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Formula 1

The 'perfect storm' all teams are facing in F1's longest-ever season

With F1's calendar expanding, and economic pressures rising, F1 teams are having to deal with additional headaches when it comes to shipping their cars and equipment around the world, as RacingNews365.com's Dieter Rencken explains.

GP Bahrain 2022 start
Analysis
To news overview © Red Bull Contentpool

Formula 1's global expansion would have been absolutely impossible without a functioning, cost-effective air cargo industry: drivers and crews could move about with relative ease via passenger flights - as per the early years of the World Championship - but without any means of speedily transporting around 700 tons of airfreight across oceans in mere hours, F1 would be restricted to European events, as it was during the 1950s.

Twenty-three races packed into a mere 36 weeks - after shutdowns and car build/testing windows are factored into the season - requires a series of back-to-backs and even triple-headers spread across continents with long-distance hops, such as, for example, Baku to Montreal, well-nigh 9000km. Add in paddock pack build/packing and customs/clearing formalities for 700 tons, and clearly there are no margins for delays or errors.

How is F1's freight moved around the world?

The process is that FOM arranges and consolidates the freight, with F1 corporate sponsor DHL handling the formalities. Freight consolidated, then transported across a number of aircraft, being cargo flights, charters or belly loads on passenger flights. Bulky and non-time-sensitive stuff such as garage equipment and hospitality kit is sent by sea – with teams rotating up to six identical sets.

Last year, a number of teams found themselves on the back foot in Brazil after inclement weather grounded flights from Mexico in Miami - a torturous route, but, tellingly, the most time-efficient alternative - and a fortnight ago technical issues delayed a consignment bound for Bahrain by three days, forcing Haas to work triple shifts to prepare for testing, then run late into evenings to complete its crucial pre-season test routines.

Of course, there were grossly unfair sniggers such as "It's only Haas" - as there were when the team was affected last year - but also delayed was a Formula 1 shipment: fortunately bound for Jeddah; thus the series promoter's proceedings were unaffected. The bottom line is, though, that the delayed shipments could just as easily have hit Mercedes, Red Bull and/or Ferrari – and imagine the outcry had that been the case.

Such incidents occurring twice in three (racing) months provide major cause for concern, and teams are increasingly worried that they could become the norm rather than being rarities: multiple sources told RacingNews365.com that airfreight out of Australia could be delayed by up to four days; imagine if Melbourne's race was twinned with, say Shanghai as in the past. Fortunately, there is a one-week buffer to Imola, but not through foresight.

			© Haas
	© Haas

Rising freight costs put extra pressures on F1 teams

Of equal concern to teams is an effective doubling of airfreight charges: prices are expressed as cost of shipping a kilogram to all flyaway races during a season. Teams budgeted for around $200 all-in for this season. Given that the average consignment per team weighs 35 tons, of which FOM pays approximately one-third, that pans out at a per team cost of around $4,6m.

Heavier cars and larger wheel rims for this year mean pallet numbers have grown by one - generally from 13 to 14 - adding further costs. Compounding the matter is that, during the Bahrain weekend, teams were advised to revise their costings and work on $350/kg (and rising) – adding at least $3.5m to freight costs. Given such costs are included in budget caps, this means around $3.5m less to spend on car performance or payroll…

Little wonder, then, that team bosses are calling for a revision of the budget cap, with Red Bull team boss Christian Horner saying: "The added complication that we have at the moment with the cap is with what we see going on in the world and inflationary prices… in the UK we are probably pretty close to 10 per cent inflation at the moment, and with freight, with logistics, fuel costs, that's having a significant impact.

"We discussed this very briefly [in Bahrain], but I think it's going to end up in the next financial meeting to come up with - hopefully - some emergency measures to ensure there's relief, because that has a one-to-one consequence on jobs and livelihoods."

The primary cause of these cost and logistics squeezes is an airline industry that is emerging from enforced lockdowns but has not yet recommissioned all its aircraft after prolonged periods of dry storage. These are costly and time-consuming activities given the associated safety standards. Add in an explosion of consumer demand as the world gradually returns to 'normal' and a perfect storm is brewing.

The problem is that in global terms, F1's 84000 tons - 700 times 12 flyaways per year, with the rest carted across Europe by road - are insignificant. As an aside, some European back-to-backs required up to 52 drivers (per team) working in shifts to ensure the show could go on, on time.

			© Red Bull Contentpool
	© Red Bull Contentpool

What's causing the increase in freight demand?

Ironically, one of F1's (and Ferrari's) biggest sponsors, Amazon Web Services (AWS), has played a major contributory role, given the explosion in consumer consumption from some of the big retailers such as Amazon – and they are swallowing every bit of air cargo available.

"Although we're big in terms of our sport, we're actually minuscule, [so] we've got very little swing," a team source who did not wish to be identified told RacingNews365.com. "As a result, prices have, as you can imagine, gone sky high, and now we've also got fuel costs increasing daily…

"There's still a kind of residual issue ongoing from COVID; flight schedules were disrupted, which had a knock-on effect in the industry."

"[But] the biggest issue we've got at the moment is Russia, because it's taken out one or two major players that we can't use now," he added. "That has another knock-on effect, because the air cargo industry was already under immense pressure, just because of modern business."

According to another team source: "It's about to get a lot more complicated the way it's going, plus there are now parts of the world we can't fly over. We've heard some horror stories about freight rates and a lot of the big freighters are Russian companies, which F1 teams won't be using.

"So now it's limited to a number of people, all of whom know that those companies can't be used, and they won't be ramping their prices down. It's about to get very expensive…"

Could it go as far as F1 teams missing races?

There are widespread fears amongst teams - RacingNews365.com spoke to six paddock folk with in-depth knowledge of the situation - that one or more teams are at risk of finding their kit delayed such that they miss a race, which raises questions about how F1 best handles such a situation – particularly given that once a team hands over it shipments the matter is out of its control.

"The way things are going at the moment, there's a possibility [of such a scenario], but do I think it will happen?" mused a Sporting Director. "No, but it certainly could, and we're actually meeting with DHL [in Bahrain] to talk through and understand what their challenges are."

Another is less sanguine: "I wouldn't say it is inaccurate [to say it could happen], and every team should be really concerned about it.

"What we need to do as a sport is try and level the playing field a little bit in terms of prioritising X number of pallets from each team to ensure everybody's got something to start work with [in the event of a delay].

"I get that there are complications about the geography and the schedule and the flights and things, but we need to be really careful that we don't hang a team out to dry."

A single team missing one race should be the least of F1's logistics worries: it is not inconceivable that the sport finds itself forced to cancel an entire race due to logistics failures outside of its control…

Also interesting:

F1 Podcast: First blood to Ferrari as F1's new era begins in style

RacingNews365.com F1 journalists Dieter Rencken, Mike Seymour, and Thomas Maher look back over the 2022 season opener in Bahrain, which was won in dramatic fashion by Ferrari's Charles Leclerc.

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