In late May we wrote of the enduring friendships
formed by people in transportation that outlast companies, careers, and
in the case of Ram Menen and Des Vertannes, still going strong with expansive
thinking and on point after 40 years.
We asked the gentlemen about some current
issues in cargo.
Here Ram Menen opens up on a variety of
subjects.
Who is Ram Menen?
Ram and his team built Emirates SkyCargo
from the ground up; from a couple of leased in aircraft in 1986 to one
of the world’s mightiest air fleets and a top market share, when
Ram retired in 2014. Mr. Menen is also the visionary industry leader that
reenergized TIACA when Dubai hosted TIACA’s Air Cargo Forum in 1996.
FT:
Best definition of Sustainability you might share?
Ram: Sustainability
has become a buzz word that people are using all the time, sometimes with
no understanding of reality. The rush to conserve resources long term
has got to be the objective, however, I find some of the targets set are
not really achievable, e.g. the move towards SAF. The challenge is that
there simply isn’t enough production to cater to the demand and
is a lot more expensive than the current fossil fuel. Can an airline sustain
such expenses and still be competitive and survive ? I don’t think
so . . . what is happening at the moment is more PR-generated,
not reflecting the reality. Same goes with Hydrogen cells and electric
engines. Still a lot of R&D has to go into creating SAF as affordable
fuel and I would say targeting 2035 to 2040 would be a more appropriate
goal.
FT:
Moving ahead, Emotional decisions in Business versus
Process Mining, or is there room for both, and if so in what measure?
Ram: Pure
emotional decsions can be detrimental to business process. Emotions can
make you subjective, however in business, objectivity has to rule. To
have a great team all around, a mix of subjectivity and process/data mining
is very important to create the basis for objective decision making. You
have to add a touch of subjectivity in the process to keep the team together.
In short, subjectivity is human and allows for good human interaction
but when it comes to decision making, objectivity should be the prime
criteria.
FT:
What can be improved in 2022?
Ram: Improvement
is a continuous process. 2002 sees the world healing and coming out of
a world shut down. Though it has had negative effects on life and trade,
it has also had a lot of positives. It has transformed human behaviour.
More people are now used to buying anything and everything online. It
has accelerated the growth of e-commerce and people, and companies have
realized that you don’t have to be in an office envioronment all
the time for a company to function. Working from
home or working remotely is equally effective in most cases. It has also
proven to be very productive and has also helped in creating a work/life
balance. Working within a hybrid model can be very beneficial for companies,
which can shed expensive real estate and save on costs. Supply chain operations
have been badly disrupted and folks have been working on patch works to
accommodate capacity constraints as well as shutdowns of production.
We will need to be vigilant to work on adapting
the original supply chain management aspects by incorporating the new
lessons learned, thus improving the old processes. In the air cargo industry,
digitization has to be a very high priority.
FT:
What if air cargo keeps things the same and does not
do anything?
Ram: Those
who don’t change or make the changes, are likely to be extinct in
the future. Digitization is a key element in today’s transactions
and will be the norm going forward. Digitization also facilitates active
implemenation of artificial intelligence which can help make the physical,
as well as, decision making processes more efficient resulting in improved
cost efficiency. Those who don’t change will carry the burden and
drown in legacy costs rendering them noncompetitive in the market.
FT:
What did you want air cargo, airlines, forwarders,
other cargo resources and truckers to know about that they may be missing
?
Ram: The
demand created by the pandemic and the resultant lack of available lack
of capacity has, in the short term, allowed yields to improve. It was
long over due for the airlines. However, greed/opportunistic activities
have raised the cargo rates to an all-time high and bred arrogance. This,
in the long term is not sustainable as it contributes to the rise in inflation
and at some stage, the market will not be able to afford the inflated
cost of logistics and the demand will wane. And as the capapcity slowly
comes back, we will all sink to pre-pandemic era levels, which will be
detrimental to the airline air cargo industry in the longer term. It is
in the industry’s interest that trade volumes continue to grow.
FT:
What have you learned in retirement you wish you knew
during your career?
Ram: I
guess, the biggest lesson has been that there is a life out there that
I knew nothing about. Having said that, there wasn’t any other way
we could have accomplished what we did. Being out of the game, one gets
a better overall perspective of the industry as one is able to see all
aspects of the game . . . it is like sitting in a gallery seat and being
able to see the entire game rather than what is immediately around you
while on the job.
FT:
Proudest moments during COVID? Most worrisome? How
has COVID changed air cargo?
Ram: The
proudest moments during Covid was how the air cargo industry came into
its own and became the lifeline for survival, reacting with great speed
to keep the world connected. They helped bring in more capacity by deploying
Preighters. Air cargo kept a lot of airlines alive when the pax business
was shut down and helped with the airline’s recovery process. What
was worrisome is what the cost of logistics was doing to the end product
and the consumer. The importance of aircargo to any airline operation
was very obvious and has been the subject of discussion in many airline
Boardrooms. Pax airlines who have treated air cargo as marginal business
are now more focused on developing their cargo business. Covid has given
a boost to the airline cargo industry, which, hopefully will result in
increased available capacity for air cargo to grow.
FT:
If you could have your career again what would you
do differently?
Ram: If
I had to start all over again, I don’t think I would do anything
any differently. What we did was build a strong foundation and platform
for the air cargo industry to grow without any constrains. It was/is an
evolutionary process.
FT:
As you look at the global market and consider options,
what is exciting?
Ram: The
excitment comes from the evolutionary/revolutionary changes taking place
in technology that allow us to manage logistics and transportation more
efficiently. The move to create more independence from reliance on China
for manufacturing activities; new markets in development; changes to ecommerce;
and bricks and mortar buying creating more demand for air cargo .
. . all of these are very exciting and challenging shifts.
FT:
What about Russia?
Ram: Russia’s
senseless invasion of Ukraine will change the dynamics of the market place.
Depending on how long this war goes on, the world could be thrown into
a massive recession. It has basically divided the world. Depending on
what happens/how long this war will continue, whether the war spills over
to other countries/teritories, we could in the long term impair trade
and commerce. At this stage it is very difficult to predict what the outcome
is likely to be.
FT:
Is One Record the totem for which IATA decided to ditch
its IATA FIATA program? Was the entire IATA FIATA negotiation just a straddle
strategy?
Ram: The
One Record initiative actually goes to facilitate improved communication
and brings better efficiency in the transactional process. I don’t
think it had anything to do with the breakdown in communication between
IATA and FIATA.
FT:
Regarding their negotiating power with the airlines,
many forwarders say they are worse off today than they were ten years
ago, is this correct?
Ram: Of
course at this stage, when available capacity is very limited, their negotiating
power is very limited and the suppliers, in this case the carriers, call
the shot. Then again, the last two years and the next couple of years
cannot be taken as the norm. This is an anomaly right now and cannot be
used to determine long term trends. Once there is sufficient capacity
in the market and supply and demand start getting back to normal cycles,
freight forwarders will be able to negotiate better terms.
FT:
Why are U.S. forwarders different from the rest of
the world, why have they not had any interest in joining forces in FIATA?
If forwarders were united globally, could this have a different significance
for IATA?
Ram:
the U.S market in itself is such a huge market, a world of its own, that
forwarders tend to focus more internally than externally. They have their
own associations that deal with their unique affairs. Even IATA has its
own sister association CNS that only deals with the U.S. market. They
are in a cocoon of their own. I don’t think their coming into FIATA
would make much of a difference.
FT:
Airlines have suffered during the pandemic, and IATA
was not very vocal, appearing to be at a crossroads. Discussing health
measures with authorities, in particular with the WHO, was not always
as straightforward as IATA’s mission statement boldly declares.
What is missing in IATA for it to establish itself as the reference model
in a global emergency?
Ram: IATA
Cargo seems to have lost the ball a bit. Their focus has been in trying
to deal with governments in opening of borders rather than focusing on
world trade, which to be honest, was very robust and grew to normal volumes
very quickly. Looking in from the outside, I see them focusing more on
operational aspects, rather than facilitating commercial/trade related
activities. I hope they can maintain their relevance as we go into the
future.
FT:
With few exceptions, the balance of power in the market
between traditional airlines, who are typical IATA members, and other
operators has changed substantially in recent years and is still changing.
Is this conversion reflecting the attitude of the traditional airlines
or IATA’s deficiencies?
Ram: Very
relevant point. Today the landscape of operators is changing, there are
the traditional airline, integrators, e-commerce operators, LCC (low cost
operators) and shipping lines who are also adding air to their portfolio.
Traditional operators have been the slowest to change. Barring
a few, especially the passenger airlines have not really kept pace with
the changing envioronment. Folks like Amazon CGA-CGM are going to eventually
force the changes. They are small in numbers at the moment and the traditional
airlines still tend to dominate the air cargo operations, so they aren’t
predisposed to change their attitude.
FT:
For many years, airlines publicized their services
with an aura of wealth, consumption, luxury and even a lack of consideration.
Has the time come for operating with consciousness, with total respect
of society and environment, or are we carelessly flying into the abyss?
What can be done to show the way?
Ram: I
don’t think it is fair to say that the airlines have not been operating
with conciousness or with total respect for the society and environment.
As I had mentioned earlier, they have been singled out as polluters and
then burdened with various kinds of taxations, eroding their margins.
They tend to operate in an extremely regulated and competitive market
where survival is a challenge. From an environmental and sustainibility
view, they have come a long way and are continuing to do their best within
the cost constraints they have to exist in. You just have to look at engine
technology, which continues to improve in fuel efficiencies. What can
help further improvements is for the governments to invest a bit of the
tax money they collect into avaiation-related infrastructure.
The development of more cost-effective unmanned
commercial freighters like Natilus will bring in further efficiencies
and contribute better to sustainability.
GDA |