Airlines need to rethink strategy to capatilise on express cargo business
FORMER air cargo executive now president & CEO of Strategic Aviation Solutions International, Stan Wriaight, has warned that airlines must change their strategic approach to cargo, or they will lose high-yield traffic and be reduced to commoditised business
15 February 2021 - 19:00
If carriers want to avoid a repeat of the loss of the express business to the integrators, they have to play to their strengths and offer a product the market wants, he says.
'Airlines have got to be on the value side,' he stressed.
There are opportunities for growth, notably the explosive momentum of e-commerce, but airlines are not equipped to take advantage of these, despite their natural advantage, argues Mr Wraight.
In the express segment, the integrators have stolen the march on airlines - although the latter have a time advantage. Flying direct between points, they can offer transit times that are impossible for any competitor, be it integrator or e-commerce behemoth like Amazon, to match. If they positioned themselves to take full advantage of this, they could charge significantly higher rates, said Mr Wraight.
Where they fall behind is on the ground, owing to fragmented and poorly organised processes that fritter away this time advantage.
'You have to have ground services equal to, or better than, Amazon, UPS etc. Help the handler invest in equipment and processes. Or self-handle. You need dedicated staff, dedicated doors and to get customs brokerage. Organise your ground services to process your cargo within hours, not within days,' he said.
To do that, a second vital element has to come into play: a more fluid and faster flow of data.
Mr Wraight regards the nascent concept of data corridors as the most promising conduit for this. While individual operators can establish fast one-to-one flows, he finds a better way would be via cargo community systems (CCSs), which have been gaining traction in recent months.
'You can have an e-tailer in Hong Kong hooked into the CCS there, the trucker picks up the shipment and enters that into the CCS; the handler scans it in at arrival and it all goes into the CCS, including the ambient temperature and other relevant information. And you can replicate the process at the other airport.
'If you prepare, you know what's coming. There are no surprises. You can plan in advance,' he said.
In addition, he said airlines should start handling transits the same way they handle passenger baggage. 'For that you need complete transparency. That'll allow you to do things like arranging planes to be parked next to each other at the gate,' he said.
Remaining focused on commoditised business is not really an option for many airlines, he noted. He pointed to a large European carrier which generated about 80 per cent of its profit from Asian trade a few years ago. This business is being eroded by improved offerings from rail, trucking and ocean transport providers.
Mr Wraight's strategy is convincing, but it faces a significant obstacle to adoption. At most passenger airlines, cargo is relegated to the lower echelons of the organisation and struggles to find an ear at the top.
'Cargo needs a seat on the board,' he said.
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