Flattening the learning curve: How the pandemic is an opportunity to streamline air cargo

Donning orange hardhats, fluorescent coveralls and masks, teams of ground handlers at Shanghai’s Pudong Airport (PVG) puzzled together airy stacks of cardboard boxes onto a composite floor that had been lined with passengers just months ago. While a load plan issued earlier in the afternoon had offered a detailed scheme for padding all usable space, nose-to-tail, with freshly-minted masks, a revision to the plan left a nearly vacant forward section that allowed the team to easily shut the clamshell-style side door. For many forwarders that were managing shipments of personal protective equipment (PPE) moving out of Asia back in May, getting cargo onto an aircraft ahead of scheduled departure became tricky. “There were delays where we would miss a charter or space on an aircraft because the inspection was not complete,” said Bob Imbriani, executive vice president, international, at 3PL Team Worldwide. Team Worldwide’s experience was hardly unique among forwarders. Other notable mishaps included PPE shipments contracted by the government of Canada. In one case, a consolidation of medical supplies handled by Bollore Logistics was unable to board a charter flight heading back to Canada on April 19. The aircraft returned to Canada without its intended shipment on board, but managed to load cargo "belonging to other Canadian entities," according a spokesperson for Public Service and Procurement Canada. While each charter flight operated at an estimated price tag of between CA$600,000-800,000, the cost of the missed flight was partially offset by cargo from other shippers. Unlike Bollore Logistics, Team Worldwide largely organized partial charters that were shared among various shippers, said Imbriani. In most instances in which a shipment controlled by the company was delayed and missed its flight, it was possible to remarket capacity to other shippers. Securing capacity on the next available flight was a thornier issue. “If the cargo wasn't ready on Wednesday, it isn't as simple as getting the flight on Thursday,” said Imbriani. Instead, it could take up to five days. Looking back to the early months of 2020, when the COVID-19 outbreak was mostly confined to Asia, or PPE and other medical equipment used in the battle against the virus flowed into China. With subdued demand for exports, due to lockdowns in China, and passenger networks still intact outside of China, demand for charters in January and February charter “were far and few,” said Vivian Lau, vice chair and group CEO of Pacific Air Holdings, which owns companies in the express, last-mile logistics and GSA businesses. PPE volume rising By March, as China had largely quelled the outbreak within its borders, but the virus was raging in Europe and emerging in North America, thus fueling global demand for masks and other supplies on a level never before seen. As the pandemic intensified, passenger flight operations tanked, leading to a precipitous drop in airfreight capacity. "Our role changed, and we started going out to get line-haul space in a major way, and then evolved to really looking at providing charter solutions,” said Lau. Not only did freight forwarders find themselves in a challenging capacity environment with a set of commodities not commonly moved by air, many of their partners at both origin and destination were new to the business. “We break our customers [shipping PPE commodities] into two categories,” said Imbriani. The first group has a great degree of familiarity with the commodities they’re handling, and understands the regulatory bodies involved on either end of the supply chain. More complex, according to Imbriani, are the entrepreneurial and humanitarian-type shippers that have “branched out into new areas, and are not as familiar with the various rules that can apply.” The sudden influx of PPE suppliers led to mismatched expectations. Just as factories pivoted to produce commodities — like masks instead of whatever product was previously moving down their assembly line — importers with little experience procuring masks and other medical supplies found themselves on the other side of the supply chain. Complaints soon followed from importers, with numerous counts of nonmedical grade equipment being sold and shipped as medical grade, counterfeit goods, and low-quality products. In response to export quality concerns, China’s Ministry of Commerce (MOC) released sweeping changes to export protocols. “China stepped in relatively early to enforce both their regulations as well as international regulations,” said Imbriani. Such changes, however, came with little notice to comply. On March 31, MOC began requiring shipments of certain COVID-19 supplies, including virus test kids, medical and surgical masks, protective suits, and ventilators to be accompanied by proof of compliance with the destination country’s quality standards. The revision also requested additional compliance documents for medical-grade exports, with the new rules effective April 1. Subsequent MOC releases on April 10 and April 25 further enhanced export controls, with implementation through the deployment of teams of inspectors to ports around China tasked with verifying documents and their accompanying cargo. Inspectors at PVG were added gradually, but not immediately in line with the rise in export volumes and the number of charter flights. Pudong International Airport Cargo Terminal saw its export throughput jump from 38,000 tonnes in February, to 88,784 tonnes in March, and 105,440 tonnes in April — an experience shared by other terminals at the airport. Shipment-disrupting congestion precipitated, with some trucks queuing for upwards of 72 hours. Stuck in the middle Once regulatory requirements are well understood, it’s possible to plan accordingly — new rules, however, are most problematic for shipments in progress. “The worst situation is to actually see transactions get caught in the middle,” said Lau. Avoiding the limbo that Bollore, Team Worldwide and countless other forwarders found their shipments in can involve rushing to get a shipment out before new regulations come into effect, or holding the order until there is more clarity into how it will be affected by the regulations. Most costly charters that flew with unfilled pallet positions during the height of the crisis did so because the shipments were deemed to be no longer compliant while already in process, or were indirectly impacted by shipments that were compliant, according to Lau. Digitalizing the customs process has been proposed as a leveler that could offer importers and forwarders visibility into the process to a degree similar to what integrators currently enjoy. Silicon Valley-based startup, KlearNow, which on May 1 raised $16 million in Series A funding, is developing a digital platform that aims to integrate customs stakeholders with local customs authorities in real time. To facilitate PPE imports to the United States, KlearNow added to its platform an FDA module that helps shippers clear medical supplies regulated by the agency, according to a release from the company. With both forwarding and express arms, FedEx has been able to minimize compliance issues with an in-house declaration app, accessible through WeChat. “Customers can search for their products’ HS codes and receive guidance about information required by China Customs,” said Kawal Preet, regional president of AMEA at FedEx Express. Once a declaration is submitted, the FedEx clearance team starts the review process and can intervene as needed. When delayed and customs-seized shipments became more common, carriers also took bold action to avoid dispatching an empty plane and returning to an empty bank account. Without a mechanism to easily gauge the risk associated with a particular shipper, carriers of all types operating flights out of China and some other countries began to require full payment prior to departure. This, in turn, required importers to wire large sums “before the freight even left,” said Imbriani. While much of the perceived risk — and the requirement for pre-payment — stemmed from inexperienced players participating in opportunistic trade activities, a solution does not focus on cutting such companies out of the space. People who are “entrepreneurial, and at times even unscrupulous, will continue to participate at times like these,” said Lau. Nor is the answer to relax export controls. Particularly during a crisis, additional measures by customs authorities to regulate and safeguard were seen as justified. “I think it's an education area that anyone who exports or imports can do their homework before getting involved,” said Imbriani. More can also be de done to flatten the learning curve for trade participation without compromising supply chain integrity. For transactions involving importers unfamiliar with their supply chain partners, a formal escrow system would facilitate prepayments, said Lau. But payment settlement is only part of the equation. Greater end-to-end visibility would need to extend beyond logistics for an inexperienced importer to be able to trust a supplier’s ability to deliver goods as promised. Although piecemeal product standards hold various links in the supply chain accountable, there is no single system right now that can verify where a commodity was produced and the validity of the product’s certifications as well as track each change of hands throughout the export process, according to Lau. “Maybe it's time to really consider a blockchain kind of solution,” she said. PPE supply chains ultimately began to stabilize in June and, for nearly every manual inspection that added time to customs clearance, efficiencies have been discovered elsewhere. Cabin-loading bucket brigades have given way to automated conveyor systems, and better traffic management has reduced road congestion at PVG. Charter flights, including those carrying PPEs are still a regular, if less-frequent sight at the airport, but forwarders can breathe a sigh of relief: planes are again departing with full loads.

Flattening the learning curve: How the pandemic is an opportunity to streamline air cargo

Cargo shoulders the weight of transatlantic route recovery for BA, AA

Pandemic steers Stratos toward A330 conversion

Related Posts

Sun Country to operate 2 more freighters for Amazon

Precision completes 1st A321PCF under CAAC

UPS, DHL reduce feeder routes in US

Pandemic steers Stratos toward A330 conversion

Stay informed with our newsletters

Cargo Facts Connect Podcast

Follow Us

Welcome Back!

Retrieve your password