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The economy's impact on outsize cargo

The economy's impact on outsize cargo

By Hpanchal on May 1, 2012

In the case of the oil and gas sector, however, he thinks the complaints are overblown. It’s a bit of a catch-22, Lancaster says. “Customers moan about the fuel prices that are currently going on,” he says. “But in the outsize cargo market, you’ll find that a lot of it is oil and gas equipment. So it’s a bit hard for them to moan too much when, ultimately, I suppose, they’re making more money out of those fuel prices.”

Plus, Lancaster says, the market has largely grown accustomed to the higher costs of flying outsize freight. “Although if somebody walked in three or four years ago, they would probably fall off their seat if they heard the prices people are paying right now,” he says.

Lufthansa Cargo Charter Managing Director Reto Hunziker concurs. “If a special tool, a spare part or an oil rig is needed somewhere in the world, then it has to fly, even though the economy is bad,” he says.

Some companies are even looking to capitalize on this need, Hunziker says, pointing to the influx of new carriers looking to fly heavy freight. Since outsize cargo routes are typically outside of the carrier’s traditional routings, he says new players are interested in serving this niche market. Although Hunziker admits that outsize airfreight has stiff competition from seafreight on long-haul routes from Asia to Europe, he doesn’t envision it affecting the former sector’s profitability.

Patricia Hwang, manager of cargo sales and marketing at Cathay Pacific Airways, begs to differ. Calling attention to the number of freight carriers that have reduced capacity in recent months, she says fleet minimization is a direct byproduct of global economic woes. Hwang admits that Cathay Pacific has also been a victim of this phenomenon, with the carrier postponing delivery of its final two Boeing 747-8Fs from 2012 to 2013. And such actions directly affect outsize cargo operations, she says, since the sector is highly dependent on freighter capacity.

“We’re all aware that many freight-only carriers are posting financial losses right now,” Hwang says. “Airlines are forced to park fuel-inefficient freighters or reduce their capacity, due to high fuel prices coupled with depressed economies.”

Fortunately, it’s not all gloom and doom, she says. Hwang reveals that Cathay’s Expert Lift offering, which caters directly to the outsize cargo sector, performed rather well in 2011. Operations lagged quite a bit at the beginning of 2012, she says, but Hwang is hopeful that they will pick up as business in the Asia-Pacific region stabilizes post-Chinese New Year.

She credits Expert Lift, in which Cathay Pacific personnel study each load’s specific handling requirements and make ensuing recommendations, with streamlining the shipment of heavy cargo. “With Expert Lift, we consult with the shipper about how they can best pack and prepare their shipment to [maximize] airfreight efficiency … and ensure a surprise-free and hassle-free experience,” Hwang says.

The screening factor

Complying with the different security regimens put in place by different governments can be a headache. After all, while the U.S. Transportation Security Administration and the U.S. Customs and Border Protection moves forward with their joint Air Cargo Advance Screening pilot program, the UK requires all unscreened cargo to be made known by an accredited consignor. Staying abreast of such disparate requirements can be difficult enough, but when you add the extra mass of outsize cargo into the mix, the screening process is even more cumbersome, Air Charter Service’s Lancaster says. This is especially true in the UK, he maintains.

“Without a doubt, screening is becoming a hassle,” Lancaster says. “We went through a period about a year or so ago where it was very hard for outsize cargo to become known in the UK. You used to be able to hand-search it, but that has become more difficult now.” Plus, he says, London Heathrow Airport recently shut down its decompression unit, which is where people often took their outsize cargo to make it known. Since this option is no longer viable, Lancaster says he encourages customers in the UK to become known shippers.

“The UK is tougher than most places, which I don’t have a problem with,” he says, “as long as a solution is put forward concerning how people can make [outsize cargo] known at a reasonable cost and as quickly as possible.”

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