Improve or go out of business

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Improving competitiveness is one of the urgent actions industry associations are telling their members to achieve at a time when the airfreight industry has been going through unpredictable changes.

The International Air Cargo Association (TIACA) secretary general, Doug Brittin, tells Air Cargo Week (ACW), some markets remain stronger, such as the Middle East and North America, while others, Europe and Latin America, are weaker. “There is still a challenge with yields, as the market remains extremely competitive, so increased volumes are still not reflected in bottom line improvements overall,” Brittin explains.

As for the industry’s challenges, Brittin feels the main one is the uncertain global economic climate. He says it is showing encouraging signs, despite Middle East, and Eastern European volatility, and Eurozone challenges, which have unsettled investor confidence. For Brittin, industry regulations are having a negative impact on business: “Increasing regulatory issues, make it difficult to stay current, and adds to the cost to remain in compliance.” He adds that the other main challenge is cyber security, and its potential impact.
TIACA wants to see the expansion of advance data regimes, according to Brittin. He explains with the European Union and US set to implement regulations in 2016, the need to ensure compatibility among systems is paramount. Brittin adds: “Industry can ill-afford a scenario where all of these programmes are dissimilar; that would add impossible cost and complexity to the issue. While we support the concept as a solid layer in the security of the supply chain, it must be done on a fully collaborative basis, and there remain a multitude of details yet to be worked out.”

Evolving technologically is something Brittin wants to see and he feels the industry must move from a paper intensive environment to one, which shares information across the chain electronically. TIACA is also seeing growing concern about regulatory and training requirements, Brittin says, and it is focusing on the harmonisation of training and compliance.
Cargo Airline Association vice president of legislative policy, Gina Ronzello, feels the main challenges are security, safety, and the environment, mainly noise issues. She explains that the principal issue is maintaining open skies as the industry needs the ability to operate globally: “The US [government’s] departments of Transportation and State need to continue their support of these policies, so the cargo carriers have the ability to operate worldwide freight networks.” Ronzello adds that the association is focusing on the environment, specifically fuel efficiency, and also how to navigate the security challenges through improved communication between government and industry.

For Airforwarders Association (AfA) executive director, Brandon Fried, change should focus on regulations. He explains to ACW the, “increasingly expanding web of complex regulations,” waste resources and create confusion, while diminishing transit time for shipments. “Countries and agencies must work together in harmonising rules to avoid duplicative and sometimes conflicting screening and customs protocols have little value while wasting time and money,” Fried says.

Fried explains that top of the list for the AfA is working on how forwarders will meet upcoming advanced data targeting requirements and how US airport cargo facilities, airlines and ground handlers will handle increasing volumes that a growing economic recovery will bring. “There must be an increased focus on electronic messaging and the transparency technology gives our customers,” Fried says. As for the future, Fried says regulations need to be the focus, as they provide little or no benefit and in his view, complex regulatory requirements reduce the industry’s competitiveness.

Airports Council International (ACI) World director general, Angela Gittens, tells ACW there are two forces in the industry pushing the pendulum in opposite directions. “As North America and Europe get back on course, the cyclical slowdown in emerging markets, such as China, has translated into subdued growth in the global air cargo market,” she explains. Weakness in the market, Gittens says, can be attributed to losing market share to ocean freight and other modes of transport. “Paradigm shifts toward cheaper modes of delivery mean suppliers of airfreight capacity need to rethink their business models to remain competitive,” Gittens feels.

In Gittens’ opinion, liberalisation presents the biggest opportunity to grow cargo across the world as she says it generates direct and indirect economic and social benefits for communities being served. But, improvements need to be made to regulations.Gittens view is that with a focus on making sure the right regulatory environment is in place, “the bottom line is for air cargo to thrive, we need to make sure airlines have the flexibility and capability to operate, and airports have the regulatory and business support they need to be able to provide the facilities to communities they serve.”

Associations are positive about the industry, but to improve competitiveness they want regulations made more efficient, a faster adoption of e-freight and other technical solutions for the harmonisation of business processes through IT.