Southwest Airlines Thinks Outside The Cargo Bay - Southwest Airlines (NYSE:LUV)

Southwest Airlines Cargo continues to win the hearts of freight forwarders for outstanding customer service, but the airline isn't resting on its laurels.

Members of the Airforwarders Association this week voted Southwest Airlines (NYSE:LUV) the best domestic airline for the 11th year running. Southwest may cement that loyalty further this year when it rolls out new capability to confirm when a shipment makes it on, or off, a plane, something customers have long clamored for.

Southwest Airlines will begin planeside scanning of cargo pieces, a service it previewed last year, at a handful of airports by late March and hopes to finish deployment by the end of the second quarter, Wally Devereaux, managing director of cargo and charters, confirmed in a FreightWavesTV interview here.

The initiative builds off Southwest's optical scanning of passenger baggage. Workers will affix bar-code labels on cargo pieces during the acceptance process. Information entered into the point-of-sale system will be married to readings from the hand-held scanner to give shippers better knowledge about the location of their product.

Most domestic airlines scan cargo with bar code technology. Some didn't it to comply with U.S. Postal Service requirements to track mail for payment based on performance and most piggybacked on existing baggage-tracking systems, according to industry officials.
"Very soon we will be able to have an absolute confirmation that something is onboard and an absolute confirmation that something was offloaded," Devereaux said.

"All the sensors are out in the field, it's being used on all of our bags. The staff is using it," he added. Formatting the information so it can be shared with logistics providers and their end customers, either by proactively pushing it out to them or making it available on the Southwest Cargo website, should be completed late this year.

Something else Southwest Airlines is considering to improve service is the use of explosives-detection canines to screen cargo, Devereaux said.

By law, 100% of cargo on passenger aircraft must be inspected at the piece level. Airlines and some indirect air carriers use X-ray equipment to do inspections if the pallet only contains a single commodity. Otherwise, delivered shipments have to be de-palletized so each box can be analyzed with explosive trace detection, which is labor intensive. In late 2018, the TSA began certifying companies to screen cargo facilities with trained canine teams and many airfreight companies are switching to sniffer dogs because of their flexibility and effectiveness, security experts say.

"It's a very efficient way to screen cargo" and Southwest is testing the concept, Devereaux said. "When you think about a location that might have hundreds of boxes coming in and [that] process can be reduced down to a matter of minutes, it's a really attractive option. These dogs are well trained and they do a good job."

There are a half dozen certified K9 screening companies, according to Brandon Fried, executive director of the Airforwarders Association in Washington, D.C. He's a member of the Transportation Security Administration's Aviation Security Advisory Committee. The TSA did not respond to questions about the program by press time.

Revenue Drivers, Headwinds

Southwest reported last week that cargo operating revenue dipped 1.7% to $172 million in 2019 and minus 4.4% in the fourth quarter.

Devereaux attributed some of the falloff to the U.S. tariff wars, which led many shippers to build up inventories earlier than normal to avoid pending or threatened tariffs. With plenty of merchandise and commodities on hand, there was less need for companies to turn to expedited domestic transport, he explained.

The grounding of the Boeing 737 MAX by regulators has impacted Southwest because it was heavily counting on the plane to be a fixture in its fleet. The airline owns 34 of the jets — more than any other airline — and was supposed to have an additional 41 in its possession by the end of 2019 before Boeing halted deliveries in the wake of two deadly accidents. Sout h west officials blamed the MAX crisis for a spike in operating costs — more fuel use and maintenance associated with flying older planes, ticket refunds and rebookings, and lost revenue potential from additional capacity — that led to a sharp decline in profits.

The MAX impact is typically viewed as a concern for passenger operations, but Devereaux said there are tangible impacts on the cargo side too.

The biggest was the decision to close Southwest's presence at Newark Liberty International Airport and consolidate operations at New York LaGuardia Airport. Newark was a good location for cargo business, Devereaux said.

With fewer available assets than planned, Southwest had to make difficult choices to meet other network commitments and expansion plans in Hawaii, Baltimore, Denver and Houston.

"In general, based on the way our network is, we should be able to move a lot of freight creatively, through lots of different routing options. For the most part, we've been able to accommodate our customers' requests. Would it have been nice to have 70 additional airplanes with lots of new routes potentially to offer? Yes.

"Would it have been nice to keep Newark? Sure," he said.

The Valentine's Day flower season is expected to help ease any revenue blues again this year. Southwest operates out of Fort Lauderdale, Florida, with a number of daily departures carrying flowers imported by other carriers from South America. Southwest also trucks flowers from Miami to Orlando, where Southwest has many daily departures, Devereaux said.

Last April, Southwest Airlines introduced Fast Fresh aimed at perishable goods such as seafood, herbs, fresh-cut flowers and even tropical fish for pet stores. The premium product gives fresh products priority boarding compared to generic cargo that is listed on a general airway bill. That means it won't get bumped if the plane is overbooked, and there are shorter cutoff times — 45 minutes before takeoff, depending on the shipment's size and the airport. Fast Fresh has a 24-hour guarantee to destination from the time of tender.

Image Sourced from Pixabay

LUVSouthwest Airlines Co

$46.373.11%

Overview

Market News and Data brought to you by Benzinga APIs

To add Benzinga News as your preferred source on Google, click here.