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Industry needs to trim the fat

By Hpanchal on August 1, 2011

Physicists and cosmologists estimate that there are a mind-boggling 100 billion galaxies in the universe with an infinite number of planets and stars and with similar statistically improbable chances of finding the right conditions to sustain life — not too hot and not too cold, but just right (otherwise known as the “Goldilocks Zone”).

After decades of going its own separate way, the air cargo industry has confounded the odds and created its own improbable ‘just right’ Goldilocks Zone. By that I mean the creation of the Global Air Cargo Advisory Group (GACAG).

Chris Welsh

Chris Welsh

So what are the conditions that have finally brought the main global air cargo supply chain players together? The air cargo industry faces unparalleled challenges that no one organization, no matter how big or influential, can deal with on its own.

Air Cargo World readers may feel that this is a bit over the top; the airfreight industry has faced problems before and has always come through. But this time I think the conditions are different and potentially more serious.

A few weeks ago, Eivind Kolding, the CEO of Maersk Line, started a liner shipping industry debate by reminding his peers that if the shipping industry didn’t adapt and change, then there was no guarantee that something left-field might not come along, rendering the shipping industry obsolete.

This all sounds ridiculous, but is it? Are there lessons to be learned from Kolding’s warning? Should the air cargo industry be similarly looking over its shoulder? I think so.

The principal air cargo challenges I refer to are climate change and aviation security. Other issues include the snail-like pace in universally implementing e-commerce solutions, particularly e-airway bills.

To give you an example of the scale of the climate change challenge, a leading pharmaceutical giant and fine-arts house, both within the membership of my organization, have embarked on major projects to limit or remove air cargo from their supply-chain logistics operations.

They are driven, on the one hand, by consumer and customer demands to reduce their carbon footprint and, on the other, to reduce their logistics costs.

This brings me back to GACAG and why the Global Shippers’ Forum (GSF) believes that a single air cargo voice is vital. The air cargo industry needs to demonstrate that it is doing its bit to reduce carbon emissions, both through international agreements and market-based emission trading schemes, but also through voluntary measures at an industry level.

We need an air cargo industry campaign to explain what the industry does, why air cargo is so vital to the world economy and international trade, and how it contributes to the lifestyles we enjoy and take for granted. Otherwise, air cargo could be on the slippery slopes.

While climate change — and, to an extent, aviation security — is likely to be more intractable and difficult to resolve, there can be no excuse in failing to tackle air cargo supply-chain inefficiency. I have heard some industry practitioners question the time, effort and resources involved in introducing airfreight e-commerce, even to the point of obfuscation or a refusal to participate in industry e-freight initiatives. I believe this is short-sighted and commercially indefensible.

With many shippers and retailers now employing lean manufacturing techniques designed to drive out waste and cost in their logistics supply-chain operations, the air cargo industry cannot afford to carry any fat through inefficient practices. If it does, then as with the pharma and fine-art trade examples cited earlier, air cargo can expect to lose traffic to other more efficient and cost-conscious modes.

The good news is that GACAG has come along at just the right time to work on the challenges described above. The GSF is totally committed to constructively working with our industry partners, who have together developed an exciting and far-reaching joint agenda to identifying solutions to these air cargo industry challenges.

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