Call for cooperation

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Optimization of the air cargo supply chain would add value to all stakeholders and bring new customers to the industry. Cooperation across the entire chain is key to increased competitiveness.

In their classic book Alliance Advantage published in 1998, Yves Doz and Gary Hamel coined the ideology that companies create partnerships within and across industries for two reasons: they race for the world, or for the future. Partnerships are formed, for instance, to obtain access to new markets and to provide new services, to benefit from economies of scale, or to maximize the level of operating, marketing, and revenues. 

For Finnair Cargo, cooperation with chosen partners has always been an important part of business. Last year, for example, the company has increased its connections by a freighter sharing deal with IAG Cargo.  

”Connecting the carrier networks of the two companies opens up new cargo destinations for us, especially in North America. IAG Cargo, in return, is able to tap into Finnair’s advanced network that connects Europe with the Asia Pacific region,” says Anja Pöyhönen, sales director for Europe.

According to Pöyhönen, Finnair Cargo is aiming at strategic partnerships that add value to all stakeholders also in the long term. As such, the company is racing for the world by widening its network. An important element in racing for the future is the possibility to develop the service offering.

”IAG’s Partner Plus program offers our customers confirmed bookings and a higher on-load priority. This is much more than a standard interline deal.”

More from IT

Finnair Cargo started another strategic long-term partnership last year by joining the growing cargo community at Revenue Technology Services (RTS), a global IT solutions company focusing on analytics for travel, transportation, logistics, and hospitality industries. 

For the new cargo terminal, currently under construction, Finnair Cargo has chosen cutting-edge technology for warehouse automation and the cargo management system, provided by Lödige Industries and Mercator, respectively.

”IT solutions will definitely allow for significant improvements in managing air cargo. As the supply chain structures become more open and flexible, cooperation between all stakeholders is likely to increase. For us, this trend is most welcome, because being close to customers is crucial to differentiation.” 

Future-proofing the business

Finnair Cargo’s new state-of-the-art terminal at Helsinki Airport is slated to open during spring 2017. According to Pöyhönen, this will take air cargo management to a new level.

”We have invested in a new terminal because our Airbus A350 fleet will bring us 50 percent more cargo capacity by the year 2020. Warehouse automation and three separate temperature zones for the handling of general and special cargo, such as Pharma and Perishables, help us serve all customer segments in an optimized way.”

Finnair Cargo was also the first carrier in the world to complete the IATA pharmaceutical certification process.

”As Pharma is a key customer industry for us and our partners, we have studied the pharmaceuticals supply chain requirements thoroughly. Even though we do not do business with pharmaceutical and life science companies directly, it is important for us to know their present and future needs,” says Pöyhönen.

Clear view on cargo flow

Generally, air cargo supply chains are complex and hard to manage. The focus of academic research has been on other fields of logistics and transportation, with some exceptions, recognizes Pöyhönen.

A study (Bernal et al.) published in the Journal of Airline and Airport Management in 2012 sheds light on the complexity of air cargo supply chains. The researchers interviewed airport managers, airlines, customs officers, forwarding agents, handling agents, couriers, and airport facilities managers. Quantitative analysis was based on data for external trade, sourced from the Spanish tax office.

By using a process simulation modeling software, the researchers showed how to optimize the entire air cargo supply chain or any of its components. Drastic improvements could be made by leveraging parameters such as bottlenecks, resources, and warehouses.

The researchers emphasized that having a better knowledge of the operations, processes, and the interrelations would enable evaluating and optimizing the supply chain, allowing other niche markets to enter.

Pöyhönen agrees with the researchers. ”It is impossible to optimize the chain from shipper to consignee if we do not understand the interrelations within. More transparency is needed. Without transparency, there is no trust—and value-creating partnerships are always built on trust.”

Text by Jorma Leppänen
Photo by iStock

Published February 4, 2016

Category: Finnair Cargo, Economy

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