Justdoinmyjob

Everyone is talking about how DAL wants to dump the freighters, then this comes out. I think it changes the argument about the freighter a bit. With the new coolers in ATL, I wouldn't be suprised to find the -200s flying through the Worldport.


Delta looking to expand cargo business | ajc.com

Delta looking to expand cargo business

By KELLY YAMANOUCHI
The Atlanta Journal-Constitution
Published on: 07/03/08
Although the airline industry is cutting back amid record fuel costs, Delta Air Lines is investing in an area that had been easy to neglect: cargo.
Atlanta-based Delta hopes to grow its cargo business to $600 million in revenue this year, from $482 million last year.

Among the investments the airline has made is a $2 million set of four giant coolers and infrastructure in Atlanta to store lucrative perishable shipments such as fresh produce and pharmaceuticals. The coolers are to be in use by July 15.
Although cargo is a behind-the-scenes business for an airline, it can make the difference between a profitable flight and an unprofitable one, particularly for international flights. And as Delta grows its share of international flights, cargo rises in importance.
For example, Delta's Atlanta-Shanghai flight launched March 30 brought in $6 million in cargo revenue by the end of June, said Neel Shah, vice president of Delta's cargo division. That flight moves cargo from China that is often transferred in Atlanta to Brazil, including electronic components manufactured in China, assembled in Brazil, then sold in the United States, Shah said.
Cargo was one of the areas that Delta cut back during earlier financial trouble, including its Chapter 11 bankruptcy from September 2005 until April 2007.
"Delta has never had a major position in the air freight business. It's always been an after-product, or an after-thought," said Ned Laird at Seattle-based Air Cargo Management Group. But with more international flights, "it becomes more important to have an air freight business," Laird said.
When Richard Anderson took the helm at Delta last year, cargo was one of the areas he directed more attention toward.
The company hired Shah, who was vice president of sales and marketing for cargo at United Airlines, which has a stronger reputation than Delta in cargo.
Cargo had been largely ignored by Delta, and "really atrophied during the bankruptcy," Shah said. "It just really declined to the point where customers were taking enormous steps to avoid taking freight out of Atlanta (on Delta). I know this because I was a competitor."
But "I was convinced about the company's commitment to the cargo business," he said.
Still, Shah faces an uphill climb if he wants to make Delta a leader in cargo.
"You can't turn the Titanic on a dime," he said.
Delta's cargo operation has about 775 employees, including about 300 in Atlanta. Shah brought in new management in cargo and is overseeing changes like cutting out redundant steps and bringing in a $4 million revenue management system.
The cargo division also has added other technological improvements, such as scanning technology. It was added to Atlanta in May, and the company hopes to roll it out to other hubs by the end of this year.
Delta's proposed merger with Northwest Airlines, a carrier with a stronger reputation in cargo, could also significantly improve Delta's position in the cargo business. The proposed merger with Northwest would combine Northwest's strength in Asia with Delta's strength in Europe.
"It's a network that none of our customers can ignore," Shah said.
Whether Delta becomes a major player in the international freight business will depend on the decisions it makes in the merger and on its investments in cargo, including what to do with Northwest's fleet of Boeing 747 freighters, Laird said.
Delta needs to improve its standards of service, Laird said. "Their freight service does not match world standards set by the Europeans and the Asians," he said.
And there are serious challenges affecting the air cargo industry across the board.
"The air freight and express industry is really struggling with current fuel prices and in the international marketplace, a lot of freight is being diverted to ocean transportation because of it," Laird said.
The new coolers in Atlanta are a key part of Delta's plan to target more valuable cargo, such as temperature-sensitive pharmaceuticals. In a weak economy, companies may move less valuable shipments from aircraft to ships, but "what you'll never find on a ship is pharmaceuticals," Shah said.
Delta has been using a contracted facility, the Atlanta Perishables Complex, to store perishables. But Shah said handling of perishables will be more dependable when Delta begins using its own coolers in Atlanta to store temperature-sensitive cargo.
Chris Connell, president of Commodity Forwarders Inc. in Los Angeles, said his company hopes to increase tonnage it moves through Atlanta in the next six to 18 months because of Delta's new system for handling perishables.
Delta's move is "a solid step in the right direction to improve the logistical cool chain for air freight," Connell said, as the airline adds "layers and layers back into infrastructure from years of hard time in bankruptcy."

johnso29

Well thought out, accurate post.

Superpilot92

I Agree! Pilots typically are pretty educated and know how to make educated decisions.

Very true

tomgoodman

Carl,

Ah, the old "rational argument" technique! Hasn't been used for decades, because it didn't work in seniority disputes, but might be worth a fresh try.

Carl Spackler

The old rational argument technique...That's the oldest trick in the book!

Carl

newKnow

Great post. I appreciate the fact that you are leaning towards voting yes. I am too, even though I would like to see stronger scope and maybe the recaptring of 70+ seat RJ flying.

But, I wonder how the "No Voters" can explain how voting "no" will change their "unknowns." Unless you are on the negotiating/merger committee, they will not know how the SLI will go. This is the world we live in, which is how mergers go. No one knows anything until its done. Thier attitude reminds me of a five year old who wants to open or take a peak at their Christmas present before the 25th.

If "no voters" want to vote the thing down for, length of K, scope, pay, furlough protection, or something of the sorts, that, seems to me to be reasonable. But to jeapordize the agreeemnt because of wanting to know the unknowns first, seems to be kind of childish to me. Sit tight like the rest of us and see what happens.

I wish us all luck in the SLI and that somehow was all get screwed (that way we will know it was done fair).

New K Now

Speedbird34

I am not in the habit of playing Peekaboo with my career.

I love change I can control, but this deal could get forced on me by my fellow pilots and investors.

If that happens then it is our system and I will live with it. But I am not going to help the process along with so many unknowns relating to my future.

It was possible to get a JPWA. Lets also get a good picture of how our future life will look in relation to the SLI, Seat positions, Fences etc.

slinky

On the cargo front, it would be nice if we took the goods and bads of the NW cargo experience and turned that into a profitable side business for the new airline. I heard Steve Dickson, the Senior VP of Flight OPS, say that we are making a ton of money in the belly of the 777LR on the china run. Full bellies of profitable cargo, maybe even some older 7er's cut to cargo birds would be a nice buffer against totally crazy fuel.

Slinky

This may even keep or build some jobs for us.....ok maybe...

slinky

newKnow

I think that's my point. How do you plan on getting this "good picture?"

Wasatch Phantom

I think Richard Anderson and his team deserve a lot of credit.

Roughly ten years ago Delta was lead by Leo Mullin and his gang of thieves; Warren Jensen (who left for more money at Amazon.com and replaced by Michelle (What's in it for me")Burns and Fred (I love RJ'S) Reid. We also had Mike Bell running revenue management straight into the ground.

Now, RA and company are trying to actually lead the company with a focus on the long term. How many times have we heard "There's no money in cargo"? They're expanding and trying to increase revenue; what a concept!