FT082114

Diane Schoeneich

Frankfurt Am Main continues as number one airport both in terms of passenger and cargo traffic in Germany and is also the second busiest airport in Europe.
The slogan “Managed by FRAPORT” already suggests that FRA prizes itself for its experience in running airports and airport-related business.
The present, however, is not without difficulties.

Costs Rising

     For decades the “Flughafen Frankfurt – Main AG,” as it was then called, carried out all functions by themselves and had a de-facto monopoly on handling (only other self handlers permitted by law were German flag carrier Lufthansa and, as a remnant from the post-war Allied Occupation Statute, Pan Am).
     This changed when the process of European integration moved ahead in the late 1990s.
     To be competitive in this new environment, FRAPORT decided to outsource a number of activities—such as cargo, de-icing, and the like—to 100 percent subsidiaries.
     Subsequently, all cargo-related activities were transferred to FCS, FRAPORT Cargo Services GmbH.
     So we wonder how has the FCS scheme worked out?
     FlyingTypers spoke to FCS customers and most commented that while FCS may not be the least costly option, it’s the one delivering a good service. Opinions vary between “reasonable” and “superb,” but indeed there was uniform consent between operator staff that FCS stronghold is their experienced and well-trained workforce that can “get almost anything done.”
     Since competition airside is limited—only one more company offers cargo loading and unloading in FRA and restricts itself to passenger aircraft; even Lufthansa Cargo contracts FRAPORTs ramp services on their home base—the naturally shorter communication channels between FRAPORT and their 100 percent subsidiary FCS make for some efficiency gains.
     Still, price is an important criterion when choosing handling partners, and adapting to the market demands has proven particularly challenging for FCS.
     FCS points out that the margins in the handling business are minuscule and require huge investments in infrastructure. It’s especially the infrastructure provided for by FCS and FRAPORT that attracts the large cargo operators.

Issues Incoming

     Another issue is the payment—invoices (which often amount to several 100K Euros) are often paid with considerable delay or sometimes even rejected because of minimal errors (such as charging FCS-supplied tie down material while the operator’s own supplies were actually used), a measure Ms. Schoeneich called “unfair.”
     FCS has also lost—and written off—a “six-figured Euro amount” on handling charges owed by Air Cargo Germany, which went bust, and left everyone holding the bag.
     It is noteworthy here that talks are underway with IATA so as to enable the handlers to collect their charges from both forwarders and operators by means of the IATA Clearinghouse in the future, something which would simplify billing and guarantee timely payment in most cases.

Rock & A Hard Place

     FCS finds itself between a rock and a hard place in the recent move of FRAPORT to collect airport concessionary charges from all users of the airport premises, a move which has met stiff opposition, especially from the forwarder community.
     Whilst the way the concessionary fees were communicated and the actual amount in question may be debatable, it also seems that the huge infrastructure investments somehow must be paid for, and it stands to reason that such payment should not be levied on airline customers alone.
     Elsewhere FRA is transforming on an almost daily basis with new buildings, roads, and gates, with significant movement also toward change behind the scenes.
     Take the “Cargo Community Project,” which aims at creating network synergies between all operators, authorities, handlers, and forwarders at or near FRA. “Increased exchange of information will cut down costs for data input on various stages, reduce truck waiting and clearance times (something subject to criticism for the last 30 years), smoothen the handling by increased predictability of handling peaks and lows as well as strengthen security,” says Ms. Schoeneich.
     With competitors such as LUG and Celebi onboard there should be sizable benefits for all stakeholders and a major contribution to a further improvement of handling quality. Since the largest chunk in air cargo transit time is made up not by the actual air transport time, but by handling, clearance, and transport to and from the departure and arrival airports, this indeed has potential to become a major improvement.

   Now, some time after FRAPORT allowed Fraport Cargo Services (FCS) to become a separate unit, some positives and negatives are discussed with FCS and their customers.
   There are issues, such as collecting airport concessionary charges and what to do when stuck with a whopper of unpaid, never-to-be-realized accounts receivables . . . like from an airline gone belly-up, called Air Cargo Germany.
   How important is it to take the lead towards driving more operations transparency between stakeholders doing business at the airport?

SCOPE & Partnerships Building

FCS and FRAPORT have partnered with Hermes Logistics Technologies to create a state-of-the-art software solution that integrates the present and future needs of cargo handlers. Despite some teething issues in 2005 to 2006, SCOPE, as the system is called, has been proven highly effective and is a major contributor for efficiency gains and handling quality.
The Dakosy “ZAPP-AIR” MAWB project, in which forwarders such as DHL, K & N, and Panalpina are participating, is another step towards a true e-freight environment.

Moving Forward

     It’s safe to say: FCS is moving ahead, despite—or maybe even because of—the multitude of challenges in a difficult environment.
     While traditional industry and services in the Rhein-Main area are not doing well—Opel, the GM-subsidiary German car manufacturer producing in nearby Ruesselsheim has for years been on the verge of bankruptcy, and banking jobs in “Bankfurt,” as Frankfurt was traditionally called, are also not what they used to be, state-rescued Commerzbank just having shed in excess of 2,500 jobs—FRA has in fact become Germany’s biggest job machine, with 75,000 jobs directly another 45,000 indirectly depending on FRA airport—and not just in close vicinity of the airport.
     Nevertheless, Germany seems to be a country of NIMBYs (Not-In-My-Backyard): Any expansion of the airport is challenged in the courts, crowned by the Leipzig Administrative Courts decision to impose a night curfew on FRA; and Blockupy protests against the “noise terror” are frequent on the airport premises and even the terminal, since these are considered “public” under German law.
     While German courts have ruled that children are no longer a source of “noise” (since their joyful cheers are but natural), almost any kind of infrastructure is challenged in the courts these days.
     But life goes on and nobody thinks the worse of FRAPORT or FCS. Certainly there is no trace of the mixed sentiments of sadness and laughter generated by what is tagged as the greatest boondoggle in history, the airport called BBI, just slightly east of FRA.
     But that’s another story.
Jens

Vol. 13 No. 71	Thursday August 21, 2014

If You Missed Any Of The Previous 3 Issues Of FlyingTypers Access complete issue by clicking on issue icon or Access specific articles by clicking on article title

If You Missed Any Of The Previous 3 Issues Of FlyingTypers
Access complete issue by clicking on issue icon or
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