INTERVIEW: We need to adapt more quickly to change and think ‘end-to’-end’ chains, not airport-to-airport
AirCargo archive stories issue #237
Thursday, 11 June 2015
DESMOND (Des) Vertannes (left) has spent more than 40 years working in air cargo. Those who know him best – and he is widely known and hugely respected in air cargo – know he strives to improve the industry. His career has included time at Air Canada, Etihad Airways and most recently, four years as head of cargo at the International Air Transport Association (IATA). He currently works as a strategic adviser at SmartKargo.
How did you come to work in air cargo? Des Vertannes: No one plans to enter the air cargo business. About 99 per cent of us fall into it by accident and I was one of those. I originally wanted to become a teacher, but as the oldest of 10 children, my father thought that earning money ‘sooner’ made more sense. I started with British European Airways (BEA) in its air cargo unit at London Heathrow, helping fill the bellies of their Tridents, BAC-111s, Viscounts and dedicated Vanguard freighters called Merchantmen – planes barely recognised today.
Let’s start with a broad view: what are the three biggest challenges air cargo faces? Security, barriers to open trade in goods and the rise in eCommerce. The first two are challenges or threats, and the last is both a threat and a remarkable opportunity.
1. The focus on security has been with us for decades, but became much sharper after 9/11 and security initiatives from government and others are ubiquitous now. What we need is a more nuanced and collaborative approach.
2. There’s not much that needs saying about tariffs and other barriers to trade in goods – most of us agree that increasing government protectionism harms world trade and hence our industry.
3. The dramatic growth of eCommerce is driven by evolving consumer behaviour. People like to buy things on line because it’s convenient, making price and feature comparisons are easy - and above all it’s fast. Universally, middle-class families are busy, and internet shopping saves time. In order to meet this growing – and to me irreversible – trend, air cargo people need to learn to adapt more quickly. Historically, we’ve not been good at change, and especially not at fast change.
How can advancing information technology help address these three challenges? I became interested in cargo IT to facilitate the fast and efficient transfer of information to all who use it. Whoever needs data should get data.
But that doesn’t happen much today. There are all kinds of blockages, some for selfish reasons that are not clearly thought out – “it’s mine” is something a three-year-old says. And even when key information does transfer between parties, it can become distorted. Sometimes governments are to blame, but often it’s the industry or the people we’ve hired to design our software and systems. Traditional air cargo IT providers see a wholesale solution, that is, airport to airport, rather than a more comprehensive and essential retail solution, from shipper to consignee. Integrators like FedEx and DHL figured this out decades ago, and it’s no wonder they’ve prospered ever since. Air cargo needs to understand this.
Another thing I learned is that developing a system in house is in most cases not the right move. Time and time again, I have seen the “make or buy” decision go in the wrong direction. The temptation to develop internally can be prompted by the best of intentions - but cost over-runs, missed deadlines and what actually is delivered can be a huge disappointment. Moreover, in my experience airlines often are delivered a system that is behind the curve in technology. It makes much more sense to contract with a proven system built for the future, not the past.
You’re a strong advocate of getting rid of paper. What’s wrong with paper? Air cargo providers move goods from point A to point B, but traditionally that also involves a whole bunch of paperwork to support each shipment. So we move the paper, and sometimes we lose the paper. And when we lose the paper, we can’t deliver the box. It’s that simple.
If we want to see what paperless can do, we need only ask our colleagues on the passenger side. The rise of e-tickets transformed distribution and lowered costs.
You’ve spoken publicly about culture change. What do you mean? It seems nearly everyone wants someone else to do the work, to make change happen.
We need leadership and we need people to take ownership. That’s the culture change. Air cargo is stuck in the old ways that no longer work.
Relationships with others in the cargo chain need to change, too. Airlines used to treat freight forwarders very paternalistically – the carriers expected forwarders to do what they were told to do. But that’s no way to treat partners, and the industry is evolving to a B2B model and procedures that treat others in the cargo chain as peers, not subordinates.
Some carriers still treat cargo as a sideline. What can be done to change that? IATA campaigned among its member airlines a few years ago to raise awareness of the value of cargo. There were three audiences: Airline ceos, government agencies (for airport investments) and the marketplace, especially investors. Among IATA member carriers, cargo averages 12 per cent of revenue, three times the average value of first class passenger business (four per cent). Yet look at all the investment in the first class product: Limousines to and from the airport, departure and arrival lounges, huge seats that turn to beds, the latest in-flight entertainment, spectacular food and wine and more. Last year, the cargo share had dropped to nine per cent and first class was still four per cent. Airlines simply do not invest what they should in cargo. Part of the reason is ‘the vicious cycle’: Low cargo revenue leads to low or no investment in IT and other items, which in turn produces disappointing revenues. It’s time to create a virtuous cycle! I also think that longer-range wide body aircraft, with ample bellies, will start to change the focus. The world is shrinking and anywhere is now one stop away. Cargo revenue will help justify the decision to buy and fly these big, long-flying planes. We’re already seeing evidence of that in North American and other carriers.
What’s your view on airlines trying to build their own cargo system? An analogy works well here: Pretend I’m pretty good with tools, and I could, with some help, build an automobile. It would run, it might even go fast enough to use on the motorway. But it would not be as good as the car I could buy from a global brand. Automobile makers invest billions in the best technology, the best safety, the best energy efficiency and styling. It works that way in cargo IT, too. Yes, you could build your own, but why wouldn’t you take products from someone who’s already done it - and done it to a very high standard. Lots of airlines have opted to build a system themselves and after millions of dollars and years of waiting have had little to show for it – and in some cases nothing.
Finally, what are the winning systems/services/products that you have access to now? I’ve advocated end-to-end solutions for years. And being 100 per cent in the cloud gives companies enormous power, for example, in making the same information visible at the same time to everyone who needs to know. SmartKargo, for example, was designed around every partner in the cargo chain, not just the carriers; Air cargo is an ecosystem, and every partner needs to be linked. That means customising tools to suit the needs of the individual, making sure systems can adapt to the particular needs of an airline.
INTERVIEW: We need to adapt more quickly to change and think ‘end-to’-end’ chains, not airport-to-airport
AirCargo archive stories issue #237
Thursday, 11 June 2015
DESMOND (Des) Vertannes (left) has spent more than 40 years working in air cargo. Those who know him best – and he is widely known and hugely respected in air cargo – know he strives to improve the industry. His career has included time at Air Canada, Etihad Airways and most recently, four years as head of cargo at the International Air Transport Association (IATA). He currently works as a strategic adviser at SmartKargo.
How did you come to work in air cargo? Des Vertannes: No one plans to enter the air cargo business. About 99 per cent of us fall into it by accident and I was one of those. I originally wanted to become a teacher, but as the oldest of 10 children, my father thought that earning money ‘sooner’ made more sense. I started with British European Airways (BEA) in its air cargo unit at London Heathrow, helping fill the bellies of their Tridents, BAC-111s, Viscounts and dedicated Vanguard freighters called Merchantmen – planes barely recognised today.
Let’s start with a broad view: what are the three biggest challenges air cargo faces? Security, barriers to open trade in goods and the rise in eCommerce. The first two are challenges or threats, and the last is both a threat and a remarkable opportunity.
1. The focus on security has been with us for decades, but became much sharper after 9/11 and security initiatives from government and others are ubiquitous now. What we need is a more nuanced and collaborative approach.
2. There’s not much that needs saying about tariffs and other barriers to trade in goods – most of us agree that increasing government protectionism harms world trade and hence our industry.
3. The dramatic growth of eCommerce is driven by evolving consumer behaviour. People like to buy things on line because it’s convenient, making price and feature comparisons are easy - and above all it’s fast. Universally, middle-class families are busy, and internet shopping saves time. In order to meet this growing – and to me irreversible – trend, air cargo people need to learn to adapt more quickly. Historically, we’ve not been good at change, and especially not at fast change.
How can advancing information technology help address these three challenges? I became interested in cargo IT to facilitate the fast and efficient transfer of information to all who use it. Whoever needs data should get data.
But that doesn’t happen much today. There are all kinds of blockages, some for selfish reasons that are not clearly thought out – “it’s mine” is something a three-year-old says. And even when key information does transfer between parties, it can become distorted. Sometimes governments are to blame, but often it’s the industry or the people we’ve hired to design our software and systems. Traditional air cargo IT providers see a wholesale solution, that is, airport to airport, rather than a more comprehensive and essential retail solution, from shipper to consignee. Integrators like FedEx and DHL figured this out decades ago, and it’s no wonder they’ve prospered ever since. Air cargo needs to understand this.
Another thing I learned is that developing a system in house is in most cases not the right move. Time and time again, I have seen the “make or buy” decision go in the wrong direction. The temptation to develop internally can be prompted by the best of intentions - but cost over-runs, missed deadlines and what actually is delivered can be a huge disappointment. Moreover, in my experience airlines often are delivered a system that is behind the curve in technology. It makes much more sense to contract with a proven system built for the future, not the past.
You’re a strong advocate of getting rid of paper. What’s wrong with paper? Air cargo providers move goods from point A to point B, but traditionally that also involves a whole bunch of paperwork to support each shipment. So we move the paper, and sometimes we lose the paper. And when we lose the paper, we can’t deliver the box. It’s that simple.
If we want to see what paperless can do, we need only ask our colleagues on the passenger side. The rise of e-tickets transformed distribution and lowered costs.
You’ve spoken publicly about culture change. What do you mean? It seems nearly everyone wants someone else to do the work, to make change happen.
We need leadership and we need people to take ownership. That’s the culture change. Air cargo is stuck in the old ways that no longer work.
Relationships with others in the cargo chain need to change, too. Airlines used to treat freight forwarders very paternalistically – the carriers expected forwarders to do what they were told to do. But that’s no way to treat partners, and the industry is evolving to a B2B model and procedures that treat others in the cargo chain as peers, not subordinates.
Some carriers still treat cargo as a sideline. What can be done to change that? IATA campaigned among its member airlines a few years ago to raise awareness of the value of cargo. There were three audiences: Airline ceos, government agencies (for airport investments) and the marketplace, especially investors. Among IATA member carriers, cargo averages 12 per cent of revenue, three times the average value of first class passenger business (four per cent). Yet look at all the investment in the first class product: Limousines to and from the airport, departure and arrival lounges, huge seats that turn to beds, the latest in-flight entertainment, spectacular food and wine and more. Last year, the cargo share had dropped to nine per cent and first class was still four per cent. Airlines simply do not invest what they should in cargo. Part of the reason is ‘the vicious cycle’: Low cargo revenue leads to low or no investment in IT and other items, which in turn produces disappointing revenues. It’s time to create a virtuous cycle! I also think that longer-range wide body aircraft, with ample bellies, will start to change the focus. The world is shrinking and anywhere is now one stop away. Cargo revenue will help justify the decision to buy and fly these big, long-flying planes. We’re already seeing evidence of that in North American and other carriers.
What’s your view on airlines trying to build their own cargo system? An analogy works well here: Pretend I’m pretty good with tools, and I could, with some help, build an automobile. It would run, it might even go fast enough to use on the motorway. But it would not be as good as the car I could buy from a global brand. Automobile makers invest billions in the best technology, the best safety, the best energy efficiency and styling. It works that way in cargo IT, too. Yes, you could build your own, but why wouldn’t you take products from someone who’s already done it - and done it to a very high standard. Lots of airlines have opted to build a system themselves and after millions of dollars and years of waiting have had little to show for it – and in some cases nothing.
Finally, what are the winning systems/services/products that you have access to now? I’ve advocated end-to-end solutions for years. And being 100 per cent in the cloud gives companies enormous power, for example, in making the same information visible at the same time to everyone who needs to know. SmartKargo, for example, was designed around every partner in the cargo chain, not just the carriers; Air cargo is an ecosystem, and every partner needs to be linked. That means customising tools to suit the needs of the individual, making sure systems can adapt to the particular needs of an airline.
DESMOND (Des) Vertannes (left) has spent more than 40 years working in air cargo. Those who know him best – and he is widely known and hugely respected in air cargo – know he strives to improve the industry. 
