Unilode pursues a global growth agenda
23 / 01 / 2018
Unilode Aviation Solutions is looking to expand its global footprint and is also focused on extracting more value from its asset fleet of 120,000 unit load devices (ULDs).
Benoît Dumont is chief executive of Unilode, which changed its name from CHEP Aerospace Solutions in February 2017 after it was sold in late 2016 by Australian parent company Brambles to Sweden’s EQT Infrastructure investment fund.
Dumont, with a CV that includes management consultants McKinsey and logistics giant DHL, came on board in September 2017.
“The first thing is to start to extract more value from what we have got,” says Dumont, who is also pursuing a “growth agenda” for the outsourced ULD management and repair specialist.
“There are a number of airports where we are not located, and where we should have a presence in terms of maintenance, repair and overhaul (MRO) for containers, pallets and galley carts.
“We are looking at the gaps in our network and we are having exciting discussions with potential partners under a number of non-disclosure agreements.”
Unilode sees an expanded MRO footprint as the first step in winning ULD management contracts with airlines, offering a pooled equipment business model as well as bespoke ULD fleets for each individual customer.
“We often go to an airline and propose to support them with outstation equipment repair, and as a second step we offer to manage repairs at their hub. You then ask: why don’t you start using us for ULD management?”
Dumont says that “strong discussions” are taking place in Asia, and also in the Middle East and mainland Europe.
While ULDs have to be repaired at the home base of an airline, it is a persuasive factor in attracting a new customer that Unilode additionally can offer the necessary network coverage.
"We opened an MRO shop in Cincinnati to primarily support DHL and now we are winning more DHL volume.
“Our global repair network offers a lot more opportunity for customers to repair their ULDs in many different places and they don’t have to reposition damaged assets using an aircraft, which they currently do by default.”
Damaged ULDs are a big issue, especially when you remember that they are considered part of the airplane structure and are the second highest cause of damage to aircraft on the ground.
IATA statistics suggest that there are some 900,000 ULDs in circulation with a replacement value of more than $1bn and with an annual damage repair cost of $330m. Hence the IATA ULD safety campaign.
Dumont, who attended the annual ULD CARE conference a couple of weeks before this interview, says: “There is a handbook with the dos and don’ts of how you handle a ULD which establishes standard processes within the ground handling operation.
“But there is no way to enforce it, so it depends pretty much on the type of service level agreements that airlines have with their ground handler. There is no enforcement and you don’t really see much of a difference in terms of [reduced] repairs.”
Dumont points out a ULD dilemma: the trade-off between building more robust containers that are serviceable for a longer time and using lightweight ULDs, to save aircraft fuel costs.
Another factor is what Dumont describes as “crunch time”, where ground handlers are under pressure to handle a greater number of ULDs within a faster turnaround time, which potentially increases the risk of damaged units.
Asked how his McKinsey and DHL experience feeds into Unilode, Dumont explains: “The McKinsey experience gives me a very strong background in terms of putting in place the right strategy for the company and developing a portfolio of programmes that can improve, standardise and grow the business.
“And when I look at my DHL Express experience, as operations director, it concerned network planning and control, and end-to-end visibility of the shipment. There is also an issue with end-to-end visibility of the entire ULD supply chain, so ULD management is very similar in terms of what we achieved in the express business.”
He adds that with regards to the repair business he can draw on his contract logistics experience: “You have got a contract for a number of years, you have a building and people, and you have got to deliver a service.
“That involves diligence and knowledge of standardising processes, and monitoring quality and productivity in repair stations. That is something I have done for a living during the last six years. There are lots of parallels in how to manage a contract, how to manage productivity and how to engage with staff in a low-margin environment that is very people-intensive.”
Asked whether MRO is a loss leader with lower returns than ULD management, Dumont says: “MRO is not a loss leader — a repair station is about time and material, so you are not going to make a massive amount of money, but you get steady returns if you are productive.”
He continues: “It is our ULD management business where we have got to do some work to extract more value because you have assets that get damaged, lost or are unreported in the network. I think that we have got to do more to increase the profitability in that part of the business and to get much more end-to-end control.”
Changes at the top
Dumont took on his new role after Brambles had divested CHEP Aerospace Solutions to EQT, and at the time of the acquisition there was media talk of the “brash Aussie” management being replaced by phlegmatic Swedes.
He says: “Our chairman of the board is Swedish and the partner from EQT is Swiss. Under Brambles, CHEP Aerospace Solutions was a small fish in a big pond. EQT has an appetite to build on the foundations laid by Brambles, to invest and use its solid understanding of an asset heavy business model. They are very collaborative and supportive of me and my management team.
“In any case, when you get on a job like that — independently from the nature of the ownership and any end-game scenario — your focus must be on using the support at hand to transform your business into a better one, by adding value to your customers that they will be willing to pay for and by adapting to the new trends and market reality.”
Asked about the current airfreight market, Dumont observes of e-commerce: “We have got business to consumer [traffic] coming into play and continuing to increase, which probably means more demand for containers.
“And there are other rapidly growing sectors, like pharmaceuticals, so I would see the introduction of more track and trace capabilities, especially for high-value goods. Also we see that airlines are trying to make a better use of the available belly space.”
But there is a delicate balancing act, making sure that you do not flood the market with additional container assets for something that may be a short-lived boom, when compared with the life cycle of a ULD.
Dumont is on the case: “When you buy new assets for your fleet, you hope that the growth is going to stay. But on the other hand you have got to decommission the older assets and scrap them, which is a normal cycle into your asset management.”
In conclusion, Dumont says: “My first months with Unilode have strengthened my initial feeling that this is a relatively new sector that has tremendous potential both in terms of generating new business and finding opportunities to improve current operational practices.”
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