Forwarders' network demands drive new opportunities for all-cargo carriers
06 / 10 / 2017
Freight forwarder and e-commerce companies’ need to control their transport network is driving demand at all-cargo carriers.
Speaking at the Freighters World conference, a panel of all-cargo airline executives discussed future opportunites for freighter operators.
One area of opportunity identified by panelists was customers - forwarders and e-commerce companies - wanting freighter owners to run new operations on routes where space can be constrained or existing belly services do not meet their needs.
Belly operators are unable to cater for this type of requirement because their services need to be built around passenger requirements and not cargo requirements.
Nippon Cargo Airlines president, Americas, Shawn McWhorter said recent examples of this trend can be found with DHL Global Forwarding signing an ACMI deal with Atlas to operate a round-the-world service.
Another example, he said, is e-commerce Amazon’s lease of 40 aircraft from Atlas and rival lessor ATSG as it looks to guarantee enough capacity to meet customer requirements. He pointed out that Panalpina also operates its own airfreight network.
While all of these deals were signed with lessors, all-cargo airlines could offer similar services and benefit from the growing need of customers to control capacity without owning it.
“Amazon could have taken the approach to go to Delta, go to United, and say let me buy all your belly capacity – why didn't they do that?” McWhorter questioned.
“Because it doesn't give the service commitment that they need to their customer on a regular basis – they can't control the network.
“So instead they went to a more expensive solution, but one that is more customer focused, and put their own network up.
“Now we are seeing more and more demand as an all-cargo carrier, that forwarders come to us and say we want to buy a piece of your network, not just a couple of positions or half a plane, we want you to run a network for us.
“Atlas is flying a couple of round the world flights for DHL, was that because DHL couldn't find enough capacity on the bellies? No, it is because the capacity wasn't in the right markets at the right time at a control point that they can give the required service to the customer.”
The trend is being driven by a tighter balance between supply and demand meaning forwarders cannot as easily buy on the market and benefit from low prices, he said.
He added that if airlines want to win this type of business from forwarders, they need to understand their needs and alter their network to meet those requirements.
Meanwhile, forwarders need to commit to fulfilling the capacity they have agreed to purchase, he added.
Axel Kaldschmidt, global director, aerospace, Volga-Dnepr agreed that forwarders wanting greater control over their networks presented an opportunity.
“The question will be, and this is where a lot of the freight forwarders are coming from, what is going to be the best airline to provide the best solution to my customer? So it comes down to customer service in the end and meeting that expectation.
“If you, on a 12 hour international flight, create a solution that gets the product there four hours earlier, that is going to be the option they are going to go with.”
Asked whether airlines should see the fact that lessors were now dealing with freight forwarders as a threat, Beti Ward, chief executive, Pacific Air Cargo, disagreed.
She felt that this type of setup would not be relevant in all cases, as long as airlines could meet forwarders' requirements.
She said: “Most freight forwarders do not have that much freight [compared with Amazon and DHL], that much capacity that they need all at once, so as long as we remain focused on customer service, why would they go out and pay money to lease freighter planes.
“Most freight forwarders are not focused on assets, they control assets, but they are not focused on owning those assets so I think it is an opportunity as well.”
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