The International Air Transport Association (IATA) Annual General Meeting (AGM) and World Air Transport Summit explored the significant changes and challenges facing the air cargo sector and the ongoing efforts to address challenges with a C-Suite panel featuring female air cargo executives from Finnair, LATAM and Polar . The three senior figures addressed the shift in focus from passenger business to cargo business following Covid and how this has shaped the air cargo domain, giving it a place at the centre.
The pandemic has brought unprecedented challenges to the global air cargo sector, disrupting supply chains, grounding passenger flights and upending traditional logistics operations. Despite these obstacles, the industry has shown remarkable resilience and adaptability, playing a crucial role in maintaining the flow of essential goods worldwide. However, the journey was fraught with significant challenges and hurdles.
One of the most immediate and serious consequences of the pandemic has been the disruption of global supply chains. The closure of factories, closures and restrictions on movement have led to a significant reduction in manufacturing output. This has caused bottlenecks and delays in the supply of critical goods, including medical supplies, personal protective equipment (PPE) and pharmaceuticals.
Gabriela Hiitola, SVP, Finnair Cargo said that “air cargo operators have had the challenging task of managing these disruptions while ensuring the timely delivery of essential items. The reduction in available cargo capacity due to grounded passenger flights has exacerbated the situation, as passenger aircraft usually carry a significant amount of cargo in their belly.”
Breaking down barriers
The air cargo sector experienced a paradigm shift as the world began to emerge from Covid-19 at the end of 2022, mainly driven by the explosive growth of e-commerce. As online shopping becomes more and more common, the logistics and transport industries have had to adapt to new demands for speed, efficiency and flexibility. One of the significant innovations in this domain is one-way routing, a strategy that has the potential to revolutionize the air cargo sector.
One-way routing is a logistics strategy that focuses on optimizing the path that freight takes from the point of origin to the destination without necessarily planning for the return trip. Traditionally, logistics companies have aimed to balance their routes to ensure that transport vehicles, including aircraft, are filled both ways to maximize efficiency and reduce costs. However, with the rise of e-commerce, the need for faster delivery times often outweighed the benefits of traditional return logistics.
“In the context of air cargo, one-way routes allow airlines to prioritize speed and direct routes, ensuring that packages reach their destinations as quickly as possible. This approach can be particularly beneficial for the execution of the large volume of orders generated by e-commerce platforms, where delivery speed is a critical competitive factor,” said Cristina Oñante López de Letona.
Technology plays a crucial role in enabling one-way routing and meeting the demands of the e-commerce sector. Advanced data analysis, real-time tracking and artificial intelligence (AI) are instrumental in optimizing routes, predicting demand and managing resources efficiently. Additionally, innovations such as drone deliveries and autonomous vehicles may further enhance the capabilities of one-way routing in the near future.
Dexterity
The International Air Transport Association (IATA) reported that cargo capacity declined by more than 25% at the height of the pandemic. This shortage of capacity has led to the rise in air freight rates and intense competition for available space.
“Cargo airlines have had to adapt quickly by increasing the utilization of freighters and converting passenger aircraft into temporary cargo carriers, a practice known as ‘preighters’. Despite these efforts, meeting the increase in demand for cargo space remains a significant challenge,” says Kersti Krepp, Senior VP and Chief Executive Officer at Polar.
Technological progress
The air cargo sector, a hub in the global supply chain, is undergoing a profound transformation driven by digitization and automation. These technological advances are revolutionizing the industry, improving efficiency, lowering costs and improving the overall quality of service. As the world increasingly relies on fast and reliable transportation of goods, the adoption of digital solutions and automated processes is becoming indispensable for the air cargo sector.
“Despite the clear benefits, the adoption of digitization and automation in the air cargo sector is not without challenges. High initial investment costs, the need for skilled personnel to manage and maintain advanced systems, and cybersecurity concerns are some of the obstacles that need to be addressed,” added Cristina Oñante López de Letona.
Kersti Krepp concluded by saying that, “Agility is the new stability. To overcome these challenges, industry stakeholders must work together to develop standardized solutions and share best practices. Continuous investment in training and development will also be crucial to equip the workforce with the necessary skills to operate and maintain digital and automated systems.”
Operational challenges
The pandemic has also presented numerous operational challenges for the air cargo sector. Health and safety protocols had to be implemented quickly to protect the workforce, including cargo handlers, pilots and ground staff. These included measures such as regular testing, social distancing and the use of PPE.
Cristina Oñante López de Letona, VP Marketing and Product Development, LATAM Cargo emphasized that “in addition, varying international regulations and restrictions have created a complex operating environment. Air cargo operators have had to navigate a patchwork of border closures, quarantine requirements and changing regulatory guidelines, often resulting in delays and increased operating costs.
Perishable goods in the sector
With Finnair moving its Norwegian salmon and live crabs around the world, LATAM makes time-sensitive movement of salmon and asparagus from Chile and Peru respectively to the US and Europe. Polar on the other hand, is busy with fresh movement from the US to Asia with flowers and cherries, the panel addressed the most sensitive sector of the air cargo domain, “the perishable goods”.
In the complex web of global trade and logistics, the air cargo sector plays an important role in ensuring the fast and safe transport of a wide variety of goods. Among these, perishable goods have a special significance because of their time-sensitive nature and the critical need to maintain their quality during transportation. From fresh produce and pharmaceuticals to flowers and seafood, perishable goods are indispensable to the air cargo industry and, by extension, to the global economy and public health.
Transporting perishable goods involves sophisticated logistics and advanced technology to ensure that these items remain fresh and safe throughout their journey. Innovations such as temperature-controlled containers, real-time tracking systems and advanced monitoring technology have revolutionized the way perishable goods are handled.
To address challenges in the movement of perishable products, “transportation of these goods via air cargo presents several challenges. Ensuring consistent temperature control, managing the risk of delays and meeting strict regulatory requirements are among the most important obstacles to be evaluated,” added Gabriela Hiitola, as the Norwegian Salmon moves through the supply chain in Finnair’s stomach cargo, thus which present immediate challenges of flight delays and disruption, causing the shipment to be rejected as unfit for consumption.
To mitigate these challenges, the industry has adopted several best practices and collaborative strategies. “Improved coordination between airlines, ground handlers and logistics providers is essential to maintain the cold chain from origin to destination. In addition, investment in infrastructure, such as cold storage facilities at airports and advanced handling equipment, plays a decisive role in maintaining the integrity of perishable goods,” adds Kersti Krepp.
