The Big Reset: Cargo Handling Companies

by | May 4, 2020

Cargo Handling Companies

Change the operating times for receiving/delivering cargo

Not reviewing the business model by cargo handling companies is a long term threat. It is surreal to believe the cargo volumes will get back soon to the levels of end 2019.

(Cargo) Airlines are mainly outsourcing their handling activities to cargo handling companies (in certain places called CTO’s – Cargo Terminal Operators) at these locations where it is not affordable for the airline to operate their own terminal/warehouse. On the other end, the freight forwarders (agents) are also a customer of the cargo handling companies as they deliver export or receive import cargo. Considering the arrangements made under the IATA SGHA (Standard Ground Handling Agreement) as well local rules and regulations, the freight forwarders might even be paying a handling fee.

Subject to the location of the warehouse it might be crucial to maintain a 24/7/365 operating model, as for example for build and break cargo to prepare for aircraft departures or arrivals. Receiving and delivering cargo by freight forwarders should be changed to a permanent two shift operating model only (example: 07:00-15:00 / 15:00-23:00).

This change will force freight forwarders to be more stringent on their operational times, which is feasible in case they organize and especially prepare better in cooperation with their customers. The cargo handling business should be able to focus more during day time on the performance of the receiving and deliveries as well customs and administrative support. Cost reduction for the cargo handling companies will be a bottom line result as well less night shifts for their staff. The freight forwarders who would like to deliver or receive their cargo beyond the two shift model, should pay an additional surcharge.

For the airlines it is imperative the warehouse remains as flexible as possible, especially when they also operate trucks for the offline handling locations or when a Hub-function is applicable.

It is all about changing ‘old habits’, which will make a significant change to a more resilient, reliable and cost effective business model, which will be beneficially at the end for all parties involved.

In case you have any questions about this subject, then do not hesitate to contact me (rinaldo@sharingiscarrying.com).

With best regards,
Rinaldo Vels