Air Cargo: A Confluence of Coincidences

Sept. 19, 2006
Frequent fliers are often verbally abused for the luggage they drag into the cabin and cram into overhead bins. The nightmare they seek to avoid was played

Frequent fliers are often verbally abused for the luggage they drag into the cabin and cram into overhead bins. The nightmare they seek to avoid was played out in Stephen King proportions when U.K. security officials banned all carry-on luggage because of an alleged terror threat. A reported 10,000 pieces of luggage went missing as a result of the chaos.

That "scary movie" may have spawned a whole set of sequels for cargo shippers. The first is the impact of shifting luggage from the cabin to the cargo hold.

Airlines may see an overall reduction in weight, which is actually good news given high fuel costs. The weight model for luggage suggests cabin bags average 30 pounds where checked bags average 60 pounds. If you shift the cubic volume of the overhead bins to the cargo hold, you haven't changed the weight of the luggage, only its location on the aircraft. But, you have potentially displaced a corresponding volume of cargo that could have flown on that aircraft. The net effect may be less weight, but also less revenue, since the cargo would have paid to fly and the baggage is accompanying a passenger.

With all of that additional baggage to handle planeside, what happens to cargo operations? If luggage is last-on-first-off, more luggage could mean a longer wait to process cargo. The spike in luggage resulting from the elevation of the terrorism alert level clearly overwhelmed baggage processing and handling systems. Were those systems initially specified for the volumes they may now have to handle? How will that affect throughput and turnaround for luggage, cargo and the aircraft itself? Is this a long-term situation, or can airport systems and operations be upgraded to cope?

In a remarkable coincidence, security rules for cargo are changing. Prior to the U.K. incident, the Transportation Security Administration (TSA) was planning changes in "known shipper" rules that would preclude non-U.S. shippers/ facilities from being designated known shippers. This could necessitate a shift of foreign-origin cargo to cargo-only airlines. Even if the capacity is available for cargo that may be displaced from passenger aircraft, the increased demand will certainly put pressure on rates. That may moderate over time as airlines introduce more freighters or cargo airlines expand, but the initial effect of a surge in demand will certainly show up in air freight rates.

Recent events have also revived the 100% inspection argument for air cargo. This could seriously affect domestic air cargo that presently flies on passenger aircraft (and dare we mention mail?).

If you're APL Logistics or Con-way Freight, you have to be celebrating your timing. Just in time for the peak shipping season, the two companies introduced a day-definite, guaranteed ocean service for less-than-container-load freight originating in China. Marketed as an alternative to air cargo, their timing may be better than they anticipated. Theirs may be the only Hollywood ending.

Logistics professionals are masters at adjusting to change, but dislike uncertainty. For the moment, the best we have are partial answers for what's next with air cargo. All we can say is, "stay tuned."

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