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   Vol. 19 No. 42
Thursday May 21, 2020
Air Cargo's Intrinsic Value
Sabiha Arend, Ram Menen, Malou Menen, Ashok Thomas and Bill Boesch

Ram Menen who invented air cargo for Emirates Airline and then led the Dubai carrier before retiring seven years ago joins the COVID-19 and air cargo story.
     “Surveying the air cargo event landscape for the remainder of 2020,” Ram said,” my guess is cargo events folks are a bit more optimistic than everybody else, namely the attendees.”

Hold Off On Trade Shows

     “Right now as the global pandemic continues to rage, I am not too sure if this optimism is well placed as travel and large gathering of people, I reckon, will not be encouraged for at least a year until a vaccine appears or at least we can feel our efforts to mitigate this global scourge are achieved, and millions of folks are vaccinated.
     “My thought is that it is better for all to cancel earlier than last moment to avoid huge costs.
     “But all of us should look, give full marks for optimism and then do what we have to do.”

Making It Happen

     “The COVID-19 pandemic has given credence to IATA Cargo’s slogan “Air cargo makes it happen”.
     “The global airline industry has always allowed cargo to be overshadowed by the passenger business.
     “But now sadly, the tables have turned at least in the short run and maybe longer as criticality of the logistics and transportation industry have been clearly established, given that their mainstay passenger business has been brought down to its knees like never before.”

Happy Days Are Here Again?

     “For several airlines, cargo is generating some cash to help sustain their companies. The passenger traffic is likely to take a few years to come back, so most passenger airlines are likely to turn to cargo to keep themselves afloat.
     “This would mean that cargo should be in the driver’s seat at least for the next 3-4 years.
     “Having said that, memories are short and once the pax traffic is back, most airline focus will turn back to pax-related issues which could sideline cargo priorities again.”

Progressives Get It

     “More progressive airlines like Lufthansa, Emirates, Qatar, Cathay, Singapore, Korean etc. will continue to give due attention to cargo as they have in the past.
     “It will be up to the leadership in the cargo departments to keep reminding what cargo did when the chips were down and let their pax peers not forget the value that air cargo brings to the airlines, airports and, the world.”

Cargo Delivers Ability To Function

     “The fact remains that without logistics, the front liners, be they in medical, an army at war, for that matter, all aspects of life, would not be able to function.
     “The folks in logistics and transportation in general are the unsung heroes.”

Cargo Bellies Up To CIC

     “Cargo in the cabin and bellies work well when the supply and demand is tipped towards demand.
     “This is not the first time that pax aircraft have been used for Cargo In Cabin (CIC) operations and this is not going to be the last.
     “The cost of using pax aircraft for cargo only missions is more expensive than production freighters.
     “In pax CIC cargo-only operation, the entire route revenue has to come from a lot lower tonnage as the available payload on a pax aircraft is up to 40-50% lower than that of a production freighter.”

CIC Elevates Breakeven

     “So the breakeven and unit cost becomes a lot higher.
     “Hence, moving cargo in this manner requires higher rates to be viable.
Aircraft such as B777-300ERF can carry up to 60 plus tons in their bellies.
     “That is why some pax aircraft are called freighters in disguise or the invisible freighters.”

PPE Cubes Out

     “To achieve true revenue success you need to have high density cargo.
     “However, in the current scenario, equipment like PPE, ventilators and other medical equipment/accessories tend to be very volumetric, cubing out before weighing out.
     “Added to density in bellies, cabin loading for mail and less dense consignments makes sense to achieve better tonnage flights.”

Delays & Manpower Drive CIC

     “Loading in the cabin works when we are in desperate situations as it is virtually bulk loading in the cabin, which is extremely manpower intensive and an inefficient high cost operation for the ground handlers. CIC also requires extended ground times which further adds to cost.”

CIC Fade Away?

     “So, once the pax operations start coming back, the attractiveness of cabin loading is likely to fade.
     “It is probable that most airlines are going to shrink their operations to match the pax demand resulting in lower capacity supply in the cargo market.”

Higher Rates Might Hold Over

     “Lower capacity as things go, could mean that air cargo rates are likely to be on the higher side for the near to medium term.
     “This has a knock-on effect on the economy and the cost of goods and services in the market are likely to be higher for the foreseeable future in comparison to the pre-Covid-19 days.
     “Put another way, we have all got to get used to a higher cost of living for a few years.”

Air Cargo Could Get Railroaded

     “What the air cargo industry has got to be careful about is the loss of traffic to rail, especially on the China/Europe routes.
     “In a high demand, short supply situation, cargo generally can take a week to 10 days to get to destination.
     “This makes the 14-17 days rail transit times from China to Europe a viable option at a lot lower cost.
     “In the past, we used to see migration from air to sea.
     “This time around we are likely to see migration from air and sea to rail.
     “So while our business is making hay while the sun shines, we all need to think about the future and try and sustain the growth of the traditional trade lanes business, which could also be affected by the reshoring of supply chains.”

Global Heroes For All Seasons

     “In a quite stressful time there are many heroes that I admire, however, in my book, the biggest heroes are the teams that help the front-liners to keep humankind and the world safe and secure.
     “These are the unsung heroes of the international, domestic and local logistics and transportation companies, including those involved in last mile deliveries.
     “Without those dear hearts and gentle people, the wheels of commerce would come to a grinding halt.
     “And yes I do believe will get through this time!” Ram Menen assures.

If You Missed Any Of The Previous 3 Issues Of FlyingTypers
Access complete issue by clicking on issue icon or
Access specific articles by clicking on article title
Vol. 19 No. 39
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Vol. 19 No. 41
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Chuckles for May 19, 2020
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Publisher-Geoffrey Arend • Managing Editor-Flossie Arend •
Film Editor-Ralph Arend • Special Assignments-Sabiha Arend, Emily Arend • Advertising Sales-Judy Miller

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