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2011 year-end review, part two

By Hpanchal on December 14, 2011

As 2011 draws to a close, a handful of air cargo leaders have taken the time to reflect on a tumultuous year.

From supply chains ravaged by the Japanese tsunami to economic instability permeating the U.S. and the eurozone, the airfreight industry has taken numerous hits throughout 2011. But can the lessons gleaned from these difficult times be used to avoid similar fates in the future?

In the second installment of a three-part series (click here for part one), Liege Airport Business Development Manager, Asia Pacific, Steven Verhasselt; Panalpina COO Karl Weyeneth; Radiant Logistics CEO Bohn Crain; and Air France-KLM Cargo Senior Vice President of Marketing, Revenue Management and Network Pierre-Olivier Bandet discuss the past year and their prospects for 2012.

What was the most significant storyline of 2011?

Steven Verhasselt: One of this year’s biggest storylines has been the downturn of freight traffic between Asia and Europe. This is further proof that airfreight demand is highly unpredictable and that flexibility is the most important asset in our business.

Bohn Crain

Bohn Crain: From our standpoint, we feel the most significant 2011 storyline was the persistent cloud of uncertainty hanging over the global economy and its impact on the supply chain. In most cases, we have all been challenged to do more with less. Even so, we believe the economy actually worked as a catalyst for both our organic growth and acquisition initiatives.

Pierre-Olivier Bandet: After the very difficult period the airlines went through from the last quarter of 2008 until the end of the first quarter of 2010, the general consensus among carriers was that the crisis seemed behind them for good. This attitude of optimism actually lasted throughout almost all of 2010 until the beginning of 2011.

Unfortunately, early 2011 showed rapidly declining figures in air transportation — more on the cargo side than on passenger operations — and this was confirmed by the same kind of down-slope of international seafreight. Worldwide trade, because of an international crisis due to the various states’ debt situations, was severely affected again by a sort of ‘wait-and-see’ policy, which penalized international commerce. We were actually facing a rollercoaster year yet again, with somewhat unpredictable results month after month. This situation was even more apparent when carriers’ re-engaged dozens of the full freighters they had parked in the desert during the previous months during the short recovery period.

Inevitably, a new situation of overcapacity is occurring almost everywhere. And it’s carrying the traditional consequences: a significant decrease of yields at levels making the cargo business almost impossible to be run in a cost-effective manner. Again, we all faced evidence that the same actions almost always lead to the same consequences.

What lessons have you learned in 2011 that will help you have a successful 2012?

Verhasselt:
[We were reminded that] as a cargo airport, we are only a small part of a logistics chain. The airfreight industry is selling time-saving service, and the shipper pays for that.

It’s the job of the airport, as well as all other service suppliers involved, to ensure that cargo is delivered quickly. All the services, from aviation, airports, Customs and handling to trucking have to be streamlined to come to this final product: a minimum door-to-door transportation cost as quickly and efficiently as possible. Legislators should support this, as logistics are the lifeline of all industries.

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