SWITCHING OFF AUTOPILOT | Global Trade Magazine
  September 29th, 2016 | Written by

SWITCHING OFF AUTOPILOT

WHAT YOU NEED TO KNOW ABOUT SETTING UP YOUR AIR CARGO SHIPMENTS

Air cargo is the obvious transportation option if you need to get something somewhere fast. If you have a shipment that needs to be in Europe tomorrow, you’re not going to load it onto a ship.

Besides its obvious applications in exigent circumstances, air cargo appeals to many shippers transporting high-value products that require security, refrigeration or special handling. Pharmaceuticals, electronics, machinery, produce and live animals have all found their place in the skies.

“In the past there was a tendency for some shippers to just look at ocean versus air rates and take the view that the cost of air cargo was too high,” says John Lloyd, senior vice president for Cargo at Virgin Atlantic. “Companies now look at the value of air cargo within their entire supply chain costs and recognize it as a key part of their customer service strategy. Air cargo is an increasingly popular and viable choice, particularly for time- or temperature-sensitive goods and higher value products.”

The air cargo industry moves less than 1 percent of world trade by volume, but more than 35 percent of global trade by value—around $18.6 billion of goods every day. The industry is able to provide this level of service by growing its capacity and the frequency of its flights. Although the business is a bit in the doldrums lately thanks to flat global trade, the industry doesn’t project the kind of morbidity that you find with ocean carriers.

“On major trade routes airfreight services are frequent and this gives customers plenty of flexibility,” says Alison Webster, executive manager Qantas Freight Enterprises. Qantas Freight, for example, offers cargo capacity on 40 flights per week from five airports in the United States to Sydney and Melbourne, Australia. The airline also offers capacity on more than 1,750 international flights per week to 50 destinations in 20 countries. Combined with interline agreements, Qantas Freight helps customers reach more than 500 destinations worldwide.

American Airlines Cargo has new airplanes on order and new routes on the drawing boards. “We help shippers reach all points on the globe through an expansive network,” says Conor Miller, manager of Global Sales and Strategy at American Airlines Cargo. “We offer 6,700 flights a day to 350 destinations in more than 50 countries. Where we don’t have direct flights we use interline options. We have new modern aircraft coming online. The Boeing 787-800 and 787-900 allow us to maximize cargo on long distance hauls.”

El Al Israel Airlines is in the process of expanding its cargo capacity in and out of New York’s JFK airport by some 400 percent with the purchase of 15 new Boeing 787 Dreamliners and the doubling of the frequency of its passenger flights.

Tal Mor, El Al’s head of Cargo Sales at JFK, also notes the airline is expanding its offering to U.S. shippers to many points globally. While currently known for passenger and cargo flights to and from Israel, El Al is transforming its Tel Aviv base into a hub, allowing U.S. shippers to reach points in Europe, Africa and Asia.

For Mor, the first thing a new U.S. exporter should do is to become a “known shipper” under Transportation Security Administration regulations. “Known shippers can ship on freight or passenger airlines,” he explains. “Unknown shippers can go only on freighters.”

It’s also possible to become a known shipper to a specific airline through a relationship with a freight forwarder. “To do that you need to be in the TSA database and comply with the airline’s requirements,” says Mor.

A relationship with a good airfreight forwarder is not a bad idea for new exporters but airlines encourage shippers to contact them directly as well. “A freight forwarder can certainly make it easier if you are new to airfreight,” says Webster. “The forwarder will advise and assist on how to move goods efficiently and comply with export documentation and shipping requirements.”

“It’s not necessary to go through a freight forwarder but it’s common,” adds Mor. Forwarders can get shippers better rates, he notes, by bundling cargo volume of multiple shippers.

“We encourage customers to reach out to freight forwarders,” says Miller. “They can help with the large volume of paperwork and back-office processes that are involved with air shipments. Also, while the airlines only provide airport-to-airport service, freight forwarders can provide door-to-door service.”

Airline reps, like freight forwarders, can be excellent sources of knowledge when it comes to more complex and innovative shipments, according to Webster. “Our Qantas Freight team played a critical role in opening up a new export pipeline for fresh Australian milk into China,” she relates. “This was a great example of us working with a shipper to establish a brand-new export market.”

The air cargo industry has been pursuing major advances in technology in recent years. “Across the industry there is a move to implement digital technologies and electronic air waybills, and at Qantas Freight we have invested significantly in our operating platform and tracking tools,” says Webster. “Five years ago, no one in the air freight industry was using smartphone apps, but now our customers can track shipments and access flight information anywhere, anytime.”

The industry as a whole has been adopting electronic airway bills in greater numbers, notes Miller, adding that a penetration rate of above 50 percent is expected at some point this year. “That would be a great achievement for the air cargo industry,” he says.

“The air freight community realized we needed to get with the times,” Miller adds. “There has been growing demand for more sustainable and more efficient operations and more streamlined processes. The ultimate goal is to eliminate all of the paperwork in the freight forwarding process and to work in a more efficient manner. Replacing manual processes with electronic exchanges will create substantial efficiencies.”

The adoption rate of electronic air waybills hasn’t been that speedy and the ultimate vision—the elimination of all paperwork—“is still years away,” according to Miller. But when that day does arrive, shippers can expect greater alignment between airports, carriers and forwarders, and a better customer experience for themselves.

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