Crisis an opportunity not disaster, says Ogiermann

WITH manufacturers rethinking their production and supply chain strategies, air cargo stands to emerge from the global economic crisis in a stronger position than other transport modes. So says Ulrich Ogiermann, chief executive of Cargolux and chairman of The International Air Cargo Association (TIACA).

Manufacturers and other businesses will now be more reluctant to tie up investment in stock, taking them back to just-in-time production, which, Ogiermann says, “demands the speed, security and reliability of transportation that only air cargo can provide”.

Despite suggestions that cost-conscious companies in the manufacturing sector will start to look for near-sourcing – buying materials and products closer to their final production points in Europe and North America and eliminating the logistics costs of imports from Asia – he believes the business case for such a strategy will not be sustainable in the majority of cases.

“Recent studies prove the reduction in logistics costs are outweighed by the increased cost of local production, where infrastructure and employment investment is greater. I do not expect this to have the negative impact on air cargo others have predicted.

“One of the few positives to come from the recession is that companies everywhere are now ready to consider and discuss any changes within their business if it benefits their bottom line. Previously there were too many taboos that left no room to manoeuvre. These have disappeared. There are no more ‘kingdoms’ in companies that are protected at all costs. This is a positive shift in change management because companies will leave anything behind that does not add value.”

With early signs of improvement in cargo volumes, he said the air cargo industry’s first goal in 2010 must be to “stop the bleeding from the wounds incurred in 2009”. Companies, he added, will want to see several months of increasing business to truly believe the economic recovery is properly underway and it will be 2011 before the industry sees a sustainable improvement.

“It will clearly take a lot of time for the entire air cargo industry to recover properly and it has to decide what it is going to do to make airfreight more attractive to customers. I expect to see more volatility over the next 12 months because there are still many unknown factors and bubbles waiting to burst at any moment. The banking sector remains exposed while the fragile real estate market and level of credit card borrowing could once again tip the balance for the already substantially challenged financial world. Many national economies will still need international support.

“Nonetheless, air cargo companies will be leaner, more cost efficient and very much wiser as a result of the unprecedented economic collapse we have experienced. The difficult decisions forced on companies will mean that they will at least be in a stronger position as business levels start to recover.”

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