Continuous planning for airfreight’s ‘black swan’ events

Brandon Fried knew weeks before his keynote presentation to the JFK Air Cargo Expo in New York that he wanted to focus on so-called “black swan” events. The March 26 event was canceled because of the novel coronavirus outbreak, which has spread quickly throughout the New York metropolitan area. 

The Airforwarder Association’s executive director couldn’t have foreseen that a local epidemic in China would have forced the shutdown of the global economy, but his choice of topics now seems prescient. 

“Black swans” are events considered so rare and difficult to predict, often with extreme consequences, that people develop a collective blindness towards them. 

When the engine of airfreight is running smoothly, it is easy for freight forwarders to be lulled into an oblivious sense of routine. Computer technology and modern aircraft allow for a relatively efficient, step-by-step cargo delivery process.

However, the industry is always a breath away from being knocked off step by catastrophic events, whether that is a sudden economic downturn, weather event, or in this latest case, a global pandemic.

“Human nature is not programmed to imagine black swans, so we rarely see them coming without a lot of practice and uncomfortable preparation,” Fried would have told the attendees at the JFK event, according to a copy of his prepared remarks.

Fried said, however, “these are events in which freight forwarders prove their value.” Forwarders are specialists at keeping complex supply chains operating smoothly and serve as intermediaries between shippers and carriers.

The problem for the industry is that it is often quick to forget past catastrophic events soon after normal business conditions resume.

Fried said that is why it is important for forwarders of all sizes to always have advance emergency plans in place to minimize the effects of regional and global disasters.

“Airlines rarely suffer crashes, but all upper-level managers have operating manuals that tell them what to do if one occurs,” he said. “Your company, no matter what it does, should have a disaster manual, which should be followed by constant education and training of staff on what to do when disasters strike.”

Air forwarders should also have a back-up plan for their operations. “What happens if the airline no longer can fly? How will you move that customer’s freight? Where will you fly the cargo if that airport is no longer accepting cargo? What are your risk-transfer insurance and force majeure agreements? These are important questions to answer,” Fried said.

Fried also recommended that air forwarders not only have emergency communications plans in place for their workers but also for their shipper customers.

“Communication is key, so make sure your computers, phones and devices are always working, even without power,” he said. “Make sure worker needs are addressed, listen to their concerns, not only for your business but also for their personal situations.”

The JFK Air Cargo Expo has been rescheduled for June 25, although an ongoing health crisis could force organizers to change the date again.