Qantas Freight Enterprises

A subsidiary of Qantas Airlines, Qantas Freight Enterprises operates as an air cargo carrier out of Sydney, Australia, with Sydney Airport serving as its main hub. According to Qantas Freight and Fork Track (2012), the airline's cargo division has an annual revenue turnover of around to $1 billion, which is mostly driven by promoting the airline's freight capability. It runs multiple terminals in Sydney, Melbourne, Perth, Brisbane, and Los Angeles that handle freight. The company's success was a result of meticulous study, adjustments, and structure of its business operations to provide the best value to the company. Both the cargo and passenger sections of the airline industry remain highly competitive due to the presence of large international players, such as Qatar Airways, Emirates, Virgin Atlantic, and Air France having a large portion of the market. Despite the immense competition, Qantas Freight has risen to become a dominant force in the sector due to careful planning of its operations. Examining the company through specific areas, for instance, its history, fleet management and supply chain, this report seeks to understand the reasons for Qantas Freight success in the air cargo business.

History of the Company

Qantas Freight Enterprises was founded in 2007 (Bloomberg, 2017). The managers at Qantas Airline at the time realized that the growing cargo business of the enterprise was creating management issues. To help them address the problems, they decided to create a separate entity that would deal specifically with shipments. As a result, Qantas Airline got a new subsidiary, Qantas Freight Enterprises, that would be responsible for cargo transfers in Australia and internationally. Since its formation, Qantas Freight has grown into the leading cargo handler in the Australian region offering both logistics and freight services.

Company

As a subsidiary of the Qantas Airline, the freight service operator follows the same mission and vision of its parent company. Qantas Airlines mission is, “We are Australia’s leading premium airline, and we are dedicated to being the best. We aim to meet your expectations every time you fly and so we continue to invest in our business and will always strive to provide you with an exceptional level of service.” Qantas has a vision of becoming the best premium air operator. The key components that drive the success of the company are prioritizing safety placing its aircraft in the right route and emphasizing customer experience.

Alliances with Other Businesses

Qantas Freight has established several alliances that help it reach more customers and increase operational efficiency. The parent company, Qantas Airline, is a member of the Oneworld Alliance. The alliance is an association of several leading airlines, such as British Airways, Qatar Airways, Air Malaysia, and Japan Airlines. As a part of the alliance, Qantas Freight benefits from having the ability to move cargo to routes where it has no operations. Having the ability to carry shipments to such regions benefits the company through increased sales.

Another alliance that the company has created involves its fleet. In conjunction with Adaptalift Hyster, Qantas Freight maintains strict control over its fleet of vehicles, forklifts, and other material handling equipment. The partnership is an integral part of the company as it aids operational efficiency by enhancing the management of the fleet. The two businesses work together to control, maintain, and organize the fleet to deliver value to the cargo transport business to realize greater customer experience. The following section covers the importance of the alliance between the two firms.

Fleet Management

Qantas Freight has a wide variety of fleet to help it achieve the goal of moving cargo from various places within Australia and internationally. The company owns material handling equipment that ranges from forklifts, vehicles, and airplanes. All of them range in their size, capabilities, and application in cargo movement. Although the business maintained a huge fleet, it had some problems, especially the efficiency and high cost of maintaining the fleet. Keeping the material handling equipment in proper working condition meant regular servicing and replacing of worn out forklifts, cars, and airplanes that led to high costs for the company. The management of the company noticed the problem, and it decided that it was necessary to develop a new strategy to help ease fleet management while delivering greater value to customers.

In 2009, the firm took the decision to replace its entire material handling equipment. The company partnered with Adaptalift Hyster to bring in a new fleet that would improve its efficiency and raise the business’s organization health and safety record. Adaptalift was given the task of maintaining the ground material handling equipment while Qantas Freight retained its core business of air transport, including airplane maintenance. The key ingredient to realizing the goals of efficiency and reducing costs was the use of the Adaptalift Hyster's ForkTrack system for managing the fleet. The airline industry has benefitted immensely from the use of technologies, especially ICT, in the handling of rising cargo and passenger numbers (Pease, 2007). The system used by Adaptalift helps it keep track of the material handling equipment enabling easier and faster allocation of the forklifts and vehicles to handle cargo.

A report by the Monash University Accident Research Center revealed an increasing problem with over speeding among the drivers of vehicles linked to airline freight carriers (Goode et al., 2012). The study also recommended that the businesses in this area needed to implement speed controls to control the behavior. Adaptalift’s system helps Qantas Freight to monitor drivers on the road helping to reduce the possibility of accidents. The move has two benefits for the company. First, it helps to ensure that drivers observe regulations on the road. In this way, the business is able to lower the potential for accidents that may lead to litigation and higher expenses for the company. Second, the company benefits from reduced insurance costs. The high number of accidents among such operators made insurers charge them higher premiums for their insurance policies. With a system to check driver behavior in place, companies have greater control over them reducing the risk for the businesses and premiums paid for insurance coverage. Therefore, the ForkTrack system helps the business with the specific management of the fleet within and outside the site.

Most firms in the cargo handling business face problems with controlling who operates the equipment. The high level of security needed at airports makes it harder for the companies to check who is responsible for the material handling equipment at the site. The introduction of a security identification card system is one of the ways the business has been able to address the problem. The cards make it possible to control access to the airport and areas where the equipment used to ferry cargo are located. Through the cards, the business can track operator compliance with regulations by identifying who is using the equipment at a particular time. The cards make it easier to identify the individual using specific equipment, and information relayed to a control center helps them track how the operator uses it. From the information, the management of the business can determine people who may need additional training enhancing cargo handling. In this way, the enterprise is able to lower losses and improve efficiency which enhances its operations.

Apart from ensuring that the people using the equipment have the right skills to handle equipment and do so properly, the management of Qantas Freight concentrated on proper maintenance of the forklifts and vehicles. The Adaptalift Hyster’s ForkTrack system also includes a pre-operation checklist that the workers fill before they begin their shifts. Each worker must undertake an inspection of the equipment before starting work. After examining the equipment, workers have to fill a form containing a complete checklist. The checklist is then sent to the parties that deal with the kind of equipment in question for immediate action. The method used by Qantas Freight to identify problems in equipment has helped to reduce the time it takes to identify a problem and make technicians aware of it. Such an approach benefits the business in two ways: efficiency in reporting equipment problems and reduced downtime on the vehicles and forklifts. As a consequence, the operations of the business have improved significantly over the past few years.

In a less way, organizational health and safety have also been incorporated into the system. Qantas Freight has realized this by including a digital weight indicator in the equipment. The indicator helps operators to know the weight they are carrying and triggers an alarm whenever the operator exceeds the weight that the equipment should carry. With the ability to know the amount of weight that an operator is handling comes greater safety for the personnel. Incorrect use of equipment at the workplace is one of the reasons for accidents that lead to work-related injuries. The injuries may lead to litigation and compensation that raises the costs for the business. Having a system to reduce one of the most common problems that lead to injuries at the workplace lowers the cost for the company. In addition, it helps to boost efficiency since employees arrive at the workplace during their shifts making it possible to continue operations as required.

The data collected from the Adaptalift Hyster’s ForkTrack system is vital not only to help the organization control its material handling equipment but also manage employees. It enables the business to reinforce positive behavior in the company by recognizing workers who show the best performance through a variety of recognition programs. The recognition that workers receive helps to motivate other workers in the company to perform their duties in line with the company’s policies and regulations. As a result, the company ensures that a great number of workers performs their tasks as required to reduce the possibility of accidents, increase efficiency, and reduce the cost. Therefore, the business is able to deliver value to customers, which has made the business more attractive to people shipping cargo.

Supply Chain Management

Qantas Airways has continued to carry freight since it started its services in 1922. Today, the Qantas Freight Enterprises acts as the airlines domestic and international cargo division of the company with 1500 personnel across the world. The company markets the cargo handling business of Jetstar and Qantas passenger flights. The two give Qantas Freight Enterprises access to 80 domestic destinations and 50 international destinations. The organization is Australia’s most prominent cargo operator.

Like many other businesses in the airline industry, Qantas Freight was still using mainframe computers to run its business operations and information systems. As the years progressed, the company found that this system became inflexible and made it difficult to take advantage of new technologies that could aid in streamlining the business processes. The ambitious turnaround of its fleet in 2009 also involved transforming the operations and improving customer services. Qantas gave IBM Global Business Services the task of replacing the business’s freight management system. IBM introduced the IBS Software Services iCargo platform (IBM Australia, 2014).

The system makes it possible for the organization to conduct most of its freight management tasks in one platform. It enables Qantas Airways to schedule, sell, reserve, manage customers, operate terminals, manage loads and capacity, give rates and tariffs, control stocks, and integrate its functions with those of Qantas Freight Enterprises. IBM Australia rolled out and steadied the iCargo platform from 2009 to 2011. After establishing the new system, Qantas Freight was able to make use of new technologies that would enable it to enhance its business operations, such as using business analytics and mobile technologies to improve the experiences of customers and raise operational efficiency.

In 2012, the company started the second stage of the transformation by implementing a program to improve supply chain management. Providing customers with a means to track their shipments, optimizing operations, and reducing paper usage to meet international standards were some of the primary aims of the company in this phase of the business operations improvement. The improvements in the supply chain had four initiatives: develop and implement an electronic waybill system that would lower paper use in the company, realize quality management through business analytics, enhance customer service through an interactive site and smartphone applications, and open self-service centers that would enable the staff to deliver real-time requests to the warehouse.

The new system is credited with greater efficiency and improved customer service. For example, before the shift to this system, consignees had to attend to the paperwork for their cargo at a counter so that the personnel could move their goods from the warehouse to a pickup location. Today, consignees receive alerts on their mobile phones and consignee accounts in the system to inform them of the arrival of their goods at a terminal. Customers can then log in at a self-service point and indicate they are ready to collect their shipments. The information is relayed to forklift operators in the warehouse who receive it on an iPad attached to the forklifts. Forklift drivers then fetch the item and move it to the selected pickup station. Customers can clear their shipments in a few minutes after they arrive at their destination.

In addition to making it easier to collect shipments, the system has made it easier for customers to track their goods from the point of departure to arrival. Various online tracking options make it easier for consignees to check the status information of the shipments in real-time. As a consequence, the system has improved customer experience by enabling them to get information on the status of their shipments in real-time. Customers are able to follow the movement of a shipment from the time it leaves the send-off point to the arrival at the terminal. The process of collecting the item is also faster and more convenient. Since only the customer has the login details of the account associated with a particular consignment, the business has gained greater control and security of the shipment. Therefore, the IBM system has made it more secure and efficient for the business to manage its supply chain.

Finally, the system enables the company to leverage on business analytics to gain insight into needs and continually improve the delivery of services to customers. Analyzing where problems occur and identifying trends are possible through the system. For instance, the company is able to identify issues such as late flights that can have a downstream effect on the business. Information collected from the system concerning the occurrence of such problems makes it possible to take action to prevent such problems to minimize problems within the business operations. As Qantas Freight keeps striving to retain its excellence in the delivery of air cargo, the iCargo system remains a key feature of the ability to realize its intentions. The innovative system from IBM is useful in improving its operations and delivering exceptional customer experience.

Current Events

Although the business has enjoyed significant success in the past, it has been forced to deal with an increasingly difficult cargo market since last year. According to Air Cargo News (2016), Qantas Freight had a 44% drop in its full year earnings for 2016. Rising competition in the market has made it more difficult to attract customers. However, the company was working to deal with the problem. First, the business has created an agreement with Australia Post and Toll that it hopes will increase its earnings from the cargo business. Second, Qantas is looking to create new opportunities by marketing the cargo business, especially in the China-Australia-US route.

Conclusion

Through planned management of its fleet, supply chain process, and human resources, Qantas Freight Enterprises has grown into the biggest cargo handler in Australia. The company has leveraged on information technologies to help with the management of these three areas. Systems such as Adaptalift Hyster’s ForkTrack and IBS Software Services iCargo help the business follow operations, identify problems, and collect data and trends. As a result, the business guarantees that workers perform duties as expected. It is also able to conduct analyses to help improve the operations. Data are also essential for determining performance. Managers are able to note the way the staff perform their duties to confirm that they have the skills and knowledge to undertake the work. Furthermore, the application of the systems has enabled the company to augment organizational health and safety. By informing the material handling equipment personnel of problems as they work, the system helps to lower injuries leading to cost savings. Qantas Freight Enterprises has also made use of a lean human resource structure to manage expenses. The planning and management of the company's operations and workers are the reason that Qantas Cargo has grown into the leading air shipments handler in Australia.

References

Air Cargo News (2016) Difficult cargo markets hit Qantas Freight. Retrieved from http://www.aircargonews.net/news/airline/freighter-operator/single-view/news/difficult-cargo-markets-hit-qantas-freight.html

Bloomberg (2017). Company overview of Qantas Freight Enterprises Ltd. Retrieved from https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapid=44205109

Goode, N., Cornelissen, M., Salmon, P., Hillard, P. & Lenne, M. (2012). Accident causation in blue collar occupations. Brisbane: Australian Air Express.

IBM Australia (2014). How Qantas Freight transformed customer experience using mobile technologies. Retrieved from https://www.ibm.com/mobilefirst/au/en/bin/pdf/Qantas_Freight_Case_Study_Final.pdf

Qantas Freight and Fork Track (2012). MHD Supply Chains Solutions, 42 (2), pp. 20-22.