Road Feeder Services are vital in the air cargo supply chain. Global providers talk about growing demand, capacity challenges and digitalisation opportunities, writes David Craik.
Jan de Rijk Logistics chief executive, Sebastiaan Scholte says the last 12 months has seen a lot of growth in its road feeder service volumes.
“From last summer to the present air cargo is booming and yields are up,” he states.
“We’ve seen an economic revival with e-commerce shipments particularly strong.”
The group, which has RFS contracts with the likes of Virgin Atlantic and China Eastern Airlines, says it had also benefited from high demand for the movement of large aerospace engines and for pharmaceuticals where it has last mile delivery to patients’ homes.
Jan de Rijk was the first logistics group to achieve certification in IATA’s CEIV Pharma programme back in 2015.
“Both aerospace and pharmaceuticals give us key differentiation,” he explains.
However, there are mounting challenges.
The main hurdle has been driven by an ongoing capacity squeeze in the sector which has led to increased operating costs.
“There is a shortage of manpower and drivers in the logistics industry in general,” he states.
“There aren’t enough young people wanting to get into the industry because they don’t find it exciting enough or because there aren’t as many of them around given the ageing demographics in Europe.”
He says Jan de Rijk, with 800 drivers, has the manpower to cope with capacity challenges but the industry shortage is putting pressure on costs.
“Because drivers and warehouse personnel are getting scarcer in numbers that means labour costs rise in the form of higher wages,” he states.
“In some countries there are collective work agreements where instead of a salary increase you make the differentiation between yourselves and other firms through job perks. But in other nations labour costs have jumped by double-digits.”
He believes the labour shortage puts more onus on the industry looking at automated driving solutions and digitalisation.
Wallenborn commercial director, Jason Breakwell says it has experienced similar challenges and opportunities.
“Both commercial and consumer sentiment has been more positive in the last 12 months or so. As a result, there has been higher demand for transport movements including re-stocking,” he states.
“In 2017 our volumes were up 20 per cent year on year and in the first quarter of 2018 we are eight per cent ahead of the same period last year.
“There has been a real capacity squeeze particularly through driver shortages as the plentiful source from Eastern Europe begins to dry up. But new legislation in some EU countries around rest breaks and minimum wage payments has also restricted the movement of truck drivers,” he adds.
Those movements, he declares, are increasingly powering towards ‘secondary airports’ such as Liege and Leipzig.
“At primary airports such as Schiphol, Frankfurt and Charles de Gaulle they are reaching capacity with not enough space for freighters, strike meltdowns, curfews and limitations on night flights.”
Another of those opportunities is using digitalisation to boost efficiency and customer service.
Breakwell says, for example, it is now streaming real-time temperature data from its trucks.
Jan de Rijk is also becoming increasingly digitalised. Since 2016 it has been one of the parties working with KLM Cargo to improve delivery times and accuracy as part of the European Green Fast Lane.
Through improved data exchange and compliance checks on the route between Frankfurt and Schiphol delivery speeds have increased and waiting times have reduced due to less congestion.
It is currently testing a new Control Tower solution powered by smart algorithms with an unnamed freight forwarder. It intends to roll out the system next year.
Hong Kong Air Cargo is certainly buoyed by the opportunities in RFS. It launched its HKAG Logistics service in March.
“With the introduction of the ‘Belt and Road initiative’ and the ‘Integrated Development Plan of the Guangdong-Hong Kong- Macau Greater Bay Area’, Hong Kong Air Cargo looked to expand its business as an all-round cargo, logistics and ware housing service,” explains HKAG general manager, corporate development, William Chan.
Another RFS expansion story comes from American Airlines. Last year American Airlines Cargo grew its European RFS network in both France and Germany to cater for flights between Spain and the US.
“American has a growing seasonal online operation in Europe with additional capacity added for the summer in Italy, Germany, Ireland, Portugal, Netherlands, Iceland, the Czech Republic and Hungary,” says AA regional sales manager Northern Europe, Andy Cornwell.
“We regularly truck from Amsterdam into the UK, with a large portion being perishable cargo – flowers and produce. We also truck plenty of hard freight too. For the perishables, we have temperature-controlled trucks to maintain product integrity.
“We have several double-decker trucks coming across each day from the Netherlands, in addition to some business moving directly on the new flights out of Amsterdam to the US.”
Keeping it on the road is paying dividends for many it seems.