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Are we scared enough?

Tags: Sea freight   Modal competition   Security   Speed   Reliability

Oliver Evans on Tuesday, September 17, 2013 3:30 PM


A couple of months ago a gargantuan vessel made its debut call in major European ports. The Mærsk Mc-Kinney Møller is (for a short period at least) the world´s largest container ship and heralds the approach of a new class of 20 vessels carrying up over 18.000 TEU. That is certainly a big number already, but wait until you see this converted into aircraft bellies: One  TEU (or Twenty feet Equivalent Unit) would fill roughly half the volume of a single long-range aircraft’s belly but twice its entire payload and more. So that no less than 36,000 aircraft are required to transport the payload of one of these “superships”. And the Chinese have now ordered even bigger ones… 

Scary?

Yes, but the size of these new ships is  – incredible as it may sound – just one part of the problem air cargo is facing in the modal competition.

Consider the relative ease with which ocean carriers can launch new routes, create and expand ports, build berths and deepen canals; and compare this to the near impossibility (at least in Europe) of building new airports, expanding runways or erecting bigger warehouses.

Then there is the dependency of belly carriers on routes which are mostly decided by the passenger side of the business and the overall scarcity of flight routes. And most of all: the intense efforts of ocean carriers to improve their game in categories until recently the hallmark of air cargo: reliability, safety and even speed.

Fierce as the competition within the air cargo industry might be, we have to understand that the fiercest competition in the future will undoubtedly come from outside our own industry. Because we are slow, not to say inept at transforming our business models.

Ocean carriers may be choosing slow steaming (to save fuel and costs), but they work very hard to cut down on time spent in port.
What do we really do to erase even a few hours from the days air freight sits  in the dim light of our warehouses?
Now, what was the last innovation in air cargo that chipped away at the market shares of other modes of transport? No answer? Yes, I thought so: it has been a while.

It is simple: the less we invent and transform, the more we will lose our competitive edge in terms of speed, reliability and security – and the harder it will become to attract future customers, except for the ones who have emergency cargo or the highest value goods. And the process is already under way as we all know, accelerated by the economic downturn of recent years but inevitable nonetheless, even in better times.

Scary stuff, I know.

But if a little angst gets us moving faster in the right direction I very much prefer its pull to the slow and tedious push our industry has grown used to.

Thank you for tuning in.

Oliver


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Comments

Published by jeniffer on Thursday, November 07, 2013 9:29 AM
I think that still it is scary to play
Published by Oliver Evans on Tuesday, September 17, 2013 5:22 PM
Dear Ted, indeed the blame game doesn’t get anybody anywhere. And indeed communication channels need to be open between all parties involved in the industry in any direction, from shippers to forwarders to airlines and all other stakeholder groups. My observation is that this is happily and increasingly the case. The urgency of upping our collective game is evident.
Published by Andy B on Tuesday, September 17, 2013 4:20 PM
Much bigger "threats" than other modes through technology. Manufacturing will be much more localised with 3D printers, molecular engineering etc. If you think that is far off technology suggest you look again http://m.popsci.com/technology/article/2013-09/3-d-printed-room-will-make-your-jaw-drop?src=SOC&dom=fb
Published by Ted on Tuesday, September 17, 2013 4:11 PM
I disagree with the state of innovation, except it didn't indeed come from within the industry. The OneAsset intelligent tag leapfrogged years of uninspired cargo tracking and status updates, adding real time information concerning temperature, humidity and most importantly, GPS based global location. Despite all the hype, all the airlines did was get the tag certified by the FAA, CAA and other regulators. It is shipper driven, not carrier or forwarder. The age old difficult relationship between these two entities has done more to damage the industry than all other external factors combined and in my view it continues to do so. Barring airlines from talking directly with shippers is incredibly selfish and near sighted, but that is what forwarders do, they want to be the one and only direct interface and it shows. There are many more things airlines could do to advance and revolutionize their business short of blaming ocean carriers, such as looking at much closer cooperation with the passenger side to work with major accounts in creative ways. Some are already doing so successfully. Also, reforming the pathetic and self-serving IATA lackluster industry representation might help.

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