The economy's impact on outsize cargo
They say that the show must go on — but in the case of the March Okinawa International Movie Festival, it almost didn’t. The problem? A load of steel beams weighing 24,956 pounds had to be shipped to Japan’s Okinawa Island in order to construct an outdoor theater, and time was running out.
To the Panalpina executives who were tasked with handling the logistics of the shipment, the best way to move the outsize steel structures was clear. The beams were loaded onto a Boeing 747 operated by AirBridgeCargo Airlines and shipped to Tokyo’s Narita Airport from Frankfurt Airport, after routing through Moscow.
Once the structures arrived in Japan, the crew onsite ensured that the steel was quickly cleared through Customs and trucked to southern Japan, where it was then ferried over to Okinawa Island. AirBridgeCargo Executive President Tatyana Arslanova admits that the move had all of the makings of a good movie — packed with action and full of thrills. It also had the requisite happy ending, she says.
“With this shipment, AirBridgeCargo demonstrated not only its expertise in the transportation and handling of outsize and heavy cargo, but also showed its ability to react promptly and professionally to such a short-notice request,” Arslanova says.
The ability to react quickly is a key reason why outsize cargo flights experienced double-digit growth in 2011, explains Dennis Gliznoutsa, group commercial director of charters for Volga-Dnepr Group, AirBridgeCargo’s parent company. Whether it was a broken oil rig that necessitated immediate repair or military equipment leaving Iraq, outsize cargo flights expedited the shipment of goods in a variety of sectors last year. And Gliznoutsa expects the number of these flights to grow steadily in the next two to three years, especially in Africa and the Middle East, despite the sour economy.
Outsize cargo demand will grow in the Middle East as major International Security Assistance Force members withdraw troops from Afghanistan. Not only will this exodus require extra flights for military personnel, Gliznoutsa maintains, but it will also demand additional charter flights for outsize equipment and heavy machinery.
The government isn’t the only player. “The increased demand [for outsize cargo] won’t only be coming from government structures, but from the commercial side as well,” he says.
Last year alone, the demand for outsize cargo from oil and gas companies grew 62 percent — a fact Gliznoutsa attributes to the development of projects in Africa, Australia and Kazakhstan, among other nations. With drilling in Latin America currently ramping up, he anticipates another boom for outsize cargo operations.
Weighing the costs
Justin Lancaster, cargo sales director at Air Charter Service, wants to get one thing straight: Airfreight is not the shipper’s first choice. Moving goods by sea is much more economical than air transportation, he says, and shippers initially look to oceanfreight as a means to transport goods, followed by a hybrid airfreight/seafreight approach. Flying outsize cargo on an Antonov An-124 or Ilyushin Il-76, for example — especially a charter operation — is not only costly, but is usually the most expensive option, Lancaster says. It all comes down to timing, however.
Suppose, for example, that an oil rig has stopped producing and is costing the manufacturer upward of $100,000 a day in this idle position, Lancaster posits. “Yes, they don’t want to charter and, yes, it’s expensive, but it’s cheaper than the alternative, which is sending it via seafreight and it taking two weeks to arrive,” he says.
Lancaster explains that a shipper is also more likely to charter if there are penalties attached to a missed deadline. Healthy economy or not, he says a company will choose to fly if they are late on a project or need goods shipped immediately due to a humanitarian crisis.
Not that they won’t do it begrudgingly, Lancaster says. “Look, companies don’t want to charter in the good times, and they certainly don’t want to charter in the bad times — but, sometimes, they have no choice,” he says. “And that’s certainly true in the outsize market, if not even more so.”