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CAPA Live. Cargo flights vital in distributing covid vaccinations

Analysis

The question of air cargo – how it has been affected by the pandemic, in what way(s) it has actually benefitted from it, its growing importance (along with e-commerce), and how it can contribute to global vaccination programmes – was discussed during the most recent session of CAPA Live in Dec-2020, during two sessions.

The full sessions are available ‘on demand’ to subscribers to CAPA Live. To become a subscriber, you can apply to gain a free pass here.

The text below contains snippets of dialogue from the two sessions, together with video links for those who wish to explore panellists’ comments in more detail.

Summary

  • The cargo segment of the air transport business has always been the bridesmaid where investment was concerned.
  • But the pandemic has shown it in a new light, and mass transportation of PPE was undertaken, with that of vaccines now under way.
  • Cargo is co-operating with other segments of the industry, with suppliers, and with regulators more than ever before.
  • This will stand it in good stead for the future, and it stands to be modernised and digitalised in accordance with its new found role. 

Manufacture and approval will be bigger issues than logistics

The first session, ‘Aviation Insiders: Air cargo prepares for vaccine roll-out’ dealt with how the air transport business has adapted to the distribution of vaccines – a difficult subject because of the need for strict temperature controls. One of the vaccines was already being given to the most ‘at risk’ cases in the UK on the day of the session.

A discussion took place involving Peter Harbison, Chairman Emeritus of CAPA, Marcel Kuijn, Global Head of Pharmaceutical Logistics for Air France-KLM-Martinair Cargo, and Andrea Gruber, Head of Special Air Cargo at IATA. Mr Kuijn and Ms Gruber are two of the leading people in the industry dealing with this issue.

Mr Harbison opened the session by saying that vaccines had been developed very quickly, but the problem is how now to deliver them; can it be achieved at the same ‘Warp Speed’ (the name given to the U.S. vaccine development programme)?

Mr Harbison asked “how big a project will this (vaccine delivery) be in 2021?”

Mr Kuijn replied, “We’ve been doing it for years and know how to do it, but vaccinating the world twice (the Pfizer vaccine requires that) means 16 billion doses are required, and urgently".

Mr Harbison then asked, “As vaccines are being applied now, in the UK and Asia, some having not been fully tested, how many fully tested vaccines can be delivered by, say, the end of Jan-2021?"

Mr Kuijn thinks that manufacture and approval will be bigger issues in that time frame than logistics, where amounts will not be huge at that time. He went on to speak about temperature requirements, which may not be too onerous, how non-vaccine shipments might be impacted, and about how many airlines have the capacity.

This part of the interview can be viewed below:

(Video Section 02.17-08.50)

A complex situation involving many parties

Mr Harbison then asked Andrea Gruber about the application of competition laws which affect airlines’ ability to operate when and where they want and if there had been, or would be, any relaxation of regulations – which is appropriate to the urgency of the situation; also about the multiplicity of organisations involved and how they can be centrally co-ordinated.

Ms Gruber responded that it is a complex situation, and still evolving. Matters that need to be taken into account include dangerous goods regulations where dry ice is being used, and the infrastructure in the receiving countries – can it handle the storage requirements and in what volumes.

IATA is co-ordinating with organisations such as the WHO, WTO, UNICEF and World Food Programme, and has also put together a guidance document for both the public and private sectors that makes clear the infrastructure and logistics limitations.

Other interested parties include ICAO, which has been good at amending regulations so that aircraft can be converted from passenger to cargo operations, and Border Control. None of them want to be the party that hinders distribution, while at the same time preventing theft and smuggling.

This part of the interview can be viewed below:

(Section 09.45-21.52)

The deployment of aircraft for this essential task still has to be weighed against other freight demands 

IATA Director General, Alexandre de Juniac is on the record as saying the distribution effort will require the equivalent of 8,000 747s. Mr Harbison asked Marcel Kuijn and Andrea Gruber about the costs of this huge distribution exercise, bearing in mind that some 8,000 Boeing 747s (the 747 being an aircraft well suited to distribution on this scale) exist, but a large number of them are grounded at the moment.

The number of doses per pallet varies per manufacturer, but it can be high. There is a full-year 2021 requirement for distribution but costs aren’t yet known, especially as methods of distribution are not fully decided.

Andrea Gruber added that the 8,000 B747s is an ‘illustrative figure’ to emphasise the magnitude of the project. Moreover, the deployment of aircraft for this essential task still has to be weighed against other, ‘normal’ freight demands. 

This part of the interview can be viewed below:

(Section 21.54-26.20)

IATA is working to raise operating limitations

Mr Harbison also asked about refrigerated freight and how much can be carried on an aircraft.

There are limitations, but the industry is working to reduce them. The problem is that everyone is working independently rather than through a central co-ordinating point. IATA is working with the FAA and manufacturers to raise operating limits safely.

This part of the interview can be viewed below:

(Section 26.37-28.56)

Politics will always play a part, especially where regulation is concerned

Mr Harbison then went on to press further on the question of whether regulation could be eased, or exemptions made, quickly, for ‘the greater good’.

What measures are being taken to improve overflight rights where they are needed? What about airlines that demand ‘a piece of the action’ in their own countries when they don’t have the handling capabilities that are needed?

Andrea Gruber proposed that the last nine months had taught us there is a need for better co-ordination throughout the supply chain. Investments made in the pharma sector by freight forwarders are proving to be of great value. ‘Advocacy work’ is being undertaken by IATA in this respect.

Marcel Kuijn believes there is a great deal of ‘politics’ involved, and all the airlines can do is to prepare themselves as best they can for distribution rights anywhere.

One benefit arising from all this is that people will understand the nature of the scale of distribution of goods by air, and will not be so quick to downplay it in the future.

This part of the interview can be viewed below:

(Section 28.57-35.25)

The need to be able to ‘scale up’, and relationships with the media are important

Mr Harbison then asked about external issues such as the production and generation of pallets, and dry ice, and how the industry can help co-ordinate that.

Marcel Kuijn said everyone has ‘volume scenarios’, meaning the ability to scale up production as required. No one is trying to advantage of the situation – for example, if there is a shortage of dry ice.

Andrea Gruber added that good relations with the media are even more important now than ever. Hopefully, aviation, and the air cargo function in particular now, are being as regarded as “critical to the overall wellbeing”.

This part of the interview can be viewed below:

(Section 35.26: 40.28)

There are 13 vaccines ‘in the race’, and distribution requirements for some of them may be less stringent

In the final question, Mr Harbison asked if there is a realistic prospect of delivering two billion vaccine doses by the end of 2021, or even more. While not all will be by air, what part can air transport play in this?

Andrea Gruber said that IATA was in regular contact with UNICEF. There are 13 vaccines “in the race” and some will have less stringent temperature requirements.

There is a wide dichotomy between governments who are timid about approving them and those that are more outspoken. There will be an evolution in 2021 but operational challenges will remain, and especially in the ‘last mile’.

Marcel Kuijn said his airlines and all the rest were standing and ready to play their part in distributing these vaccines throughout the world, and “without breaching any competition laws”.

This part of the interview can be viewed below:

(Section 40.28: 43.18)

Mr Harbison summed up by saying that everyone would know about where they stand within a matter of weeks, as it is “a very rapid learning process.”

Cargo and e-commerce proves more important than ever before

In the second CAPA Live session on cargoge, ‘Cargo and e-commerce proves more important than ever before’,  Vladimir Zubkov, the former Secretary General of TIACA (the International Air Cargo Association), and founder of VZ Aviation Consulting, was joined by Guillaume Halleux, Chief Cargo Officer for Qatar Airways, and Konstantin Vekshin, CCO of Volga Dnepr Group.

Both companies (Qatar Airways and Volga Dnepr) are ‘giants’ in their business, but different in that whereas Qatar Airways moves cargo from a central base using dedicated freighters, as well as having a huge passenger aircraft base, Volga Dnepr Group operates dedicated freighters through five companies, two of them being strategic partners. Its fleet includes the Antonov 124 – one of the largest aircraft in the world and tailor made for freight shipments.  

Different companies with different strategies.

E-commerce was not a priority previously, but now, multi-year deals have been signed

Guillaume Halleux said that when COVID-19 hit, e-commerce was not really a priority.

In Jul-2020 when it became evident the emergency would last, Qatar Airways noticed a big increase in e-commerce demand to satisfy ‘home delivery’ requirements. The main response was the provision of ‘passenger freighters’. New e-commerce deals have been signed during this period which are not specifically ‘COVID-19 deals’ and lasting several years. The pandemic hastened the development of e-commerce.

Konstantin Vekshin said Volga Dnepr had been in existence for 30 years, and that responding to emergencies “is in its DNA”. He agreed that consumption demand had changed, hence the increase in e-commerce activities, adding that clients demand certainty. They will not subscribe to a service that can fail; they want “delivery as promised”.

This part of the interview can be viewed below:

(Section 01.52: 05.49)

Airports’ lack of response to cargo airline needs during the pandemic has been a function of chronic lack of investment

Vladimir Zubkov asked about co-operation with partners and especially airports, which have not always put cargo operations at the top of their priority list. He asked if there was adequate support from them – do they offer sufficient computerisation and digitalisation, for example?

Guillaume Halleux said the answer to all of his questions was “no, no, no, no, no”.

He gave a specific example of a major Chinese airport where, in May-2020, with no passenger activity but masses of cargo activity, freight was not being on- or off-loaded to and from trucks for up to 20 hours. Cargo facilities have always played second fiddle to passenger terminals where investment is concerned, but COVID-19 could change that.

On the other hand, cargo-dominant airports such as Luxembourg, Leipzig, Liège and Paris Vatry in Europe, and also Zhengzhou in China, have “done the job”; but they are more agile by nature, hence, they have been heavily used by Qatar Airways.

Konstantin Vekshin took a different view, saying “hats off to all airports” for responding to the great pressure and duress they have been under, and the nature of the crisis.

Mr Zubkov said the objective is not to criticise airports but to develop a ‘wish list’ for their co-operation. Physical expansion and modernisation should top that wish list. Guillaume Halleux agreed that many ground handling staff had been heroes during the crisis, but it has revealed the fundamental lack of investment at many airports.

This part of the interview can be viewed below:

(Section 05.50: 13.00)

Qatar Airways’ ‘We Care’ programme has spawned more initiatives

Mr Zubkov then turned to specific issues for each of the airlines.

To Mr Halleux he asked about the ‘We Care’ programme at Qatar Airways and how it impacts on the reputation of the airline and the morale of the team.

The programme was launched pre-COVID-19 and founded on the fact that Qatar Airways is the largest cargo carrier in the world, and it should lead by example. One million free kilos of freight was offered to freight forwarders so they could match the gift with donations to charities of their choice.

It created a momentum, and further such initiatives will follow.

AN-124 accident has temporarily removed a major contributor to distribution of PPE, and perhaps of vaccines

Mr Zubkov also asked Konstantin Vekshin about an accident to an AN-124 aircraft on 13-Nov in Novosibirsk – its suspension from service by the airline, and how it is dealing with it.

Mr Vekshin said the investigation continues; fortunately there were no injuries. The service suspension has caused disruption with clients, but safety is paramount, and they have understood and accepted that. Antonovs have shifted huge amounts of PPE during the year, and their goal is to get it flying again as soon as possible.

Mr Zubkov mentioned the transportation of vaccines and the dry ice issues as above. He asked if the AN-124 had no limitations where dry ice is concerned.

Konstantin Vekshin said that, technically speaking, the answer is yes (no limitations), but there would be a case-by-case approach to everything.

Qatar Airways now has 200 cargo flights daily, many of them using passenger aircraft

Mr Zubkov then asked Mr Halleux if Qatar Airways’ new winter schedule takes into account potential trunk routes for vaccine delivery. The schedules were not designed with the vaccine in mind, as demand by route is not yet established.

A dedicated charter division is experienced in flying ‘offline’ already. And in any case there are 200 cargo flights daily now, compared to 50 at the start of the year, using dedicated freighters, passenger aircraft (belly hold) and ‘mini-freighters’ (passenger aircraft with the seats removed).

With that level of supply the airline can adapt to any requirement.

This part of the interview can be viewed below:

(Section 13.01: 23.23)

Carrying pharma products is not new, but trial runs with COVID-19 vaccine have gone well

Taking the vaccine transportation issue a step further, Mr Zubkov asked about the readiness of the vaccine supply chain. What is the readiness of the two airlines?

Qatar Airways has had some trial runs, “without a glitch”, and has a great deal of experience with pharma products anyway. There is plenty of cold storage facility. They are just waiting for the green light.

Mr Halleux added that airlines had been shipping vaccines for years, and it is a booming segment; it is not a new product for the industry – just the quantity.

Volga Dnepr is doing the job already, with 19 Boeing 747s committed, covering the world and especially Asia-North America. “So far so good”.

This part of the interview can be viewed below:

(Section 23.24: 27.33)

The pandemic has shown cargo flights in a new light – investment will be attracted and digitalisation increased

The final question was: “How do you see the future of the air cargo industry against the background of what has been learned during the pandemic?”

Guillaume Halleux said the cargo divisions of airlines now know what their role is, even if they didn’t previously, and it has been “good PR” for the segment. It will attract more investment and prompt an acceleration in digitalisation.

Konstantin Vekshin is of the opinion that 2020 will make the industry, including regulators and aircraft manufacturers, far more aware of the importance of the entire cargo segment and all its participants.

This part of the interview can be viewed below:

(Section 27.34: 30.57)

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