Supply chain radar: UPS hasn't caught FedEx’s bug
Market sentiment can be a bit like the cold, or diarrhoea. Try as you might to ...
FedEx has criticised US passenger carriers for failing to address the issue of air cargo in their applications to operate routes to Cuba.
Not one of the other 12 airlines described their cargo services in filings to the Department of Transport (DoT), and in some cases failed even to include belly capacity, despite being instructed to do so by the DoT.
The oversight leaves FedEx clear to argue, in its response to the DoT’s Cuba frequency allocation proceedings, that it is the only carrier serving the needs of US exporters.
FedEx is proposing a daily Monday-to-Friday service – or 3.6% of the total allocations – to Havana only, using a 757-200F, which will also have capacity for a Merida, Mexico, service. The filing says that up to 63,000lbs of cargo capacity would be available for US-Cuba, Cuba-US traffic, and that Havana would be connected to nearly 1,000 city pairs through FedEx’s extensive network.
FedEx would serve three other Cuban cities: Santiago de Cuba, Mariel and Varadero by truck.
The 45-page filing claims “the other applicants have little enthusiasm for supplying cargo services”, and that even if they did, the requirement for other suppliers such as forwarders, warehousing and customs clearance make belly shipping too cumbersome.
The biggest commodity, according to FedEx, will be phones and computers, which, under the new rules, are now permitted to be exported from the US and a fast-growing area in Cuban consumerism.
The FedEx filing examines each of the other airline applications, some of which are from non-cargo carrying, or low-cost operators, focusing entirely on the passenger side.
But even AA comes in for criticism from the integrator. Outlining the belly space available, FedEx notes: “Yet, with all of that potential space for serving the trading needs of US businesses, there is not a single mention of cargo service in the extensive American pleadings. It would appear that American might be quite content to leave the US-Cuba cargo business to FedEx.”
On Delta, which apparently has forecast 40lbs of baggage per passenger on its 757 and 737 services, FedEx argues the amount is “very much understated for this destination, and that much of the cargo capacity will not be available for shippers”.
FedEx hopes that by asking for a relatively small application, and not at weekends, it can be picked together with another carrier to split frequencies. United, for example, has asked for a Saturday-only service to Havana.
FedEx concludes: “[We] have reviewed the applications of the 12 other carriers in this proceeding and cannot discern any benefit their services would provide to US shippers and US commerce.
“While the passenger carriers propose a wide variety of ways to take US businesspeople to and from the island, they have ignored the necessity of moving the US goods that their passengers and US businesses would deal in.”
The integrator’s filing includes a statement on the economic analysis of FedEx’s proposal, by Dr Michael Tretheway: “FedEx creates significant value for a wide range of shippers but is especially valuable for small businesses and entrepreneurs stating news businesses.
“Over 300,000 US businesses, 98% of which are small- and medium-sized businesses, depend on the air cargo supply chain to sell and compete in the global marketplace. Air cargo plays a vital role in the economic development of US communities by supporting jobs all across the country.”
Atlas Air, meanwhile, claims to have operated the first commercial charter operation by a US carrier, when it flew in the equipment needed for the Rolling Stones’ concert in Havana last month. It brought in 97 tons of equipment by air, while another 61 containers, weighing about 500 tons, came by sea. A friend of The Loadstar who attended the concert, said: “It was incredible. The experience of a lifetime.”