The International Air Transport Association (IATA) Annual General Meeting (AGM) and World Air Transport Summit examined the significant changes and challenges that air cargo sector has been through and the ongoing efforts to address challenges with a C-Suite panel featuring female air cargo executives from Finnair, LATAM and Polar. The three senior figures addressed the shift in focus from passenger business to cargo business in wake of Covid and how it has shaped the air cargo domain, giving a spot at centre stage.
The pandemic brought unprecedented challenges to the global air cargo sector, disrupting supply chains, grounding passenger flights, and upending traditional logistics operations. Despite these hurdles, the industry demonstrated remarkable resilience and adaptability, playing a crucial role in maintaining the flow of essential goods worldwide. However, the journey was fraught with significant challenges and hurdles.
One of the most immediate and severe impacts of the pandemic was the disruption of global supply chains. The closure of factories, lockdowns, and restrictions on movement led to a significant reduction in manufacturing output. This created bottlenecks and delays in the supply of critical goods, including medical supplies, personal protective equipment (PPE), and pharmaceuticals.
Gabriela Hiitola, SVP, Finnair Cargo stated that “air cargo operators faced the daunting task of managing these disruptions while ensuring the timely delivery of essential items. The reduction in available cargo capacity due to grounded passenger flights exacerbated the situation, as passenger aircraft typically carry a substantial amount of cargo in their belly holds.”
Breaking barriers
The air cargo sector has experienced a paradigm shift as world started to come out of Covid-19 in late 2022, driven primarily by the explosive growth of e-commerce. As online shopping becomes increasingly prevalent, the logistics and transportation industries have had to adapt to new demands for speed, efficiency, and flexibility. One of the significant innovations in this domain is one-way routing, a strategy that has the potential to revolutionise the air cargo sector.
One-way routing is a logistics strategy that focuses on optimizing the path that cargo takes from the point of origin to the destination without necessarily planning for the return trip. Traditionally, logistics companies have aimed to balance their routes to ensure that transport vehicles, including aircraft, are filled both ways to maximise efficiency and reduce costs. However, with the rise of e-commerce, the need for faster delivery times has often outweighed the benefits of traditional round-trip logistics.
“In the context of air cargo, one-way routing allows airlines to prioritise speed and direct routes, ensuring that packages reach their destinations as quickly as possible. This approach can be particularly advantageous for fulfilling the high volume of orders generated by e-commerce platforms, where delivery speed is a critical competitive factor” said Cristina Oñante López de Letona.
Technology plays a crucial role in enabling one-way routing and meeting the demands of the e-commerce sector. Advanced data analytics, real-time tracking, and artificial intelligence (AI) are instrumental in optimizing routes, predicting demand, and managing resources efficiently. Additionally, innovations such as drone deliveries and autonomous vehicles could further enhance the capabilities of one-way routing in the near future.
Agility
The International Air Transport Association (IATA) reported that cargo capacity was down by more than 25% at the peak of the pandemic. This shortage of capacity led to skyrocketing air freight rates and intense competition for available space.
“Cargo airlines had to quickly adapt by increasing the utilisation of freighters and converting passenger aircraft into temporary cargo carriers, a practice known as ‘preighters’, despite these efforts, meeting the surge in demand for cargo space remained a considerable challenge” said Kersti Krepp, Senior VP and Chief management Officer at Polar.
Technological advancements
The air cargo sector, a linchpin in the global supply chain, is undergoing a profound transformation driven by digitalisation and automation. These technological advancements are revolutionising the industry, enhancing efficiency, reducing costs, and improving the overall quality of service. As the world increasingly relies on quick and reliable transportation of goods, the adoption of digital solutions and automated processes is becoming indispensable for the air cargo sector.
“Despite the clear benefits, the adoption of digitalization and automation in the air cargo sector is not without challenges. High initial investment costs, the need for skilled personnel to manage and maintain advanced systems, and concerns about cybersecurity are some of the hurdles that need to be addressed” added Cristina Oñante López de Letona.
Kersti Krepp concluded by stating that, “Agility is the new stability. To overcome these challenges, industry stakeholders must work collaboratively to develop standardized solutions and share best practices. Continuous investment in training and development will also be crucial to equip the workforce with the necessary skills to operate and maintain digital and automated systems.”
Operational challanges
The pandemic also posed numerous operational challenges for the air cargo sector. Health and safety protocols had to be swiftly implemented to protect the workforce, including cargo handlers, pilots, and ground staff. This included measures such as regular testing, social distancing, and the use of PPE.
Cristina Oñante López de Letona, VP Marketing & Product Development, LATAM Cargo emphasised that, “additionally, varying international regulations and restrictions created a complex operating environment. Air cargo operators had to navigate a patchwork of border closures, quarantine requirements, and changing regulatory guidelines, which often resulted in delays and increased operational costs.”
Perishable goods in the sector
With Finnair moving its Norwegian Salmon and live crabs across the globe, LATAM is making time sensitive movement of Salmon and asparagus from Chile and Peru respectively towards US and Europe. Polar on the other hand, is engaged in fresh movement from US to Asia carrying flowers and cherries, the panel addressed the most time sensitive sector of the air cargo domain, “the perishable goods”.
In the intricate web of global trade and logistics, the air cargo sector plays a vital role in ensuring the swift and safe transportation of a wide array of goods. Among these, perishable goods hold a special significance due to their time-sensitive nature and the critical need for maintaining their quality during transit. From fresh produce and pharmaceuticals to flowers and seafood, perishable goods are indispensable to the air cargo industry and, by extension, to the global economy and public health.
The transportation of perishable goods involves sophisticated logistics and advanced technology to ensure that these items remain fresh and safe throughout their journey. Innovations such as temperature-controlled containers, real-time tracking systems, and advanced monitoring technologies have revolutionised the way perishable goods are handled.
Addressing challenges in the movement of perishables, “transporting these goods via air cargo presents several challenges. Ensuring consistent temperature control, managing the risk of delays, and adhering to stringent regulatory requirements are some of the key hurdles that need to be evaluated” added Gabriela Hiitola, as the Norwegian Salmon makes it way across the supply chain in Finnair’s belly cargo, thus posing immediate challenges of flight delays and disruption, causing the consignment being rejected of unfit for consumption.
To mitigate these challenges, the industry has adopted several best practices and collaborative strategies. “Enhanced coordination between airlines, ground handlers, and logistics providers is essential to maintain the cold chain from origin to destination. Additionally, investment in infrastructure, such as cold storage facilities at airports and advanced handling equipment, plays a crucial role in maintaining the integrity of perishable goods” adds Kersti Krepp.
