In the first installment of our senior executive interview series, Greg Schwendinger, president of American Airlines Cargo, shares insights into how the cargo carrier is leveraging the e-commerce surge and investing in digital innovation to boost operational efficiency and elevate the customer experience.
How are global economic conditions affecting the air cargo industry, and what implications does this have for American Airlines Cargo?
Economically, we are seeing signs of more positive trends, including inflation slowing and a likely relaxation of monetary policy in key markets with the hope that this will further stimulate consumer demand.
E-commerce has been a welcome boost to air cargo volumes this year and there are no signs of that changing.
We are participating directly in the e-commerce boom particularly out of Asia, but also into and out of Europe and Deep South America.
Overall, I am encouraged by the positive direction our global economy seems to be moving.
In a highly competitive market, what differentiates American Airlines Cargo from other major players in the industry?
We’ve had a positive first half of 2024 and remain optimistic for the remainder of the year.
The environment remains competitive; however, we are encouraged by the increase in volumes that we’ve been seeing.
Despite strong competition, we feel confident in what we offer our customers – in particular, exceptional operational performance and service coupled with specialised products and solutions that match the verticals where we are seeing growth, such as pharmaceuticals, electronics, and perishables.
We continue to invest in digital transformation, including the development of more user-friendly tools for booking as well as tracking of shipments on our aacargo.com platform. We believe these investments, coupled with the breadth of our global network reach, provide us with a strong advantage in a competitive market.
What major trends do you foresee impacting the air cargo industry in the next five to 10 years?
We see several impacts on the horizon for the industry over the next 5-10 years. The continued rise of e-commerce will drive demand for faster and more reliable air cargo services, as well as airport infrastructure investment to handle the increases in volumes.
Additionally, shippers and forwarders will have higher technology-driven expectations across the shipment journey with enhancements to services such as real-time tracking, booking processes and payment modernisation.
Broader digitalisation efforts and automation, like AI, for process optimisation, and automated facilities will become more prevalent.
And finally, changes in global trade policies and regulations will impact the industry. Compliance with new security measures, customs regulations, and sustainability requirements will be crucial.
How is American Airlines Cargo leveraging advancements in digitalisation to optimise operations and drive efficiency?
We’ve made several advancements in the last few years, which have increased our digital capabilities and end-user benefits to our customers and team members.
One example of this includes greater promotional pricing capabilities. Recent enhancements to our cargo technology platform coupled with API connections that we’ve built have allowed for greater pricing flexibility and the ability to offer customers discounted rates in various lanes and times via our eBooking channels.
This increased pricing flexibility provides us with greater agility in reacting to market changes (for example, over holiday weekends) and gives our customers the ability to ship with better rates.
A second example is by optimising our trucking operation. Our teams are in the final testing phases or have recently rolled out several enhancements aimed at better managing the 200+ trucks we run daily. This allows us to expand our network reach and increase the number of direct pick-ups and deliveries at our customer’s facilities.
To deliver value, we looked at the trucking process from end-to-end and identified every opportunity to automate repetitive tasks, or leverage real-time data insights, which could help optimise scheduling of trucks in the most efficient way possible. The result is we have better schedules, with better utilisation – while also being able to give our customers more accurate and timely updates on shipment milestones.
What are the main goals of American Airlines Cargo for the remainder of 2024?
We are intently focused on delivering digital innovation and operational excellence through the remainder of this year.
First, we are continuing to invest in digital transformation, which enhances the customer experience and improves operational efficiency. These investments are possible thanks to the recent upgrade of our end-to-end cargo technology platform that was initially implemented in 2019 and marked the beginning of our digital transformation. Having a modernised platform provides us with a foundation to build upon, which is the phase we are in right now.
That includes the capability to connect directly with customers and handlers, implementing the use of modern tools like automation and machine learning, and expanding self-serve capabilities for our customers on our aacargo.com channel.
Part of our digital innovation strategy also includes expanding our distribution channels through enabling third-party offerings including CargoAI, with whom we recently announced a partnership.
Second, we are making some enhancements to our London Heathrow (LHR) operation, which is our largest station in terms of tonnage. We are working with our handling partner to expand the size of our warehouse, making capital investments within the expanded warehouse to drive efficiencies and operational performance, and implementing some technology enhancements that will further drive synergy and communication with our handling partner. This focused work at LHR should conclude by year-end and we are excited to support our customers even more with these new enhancements in place.
What are the key areas of investment for American Airlines Cargo over the next few years?
Digitalisation remains crucial for us, and we will prioritise modernisation through digital enhancements in the coming year.
We are also focused on ensuring that the cargo products we offer customers are effectively meeting evolving customer needs. This can include evaluating how to provide a more tailored solution for specific types of freight and handling requirements.
We are also investing in our facilities. I mentioned the upgrades we are making at LHR. We are also investing heavily in our Dallas/Fort Worth facility making several infrastructure enhancements as well as renewing our customer-facing and employee support spaces, together with investments at our facilities in Philadelphia (PHL) and Los Angeles (LAX).
With a global surge in e-commerce over recent years, how has American Airlines Cargo adapted its operations to meet the increased demand for fast and reliable shipping?
E-commerce continues to be one of the fastest growing sectors within the industry and has fuelled much of the industry growth we have seen in recent years – due to retail moving online and consumer expectations changing.
We move a significant amount of e-commerce-related traffic across our network, particularly to and from Europe, from APAC to the US and throughout our domestic US network. Forecasts suggest that this sector will continue to grow in the near future, and we are currently working to evaluate how our service offering will continue to evolve to meet the growing needs of this sector.
How are customer expectations changing, and what steps is American Airlines Cargo taking to meet and exceed these expectations?
The rise of digital and e-commerce continues to be a driver of customer expectations. People are growing used to quick, digital, and self-serve capabilities for conducting business with high levels of visibility across any category.
Thankfully, we’ve put in the work over the last few years to modernise our end-to-end technology platform and have therefore been able to offer more capabilities for digital booking. This includes specialty bookings and enhanced tracking and self-serve features on our own aacargo.com channel, direct connections to customers for booking on their own internal channels, and integrations with third-party platforms.
Moving forward, digital innovation remains a priority for us to ensure we are as easy to do business with as possible for all our customers.
Can you discuss American Airlines Cargo’s efforts towards sustainability and how you are addressing environmental concerns within the industry
As an airline, we have set milestones along the way for achieving net-zero emissions by 2050, including:
- Replace 10% of jet fuel with SAF by 2030
- Reduce greenhouse gas (GHG) emissions intensity by 45% by 2035
- Target net-zero emissions by 2050.
In recent years, American has undertaken the most extensive fleet renewal effort in the history of commercial aviation, which has given us the youngest mainline fleet of any major US network carrier and drives significant improvement in fuel efficiency. Added to this we have a robust aircraft order book which includes 30 widebody Boeing 787-9s which are expected to be delivered over the next four years.
Specific to cargo, we announced at the beginning of the year that in 2023 we reduced our long-term plastic waste by the equivalent of 8.6 million plastic water bottles. This achievement is thanks to our collaboration with BioNatur Plastics, whose plastic products bio-degrade in natural landfill conditions in 8-12 years, rather than 1,000 years for regular plastic.
In 2021, we announced a strategic agreement with one of our largest cargo customers for a bulk sustainable aviation fuel (SAF) purchase and we continue to evaluate opportunities for more commitments in this space.
Reflecting on your role as a senior executive at American Airlines Cargo, what significant lessons have you learned about your organisation, and of the dynamics of the air cargo industry?
Our cargo business at American is unique in that it operates as a self-contained company within a company. We can operate with a start-up mentally, making decisions and implementing changes quickly and are nimble as a business – yet we get to benefit from the resources of one of the largest airlines in the world. This structure opens a lot of opportunities for us while supporting innovative, creative thinking.
In my time as president of cargo, I’ve quickly learned that our culture is our secret. When I am out and about meeting with the team, seeing team members with more than 35 years of experience in cargo alone is quite common.
People love working here. What we do at American Airlines Cargo, and the role the air cargo industry plays in the world, is a mission we all care about.
We help move food and vital medicines, support economies around the world, and provide humanitarian aid and relief to places that need it.
Our team is close-knit, we work incredibly well together, and everyone respects the role they and their colleagues play in contributing to our success. I am incredibly proud to work alongside the men and women of American Airlines Cargo.