Urgent call for breakdown of cargo onboard as General Average declared on Dali
Singapore-based Grace Ocean has officially declared General Average on its vessel, the Maersk-chartered and operated ...
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In comes an email about a conference focusing on crisis management. At the risk of upsetting the conference organisers, one must ask: really? Lecturing airlines on crisis management? You may as well teach your grandmother to suck eggs. (A peculiar English phrase meaning don’t try to advise an expert.)
Airlines thrive on crisis management. They seem to live in a permanent state of chaos, constantly firefighting. That is their default setting.
It’s no wonder. From safety and security to volcanic ash and Sars, it’s a high risk, high-investment industry. It faces daily challenges.
But oddly, in the air freight industry, crisis management is mirrored by a large number of its customers, in a bizarre symbiotic relationship. Supply chain emergencies are bread-and-butter business for airlines. One forwarder explained that when he talks to shippers about air freight, they say they have no budget. Yet they consistently spend between $1 million and $2 million a year on it, unplanned. Supply chain breakdowns, poor forecasting, manufacturing problems all cause frenzied shippers to rely on the airlines.
It is a part of the industry in constant panic.
Forwarders are looking to change this. They want to see a strategic use of air freight – planned, managed, orderly. Airlines, for their part, appear not to know that most industries function in an altogether calmer, more rational way (publishing excepted).
As we all know, panic doesn’t always lead to the best decisions. It’s based on short-termism, and is a way to avoid the day-to-day realities, the planning, the true management of an organisation. And if the industry could alter its mindset, just a little, perhaps it could keep some of the chaos at bay and concentrate on the longer term.
If it is to increase the size of “the pie”, it is critical the industry focuses harder on the bigger picture. (And while business is so slow, now would seem a good time.) Because there is an industry constantly snapping at the heels of air freight, now more than ever.
I know that a good half of you prefer not to believe in modal shift. But if you don’t believe in modal shift, how can you increase the size of the pie? Where is that extra business going to come from except modal shift, and specifically, sea freight? There must be an overlap – a tiny section of the market that will switch between one and the other.
Yes, it’s true that of the 2% market share air freight has, most of that can only be flown. The same goes for the vast majority of the 90% which has a sea freight leg. But it really doesn’t take much to eat into 2%. And by upping its game and attempting to take market share from competitors, Maersk will no doubt eat slightly into that tiny overlap, those shippers perhaps seeking reliability rather than speed.
The Daily Maersk is a new service, promising – guaranteeing in fact – a reliable service. With daily rather than weekly cut-off times, no terminal time, it is a little-and-often service, supporting good inventory management. In itself, it doesn’t compete with the high-speed-to-market, or distressed-supply-chain business of the airlines. What it does reflect though is an industry attempting to better itself. It has taken note of sea freight’s 56% reliability. It has listened to shippers asking for a regular service. It has noted the costs to the shipper of goods sitting around waiting in ports. And it has acted.
(It has also dropped rates to such a degree that it appears to be forcing competitors out. According to one well-placed source, Daily Maersk Asia-Europe is now minus $400 per teu. Although the fuel charge means shippers do have to pay, they are paying less than the actual cost of the fuel.)
Once again, it is about efficiency – efficiency for all across the supply chain, from shipper to handler. And when other transport industries are finally pulling it together, it is surely time for airlines to stop the back-foot approach of crisis management, and implement long-term, innvoative, game-changing strategies that contribute both efficiency and stability to the industry, while increasing aviation’s market share.
If even the unreliable, arrogant and disorganised shipping line industry can do it, then so can you.
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