Air cargo’s new mantra: “agility is the new stability”

The Annual General Meeting (AGM) and World Air Transport Summit by the International Air Transport Association (IATA) are mostly about subjects relating to the passenger side of the global aviation industry. But the pandemic of 2020 changed the direction as the passenger aviation business was severely disrupted. Cargo was the lifeline for most of the global airlines.

Therefore, the 80th IATA AGM and World Air Transport Summit, held in Dubai earlier this week, had a session on the importance of cargo in aviation featuring three leaders from the world of air cargo. In fact, the all-women panel was the concluding session of IATA’s Dubai event. The panel, headlined ‘View from the C-Suite’, was moderated by the CNN Anchor and Correspondent Richard Quest. The panel had Gabriela Hiitola, SVP, Finnair Cargo, Cristina Oñate López de Letona, VP Sustainability & Product, LATAM Cargo, Kersti Krepp, Senior VP and Chief Management Officer, Polar Air Cargo.

The panel discussion started with the challenges and hurdles for the air cargo sector during the time of the Covid-19 pandemic. Hiitola of Finnair Cargo mentioned that although the pandemic was challenging, the cargo sector proved to be a positive aspect for the company. In contrast, Krepp of Polar Air Cargo described the experience as dramatic due to the company's substantial transpacific trade. She also noted that government regulations for entry, exit, and quarantine tested the company's agility. López de Letona of LATAM Cargo highlighted that instead of converting the aircraft, the company utilised the seats of passenger aircraft as "seat containers."

Post-pandemic, the road for the air cargo industry was not smooth because the pandemic accelerated the shift towards e-commerce, leading to a surge in demand for shipping services.

López de Letona said that 2023 was also tough for the industry, especially due to the yields. She also noted that the company saw a shift in the customers they were serving. She highlighted how there are challenges and regulations associated with transporting e-commerce shipments because there are lithium batteries too which require additional safety measures for transportation.

Krepp and Hiitola discussed the issue of one-way routing in the air cargo industry, highlighting the challenge of securing payloads for both legs of a trip. As a result, aircraft often fly empty on the return journey.

The three speakers further talked about perishables highlighting their company’s expertise in handling perishable products. The main perishable items that Finnair carries are Norwegian Salmon and live crabs that are transported in its belly cargo space while LATAM Cargo carries Salmon from Chile and asparagus from Peru as well as exports flowers from Columbia and Ecuador to the US and Europe. Krepp of Polar Air Cargo mentioned that their aircraft carry cherries, as well as flowers, moving westbound from the US into Asia.

The speakers also delved into the challenges associated with perishable shipments, including factors such as temperature control, humidity levels, and shelf life considerations.

The discussion then shifted toward the digitalisation of data and automation within the industry. Hiitola noted the industry's reliance on paperwork and highlighted the significant demand for digitisation to enhance data quality. López de Letona emphasised the challenge posed by airport infrastructure, pointing out that airport designs predominantly cater to passengers, with cargo warehouses often located far from the apron.

Hiitola also addressed the issue of insufficient investments in digitalisation, noting that the fragmented nature of the logistics chain presents a bottleneck for digitalisation efforts. She emphasised the necessity for alignment among industry stakeholders to prioritise digitalisation initiatives.

Additionally, they spoke about signing the IATA digital charter. Krepp emphasised that the company's primary focus for the current year is transitioning to cloud-based cargo management systems.

The speakers also discussed a general perception of the air cargo industry which is that it mainly carries high-value items mentioning the fact that it does carry high-value items however it also carries high-demand items.

“It can be very low value in terms of its actual value if they are being sold in stores. I think the value is created by what is needed in terms of transit times. So that often determines whether it is air cargo or they go into ocean containers,” Krepp said.

She provided an example from the Covid-19 pandemic, illustrating how masks, initially perceived as low-value items, experienced a surge in demand, transforming them into high-demand commodities.

When Quest remarked that moving passengers seemed simple compared to moving cargo, Krepp responded that even seemingly unrelated situations outside her market can have an immediate impact. She quoted “Agility is the new stability. You have to be nimble, always ready and situationally aware of geopolitical developments. That is our new mantra.”

In summary, the discussion underscored the challenges faced by the air cargo industry. While e-commerce growth presents opportunities, it also brings challenges in managing high volumes and ensuring safety. The industry's lag in digitalisation was noted, emphasising the importance of collaboration to streamline processes through investment in new technologies. The speakers emphasised that agility is now a cornerstone of stability, highlighting the necessity of adapting to unforeseen circumstances and evolving customer demands for success.