Scott Dolan addressed The Traffic Club of Chicago (Thursday September 20).
      The United Airlines Worldwide Cargo top executive helped mark the 100th anniversary of the pioneering transportation organization with a brief yet concise look into America’s second largest airline’s air cargo activities, offering a glimpse at what lies ahead.
      “We must create value for our companies and our customers—using the specific example of air cargo's key role in today's global market.
      The industry has experienced tremendous change over the last few years and continues to be reshaped by a number of dynamic and fluid factors.
      Fuel is probably the first thing most people think of when considering change and pressures in the air transport industry.
      The rising cost of fuel continues to place real constraints on how air carriers have to operate.
      It makes the pursuit of continual cost reduction and efficiency a stream of constant work at United and across the industry.
      Of course the changing picture of competition continues to pose challenges as well.
      With the growth of low-fare carriers on the domestic side and continuing serious players on the international side, capacity is outstripping demand more each day.
      This makes consolidation increasingly necessary—and creating value in new ways for one's company and its customers at every opportunity increasingly important.
      Some forms of consolidation are already happening on the cargo side of things, and affecting everyone involved—particularly combination carriers, such as United, who handle both passengers and cargo.
      The idea of forming alliances to build capacity, attract customers, enhance service and drive growth and profitability is resulting in more mergers and acquisitions.
      Some freight forwarders are getting larger and larger, and their control over total spend is increasing with their size. On the other hand, some local forwarders are willing to pay more per kilo to get their cargo on a specific flight.
      Additionally, trucking networks are becoming more critical components in the overall cargo picture.
      In addition to forcing additional cost reduction in other areas, the high price of fuel also is affecting the flow of air cargo traffic.
      With a current level 12 fuel surcharge of 60 cents a kilo, a great deal of former air cargo is now shifting to the ocean. Shipping cargo via ocean is no longer what it used to be.
      Ships are much faster and ports have improved their efficiency—making the quality of cargo service provided by air carriers even more critical to sustaining and growing that business.
      Finally, in the last few years, we have all had to adjust to a world where security is now a primary concern.
      New requirements and processes have changed the way we do business on a daily basis, and add additional cost and time.
      In addition, it requires a great deal of manpower at all levels of the organization to help shape and then comply with the requirements.
      As a belly carrier in this complex picture of air transport, United occupies a unique position when it comes to a business model.
      The relationship between the cargo and passenger sides of the business is complex.
      United's focus on international expansion—and strengthening our international passenger service—has direct implications for cargo.
      Widebody flights cannot be truly profitable without solid cargo traffic. And with our high aircraft utilization, coordinating cargo to maximize revenue on every flight has become even more critical.
       While the air cargo business is growing in certain parts of the world, we continue to face a number of threats that make sustaining a solid business in the market a challenge.
      From increasing competition from different modes of transportation to increased security requirements that add cost and transit times for shipments, air carriers have to find new ways to create value for customers.
      All of these factors are forcing each of us to rethink how we do business, and how we can continue to create value for ourselves and our customers.
      United Airlines is not alone in that fact and has focused specifically on tightening and restructuring the cargo business over the last three years as one way to be more competitive in the changing marketplace.”
Geoffrey