Air Cargo Handling Conference Update

February 2017, 13

Patrick Murray, Head of Calogi, attended the Air Cargo Handling Conference 2014 in September in Milan. He provides this update. 

1. Update from Cargo Operational Advisory Group (COAG)

With mature markets in America and Europe recovering, COAG’s priority is to integrate cargo operational standards into IATA standards. Other objectives include improving IATA manuals relating to Cargo Operations (IGOM), interacting with key cargo-operation stakeholders and removing complexity. 

COAG’s deliverables include:

• Amending the cargo section of the standard ground handling agreement to facilitate e-AWB and support a single process, aligning it to modern practices
• Enabling e-standard cargo operations procedures
• Listing standard cargo operational procedures and producing a facility capabilities matrix
• Areas of focus include safety, security, special cargo and messaging.

2. Voice of the shipper - Areas for improvement 

Areas for improvement from the point of view of the shipper/forwarder were identified as follows: 

• Visibility – real-time information on cargo’s location
• Need for speed – releasing the goods two hours earlier could result in total reduction of one day for the delivery
• Cold Chain GDP – increased need from pharmaceutical industry for control throughout the supply chain
• Reduction of costs through integration of processes – opportunity for ground handling agents to provide services to smaller forwarders
• Too much focus on reducing costs - Forwarder and, consequently, the carrier selection of the GHA is becoming more and more dominated by procurement departments with the number one intention of reducing direct purchasing costs.

3. Improving quality and productivity 

Thilo Schafer, Vice President Global Handling Management, Lufthansa Cargo, posed the question: “How can we further improve productivity of the air cargo supply chain while getting costs under control?” Lufthansa has attempted to do this by focusing on lean logistics and digitisation. Transparency and data quality were identified as the biggest issues faced today, and Thilo claimed lean processes could save the industry millions of Euro if implemented across the network.

The Lufthansa LEAN project is about people, and focuses on transparency in areas like shipment status, location of documents, flow, and handling processes. The three areas of change are:

• Hand: Changing the work environment and processes
• Head: Changing the way of leading and steering
• Heart: Working with passion to drive change

Ultimately, LEAN improves KPIs, staff productivity, reduces failure costs, improves production lead times, and improves quality. Quality of data is still an industry issue. Having tested 1,000 air waybills, Lufthansa found none of those tested could be classified as 100% perfect.

4. Emerging opportunities 

Michael Fiorani, Manager Ground Handling Contracts at Cargolux, and Peter Schloten, VP Commercial at Saudi Arabian Airlines, discussed emerging markets, or countries making an effort to improve their economies and reach the same level of sophistication as countries termed as developed. 

Five emerging markets were discussed in detail. Vietnam has advantages that include its electronics and textiles, skilled and low cost labour, and location. Weaknesses include a lack of capital for research and development and non-privatisation of public companies. Kenya offers a stable political environment, labour availability and a diverse economy but threats include violent crime, security and terrorist activity. Nigeria has a large consumer base, oil resources and low taxation but weaknesses include corruption and religious tension. Importantly, Nigeria is a big importer while Kenya is a big exporter. South Africa has strengths including the automotive and mining industries, and close trade ties with Europe are an advantage but currency volatility is a weakness and threats include violent and petty crimes. Mexico also has strengths in the automotive industry, textiles and electronics but suffers from an immature transport network, violence and a dependence on US markets.

5. Process Optimisation, IT, Industry KPIs, Milestone Measurement and other tools 

The workshop facilitated by Patrick Murray identified industry KPIs including e-AWB penetration and quality/timelines of the FWB, Freight Status Updates, consignment receipt, departures arrival and delivery. The workshop also identified other areas that should also be measured, identified the risks and how they could be mitigated and identified the next steps, including stronger commitment from COAG members to the support group, an ongoing improvement in communication between COAG, IATA and C2K, and the involvement of IT companies solutions.