Shippers wary of Y2K plans of foreign air carriers
Representatives from Northwest Airlines say they are concerned that international airlines and airports may not be ready for Y2K.
By BRIAN MILLIGAN -- Purchasing, 9/16/1999 2:00:00 AM
Shippers have all the confidence in the world when it comes to the airline industry in the United States and the potential "Y2K bug." But that confidence isn't extending overseas.
"The general consensus is there are still some questions about some international markets," says Kathy Peach, spokesperson for the Minnesota-based Northwest Airlines. The airline has a significant air cargo operation in Asia and Europe. "It is yet to be determined what we will find in international markets."
This is what some purchasing managers are concerned about as they consider the fate of supplies shipped by air cargo on or around Jan. 1. Some worry that the supply chain could potentially be interrupted if, say, air cargo shipments of high-valued electronics are delayed coming out of Asia. Such problems could have a domino effect, trickling down to many manufacturers who depend on foreign supplies.
It's something Bill Meade has considered. Meade, purchasing manager for the Florida-based U.S. Filter, says his company has carefully prepared for Y2K. It has asked its prominent domestic suppliers to have three-months worth of backup supplies just in case problems arise on Jan. 1, 2000. But the same sort of request gets a little more complicated when it comes to suppliers in Asia or other parts of the world.
"Oh, yes, it could cause problems in the supply chain," says Meade. "It all trickles down. If some places get handcuffed, and they can't get it in here, it will affect other people."
While he's not sending out a grim warning, Department of Transportation representative David Smallen says the safest bet for manufacturers in such uncertain times is to be aware of what countries may be having the worst problems, and plan accordingly.
"If they know what specific countries they are dealing with, how the system works, they should make sure the people they deal with are aware of the problem and make sure that they are ready," he says.
The latest worry
Welcome to the latest Y2K worry. To face it, purchasing managers are advised to:
- Keep track of the readiness of specific international airlines. The information will be posted through the fall on the Department of Transportation's Web site. The site is www.dot.gov.
- Contact foreign suppliers to make sure contingency plans for important supplies are in place.
Some experts say all of the worry is legitimate, even while those who represent the international market say it's overblown and self-congratulatory.
"The airline industry is in great shape, and we will be ready for the new millennium," says Carol Hallet, president and CEO of the Air Transport Association. The association is the trade organization for the principal U.S. airlines. "Individual carriers have been working for several years to tackle Y2K problems, and the situation is well in hand."
The industry's response
Sophie Bethune, spokes-person for the association's Aviation Millennium Project, says U.S. and Canadian airlines are 95% finished with Y2K remediation efforts. The project is being coordinated by the association. It is working with 102 airlines, more than 500 airports, air traffic control systems, and hundreds of suppliers and manufacturers to advance industry readiness.
Bethune says the U.S. airlines, in coordination with the Federal Aviation Administration, will continue testing contingency plans throughout the year. But so far:
- Airlines have spent more than $750 million on solving the Y2K problem.
- At any one time, more than 4,400 people have been working on Y2K problems throughout the industry.
- Airports report they are on schedule with their own remediation efforts.
Additionally, the FAA announced that as of June 30, all of its systems--including traffic control and security systems--were deemed Y2K compliant.
Positive feedback
All of this is well and good, and it's convincing a lot of people that United States airlines and airports are in adequate shape when it comes to Y2K. Some representatives from U.S. airlines say they are getting a lot of positive feedback from shippers who regularly use their service. They say the shippers believe the industry has taken the problem seriously.
"We've not seen much of a concern at all from the shipping community, certainly not that much from those who regularly ship with the airlines," says Jim Brown, spokesman for Missouri-based Trans World Airlines. "This is probably because of all the advanced planning the airlines have gone through to get where we are today."
"I believe shippers are confident, and we are looking at this problem from a holistic approach," says Christine Turneabe Connelly, spokesperson for Texas-based Southwest Airlines. "We are not taking the customer focus over cargo. Everything is equally important to our business. If they are shipping with us, we want everything ready for them."
Questions arise
But questions are still popping up as to whether or not other countries--and the airlines that work in them--will be as prepared.
In some ways, it's easy to foresee potential Y2K-related problems looming in other parts of the world. The International Air Transport Association and the International Civil Aviation Organization have been trying to network different countries' airlines and assess their Y2K readiness through surveys. But while such a survey process can be easily accomplished in the United States, which has one government, a common language, and one set of legal standards, the rest of the world is much more complicated.
"We've said from early on that the level of readiness abroad varies," says Smallen. "Some places, I guess, are going to be compliant and ready for the new year. But some are not going to be at that level. I guess we just want to make sure people are aware there are some places where there may be concerns."
Ungrounded concerns
But Nancy Gautier, communications manager for the International Air Transport Association's Year 2000 Project, believes such concerns are ungrounded, if not unfair. "There is, of course, a complexity in any international program that a national program does not have," says Gautier. "But we work internationally all the time, every day of the year. We schedule flights from country A to country Z, and that is a normal environment for our industry."
Gautier explains that IATA launched its Year 2000 Project in 1998 to identify and eliminate potential Y2K effects at international airports, air traffic service providers, and cargo customs authorities. IATA is still gathering data using standardized questionnaires, and channeling it into a centralized database that is available for participating airlines. The information explains, among other things, the contingency plans the survey participants are preparing.
Working with airports
Gautier says IATA is working with up to 700 airports worldwide. To suggest that the airports are less than ready for the year 2000 is unfair, she says.
"We don't believe it's an accurate picture to say we should be worried about what's going on over there," she says, referring to Asia and Europe. "You have to look at the data to make an estimate in your mind on how that shows normal service can continue or if adjustments will be needed.
"It's easy to speculate on readiness. But you have to look at the facts," she says.
Gautier cautions that Y2K tests are the most important part of preparing for the millennium. Many international airports and airlines, she says, won't complete testing until October.
Representatives from the Federal Aviation Administration are not convinced that the tests will paint a completely rosy picture. And since the FAA does not have control or authority over foreign air space, there is little that it can do about it. And FAA spokesman Paul Takemoto says the administration still can't pinpoint specific countries that are having problems. "Frankly, it's too early for us to say," Takemoto says.
Impact on the supply chain
All of this could have a potential impact on supply chains. On the positive side, minor delays caused by computer glitches could be made up if airlines made alternate stops or took different routes to help their shippers. Many airlines say they are willing to do this in the event of Y2K problems.
But lengthy delays--perhaps caused by confusion at a foreign air cargo customs station--would have a more significant impact.
"On the U.S. side, customs seems to be well along. We've done tests," says Peach of Northwest Airlines. "But in some other market, you're not sure if things will work well, get to the location. And if you can't get it cleared, you can create a backlog in the system. If you're not moving something along in the manner you normally expect, it could have all sorts of implications on the manufacturing process."
Some, like Kurt Ebenhoch of the Chicago-based United Airlines, say their airlines have employees posted in foreign countries, trying to assess the situation.
"We're in the process of gathering as much as we can about those countries," says Ebenhoch. Ebenhoch notes that United has invested $90 million into Y2K preparations and tests. The fleet, which flies out of 27 countries with 134 destinations, has a lot at stake with its worldwide air cargo operation.
"We have people on the ground in the countries we serve, and are talking to local management," he says. "We will analyze every single route we fly and assess its readiness."
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