English Arabic Armenian Azerbaijani Chinese (Simplified) Chinese (Traditional) Czech Danish Dutch Estonian Filipino Finnish French Galician Georgian German Greek Hindi Hungarian Icelandic Indonesian Italian Japanese Korean Latvian Lithuanian Malay Maltese Norwegian Persian Polish Portuguese Russian Slovak Slovenian Spanish Swedish Thai Turkish Ukrainian Vietnamese

Only the smart survive

ISTANBUL: The future direction of, and involvement in, shipping by air will depend on the rise of middle class spending in developing countries and what type of supply-side company is going to meet their service requirements.

Brian Clancy PhotoSpeaking at TIACA's Executive Summit in Istanbul on April 24, Brian Clancy (left) a founder of aviation consulting company MergeGlobal and now a partner in Logistics Capital & Strategy, echoed the observation of FedEx chairman Fred Smith who told IATA's Cargo Conference in March: "The future ain't what it used to be".

Both men seem to think the golden age of airport-to-airport cargo shipping and its associated business infrastructure is all but over for some types of players.

Clancy told conference attendees that the supply-side is facing four major challenges in a post-Great Recession era: slow growing episodic demand; a declining length of haul; rising shipment density and a shift to what he describes as "hybrid inventory strategies" prompted by shipment consolidation and modal shift.

So by 2018 who will be the winners? Clancy comes to a similar conclusion as Smith: "The integrators are in a better strategic position relative to forwarders and will further improve their market position in intercontinental small package, divert the highest yield emergency air freight shipments away from airlines, and re-capture downgraded air freight demand with their vast ground package and LTL networks in North America and Europe."

Forwarders, meanwhile, "will manage modal substitution of planned air freight users by re-capturing pallet-sized shipments as LCL sea freight or consolidated FCL shipments. Net revenue margins per kilo will likely drift down forcing [them] to explore new initiatives to reduce unit costs."

Clancy reassured his largely airport-to-airport sector audience by suggestemiratesing non-integrated airlines operating belly capacity will always have what he euphemistically describes as "pricing flexibility" due to the passenger revenue contribution to operating costs. At the same time operators of fuel-efficient B777/B787 passenger aircraft will benefit from increased cargo payload per departed seat; and those airlines that can afford next generation freighters will gain from an industry with fewer competitors.

So potentially good news for airlines like AirFrance-KLM, the Lufthansa Cargo Group, Emirates or even Cargolux but not so good for "freighter airlines, including ACMI carriers, that have based their fleet strategies on low capital cost used aircraft and cannot afford to replace their fleets. [They] will be forced to exit the industry – [and the] military downturn will accelerate this process in 2014," he says.

Clancy thinks the survivors in this new era will need to achieve a deeper understanding of costs and prices to manage slow and volatile demand; embrace cloud-enabled IT cost reduction while simplifying their service offerings to anticipate changing shipper requirements; and increase "share of wallet" with their best customers rather than trying to acquire new customers from their competitors.

Finally, in a reminder that not much has really changed in the past 25 years apart from lower margins, Clancy told his audience that "human resources becomes even more strategic as highly variable compensation models risk talent flight in many forwarding companies."

Or, in an echo of that immortal catchphrase from Burlington Air Express: "People, not planes, deliver".

News

Written on 22/02/2018, 19:42
infrastructure-improvements-not-rocket-science-says-iataNEW YORK, NY: February 22, 2018. IATA director general and CEO Alexandre de Juniac says the U.S. government should get out of the business of running...
Written on 22/02/2018, 17:40
top-employer-dhl-opens-new-brussels-hubBRUSSELS: February 22, 2018. DHL Express has a new €140 million, 36,500 sq.mt. regional hub at Brussels Airport that can handle 42,000 shipments an...
Written on 22/02/2018, 16:10
record-year-for-rockfordROCKFORD, IL. February 21, 2018. The Chicago Rockford International Airport (RFD) has reported a 50 percent increase in landed cargo in 2017 to reach a...
Written on 22/02/2018, 15:44
brussels-levies-395-million-fine-on-maritime-car-carriersBRUSSELS: February 21, 2018. The European Commission (EC) has levied fines totaling €546 million on four maritime car carriers and three major car parts...
Written on 15/02/2018, 17:39
first-uae-built-satellite-nears-launch-dateDUBAI: February 15, 2018. The first satellite developed and built at the Mohammed Bin Rashid Space Centre (MBRSC) by Emirati engineers has been flown to...
Written on 14/02/2018, 22:30
saudi-arabia-and-uae-provide-mobile-lift-for-yemen-aid-programSANA'A, Yemen. February 12, 2018. Prior to disbursing US$1.0 billion in humanitarian aid to Yemen next month, Saudi Arabia and the UAE recently arranged...
Written on 14/02/2018, 16:09
master-showjumpers-travel-in-styleHONG KONG: February 14, 2018. The latest Longines Masters equestrian event ended last weekend with a Grand Prix win by France's Patrice Delaveau on his...
Written on 12/02/2018, 18:37
humanitarian-logistics-databank-launchedDUBAI: February 11, 2018. The Humanitarian Logistics Databank, an information-sharing platform for aid agencies, has been launched by Princess Haya bint...
Written on 10/02/2018, 23:29
gac-to-manage-yamal-lng-icebreaker-fleetSABETTA PORT, Russia. February 09, 2018. The Yamal LNG gas project has appointed GAC Russia to manage its fleet of icebreaker tankers at Sabetta for the...
Written on 09/02/2018, 18:26
drones-about-to-take-off-in-singaporeSINGAPORE: February 07, 2018. Airbus has partnered with the Civil Aviation Authority of Singapore and Singapore Post to test its Skyways package delivery...
Written on 06/02/2018, 15:55
singapore-tops-new-belt-road-indexSINGAPORE: February 05, 2018. According to an index of real estate prospects in 67 countries along China's Belt & Road Initiative (BRI), Singapore,...
Written on 04/02/2018, 21:56
record-profit-for-amazon-undermines-the-need-for-tax-breaksWASHINGTON, DC: February 01, 2018. A report from the U.S. Economic Policy Institute (EPI) concludes Amazon fulfillment centers do not boost overall...
Written on 04/02/2018, 21:27
tiaca-adopts-new-vision-with-makeoverMIAMI: January 31, 2018. The International Air Cargo Association has announced a new vision that includes more training and consultancy projects to ensure...
Written on 04/02/2018, 20:26
cartel-members-fined-169-millionLUXEMBOURG: February 01, 2018. The Court of Justice of the European Union has upheld €169 million in fines originally imposed by the European Commission...
Written on 01/02/2018, 20:16
iata-confirms-a-record-year-for-air-cargoGENEVA: January 29, 2018. IATA reports a 9.0 percent year-on-year increase in freight tonne-kilometers (FTKs) in 2017, noting it was the strongest...
Written on 28/01/2018, 18:01
us-4-5-trillion-circular-economy-goes-mainstreamDAVOS, Switzerland: January 24, 2018. BMW has joined 29 major corporations with collective annual revenues of US$1.3 trillion in supporting a circular...
Written on 27/01/2018, 01:21
low-marks-for-russian-corporate-transparencyMOSCOW: January 25, 2018. Transparency International (TI) Russia has published a first-ever study on the financial transparency of 200 Russian companies...
Written on 27/01/2018, 00:09
boeing-loses-bombardier-anti-dumping-caseWASHINGTON, DC: January 26, 2018. In a blow to the Trump administration and Boeing, the U.S. International Trade Commission (ITC) has ruled unanimously...
Written on 26/01/2018, 21:28
ndia-s-gst-expected-to-reduce-tax-ratesKUWAIT CITY: January 25, 2018. According to the latest survey of global logistics executives by Agility, India's GDP is accelerating again after early...
Written on 23/01/2018, 20:30
logistics-industry-optimism-for-emerging-marketsBAAR, Switzerland: January 22, 2018. Emerging markets have ignored growing populism in the U.S. and parts of Europe to "look brighter than they have in...

- powered by Quickchilli.com -