Ground handling gets smarter
Ground handling in air cargo is a competitive business. As carriers get more demanding, service providers are creating solutions to suit their various needs. Namrata More writes.
Ground handling is becoming more professional and sophisticated, offering better value for money than ever before. Airlines too are becoming much more process driven and specific on how they want the ground handling operations to be conducted. “This means that the carrier and the ground handler have to work very close together and work with continuous improvements in order to optimise the operation,” says Andreas Vassilaros, projects director, Aviator. Aviator works with loading and off-loading of cargo flights at various airports in the Scandinavian region with integrators like DHL and UPS. The airline industry is not enjoying the same success in the cargo environment as the passenger market. The tonnages are there, but the rates are unsustainably low, which affects the combination carriers, but repercussions are much more serious for the all-cargo operators, cautions chief executive Whitehead of Hong Kong Air Cargo Terminals.“They are caught in a perfect storm of high fuel costs, and high leasing costs if they want fuel-efficient aircraft, whereas, handlers are caught up in the drive to reduce costs, so no handler is making the ideal margins that will encourage optimum staffing levels and future infrastructure investment”. But he also observes that this situation cannot last forever; eventually standards will fall to match prices, or prices must rise to sustainable levels. “To look at new business opportunities we need to provide more out of the box solutions to our customers,” says Murtada Al Qassab, senior manager, Bahrain Airport Services. The competition is also getting tougher in the Middle-East market, which has its key hubs like Dubai, Abu Dhabi and Doha,vying for the same business opportunities. At the same time, high operating costs are also an issue. “Everybody is looking at reducing costs. But we cannot jeopardise our services as it is of no value to our customers.” In a bid to manage costs, service provider are now offering customised solutions to carriers. “ I see that solutions will be even more customised, which will also spread to other areas of ground handling,” says Vassilaros. “Handling operations require a very well planned and structured operations in order to be efficient. But the nature of the business is such that there are many uncertain variables.” As ground handling constitutes a major chunk of the supply chain, time is money. And that is when location has an important role to play. Liege Air Cargo Handling Services (LACHS) is strategically located at the heart of the golden triangle Frankfurt-Paris-Amsterdam for quick accessibility to most of Europe. “Open borders across the Europion Union results in quicker release from customs, shipping and handling, and allows us to avoid forwarders, agents, and brokers who add efficiency to the process,” says Eyal Zagagi, CEO, CAL Cargo. “Since our airline crew, ground handling agent and staff, sales and operations all sit in single location they enjoy an extremely close relationship, for the benefit of our customers. Shared interfaces, sources and information means excellent control over shipments and lower costs.” LACHS as part of the CAL Group allows the ground handling team to understand airline needs and offer better-customised solutions. It is located at Liege Airport in Belgium, streamlining the cargo experience. Technology plays a key role in this drive for cost efficiency. “Ground handlers that capitalise fully on the technological innovation available, conducting business electronically, as far as possible, without sacrificing the important element of human interaction will be the most successful ones in the current business environment,” says Patrik Tschirch, managing director and COO, LUG aircargo handling GmbH.LUG offers customised solutions based on state-of-the art IT applications. “Customisation is part and parcel of our premium quality service. Naturally, a higher quality demands a higher price but it remains a good buy,” adds Tschirch. Meanwhile, Hactl has made many enhancements to industry-leading COSAC-Plus system, such as completion of its e-AWB capabilities according to IATA guidelines, and the launch of COSAC-Customs to accommodate customs validations for different countries, to simplify verification and reduce errors in manual processing. One of the most exciting developments is the launch of COSAC-Mobile, an iOS or Android supported application that provides flight schedule, cargo tracking, storage charge information, truck paging and GPS tracking. “This application enables us to send notifications to truckers for terminal entry, while the GPS tracking integrated with the import pre-declaration (IPD) function of COSAC-Plus allows the forwarder to book the cargo release,” says Cindy Ng, executive director- information services, Hactl. Using the GPS function of the driver’s smartphone, Hactl and the forwarder can locate the truck’s position anywhere in Hong Kong. COSAC-Mobile for Warehouse replaces the old, heavy-duty handheld devices previously used in the warehouse with iPods. This in-house developed application takes photos to record cargo condition at all stages, and updates cargo and job status. It’s part of a wider move to increase the use of mobile devices in the ramp, airside and landside operations. “Later this year, we will focus on mobile computing, business intelligence and updating electronic data interchange (EDI) messaging to newer versions such as IATA CargoXML,” confirms Ng. There will also be ongoing work on e-AWB capabilities to accommodate the increasing take-up of e-freight by the industry. “Ground handling needs to be much more focused on exploiting the benefits of latest technology. This is the only way it can counteract the delays caused by increased security requirements, and reduce costs to match falling industry revenues,” says Ng. This year, Aviator is finalising the integration of newly acquired businesses into its different infrastructure platforms. The new platform will improve mobility and communication. Aviator has also recently launched an application for smartphones for their customers, to keep them updated on a constant basis. “We believe that IT really can continue to drive innovation within the ground handling industry, both for automation as well as for new or improved services,” says Vassilaros.
Setting right standards It’s a well-known fact that ground handling processes are currently not in line with industry initiatives, as too many processes are still paper based. “We need a courageous leap into a digital future. And we need higher industry service quality standards. The current unsatisfactory situation is not only due to a lack of IT investment by ground handlers. There are still too many documents that need to be presented in paper to various authorities around the globe,” says Tschirch.While IATA sets minimum handling standards, handlers actually work according to the standards and key performance indicators(KPI) agreed with individual airline customers. There is always room for improvement, as service providers believe that the current standards are doablse in very difficult circumstances. “Being asked to perform the same function many different ways by airlines is very challenging. If we can remove that complexity and introduce more simplicity, we will improve the consistency of the service offered,” says David Ambridge, Director - Cargo, Africa Flight Services Kenya.AFS is currently working on IATA COAG focusing on exactly these issues. It is also trying to develop service level agreements, focusing on customer needs that airlines can adopt in the future. Handling companies are working hard to standardise the processes by deploying global management and system solutions to achieve improvements in productivity along with quality and flexibility. “e-freight will support the standardisation of the industry as well as increasing the speed of throughput within the airfreight supply-chain,” Daniel Setz, SVP, head of global operations cargo, Swissport International. An equally important issue for ground handlers is maintaining high security standards appreciable on a global scale. The introduction of ACC3 on July 1, this year has had a huge impact on them. “We have had to invest in new Dual View X Ray Machines, at considerable cost, and some of us have invested to become RA3 compliant,” says Ambridge.“Security will never be relaxed, it will only increase and become even stricter in the future. A lot of that burden falls squarely on the ground handlers.” But the problem here is that airline customers are reluctant to assist with this investment. As mentioned by IATA on their website, “To obtain ACC3 status, the air carrier must deliver a “Declaration of Commitments” setting out how it details and operationally delivers its aviation security responsibilities to the civil aviation authorities of the EU member state to whom it flies cargo and/or mail. The template for the Declaration of Commitments is set out in the EU Regulations. ACC3s are obliged to ensure that cargo and mail destined for the EU is screened or comes from a secure supply chain. If the ACC3 wishes to have the security controls applied by a business partner such as known consignors, regulated agents or ground handlers at non-EU airports, these entities will also have to undergo independent validation, either as part of the carrier's accreditation or in their own right. ACC3 implementation has set a standard for the European Union (EU) but it is on a regional basis. Global standardisation of security does not seem to be coming forward, opines Setz. “The more regional standards being set complicate the operation and the compliance. For example we have EU PRECISE coming, which is the EU version of the ACAS process being trialed currently, and I am sure there will be variations on the same theme.” The non-standard regional security programs add complexity to the operations and require different IT set-ups, which adds complication and cost. “We would welcome if at ICAO level, governments would globally set standards.” There is an inevitable conflict between security and airfreight transit times. As more security measures are being introduced, the greater the potential for delay. “Only through investing in the latest systems and equipment, and reviewing our procedures, has Hactl been able to comply with all new regulations without a detrimental effect on our customers,” adds Whitehead. “A year ago, I would have complained that authorities in parts of the world were making unilateral decisions on security procedures, without asking the industry if they were workable. Ultimately, all of us in the airfreight industry are on the side of total security: we just don’t want our industry to be destroyed in the process. Recently, we find regulators are willing to listen, that is an improvement.” Hactl just successfully gained ACC3 accreditation, even though Hong Kong is exempt from the latest European requirements. “We saw it as a prudent external audit of our own procedures, and we are pleased that they have been endorsed,” says Whitehead. LACHS has the highest security clearance, specifically for dangerous goods. “As an Israeli company we have tremendous experience and professional expertise in all security issues. Just three months ago we successfully passed the EU security audit,” says Zagagi. “Since we specialize in complex cargo, many of our clients need specialized equipment and services especially for perishables, pharmaceuticals, dangerous goods and live animals.”
Market trends The industry is witnessing a slow and inexorable move from freighters to belly-hold capacity on many routes, which can impact handlers at many of the largest gateways. “The ingress of new generation passenger aircraft with larger cargo capacity means there is going to be more ramp activity around the passenger aprons,” says Whitehead. The ground handling industry is affected by over-capacity in the airline sector, observes Tschirch. “There is no light at the end of the tunnel as passenger connections in Europe and to or from Europe increase as well as aircraft sizes.” Cargo volumes are rising in Europe but at low levels compared with other continents. LUG Handling sees2014, as a year of consolidation with a strong focus on further customer service improvements. “However, at the same time we are trying to strengthen our foothold in the Americas and build up a geographically more balanced customer portfolio,” says Tschirch. Hactl on the other hand, apart from continuing to pitch for every new entrant to Hong Kong, will see developments in their Hong Kong Air Cargo Industry Services Limited (Hacis)subsidiary, which is becoming more popular as a provider of bonded road feeder services (RFS) capacity into and out of China’s Peral River Delta. “With the opening of the Hong Kong-Zhuhai-Macau Bridge in 2016, we foresee opportunities to further expand Hacis’ RFS network to the benefit of our client carriers in Hong Kong, who will be able to attract more cargo onto their existing services,” adds Whitehead. Indeed, ground handling is getting interesting with service providers getting out of their comfort zone and creating solutions that are desirable on a global level.