Pandemic has Catalysed Positive Collaboration Among Air Cargo Players
Moving over to the airside, the third session of the Future of Logistics conference held in Dubai focused on insights from government, air cargo and logistics companies along with pharmaceutical manufacturers on how adaption and collaboration will keep air cargo flowing smoothly well into the future.
The participants of the session were:
Joe Beydoun, speaking on-behalf of Fast Logistics Cargo
Fabio Weiss, VP, Head of Air Freight MEA at DHL Global Forwarding
Qutaiba Al Manaseer, Government Affairs Director Middle East & Africa, AstraZeneca
Madhav Kurup, Regional CEO (MESA Region) – Hellmann Worldwide Logistics
Arne Roehrig, Head of Projects & Systems - DIMOS
Fabrice Panza - Manager Global Cool Chain Solutions - Etihad Cargo
Lars Jensen, the moderator, began by asking all the panellists what advice they would give to players in the air cargo sector on things that should do moving forward and what they should not, based on learnings of the last 18 months.
Responding to the questions, Fabrice Panza started with a famous quote by Winston Churchill: "Never let a good crisis go to waste".
This, Panza said, really illustrated what happened over the last 18 months when the passenger side of operations completely tanked but a positive outcome was on the cargo side, which really took off thanks to the worldwide requirement of PPEs and pharmaceuticals.
Airlines thought out-of-the-box to come up with creative and innovative methods to meet the huge surge in demand.
The second key learning, said Panza, was the importance of community and cooperation despite the competition that has existed between different players in the industry. A prime example of this cooperation was the formation of the Hope Consortium that has seen remarkable outcomes by providing a coordinated response to the Covid-19 crisis.
Speaking next, Fabio Wiess said that with the current situation of air freight capacities, he advised end users and customers to "plan their supply chains well with reliable partners and to be cost sensitive but at the right time."
Arne Roehrig felt it was the right time to use the pandemic to improve and innovate cargo systems. "The cargo industry, from the equipment point of view, has not changed much in the last 40 years," he said and it's time to upgrade cargo systems and equipment to make them more flexible in order to better adapt to changes.
Agreeing with Arne, Joe Beydoun said that the one thing that the air cargo industry indeed needs to do is become more flexible, in terms of pricing, capacity and innovation. And as for what it should stop doing, Joe said they should stop taking business for granted as there is great competition out there today and the customer has many options.
AstraZeneca's Qutaiba Al Manaseer said that one key learning from the pandemic was the need for greater collaboration in the supply chain. Two years ago AstraZeneca was not even a vaccine manufacturer and thanks to their collaboration with Oxford University they have manufactured over 2 billion vaccine doses today, and counting.
"So with collaboration you can really accelerate innovation," said Qutaiba. Then speaking about what not to do, he said the industry should "not work in silos" and bring about a change in mindset that would turn challenges into opportunities.
Giving the example of his own company Qutaiba said that AstraZeneca decided to manufacture the vaccine on a not-for-profit basis as the company thought the biggest return from producing the vaccines was to end the pandemic itself and "contribute in the public health fight."
Madhav Kurup of Hellmann also agreed that that cooperation was critical but added that another thing that was required in today's air cargo supply chain was "competency enhancement" of the people involved in it.
Referring to the processes of the pharmaceutical cold chain Madhav said that as of today "they are not very well designed" and across airports worldwide, people, from warehouse handlers to customs officials, are not trained enough to manage pharma cold chain products in the right manner and there is a huge scope for competency improvement and awareness training.
According to Madhav another critical requirement that the pandemic has revealed is the lack of ownership at various stages of the supply chain.
Taking Madhav's point further Lars addressed the two representatives present from the air carriers i.e. Etihad Cargo and DHL and asked them "if things are going to change?"
Responding to the question Fabrice Panza said that Etihad Cargo is IATA CEIV certified and taking every step to ensure that all stake holders in the cold chain are well-trained and "speaking the same language" while constantly updating and evolving processes and systems.
Fabio Wiess said the pandemic was a unique and first-time challenge to the air cargo industry. DHL was already carrying out assessments of their worldwide network well before the vaccines came out to make sure they had the right people and equipment in place in order to successfully meet the requirements of quick and effective vaccine distribution.
The discussion of air cargo supply chain readiness was then moved closer to home with Lars asking the panellists about the advantages and challenges in air freight movement specific to Dubai and the Middle East region and what were the prospects of the Middle East being a catalyst to drive global change in the air cargo industry?
The challenges to the industry even after the pandemic have not changed much only the scale has become bigger, said Madhav Kurup. Infrastructure continues to be a challenge for some of the airports in the region and finding the right people for the job in certain countries is also difficult. Collaborative efforts could also use a boost in the region, added Madhav.
Responding to Madhav, Joe Beydoun agreed that there were certain airports in the region that cannot provide the seamless services required by the supply chain but at the same time there are some great alternatives like Dubai and Abu Dhabi that have better infrastructure, services and talented manpower than most airports of the world.
Speaking of his personal experience Fabrice Panza said that he came to work in Dubai for the first time a year ago and he was amazed the infrastructure here. Giving the example of the artificial intelligence capabilities in the region he said it's going to be "very happening" in the region very soon.
The region also sees very close cooperation between academia and business, Fabrice added. This, coupled with Dubai's geographic location is going to ensure that Dubai continues to play a even more critical role in the global supply chain.
One of the challenges in the region, according to Fabio Weiss, was that it has some of the biggest airlines in the world which, thanks to the drastic reduction in revenue from the passenger business, are now fighting for survival. How they can best leverage their cargo business and freight rates in the coming year will greatly impact their bottom lines.
As an equipment supplier Arne recalled the flower center that DIMOS helped set up in Dubai 20 years ago. What was critical to the center's success, was the value-added services the center provided. Dubai should keep such innovation going and build value additions on top of the great infrastructure that exists here today, he said.
The next question posed by Lars to the panellists referred to the recent moves by shipping lines like Maersk and CMA CGM to acquire aircraft and do they see a this as something that will upset the air cargo industry?
Replying to the question first Madhav Kurup said that companies like Maersk and CMA CGM want to be integrated providers and not just shipping lines any more. In a few years they will become major players but that will only affect the biggest shippers while mid-sized companies will continue to use freight forwarders and current air cargo carriers.
Directing the question to Fabio Weiss, Lars asked that with shipping lines going multimodal will it threaten the very existence of freight forwarders like DHL?
To that Fabio replied that they can have their aircraft but the real asset in the freight forwarding business is the people and the systems that they have created. Given the current circumstances, now is a good time to have cargo transport assets that are getting filled up wherever you take them in the world. But in long run Fabio saw it as an unsustainable business model.
Turning to Fabrice, Fabio asked him in a lighter vein, if Etihad would consider buying a ship?
Fabrice replied that it would not be a good idea but on a more serious note, he added that presently air cargo volumes constitute between 1 to 1.5% of cargo moved worldwide. But in terms of value that cargo is between 25 to 30%. So there will always be a need for air cargo lines. Shipping lines buying cargo aircraft is just temporary opportunistic move, according to Fabrice.
Lars then invited questions from the audience to which Mohamed Ahmed, a freight forwarder, responded by asking that if decisions today were made on the basis of cost most of the time how long did the panel see the current price war going on and as a company how does one strike the right balance between acquiring the best talents and technologies and realising the best return on those investments?
Taking first crack at the question Qutaiba Al Manaseer explained AstraZeneca's approach to competition and what differentiates them from other pharmaceutical companies is that they look for areas where they can actually cooperate with the competion in terms of research and development or distribution.
Fabio Weiss responded by saying that at the moment it was not so much a price war as it was a war for capacity and there were too many elements in play that were beyond the control of any one company. As to when it will be over? He did not see any change till at least the middle of 2022.
However, what shippers can control, said Fabio, was how they plan their supply chain and distribution. If they plan keeping longer transport times in mind then maybe the ocean to air cargo conversions that are happening currently would slow down.
Joe Beydoun was of the opinion that the high price season is not about to end any time soon as long as manufacturers in China and the rest of the world along with customers continue to demand quick deliveries.
Providing an air cargo carrier's perspective on the question Fabric Panza said that with passenger traffic going down drastically and cargo has proven the lifeline of most airlines.
To this Fabio said: "This current situation has put cargo logistics on the map and the industry has finally become 'sexy'. Now this industry requires people can really think on their toes and find solutions. So it has become a challenging and rewarding industry now."
Madhav Kurup agreed and said the pandemic has given the industry the recognition and purpose that it has long lacked. And this is attracting the best talents today.
As for the high prices, Madhav said that one positive outcome of that is transport and logistics companies have made record profits in the last two years and this in turn will drive a greater risk-taking approach of these companies creating greater scope for innovation and entrepreneurship moving forward.
Lars Jensen then summed the discussion by saying that a lot of the problems that were discussed existed even before the pandemic disrupted things. However, a good outcome from the pandemic has been that it has made transport and logistics companies actually walk the talk on collaboration that has been going on for ages.
The pandemic has catalysed companies to implement process improvements and brought about real and positive collaboration among the various players of the air cargo supply chain.
Joe Beydoun concluded the discussion by saying that today, with vaccine distribution being so critical, efficient logistics has become an issue of life and death and this has created a sense of accountability that was there even earlier but today, it has become more real and significant than ever before.