Cargo Infrastructure – No longer the poor relation

The quality of service from cargo handlers is still affected by outdated infrastructure, but is there light at the end of the tunnel? Graham Newton examines the issues involved.

Air freight growth is sluggish. IATA figures for the first six months of 2007 show just a 2.7 percent increase, well below what was a relatively slow 2006 at 4.6 percent. Although May and June rates (up 5 percent and 4.9 percent respectively) suggest better times ahead, demand is not what it could be.

Perhaps it is just as well. Slow growth may never be a good thing but with cargo infrastructure problems at many major airports, air freight’s inefficiencies would only receive greater exposure. The challenge for handlers is to work around these obstacles and yet still deliver a quality service.

Stephan Beerli of Swissport, the largest independent cargo handler in the world, reports that in many instances the cargo infrastructure available simply does not meet market needs. He says many airports focus most of their resources on the passenger side and too often cargo warehouses, ramp spaces and roads to/from cargo areas take a back seat. “They do not get included in the initial plans and thus are not organized as efficiently,”
he says.

Lack of warehouse space is perhaps the biggest bugbear right now. “During the peak seasons warehouses can become chaotic, particularly at the higher demand cargo airports and, as more and more capacity is deployed, this becomes an increasing problem,” agrees Baba Devani, vice president, sales and international customer service, BA World Cargo.

Of course, this assumes the aircraft can land in the first place — by no means a guarantee when slots are also at a premium. Devani confirms that in markets that suffer a peak, such as Shanghai, securing the right slots can be a real challenge.

Such infrastructure deficiencies can be best highlighted by perishables. Transporting them is a complex process requiring on-time arrivals and departures, the close proximity of aircraft parking relative to the cargo facilities as well as the necessary equipment. Only then can “cool chain” integrity be maintained throughout the end-to-end process. Too often, however, there are weak links.

Devani admits specialist facilities such as BA World Cargo’s Perishables Handling Centre — capable of processing more than 115,000 tons of perishables each year — are not exactly commonplace.

A 24/7 business
Devani brings another factor into the equation if handlers are to deliver a quality service — regulatory procedure. For example, he notes perishable freight is naturally time sensitive and therefore requires a full understanding of the product and a more efficient paperwork process. “It is vital that handling agents engage in a streamlined process with the regulatory authorities or customs to ensure that these goods are cleared as soon as possible,” he says.

He describes air freight as a 24/7 business; so sufficient space, the requisite infrastructure and the right regulatory framework — together with the capability of processing freight throughout the day and night — are essential.

“A good cargo handling service also needs to be cost effective — that’s not to say it has to be the cheapest available, rather price should be linked to efficiency and the value that the services add to a carrier’s operation,” he says.

Whether that is possible given the state of infrastructure and regulatory demands is another matter. “I would say cargo handling services around the globe are of an average standard,” Devani responds. “Some are very good, such as Hactl in Hong Kong, but there are few that are flexible enough to meet the needs of today’s carriers.

“This is particularly true of the monopolies, those that are government-supported and rarely go beyond offering the very basic service,” he continues. “I think market forces will eventually change this, but for now it is a very real frustration. Handling agents in emerging markets in particular need to pay attention to their service levels and ensure that they are offering a valued service.”

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