In highlighting the importance of air cargo, not just to global airlines, but the global economy, Tyler laid out the difficulties facing the industry and appealed to the carriers’ partners to help boost the value proposition of air freight.
“We have to make sure air cargo has a strong value proposition. The industry is having a tough time – and shippers are having an equally tough time. We need to develop a higher level of trust with one another… We are partners in a totally remarkable industry,” Tyler said.
Tyler’s entreaties to the forwarding community further a distinct thaw in relations between the two associations which began with the appointment of Des Vertannes as IATA’s global cargo head, nearly four years ago, which helped to set relations between the two organsiations on a more productive track, as compared to the often bitter disputes in the past, particularly during the reign of Giovanni Bisignani.
Introducing Tyler to the assembled delegates, Jean-Claude Delen, past president of FIATA said: “A new, refreshing wind has started to blow inside a bureaucratic organisation. There is no need to remember the difficult relations between FIATA and IATA under the previous DG and the arrogant management.”
In outlining several key difficulties faced by the air cargo sector, Tyler said that although world trade had grown 12 per cent since 2010, air freight had grown by only two per cent, as other modes continued to grow faster with the integrators accounting for much of the air freight growth meaning “for the rest of the industry, it’s even bleaker”.
This has resulted in shrinking revenues, with air cargo accounting for US$66 billion in revenues in 2010, contributing 11.4 per cent of airlines’ revenue, figures that drop to $59 million or 8.3 per cent of airline revenues this year.
Key to the modal shift, he noted, is the increased competition from the maritime industry, which has benefited from improved demand forecasting by shippers, better technology that has allowed ships to carry more perishables and the perception by shippers that sea freight was more environmentally friendly.
But Tyler was quick to add: “I am not here to predict the end of the air cargo industry – far from it. The theme of this speech is building solutions together. And what we need to do together is to drive the changes needed for our industry to adapt in order to thrive in a dynamic business environment.”
“No business or business model survives without change. And if I look at these four forces challenging air cargo’s competitiveness – changes in the economics of just-in-time manufacturing, longer delivery lead times facilitated by improved predictability of demand, innovation by our competitors and environmental pressures – there is clearly a need for our industry to take a long and hard look at its value proposition, so as to guide improvements in competitiveness,” he said.
The areas in which Tyler sees potential to work in partnership to build a stronger future for air cargo, includes as his ‘short list’: Improve quality, implement e-airwaybill (e-AWB) and e-freight, enhance security and “become much closer partners”.
“If shippers pay a premium for speed, there is little value in late delivery. Air cargo is a premium product. Quality and reliability has to be in industry’s DNA.” By working together and enhancing the Cargo 2000 master operating plan “I know we can generate real momentum in the drive for quality.”
E-freight was essential, he said, noting that customers want instant access to information and that is precisely what they get it from the integrators. “The progress of e-freight has been disappointing… but airlines on their own cannot deliver e-freight. We need the whole air cargo value chain to be marching towards the same goal, to the same beat and completely in tune,” he emphasised.
He noted that a better relationship between the two “must manifest itself in action in order to see results. That’s a long way of saying that more airlines and forwarders need to sign up.” The industry can’t progress without individual commitment and leadership, he added.
Tyler also urged forwarders to get validated for Europe’s new ACC3 security regulation as soon as possible, noting that the July deadline was “very challenging”. “We continue to engage the EU, but the EU is saying it’s an immoveable deadline. My advice is to get ready.”
And he called on forwarders to help “grow the pie”. “Air cargo in the past was a tug of war among different parts of the value chain. It doesn’t have to be that way. We need to position air cargo to meet tomorrow’s world.”
He added: “It will only be more difficult if we fight. There will always be points of contention, but if we trust each other and work together it will be very important, moving forward.”
Delegates also elected the new Presidency and the new Extended Board of FIATA with Italian Francesco Parisi succeeding Singaporean Stanley Lim as President. Lim will now serve as Immediate Past President, his predecessor Jean-Claude Delen, Belgium, the new Treasurer and Heiner Rogge, Germany, remains in the position of Secretary General.
