The air cargo industry has long been criticized for its lack of customer-centric services and slowness to adapt digital integration. Pressures caused by Covid-19 changed that.
AACargo, for one, has plans on the near horizon to make services more accessible in an array of different ways.
“We want our customers to find us wherever they’re looking,” said Roger Samways, vice president commercial, at AA Cargo. “Overall, we’re focused on moving in the direction of real-time data, seamless connectivity, and transparency in pricing and capacity that makes it easier for customers to do business with us and keep our teams equipped and ready to adapt to changing customers’ needs.”
Jannie Davel, managing director, commercial, at Delta Cargo, noted that digitalization will be a key component within the technology evolution process. Already, Delta’s e-Freight program offers customers the opportunity to submit air waybill information electronically.
Lufthansa Cargo, one of the early adopters of digitalization, went completely paperless on 27 March, with e-air waybills. In addition, it introduced a “paper-to-eAWB” service, through which the few remaining paper-based AWBs are digitized at shipment acceptance then accompany shipments as an eAWB.
Financial growth
Positive earnings continued in 2021 due to market conditions caused by high demand and tight capacity.
Lufthansa Cargo almost doubled its adjusted EBIT year-on-year to €1.5 billion—the best result in its history. Its revenues topped €3.80 billion over €2.76 billion in fiscal year 2020. The average load factor improved by 1.7 percentage points year-on-year to 7%, while the supply of capacity increased by 8.7 percent to 10.1 billion freight ton kilometers offered.
IAG Cargo reported record financial results with annual revenues of €1,673 million for 2021 for an increase of 30 percent versus 2020. It also reported fourth quarter revenue of €499 million, an increase of 25.7 percent over 2020.
Good revenues are also allowing carriers to expand fleets and further product offerings. Qatar Airways has ordered 34 of Boeing’s new 777-8 Freighters—the largest, longest-range and most capable twin-engine freighter in the industry. It has options for 16 more.
With payload capacity nearly identical to the 747-400 Freighter and a 25 percent improvement in fuel efficiency, emissions and operating costs, the 777-8 Freighter is a more sustainable and profitable aircraft for carriers to operate.
AACargo is positioned to take delivery of more Boeing 787 aircraft over the next few years, a move that will help support further capacity growth across its network. “This year, we’ve already planned for nearly all our widebody fleet to be dedicated to long-haul international routes which is ideal for our cargo business and the strong international demand in the market,” said Samways.
Last year, Lufthansa Cargo completed its fleet modernization program. The fleet is now comprised of 15 Boeing 777F aircraft, two of which were newly flown last year. The twin-engine B777F is considered the most efficient, modern freighter in its class.
To address the need for capacity for cross-border e-commerce, Lufthansa Cargo is also adding converted A321 medium-haul freighters to its fleet and announced plans to lease the two short-haul aircraft in July 2021 for freight operations within Europe.
“With the added medium-haul freighters, we’re opening up a whole new strategic business segment,” said Ashwin Bhat, chief commercial officer at Lufthansa Cargo. “In the future, the A321F will offer attractive, same-day and e-commerce solutions within Europe and to selected medium-haul destinations. The new network represents a major step towards the fast-growing e-commerce segment.”
Lingering issues
Still, the International Air Transport Association (IATA) maintains that air cargo did not meet its full growth potential last year. The reason: Insufficient capacity and the fact some available capacity was located in the wrong place. Other factors include congestion at some key airports, labor shortages, and quarantined crews.
Cargo congestion particularly escalated at major US airports such as Chicago (ORD), Los Angeles (LAX), Atlanta (ATL), and New York (JFK) where illness due to the pandemic resulted in staffing shortages and long processing times. Warehousing space was, and remains, tight.
Some flights were rerouted or shifted to secondary airports such as Chicago-Rockford International Airport (RFD), which ended 2021 with a record-breaking 25 percent growth in cargo and over 3.4 billion pounds of landed weight compared to
2.7 billion pounds in 2020. Driving that growth was the sheer increase in cargo flights and new international cargo operators serving RFD.
Jannie Davel, managing director, commercial at Delta Cargo, earmarked two other issues that continued to linger over the industry into 2022. One is manpower, or the ability to find the right people for the appropriate roles, and second is infrastructure, including warehouse space for improved last-mile delivery.
“Cargo is a niche and ever-evolving industry, so finding qualified people to fill some of the unique and diverse roles can be challenging,” Davel said. “Having access to adequate and consistent equipment throughout the supply chain to allow effective cargo flow to final delivery will continue to be a significant issue that the industry faces throughout the rest of 2022.”
Davel contended that both issues are important because the industry is truly an end-to-end and cyclical process. “If not maintained resourcefully, issues such as congestion can snowball very quickly,” he said.
