Calogi continues to grow despite tough market conditions. We are ahead of our targets, but challenges remain in selling the benefits of technology.
Calogi continues to grow despite tough market conditions. We are ahead of our targets, but challenges remain in selling the benefits of technology.
There was large volume growth in transactions in April and May versus last year, this despite the runway upgrade project at our home in Dubai. Our message volumes increases significantly, suggesting many in the industry are becoming aware that doing business online is easier than using telephone, fax, or email.
The industry runs on relationships and I am not proposing this should stop, however, meetings and personal contact should focus on broader collaboration, leveraging products and services rather than on individual rate negotiations and bookings.
We have upgraded our e-CSD feature and made additional enhancements to our airline product, allowing an airline user to view what is on hand in the warehouse, produce a load plan and share the same with the Ground Handling Agents (GHAs). Smaller airlines/GHAs can also use this feature to generate an electronic/paper manifest and send status (FSU) messages.
We continue to work with the industry at Heathrow to implement the e-CSD and reduce the bottlenecks caused by GHAs having to check the paper CSD against the department for trade database upon truck arrival. The e-CSD, sent in advance, allows the checks to be done prior to the delivery and reduces the time taken for acceptance.
We are also looking at ways we can work with the industry to accelerate the e-AWB adoption. More needs to be done in terms of education programmes, many still cling to paper because they are worried this is the only guaranteed means of getting the shipment cleared at the destination. Another issue is manual pre-printed stock are still being distributed in some countries which can only be printed or typed. It would be good to see a shift to distributing air-waybill-stock numbers only. In the short term, moving to an A4 air waybill will help, while reducing the costs of heavy-duty printers and expensive neutral stock.
Much of what we do is a first for the industry. For example, our ad-hoc air waybill release feature enables each airline/GSA to do business with over 600 forwarders in Dubai without the need for the traditional stock release and associated payment delays and credit risks. The airline makes a pool of air waybill stock available to the community and each forwarder has the option to assign an air waybill from that pool to a particular job. Upon execution of the air waybill, the monies are deducted from the forwarders Calogi c-Trade (credit) account with a guaranteed payment to the relevant airline every month. The airline charges a fee (currently set at 50% of the local AWB fee) for this type of flexible release, which is a source of income that did not exist prior to the Calogi implementation.
Our loyalty programme continues to grow. The Calogi loyalty solution allows any seller of services on the portal to run his own flexible loyalty scheme with any buyers on the portal. By running their own loyalty programme, Calogi subscribers are able to solidify existing relationships, initiate new relationships, and convert one-time customers into repeat business. We have already had several large airlines running their own programmes.
Our branded version of the Calogi website is proving popular, particularly with GSAs. Users logging on are directed to the GSA’s branded version of Calogi are only able to access the products and services offered by that specific company, yet still benefit from the extensive range of functionality the portal offers.
There is no doubt that replicating the Dubai-business model at other airports will bring the most benefits. Imagine a world where air cargo supply chain stakeholders can achieve 00% e-freight penetration and remove all paper forms, not just those that travel with the freight, but also Airline/ Ground Handling Invoices, Statement of Accounts, Airlines Sales Reports, Agents Sales Reports, Stock Reports, Shippers Letter of Instruction, Charges Correction Advices, the Air Waybill and the House Air waybill. Implementing this is going to be one of the biggest challenges as the industry needs to address several hurdles to be successful.
Cutting 48 hours off of the transit time
Imagine a brave new world, where the electronic air waybill and electronic security declaration are sent prior to shipment delivery. tThe warehouse check-in desks opened 24 hours in advance of the flight departing and closed six hours prior. The cargo is delivered during this time and is sent to the relevant build-up area, where it is loaded into ULDs. The import customs entry is done in advance of the goods travelling and the shipment is selected either for inspection or pre-cleared prior to arrival. The ULDs are loaded and the flight departs. The consignee is notified that the goods are cleared and requested to make arrangements to collect the same within 24 hours of flight arrival. Goods pre-cleared are delivered directly to an off-airport non-customs bonded delivery warehouse and are available for collection within 12 hours of the flight landing. Goods for inspection will be sent to a designated area and once cleared, sent to the delivery warehouse. Total time taken:
I have probably over simplified much of the above and to get to this point will take a lot of effort and probably a fair amount of investment in infrastructure and IT, but as Steve Jobs said. “The ones who are crazy enough to think that they can change the world are the ones who do”. Worth remembering, the integrators do this day in and day out.
IATA’s new Global Head of Cargo
Congratulations to Glyn Hughes, the new IATA Global Head of Cargo who is probably one of the most likeable chaps in the industry. Des Vertannes is a tough act to follow, however Glyn is well respected and will no doubt, give the job everything he has.
Des took great pains to set the tone that IATA can only encourage behavioural change, but the drive to achieve that change must come from the industry. We need look no further than the implementation of e-ticketing, one example of success for IATA in encouraging behavioural change. IATA and the board of governors mandated the move to 100% e-ticketing and achieved this through a four-year programme. The costs savings and convenience this bought to the passenger was unparalleled. I’m sure a few us still remember having to wait for about 10-15 minutes while a ticket desk agent wrote out a paper ticket, having manually calculated the fare. The fact that e-ticket details can be emailed to family and friends in seconds is also a major step forward. Now all we need is our passport to check in at the majority of airports. One can only wonder why the cargo equivalent of the e-ticket, the e-AWB, has not enjoyed the same rate of adoption.
Before bowing out Des said that air cargo faces considerable challenges and set an ambitious goal to improve the industry’s competitiveness through a cut in end-to-end shipping times of up to 48 hours. If I have read this correctly we will reduce the average current transit time of 6.5 days to 4.5 days. Definitely a step in the right direction and it will be interesting to see how this will be measured. I understand that Glyn and his team will be dedicated to achieving this goal and I’m keen to see how Calogi can help.
Other priorities for Glyn and his team include safety, security, quality, modernisation and transformation through the e-cargo agenda. In terms of modernisation, Des commented that IATA cannot implement change at any decent pace and citing the governance at IATA as the biggest frustration, perhaps there is an opportunity for Glyn to give the IATA cargo committee more decision making powers to try to circumvent time consuming procedures and lengthy consultative processes.
I, like everyone else, wish Glyn all the very best in his new role.
Cargo Yields under pressure
Once again we hear that cargo yields are under pressure due to overcapacity in many markets with more and more cargo-friendly aircraft coming into service. Simple laws of economics dictate that where capacity exceeds demand, rates will be depressed. This has been the trend for the last 20 years and there are no real indications that this trend will change. Meanwhile air-cargo revenues were expected to reach US$20 billion more than they did today
For an industry that is already suffering due to high oil prices, protectionism, modal shift and a move to onshoring, time are becoming increasingly difficult. It has been said before and there is no harm in repeating this, but reducing costs and making more effective use of resources is now going to be key to the survival of many in the air cargo business. I also believe that the recovery has to be led by listening to our customers. According to a survey undertaken by the Seabury Group and presented at the IATA WCS by Gert Jansen, Executive Director, shippers want:
Lots of answers spring to mind and once again we have many existing solutions to address the above. Immediate thoughts are:
Reduce costs by implementing e-cargo solutions, reducing the usage of the telephone, fax, and email, grow business without increasing costs and pass the savings to customers. Make it easy to do business with your company and don’t keep people hanging on the phone. This will only work if the online requests are dealt with promptly, otherwise confidence will be lost and the business partner will revert to the phone. Incentives need to be in place to persuade supply chain partners to do e-business with each other. For instance, guaranteeing a response to an electronic booking request within five minutes could persuade a forwarder to use this feature. If a forwarder is booking from his specific allotment (guaranteed space allocation) many automated systems can confirm the booking in seconds. IT solutions should be considered as a differentiator. This really is a must do for the industry.
Look at what the integrators are doing: door-to-door, guaranteed delivery, next day delivery, money back guarantees. Form alliances with service providers who can help provide these products. Imitation is the sincerest form of flattery.
If we are able to reduce our workload with e-cargo solutions, we can find more time to spend with our customers detailing solutions to their problems.
One combined transport document would help the cause. Consider ocean/air codeshares.
IATA has laid down the gauntlet to the industry: reduce transit times by 48 hours. Increase the value proposition of airfreight. IATA has engaged ground handlers, a key provider of services in the chain; it’s now time to engage customs authorities in the same manner. Furthermore most of us sit on huge amounts of information and we can use this to identify trends and to react to them. Reacting early to changes and understanding your customer can help better manage business and to address risks before they become issues.
Fred Smith, at the IATA WCS 2014 described the 747-400 and MD11 9 as the workhorses of that golden age, but have now become very expensive to run, resulting in airlines needing to rethink their freighter strategy. A 777-freighter flight from Hong Kong to Anchorage costs $30,000 less than a 747-400F while carrying almost the same payload. New fuel-efficient, twin-engine freighters in the form of the 777F and the A330F provide airlift with much lower unit costs than the 747-400 and MD11.Given all these factors and the fact that current freighter capacity exceeds demand, 43 Boeing 747-400s and 20 MD11s are parked in the desert and six 747-400s and four MD-11s have been scrapped. Fred closed his speech by stating that in the absence of a change in the outlook for overall global trade and given the introduction of over 200 efficient 777, A330, and 747-8 freighters, more 747-400Fs and MD-11Fs will have to be retired. Their economics simply cannot compete with the more modern airplanes. Moreover, underbellies will be increasingly attractive for the smaller shipments that do not require priority service. All of us may wish for a return of the days of double-digit air cargo growth, but we are creatures of much larger forces and the winds are not favourable.
Lufthansa Cargo head, Karl Ulrich Garnadt, told media recently that he too didn’t believe there was a strong future for all-freighter operators. “The combination carrier model is the only one I believe has a future in traditional air freight,” he said.
According to Stan Wraight, around 230 widebody freighters are due to come on stream in the next four years, leading to capacity growth of 5%. But with growth predictions coming in at far lower levels, even if there was 3% growth in that time, the extra capacity will lead to 9% excess main deck capacity.
Gert Jansen, Executive Director of Seabury, said that the IATA WCS that the average large and medium freighter is flying increasing shorter sectors to “vacuum clean” for cargo, the range capabilities of the aircraft are typically not used.
Gert also shared that while freighter orders since 2009 will continue to provide new deliveries in the next few years, after 2014, deliveries are not (yet?) expected to come close to the 2012/2013 peak.
Many industry leaders continue to push for a rethink. IAG Cargo recently signed a long-term commercial agreement with Qatar Airways to purchase capacity on Qatar-operated freighters, terminating their agreement with Global Supply Systems, for three leased B747-8 freighters. QR will now operate five B777F flights a week between Hong Kong and London on behalf of IAG Cargo.
The trend is also downward:
Air France-KLM have cut freighter capacity by 11.5% and Cathay has ceased freighter operations into Manchester. In contrast, Russell Tom, Boeing’s Regional Director of Marketing for Air Cargo, stated at the IATA WCS 2014 that main deck’s share of cargo continues to remain steady at about 60%. Boeing figures say the world’s freighter fleet would increase from 1,730 to 2,300 by 2032
I think freighters are here to stay, but we will see more retirements over the coming years. The challenge is to be competitive, carriers have to use more modern fuel efficient freighters and making a case for a new passenger plane is always going to be easier than making a business case for a new freighter. It’s also worth bearing in mind the passenger business normally pick up most of the costs for belly cargo, whereas the cargo side of the business pay for freighter operations in their entirety. The main demand will continue to come from integrators but where it makes sense to do so, larger airlines will continue use freighters to serve markets where they have no passenger flights and where the demand makes it sensible to do so.
Vol. 14 No. 12 Saturday February 7, 2015
WEST COAST PORT MELTDOWN
According to reports, the west coast of the United States could experience a total shutdown.
In this recent photo, incoming container ships queue up outside the Port of Los Angeles waiting for dock space.
Employers could lock out West Coast dockworkers in as few as five days if the two sides do not reach a new contract.
That warning came Wednesday, Feb. 4, 2015, from the head of a maritime association that is negotiating a new deal with a union representing longshoremen at 29 ports, which handle about $1 trillion in trade annually.
The shipping lines employer group says they have put a new contract proposal on the table for West Coast dockworkers.
Pacific Maritime Assn. President Jim McKenna pleaded that International Longshore and Warehouse Union accept a five-year “all-in” contract proposal and end alleged slowdown tactics employers say have crippled West Coast ports, including Los Angeles and Long Beach.
McKenna said the already congested ports are roughly five to 10 days from a meltdown.
“We are at a critical time and this can't keep going forever,” McKenna added.
A Landmark Series By Richard Malkin
In early February two of Europe’s largest container lines announced they would further enhance their cooperation. CMA CGM and Hamburg Süd were already offering joint services from North Europe to South America and the Caribbean, but starting in May there will be further cooperation.
Subject to FMC approval, this will see the lines start a new pendulum service that will connect Asia, the Caribbean, the United States East Coast, and North Europe. And from July onwards the lines will, together with further partners, revamp their services between Asia and both the East and West Coast of South America.
The announcement was significant because German line Hamburg Süd was the last major line to commit itself to the mega-alliance model that has carved up global container shipping capacity in less than a year.
In fact, since Chinese regulators blocked the huge P3 merger—which would have joined CMA CGM, Maersk, and MSC— last summer, lines have simply sought out new arrangements with ever more vigor, rather than discard the strategy.
CMA CGM, the world’s third largest container carrier with around 9 percent, behind only Maersk (15 percent) and MSC (13 percent), has been among the most eager to move on to fresh pastures after the P3 debacle.
What Is Going On
Apart from its arrangement with Hamburg Süd, CMA CGM is also now a key member of Ocean Three with China Shipping and United Arab Shipping Co. Ocean Three represents around 21 percent of global container capacity, according to Drewry. This compares with the 2M alliance, which represents 31 percent of the market, and the CKYHE and G6 alliances with 24 percent of the market each.
In the short period of time since P3 was blocked, therefore, the global container shipping business has, in effect, been split into four major alliances supplemented by a range of slot deals and service arrangements with the few carriers, such as Hamburg Süd, which had previously refused to follow the crowd.
The drive behind mega-alliances comes from lines seeking to lower port and shipping costs and reduce the impact of excess supply at a time when they still need to invest in new ultra large container ships which offer reduced fuel usage and greater economies of scale to remain competitive.
Shippers have generally taken fright at the thought of such consolidation. Although lines are not allowed to jointly set prices, they believe that the ability to manage capacity could effectively stop rates falling freely. They are also concerned that service reliability and port congestion could both deteriorate.
But so far at least, most of those fears have proved unfounded. Certainly regulators are keeping a close eye on pricing arrangements. Rate peaks and troughs at the start of 2015 on key trades have been marked, but the pattern is not dissimilar to 2014 with lines continually attempting to implement new rate increases or surcharges which are then quickly eroded by the market.
Of course, the pricing landscape has been clouded in the first quarter due to U.S. West Coast port congestion and union issues, which are taking capacity out of the market and bumping up prices, and preparations for Chinese New Year, which are adding to the rush to load ex-China prior to factory closures. Exactly how rates are being affected by the new mega-alliances will not, therefore, become clearer until later in the year.
In terms of performance, the mega alliances do not have to reach too high to improve matters this year compared to last. According to SeaIntel Maritime Analysis, 19 of 20 shipping lines recorded a decline in on-time performance during 2014, with CSAV the only exception.
Of the analysts, Drewry has been the early leader in examining exactly how the mega alliances are influencing liner behavior on key routes. In one recent report, the analyst found that on the key Asia-North Europe lane, the four major alliances now control almost all of the services. However, more positively, the number of services and available capacity has barely changed.
“Many feared that the formation of the mega-alliances would intensify the homogenization of the industry whereby carriers can only compete with one another on price as they all have the same services,” said Drewry. “However, closer inspection of the schedules reveals that the alliances are far from uniform and between them they have created a pretty well-balanced network with wide port coverage at both ends of the trade.”
Drewry also concluded that for time-sensitive shippers the alliances were providing a wide array of transit times. From Shanghai to Rotterdam transit times range from the quickest time being 28 days to the slowest time being 36 days, for example.
“With each alliance having a slight geographical bias, often dictated by members’ terminals interests, they all can boast some transit time supremacy somewhere,” said Drewry.
“Interestingly, the advent of the new alliances looks to have increased the average speeds of ships on the trade, which is probably a consequence of both dramatically lower bunker fuel costs and the desire of carriers to make their new services more attractive to customers.
“Drewry estimates that average westbound service speeds have sped up to 18.5 knots; versus 17.8kts as measured in December. The 2M again leads the way with an average speed of 19.8kts, while the G6 brings up the rear on 17.5kts.”
However, Drewry adds the caveat that its analysis was based on scheduled transit times and “shippers will be well aware carriers do not have a great track record of delivering cargo on-time” with Drewry’s Carrier Performance Insight finding that reliability in the Asia-Europe trade was only 64 percent in December.
So while the pricing and service implications of the new liner mega-alliances are still not entirely clear at this early stage, from a shippers’ point of view, their worst fears have so far not materialized.
Oil Dip Fuels India Cargo
The sharp fall in global crude oil prices by nearly 35 percent over the last year has awakened the freight forwarding industry in India. Other than the forwarders, it is the express industry that uses airlines. So, it was not surprising when the Express Industry Council of India (EICI), the apex body of express delivery service providers in India, demanded the immediate withdrawal of Fuel Surcharge (FSC) levied by domestic airlines.
Presently, the domestic airlines in the country charge between Rs 13 to Rs 16.50 per kilogram (0.21-0.28 cents) as fuel surcharge.
The EICI has also asked the Civil Aviation Ministry and the Director General of Civil Aviation (DGCA) to look into the matter and ensure that the domestic carriers set right the FSC and bring about a transparent and market-driven mechanism for the determination of the surcharge in the future.
Fuel surcharge on shipments is levied on a per kilogram basis and was introduced in May 2008 to counter the volatility in fuel prices. Air Turbine Fuel (ATF) prices then were Rs 58387/kl (at Delhi Airport). The FSC were then fixed by airlines at Rs 5/kg for cargo shipments. “Currently, the ATF price is at Rs 52423/kl, which is 10 percent lower than the 2008 price, but the FSC charged is as high as Rs 16.50/kg for the cargo shipments. In the past as well when fuel prices fell, airlines continued to increase their FSC.
“Airlines need to appreciate that FSC is purely a tool to mitigate volatility and cannot be part of cargo rates,” said an agitated Vijay Kumar, chief operating officer, Express Industry Council of India.
Globally, airlines benchmark FSCs to a reference like the Brent crude movement or an index like USGC (published by US Department of Energy). Even in India, Blue Dart Aviation, a cargo airline references their FSC to a Brent index. Doing that would be fair to the trade and bring down transaction costs of the Indian businesses using air cargo, including the large number of micro exporters and medium and small industries, a key component of the government’s thrust to industrialize the country, Vijay Kumar said.
Kumar went on to give the example of IndiGo: The airline charged Rs 5/kg as FSC in May 2008, while in May 2014 it charged Rs 15/k when ATF was Rs 71034/kl, and Rs 16.50 in December 2014 when the fuel price was Rs 59943/kl. Other carriers were also levying FSC at around the same rates. Hence, the subsequent demand by the industry to stop the fuel surcharge.
Meanwhile, EICI, along with a large number of exporters, is hoping that India’s Foreign Trade Policy (FTP) does come through. It has been more talked about than seen. Once the FTP—valid for a five-year period with the latest one from 2014-19—is notified by the Central Board of Excise and Customs (CBEC), it will allow small exporters to send out shipments at cheaper rates.
Exporters sending small shipments through the cargo option have to do a lot of paperwork. A Custom clearance charge has to be paid by these exporters per package, which is often more than the price of the contents in the package. These exporters are hoping that with the FTP, they would also be able to send goods abroad to consumers buying on the net.
Courier operators believe that the FTP will help small and micro exporters reach their global consumers because the country’s exporters would not have to go through a number of cogs in the freight chain to deliver goods to the customer. These include transportation at the origin and the destination, air transport, clearing agent, etc. Once the way is clear for couriers, not only would tariffs for small export packages reduce substantially but these will basically be done by a single entity.
Vol. 14 No. 11
Tuesday February 3, 2015
Most signposts for air freight are looking rather perky ahead of an expected spike in demand out of China before factories close for Lunar New Year celebrations.
Stifel’s January Airfreight Logistics Confidence sub-index—which uses a European-based survey to generate its results and so does not take into account congestion and labor challenges on the U.S. West Coast—continued on the relatively steady upward curve that started in March 2014, as it increased 0.8 points compared to December to reach 56.6.
All lanes experienced gains in January except U.S. to Europe, which declined 0.4 points to 53.6. Europe to the U.S. was the biggest improver. Aided by the strong greenback this lane rose 2.6 points to 54.7. Europe to Asia increased 0.2 points to 47.2 and Asia to Europe gained 0.9 points to reach an impressive 61.9.
In Asia the export demand outlook is particularly robust. Speaking to FlyingTypers from Thailand, Stewart Sinclair, managing director of Suvarnabhumi Airport ground handler Bangkok Flight Services, said volumes had been strong throughout 2014 and this had been maintained in early 2015. “We see no reason for this not to continue into the New Year,” he said. “There have been some additional charters related to the West Coast congestion but in general we have seen continued strong volumes throughout the year.”
The Association of Asia Pacific Airlines said members had seen an “encouraging revival in demand after three consecutive years of declines” during 2014 as international shipments from manufacturing hubs prompted a 5.4 percent year-on-year gain in freight ton kilometer terms. Andrew Herdman, AAPA director general, said the outlook for the coming year was “broadly positive.”
Asian carriers will be major beneficiaries of the anticipated peak out of China and other hubs in Asia in the coming weeks, as shippers rush to ship product ahead of the Chinese New Year celebrations.
These officially run February 18-24, but factories will be closed before and after this period as coastal workers commence long journeys back to villages in the interior. A large proportion also fails to return, and short-term labor shortages are not unusual after the holidays.
“We expect to see a surge in volumes ex China over the next two weeks in the run up to Chinese New Year—this would be in line with previous years,” one Asia-based carrier executive told FlyingTypers.
“The West Coast is also still playing its part. Demand to the U.S. is notably stronger than demand to Europe and we expect this to continue throughout the quarter.
“Even if all the West Coast issues were solved overnight there would still be a considerable backlog.”
Cathy Roberson, a U.S.-based senior analyst at Transport Intelligence, takes a similar line. “Traditionally the lead up to the Chinese New Year means demand rises for air freight and this year will be no exception,” she said. “With no end in sight to the troubles at the West Coast ports, air freight will continue where it left off in 2014 and regain a bit of share it lost to ocean freight, particularly on the Transpacific lane.”
Vol. 14 No. 10
Monday February 2, 2015
HONG KONG TOPS AGAIN
Art & Airports . . . “1,600 Pandas World Tour” brought several hundred of the 1,600 paper pandas created by French artist Paulo Grangeon to the Arrivals Hall of Hong Kong International Airport (HKIA) last June.
Latest numbers confirm HKIA once again tops world cargo.
Hong Kong International Airport looks set to retain its place as the world’s largest freight airport after racking up record volumes in 2014. Intense competition between its three ground handlers has underpinned its success.
Last year HKIA handled 4.38 million tons, up 6 percent year-on-year. Although the final numbers have not yet been tallied, it looks like enough of an increase to ensure its status as the world’s largest international freight hub remains in place for another year, ahead of rival contenders such as Memphis, Shanghai, Incheon, and Dubai.
HKIA’s enduring competitiveness is in no small part down to the high standards of freight handling it offers, not least since the phased opening of Cathay Pacific Cargo Terminal in 2013, which threw down a significant gauntlet to established handlers HACTL and AAT.
Cathay’s new facility, operated by Cathay Pacific Services Limited (CPSL), handled 1.45 million tons of HKIA’s throughput in 2014, up from around 600,000 tons in 2013 when it was not fully operational.
HACTL ended 2014 with its strongest quarter of the year, handling 491,476 tons, up 4.9 percent on the same period of 2013. This helped the handler record full year tonnage of 1,814,726 tons, up 8.7 percent compared to a year earlier.
HACTL remains HKIA’s leading handler by volume. But amid its upbeat PR about year-on-year gains it is worth noting that it continues to lose market share. And its tonnage figures remain more than one million tons lower than in 2012, when HACTL was still handling Cathay Pacific’s fleet—2012 was the second best performance in the firm’s history and just 4.2 percent short of the 2,899,603 tons recorded in 2010.
The rivalry for airline business at HKIA is now placing all of its handlers under intense commercial pressure. Although airport handling rates are fixed, HACTL, AAT, and CPSL are free to negotiate rebates based on delivered tonnage on a commercial basis with airlines. “Handling rates are set by the authorities,” explained one Asia-based executive for a European airline. “What can change is the rebate that each handler offers. With more competition, there is clear pressure on these.”
And that pressure seems certain to grow as CPSL looks to boost its market share. With capacity to handle up to 2.6 million tons per annum, CPSL has the ability to further expand and is promising customers extended cut-off times, last-minute cargo acceptance, and reduced connection times for transshipment cargoes.
Certainly, volume growth is on an upward curve. CPSL saw an increase in volumes in Q4 over Q3 and expects further gains in 2015. Already this year it has announced a contract to handle EVA Air’s cargo handling and documentation services at HKIA. It was a major win—BR operates 60 scheduled passenger flights and 15 scheduled freighters a week and was formerly handled by HACTL.
Apart from Eva and Cathay, CPSL’s 1,800-strong workforce currently also serves AirAsia, Air Hong Kong, Dragonair, Royal Brunei Airlines, and Thai AirAsia. But with around 100 airlines now using HKIA there are still plenty of potential customers at which managers can shoot.
“It is very difficult to give you a projection for 2015 as our market share is also dependent on airlines' business performance,” a spokesperson told FlyingTypers. “However, what I can say is Cathay Pacific Services Limited is becoming more proactive in expanding its customer portfolio. We have made a good start to 2015 by securing EVA Air, one of the key air cargo players in Hong Kong.”
Luckily for rival handlers they, like CPSL, are at least fighting for shares of an expanding market. “Air traffic demand continues to grow, and we expect 4-6 percent growth in passengers, cargo volumes, and flight movements this year,” said Fred Lam Tin-fuk, CEO of Airport Authority Hong Kong.
Vol. 14 No. 9
Thursday January 29, 2015
WOMEN IN CHARGE
At FlyingTypers, we’re endlessly thrilled when we hear news of women not just securing jobs in air cargo, but also excelling in them. The news is even more exciting when it involves a pioneering effort, which, in the case of women in air cargo, it often does.
Last year we applauded the work of Dolores Hofman, who currently works at the Queens Air Services Development office, but who began as a secretary in the Pan Am Cargo office and later became the first female to operate a commercial forklift truck in commercial air cargo service.
This year, we travel to the UAE, where a young woman named Ayesha Hassan AbdulRahman Al Marzooqi has been launched on a similar career path, albeit in a much different place. Given the special circumstances career women face throughout the world, FlyingTypers is more than happy to shine a spotlight on the accomplishments of women in the Middle East especially, as evidenced in our earlier 2013 article, “Women Power Middle East.”
Ayesha began as a clerical worker in an office, but the 28-year-old Emirati soon set her sights on something far more challenging and groundbreaking—Abu Dhabi Ports’ flagship Khalifa Port. One of the most technologically advanced ports in the world, Khalifa Port is the first semi-automated port in the GCC region and it now boasts an even bigger claim: it holds the first female quay crane operator in the UAE, and she also happens to be an employee of Abu Dhabi Terminals (ADT) and the manager and operator of the Khalifa Port container terminal.
Khalifa Port is home to a gigantic super-post-Panamax crane, which weighs 1,932 tons and rises 126.5m into the sky. It is one of the largest ship-to-shore quay cranes in the world, and Ayesha, currently a trainee in the final stages of her training program, works underneath its boom, in a small, transparent cabin where she operates the “spreader,” a specialized tool connected to the crane’s framework. As a trainee, Ayesha works five days a week in four-hour shifts, from 8am-4pm. She is one of only four women in a trainee group of 23 Emiratis. From her tiny eyrie some 60m above the ground, Ayesha manipulates steel ropes that lower the spreader to the top of the ship to lock onto the containers. She then maneuvers the containers dockside.
“I watched a documentary about a female pilot in the UAE Air Force who truly inspired me,” Ayesha said.
“Before I started my training at Khalifa Port container terminal, I was given a tour of the port facilities and the ship-to-shore quay cranes really fascinated me. I felt this was my calling and I decided to become a crane operator.”
Ayesha hasn’t just learned how to handle a Panamax crane, either. She is becoming well-versed in port fundamentals, health and safety procedures, as well as the overall infrastructure of Khalifa Port and its present handling capacity of 2.5 million containers a year.
“Our comprehensive on-the-job training for Emiratis started two years ago and we are immensely proud that Ayesha Al Marzooqi joined ADT to become the first female Emirati crane operator,” says Senior HR Director, ADT, Eisa Hassan Al Marzooqi.
“One of ADT’s top strategic priorities has always been to train and develop Emiratis to join the fast growing ports industry. As a result of this, we have almost doubled the number of Emirati nationals within a year; ranging from senior and middle management to supervisory and practical roles,” adds Al Marzooqi.
“ADT is delighted that Ayesha has made history by becoming the first female Emirati crane operator. Being an innovative ports operating company, we are dedicated to the development of UAE talent and will continue to create new job openings. It is our continued ambition that our Emirati training program grows each year along with the significant growth of ADT,” says ADT CEO Martijn van de Linde.
FlyingTypers believes as long as the number of women in the Emirati workforce continues to grow, businesses like ADT will continue to see their profits expand in kind.
Vol. 14 No. 8
Tuesday January 27, 2015
WHERE WE ARE RIGHT NOW
After a strong end to 2014, air cargo demand is again building in the run-up to Chinese New Year and forecasts are now suggesting that 2015 could see the sector further improve from where it was a year ago.
Managing Director, TNT Asia, Middle East, & Africa Michael Drake (left) said he expects to see an increase in demand in the run to Chinese New Year. “This is traditionally what occurs and we believe this year will deliver the same,” he told FlyingTypers. “However, this increase will not be as large as the run up we experienced prior to Christmas, but it will provide some impetus to the market.
“This would be welcomed, as the single largest market to impact demand will be Mainland China and we have seen their manufacturing index weaken over the last 3 months of 2014, which suggests a less than buoyant start to the year.”
China’s official Lunar New Year celebrations run February 18-24 this year, but many workers leave coastal factories to visit villages in the interior long before the holidays begin, so they can undertake journeys that sometimes last 3-4 days.
Many also return late, forcing most major export factories to shut down or reduce production for a number of weeks. As a result, shippers traditionally rush to get cargo out of China before output slows, giving both air and ocean a demand spike before the lull that follows.
Sou Ping Chee, (right) Panalpina regional head of air freight for the Asia Pacific, expects uplift demand to be particularly strong from Hong Kong and key Chinese airports in the next few weeks due to disruption to transpacific ocean supply chains.
“Traditionally, the time leading up to Chinese New Year has always been busy for the air freight market in the Asia Pacific, especially in China and Hong Kong, so we expect 2015 to be no different,” he said. “However, given the exceptionally strong 2014 peak season and the still unresolved U.S. West Coast port congestion, the pre-CNY peak could potentially be stronger this year, particularly on the transpacific trade lane.”
Gary Phelps, (left) senior vice president, Global Air Freight, BDP International, also forecasts continuing tightness in the market from Asia Pacific to the U.S. in the absence of a labor/management contract agreement at U.S. West Coast seaports.
“In addition, we see continued growth from U.S.A. to Asia Pacific for airfreight, with an emphasis on Shanghai seeing the most growth,” he added. “We have also seen additional U.S. spikes in airfreight to South East Asia.”
He said that on top of the impact of West Coast port congestion, air freight capacity generally tends to tighten between 10 and 14 days prior to Chinese New Year, as ocean shipments stop becoming an option.
“Shippers are expediting shipments before China goes quiet in observance of the Lunar New Year,” he said. “Pricing, true to form, will definitely spike up due to the high demand, especially for the trade lanes between Shanghai and Los Angeles, and on the Shanghai-Chicago trade lanes.”
The bright start to the year that Chinese New Year provides could also give the whole of 2015 some early momentum, according to IATA. In a recent letter to FlyingTypers, Chris Goater, manager, Corporate Communications, defended the organization’s downbeat forecasts during 2014, when IATA’s forecast of FTK growth of 2.1 percent was short of the mark—it in fact expanded by 4.3 percent.
But he was far more bullish on 2015, although he insisted positivity should be put into a more general context.
“Our December 2014 outlook suggests that FTKs could grow 4.5 percent this year, and nothing would please us more than if this also turns out to be an underestimation.
“[But] it remains the case, however, that air cargo revenues are $5 billion lower than in 2011 and that yields are set to fall for the fourth year running. So there is still a ‘way to go’ before the industry can truly be said to be back where it belongs.”
Vol. 14 No. 7
Friday January 23, 2015
EMO TRANS TRANSITIONS
The meteoric growth of EMO Trans has continued unabated since it launched in 1965, and now, fifty years later, many of the employees who helped ensure its success will be leaping forward within the company.
On January 1, 2015, Jo Frigger effectively transferred his role as CEO to current Presdent Maro Rohrer, who will now assume the title of President and CEO.
“Since taking on the role of President in 2013, Marco has demonstrated a remarkable energy and unwavering drive to lead this company forward with a steady hand and resolute determination,” Jo Frigger says.
“Having Marco assume the CEO role will not change day-to-day operations and only serve to further strengthen customer focus,”he added.
Mr. Frigger will continue to serve as Chairman of EMO Trans, focusing on strategic global development and delivering greater global visibility to customers.
Vice President – Sales and Marketing, Jenni Frigger-Latham, a staple at EMO Trans, is now a member of the Board of Directors.
Responsible for furthering growth at home and overseas, Frigger-Latham is also juggling board membership in the Air Forwarders Association.
CFO Tom Harlin is now also the executive vice president, expanding his responsibilities to include EMO Trans’ investments abroad.
The Southeast Region’s Peter Crooks (right) was promoted to vice president, whose expanded responsibilities will now include a new Advisory Board of representatives from key departments within the company.
Director of Compliance Sven Frigger will serve as a representative on the Advisory Board, responsible for ensuring conformity with rules and regulations.
“We have created this group to ensure that the ideas and concerns of all offices, down to the grass roots level, will be properly recognized and addressed by the Board of Directors,” says Jo Frigger.
With an interest in further developing EMO Trans’ presence in the Midwest Region, Uwe Kaeding (left) has been promoted to vice president, with additional responsibilities for the West Coast.
“Uwe has shown his skill in successfully growing the offices in the Midwest, and we are confident that under his guidance, the West Coast offices will expand and continue to thrive,” Mr. Frigger assures.
Lastly, a new EMO Trans convert, Donna Landeck will head the Human Resources department to help manage EMO’s expanding workforce.
“In keeping with our deep-rooted culture of Success by Performance, all of the appointees, with the exception of Donna, are long term members of the EMO Trans group.
“They satisfy my utmost concern that our culture, spirit, and open management style of mutual trust and respect will be maintained and nurtured,” Jo Frigger said.
Vol. 14 No. 6
Tuesday January 20, 2015
OLIVER EVANS – NO DESK JOB FOR HIM
It was Samuel Johnson who observed that languages are the pedigrees of nations. And it was Oliver Evans, chief cargo officer of Swiss International Airlines and chairman of The International Air Cargo Association, who leaned on those pedigrees to broaden his executive and managerial talents in a global air cargo universe.
Master of five languages, he has directed his attention toward the growth of new business capabilities to meet today’s challenges head-on. Over the decades in the transportation industry, Mr. Evans has “deliberately shaped” his career to amass experience as part of different logistical thrusts in different countries.
Asked to comment on the current state of the transatlantic cargo market, Mr. Evans noted that despite media reports of economic recovery, “especially in the United States,” he stated that “the opposite is true of Europe where many countries are stagnating or even threatened by recession.” (On the other side of the world, Japan has fallen into another recession.) There was hope in the fact that 2014 experienced a recovery of air freight volumes, but that bit of good news took a steep nosedive under the impact of a “spectacular increase in capacity.”
He held that overcapacity on the transatlantic run drove rates for many large general cargo traffic to a point where “they no longer cover variable costs.” Add to the foregoing shifts in modal transportation, miniaturization, and “gadget convergence,” and re-engineering in the supply chain. Insofar as Swiss WorldCargo is concerned, its principal focus is on “care-intensive” products that require solid reliability—an area of service that brings “a reasonable return.”
The iron dictates of geography have imposed certain constraints on Swiss WorldCargo whose home base is landlocked. Long ago it turned its back on competing for volume, instead focusing on specific markets.
The carrier’s concentration on market specialization—temperature-sensitive pharmaceuticals and laboratory and high-tech material, for example—has proved to be a wise course to follow. Remarking on the tough year 2014 turned out to be for the industry, Mr. Evans drew obvious satisfaction from SWC’s results which were “ahead of budget for the year to date.”
Swiss WorldCargo is one of the four cargo-oriented sevices forming Lufthansa Cargo Group. Mr. Evans explained that the German airline’s group comprises a number of “air freight-related companies whose portfolios of destinations, capacity, products, and services complement each other.” The core of the group is formed by Lufthansa Cargo and “seven other providers of belly and/or main deck capacity.” SWC’s chief went on to state:
“The Lufthansa Group have wisely chosen a very flexible approach to forming alliances inside and outside the group so that Swiss International Airlines and Austrian, for example, have chosen very different paths to success—specifically, it has been recognized that the high degree of autonomy enjoyed by Swiss WorldCargo brings huge financial advantages to customers and shareholders.”
SWC, whose total lift is without all-cargo capacity, schedules 63 flights per week in both directions to/from the United States. It markets the freight capacity of the Swiss International Airlines fleet: Airbus A330-300 and A340-300 for long hauls, and narrowbodies for short and medium hauls. Joining the fleet in 2016 will be the Boeing B777-300 ERS (long haul) and the Bombardier C series (short haul).
Based on 2013 statistics, Europe (37 percent) and Asia (36 percent) turned out to be SWC’s leading sources of cargo revenue, with U.S./Canada (16 percent) a poor third. In descending order were South America (6 percent), Africa, and Australia/New Zealand (2 percent each), and Middle East (1 percent).
Air cargo’s middlemen, the IATA-authorized cargo agent and the air freight forwarder, burst into quick prominence in the new air freight market on the heels of World War II—not to unanimous applause from the airline side. The ensuing decades have produced a large measure of middleman-carrier cooperation and emotional stability—but one with an alert ear cannot miss occasional grumbling on either side. How do the forwarder and agent fit into SWC’s drive toward heavy goals? Are they major or minor elements in the big picture?
In a flat statement, Mr. Evans stressed the point that the forwarder’s value to the customer is “huge” because he “plans and executes the entire supply chain.” In other words, the forwarder’s acknowledged expertise and “core competencies” exceed the airline by far. This naked fact makes the forwarder a natural as an airline customer. Having given the forwarder (and agent) their due, Mr. Evans followed with another aspect.
“It is clear that in the highly specialized segments that we serve, the degree of sophistication of services to be provided means that the forwarders welcomes our direct dialogue with the end user, his customer,” he said. “Air cargo in these segments is not a commodity, but a highly prized service, and forwarders consider us as an ally and partner in acquiring business because of the airport-to-airport expertise we bring to the table. While not at 100 percent, by far the majority of the cargo we carry is acquired via the forwarding community. Certain very specific customers, such as banks, do trade directly with us.”
At age 60, Oliver Evans, articulate pilot of Swiss WorldCargo, was born in Chaville, France, claims French-British nationality, and makes his home in Switzerland. He is married with two children. He has a BA degree from the University of Manchester. His record in transportation-industry activity—both air and surface—covers substantially more than half a lifetime.
After joining Ocean Transport & Trading PLC in 1976, Mr. Evans spent a year in management training, which brought him to London, Milan, and New York. Assigned to what turned out to be a series of commercial and operations positions in the latter city, the young man was filling the office of vice president and general manager, U.S.-West Africa in 1985 when he was named manager-strategic development. He was to last two more years dealing with sea cargo. In 1987 he responded to KLM’s beckoning finger.
The modal change brought Mr. Evans to the British capital where for the next two years he served as cargo sales and marketing manager–U.K./Ireland. In his professional ascent at the Dutch airline, he moved to regional cargo manager–Southeast Asia (Singapore); deputy cargo area manager–Asia, Australia, Middle East (Singapore); cargo sales director–Central and Eastern Europe (Frankfurt); sales and marketing director worldwide, Business Unit Air Cargo (Netherlands); vice president-strategy and alliances; KLM–Alitalia cargo joint venture (Netherlands); vice president–cargo alliances (Netherlands).
It was a 14-year adventure in the service of KLM, in a way reminiscent of Tennyson’s “so many worlds, so many things to do.” There followed a year-long intermediate period at BAX Global as vice president–global sales, and toward the end of 2002—Voila!—he showed up in Zurich to enter the employ of Swiss WorldCargo as executive vice president. That same year Mr. Evans was advanced to chief sales and marketing officer, and it took but another seven months—in March 2002—for him to assume Swiss WorldCargo’s presidency.
He has contributed his talent and energy to a string of professional organizations, including IATA and TIACA. And he admits to such hobbies as rowing, hiking, swimming, and reading—but one’s left wondering, since a day consists of only 24 hours.
Possibly the greatest part of his attitude toward his job is his candidly declared love of travel. He is happy hopping around the world, dropping in on customers, partners, and staff—“and to learn from them.” Leadership, he stated strongly, does not equate with a desk job. As far as vocations go, his is a “wonderful” one. It’s a journey that “goes from one end of the planet to the other—and never ends.”
In response to a suggestion he identify the present-day air freight customer’s No. 1 complaint, SWC’s head underscored the “slow pace of real change in the transformation of industry’s processes.” That customer, he added, is on the right path when he demands a redoubling of industry effort to bring about the urgently desired transformation. He expressed astonishment at “how much acceptance there is for mediocre services, and how many customers still go with the cheapest price.” In the long term, he insisted, quality and reliability provide the best pay-off.
Two competing questions: Price? Service? Mr. Evans stated emphatically that if price had been the primary choice of air carrier, “he would have been out of business a long time ago.” SWC, he maintained, ignores the needs of the mass market, offering neither the required capacity nor price level. Still, he conceded, SWC is hardly immune to pressures in the marketplace and competition, and it makes a special offer to “provide the best quality-price relationship to help our customers to prosper.”
Are air freight forwarders throughout the world of a single stripe, or are their striking differences in professionalism influenced by location?
The era of substantial differences in levels of education and expertise around the world is long over, he said. The air freight industry is now a “global village” where data and knowledge are at one’s fingertips. He went on to point out that resourceful forwarders of any size “can be in the most challenging of environments where basic infrastructure or trade facilitation leaves a lot to desire.”
What can he say about those disturbing reports about confirmed air shippers reverting to surface modes? Mr. Evans’ initial reply was to call attention to the fact that supply chains are under endless review and companies settle on different transport modes. Acknowledging that of late there has been considerable talk about the shift from air to ocean, he tagged some of it as pure exaggeration. Why so? Because only the cheapest commodities are affected. On the other hand, “goods of a certain valure, particularly in the earliest stages of entering the market, will always benefit from air transportation.” Are the modal shifts worrisome to SWC? Not nearly as much as the transfer of “the airline-forwarder alliance to the integrator.” As a defense, SWC is creating solutions for the forwarder to “retain that growing business segment for ourselves.”
After that big industrywide build-up of e-freight’s paperless glory, where does it stand today? Mr. Evans is clearly on record as there is “enormous room for improvement and acceleration.” He was pleased by what he described as new “momentum” in the number of e-AWB transactions. His tone changed as he said, “Let’s not kid ourselves; this is just one document out of many, and there is a long, long road ahead.” Mr. Evans hastened to express his belief that there exists an opportunity for an organization like TIACA to “bring together all the parties involved, from regulators to shippers and all in between—including the various other associations representing these diverse groups—and convince all to strive for industrywide solutions rather than one-to-one solutions.”
For a change of pace, Mr. Evans was asked for his opinion of the average shipper’s grasp of the basic economics of air freight transportation. Were they fully conversant with its pluses and minuses in relation to their particular businesses? Were there significant gaps? He quickly pointed out that, on the shipper side, “supply chain practitioners are looking at all modes of transportation with air often being the minor share in terms of volume.” It remains for the airlines and the forwarders, he continued, who are faced with a “big job” in continuing assisting shippers, as well as the wider public, to “understand the vital role we play in the facilitation of global trade.”
Actually, Mr. Evans’ business contacts, which certainly include procurement and purchasing executives, are diverse. Most important, he went on, is to understand that “it is not the function or trade of anybody you deal with, but how you interact with them.”
Questioned whether cargo marketing practices have undergone change, SWC’s boss instantly replied, “Thank goodness, yes!” In sharp contrast to those days when air carriers “took cargo for granted and invested minimally,” industry maturity has shaped it as competitive as any other. The airlines are now in a position to make total use of “the entire spectrum of capabilities and channels, from social networks to internet advertising and more traditional paths.”
In pursuit of his professional duties and corporate obligations, Mr. Evans has traveled the world over. Thus it was simply considered routine to ask him where, in his personal opinion, the world’s top three cargo airports are located. He momentarily stunned the interviewer with the prompt reply, “Zurich, Geneva, and Basel, of course.” This was accepted as a show of pride and possibly tongue-in-cheek. He explained: “Our airports reflect the exceptional nature of our infrastructure, and provide examples that others can follow. But because freighters are not part of their day-to-day bread-and-butter business, I do have to work hard to remind them that their national airline, and therefore they themselves, prosper also because of the huge cargo contribution.”
The international airlines have never been without a slew of problems. What did he consider to be their current major headache? Noting that they straddle two distinctly different businesses—cargo and passengers—the two “rarely develop in sync.” This leads to a path to a variety of “distortions and dilemmas.” Extending even to the political. No, his job is not an easy one, but—with a broad smile—“Don’t we just love it.”
The element of cargo security ranks high at SWC. Mr. Evans claimed that the Swiss carrier has won universal recognition as a “global leader” in that field of endeavor. In addition to international (ICAO), European, national, and company security regulations, he stressed SWC’s commitment to a list of cargo-specific programs and standards.
Gazing into the future, can he recognize any potential dangers? It was a query exclusively related to the air cargo industry, but Mr. Evans apparently saw this as an opportunity to give vent to a broad intensely human expression:
“Not only our industry, but our world is facing extraordinary dangers. Our phenomenal intelligence has put us in charge of the future of our beautiful planet, but our equally phenomenal stupidity often makes it seem likely that we will squander our gifts and make an enormous mess of it all. Luckily it seems that danger and adversity are the mothers of invention, and we are all learning with an ever-increasing sense of urgency.”
In the scores of interviews which this writer has conducted over the years, he occasionally requested his subject to describe one or two significant case histories in which he was personally involved. This request was put to Mr. Evans who denied having the ability to answer such a question “in a succinct way.” Why not? Because “the nature of our business is that we carry the widest range of shipments and each one of them tells—or could tell—a fascination story.” Expanding on the topic, he alluded to his many years plugging away on three continents and traveling to virtually every other corner of the world. There is a treasure chest of exciting operations involving shipments of urgently needed vaccines, human organs, emergency supplies, and so on. Getting down to basics, SWC’s chief offered an invitation to any observer of the industry to “enter any one of our warehouses, point at random to any package or box they come across and start to investigate the story behind it: our world is indeed endlessly fascination, and the hectic pace of our daily lives or events us from appreciating all these wonderful stories.”
On a note of finality, it was suggested to Mr. Evans that, given the authority, what would he change in the air cargo industry? He bridled at the question because it implied he didn’t have the authority, “or enough of it.” Standing on “firm belief and personal conviction,” he clung to the view that all of the involved possess “incredible powers” to create a difference—not just himself as a senior airline executive and also at TIACA, but “every one of us.” Underscoring this line of thought, he insisted that “we all have daily interaction and encounters with countless others; we are all therefore leaders in our own right, able to exercise enormous influence on the world around us.” His desire is to help himself and others to “tap ever deeper into this pool of potential and satisfaction.”
Away from the job, Oliver Evans is a homebody, deep in the comfort of family life mirrored in the presence of his Irish wife Liz and (pictured above) daughter Alison and son Luke. For a man in his position and disposition, he must deal with a fine line which divides work and travel on one hand, and “quality” time spent with family. Whatever his achievements, he credits his family’s love, support, and understanding.
The Evans family has found happiness and comfort residing in Switzerland, and it looks like they will make it their permanent home. In any case, Oliver Evans’ contract with Lufthansa terminates this September, and there are compelling thoughts about self-employment during the remaining years of his career.
Vol. 14 No. 5
Friday January 16, 2015
UNITED CARGO MOVES AHEAD
“We believe this realignment will streamline our decision making and quicken our response to opportunities offered by our customers,” said United Cargo President Jan Krems, as United Cargo named Jacques Leijssenaar—an 18-year veteran from AF/KL Europe—as Vice President, Cargo Sales EMEIA. The appointment of Leijssenaar is part of a new re-aligned sales set up with all four sales divisions, including Vice President, Cargo Sales Americas Jim Bellinder, newly named Vice President, Cargo Sales Asia Pacific(APAC) Mirco Renfer, Managing Director, Cargo Sales Strategic Accounts Helen Kristensen, and the aforementioned Leijssenaar, reporting directly to Mr. Krems.
“This change will enable us to serve as an even more valuable business partner in 2015,” Jan Krems said.
In a related development, David O. King is now managing director, Cargo Pricing, Revenue Management & Sales Strategy. King first joined Continental Airlines Cargo in 2006 and has led Cargo Sales Americas for United since 2013.
UA bid farewell to Rick Fall, (right) who steps down and retires from cargo sales Asia Pacific (APAC) following a remarkable career of nearly 45 years in the airline industry.
“We salute Rick for his dedication and thank him for his countless contributions.
“We are certain all his industry colleagues join us in wishing Rick a happy and healthy retirement,” Jan Krems said.
Vol. 14 No. 4
Wednesday January 14, 2015
TSA Deadline looms
With a February 16, 2015, deadline for implementation, the TSA-mandated security updates for all-cargo aircraft—affecting all U.S. and non U.S.-based freighter aircraft operators into and out of the U.S.—drew sharp fire from TIACA Secretary General Doug Brittin. Brittin worked for the TSA before joining TIACA.
“The timing of the announcement (December 29) over the holiday season, and the short implementation period are not ideal,” Brittin said.
“While the updates incorporate some ideas which the industry has worked on with the TSA, they do not address the risk-based approach, which we have discussed and fully supported.”
“We would urge the TSA to consider reinstating an air cargo division to facilitate an even closer working relationship with industry.”
Vol. 14 No. 3
Monday January 12, 2015
VOYAGES OF DISCOVERY
You cannot help it. You work in, or are connected by air cargo to, the airline business.
For many people, airlines depart from the familiar to explore places yet to be discovered.
A new year affords a wonderful opportunity to consider why and how to spend the coming year.
Today we are talking about industry trade shows with an interview with the U.S.-based Air Forwarders Association.
We’ve been thinking a lot about it.
After you run the gamut of two or three air cargo trade shows, around about May, the most oft-heard rationale for appearing at industry events is that they “are good for networking.”
Granted, networking is important, but after a couple of times you cannot help but wonder if it’s the drinking time or if there is really anything more to say to the “usual suspects”?
We suspected the truth could be found in a mix of both, and have embarked on checking out some new options for trade show attendance that might bring new opportunities to air cargo.
Last week was the blockbuster Consumer Electronics Show (CES) held in Las Vegas.
We’ve just passed through the twinkling, always lovely, and sentimental holiday season, so having the Consumer Electronics Show in a place where the night is brighter than the day is a power surge for the senses, and quite a propos.
The fact that so many commodities partially or entirely shipped by air cargo are in attendance makes CES an important, albeit overlooked, event for air cargo people ready to explore what could be a goldmine of future business.
Consumer Electronics Show 2015 (CES), held January 6-9, was resplendent with high tech, air cargo-dependent consumer goods. Despite being held in the glittering fantasia of Las Vegas, Nevada, the majority of CES attendees originated from overseas, with big players Samsung, Sony, LG, and HTC leading the ranks. Air cargo should open their ears and eyes to the products promised at CES 2015—including where they will be produced and where they will be in demand—as these details directly relate to the future success of the air cargo industry.
We recently wrote about Airbus’ 3-D printed jumbo jet, and it seems 3-D printing will be expanding beyond plastics. At CES 2015 the company Makerbot introduced new plastic filaments containing wood, metal, and stone pieces, which will herald new opportunities for makers and artists of all stripes to enlarge the world of 3-D printing. Voxel8, a new 3-D printer, takes the technology one step further by introducing the ability to print complete tech objects (as opposed to singular components that have to be pieced together). Voxel8 can essentially print the plastic body and metal circuitry of a drone, with all the wiring already printed inside.
As I sit typing this, looking at plastic I’ve wrapped over a leaky AC unit that breathes bitterly cold air into my office, I long for Keen Home’s new smart vents, which fit over the vents in your home and “smartly” open and close to modulate the temperature in your home.
But these are just some of the “small beans” products—niche technologies that added a little color to the event. The big dogs, the sharp-edged tech introductions that will be slicing through the tech world to serve up a brand new future, should really be on air cargo’s radar.
Samsung held back on unveiling its Galaxy S6 phone, opting instead to reveal its SUHD television. From plastic printing to next gen TVs, 3-D knows no bounds in 2015. Not only will Samsung’s SUHD TV offer no-glasses-required 3-D, but it also boasts a 110-inch LCD screen with 8K resolution (forget 4K, which is only just now becoming affordable)—that’s about 16 million pixels, which is hard to even imagine. We can’t guarantee the whole thing won’t make you feel like you’re living in the movie Gravity, nauseous and a little punch-drunk, but hey, if Sandy Bullock can make it out alive, then maybe so can we. The problem will really lie in the availability of 8K-compatible programming. At the moment, with 4K only now becoming available and even remotely affordable, the question becomes whether 8K products will even be usable before the end of this decade. LG, Sharp, and Panasonic also introduced 8K prototypes, but only Panasonic addressed the issue of 4K programming with the introduction of a 2015 4K Blue-Ray player, which will be great if you can find a 4K Blue-Ray disc (you can’t). 4K was still a big player at CES 2015, and as it becomes more affordable, will become a tech innovation to pay special attention to as the next generation television system.
Sony revealed its new “Walkman” portable music player, which I grew instantly excited about, thinking I could revive my dusty cassette mixtapes with a swanky new personal player system. Alas, Sony’s new Walkman is, like its Apple iPod contemporary, a digital music system—but better. The new Sony Walkman plays uncompressed, high-res audio files that supposedly surpass your average MP3 or CD. Bulkier and heavier than an iPod, the new Walkman is composed of aluminum alloy and sports a faux-leather back. But unlike the $20 Walkman I bought in 1988, the new Sony Walkman boasts a $1,200 pricetag, so unless you’re an avid audiophile, it might not be worth it.
New smartphones from the big cell phone companies were conspicuously absent at CES 2015. While HTC introduced its Desire 826 and 320, it was companies like ASUS with its uber-affordable Zenfone 2 ($199) and Zenfone Zoom, Motorola-owner Lenovo with its A6000, and YEZZ with its Firefox OS-dependent phones that showed their wares, to name a few.
The biggest thing to come out of CES 2015 was probably the myriad drone iterations. More than 100 different drones were present at the show, confirming that drones are one of the most rapidly growing consumer technologies of late. Drones have become so popular and ubiquitous among techies that they were even reserved a special “Unmanned Systems Marketplace” area at CES, where several companies could exhibit and fly their models undisturbed. There’s the Ghost Drone, which unlike most available drones can be operated solely via a smartphone app. Another drool-worthy device for millenials, the Nixie is a miniscule drone with flexible arms—it can be worn, bracelet style, and then thrown in the air to take selfies. There’s the FLYR1, which includes a detachable high-definition camera, can follow and pinpoint you by homing in on the pattern of your shirt, and stream what it records directly to your cellphone. And once again 3-D printing becomes a large and necessary factor, with some drones hoping to offer schematics and circuitry details to 3-D printer owners so that they can produce their own drones at home. Intel is also supplementing drone technology by offering depth-perceptive cameras that will sense obstacles and smartly configure the shortest route between points. With the FAA predicting that 7,500 drones will take to the skies by 2018, it’s high time the cargo industry looked up at their skymates. The real issue drones are facing is a very short battery life and an inability to carry more than about 55 pounds, but with technology moving at its current pace, those restrictions may be lifted by 2018.
Vol. 14 No. 2
Wednesday January 7, 2015
BUOYANT BELLINDER BRINGS 2015
Lucky 7—When Jim Bellinder was named Vice President, United Cargo Sales on January 7, 2013 (exactly two years ago today), he assumed command, leveraging 26 years of experience in Continental Airlines and United Cargo Sales.
He needed that experience and more, as we all know now.
UA Cargo was going through a baptism of fire, combining the resources of the two aforementioned carries—with all the attendant difficulties associated with that kind of effort—while also adding new systems, opening new facilities, and dealing with a declining cargo business.
Today the story has changed dramatically, and as 2015 dawns, this hands-on air cargo guy who began his airline career as a Cargo General Sales Agent in Chicago, then progressed to Area Sales Manager, International Sales Manager, Regional Sales Manager, Regional Sales Director, and Continental Cargo’s Director of Cargo Sales – Americas, can approach this month and year with great hope and enthusiasm.
January has always been a signature month for Jim; in January 2011, following the United-Continental merger, he assumed the post as the first Director of Cargo Sales at UA.
Revenue Up 19.1% in 2014
“I’m happy to say United Cargo is in a much better place at the start of 2015 than we were at this time a year ago.
“We posted some pretty encouraging numbers in 2014: revenue grew 19.1 percent year-over-year in the third quarter and volumes were up 23.2 percent in the same period.
“Of course, we’re not fooling ourselves—we were able to achieve such a high percentage of increases because of the hit we took when we implemented our new cargo technology systems in the last half of 2013.
“But the most profound change from 12 months ago goes beyond numbers.
“As 2014 progressed, we were able to regain our customers’ trust in our ability to deliver on our promises.
“Because of that, we have reestablished our own team’s confidence and pride in the service we provide.”
“Another reason our team is confident as we move into 2015 is that most of the worldwide economic indicators that impact air freight are trending positive.
“To cite two examples: final returns aren’t in, but 2014 should be the first year since 2010 in which freight volumes grow at a greater rate than capacity.
“Also, in IATA’s forward-looking report issued in December, they state that global GDP is expected to grow by 3.2 percent in 2015, which will be the first time above 3.0 percent since 2010.”
Taking Nothing For Granted
“But United Cargo’s confidence, along with the improving conditions, doesn’t mean we expect to just sit back and watch the business roll in.
“It means there is great opportunity for the organization that is creative and accommodating enough to capture the business, then deliver operational results consistently and in a way that makes the customer look good.
“Looking at regional and country-level growth, United Cargo is very encouraged by developments in the China market.
“China has shown great progress as an import market in the past few years—a complement to their ongoing importance as a manufacturing center and a source of exports.
“United has the largest China-U.S. network, and retaining and benefitting from this leadership position is a key to our growth plans.
“We now operate direct flights between the U.S. and Beijing, Shanghai, Taipei, Hong Kong, and Chengdu, and we continue to explore adding capacity and new cities to our China service.
Dreamliner A Dream?
“The 787 Dreamliner has been a boon to United Cargo because its unique size and greater fuel efficiency has opened up new markets United could not profitably serve with other aircraft.
“These include Houston-Lagos, Denver-Narita, and San Francisco-Chengdu.
“SFO-CTU is a particularly good example, because the 787 allowed us to operate not only the first service by a U.S. airline in Chengdu, but the first service by a U.S. airline in mainland China beyond Beijing and Shanghai.
“We had high hopes (no pun intended) for Chengdu’s potential as a cargo market, and the first six months of service have fulfilled our expectations.
“B787 brought even more to the table late in October when we began to operate the world’s longest regular 787 route: Los-Angeles-Melbourne.
“This service takes advantage of the greater range of the 787-9 ‘stretch’ version.”
Getting Back To Basics
“We've had limited focus recently on the development of any new products. This is in line with our belief that the most important thing is to ensure we continue to execute “the basics” of our business at an excellent level of quality.
“Our longer-term goals are to develop new features and enhancements for our specialty products—including TempControl, EXP Express, QuickPak and UASecure—to ensure these services deliver exactly what our customers need.
“In 2014, our product enhancements were focused on TempControl, our premium product for the transport of pharmaceuticals and other temperature-sensitive shipments.
“We expanded our global TempControl network and recently reached the 50-location milestone.
“Earlier last year, we launched our ‘Control Tower’ for the planning and management of TempControl.
“This approach involves a focused team of specialists who provide customers a single point of contact through all phases of their shipment’s lifecycle.
“We also became the first U.S. carrier to accept Envirotainer RKN e1 temperature control container following the FAA’s approval in July.
“In addition, we also introduced two new service options for customers shipping temperature-sensitive cargo: EZ Passive and EZ Active.
“These options allow customers to book and ship TempControl immediately without waiting for a customized set of processes to be approved.”
Time To ‘Fess Up About UA
“We know that United Cargo in a highly competitive, ever-changing market needs to be very flexible.
“We have changed for good.
“It’s not just about one or two aspects of our offering either.
“We’ve made it clear to every member of our team that we will do what’s right for the customer first, and we will never take any shipment for granted.
“Our customers and service partners and others that may be considering our services need to know that we are doing business in this manner everyday.
“We've shifted our priorities toward exploring the benefits of long-term strategic partnerships with our customers rather than obtaining the benefits of any single deal.
“Think of us first when you as a customer are proposing something that needs unconventional thinking or a fresh perspective.
“We know the supply chain, as well as our customers’ needs, are evolving in ways we can’t predict.
“That’s why we’re empowering our people to make decisions that generate fresh and creative solutions.”
An Industry for Everybody
It being the beginning of a new year, we asked Jim Bellinder what he would like to see happen to air cargo on an industry basis. In regards to what the industry can do better, Jim had a lot to say.
“It’s no secret that recent years have been a very challenging time in the air cargo industry. Businesses that are struggling to survive tend not to spend a lot of time and resources on long-term developments that benefit the industry as a whole. Now that the outlook is a bit brighter, we need to get traction on a number of lingering issues.
“The recent progress on the expansion of e-AWB is an example of the positive things that happen when necessity, benefit, and consensus come together. I think our industry needs a similar innovative and comprehensive response to the issue of modal shift. We all believe in the advantages of air cargo versus other modes, and there are several ways we can work together to both maximize and publicize these advantages.”
Why Air Cargo?
As with everyone we interview, we’re curious as to how Jim’s path veered towards air cargo, and what keeps him here.
“I met some really terrific people from Northern Air Freight in 1985.
“They explained to me, with excitement and enthusiasm, how the air cargo business worked.
“Shortly after that I had the opportunity to begin working for the Cargo Development Group as a GSA for Continental Airlines in Chicago.
“I've been working in air cargo since then.
“I love that air cargo is all about the quality of the individuals who work in this great business of ours.
“I really enjoy working with my colleagues at United Airlines and interacting with industry associates from around the globe.
“Another key factor that keeps me in air cargo is the feeling of accomplishment that comes with collaborating with our team and our customers to find a creative and effective way to meet the customers' needs.
“Feeling like I've made a difference in a positive way reinforces my commitment to the company and the industry.
“Air cargo is a dynamic industry—sometimes simple, other times complex—that can lead to a long-lasting vocation. I would tell anyone thinking of entering this great industry in 2015 and beyond to start at the bottom and work your way up, respecting the importance of each job you have and learning everything you can at every level.
“You will have a career of which you can be proud,” Jim Bellinder said.
As Jim spoke, in my aviation mind the word ‘proud’ connected to “Proud Bird,” a great hangout and place to watch the birds at LAX, and, if memory serves, Proud Birds was also a now-forgotten ad phrase from the old CO.
Always loved the bump line from that 1970s ad campaign:
“We really move our tail for you.”
All things considered, today the ad might seem passé.
But proud people building the new United Cargo are making that great airline look better everyday.
Vol. 14 No. 1
Monday January 5, 2015
UP UP AND AWAY 2015
Global air cargo demand now seems certain to soar well into 2015, and analysts believe Asian carriers and handlers are best placed to prosper.
“Volumes have stayed strong throughout all of 2014 and we see no reason for this not to continue into the New Year,” said Stewart Sinclair, managing director of Suvarnabhumi Airport ground handler Bangkok Flight Services. “There have been some additional charters related to the west Coast congestion, but in general we have seen continued strong volumes throughout the year.”
A new report from HSBC forecasts that air cargo demand will provide a major boost to Asian carriers next year. “We forecast a significantly better 2015 for Asian airlines,” said HSBC. “We expect a pick-up in underlying demand, boosted by the impact of lower fuel surcharges, to comfortably absorb new capacity during this upswing. We believe the best-positioned routes will be intercontinental and intra-Asia Pacific trunk.”
HSBC said U.S. west coast port congestion had caused some shift back from sea to air. With congestion expected to continue “well into 2015,” this would see a strong start to the year for air cargo.
“As only 2 percent of cargoes go via air and 98 percent by sea, only a modest diversion from sea can be quite supportive of air freight,” said the report. “While there is always very little visibility in air cargo, the chronic nature of the U.S. west coast port congestion is providing more prolonged support for air freight volumes. Port delays are creating uncertainty and this means there is an increasing tendency to ship a portion of popular products via air to ensure inventory levels can be managed.
“Our discussions with liners and industry participants suggest congestion will take time to resolve and implies a continued migration from container trade to airfreight in 1Q15.”
HSBC’s analysis is supported by the latest bellwether air cargo figures from Asia. Cathay Pacific, usually a good indicator of performance by Asian airlines’ freight departments, reported a 12 percent year-on-year increase in cargo handled in November, and volumes were up 11.9 percent over the first 11 months of the year.
HKIA also became the first airport to ever handle 400,000 tons in a month during November 2014. Hactl, one of the hub’s leading handlers, said it had broken both daily, weekly, and monthly records in November due to growing U.S. west coast port congestion, traditional traffic peaks related to Thanksgiving and Christmas, and the launch of new mobile products.
Julia Yan, general manager, Strategic Planning & Development of Airport Authority Hong Kong, predicted that cargo demand would continue to grow through December. “We expect across-the-board growth in traffic volume to continue as we approach the end of the year,” she added.
HSBC said that air cargo markets were now settling down after growing by about 2x global GDP growth from 1979-99, before slowing over the last decade due partly to a loss of market share from air to sea. “As the relationship between economic growth and air cargo volumes has changed there is less visibility on demand,” said the report. “We believe air cargo volumes will now grow at about 1x GDP growth. As we expect the key source markets for the Asian airlines to grow GDP by 4.4 percent in 2015 (estimate), this implies freight volume growth of 4-5 percent.”
However, Cathy Roberson, a senior analyst at Transport Intelligence, was more cautious on air freight demand in 2015 than many of her peers. She predicted Q1 would start strong for airfreight and for integrators thanks to inventory replenishment and holiday returns. “Demand should then level off once the Chinese New Year passes and possibly be subdued due to a cautious economic environment through mid-late second quarter,” she added.
“Integrators will probably continue to see good demand particularly due to e-commerce and will look to build out capabilities to enhance services to meet this growing trend.”
Vol 13 No. 102
Taking Control Of Lithium Shipping
When Over Is Not Out
Best In Show Scores Productivity
Chuckles For December 19, 2014
Nut Gate At Korean Air
More Chuckles For December 19
Ode To Concorde
Vol 13. No. 101
Ray Of Hope For Delta Cargo
Any Which Way But Down
Mail For December 15, 2014
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