FROM RUSSIA WITH FREIGHT - Global Trade Magazine
  July 29th, 2016 | Written by

FROM RUSSIA WITH FREIGHT

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  • Considerations For Oversized Cargo
  • Potential Time-Sucks For Air Cargo Charters
  • Oversized Air Cargo Is No "Walk In The Park"

A malfunction of the main rotor at a power station in the Malaysian state of Sarawak this past April prompted a scramble to send a 19-ton portable welding system, alongside other equipment needed for the repairs, to the stricken site. An Ilyushin 76 cargo aircraft operated by Russian freighter airline Volga-Dnepr had to be chartered to carry the cargo to Bintulu in Malaysia.

All 11 pieces of cargo in the shipment were packed in special crates for transportation and were loaded using a three-ton capacity forklift vehicle.

The shipper had little room for choice—no freighters large enough to carry such a load call on a scheduled basis at Bintulu, and only a few aircraft types outside the military can accommodate outsize loads. Chartering a plane was the only option.

The only Western-built freighter that can take outsize cargo today is the Boeing 747. It is not only the largest model but also the only one that can be loaded from the front. According to one 747 operator, less than 10 percent of its cargo requires nose loading capability.

Even the 747 has limitations, however, and they’re caused by the size of the opening. Shipments of larger dimensions require the Antonov-124, a Russian/Ukrainian freighter designed to take loads up to 150 tons. This aircraft is frequently used to carry large generators, train engines, satellites and outsize equipment used for oil drilling or mining. Shortly after the Bintulu charter, Volga-Dnepr—which operates a fleet of AN-124s alongside its Ilyushin-76s—moved a 59-ton compressor from Zurich to Singapore for inclusion into a bespoke oil rig build.

For American shippers and their agents, chartering an AN-124 is not always possible. To obtain the necessary permitting from U.S. authorities, they must demonstrate that there is no Western-built freighter that can accommodate the shipment and that it has to go by air, according to Derek Traylor, charter manager, Americas, at forwarder CEVA Logistics.

A charter may suggest a departure within hours, but this is rarely the case with international shipments. For one thing, aircraft are seldom in the location for the intended departure, but even if they are, there is paperwork to be sorted out first.

“It’s hard to say what lead times for charters are. There are so many different factors,” says Traylor. “The first point is, how long does it take to get the permits in place? If your charter goes to Japan, you need 10 days for that. To Europe or South America it’s usually three days.”

He points out that not only the jurisdiction at destination comes into the picture but also countries in the flight path. Some, such as Israel, take even longer to issue a permit than destination countries.

“You may reroute the flight to avoid that country, but that costs more. But if you spend a lot of money on a charter, a few thousand dollars more won’t make much of a difference,” Traylor says.

Often it takes time to prepare the shipment for the journey. When Volga-Dnepr moved the 59-ton compressor to Singapore in April, a special frame had to be constructed first. This served two purposes: spreading the weight of the compressor throughout the cargo cabin of the freighter and also protecting a delicate overhanging high voltage box from movement throughout the transportation process to avoid putting undue stress on the connection and causing any damage.

“The HV box couldn’t be removed for transit because it contained sensitive electrical wiring which was directly connected within the compressor housing and the customer wanted to avoid sending an engineer to Singapore to re-assemble it, which would have added more cost and a potential time delay to the project build program,” recalls Alan Baldwin, Volga-Dnepr’s business development manager.

Aircraft availability can also be a stumbling block for quick departures, although this is less of a problem in the current market conditions. According to two charter brokers, getting ahold of a suitable freighter is usually not a problem these days, as several industries that usually regularly need charters are going through a slow period. Oil and gas exploration has been hit hard by the slump in energy prices, and the contraction in demand for commodities has depressed activity in the mining sector, says Justin Lancaster, group commercial director at Air Charter Service.

From the other end of the equation, the overcapacity in regular airfreight activities and the ensuing erosion of their yield have prompted airlines that were traditionally reluctant to embrace charters to review their strategy and spend more time chasing charter opportunities.

“Charter is part of our core strategy, it is not an afterthought. We intend to run a certain number of charters per year. It’s in our budget,” says Shawn McWhorter, president for the Americas at Japanese freighter operator Nippon Cargo Airlines. NCA purposely creates down times in its schedule to accommodate charter requests, he adds.

As often as not, the strategy does not yield a full charter but a diversion of a scheduled flight. “We get a lot of charter requests that are not for full plane loads,” McWhorter reports. Rather than dedicate an aircraft to a charter operation, a better solution is to divert a freighter on a scheduled route to make an extra stop to pick up such cargo.

Several airlines have been chasing such opportunities lately, notes Traylor, adding that these carriers are happy to supplement their loads on scheduled sectors in the current market conditions, provided the additional stop does not create problems with the schedule.

In North America, NCA is reluctant to head down to Miami for a single load, but there are a lot of viable points between New York and Tokyo, McWhorter says. The Japanese airline aims for one or two diversions a month. Many shippers and forwarders mistakenly believe that full charters are more reliable than diversions, but the cost savings are hard to ignore, McWhorter adds.

“Diversions save customers a lot of money,” confirms Traylor. Chartering an aircraft remains an expensive option, even though the lower oil price has reduced the hit on shippers’ budgets somewhat.

 According to one forwarder, charter rates to Asia have come down from previous levels of $1 million to $1.2 million to the $800,000 to $1 million bracket. To Europe the bill may come down to about $500,000 if the aircraft is already in the region and does not have to be flown over first.

Cost savings can be wiped out by mistakes in the information that shippers provide to charter brokers. Traylor cites a recent instance where the shipper had supplied inaccurate information about the size of the shipment, which turned out to be two inches higher than indicated. As a result, the cargo did not fit into the Ilyushin 76 that had been lined up for the job and a larger aircraft had to be ferried in to take the load. On top of the costs involved, the shipper had to live with the longer time needed, Traylor says.

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