American Airlines Cargo looks forward to an innovative 2016

In a wide-ranging questions and answers interview, American Airlines Cargo president Jim Butler outlines how the company performed in 2015 and his thoughts on the future of air cargo.

Overall, for American Airlines Cargo, how was 2015 compared to 2014?
2014 was a year full of [US Airways] integration-specific projects and campaigns. The successful integration allowed for an even more impactful 2015. Before the merger, we only serviced 11 places in Europe, while now we reach 21 locations, a gigantic feat in our goal of expanding our reach worldwide.
We’ve placed a heavy focus on investing in the improvement our facilities, particularly at some of our busiest hubs, such as Miami and Dallas/Fort Worth.
ULD management is also a key element in achieving high efficiency and customer service in air cargo transportation. Lightweight containers replaced many of our existing units, providing over 500,000 gallons in fuel savings, greatly reducing our carbon dioxide emissions.

Do you think this will continue into 2016 or change and why?
We are highly confident in our team’s ability to continue the momentum we’ve gained this year into 2016. Through greater collaboration with partners and customers we can achieve more in a few years than we’ve been able to in the past 20 and our future is bright.
At American, we’ve introduced new cargo-friendly aircraft to our fleet and expanded the use of the Boeing 777-300. Now, we have 18 in our fleet, with an additional 47 of the 777-200s circulating the globe.
The 777-300 will also be utilized on our new Los Angeles to Sydney route (which began December 17 out of LAX). We’ve also added the Boeing 787 to our fleet. Its fuel efficiency and range will provide an opportunity to connect cities that weren’t possible before.

What was the highlight of 2015 for cargo?
In 2015 we made strides in the e-freight category, particularly with eAWB, reaching our year-end goal of 30% adoption with two months to spare in the calendar year.
We also celebrated our one-year integration anniversary as a division, taking a moment to recognise how far we’ve come in a year and all the people, and history, which have paved the way for our growing success.

What was the highlight in the industry as far as your company is concerned?
Finding better and more efficient ways to improve on the customer experience has become a more highly visible priority in the air cargo industry.
For us, it’s about finding the right tools and technology to help us streamline communication and track cargo during every step of the transportation process.
We talk with our customers to understand their evolving needs and use their feedback to ensure each experience is as personal, as simple and as efficient as humanly possible.

What was the low point and why?
It’s definitely been a year of growth and positive changes, but like many companies in this industry, we saw a good bit of the yield erosion that’s impacting supply and demand.
This leads to the risk of delaying required investment needed for the industry to expand our businesses and evolve our processes to stay ahead of the curve.

Did you take on new staff during the year – why and in what kind of positions?
We created a Customer Experience team, a highly experienced group of individuals who report directly to me and act as the primary source of contact—no matter the time of day—when a customer is in need.
The goal here was to help drive partnerships and customer loyalty well into the future meaning this team has one of the most important jobs around.
In addition, we’ve also expanded our sales presence in Europe, developing a new position to oversee regional sales in South Asia, the Middle East and Africa.

Did you open any new locations in 2015 of your own or did you stick to GSAs? Are you planning on any in 2016 and why?
Most recently, we established a GSA partnership in Sydney with GSA Cargo, in support of our new LAX-SYD service that started December 17.
We’re all extremely excited about this new nonstop service LAX and SYD, since it utilises one of our most cargo-friendly aircraft, the Boeing 777-300.

How were you affected by the various changes in the carriage of lithium batteries over the year?  Will this continue in 2016?
We had already made changes to our policies when the recommendations were made on the restricted carriage of lithium ion batteries.
In early 2015, after reviewing the facts, we made the decision to no longer accept bulk shipments of the lithium ion batteries that may pose a risk to the people handling the cargo or riding with it on board.

Are you protected to some degree from the ups and downs of world trade because you are now a global carrier?
Certainly the more markets you serve helps to spread risk, meaning you are less vulnerable to issues that affect a particular entity.
We now reach five continents with over 6,700 flights a day and feel strongly about our ability to connect our customers to almost anywhere in the world, despite any external factors.

What percentage of your business is domestic and what is international – has this been changing, and why?
About 80% of our business is international, while around 20% is domestic. These percentages are fairly consistent year over year.

Will the air cargo industry ever get on top of e-air waybills (e-AWB) unless something mandatory is put in place by IATA?
With the technology and tools now available, yes we can, but only if we come together as an industry to make a full, coordinated effort to become entirely automated. Without the ability to access data instantly and provide our customers with the information they need on hand, we won’t be able to move forward successfully.

E-AWB are only the first step and recent momentum is encouraging, but we have to get there more quickly to be successful as an industry.
It’s about transparency, accuracy and speed—and shippers increasingly expect to have visibility on the location of their shipments in real time with accessibility across a variety of online platforms. Air cargo customers don’t see it as a bonus anymore, but a necessity.

How many countries do you operate in? Are some more difficult than others or is the playing field more level these days? 
Daily, we fly to nearly 350 destinations in more than 50 countries around the world. It may be slightly more difficult to operate in some countries, such as Brazil, with stricter import/export regulations, but with our smart, dedicated team, we’re able to operate successfully at all of our locations.

Do you think the switch to ocean freight will continue in 2015 or have things reached a plateau now?
Both the ocean and airfreight businesses compliment a shipper’s needs and new products that enter the market.
Although, shifts in consumer expectations, including the need for shorter transit times, will add an increased need for the speed and accuracy the air cargo industry can provide. The benefit of air cargo involves the ability to move higher value goods, perishables, and urgent shipments, more susceptible to ambient environments and other external factors.

Is all your business air cargo or do you get involved in express products too and how much is express?
We have a popular Priority Parcel (PPS) product today with a strong domestic presence and some international coverage as well.
The product is focused on small shipments and documents with much shorter drop-off and recovery times than our typical air cargo shipments, which usually require build up and breakdown to facilitate carriage.

What do you think the major challenges will be in 2016 for cargo?
We have invested significant resources toward improving the customer experience and implementing new processes will take time and effort—but it will be well worth every minute in the long run.
Delivering our new tools and benefits on schedule will be a priority, as well as continuing to roadmap further improvements beyond 2016.

What do you think the major opportunities will be in 2016 for cargo?
While it might also be a challenge, delivering a better experience for our customers is, even more so, a major opportunity.
Not only will this benefit our business, it will help us deliver a service our customers can trust and continue to rely on in the years to come.

Will pharma continue to be the key vertical in 2016 or can you see opportunities in other fields?  What would they be?
The growing demand in the cold chain industry means pharmaceuticals will remain a key vertical.
We are committed to maintaining our momentum within this vertical and feel we are well positioned with our new and improved facilities, as well as the full suite of cold chain products we now offer.
Just recently, we announced the addition of the new, high-tech Envirotainer e1 and e2 containers to our list of approved product offerings.
Not only have we invested in the enhancement of our products, we’ve added a CSafe leasing option for our customers who require an easier and more cost-efficient option.
Of course, we have many other areas that are presenting great opportunities worldwide, particularly high-value shipments and perishables.

Will you continue to invest in pharma in 2016 – will there be any other facilities like your one at Philadelphia?
We are always looking for more opportunities in this growing and highly-important sector. Our dedicated facility in Philadelphia has been an extremely beneficial option for our pharma customers.
That location is ideal, as it’s one of the most strategic markets for pharmaceutical products in the US.

What’s the one thing you would personally like the air cargo industry to achieve in 2016?
I think a lot of people now know how passionate I am about navigating toward a simpler, automated system—from booking to pick up.
A jump in the increase of paperless operations is a needed for the success and growth of the air cargo industry and we need to prioritise a strong push toward e-freight as the benefits, of aggregated data alone will ultimately open up new strategic opportunities.
We must differentiate air cargo and leverage our inherent advantages to a far greater extent than we do today.
I’ve challenged my colleagues and partners to leverage the data to meet our own industry needs, increasing visibility into our individual operations, so we can see a failure coming long before it happens, preventing, or at least minimising, operational snags.

Is there anything else you would like to tell us about either the year gone by or the one coming up?
This year (and next) is all about transparency and willingness to evolve and embrace technology and partnerships that drive real change; it’s about focusing on safety, speed and visibility, while driving additional value for the customers who keep this industry alive.