Agility's flexible business model
01 / 12 / 2013
IF YOU WANT to know why big hub airports continue to thrive in the air cargo business, you could do worse than study the new 6,300-sq m airfreight hub that Agility Logistics opened in Frankfurt airport’s CargoCity South at the start of April.
It was aimed initially at Asian manufacturers – particularly in hi-tech, but also fashion and textiles – shipping to customers in eastern Europe. Agility reckons it can provide a better service to such shippers via Frankfurt than they can flying cargo direct to eastern European airports.
How so? Well, firstly as Buelent Buelbuel, Agility’s airfreight manager for Europe points out, if you want to move cargo from Hong Kong to Budapest or Shanghai to Prague, you have a pretty limited choice of carriers – maybe only one or two. That means higher rates and less choice of departure times.
“It is much easier to negotiate consolidations to Frankfurt than bits and pieces to Slovakia or Croatia,” he says. “Using Frankfurt also gives us the opportunity to use an airline that is perfect for the customer’s needs and transit times.”
On flights to and from Frankfurt, Agility can also combine different types of traffic to get that all-important optimal mix of cargo.
Buelbuel candidly admits that given the competition for the larger hi-tech accounts and the “extremely demanding” nature of these shippers, it is very hard to make money on this traffic alone. “You need to mix high volume accounts and small to medium ones,” he says.
Next, once landed in Frankfurt the cargo is swiftly transferred to Agility’s new facility, where it will be kept in accordance with highest security standards. The forwarder is in the process of getting TAPA 'A' certification, the highest level offered by the security standards organisation.
That focus on security also extends to the next stage of the service, which is delivery from Frankfurt direct to the customer’s door. Agility trucks are at least TSR 3 level – the minimum TAPA requirement – but Buelbuel says they can be up to TSR 1 if needed.
Most importantly, the cargo is moving on Agility’s own trucking network, so the company has full oversight right to the door.
“In the past, the airline forwarded the shipment by road to its final destination, but then you are depending on the airline’s track and trace system to find out where the goods are once they are on the ground. With our system we are in full control,” Buelbuel says.
Moving the cargo direct from the airport to the customer’s facility also cuts out one set of unloading and loading, which is a useful security boost for hi-tech shipments. Doing Customs clearance in Frankfurt – which is also possible for other European Union countries – cuts out yet another step.
Customers have access to tracking data via their smartphones, where they can enter the house airwaybill number and get live updates. Since the trucks are operating according to a published schedule, the customer knows as soon as the shipment lands roughly what time it will be arriving at his facility.
The combination of consolidated flights into Frankfurt and its published truck schedules also makes life easier for the Agility sales team. “The sales person does not have to go back to the airline to get a rate to Prague or Basel,” says Buelbuel.
“For each customer, there is just one rate from origin to Frankfurt, and for the trucking from Frankfurt to the consignee there is a [separate] published time-table and rate.”
Since Agility trucks are serving many of the eastern European markets daily, and flights into Frankfurt are usually just as frequent, Agility can also offer the customer a departure on whatever day of the week he wants, whereas direct flights to a eastern European airport will likely be available only on certain days of the week.
Due to the excellent road network in Europe, many places can be reached overnight, arriving at the customer’s facility by 9am.
These daily departures mean the customer can also change his mind about the level of service he wants. “For example, if the goods are on an economy service and planned to arrive on Wednesday, and the customer decides he needs them on Tuesday instead, we can change it to express,” says Buelbuel. “Because it is our truck service, our sales people don’t have to deal with complicated airline processes to change the booking. We can change it straight away.”
While the new consolidated service is particularly aimed at east and central Europe, it has proved so popular that Agility has now extended it to the Benelux countries and Scandinavia. Buelbuel says that there has been double-digit imports growth since April as a result of the new service, and a 50 per cent rise from April to October. “We’re getting new customers all the time,” he says.
One particular source of new business is shippers who want to merge in transit – to combine shipments from different sources – or to have pick-and-pack operations in the Frankfurt facility.
Buelbuel cites a customer who has cargo originating in Shanghai, Taipei, Hong Kong and Bangkok. “By bringing all these into Frankfurt, we are able to deliver them all to the customer at the same time. So instead of four unloadings to manage, they have only one.”
The service has proved so popular, indeed, that though originally designed for imp-orts, it is now being rolled out to export traffic as well. This has already started out of Basel, and soon the Netherlands and eastern Europe will be added. “It is the same concept in reverse, and will take advantage of the round-trips of the trucks,” Buelbuel says.
One danger of routing most traffic through a single hub can be that it becomes inflexible, as well as being vulnerable to disruption at that airport. But Buelbuel says that the concept is not entirely dependent on Frankfurt. “For example, if we had another volcanic ash cloud situation, then we could easily put in place the same solution using Basel, Budapest or Madrid.” Also, very urgent shipments continue to be flown direct to the destination airport.
As well as implementing the Frankfurt hub, Buelbuel says Agility is also very focused on rolling out e-freight, describing himself as “an extreme friend” of the project. The forwarder’s target is for all e-freight-enabled routes to be e-freight-only by the end of 2014.
Interestingly, the electronic airwaybill is the last piece in the jigsaw here, not the first. Buelbuel says the various shipper documents – packing lists, letters of origin and so on – are already sent electronically from origin. “So if airlines did not require paper airwaybills, we would [already] be all electronic.”
Having said this, Buelbuel admits that Agility still has some work to do on the accuracy of the electronic data it supplies to airlines. “Now it is only 90 per cent reliable, but our aim is to make it 98 per cent minimum,” he says.
He adds that, until recently, there was confusion about airline messaging requirements, with different carriers using different versions of Cargo-IMP, for example. “When we started it was hard to know which airline was using which. But now IATA has made it loud and clear what the minimum requirements are, and we’re upgrading from version 7 to version 12.”