Call for greater cargo cooperation
Greater cooperation among all air cargo stakeholders — airlines, freight forwarders and shippers — will help erase the communications gap between shippers’ expectations of service quality and what the airlines actually provide, according to the European Shippers' Council.
To that end, the industry as a whole needs to collaborate on new pilot projects to close this gap and put shippers’ needs into the equation, the organization said.
The shipper’s body recently made that claim in its Air Freight 2020 and Beyond whitepaper, which updates a similar study conducted in 1995. Of course, the last analysis was conducted during a different era for air freight, and ESC acknowledges that a lot has happened since the last whitepaper and new issues needed to be addressed. Security is a primary concern in today’s air cargo operations, and ESC has also placed an emphasis on sustainability.
The new document aims to keep the needs of shippers in the minds of the industry and government legislators, while at the same time setting goals for the manufacturing industry. The group said it represents members who use air freight for strategic reasons, not those who use this transport mode to ship large volumes of expensive, time-sensitive and urgent goods. ESC said the airlines and related service providers aren’t meeting its members’ expectations. To meet these needs, shippers require a larger stake in the industry and consultations on industry issues, ESC said.
“In a team effort, we ought to raise the bar for the air cargo industry and rise to challenges ahead of us,” the group wrote. “The way to establish this is a structural exchange of visions and ideas that is not related to the commercial discussion.”
For starters, the organization said air freight has to evolve at a much quicker pace to keep up with new commercial realities. It noted new technologies have been gaining steam in the past five years, but “the processes and the methods of industry have not been modernized over the past 20 years.”
ESC said the International Air Transport Association’s e-freight initiative is on the right path. Improving data exchange on all levels is also important, as IATA has pledged to cut air cargo transit times by 48 hours in the next six years, a move the Brussels-based shippers’ group has supported.
But the e-freight initiative has its problems, ESC said, noting its focus is on transferring messages between two forwarders. The group wrote “shippers do not have the opportunity and the technical know-how to invest or create a system for themselves. They depend on investment from freight forwarders in a paperless solution.” ESC urges forwarders “to work together with shippers in investing in systems, making an information chain between forwarders and shippers a reality.”
On security, ESC said the 100-percent screening approach is not the way to go, because this burden would impact the quality and reliability of air cargo deliveries. The organization proposed a secure supply chain protocol as another option, allowing governments to regulate how large-volume shippers invest in security protocols.
“Other types of shippers that are not able to invest cost-efficiently in the supply chain will hand over their cargo as being ‘not secure’ to the logistics-service provider for screening and will accept the negative consequences of screening,” the organization said.
Governments can refuse to give shippers this option, but ESC said this might make manufacturers think twice before investing in those locations. To make sure everyone is on the same page with security, ESC said global security standards should be in place by 2020.
At its heart, the customer experience is one of the most important aspects of air freight, ESC stated in its report, and better attention to customer detail will slow the modal shift underway between air and ocean transport. Setting out customers’ goals will also create a better flow of information industry wide.
The group’s report also hit on the controversial topic of surcharges, an important lobby issue that ESC has been focused on for months. European shippers want “a more transparent system of surcharges,” because the way they’re implemented now creates negative feelings among shippers towards carriers.
“The new model should create a clear link between the level of surcharges and independent factors such as the market price for aviation fuel,” ESC said.
European shippers are presenting these issues during a time in the air freight market that may have finally turned the corner. Airports Council International, which measures activity at 591 airports worldwide, said its latest numbers show freight growth in February rose for the fifth month in a row, increasing 2.6 percent, year over year, for a two-month growth average of 2.9 percent. During that same two-month period, international freight growth of 4 percent far outpaced domestic market growth, which rose 0.6 percent.
IATA, which measures airline activity, said air cargo demand ticked up 2.9 percent, year over year, in February. In the first two months of the year, demand rose 3.6 percent when compared to the same period in 2013. IATA noted most of the February demand growth occurred in the Middle East and Asia.
So it seems like after a three-year lull, air freight is finally gaining some momentum. ESC hopes to keep shippers in the loop as activity ramps up, creating a positive atmosphere between shippers and the air cargo industry, while also being aware of the shippers’ role in the multimodal supply chain could help stem the modal shift away from air cargo.
“In an ideal world, shippers do not think in modes of transport,” ESC wrote. “Instead, they would like to think in terms of lead time, reliability, costs and transparency. When the air cargo value chain adopts to this philosophy, the modal shift from air to other modes can be stopped.”