air freight industry is in danger of losing more market share to the integrators if it fails to adapt, delegates at Air Cargo Africa heard yesterday. Relationships and collaboration across the supply chain came under scrutiny as the industry once again looked at the barriers to its sustainability.

As airlines, airports and handlers gathered to discuss the challenges facing them comparisons with the more efficient and successful express business, were inevitable.

“Solutions lie in how quickly we can adapt,” said Des Vertannes, head of IATA Cargo. “We need to look at how fast the global consumer is adapting, and it’s about how quickly we can adapt. Survival has been the focus rather than building for the future, which is what the integrators have been doing. If the market doesn’t adapt, it will go to those who give the customer what they want – the integrators.”

Jacob Matthew, president Middle East and Pacific Rim for the forwarder / airline National Air Cargo, warned: “It is up to us to take the lead. Look at how well the integrators are doing. What do they do better? They have the same aircraft and the same business. The industry has to make the necessary changes – otherwise it won’t stay in the market.”

He was backed by Russi Batliwala, CEO of aircraft charter broker Chapman Freeborn, which earlier this month announced it was taking a 747-400 on lease from Atlas Air. He said the move was simply “just doing what the customer wants”. But, he added: “There are lots of people in the industry who don’t add value. We need to look at who does and who doesn’t.”

Air freight, which battles a lack of common IT systems, heavy-handed regulation, and multiple players in the shipment process – among other challenges – has seen modal shift both to sea and to the integrators. But the question remains as to who should be driving the change, and how so many parties can implement one efficient system that replicates the express industry.

Several players called on freight forwarders to take the lead, arguing that airlines are simply transport providers and that forwarders were better placed to provide the cohesion the industry needs. “Airlines have the heaviest asset cost but they are the ones who have to show the most flexibility,” said one delegate.

“If we don’t do anything we’ll be in trouble,” said Michael Steen, chairman of The International Air Cargo Association (Tiaca). “Some companies can benefit from lack of action, while others are just trying to survive.”

But, he added, there were grounds for optimism. “We’ve never seen as much collaboration as we do today. Let’s use this opportunity.” And he also pointed to sectors which are currently growing well –the integrators and the Middle Eastern carriers – demonstrating that opportunities remain in the market.

But the talk wasn’t simply about winning back lost market share. Tiaca has also been focusing on growing the overall air freight market by lobbying for trade liberalisation. “The global economy could be stronger if we liberalised trade,” argued Mr Steen. “We must convince nations that it will benefit their local economies.”

Mr Vertannes added that governments are currently very receptive to the industry. “Never before has government reached out to industry as it does today. They don’t have the answers, and industry does. But we need to provide them with solutions.”

The session covered the whole array of air freight’s woes, from the “disappointing” uptake of e-freight, to airport infrastructure and quality processes. And that shows how far – and efficient – the industry has become. What used to take two days to talk about was covered in just two hours. The question will be however, whether companies from across the supply chain finally start to act.