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Air cargo as a dedicated science
D J Ghosh, president of New York-based American Friendship Cargo, believes that like a grown-up child that has lived for too long under the same roof as his parents, it is now evident that air cargo operators have remained for too long under the umbrellas of their passenger counterparts – and it is time for a change
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While a significant portion of global air cargo is still carried in the bellyhold compartments
of passenger aircraft, full-freighter aircraft and freighter operators are here to stay. As the dedicated air cargo business evolves and grows, a new science must emerge to cater to this developing industry. Just like a child who has grown into an adult, achieved financial independence from his parents, and acquired a new circle of friends, air cargo businesses must stand on their own two feet and forge independent relationships with their customers and suppliers that are different from those of their passenger brethren.
We believe that this new identity brings significant opportunity and the need for a greater degree of specialisation. All the major suppliers to the airline business will now need to specifically tailor their products to suit the needs of cargo airline operators. Any value proposition should be based on researching
every aspect of the cargo airline business and it should be used to create new benchmarks on how this business should be run. The industry needs to create a body of knowledge and intelligence to turn air cargo into a dedicated and profitable science – one that is separate from the passenger business.
As a start, the industry should steadfastly promote the business case for all airlines, integrators, freight forwarders and government agencies to outsource the operation of their cargo aircraft to specialised freighter aircraft operators. To encourage stability, innovation and eventually cost
savings, we need to move towards very long-term cargo airline contracts of 10-12 years or more. Large shippers need to drive this move and to encourage their forwarder partners to do the same. Short-term thinking, manifested
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in short-term contracts, has been a long-standing curse of the air cargo industry. We need to work towards moving 100 percent of all
cargo on new and converted dedicated cargo aircraft, away from passenger aircraft, thus ensuring the long-term viability of the freighter business and improving the safety of passengers. Eventually, all freight should move only on specialised freighters.
Air cargo needs to rapidly migrate from higher cost hub airports to lower cost all-cargo airports with dedicated facilities for cargo operators and freight forwarders. In the long run, all air cargo should move through dedicated cargo airports – and it is the large shippers and forwarders who need to make this happen. The air cargo industry also needs to work with Wall Street
research analysts to spruce up its very shoddy investment image. Working with these analysts, we need to create a separate set of metrics and a distinct investment class for the air cargo business. We hope that this transparency will create a path for venture capital, private wealth and institutional money to enter the air cargo business.
We need to carefully study the dynamics of each type of air cargo product and air cargo customer and promote specialisation, branding and product differentiation in the transportation of each product category. At the same time, the industry needs to specialise in the
provision of seamless ‘end-to-end’ temperature-controlled global transportation solutions, to cater to the growing perishables and pharmaceuticals markets. Finally, at every stage of our business, we must
incorporate the latest information technology into our offerings to streamline and optimise all processes across the supply chain.
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