The cost of fuel is down, the passenger numbers up, profits instead of earning warnings, new runways, seemingly nothing to worry about. The business of aviation seems to be doing OK, thank you. Or so I thought until I ran into some old and new friends at the recent Payload Asia conference in Singapore.
I decided to attend because one of the topics on the agenda was dedicated to impacts of e-commerce on the airfreight business. I will come to that subject later because it became clear during the conference that airfreight industry is having an existential crisis that is affecting e-commerce in more than one way.
While the number of dedicated freighters is increasing slowly, every passenger plane joining carriers’ fleets brings ever-expanding cargo capacities below the deck. So, every time you take a commercial flight, you are sharing the flight with tonnes of commercial cargo. All activities that went into packaging that cargo, documenting it, palletising, loading onto a plane, and securing it in the belly hold happened thanks to people working in broadly defined ground services.
If you travel a lot, your most common experience with ground services is probably limited to the airline check-in desk, food served in-flight (but prepared on the ground), and if you are really unlucky, a conversation at the lost baggage counter. If your flight goes smoothly, you hardly give it a thought. But behind the walls, in the bowels of the airport, on the ramps and all the way to the airplanes’ cargo and luggage holds, a crisis of multiple dimensions is taking hold. A crisis within the ground services could affect your life, and not because in-flight catering undercooked your chicken.
The cardinal obligation of the airline is to safely transport people and goods between any two airports. Not so long ago, the airlines were vertically integrated. They owned and managed resources and events from kerb side to kerb side, in the case of passengers; and between the docks of origin and destination for cargo. This is now a distant past. In the process of responding to demands of passengers and cargo shippers, airlines kept lowering the prices and looking for savings at every step of their business processes. It did not take long for them to discover outsourcing as a means of reducing the costs. That way, the airlines gained leverage over suppliers of aviation services integral to them performing transportation services. Paradoxically, this has led to the development of strained business relationships typical of supplier-buyer relationships in which prices represent the chip with which each side bargains. In that process, attention to safety is still important. But, at any step, the price could trump everything else.
Ground services rely on human labour – something that even the cleverest automation will not be able to replace in the foreseeable future. Or at least, this is what my fellow conference participants felt. To attract and to hold an employee in ground services is an arduous job. The ramp working conditions are harsh: heat, cold, dust, noise, rain, snow, sleet, overtime-induced fatigue – you name it. The shifts are long, and they operate 24/7, a sure recipe for high employee churn or lack of desire to work in this business. Most of the ground services companies I work with have long lists of unfilled positions. If ground services are part of the airline, they can afford to invest in employees’ training, optimise work assignments to avoid fatigue, and enforce occupational health & safety standards. The outsourcing companies are not subject to the same scrutiny and enforcement. If they choose to offer employees lower incentives to perform quality work or save on staff training, airlines would not be any wiser.
And this is where we come to e-commerce. The exploding volumes of small packages traversing the globe are enough to keep the integrators and freight forwarders working directly with commercial airlines very busy now and in the future. On one hand, that increasing volume offers ground services companies an opportunity to become value-adding handlers for e-commerce companies. They could offer auxiliary services related to shipment quality checking, re-packaging, repairing, returning, etc. On the other hand, the intersection of fatigued, under-trained force and a massive increase in the number of shipments presents a problem, even before ground services companies consider getting into those value-added services.
Say that the waybill declares electronic toys inside the damaged package. It is re-packaged by the employee who ignores the fact that instead of declared toys, the package contains a few thousand tightly packed lithium batteries. The package continues its journey on another plane to its final, possibly in more than one way, destination. And possibly it is not a dedicated freighter, but a passenger plane with you on it.
Do we possess countermeasures to ensure that the supply chains relying on airfreight are moving, that the safety of aviation is not jeopardised, that the people taking care of the freight while on the ground perform their jobs with utmost diligence? Not really. I heard passionate opinions on only 30% of shipments relying on e-waybill (have you seen an airline paper ticket lately?). That means we cannot apply technology to scrutinise load manifests throughout the whole journey and decide the safest path for them to take. I heard that scanning the cargo and ensuring compliance between the waybill and content is going to rely on human observation and opinion for a very long time. I heard that securing the loads in cargo holds cannot be automated, as humans are the only ones who can fasten the safety straps around shipments in tight plane spaces. With not enough humans to work in ground services, air cargo increasing, airlines’ demands for flights to depart on time, we can attempt to use software to optimise the workforce the best we can, but there is only so much that a smart shift management can achieve.
For e-commerce to move and grow unimpeded, we need to re-think and possibly re-invent how freight moves by air. This is not about track-and-trace, this has to go deeper into every element of the supply chain – the processes, machines, and the people. The air cargo business cannot stay the same because the way consumers acquire their things has changed forever with e-commerce.