In a characteristically blunt start to his presentation, Jim Friedel, president of cargo for Northwest Airlines, explained how a refusal to grant fi fth freedom rights had led to Hong Kong losing the freighter services ofNorthwest.
“As a US carrier we have never been allowed to carry cargo from here to Japan. We have continually pressed for these rights, but have not yet got them,” he explained.
“But the US government has made great progress in its bilateral discussions with China, and as a result, we have been able to open freighter services between Guangzhou and Japan. So we cancelled our Hong Kong freighter service last year and now serve Guangzhou six-times a week. Some forwarders have preferred to stay in Hong Kong, but some have joined us in Guangzhou, so the fl ight has been a success.”
Despite this, Friedel went on to point out that liberalisation means more than just traffi c rights. “It means being able to take off and land at the time of the day you want, being able to fl y the routes you want to reduce fuel burn, and being able to clear Customsquickly and without cost.”
These twin factors of time and cost were critical, he said, because in the past twelve months there had been a slowdown in air cargo demand at least in part due to forwarders shiftingfrom air to sea.
“Ocean carriers now offer a time defi nite service, allowing customers who care about time to be last on the ship and fi rst off,” he said. “Some ocean carriers now offer a transpacifi c service in 10 days.” With increased fuel costs, the price gap between air and ocean was also getting bigger.
In order to compete, air cargo needed to remove any possible restrictions which might delay a shipment, Friedel said, listing several areas where progress was needed. One was ground handling. “In too many airports, there is not a competitive market for ground handling. In an airport which handles thousands of tonnes of freight a day, there should be more than two handlers.” In Asian airports which were still handling duopolies “costs are too high and carriers lose control over their service”,he told delegates.
He gave as an example the inability of some Asian handlers to give faster treatment to built-up pallets. “This kind of thing just hands an advantage to sea freight,” he told delegates. So did the slow progress that the industry was making on removing paper from air cargo processes:“Everyone in this room is in favourof paperless transactions, but to putany cargo executive in a deep tranceall I have to do is talk about the manyspecifi c areas where we need to improveprocesses.”
He suggested all air freight companies answer some simple questions:“Do you know the problems yourcarrier has around e-freight? Do youhave middleware? Is someone onyour staff working with Customs onpaperless.”
Only by answering these questions and making real progress on paperless transactions could air freight continue to compete effectively, Friedel concluded.