Put in the work to survive

AIRFREIGHT needs to put some serious work in, if it wants to survive the economic downturn, was the message at the recent Cargo Network Service (CNS) conference in Carlsbad, California this month.

In his opening speech, Michael Vorwerk, the new president of CNS said that the industry needed to consider the entire supply chain as a seamless process. Doing so will ensure that a fault at one stage of the process will then only have minimal knock-on effects.

He stressed the need for greater efficiency and security in airfreight, as well as more universal uptake of e-freight and Cargo 2000.

The keynote speaker was former chief executive officer of American Airlines, Robert Crandall (right). Crandall dismissed the recent swath of mergers and acquisitions as a viable way to survive in the current economic climate, especially as he doubts that the recession will recover as quickly as the optimists believe. “I don’t find the arguments for mergers very persuasive,” he said. “Mergers won’t lower fuel prices. Effective implementation of mergers requires major capital expenditures. Mergers also inevitably disadvantage many employees whose incentives to provide good service is further reduced.

“Nor am I a fan of international alliances. While alliances have not been a major factor in the cargo business, they add to the operational costs of the airlines. I don’t see the purpose other than to expand the network and thus reduce competition.”

However, while Crandall disapproved of such reduction of competition he was also adamant that unregulated competition doesn’t work in certain industries. He believes that airlines act more like utilities and that market forces will not create a satisfactory aviation industry.

He also criticised industries lacklustre pursuit, not only of e-freight, which has a burdensome paper trail, the digitisation of which has hardly been tackled, but also the looming deadline for 100 per cent screening of all cargo to enter the US, set for 2010. He said that airfreight companies are simply hoping that the government will cave in and give compromises, a situation that is simply not going to happen. Any chance of that, however slim, would become politically impossible should any “event” occur between now and then.

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