ULDs: Adjusting to market conditions

Cargo demand has fallen back to pre-pandemic levels and ULD providers are looking to 2024 as the year for normalisation.

Aviation is recovering and that puts Jettainer on a good path to have a successful end to the year, says CEO Thomas Sonntag.

Jettainer has maintained long-term relationships with loyal airline customers including extending contracts with WestJet Cargo and ITA Airways.

The right people are key to any company with Jettainer appointing Rammohan (Ram) Krishnaswamy as General Manager for the Middle East, Africa and Indian Subcontinent, and Christine Klemmer as Chief Innovation Officer to lead a new department enhancing ULD management services through cutting-edge technology, AI applications and tracking solutions.

For 2024, Asia Pacific is an area of focus due to most airlines continuing to manage their ULDs in-house.

Sonntag says the region is both promising and complex due to diverse countries and cultures, and airlines face challenges due to cost and sustainability pressures.

Sonntag says, “We thus strongly advocate outsourcing ULD management, offering cost-effective solutions with top service quality, as validated by collaborations with airlines like T'Way, CEBU Pacific, and VietJet. Our unwavering commitment to the region is furthermore evident through our expansion in key gateways and our focus on regional ULD expertise.”

Jettainer has recently entered into a partnership with PACTL West, the ground handler for Shanghai Pudong International Airport Public Cargo Terminal Co, which includes opening a new hub for lease&fly leasing services at the airport.

PACTL West will be responsible for handling and storing ULDs and customers will have fast access to PMC pallets with more products in the future.

As airlines return to a normal demand pattern, Jettainer can scale operations across its network more efficiently again.

Sonntag believes airline recovery will make ULD management services more attractive as they recognise it is a way to save costs and make operations more flexible and sustainable.

Sonntag says, “We have always had a very strong ability to react flexibly to different circumstances, this also helped us when air cargo demand returned to pre-pandemic levels. And to get even better, we are driving innovation to offer the best possible solutions for any situation.”

Digitalisation and automation are key to Jettainer’s operational strategy, and Jettainer is continuing to invest in its IT services.

Sonntag says the JettWareNG next-generation IT platform marks a new era by streamlining workflows, enhancing the user experience and automation.

Jettainer has been using AI for a long time with Sonntag commenting, “By analysing historic movement data of our ULDs, AI can offer our controllers decision making options to manage our customers’ ULD fleets even more efficiently and sustainably.”

Digital twins have been created of Jettainer’s 100,000 unit fleet, collecting data to help make automated decisions and to optimise ULDs throughout their lifecycle.

Equipping ULDs with Bluetooth Low Energy (BLE) tags whenever it brings value to customers.

Jettainer has combined its ULD management services with Descartes’ next-generation IoT Bluetooth low-energy ULD trackers for Etihad Cargo.

Sonntag says, “Among other things, this makes it possible to improve ground processes for cargo and ULD handling and to gain data-driven insights into the transport and environmental conditions of air cargo in motion.”

He admits BLE tags are only beneficial when the reader infrastructure is in place at airports and leaving airports.

Jettainer is working with its customers, ground handling service providers and Descartes to provide sufficient coverage.

Digital transformation is fundamental to the air cargo industry and the technology is there to assist people in their tasks and further enhance services to customers.

Sonntag says, “In today's digital era, data overwhelms us. Leveraging automated processes with artificial intelligence support, we transform this vast data into actionable insights. These insights are pivotal for continually enhancing our ULD management solutions for our customers.”

Coming off the sugar high
The Covid years were dividend years, says Steve Townes, CEO of ACL Airshop which he describes as a sugar high of freighter fleets being utilised to the max, restricted belly capacity and sea freight disruption.

Pivoting and accelerating with its freighter clients, ACL Airshop invested heavily in its lease-ready stock of ULDs.

The market this year has been softer, coming down from the all-time highs of last year with Townes expecting growth to return to 4% real growth per annum in the coming years.

For 2024, Townes and the ACL team are expecting growth to return, adding that it depends on unexpected events.

The world has avoided a global recession, consumers remain confident, e-commerce continues to grow and the world continues to trade, which are reasons to be optimistic.

Summing up how ACL Airshop coped with falling cargo demand, Townes says, “We tapped the brakes and lit the afterburners”, meaning the 2023 budget was adjusted to reflect market conditions, discretionary spending was reviewed, hiring was slowed, the growth in capital expenditure was trimmed and the team redoubled outbound sales and proposal efforts.

Townes says, “It was simply a prudent reaction to multiple market forces that were moving downward. We have coped well, and the company is in strong condition especially with such a huge majority shareholder, Astatine Investment Partners.”

Looking at 2024, there is likely to be a modest uptick and Townes says ACL Airshop will adjust accordingly to market factors and customer requirements as the year progresses.

After 40 years in business, ACL Airshop has navigated various economic and geopolitical challenges.

Fundamentally, ACL Airshop is the same fast, agile business it was before the pandemic, with the pandemic making it even more nimble, flexible and creative.

Townes says, “The Covid challenges have permanently improved our entire go-to market mindset and methods as an enterprise.”

Digital transformation continues to evolve, having started with the ULD Control System automating many logistics management and asset accountability tasks.

The next steps were bar-coding, Bluetooth smart trackers, then there was the FindMyULD app, which is being coupled with ERP systems and linked with customers’ operational ULD control centres.

Tying the Airway Bill to the ULD’s serial number and smart trackers has got through successful beta testing. One more proof-of-principle test and this will be ready to go.

Townes sums up ACL Airshop’s technology vision as Uberization, saying that using the FindMyULD app gives customers access to ULDs from the palm of their hand, making leasing and logistics decisions as easy as hailing an Uber.

“Ambitious? Yes. Feasible? Yes. We are making progress. We will remain steadfast bulldogs on this important goal,” he says.

Ambitious and feasible are two words that sum up ACL Airshop’s growth in recent years, with its owned asset fleet tripling to 75,000 units and the total ULDs under management at 100,000.

Its network has grown from 23 cargo hubs to 57, and this number will continue to rise.

Townes says, “Because of new efficiencies and lean initiatives, we have doubled our throughput of goods and services without doubling our headcounts or overheads. We have a disciplined, metrics-based approach toward managing growth and building-out the business, one good increment at a time. That time-proven method serves us well.”

Whatever happens in 2024, ACL Airshop will be ready to respond. Townes concludes, “The beauty of our business model, which is an equal mix of long-term ULD fleet contracts plus our market dominance in short-term leasing, means that when things come back, the amplitude of short-term rises quickly.”

Building on success
Almost two years since he took the role of CEO at Unilode Aviation Solutions, Ross Marino is satisfied that the foundations have been laid to reach new heights.

The aviation industry has been through unprecedented challenges, having to navigate lockdown restrictions, pivoting businesses to focus on cargo then cater for pent-up travel demand as the pandemic becomes a memory.

Reflecting on 2023, Marino says it has been a strong and robust year despite the soft cargo market with demand for cargo ULDs dropping off, mitigated by passenger demand.

Business has grown with new contracts and Unilode has been able to retain all existing clients.

Another highlight of the year is finalising the executive leadership structure with the appointment of Janis Balkens as Chief Operating Officer and Hazel Hogben as Chief People Officer.

Marino admits the cargo demand was intense during the pandemic and finding enough pallets for customers was challenging, which Unilode was able to do successfully with investments in new assets.

This demand for pallets has reduced significantly since cargo volumes softened, particularly on short-term leases.

He comments, “As they say in life, when one door closes another one opens. What we have seen is while cargo has dropped off, passenger loads are incredibly strong and have remained strong so what we are seeing is airlines balancing cargo pallet requirements with baggage containers.”

As many of Unilode’s customers operate a mix of passenger and freighter aircraft, demand for different products has come back to the pre-pandemic balance.

Marino notes that the peak season for cargo has been softer this year compared to previous years, although they are seeing a late surge in demand.

Demand for passenger containers remains very strong.

Looking at next year, Marino says the outlook is good with cargo demand likely to come back from mid- 2024 and passenger demand remaining strong.

“We are seeing geopolitical events around the world which are concerning us all and the aviation industry also gets impacted by those events. If we are able to navigate those in such a way that normality returns, we see the outlook remaining robust,” says Marino.

Having been in aviation for over 30 years, Marino has seen his fair share of challenges such as 9/11, SARS, the 2008 financial crisis, volcanoes and the Covid pandemic, with the industry able to bounce back stronger every time.

The Ukraine-Russia war as another example sent the price of aluminium, spare parts and shipping skywards, which, of course, had a big impact on business, though pricing is starting to return to normalised levels.

“Despite the turbulent year, we have been able to ride the storm and still deliver robust results and move forward as a company,” says Marino.

Top priorities
Sustainability and digitalisation are top priorities with digital investments making it easier for Unilode to keep track of assets and improve utilisation, which enables its customers to have the right stock levels in the correct locations every time.

Marino stresses sustainability is not just about ordering lightweight equipment, though that is important.

Materials need to be sustainable so they can be reused and recycled, so lightweight aluminium solutions is the preferred material.

Pallet nets are an area of interest as they go to landfill when scrapped, so a net working group at Unilode is looking for more sustainable outcomes.

Another working group is studying ULD repair versus scrapping. This is also a financial decision because scrapping a unit means buying a new one but decisions need to be made about how much time is spent repairing a unit, taking into account sustainability and financial considerations.

Repairing ULDs at the source of damage is a positive and sustainable service as it means Unilode’s airline customers do not have to fly ULDs back to their hub station for repair, which reduces weight on the aircraft and critically, frees up space for revenue-generating cargo.

“What we are saying is let’s get ULDs repaired at the point of damage so the next time it goes on your aircraft, it has been repaired. With a global network of 50-plus repair centres, 34 of which are our own, we can do those repairs at the point of damage, which from a sustainability perspective is a real positive for our customers,” says Marino.

The progress on digitally tagging assets has been phenomenal says Marino, with the reader network growing 33% alone this year and 92% of Unilode’s ULDs have been tagged this year.

Unilode’s new mobile app will be launched soon, providing greater data insights and will do more active scanning when it goes live this year.

The new customer portal will offer services such as track and trace, with Marino saying Unilode’s own data showing a tagged ULD is five times less likely to get lost than an untagged unit.

This makes it easier to balance stock levels, meaning customers only pay for what they need.

Unilode can also provide sensory data identifying conditions such as shock, humidity and light, with Marino commenting, “We don’t just want to be a ULD asset provider, we want to give our customers much more than that. The work we are doing with our IT structure to support has seen us make great progress in 2023, but we are really looking at 2024 as the year where we can make a lot more progress in that respect.”

Growing network
A new player in the ULD market, Mercury ULD has established its presence with operations at several leading cargo hubs.

Established 18 months ago, General Manager Kenneth Poon says the network has grown to 18 stations across Asia, Europe, the Middle East and the US.

He says Mercury ULD is looking to expand its network to other major hubs and is looking at up-and-coming hubs where there is less competition.

Growth needs to be carried out in a control manner, with Poon commenting, “While we were actively looking for opportunities in different regions, we were conscious with our capital and operating expenses to ensure that we can sustain and survive during the period. But we are confident that the market will return and there are opportunities in the market that we could penetrate.”

The air cargo market has been through a challenging year and a half with numerous global issues affecting the market.

Poon admits that 2023 has been a difficult year with weak cargo demand affecting demand for ULD leasing.

The pandemic-fuelled demand meant many airlines invested heavily in equipment such as pallets, which means there is now surplus ULD inventory at a time of low cargo demand.

Cargo demand is picking up again, with Poon saying, “2024 would be a better year than 2023 if interest rates around the world drop as expected and that will increase productivity in China. These factors would increase economic activity around the world thus the demand for air cargo transportation. But we also need to keep an eye on the development in conflicts around the world.”

Offering short-term and long-term pallet leasing, Mercury ULD is targeting freighter airlines and plans to grow its capabilities and provide container leasing and maintenance services in the future.

Although Mercury ULD is a new player and not as large or well-known as other companies, it is ambitious.

Poon says, “Our strength is being quick and agile which allows us to respond to the market very quickly and be able to tailor-make solutions to fulfil individual airlines’ specific operational requirements.”

This article was published in the December 2023 issue of Air Logistics International, click here to read the digital edition and click here to subscribe.