South African trade moves away from air cargo as ocean rates tumble
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The trail of announcements about new temperature control capabilities is testament to airlines’ efforts to boost profitability through premium services, but Stan Wraight, executive director of Strategic Aviation Solutions International, has doubts about many of these efforts.
“You cannot control your destiny when you do not own your processes,” he said, pointing to the bout of outsourcing that has left most airline relying on handlers and other providers.
Since most airlines are reluctant to make long-term commitments to handlers but insist on a 90-day cancellation clause instead, and because they are not willing to pay handlers fees that would provide them adequate ROI, there is no incentive for the handling firms to ramp up their performance to give the carriers a sustained high service level, he continued.
In order to achieve a performance level that would put an airline on a par with the integrators would require a strategic partnership with a handler, Wraight argued. To get there, he thinks that one airline would have to take the lead in developing a true partnership with a handling agent to demonstrate the benefits to the rest of the industry. If a carrier succeeds with this, others will follow, he predicted.
“And then they should publish their statistics. Not flown as booked, but delivered as promised,” he added.
James Woodrow, director of cargo at Cathay Pacific, agreed with the measurement paradigm. “Flown as booked alone is a fairly crude measure, as it gives no information as to whether the plane was on time, delayed 24 hours etc.,” he noted.
Ram Menen, the former head of cargo at Emirates, also looks beyond flown as booked. “Delivered as promised has always got to be the target,” he commented.
Two-and-a-half years ago Lufthansa Cargo decided to shift its chief measuring paradigm to ‘Notified for Delivery’ (NFD), its version of delivered as promised. The carrier generates a transport plan for each air waybill, based on the flight chosen, which determines key points like drop-off time, time of arrival and when the shipment is available for pick-up at destination. These elements are agreed with the forwarder, usually in an automated process in the case of larger agents.
Smaller and mid-sized forwarders, on the other hand, for the most part still work with estimates of flight arrival and import handling time, which means they have a far less accurate idea when their freight is going to be ready, noted Daniel Röska, head of quality management of LH Cargo, who is also vice-chairman of Cargo 2000.
According to him, for Lufthansa the shift to NFD was relatively seamless, as the elements are covered by C2K, of which the airline was one of the earliest adopters.
Panalpina offers time-definite services and can deliver as promised on many routes, stated Raoul Wintjes, the forwarder’s corporate head of air freight product management. “Our clear commitment to ‘delivered as promised’ is reflected in our support of Cargo 2000 and in our air freight service levels,” he added.
Röska claimed that the efficiencies of C2K and the internal standards developed on its back have been helpful to Lufthansa but stressed that it could be even more efficient if there were a broader uptake of C2K in the industry. “I believe standardisation in the industry is very important,” he added.
The C2K board is currently looking at various ways to boost membership. One key objective is to attract more small and mid-sized forwarders as well as smaller airlines.
Panalpina has implemented phase two of C2K, which measures performance at the house air waybill level, and has developed a diversified portfolio of time-definite offerings on the back of it. These include an express product, a standard offering and a premium service that gives customers a flexible and regular transport option with priority access to capacity.
“It goes without saying that a commitment to a specific delivery date and time is more inherent in PanExpress or PanPremium than it is in PanBasic,” remarked Wintjes.
During the 1990s Lufthansa Cargo revamped its product line-up with three distinct time-definite options in a departure from flight-specific bookings. As long as delivery times were met, it was of no difference to the clients on which flight their shipment moved, management argued at the time.
Forwarders begged to differ, however, which eventually forced Lufthansa to abandon the project and return to flight-specific bookings and related product offerings.
Probably the biggest stumbling block was a fixation on flown as booked on the forwarder side. In part this was simply a matter of habit, but the main problem was that many of their processes were export-driven and built-around flight-specific bookings, Röska recalled.
“Shippers are starting to understand that not all air freight is the same. However, we believe that the awareness of this has not yet truly sunk in. This is also one of the reasons, why time-definite offerings have not yet made their way in the air freight industry as a whole,” commented Wintjes.
Röska sees no indication that the market would be ready to embrace a time-definite product portfolio detached from specific flight bookings any time soon. For the foreseeable future the industry remains welded to this practice, he reckons.
Still, there are moves towards embracing delivered as promised in operators’ performance commitments. Menen pointed to carriers that guarantee delivered as promised under express or priority banners, where cargo gets expedited breakdown for delivery.
A broader adoption of C2K metrics would help prepare the ground for a migration of the focus to delivery times rather than flight departures, but for now flown as booked remains entrenched in services, although delivered as promised has gained ground in terms of performance measurement.
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