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Trade data is for sharing


Shippers widely say they are quite happy with their freight forwarders and logistics companies, especially when it comes to air freight. I would suggest that most have no intention of becoming more involved in the management of their air freight, preferring to leave such matters to their forwarders. But if everyone is happy with


the way things are, why did the recent Air Cargo Forum in Amsterdam run a session discussing the role shippers could play to improve air freight? I had a hunch that not all


shippers are as happy as they make out - and I was right. Scratch the surface and a number of ‘complaints’ crop up. Three separate air freight customers named similar issues in the sector: a lack of innovation, too much volatility, too much air freight being used


- and it was too expensive. Ask anyone close to shippers


and they will tell you that a great many are considering reducing their use of air freight because it is too expensive; but at the same time the vast majority are more than happy with their freight forwarders. Why, then, in the face of falling volumes and customer satisfaction with the services they are getting did those speaking at the TIACA Air Cargo Forum support a more proactive role among shippers in air freight? The reason, as surmised by


Ramiro Dias, owner of 4POLE, a 4PL service provider (effectively managing the freight transport procurement in line with the supply chain requirements of his customers), is mindset. If people want to avoid volatility in air freight they need to provide better forecasts to the carriers and create an environment


conducive to long term contracts. That’s easier said than done


but, Dias suggests, customers have enough information to do this if only they were prepared to collect it and, importantly, share it. I applaud such honesty. I have heard too many shippers say they cannot predict volumes from one day to another, but how do their own businesses manage if they do not have a reasonable estimate of supply and demand? They have more information than they care to admit. Beyond a few weeks it does


tend to become less accurate but, as in weather, a long range demand forecast based on historical data and models of predictability are still valuable. They are regularly reviewed and modified, but they can be extremely useful in reducing some of the volatility that exists and they will help to build trust with the service providers.


Get your retaliation - or compensation - in first


The long-drawn-out airline cartel case in the European courts is over - or is it? Quite apart from any appeals against the fines by the affected airlines, there is still the little matter of compensation. Not every affected airline customer may be inclined to pursue it. There may be a reluctance to ‘upset’ carriers. This may be partly down to a general conservatism within the freight industry and a reluctance to ‘cause trouble’ though fears of having your cargo offloaded are probably a bit far-fetched. Surely the airlines are not that Machiavellian or willing to test the European Commission again? There is also the practical matter that the cost of pursuing any claims may come close to any compensation that may be gained. No one really wants to


trawl through seven years’ worth of airfreight invoices unless they are convinced that the amount they will be paid – a figure of 5-10% of airfreight charges has been suggested – will compensate


“Legal firms have been trawling the industry recruiting companies for joint claims and for those who are interested there is still time to get on board the gravy train.”


them for their time and trouble. Legal firms have been trawling


the industry recruiting companies for joint claims and for those who


are interested, there is still time to get on board the gravy train. Just be warned that the gravy may not be quite as rich as you think it may be. Should we have any sympathy


at all for the airlines, who have been hit with some pretty swingeing fines? In a word no. Quite apart from the fact that they should have made allowance for both fines and possible compensation payments in their accounts, so there should be no question of tipping your flag-carrier into bankruptcy, there is the little matter that they have broken the law. Is there anything that could


prevent a similar occurrence in future? Not really, other than the fact that this latest episode acts as a warning not only to the airfreight industry but to the shipping lines too.


That trust will translate into longer contracts but, as Dias says, longer contracts does not mean fixed rates for the period. He would like contracts of 1-3 years with carriers, but to expect rates to be fixed for that length of time would be unrealistic. Instead, he says, a contract should establish the principles of his clients’ businesses contractually, with service level requirements, regular reviews of service needs, and forecasts to help ensure capacity is available when it is needed, save for the most unpredictable circumstances. Shippers should not be over-


concerned with confidentiality or using their own intelligence to play the markets. If air freight is important to a business, then shippers, their agents and the carriers must work together to secure the transmission and storage of data. But, says Dias, “what company doesn’t already


have a good idea of what their competitors’ volumes are, and where they are moving?” One might deduce from this that shippers are overly paranoid, or have other motives for not collecting and sharing their data. But the air freight sector itself


also needs to take a long hard look at itself, and ask why there has been so little innovation in the product offered to shippers over the past 20 years. Esther Liskamp, in charge of Philips’ purchasing, forwarding and distribution, claimed to want more from the service providers: multimodal service offerings such as air-parcel, sea-air, rail-air or air-road. Greater visibility was also called for in the chain as a real business need and, as we are all aware following the Yemen bomb-plot, to improve security. That view has to be endorsed.


It is not dissimilar to the call for sharing more data: put greater


Dr Andrew Traill


visibility and data into a system that manages and secures the air freight product, and we may find new opportunities and innovative service offerings. It might even possibly prevent the demise of belly-hold cargo on passenger aircraft (currently 50- 75% of international air freight) and costly, time-consuming restrictions on freight shipped in all-cargo carriers and combis, such as are currently being urged by politicians seeking to raise their own popularity among voters.


A proportionate response


Will the ‘Yemen incident’ lead to a rethink on Europe’s air cargo security regime? It may do. When Brussels first deliberated on stiffening controls on freight security in the EU in the wake of the ‘9/11’ attacks, the Known Consignor system was introduced across the EU. To manage it (along with the revisions that are now in the process of being introduced over the next two years) there was to be a central database enabling those with the appropriate authorisations to check who is a genuinely security cleared consignor, trucker, warehouse-keeper and agent. What we have right now is a watered-down version of what was originally being proposed by some in the industry and the European Commission. While the system currently being installed


will have many benefits, although it is ultimately little more than a list of known consignors, at the time many people suggested that much more could have been done with interactive databases at relatively small extra cost. The system introduced at the time was no doubt proportionate to the perceived risk, but now we have had the first use of airfreight by terrorists to deliver an attempted attack. Some may argue that the cost of the original system that was being tested before


being replaced by a cheaper option, is still too high. But compared with some of the measures that might be imposed by outside agencies like Governments appealing for much more security scanning requirements and restrictions on air freight, such costs might now appear more reasonable. We don’t want to end up with measures such as 100% scanning forced on us by politicians with an eye to popular support rather than the costs and disruption to the supply chain - especially considering that many of the more disruptive measures are not necessarily any better at stopping bombs getting on board planes. Being able to monitor compliance with the security regulations using a more sophisticated database may be what is needed to placate those who doubt the effectiveness of today’s known consignor (known shipper) security programmes for air freight. It might even be necessary to provide even


more data for risk assessment purposes. Some may baulk at the prospect, but as I explained above, shippers already have a lot of the necessary data in their pipelines. It’s just a matter of accessing it at the right point in the supply chain and preventing the wrong people from getting to it.


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