NO QUESTION TIMES ARE GETTING TOUGHER
Business is continuing to shrink and while President Obama sees glimmers of hope that certainly does not extend to forwarding. Qantas admitted yesterday that the lack of business class travelers and international freight was the root cause in another round of layoffs, this time shedding nearly 2,000, (including 500 management jobs) from its 34,000 workforce, the cancelation of new aircraft orders and the grounding of a further ten planes. The CEO claims there is more still surgery to come. What truly surprises me is freight being included as a culprit. Although averaging around 20% of passenger airline revenues, the largely forgotten cargo divisions rarely ever rank a mention, but here is Qantas stating it is feeling the effects of declining yields from the bellies of its fleet.
Only two carriers to the South Pacific have maintained pre-recession capacity and they are 100% reliant upon moving boxes; UPS and FedEx. FedEx, if it accepted the reality that the era of China is over, seems to have a far better grip on its airline operations than the other outfit that runs those ugly gas guzzling brown trucks. If there was ever a company run like we imagine a government department to be run, it is UPS. In a recent blog I referred to a retired CEO in the present and after realizing my mistake I decided not to make any changes. Not one reader corrected me. If I misspelled Fred Smith’s name, I would have been hauled over the coals! And that is the difference between the two. Fred Smith has surrounded himself with an entrepreneurial team with a can do spirit and in ten years the business has grown four fold to nearly match static UPS’ revenue, while UPS executives and their bunker mentality continue to play musical chairs with one another. I see UPS eventually reducing their international capacity in answer to reduced business while by contrast FedEx explores more opportunities. Example; DHL runs a daily freighter service to Auckland from Sydney with an ancient 727. I would not be surprised to see FedEx enter this market with a 757 and relieve DHL from the task.
For CII, it is a constant battle to keep the kilos crossing the dock. Shortly we will have our x-ray equipment installed and we will be offering our customers all sorts of choices which will add value to our service. For instance, so many small to mid-sized forwarders are paying costly cross-docks and transfers. Once our terminal is fully operational security-wise, we will be offering pick up from any point in America, screening at our facility and delivery to airport with an all in one pricing. The cost savings will be huge, but more importantly the service will have no peers. We have two executives totally dedicated to improving upon our systems and turning our “brainstorming” ideas into action. Yes, I make no secret of the fact CII is fighting for its life, but I believe our survival is dependent upon never giving up and always striving to find ways to do things better so the customer shares in the benefits.
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