Air Cargo: Business As Usual

Unfazed. Surviving a tumultuous two-year stretch marked by security and regulatory demands, rising shipper expectations, and internal profitability pressures, air carriers show resolve and resiliency. Here’s a look at how airlines, forwarders, and integrators prove that, despite the challenges, it’s just business as usual.

It’s business as usual for United Cargo, says Roger Gibson, vice president of cargo operations. Given United Airline’s recent filing for Chapter 11, that’s saying something. But his optimism also speaks to the resiliency and resolve of the air cargo industry.

Overall traffic in the U.S. airfreight and express industry declined 9.2 percent in 2001 to 14.013 billion revenue ton miles, according to a July 2002 report by Air Cargo Management Group (ACMG), a Seattle, Wash.-based air cargo consultancy. As a result, total revenue dropped 6.5 percent from $29.3 billion in 2000 to $27.4 billion in 2001.

Failing U.S. economic conditions similarly impacted the global market as international airfreight traffic experienced a decline in volume and revenue in 2001. 2002 showed slight signs of growth, but according to the ACMG report, this still represented an unprecedented decline in the air cargo industry.

“Under a normal growth scenario, 2002 traffic would have been nearly 25 percent above the 1999 level. In other words, the air cargo industry has lost nearly three year’s of growth, and the weak market has impacted both the traditional airlines and the express companies,” says ACMG.

While ACMG predicts that the air cargo industry will return to positive growth in 2003, air cargo companies are still challenged with meeting new security and safety provisions, increasing customer expectations, and internal pressures to be profitable and competitive. To recoup lost revenue and at the same time stabilize their business, many are focusing on their core competencies to position themselves for future growth.

It’s a complicated paradigm that requires a great deal of collaboration and flexibility, but a task that air cargo companies, such as United, approach with a “business as usual” attitude.

Back to Basics—Cargo

When faced with shrinking budgets and operational constraints—challenges that most companies experienced as a result of the weak economy and residual fallout from Sept. 11—the natural inclination is to revert to core business strengths. As much behavioral conditioning as it is business strategizing, the objective is the same—short-term survival and long-term growth. Air cargo companies, in this regard, are no different.

“Segments and modes have a different look,” notes Mack Sikorsky, director of cargo and mail, Southwest Airlines. “Integrators transport U.S. mail domestically and report it as freight. Trucking companies market air expedited freight that never leaves the ground. Those are just two examples of changes that skew the carriers’ potential market share.”

Despite this blurring, the Dallas, Texas-based carrier is committed to operating as it has, focusing on customers and their needs. “Our operations have not changed much,” adds Sikorsky. “Southwest Cargo has never positioned itself to be all things to all types. We remain focused on only offering services that conform to our niche. This allows us to keep it simple and do what we do best.”

For integrators such as UPS, their value proposition has been “to be all things to all types of shippers,” and that is what has enabled them to thrive in the past few years. UPS’s strength lies in its ability to provide customers with a complete transportation solution.

“Flexibility is the key,” says Chuck Cocci, vice president of airfreight services, UPS Supply Chain Solutions. “We need to offer a complete range of transportation options for virtually any size shipment—from ocean to air, then on any destination in the United States via air, rail, or ground.

“Our customers range from those who rely on us strictly for small package shipments to those who entrust us with their entire supply chain management, including inventory management, order fulfillment, and returns management, as well as multimodal freight transportation.”

United Airlines Cargo, by contrast, has been compelled to take a more grass roots approach to reorganizing its business, following its parent company’s Dec. 2002 filing for Chapter 11. But even before this announcement, the cargo division had taken proactive measures to realign its core business—moving freight—by taking over control and responsibility of its 12 customer service centers across the United States.

More recently, United Cargo simplified its cargo rate structure, reducing the number of geographic pricing zones within the continental United States from five to three to make it easier for customers to work with.

Customer service is similarly important in the air charter industry where the very nature of on-demand transportation requires accuracy and urgency.

“One month you have a port lockout, the next month a severe supplier issue, then a weather problem the next,” says Brian Hermelin, CEO of Belleville, Mich.-based Active Aero.

When shippers need to buy transportation on the fly to manage supply chain bottlenecks, they need fast and reliable service. To this end, Active Aero has invested a significant amount of capital in its CharterNet web-based bid and quote system to help shippers procure transportation.

The common thread among these four unique air cargo service providers is their commitment to the customer—be it a shipper, consignee, or forwarder. More than anything else, it is the customer that drives their business, and meeting customer demands is the basis of what they do. That part is business as usual.

The #1 Differentiator

Over the past few years, cargo providers have differentiated themselves by how well they serve their customers. Nowhere has this been more apparent than in the U.S. airfreight industry where integrated express carriers alone generated 89 percent of the industry’s total revenue in 2001, according to ACMG.

“Express companies in the U.S. marketplace have become dominant forces in terms of market share relatively quickly, and they’ve done it based on service,” reports Christopher Reanier, research director for ACMG.

Integrators move freight. That is their core business and that is what they do best. They have accordingly tailored their services, technologies, and facilities to better meet the demands of their customers.

For a company such as TeddyCrafters, a customized teddy-bear manufacturer located in Redwood City, Calif., partnering with UPS was a more economical alternative than investing in a distribution center to better source and control inventory coming from Asia.

UPS currently manages inbound deliveries from TeddyCrafters’ suppliers, stocks needed items in a UPS-owned distribution center, and facilitates weekly replenishment of bears and accessories to all TeddyCrafters “factories.” The added value of working with a partner that can provide a one-stop shop has been readily apparent to Fred Rubenstein, co-founder and vice president of TeddyCrafters.

“There’s great value in not having to worry about the inbound distribution end of the business,” Rubenstein says. “We live in a business environment where capital availability is questionable and growth rates are unsure. I need to put my time into making sure my business prospers in a tough environment. Knowing I have access to professionals who take responsibility for making things right for my company makes my job that much easier.”

Companies such as TeddyCrafters have benefitted greatly from the all-encompassing services provided by an integrator such as UPS. This model for success has not gone unnoticed among combination carriers.

Combis Switch Gears

“Combination carriers over the last two years have moved to develop more time-definite products—products with more guarantees—to try and match what express companies offer their customers, as well as shave off some of that business and improve their yields,” Reanier says.

Southwest, for example, recently enhanced its existing Next Flight Guaranteed services, which had previously been only available on direct and nonstop flights, to include connecting flights—an initiative driven by a customer’s request. Other combi carriers have made similar changes in the cargo services they offer.

Unlike integrators, moving freight has traditionally been an ancillary business for combi carriers. But as reduced passenger volume and excess cargo capacity threaten profitability, major airlines are compelled to rethink the way they approach the cargo side of their business.

“The passenger side is driving this change,” notes United’s Gibson. “Passenger demands are down dramatically. You don’t want to be flying airplanes that are not making money. What United is trying to do is size its fleet to the opportunities of the marketplace. You will see a number of airlines looking at how they pull down their capacities going forward because there is not enough demand in the marketplace.”

Scaling Back the Fleet

A reduction in volume has similarly impacted the global air cargo industry, compelling air carriers, and to a lesser extent integrators, to scale back their fleets, notes Richardson Sells, vice president, global sales, Northwest Airlines Cargo.

“There is too much capacity out of the United States and everybody is scrambling to retain or grow share and that simply drives rates down,” he says.

Complicating matters for passenger airlines that are also carrying freight are the known/unknown shipper provisions imposed by the Transportation Security Administration. These provisions have made it more difficult to create new business.

“The combination carriers in the U.S. domestic market have had their hands tied by security regulations,” says Reanier. “They can’t just accept freight from anybody.”

As a result, combi carriers are relying more heavily on freight forwarders to justify known shippers and generate more business. But, as Sells notes, it’s a mutual partnership that has competitive advantages as well.

“Freight forwarder plus Northwest Airlines plus freight forwarder equals integrator. That’s why we have such a strong bond with them—to help both of us compete against the integrators,” he says.

United and Pilot Flex Their Inbound Muscles

“You can choose any airfreight company, forwarder, or ground transportation provider, but the service has to come along with it,” says Don Hosler, customer service logistics manager, North American Division, FlexTronics.

Flextronics currently works with both Pilot Air Freight, a Lima, Pa. forwarder, and United Cargo to import and export automotive parts and other time-critical shipments domestically and globally.

“Service is especially vital to me because I manage $30 million in sales and transportation moves a year. Working with a company that takes care of me—where I don’t have to constantly look at what’s going on—is a huge benefit.”

Pilot Air Freight and United Cargo currently work together, moving a mix of freight both domestically and abroad. Thirty to 35 percent of Pilot’s business is generated by selling to the stateside consignee, according to Randy Gentile, regional vice president, Pilot Air Freight. United’s breadth of schedule and services has been a great help in targeting this segment of business.

“There is quite a bit of inbound freight out there and our customers want to get their hands on it and they want to do it effectively,” Gentile notes. “We have been able to use different services that we have through our relationship with United. We have the capacity to expedite a shipment overnight or on a second-day basis if needed. We also have relationships with other transportation providers that go airport to airport vs. the hub- and-spoke system.”

It is a collaborative effort, and one that customers such as Flextronics have been able to harness to help move cargo both inbound and outbound. With seamless visibility into Pilot’s system as well as United’s, Hosler has the ability to make changes on the fly if need be.

“I can track shipments and create bills of lading online,” says Hosler. “I also have the ability to stop a shipment at a port and change the mode to move it faster if I need to.”

“We have focused a lot on the technology side—in terms of developing technologies and methodologies to make it easier for freight forwarders to work with us,” notes Gibson.

One example is the Cargo Portal Services network—a joint effort between United Airlines Cargo, Air Canada Cargo, Northwest Airlines Cargo, and Unisys. The network offers forwarders easy access to booking, shipment management, and communications in a web-driven environment.

These functionalities “will enable customers to interact with us at various levels and at the same time take costs out of their business,” says Gibson.

Jumping through Hoops

With nearly 97 percent of its business coming from forwarders, it is little wonder why United has invested so much in its technological capabilities. And a forwarder such as Pilot Air Freight values this relationship because United makes it look better, too.

“United jumps through hoops to make the information available,” notes Gentile. “We’re pre-alerted from our agent in Hong Kong or Singapore that the freight will be arriving. United’s time percentages are very good and the recovery times are excellent as well. The consignee on the import side knows that we are becoming a player in the international community simply because we have a strong agent network, a good airline relationship, and the local broker community does its job.”

One of the greatest challenges facing air cargo companies is meeting the increasing demands of their customers while creating profit—two seemingly divergent objectives. As much as carriers are compelled to provide the services their customers demand, there is also an element of self-preservation at play. The air cargo industry is a low-margin business as it is, and rising insurance premiums, escalating fuel prices, and capital investment in security and safety measures eat into profits.

While cost is often a discriminating factor for prospective customers, being able to guarantee that a shipment will make it to its destination on time is a value that many are willing to pay for. Integrators have successfully leveraged their networks to offer these guaranteed services and that is the core strength of their business. Combi carriers, too, realize they can validate costs by adding more value to existing services—a reality that has become increasingly relevant given the current economic impasse.

“There has been a lot of focus on the commoditization of this industry,” notes United’s Gibson. “Commoditization does not work because to the extent that you play that game well, your margins become even more nominal. You are not positioning yourself to reinvest in or grow your business.

“United Cargo is focused on building relationships at a more strategic level than what has historically happened in this industry, with freight forwarders who are looking to create more value for their customer base,” he adds.

Greater collaboration with forwarders has been one obvious way carriers create more value for shippers. The evolution of cargo alliances and further investment in technology are two other trends that will help air cargo companies, especially combi carriers, grow their business in terms of service and revenue.

Alliances: Strength in Numbers

While integrators continue to diversify their service offerings and extend their global reach by acquiring companies that complement existing businesses and/or investing in new facilities, equipment, and technologies, some combi carriers are doing the exact opposite. Rather than invest capital internally, they are creating alliances to take advantage of shared networks. While carriers have historically code-shared with other airlines on the passenger side, this is a new phenomenon for freight services.

“These alliances are relatively new and their cargo functionalities are even newer,” says Reanier. “But they offer a much broader network for shippers and at much less capital cost for carriers than doing it themselves.”

Among the more notable coalitions:

  • SkyTeam Cargo— an alliance between AeroMexico Cargo, Air France Cargo, Alitalia Cargo, CSA Cargo, Delta Air Logistics, and Korean Air Cargo that currently serves 114 countries daily, with more than 8,217 flights to 512 destinations.
  • WOW Cargo— an alliance between Lufthansa Cargo, SAS Cargo, Singapore Airlines Cargo, and JAL Cargo provides shippers with fully linked systems for seamless delivery of goods across five continents.

Many carriers have partnered with other regional airlines to help penetrate new markets, and it’s likely that in the coming year more airlines will find similar strength in numbers.

Evolving Technologies

“Where the industry is going, technology becomes a bigger component of this business,” says Gibson. “If air carriers are prudent about how we introduce this new technology to the marketplace we should have the co-benefits of improving overall service to the customer and at the same time be able to take cost out of the equation.”

Certainly initiatives such as the Cargo Portal Services Network, the various cargo alliance web portals, and company-specific web tools such as Active Aero’s CharterNet, will benefit greatly from evolving technologies. Transportation providers, for their part, will similarly have to invest in their own visibility and communication tools to enhance and complement the capabilities of their partners.

Integrators will likely have more at stake in investing in technologies because they are controlling the flow of goods from dock to door, says UPS’s Cocci.

“We have a full suite of supply chain technologies that keep track of the events that occur as goods move through the supply chain from vendor to carrier and customs, to distribution centers and order fulfillment operations then on to customers,” he says.

Southwest Cargo similarly offers a suite of visibility tools to its customers and is looking to grow that portion of its services as well. “We currently offer online tracking and tracing. In the future we will have the capability to provide shipment status updates via email,” says Sikorsky.

UAL’s Gibson perceives the evolution of technology as a twofold approach. “Technology will be driven fundamentally by regulation requirements,” he says, “and secondarily because customers will demand a higher level of quality data and information about their shipments.”

Back to Basics—Expedited and Mail

Imagine a business partnership built around contingencies and what-if scenarios, where innovation is driven by the fear of failure rather than success, and customer service can literally be the difference between life and death.

As daunting as this might seem, it’s a script that Covance Inc., a Princeton-N.J.-based pharmaceutical development services company, and Airborne Express act out on a daily basis—preparing for the unexpected, expecting the worst, all the while performing flawlessly in situations that might otherwise leave shippers, carriers, and consignees scrambling for last-minute fixes.

Covance’s business is all about planning for the improbable, and for good reason. As one of the world’s largest drug development services companies, with operations in 17 countries and more than 6,900 employees worldwide, success and failure straddle a very thin line. Pharmaceutical manufacturers and partner integrators (physicians) look to Covance to design, create, and implement clinical trials that will help usher new drugs and therapies to market and conceivably save patient’s lives.

Inbound Via Airborne

In 1997, Covance partnered with the Seattle-based shipping and logistics carrier Airborne to ship custom clinical trial test kits, results data, and other materials to trial participants in the United States, as well as pick up and deliver test samples to Covance’s Central Laboratory facility in Indianapolis, Ind.—in all, more than 2,500 shipments a day. In the six years since, Airborne and Covance have evolved an inbound strategy to pull cargo through the carrier’s Wilmington, Ohio, hub to better manage, expedite, and control the flow of shipments into Covance’s Central Lab.

The proximity of Airborne’s hub in Wilmington to Covance’s laboratory in Indianapolis—approximately three hours by truck—has played a critical part in not only streamlining this transportation leg, but also allowing for alternative strategies if the need arises.

“Airborne’s hub allows for various contingencies,” acknowledges Mike Mitchell, associate director of logistics at Covance’s Central Laboratory Services Division. “If we were not within trucking distance, located in a city that required an aircraft to reach us, it would be very difficult.”

The unique nature of Covance’s business, and the clients it serves, makes contingency planning a critical part of its relationship with Airborne.

“Our whole program, when we converted five years ago, was not just to move a package from Point A to Point B,” says Mitchell. “It was a strategic alliance that would anticipate service failures and build contingencies.”

With millions of dollars invested in potential drugs and therapies that may or may not make it to market, Covance’s customers have stringent service requirements. Eliminating the potential for service failures and being able to expediently manage them when they do occur, while simultaneously streamlining costs as service permits, has been key to maintaining successful customer relationships.

“Our pharmaceutical customers are feeling crunches because they want to accelerate their drug development processes as well as try and control their costs,” says Holly Jerome, senior manager marketing communications, Covance Inc. “So they’re looking to find partners—central laboratories—that can help them guarantee their trials complete on time or ahead of time. This helps them get their new medical therapies to market sooner, and helps the patients as well.”

Aside from meeting the provisions of its pharmaceutical customers, as Jerome alludes, Covance is also serving the physicians who oversee clinical studies and the patients under their care. Because of this additional responsibility, time is a decisive factor. In terms of service and reliability, anything less than perfect is unacceptable, says Mitchell, because “service failures are tied to patients.”

“We have a zero-tolerance for failure, so we plan for it,” he adds. “This system was built assuming a package wasn’t going to make it to us today through the normal process and that we would have to expedite that shipment to our laboratory and ensure that it would be tested within the prescribed stability time.”

One of the challenges for Airborne is not only recognizing Covance’s rigorous requirements, but also understanding the needs of the physicians and their patients. Getting to know Covance’s customers provides Airborne with a perspective that is both educative and a source of motivation.

“We have worked very closely with Covance to learn as much as we can about its entire operation and industry,” says Eric DeWitt, national account manager, Airborne Express. “But we also need to know how our service affects the doctor and the patient. Since I’ve been working with Covance, I’ve visited doctor’s offices, and sat down with nurse practitioners and doctors conducting these studies. We really try to see a place where we can improve so we can make ourselves better. It all starts with the patient.”

On Trial

Being able to quickly and efficiently remedy problems when they occur is all the more important given the vulnerability of Covance’s shipments. The slightest delay, or change in temperature, can impact the outcome of a trial.

“A lot of studies that we do involve bulk shipments,” notes Jerome, “so it is absolutely critical that they get to us in a viable condition—that could be several months of work that investigator sites have been doing. If that shipment, which could include 500 to several thousand samples, is lost, there may be severe damage to a clinical trial. Often, those are one-time-only samples that cannot be recreated.”

To complicate matters, the sensitivity of many of Covance’s shipments—frequently test samples that include blood, urine, and other biological agents—require special handling. For packages that are susceptible to cold temperatures, for example, Covance and Airborne must take special precautions to ensure that shipments arrive at the testing facility in the proper condition.

“We bypass the local Indianapolis Airborne station on the inbound delivery from the Wilmington hub, our freight is loaded onto a dedicated Covance truck, then driven straight to our location. We even put heaters in the truck to prevent mass-freezing of ambient shipments,” says Mitchell.

Similar steps must be used for specimens that require freezing. “If something is shipped to us frozen, it must remain frozen in transit to our location,” he adds. “One of the things we will do is ship dry ice to the Airborne hub so delayed shipments can be re-iced before they are loaded onto one of our inbound trucks.” This ensures that those packages are not compromised by temperature fluctuation.

Having complete inbound visibility into Airborne’s system lets Covance identify services failures before they happen so it can make proper arrangements.

“If the airport is closed in Eugene, Oregon, due to fog, for example, and the aircraft is prohibited from departing, it will miss the night sort at the Wilmington hub,” says Mitchell. “There are two options: a flight can come in during the day and we can pull out freight from Airborne’s afternoon sort and have it delivered to our Indianapolis location later that day to facilitate testing and avoid waiting for it to come to us overnight.

“The other option would be that if it stayed in Eugene and departed the next evening, then went through the night sort on the second night, we would ship dry ice to the Airborne hub. Knowing that we have a service failure in progress, we can make it easier for Airborne to secure dry ice and prevent specimens from thawing due to a service delay,” says Mitchell.

For its part, Airborne has similarly accommodated Covance’s need for visibility by creating an electronic mailbox in its system where Covance can access service failure reports if a shipment has been delayed.

“If a package is held due to a hazmat or dangerous goods violation, meaning that the physician incorrectly filled out the paperwork, Airborne agreed to create a mailbox in their mail system for us,” says Mitchell. “If station management has to hold or bump one of the shipments, it reports that information to that mailbox. We can then call the shipper, explain why the shipment was bumped, and what it needs to do to ensure that we get the package back here with proper documentation.”

This is especially relevant when a service failure occurs outside Covance and Airborne’s realm of responsibility. Regardless of fault, the shipment must be moved.

“This collaborative effort is addressing a non-Covance or non-Airborne failure—rather a mistake by the shipper or investigator, our customer,” adds Mitchell. “The strength of our information exchange allows us to overcome this to prevent a loss of specimen that might impact a pharmaceutical study and patient.”

A White Box in a Brown Box World

Without a seamless understanding of each other’s business operations, preparing for the improbable would be virtually impossible.

“There is a high visibility of Covance shipments in our system,” says DeWitt. “Everyone from the person loading containers all the way up to management knows and is trained about Covance. If you go to any station across the United States and you mention the name, the managers and drivers know that Covance is trained differently than other Airborne shippers, based on certain procedures that have been put in place.”

Mitchell sees a similar level of understanding of Airborne’s operations on his end. “We try and have very high visibility in the Airborne system all the way down to the employee handbook. We work in a collaborative way to provide information about the company, boarding priority, the uniqueness of the type of shipments we send, and the different type of classifications,” he says.

Such intuitive collaboration also allows for greater preparation before a shipment even gets in the system. Covance, for example, meticulously packages its shipments in white boxes with iridescent lettering to differentiate them from others.

“We’re a ‘white box’ in a brown box world,” notes Mitchell. This discipline not only helps winnow out confusion that might occur within the system, but also takes some of the burden of responsibility off Airborne.

“One of the reasons this relationship has worked so well is that we do not leave things to chance in regards to the inbound process,” Mitchell notes. “We actually move our packaging systems to the physician site and pre-stage them before the protocol begins. In addition, we pre-print the paperwork for Airborne and on that paperwork we include a pre-marked routing code.”

Covance’s Central Laboratory has its own unique routing code in Airborne’s system. When a shipment is unloaded at the Wilmington hub, the package is scanned and automatically sorted to a truck destined for the Indianapolis facility. This averts any human error that might occur in the routing process.

“What I don’t have to worry about is a person writing a five-character alphanumeric routing code on a package that is difficult to read later,” notes Mitchell.

Creating an Audit Trail

But Covance doesn’t stop there. To further anticipate errors in the shipment process, Covance cross-references packages when they reach the Central Laboratory.

“We also look into our own system, just in case a package doesn’t get scanned on the dock,” says Mitchell. “We create an audit trail as a package gets to our building, scanning the courier’s bar code against a bar code that is assigned to these specimens that are coming back to us.

“We begin an audit trail at our back door as soon as the Airborne employee pulls the package from the container and puts a scan on it,” Mitchell says. “This way we can open the package, put our scan on it, and marry it to the tracking number from that airbill.

“When we identify these shipments before noon, it gives me at least a half day to identify packages that fail to make it to me and locate where they might be,” he adds. “Then I can look at my expedite options to ensure that they arrive here within testing stability. That’s the power of electronic reporting.”

Accommodating Covance’s shipping provisions has given Airborne a perspective of its own operations that enables it to continually raise the bar in terms of how it serves customers.

“We insist on checks and balances for ourselves to ensure that we provide Covance with the best service possible to its clients,” says DeWitt. “The demand on the type of shipment that Covance presents to Airborne is so outside the box that it increases our flexibility and allows us to be better at what we do.

“We have put special procedures in place for Covance to make sure that we have the packages delivered in a timely manner and that recovery mechanisms are in place. Our relationship with Covance has allowed us both to grow,” he adds.

Because Covance’s business is continually changing as it takes on new customers and develops new clinical trials, there is little room for complacency. “We’re always looking for better ways to do things than we did them yesterday, in terms of efficiency, cost containment, and operations,” notes DeWitt. “Covance’s business will change based on what it’s involved in, so that always keeps us on our toes.”

Very much a clinical trial in supply chain management and inbound logistics, Airborne and Covance’s relationship continues to evolve as they jointly experiment with new ideas, create new solutions, and bring these innovations to fruition.

“As we grow, the volume grows within the Airborne organization, because everything that comes into our Central Laboratory is driven by something that went out,” notes Mitchell.

But, despite the endless demands and increasing expectations that keep both companies looking for ways to improve their operations, when all is said and done, it boils down to one thing, says Mitchell. “If we have 1,500 packages inbound to our laboratory today, each one is an individual package to us. This is the premise that we build our relationship on and Airborne sees it the same way.”

Back to Basics—Mail

When Continental Airlines jets lift off from any of the 200 airports it serves, ACOM Solutions Inc. is present on board—not in the cabin or on the electronically tricked-out flight deck, but rather in the cavernous cargo hold, where tons of U.S. mail share space with every conceivable type of cargo.

The airlines are critical to the operations of the U.S. Postal Service (USPS), which has aggressively pursued the implementation of EDI communications with aviation business partners for several years to speed the two-way flow of shipping, manifest, and carrier information, as well as the flow of the mail itself.

The airline began working with USPS, its biggest cargo customer, four years ago to develop the means to exchange information electronically, according to Wally Mensing, senior technology analyst, Continental Airlines. The development work continues, as both trading partners expand the amount and kind of data they exchange. For the past year, ACOM’s EZConnect EDI/XML solution has formed the basis for much of Continental’s development work.

ACOM’s EZConnect EDI/XML is a complete SQL-based EDI system that connects applications in real time to build, import/export, and print trading partner data. EZConnect integrates directly with any ODBC-compliant database and is fully extendible, scalable, and flexible to fit any EDI system need. It supports all EDI and EDIFACT standards and is compatible with all VPNs, VANs, and proprietary networks. The solution includes translation and mapping software, a trading partner management tool, security module, and a documentation tool—with an SQL Server relational database for non-stored partner documents.

Until the EDI initiative began, all the information flow between the USPS and Continental followed a paper trail. In fact, paper copies remain the “official” documents when the postal service moves its mail, accompanying shipments to the airport.

Why the extensive EDI initiative? One word: efficiency. Exchanging information on cargo commitments and space availability ahead of the paperwork enables the Postal Service to optimize the scheduling of its shipments and at Continental’s end, enables allocation of personnel and equipment resources for greatest efficiency and effectiveness. A device used by the Postal Service computerizes information generated when the shipping labels are prepared. When enough mail is assembled for a shipment, an EDI message goes out.

“We receive 15,000 of these messages per day from the Postal Service, and we send USPS 60,000 to 80,000 EDI messages per day, with transmissions every 30 seconds,” Mensing says. “We provide flight schedules a week out, and in the interim, furnish a stream of constantly updated information about every flight—time changes, cancellations, insertions, and cargo space availability—to facilitate their own planning.

“USPS’s information tells us how much mail to expect, whether bulk shipments or containers, the type of mail—priority, first class, parcels, express, letters, or boxes,” he adds. “If they have information in place early enough, they even designate the flight they want the shipment to move on.”

Mensing purchased EZConnect and asked ACOM Professional Services to implement “Add a Message,” the Cardit message that conveys the cargo information electronically to Continental. Cardit is an EDIFACT document format developed by the Universal Postal Union that is similar in principle to the X12 document types used for domestic EDI. It is a versatile, internationally acceptable document format that communicates cargo routing, transfer, and destination information from the Postal Service to its carriers.

“ACOM said: ‘Tell us your data structure and how you want to populate it, give us some message samples, and we’ll get it going’,” Mensing says. “Two weeks later, it was ready to run. It’s powerful and easily handles the load.”

It Happens in an Instant

Initially, EZConnect deals only with incoming Cardit traffic, polling the USPS server every 10 minutes and relaying the collected data to the SQL Server database. Different applications then examine the data and pass it on instantaneously to the field operations sector that handles postal service cargo.

Continental’s own data will remain on the old system until the company changes the way the data streams come in from operations, at which time outgoing message traffic will also be handled by EZConnect.

Meanwhile, Mensing and his colleagues have mapped the data for international mail and are developing methods for providing the Postal Service with comprehensive reports from intermediate points. Mensing has also collected operations data on international shipments and has mapped the response portion of that process.

The EDI solution has proven to be immensely valuable in load planning—coordinating the passenger, cargo, and fuel factors with the personnel and equipment requirements. For example, Mensing says, if you have 8,000 pounds of bulk mail, it requires more people than if you have a container, which requires different handling equipment.

“If you can have the information before the shipment arrives at the airport, you can make the necessary arrangements ahead of time and get the job done faster and better,” he says. “Thirty minutes of lead time makes a vast amount of difference.

“The Postal Service is a tremendously important part of our cargo division operations, and they are such an immense organization that it is difficult for them to inaugurate changes, so we strive to lead the way as much as we can,” says Mensing.

With its power and flexibility, ACOM’s EZConnect makes that job easier.

Making the investment, maintaining relationships, and growing markets as best they can, it appears that most air carriers are taking today’s travails in stride. It’s just business as usual.