Business class for cargo
A ULD doesn’t grumble – in contrast to many an air passenger. The airfreight segment is nevertheless relatively demanding, in comparison with other modes of transport. Glyn Hughes, Iata’s new head of cargo, answered our questions shortly after he took office.
Mr Hughes, congratulations on your new job! What stations in your career brought you here?
Thank you, I was very honoured when I was asked to continue the great work started by my predecessor, Des Vertannes, who worked tirelessly to improve the air cargo industry. My career started in the cargo department of British Caledonian. After the latter’s merger with BA I moved on to Air Europe. In those early days I specialised in accounting, training and standard-setting. I subsequently joined Iata in 1991, to launch Cass UK with Colin Stevenson, the Iata cargo manager for the UK – a great colleague who I was very privileged to work with.
You’ve had a formative role in airfreight for some time now. How do you think the industry has changed over the years?
Interestingly enough, some parts of our industry have barely changed at all; the basic business model and operational components are still very much as they were when I joined the industry in the mid-1980s.
However, one area that has changed is the availability and variety of technology that has been developed, although we haven’t yet connected the elements with each other effectively. Another area which has changed is the relationship with the forwarding community, which has evolved from the early agency days to what today is a relationship between a customer and a service provider. The number of specialised supply chain solutions has also advanced greatly over the past few decades, with today’s focus on quality, time and temperature-definitive products ensuring shippers have tailor-made solutions aligned with their needs.
What do you consider to be the greatest challenges currently facing the sector?
Our greatest challenge is to ensure that airfreight responds to the increasing modal choice available to shippers. Airfreight has to justify its position as the premium mode for cargo, by driving up quality standards, enhancing reliability and transparency and cutting end-to-end transit times.
What hot potatoes will you prioritise?
The e-cargo agenda is still our number one challenge. We’re making good progress with the e-AWB uptake, but we’re still a long way from the industry’s year-end target of 22% penetration.
Our other big priority for this year is our work to modernise the cargo agency programme. We’re working hard, together with our partner Fiata, to design a new programme that enhances the benefits for all participants. Our goal is to conclude the discussions soon and commence pilot implementation schemes by the beginning of next year.
How do you expect cooperation with the other members of Gacag, the global air cargo advisory group, to progress?
I’m very proud of the role Gacag has been playing in the industry, and Iata is absolutely committed to Gacag and its agenda. Cooperation between the members of Gacag is very strong – and I want to especially single out Tiaca for the leadership and resources it has dedicated to the group. I think it’s time some of the other members, including Iata, shoulder more of the burden.
How do you think airfreight will develop vis-à-vis the other modes of transport?
As I mentioned above, modal choice is a stark reality. We’ve seen some cargo shift to maritime and rail transportation, as the cost of some items that were previously shifted by air has fallen (semi-conductors are a good example). Low interest rates also mean that inventory can be held for longer without making a major financial loss. However, as the economic cycle changes and airfreight enhances its own value proposition, I’m confident that the industry can hold its own.
Please describe the situation facing aviation and airfreight in the various regions of the world. What short-term developments do you expect in each market?
Cargo growth differs markedly from region to region. It is no surprise to see that the Middle East has been the stellar performer in recent years, and this is expected to continue. Gulf carriers in particular have benefitted from east–west trade between developed economies, and also from opening up new southbound trade routes.
Latin America and Africa have had a bumpy ride, but offer strong growth potential. Latin America in particular has been growing strongly, but it is very dependent on the health of the major regional economies Brazil and Argentina, which have been slowing down recently.
The mature markets of Europe and North America are still recovering slowly from the effects of the massive recession of 2008 / 2009. Although they bounced back strongly in 2010, since then volume growth has levelled off again, reflecting the general weaknesses in those economies. But the signs are positive that stronger growth is on the way back.
Finally, the Asia-Pacific region remains by far the largest market, and cargo is still very important to the financial health of many airlines in the region. Fortunately it looks like concerns that China would have a hard landing have receded – this is excellent news and bodes well for stronger growth in the rest of the year.
Iata is headquartered in Montreal, with an executive office in Geneva – but no station at the heart of the markets of the future. Do you expect to change this?
I disagree! Iata has a strong presence in every region of the world, through our five regional offices in Amman, Beijing, Madrid, Miami and Singapore. Iata has been reorganised since July 2013, and is now organised on the principle of «global development, regional delivery». This empowers our regional offices to be more responsive to the industry’s needs. In any case, Iata is prepared to give support flexibly wherever it’s required.
Iata is celebrating the 100th anniversary of the civil aviation sector this year (see www.flying100years.com). Air cargo celebrated its own anniversary four years ago. It looks, however, as if the global passenger segment has overtaken air cargo. When will it be as easy to establish global airfreight standards as it is for the passenger segment?
While you’re correct in saying that air cargo predates passenger services, I’ve been delighted to see air cargo play a prominent role in the celebrations of the 100th anniversary of commercial aviation. The role cargo plays in making the modern world happen is incontestable, and we have a very important job to continually remind people, in particular policy-makers, of this fact. This is a strong theme expressed through our campaign underscoring the «value of air cargo».
In terms of a global approach, many very important standards already exist, particularly in areas such as dangerous goods transportation. Iata works closely with Icao to make sure that global standards are developed and implemented wherever practical. We’ve seen important developments in security, electronic messaging and safety standards (for example with ULDs). So I don’t agree that cargo has been overtaken – although it’s true that we would like to see even greater harmonisation in the future.
Where do you see the airfreight industry in the very distant future – let’s say in 75 or 100 years?
It’s very hard to look that far ahead... My job is to make sure that the industry is fit and competitive for this decade and beyond. One thing I’m sure about is that there will always be a need for air cargo. Although we will undoubtedly see great strides in new technologies, such as 3D printing, over the coming century, there will be some important goods that will always need to be transported by air.
I believe that the air cargo industry can be competitive vis-à-vis the other modes of transport, so that it will be able to retain its place as the premium option. If you want to get something somewhere quickly, safely and reliably, I’m certain that air cargo will always be the number one service in the world.