News Content

Changes to supply chain strategy with excess belly capacity

THE gateway airport supply chain strategy for air cargo is "under siege" as increasing belly capacity flying to secondary airports has allowed forwarders to switch to a point-to-point operation, a recent Air Cargo Forum was told.

Speakers at the forum looked at how excess belly capacity and a rise in the number of flights serving secondary markets was affecting air cargo supply chains. Logistics chief executive Sebastian Scholte, Jan de Rijk, who is also Tiaca's vice chairman, said he had noticed a switch in supply chain strategy as a result.

"We truck a lot of airline cargo within Europe and it's a trend that we definitely see happening; more point to point. Before you had certain airlines that consolidated at certain hubs and now they are flying to 35 cities within Europe and by going to those airports they save offline handling and trucking [costs] and they deliver a lot quicker, so that is a trend that we definitely see happening with all this excess capacity.?

US Airforwarders Association executive director Brandon Fried agreed with Mr Scholte and added that smaller forwarders were able to capitalise on the spare belly capacity at secondary airports to negotiate better rates, London's Air Cargo News reported.

"The gateway strategy is under siege now," he said. "Especially as you have Emirates starting flights between Dubai and Fort Lauderdale non-stop, it results in decentralisation. The small guys are going to go point-to-point because you can negotiate a rate and there is a lot of capacity."

Boeing vice president Randy Tinseth pointed out that while this could be a trend, it wouldn't necessarily affect demand for freighters because belly capacity represented such a small portion of the overall market.

He gave the example of the Asia-North America trade where passenger flights represented less than 30 per cent of the overall capacity. He added that in certain locations, such as the fast-growing Asian market, the aircraft being flown just weren't suitable for cargo.

Mr Scholte added that it was unlikely freighter operators would move away from gateways but said there were regions in Asia, such as southeast Asia, where a point-to-point strategy could be suitable.

"You only see this on the passenger side," he said. "The freighter operators go to only one hub, as for those companies the economies of scale of do work. It doesn't make sense to fly a freighter to 20 cities in the US."