Light but strong

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Air cargo containers are more than just boxes shoved into aircraft hold: they are an important part of the whole business of flying goods around the world. They are produced by specialist manufacturers, leased by dedicated ULD suppliers and developed as the result of some pretty leading-edge technologies

Moving baggage and cargo, whether on the maindeck of a freighter or in the lower deck of a passenger aircraft, might not seem a glamorous part of the aviation industry but it is nonetheless a critical one.

As a result, perhaps, there is no shortage of companies involved in this aspect of the air freight business, ranging from container and pallet manufacturers to companies dedicated to sourcing and managing ULDs for airlines, and to firms supplying specialist equipment designed to carry sensitive cool-chain shipments such as pharmaceuticals.

In terms of the first category, numerous manufacturers of air freight containers are operating today but amongst the largest and most well-known are Zodiac Air Cargo Equipment (which has subsumed the well-known Driessen ULD manufacturer) and Norway’s Nordisk Aviation Products.

Zodiac Air Cargo Equipment, part of the French conglomerate Zodiac Aerospace, offers a wide range of lower-deck containers and pallets that it markets worldwide to commercial airlines. According to Jasper van Gelder, sales & marketing director EMEA & Americas, the Zodiac philosophy is based on offering products which are as light as possible but that are made in such a way that impact neither their structural integrity nor ease of maintenance and retrofit.

The lightweight panel sheets that make up Zodiac’s ULDs provide for better impact resistance than aluminium sheets yet they are sufficiently stiff to ensure that the container maintains its contour when loaded, he observes. “And last but not least, at a decent cost,” van Gelder insists.

Driessen Aerospace Group, a well-known name in the field of air cargo containers, was taken over by Zodiac Aerospace in 2008 and, shortly after, this part of the Zodiac business empire moved to a new headquarters in the Netherlands.

Nordisk represents another of the big ULD manufacturers and a key player in the container market. Its president, Frode Ljoterud, believes that his company offers the widest range of containers and pallets of any manufacturer and – with more than 650,000 ULDs sold in the global aviation market – Nordisk products are used by almost every airline around the world operating wide-bodied aircraft. In addition to passenger and freighter airlines, the company’s customers include forwarders, integrators and pooling companies, he notes.

Having been in the business for 40 years, Nordisk has plenty of experience. Most notable perhaps, says Ljoterud, is its history of working with aluminium alloys and its expertise in producing light but rugged containers. It has its own test facilities: “We know that every product that leaves here has been thoroughly tested and qualified,” he points out.

Recent years have undoubtedly been difficult for the air

cargo business; the decline in demand for air freight services had an unwanted impact on demand for containers (though not pallets).

Nordisk’s Ljoterud admits that times became challenging for the Norwegian company, as orders for its products slumped during the virtually global economic downturn. “We had to battle in the face of reduced demand,” he confesses, think smarter and operate on an even leaner basis, but the company’s worldwide footprint and the fact that it was not dependent upon the shattered air cargo industry and hard-pressed freighter operators – the majority of its business comes from passenger carriers – meant that it was able to push through the lean years.

Moreover, demand has already begun to recover – as illustrated by the announcement in May that LATAM Airlines Group has purchased 3,517 Nordisk Ultralite containers and that these will replace all those in use on LATAM’s freight operations (including LAN Cargo’s, TAM Cargo’s and its various other affiliates’ cargo businesses).

But, for others, the market for pallets appears to have held up pretty well right throughout the industry downturn. In fact, during 2010 and 2011 there was actually what van Gelder perceives to have been “a real revival” in demand for pallets that were not purchased during the economic crisis in 2009. Plus, he adds: “The passenger market is showing positive figures and here we notice a rise in container sales.”

Minimising weight, maximising strength

The holy grail for any air cargo container manufacturer is a unit with minimal weight yet one that is still both rugged and inexpensive. And improvements in ULD designs over the years have brought significant reductions in unit weights. Indeed, says van Gelder: “If you look to the ULD industry’s weight development, you notice a gradual reduction of weight since the seventies, when containers were made of aluminium.“In the late nineties, hybrid/composite and honeycomb panels entered the market and this resulted in further weight reductions, especially in the AKE container. This development resulted in weight reductions from 95kg to less than 60kg, and the question is whether the market will ask for further reduction or for a stabilisation in weight and the security of a certain strength (of ULD) in the coming years.”

Certainly, he remarks: “Zodiac will optimize the use of lightweight materials in order to continue to offer competitive lightweight products to our customers and to ensure further growth in our business.”

For Nordisk, the degree to which it can help airlines reduce operational costs through the use of innovative lightweight containers is not only important, it is vital to its business model and has been an integral part of its offering for decades. Its history of working with aluminium alloys and composite materials has allowed it to specialise in low-weight containers. As a result, Ljoterud says, it now offers the lowest weight production-built container, at just 55kg. Kevlar panels are employed to minimise weight while the container remains sturdy and robust.

Of course, in using this sort of material there is a cost implication, but such is the demand for lightweight containers that has been driven both by the high fuel costs being felt by carriers and the growing influence of the environmental lobby to minimise the aviation industry’s fuel burn, that there may well be a very promising future for such technology.

ULD pooling

The move towards lighter, yet still robust, containers has been a major trend in this segment of the aviation industry. Another comparatively new development has been the move by many airlines towards outsourcing ULD ownership and management functions. ULD pooling and management are becoming ever more common amongst the world’s big carriers, as airlines seek to concentrate on their core businesses of flying passengers and/or cargo while minimising their variable costs.

Two players stand out in this business: Switzerland-headquartered CHEP Aerospace Solutions and Germany-based Jettainer.

CHEP claims to be the biggest container pooling company in the world. Carriers for which it is asset pooling include AirAsia, Brussels Airlines, Cargolux, Gulf Air, Monarch, SAS, Thomson and the recently signed-up Air Canada – the latter a big win for CHEP, the deal secured just before Christmas last year.

In its standard model, CHEP will buy an airline’s ULD fleet, integrate the assets into its pool of more than 55,000 pallets and containers, and then manage the inventory on behalf of the carrier for an all-inclusive monthly fee. Such a contract will typically last for five or more years (although CHEP also offers a short-term container leasing option for customers looking for more flexibility).

As well as taking all the tasks associated with ULD management out of the hands of the carrier, CHEP will also handle the repair and maintenance of containers and pallets at one of its many repair stations around the world – it has 50 of them, half of which are owned, the other half sub-contracted. This network of stations not only means containers and pallets can be quickly brought back into the working fleet, but also that fewer empty or damaged ULDs are flying around the world at both a financial and environmental cost.

American Airlines recently signed up to CHEP’s ULD repair offering, a not insignificant development for the company. Other customers using this aspect of the CHEP service portfolio – and there are more than 50 airlines on this list – include Air New Zealand, Qatar Airways, Qantas and United.

The big difference with the asset pooling option offered by CHEP – as opposed to an airline simply outsourcing its own ULD fleet’s management – lies in the size of the ULD stock that then becomes available to the carrier. CHEP has large numbers of containers and pallets stocked and ready for use at numerous gateways, all set for employment by any one of its customer airlines.

Again, this also saves on empty ULDs being flown around the world by individual airlines when the need for a container or pallet arises at any given gateway where there might not be sufficient units of a carrier’s own stock in situ.

Jettainer, based in Raunheim, Germany, is another alternative for airlines seeking to outsource their ULD management. A Lufthansa subsidiary, it currently manages an overall fleet of more than 65,000 ULDs for 13 customers and is active at over 350 of the world’s airports. The company points out that it “covers the complete value chain of ULD management”, including the purchasing of ULDs, repair and management, IT and asset financing.

Jettainer has developed its portfolio away from simply handling ULDs for its parent carrier, just as it has diversified its service offerings. In 2011 it launched JettLease, a short-term ULD lease option, while other recent developments have included the delivery of collapsible horse stall containers to Lufthansa Cargo.

Market evolution

While the ULD manufacturers have concentrated much of their efforts on producing lightweight containers, so the pooling service providers have also had to take notice of this significant trend in developments.

Thus, for example, CHEP offers carriers access to two different ULD fleets – its regular aluminium ULD inventory and, separately, its lightweight containers. While the regular ULD fleet remains slightly larger (60:40 is perhaps the current ratio of inventory levels, the president of CHEP Aerospace Solutions, Ludwig Bertsch, estimates), the trend towards lighter containers in the industry and therefore in CHEP’s comparative fleet sizes has been marked.

“The future is lightweight, 65kg or less,” he declares. The big ULD manufacturers generally have “a good product”, Bertsch argues. Nordisk’s ultra-lightweight container based on Kevlar panels described above is particularly interesting. However, it is rather expensive, he points out, and the cost of repairs might also be a stumbling block for some purchasers.

Nevertheless, for Bertsch, the future is clearly in lighter containers. Within a decade, most of the old, aluminium style ULDs will have gone, he believes.

Jettainer has also developed its lightweight ULD offering. It has partnered with Abu Dhabi-based carrier Etihad Airways to launch a new lightweight, double-width ULD that is known as ALF. Developed by Zodiac and manufactured from a range of composite materials, the container weighs just 130kg, more than 30 percent lighter than traditional double-width ULDs. Etihad is to take delivery of 250 ALFs just this year.

According to Jettainer managing director Alexander Pluemacher: “We will continue to work with partners such as Etihad Airways and Zodiac Aerospace Air Cargo Equipment in order to further improve our products. We aim for exploring additional weight-saving opportunities which will enable us to enrich our customers’ ULD fleets by even lighter units in the future.”

Future expansion

CHEP is also looking to grow further and to expand its offering. Bertsch notes that the company expects to expand by another 30 percent or so this year. Growth has been rapid since parent company Brambles brought together container pooling services provider Unitpool with JMI Aerospace, a maintenance and repair services provider in the Australasia and Asia Pacific region, and Driessen Services, which brought to the table an extensive network of maintenance, repair and overhaul service centres in the US and Europe, in order to launch CHEP Aerospace Solutions.

Since that launch in late 2011 (Unitpool had actually been acquired a year earlier, JMI and Driessen Services in 2011), expansion has continued both organically, with new carriers added to its pooling client list (CHEP now offers asset pooling at more than 300 airports around the world), and inorganically. Additional acquisitions of a number of maintenance and repair companies around the world are planned, along with the opening of new repair stations in Europe, the USA and the Middle East.

Further growth may not continue at the same exponential rate, Bertsch confirms, the company now considering it more important to guarantee successful delivery on promises made to its growing customer base. But there will be ongoing careful, phased expansion.

“The concept (of ULD pooling) has been proved to the market and it has been shown to be very popular,” he insists. The economies of scale that can benefit a ULD pooling services provider are significant, Bertsch believes, and, with CHEP’s additional, unique repair option, it has a varied portfolio of services on offer.

Keeping cool

Envirotainer, the Sweden-based company that has concentrated its efforts on providing active temperature-controlled ULDs, is another player in the air cargo container business looking to achieve steady growth. Very much the market leader in the area of actively temperature-controlled containers, Envirotainer CEO Gustaf Ljunggren is very keen that the company maintains that leadership while not succumbing to complacency and ‘fat cat’ syndrome.

Key to Envirotainer’s success in cool-chain container leasing has been offering “very attractive solutions”, he says, not just in terms of the containers themselves but also in the surrounding support service – before, during and after shipment.

Close collaboration with all its customers is vital, Ljunggren informs. Invoices may be sent mainly to forwarders and airlines but the wishes of the end-user, the pharmaceutical shippers, are also at the forefront of his mind. “We really need to understand all their needs and make sure that we all benefit by working together,” he insists.

Envirotainer’s global presence is vital not only to maintaining those close relationships but also ensuring that the client is never far from an active container solution. Now with about 50 stations around the world, the company is expanding rapidly, establishing a footprint wherever it sees customer demand. Latin America is the latest focus for growth, although the key pharma trade lanes into Europe and the US remain fundamental for most of its business.

Expansion is evident in the financials as well as in geographical presence. Last year, revenue rose by 25 percent. “We are growing faster than the market, so we are definitely doing things right,” Ljunggren observes. He wants to continue to grow the business, but is not willing to risk the good name of the Envirotainer brand by expanding too quickly. Thus, for example, there is no thinking to branch into the larger but less specialised passive temperature-controlled sector of the air freight container market.

“Envirotainer has a premium brand and a premium solution, and we are shipping premium products,” he advises. Indeed, it is hard to argue. Between US$50-60 billion worth of goods were shipped in the firm’s containers last year. Close to 40,000 shipments were made in approximately 4,000 Envirotainer units.

But further growth is certainly envisaged, not least in the company’s container inventory. Thus, for example, in June it was announced that Envirotainer’s 1,000th RKN e1 heating and cooling unit had rolled off the production line, and that another 250 would be added during the remainder of 2013.

Plus, alongside the planned geographical expansion, technological improvements are expected to be brought in, such as advanced telematics that will allow an Envirotainer container to send data regarding the condition of its pharmaceutical contents back to a company representative in real-time and as long as the shipment is on the ground; long-term, the hope is that it may also be able to do this while the container is in the air, although the challenge of avoiding any possible interference with aircraft systems when transmitting while airborne may take some time yet to be fully overcome.

Cost is also a priority. Pharma shippers are becoming more and more price-conscious, and Ljunggren is keen to cut any unnecessary costs from the cool chain. Thus, the future might see development of lighter weight Envirotainer units.

Finally, the provision of support to customers away from the actually leasing of containers will continue to be developed, he says. Education and training in the use of the units and in cool-chain shipping is crucial, Ljunggren believes, and last year the company trained over 5,000 of its customers. Gaining Qualified Envirotainer Provider (QEP) status as a result of training and education provided by the company has set a standard in this segment of the air cargo business, he points out.

With pharma-related regulations growing ever more stringent, the need for such training is only going to increase, and Ljunggren fully expects to add more training sessions in coming months.

CHEP and Envirotainer ink deal

In July came the announcement that Envirotainer and CHEP Aerospace Solutions had signed a deal according to which CHEP will ensure that Envirotainer’s maintenance, repair and handling is performed consistently to a high quality right around the world.

CHEP’s repair management system, ACTIS, will be employed at the latter’s stations, and Envirotainer CEO Ljunggren notes that the move represents “another solid step in our journey to build on our strong foundation in active cold chain services and to further expand our capabilities. It takes our global service network into a new era.”

Envirotainer simultaneously announced that it will be establishing four new competence centres in Amsterdam, Atlanta, Singapore and Vienna, further expanding its global footprint.

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