While the screening of passengers, baggage and cargo remain the primary security focus of airports across the globe, airports have not forgotten about the delivery of goods and supplies to their shops and restaurants, some routinely using sniffer dogs or X-rays to validate the content of packages.
Indeed, in recent years an ever-increasing number of North American gateways have restricted vendor and concessionaire deliveries to specific areas or times. Some, such as Toronto–Pearson and Minneapolis/St Paul, have even gone as far as to introduce a centralised/consolidated delivery system.
And according to a new study carried out by US-based benchmarking specialist Best Practices LLC, in conjunction with Alabama’s University of Montevallo, centralising the collection and distribution of goods and products could represent the way forward for the world’s airports in terms of security and customer service.
The study, which was based on input from senior managers and key stakeholders at 50 US and Canadian airports, claims that the “centralised receiving and distribution solution offers airports a vitally important, no cost opportunity” to improve some of the most pressing issues of concern for the region’s gateways. Namely, the desire to upgrade security, reduce costs and/or increase revenue and enhance the traveller’s experience.
The report found that 12 of the 50 airports to come under the microscope in the report had fully or partially deployed the ‘centralised receiving and distribution centre’ solution, while another seven confirmed a movement towards implementation.
So what were its key findings? It claims that having a centralised receiving and distribution centre can act as a catalyst for cost reduction opportunities, providing potential annual savings of between $1.8 million and $5.6 million per annum for the airports taking part in the survey.
The study actually identified 12 areas where savings could be made, ranging from the need for less security staff and reduced maintenance costs to the elimination of the need for suppliers to acquire expensive aircraft liability insurance cover for their delivery trucks.
The report reveals that tenants can also reduce staffing hours because they no longer have to pick-up material at drop points and transport the material to storage areas and stores, and that 60% to 80% less time is needed to complete the delivery cycle (supplier to end-user) because of process, scheduling and technology.
It also found that the logistics infrastructure put in place at a central facility is usually able to support major terminal expansion for years to come and reduces the need for additional back-of-house infrastructure. Several airports confirmed capital dollar savings in the millions.
According to the study, airports adopting the solution were able to significantly enhance security as the system ensured the collection, inspection and distribution of all items and reduced the number of deliveries made by third-party trucks as many tenants opted for one consolidated delivery a day.
The report estimates that centralised receiving and distribution centres raised safety levels by between 10% to 20% because of process standardisation, the elimination of vehicles on the airport operations area (AOA), and the fact that it separated large delivery trucks from passenger vehicular traffic.
A centralised receiving and distribution centre creates numerous opportunities for additional revenue generation for the airport, according to the study, which found eight potential areas where the gateways with centralised receiving and distribution centres could earn additional potential income ranging from $300,000 to $1.9 million per annum.
The source of the potential new income is said to range from freeing up space in the terminal building for additional retail and F&B activity to the establishment of a perishables building or central airfreight screening facility.
The solution also provides numerous environmental benefits that include lowering carbon emissions and reducing an airport’s trash costs by up to 30% per annum through centralised rubbish recycling. In fact, at one airport, the study discovered that the yellow grease from the concessionaire fryers was being recycled as a bio-fuel to run airport vehicles as part of a programme designed and managed by its centralised receiving and distribution contractor.
Airports with centralised receiving and distribution centres also tend to get higher passenger satisfaction scores than those without, claims the survey, Best Practice estimating that they boost traveller ratings by an average of 5% to 10%.
Streamlined operations, the elimination of unsightly stock, and limiting the ‘hassle factor’ of having to share the same roadways with an assortment of delivery trucks are just a few of the reasons for the raised passenger satisfaction levels, the study says.
A centralised receiving and distribution centre can also leverage its facilities, equipment and labour to economically and efficiently support other compatible types of service for “the greater good of the airport community,” says the report.
So what are the obstacles to the opening of a centralised receiving and distribution centre? Well, firstly and perhaps most obviously of all, it is not going to happen unless an airport makes a top-level decision to support the project.
If this is not forthcoming, the report warns that the special interests of numerous stakeholders will stifle forward progress for moving ahead, despite it almost invariably being in the best interests of the airport. Out of the six largest concessionaires interviewed in the study, one organisation wholeheartedly supported the solution, while the others did not. Concessionaires oppose the concept because of concerns about additional costs; the loss of operational control over deliveries; having to conform to highly scheduled/standardised processes; and bringing transparency to their operation.
Indeed, the report discovered that concessionaires will lobby hard against the solution (offering many roadblocks), but Best Practices found most reasons to be skewed for self-interests. It was interesting to learn that these roadblocks were not put forward at time of contract renewal during the competitive RFP renewal process.
During interviews for the study, several concessionaires claimed that they possessed the know-how to manage a central facility. However, the study findings conclude the opposite, as it identified ‘night and day’ differences between the material management abilities of most concessionaires to those of the two providers of centralised receiving and distribution centres (Bradford Airport Logistics and Genco Distribution).
Simply put, the concessionaires didn’t possess the same level of logistics expertise or the critical technology necessary. As a result, the study insists that an impartial and professional third party contractor is essential to constantly put first and protect the interests of the airport while treating equally the numerous stakeholders involved (many competitors).
The report also discovered that the bureaucratic organisational structure of many airport authorities meant that they were slow moving and easily swayable by special interest groups, effectively ensuring that they were often their own worst enemies when it came to making the necessary commitment to introduce the solution.
Many airports tend to be reactionary rather than pro-active in their management style, which is neither a sound leadership nor effective management practice, notes the study.
Based on the findings of the study, there is no doubt that there is a ‘swelling trend’ of support for centralised receiving and distribution at airports across North America. Indeed, it is a ‘best practice’ that can be unequivocally recommended.
In essence, it offers airports a ‘no cost solution’ that they can use to help them:
- Tighten security
- Improve service quality (airport ratings)
- Lower costs
- Increase revenue
- Upgrade safety
- Become more environmentally friendly
A note of concern, however, is that the study observed that most concessionaires oppose the solution, based on reasons that outwardly sound good, but in actuality support self-interests and profits, rather than lookout for the best interest of the airport community.
In the end, their position is based on invalid information and assumptions (not empirical research), which stifles progress. The focus of the study is quite simply to bring independent scientific information that can be used to implement positive change for the good of airports, local communities, nations and the traveller.