CHALLENGES AND OPPORTUNITIES
Vivian Lau, executive director of Hong Kong cargo handling giant, Hactl, looks back on a tough year for aviation and hopes for better things for the industry in 2021.
To say that 2020 was an extraordinary year for air cargo and the aviation industry would be an understatement.
After a promising start with solid cargo volumes, we began to hear increasingly alarming reports about the spread of the deadly COVID-19 virus on the Chinese mainland, and the threat of transmission beyond its borders.
At that stage, we did not even know whether COVID could be transmitted from human-to-human, nor its mortality rate. However, Hactl identified the potential risk of service failure in the event of staff infections, so we took a number of preventive measures to ensure staff safety.
Every person visiting our SuperTerminal 1 facility at Hong Kong International Airport (HKG) was temperature-monitored before being granted entry and all 2,400 staff were issued with face masks and sanitiser.
The top priority was to protect staff and maintain Hactl’s operational stability and service standards. These steps initially looked like an over-reaction, but events soon proved their value, and it’s thanks to our decisive and early actions that Hactl has been virtually untouched by COVID-19.
Two major types of cargo emerged in 2020: personal protective equipment (PPE) and medical supplies, and IT equipment: both for home working and for home entertainment (such as gaming consoles).
PPE handling was not without challenges: the initial supply shortage gradually improved after Chinese factories resumed production, but then Chinese Customs imposed export controls on PPE shipments. Some hand sanitisers were re-classified as dangerous goods, so required special handling, too.
Our charter broker friends told us of charter rates that tripled overnight, and how they scrambled to get every available aircraft into the air. In Hong Kong, Hactl saw the arrival of increasingly exotic big birds – such as Boeing’s Super Guppy (normally used for carrying wing assemblies), the Antonov An-225, and several military transports.
Anything that could fly was flying. Initially, charters tended to be ad hoc; as the year progressed, charterers were committing to multi-flight programmes often spanning three to six months.
A lot of new charter carriers were attracted to HKG and many new routes emerged such as Hong Kong direct to Mexico – one of the longest sectors ever flown.
For Hactl – whose normal handling business had previously comprised around 60% freighters and 40% passenger bellies – all of this caused a dramatic shift. In tonnage terms, most of our operation became freighter handling, supplemented by loading ULDs for cargo-only passenger flights, and presenting ULDs to our passenger flight handling counterparts, for cargo-in-cabin (CiC) flights.
These “Preighters” well reflect the agility of this industry, both among airlines and ground handlers – the latter quickly mobilising resources to cater for this new ‘aircraft type’.
Another major factor in 2020, and one which we saw clearly in Hong Kong, was the accelerating trend towards e-commerce.
Locked-down consumers around the world – unable to shop on the high street or to buy goods due to stock shortages caused by supply chain disruptions – turned to the internet in their masses.
The result was enormous growth, particularly in small packages and post. But there was also evidence of some bulk stocks switching from ocean to air in a massive game of ‘catch-up’, while some e-commerce or postal traffic on regional routes opted for ocean freight (for example, from HKG to the ASEAN countries).
Multi-modal logistics combining air, sea, rail and road also became more commonplace, due to the limited capacity worldwide.
Throughout the enormous challenges of 2020, Hactl’s highly-automated facility, and its dedicated team of professional staff, enabled it to continue operating without any disruption – despite the major shift in our business, and the frequent peaks in operational demand.
Our wholly-owned subsidiary, Hacis, also launched an E-commerce Fulfilment Centre. Located in SuperTerminal 1, the new centre enables e-commerce operators to deal with online shopping orders.
Hacis provides value-added services such as ‘pick & pack’ and delivers the goods to the carrier. Its IT system interfaces with e-commerce platforms to provide seamless data flows and maintain the information transparency essential to e-commerce vendors’ tracking systems.
As 2020 progressed it gradually became more like a “normal” year for the industry, with continued depressed air cargo levels, but with some of the shortfall made up by PPE and medical traffic and e-commerce – and rates running at a level not seen since the official IATA rates of the 1970s.
And while nobody would make light of the enormous damage done to the aviation sector by COVID-19 restrictions and loss of passenger confidence, the air cargo side of the industry – including freighter operators and those passenger airlines who grasped the opportunity to continue carrying cargo – can be grateful that the year ended much better than most had expected.
So, what about 2021 and the longer-term future? The next big issue will be vaccine transportation as the world places its faith in immunisation as the most effective route back to normality – people going back to work, earnings and economies recovering, and travel becoming safe and trustworthy once again.
While new vaccine sources are still emerging, vaccine distribution is not just a logistics issue: it’s now becoming a political issue, too.
But, whatever happens, Hactl is ready: the investment which we made in qualifying first for WHO GDP and, later, IATA CEIV Pharma, led us to transform our systems, processes and resources to create a state-of-the-art fast-track service that will be invaluable in the successful mass handling of this temperature-sensitive, life-saving commodity.
We believe the pandemic will speed up the transformation of most industries, driving greater adoption of digitisation and automation – and this includes the air cargo industry. In the meantime, e-commerce will continue to grow as it has become a new consumer habit, and its scope has still not been fully recognised or exploited.
Indeed, consumers now regard reliable, visible and economical delivery of their orders as an inherent feature of the goods they are ordering. E-tailers who provide slow or expensive delivery service, whose goods are damaged in transit, or who do not enable customers to track their orders, will be left behind.
Recognising this fact, they will seek service partners who facilitate their business, rather than impeding it.
As an element in the supply chain, the air cargo industry must therefore recognise its duty to facilitate e-commerce; we must replace any remaining paperwork with digitised alternatives, and we must support the seamless flow of shipping data from origin to end customer.
Overall, the pandemic has changed the world and reshaped the aviation sector. The future belongs to those who are prepared to invest, innovate and listen to customers’ needs. For such companies, the future is once again an opportunity, not a threat.