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13/04/15 2:37 PM

The weekly newspaper for air cargo professionals Volume: 18

Issue: 26

6 July 2015

Heathrow runway recommended

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third runway has been recommended for Heathrow Airport by the UK government’s Airports Commission.

Its study found that airfreight gross domestic product will increase by 3.3 per cent by 2040 with Heathrow expansion, compared to 0.3 per cent with Gatwick Airport.

Called the North West runway, it would be a full length runway at 3,500 metres, and every type of aircraft operating from Heathrow could use it for take-offs and landings. According to the commission report, Heathrow’s North West runway scheme masterplan has provision for an expanded freight handling capacity within the airport boundary, designed to handle a, “significant increase in the airport’s freight operations. It could accommodate a rapid throughput of freight handling across all areas of its airfield.”

Heathrow Airport states that with the third runway its cargo capacity could increase from 1.5 million tonnes today to three million tonnes. The members of the

Airport Commission, set up by the UK government in 2012 to recommend options for UK runway capacity, were unanimous in their decision in favour of an extra Heathrow runway. At the commission’s press conference, its chair, Sir Howard Davies, says: “Heathrow is the freight airport and that is a very important part of the calculations.”

But, the commission is opposed to a fourth runway at Heathrow, ruling it out completely. This would mean a future three runway Heathrow at full freight capacity

would mean more cargo would have to be flown in and out of other UK airports (see page two).

In an interim report, the commission had put forward a second runway at Gatwick as a possible option. In its final report, the commission’s arguments against Gatwick are that it is an airport that mainly serves short haul, low cost airlines, it does not have the long haul East, West routes needed for airfreight, and its location South of London is not advantagous for trucking shipments.

Heathrow, however, provides

more than 70 per cent of the UK’s long haul flights, and carries more freight by value than all the UK’s other airports combined. The commission says of Heathrow’s long haul connectivity: “Industry projections show that the strongest growth for freight in the developed world is expected to be with emerging economies, emphasising the continuing importance of the role of Heathrow Airport as the UK’s most important freight hub.”

Heathrow’s freight operations are significantly larger than those at Gatwick. According to the commission, about 17 times larger in terms of tonnage and more than 170 times larger in terms of value.

Heathrow’s motorway links are also important, it adds. Earlier this year Heathrow appointed a head of cargo, Nick Platts. He says: “We welcome the Airports Commission’s clear recommendation and their recognition that the benefits of expansion at Heathrow are, ‘significantly greater,’ for freight operators.”

For more Airports Commission news turn to page two.

handle up to 1,070,000 tonnes per year by 2050. This growth is from more long haul services. Under Gatwick’s plans it would add a 65,000 square metre cargo facility on a site of up to 20 hectares in size.

With airside and landside parking and storage areas, it would have access to the apron. Gatwick’s bid has gained support from the Institution of Mechanical Engineers and the GMB trade union.

In May, Gatwick saw cargo volumes fall by 24.3 per cent yearon-year (YOY) to 5,652 tonnes, which it says was because of Emirates operating triple daily Airbus A380 services rather than the Boeing 777 which carries more cargo.

So far this year, Gatwick has only seen YOY growth in March, while January, April and May have all seen double digit falls.

Gatwick fights back over extra runway Gatwick Airport wants the UK’s governing Conservative party to ignore the recommendations of the government’s Airports Commission and opt for a second runway at Gatwick.

In response to the Wednesday 1 July publication of the commission’s final report and recommendation of a third runway at Heathrow Airport, Gatwick chief executive officer, Stewart Wingate, says: “It is...for the government to decide...We are confident that when the government makes their decision they will choose Gatwick as the only deliverable option. The

[commission] report underplays the massive environmental challenges of air quality and noise at Heathrow.”

Gatwick tells Air Cargo Week that with a second runway it could

stansted Could be next uk freight hub cool future for finnair cargo terminal networks is the strategy

bespoke is better by far

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United buys into bioenergy firm UNITED AIRLINES has bought a $30 million stake in Fulcrum BioEnergy, a specialist in converting municipal solid waste into what it claims is low-cost sustainable aviation biofuel.

The agreement allows for the joint development of up to five projects, all near United’s hubs. They could produce up to 180 million gallons of fuel per year. This alternative fuel meets United’s technical requirements and Fulcrum expects to begin commercial operation in 2017.

“We know alternative fuels is an emerging industry that is vital to the future of aviation and this is just one of our initiatives to help make these fuels saleable and scalable,” says United’s executive vice president and general counsel, Brett Hart. “It’s a smart move for our company as biofuels have the potential to hedge against future oil price volatility.” United has negotiated a long term supply agreement with Fulcrum. Subject to availability, the airline could buy at least 90 million gallons of fuel a year for a minimum of 10 years. The cost is expected to be competitive with conventional jet fuel.

NEWSWEEK

Stansted could be next UK freight hub

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eathrow Airport would have no more than three runways under the UK government’s Airports Commission recommendation, and so London Stansted Airport has been tipped as a possible successor to Heathrow as a freight hub.

The commission is opposed to a fourth runway and its final report says: “There would not be any credible case, however, for a fourth runway at Heathrow.”

A future three runway Heathrow at full freight capacity will mean airfreight has to increase at other airports in the next thirty years. According to the commission’s final report, “there would be likely to be sufficient demand to justify a second additional runway [in England] by 2050.” The report goes on to say: “If new capacity was found to be necessary...airports previously assessed as part of the Commission pro-

cess, for example Stansted and Gatwick [Airport], and airports outside London and the South East, such as at Birmingham or Manchester,” should be considered.

The UK airfreight industry is already centered around the London region. The commission examined options for runway expansion at Heathrow and Gatwick.

At the commission’s press briefing on Wednesday 1 July, its chair, Sir Howard

Davies (see picture), said that Gatwick was rejected because it as an intra-European low cost airline focused airport with a location South of London that means its road links to the rest of the UK are not as good as Heathrow.

In 2014, Gatwick handled 88,000 tonnes.

Stansted handles more than 230,000 tonnes annually and new freight carriers attracted in the last few years include Qatar Airways and China Southern Airlines. Stansted managing director, Andrew Harrison, says: “We share the commission’s view that Stansted’s existing runway will be full by around 2030. Stansted provides an obvious solution for additional capacity.” But, Stansted tells Air Cargo Week: “We don’t have any plans for runway expansion.” However, Stansted’s former owner, BAA, did have a proposal for a second runway following a government white paper in 2003 that called for runways.

Heathrow decision has wide support AIRFREIGHT organisations have welcomed the recommendation of the UK government’s Airports Commission that Heathrow Airport be given a third runway and urge a quick decision by the governing Conservative party.

The Freight Transport Association (FTA) is urging the government to make a quick decision. The FTA’s director of global and European policy, Chris Welsh, says: “Additional capacity at Heathrow is critical to allow importers and exporters to access new and emerging markets in Asia, South America and the Indian sub-continent. FTA urges the government to take on board these recommendations and act quickly.”

However, in the UK parliament on Wednesday 1 July, UK government prime minister and Conservative party leader, David Cameron, said only that a decision would be made by the end of the year.

The Board of Airline Representatives in the UK (BAR UK) says that the commission recommendation has widespread support from international airlines serving the UK. BAR UK’s chief executive, Dale Keller, says: “Now is the time for everyone, including politicians of all parties, to pull together in the national interest and support the bold plans to expand and improve airport infrastructure at Heathrow.”

The British International Freight Association (BIFA) has backed the proposal for expansion at Heathrow. BIFA’s director general, Robert Keen, says: “ Over the past decades, successive UK governments have shown a singular lack of vision in the face of a massive surge in air transport and consequent pressure on existing airport in-

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frastructure in the South East. In 2009, BIFA gave qualified support to the then UK government’s decision to allow a third runway at Heathrow airport. We trust that today’s report will finally lead to some action.”

The Baltic Air Charter Association (BACA) has welcomed the third runway recommendation. BACA gives its full backing to the speedy implementation of the findings of the report. It is urging that construction goes ahead at the earliest possible opportunity and that any objections should be dealt with quickly within a time limit of three months. BACA wants the UK government to respond quickly and begin implementing the findings with immediate effect.

BACA chairman, Tony Coe, says: “With UK airport capacity at full stretch there should be no further delays in the building of the runway at Heathrow. The issue of UK airport capacity has to be urgently addressed, BACA is of the opinion that the new runway should be the number one infrastructure priority for the UK.” Pro airport expansion group Let Britain Fly is calling for more capacity expansion. Let Britain Fly director, Gavin Hayes, says: “All of London’s airports will be full by the end of the next decade. The urgency of the situation requires the government to grasp the moment and respond to the Airports Commission’s final report in a timely manner.

Kicking the can down the road for another year is no longer an option.”

Let Britain Fly has support from the British Chambers of Commerce, London Chamber of Commerce and Industry, London First, Institute of Directors and the Federation of Small Businesses.

NEWS WEEK

Cool future for Finnair cargo terminal with 2017 operational start

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innair Cargo has started construction work on its 80 million euro Cool Nordic Cargo terminal at Helsinki Airport.

The cornerstone of the facility was laid by the airline’s chief executive officer (CEO), Pekka Vauramo (see picture), and cargo managers in a groundbreaking ceremony on Tuesday 30 June.

The facility is expected to be in operation in April 2017. Once finished, the terminal will have 31,000 square metres of warehousing space and 6,000 square metres of office space. It will be capable of handling 450,000 tonnes annually. The airline also has the option of expanding the site by a further 10,000 square metres and 100,000 tonnes annually.

The terminal will be split into three areas. This will feature a 3,000 square metre pharmaceuticals area with an average temperature of plus 20 degrees Celsius. There will be storage rooms for pharma needing to be kept from two to eight degrees Celsius. There will also be a frozen

storage section. Another section will be a 3,500 square metre perishables area. This will include a packing area for perishables needing to be stored at six to eight degrees Celsius. There will also be

a storage area for products needing to be kept at two degrees Celsius. General cargo will also be stored separately. The development is part of a Finnair fleet development strategy that will see the Finnish carrier receive 19 Airbus A350 over the next five years, including four this year. This will result in cargo capacity being expanded and the opportunity to handle more volumes.

Speaking at the ceremony, Vauramo says the terminal investment is an integral part of the strategy to renew its widebody fleet. “This cargo terminal is part of the strategy that will see us increase our bellyhold cargo. It is an important step for us. With this new terminal we are able to raise the bar for our customers with more cargo terminal services and specialist services that guarantee cool conditions for cargo needing to be temperature controlled.”

The facility fits in with Finnair’s plans to focus on specialist types of cargo such as pharma and perishables, Vauramo explains: “We want to spe-

cialise and find those niche cargo goods that are high-end in value.” The terminal will also have an automated unit load device (ULD) system with a capacity for 550 ULDs and an IT system that will aim to optimise operational processes.

Speaking to Air Cargo Week at the event, Finnair Cargo head of operations, Jukka Glader, says the development gives the carrier the chance to move cargo operations to another level.

Glader explains, as the terminal will be largely automated, the airline will no longer have to rely on manual labour for operations, which will improve efficiency. He adds it gives Finnair the chance to understand, “what cargo it is dealing with and when”.

Once the terminal opens, he says, it will result in less cargo transited through the hub on trucks. Finnair Cargo has been awarded the International Air Transport Association’s (IATA) center of excellence for independent validators (CEIV pharma) certification at the event.

Finnair aims at doubling cargo

FINNAIR CARGO is aiming to double the amount of cargo it handles by 2020, as part of its investment in its widebody fleet and construction of a new freight terminal.

The carrier is set to receive 19 Airbus A350 over the next five years, increasing total bellyhold capacity by 50 per cent. In 2014, the airline handled 149,000 tonnes of cargo and is aiming to process 300,000 tonnes by 2020. Cargo made up 17 per cent of Finnair’s revenues last year.

Speaking to Air Cargo Week (ACW) on Tuesday 30 June before the cornerstone ceremony of the new terminal, Finnair Cargo vice president and head of cargo, Antti Kuusenmaki, says the facility heralds a new era for cargo and is part of a bigger plan and investment by Finnair, totalling three billion euros.

Kuusenmaki explains Finnair’s cargo strategy: “The construction is based on our model of transit cargo and specialised cargo. We have a strategy focusing on life sciences (pharma), perishables, mainly seafood and general cargo.” Finnair has introduced eight services for specialist types of cargo including pharma and seafood and will have two more by the end of 2015, Kuusenmaki adds, as part of its bellyhold cargo strategy.

The key trading lines for Finnair are central Europe and Asia, according to Kuusenmaki, and he says the airline is focusing on driving growth in these regions. The carrier is also set to add more bellyhold routes into high demand regions. “We are strong into North East Asia, China and Japan, as we have the optimum flying time from Europe of nine hours, so we want to get the most from this region,” Kuusenmaki tells ACW. Kuusenmaki says a high growth area is salmon to Asia, and the carrier’s proximity to Norway means they can move salmon to Japan within 36 hours. Finnair is also seeing demand for high-end products to China. The Scandinavian market has not been too well, Kuusenmaki says, and he adds that Helsinki is not the strongest market and has challenges along with nearby Sweden. He says the uncertain macro economic situations in the Eurozone and Russia have not had too much of a negative effect, as strengthening currencies in Asia have helped balance any impact out.

Another key part of Finnair’s strategy, Kuusenmaki explains, is the twice-weekly freighter service into Brussels Airport, its only freighter route. He says this is integral to growth as it feeds the carrier’s network in Europe.

ACW 6 JULY 2015

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NEWSWEEK

May sees slowing cargo says IATA

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ir freight volumes were up just 2.1 per cent in May compared to a year ago, according to the International Air Transport Association (IATA).

This is down on the April result of 3.9 per cent and well below the annual growth rate of 4.7 per cent seen in 2014. IATA figures show that overall freight tonne kilometres (FTK) rose by 2.6 per cent, year on year (YOY).

The association says that the figures confirm some slowdown in cargo growth, which is consistent with developments in trade activity and weakness in some emerging markets. It cites, “adverse developments in Asia Pacific,” as the main reason for the flattening.

Carriers in Asia Pacific recorded a 2.8 per cent rise in FTKs in May YOY. IATA says that the region has experienced notable slowdown in imports and exports over recent months, but points to April’s recovery in Asia exports as a cause for some optimism. In the Middle East,

carriers continue to show strong growth, with a YOY rise of 18.1 per cent in May reflecting ongoing expansion in capacity and networks, as well as trade with Middle Eastern economies.

Europe fared less well in May. Volumes fell by 1.3 per cent. IATA says that, “recent improvements in business confidence in the Eurozone have yet to translate into increased demand for airfreight, and consumer confidence remains subdued.”

In the US, May volumes fell by 2.9 per cent YOY. A better economic performance is expected in the second quarter, due to the impact of bad weather, falling oil prices and US sea port congestion. This should boost demand for air freight. It was a disappointing month for Latin America, with volumes down by 10.5 per cent.

Improvements to regional economies are yet to be reflected in volumes. African airlines, which account for a small proportion of global FTKs, saw YOY volumes up by three per cent in May.

Emirates responds to subsidy claims

EMIRATES has released a response to the allegations of subsidy and unfair competition made by US airlines in recent months.

The Dubai-based airline says in a statement issued on 30 June that the allegations made by the US carriers, Delta Air Lines, United Airlines and American Airlines, are wrong.

Emirates accused the three airlines of having, “launched an aggressive lobbying campaign in January, in a protectionist bid to restrict consumer choice, and restrict the growth of international flights to the USA operated by Emirates and other Gulf airlines.”

Emirates president, Sir Tim Clark, (see picture), says: “The methods employed by the US legacy carriers to discredit Emirates have been surprising and frankly, repugnant. We do not underestimate their

lobbying prowess, but facts are facts. Unlike the [airlines’] white paper, which is riddled with inaccuracies, conjecture, and legal misinterpretations, Emirates’ response is comprehensive and based on hard facts”.

Emirates responded to the allegations one by one. First, the airline denies that it is subsidised. Clark stresses that Emirates has, “been profitable for 27 years straight,” and that its expansion has been funded by its own cash flow.

Second, Clark says that the US carriers, “built their case on the wrong legal standards”. He stresses that the World Trade Organization’s anti-subsidy rules do not apply to international aviation, nor are they implicitly incorporated in the US open skies agreements. His view is that, “the US legacy carriers have framed their complaint in terms of their own narrow interests”, adding that they favour open skies agreements, “only when such work to their financial advantage”.

Clark concludes: “The [US airlines’] white paper is littered with self-serving rhetoric about fair trade, [a] level playing field, and saving jobs, but their mess of legal distortions and factual errors falls apart at the slightest scrutiny”.

The Partnership for Open and Fair Skies, which includes American, Delta and United, responded in a statement. It says: “Emirates can submit as many pages as it wants, but it still won’t paper over what has been well-documented: Emirates has received billions in subsidies and unfair benefits from the treasury of the UAE. Our investigation shows that these massive subsidies have ...[distorted] international competition and tilting the playing field to its advantage.”

FAA could fine its Bagram litigant FEDERAL AVIATION ADMINISTRATION (FAA) is proposing a $77,000 civil penalty against National Air Cargo Group for allegedly failing to comply with requirements for loading and securing heavy cargo.

The FAA alleges that during March and April 2013, National failed to comply with US government federal aviation regulations while loading heavy military vehicles onto two Boeing 747 freighters.

The 747F were flown on seven flights while loaded with one or more mine resistant ambush protected vehicles (MRAPs), with each MRAP weighing between 23,001 pounds (10,435 kilogrammes) and 37,884 pounds.

The FAA allages that one of the occasions of non-compliance during that two month period in 2013 was on 29 April. On that

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day one of the two 747Fs crashed immediately after take-off from Bagram Airfield in Afghanistan while loaded with five MRAPs. The seven crew died and the aircraft was destroyed. The probable cause of the accident is still under investigation by the US government’s National Transportation Safety Board.

The FAA alleges that National did not comply with the operating limitations set forth in the 747 flight manual. National Air Cargo has asked to meet with the FAA. The carrier has taken legal action against the FAA regarding an unpaid insurance claim. National, and its insurer AIG, are sueing the FAA for $45 million for refusing to pay out $42 million under a non-premium and liability war risk policy, which the firms claim covered the fatal 29 April crash.

NEWSWEEK Hong Kong rejects Jetstar licence bid

THE Hong Kong government’s Air Transport Licensing Authority has refused Jetstar a license to operate in Hong Kong, prompting a review from Qantas and its partners.

Jetstar Hong Kong, a joint venture between Shun Tak Holdings, China Eastern Airlines and the Qantas Group, was announced in March 2012. Jetstar had planned to have a base of 18 aircraft flying to destinations within five hours of Hong Kong. Its license application has been

under consideration for more than two years. It was opposed by competitors such as Cathay Pacific Airways on the grounds that Jetstar Hong Kong was a, “branch office of an Australian airline,” rather than a local enterprise.

Qantas has stressed, however, that each Jetstar partner holds a one-third economic share, while the Hong Kong-based Shun Tak Holdings has 51 per cent of the voting rights and ultimate control. Seventy per cent of the board is from Hong Kong. “[Hong Kong] is closed to fresh aviation investment even when it is majority locally owned and controlled,” says Qantas Group chief executive officer, Alan Joyce, also describing the decision as “disappointing”.

He adds that: “At a time when aviation markets across Asia are opening up, Hong Kong is going in the opposite direction.”

New Zealand JV to fly Boeing 737

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reightways is to upgrade its fleet from Convair CV-580 to Boeing 737-400 Freighters to meet the growing demand for express packages.

A provider of express package services throughout New Zealand, Freightway’s Fieldair Holdings subsidiary, an aviation engineering company, will form a joint venture company with specialist aviation provider Airwork Holdings. Fieldair operates the existing Freightways airfreight business on a daily basis between the New Zealand cities of Christchurch, Palmerston North and Auckland.

The joint venture will operate three 737-400F, replacing the five Convair freighters in operation. Airwork will lease the three 737-400F to the joint venture firm. According to Freightways, the 737-400F operate with a net payload of about 17,000 kilogrammes, compared with a typical Convair CV-580 net payload of about 6,500 kilogrammes. The transition to the new

aircraft will start early next year. Freightways’ managing director, Dean Bracewell, says that as express package volumes have grown, demand for the earlier positioning of freight through the airport hubs has increased.

“This new airfreight service will provide increased airfreight carrying capacity, faster sector speeds, savings in annual capital and operating costs and reduced carbon emissions per item of freight carried.

“In addition, the new fleet will provide sufficient capacity to accommodate the expected future growth of our business to business and business to consumer customers”, he says.

The new company’s main customers will be Freightways’ express package businesses and the state owned New Zealand Post’s express courier service. Capacity will be made available to other freight operators if required.

Taoyuan Airport expands handling TAIWAN TAOYUAN INTERNATIONAL AIRPORT has added to its cargo handling technology in its Taiwan air cargo terminal (TACT).

The extension project included the planning, design, delivery and construction of 669 conveyors, two cargo hoists and three elevating transfer vehicles (ETV), provided

by Siemens. Steel racks, a control system and Siemens’ cargo compact handling software were also installed at the Taiwan air cargo terminal.

TACT vice president, Frank Ke, says: “We recognised the high quality and professionalism expended in delivering these state of the art cargo handling systems and ETV systems that are operating in our terminals both in Kaohsiung [International Airport] and Taoyuan. We appreciate the positive attitude and dedication shown by the Siemens team.”

This is not the first collaboration between the two companies. In 2011, TACT com-

missioned Siemens to extend its material handling system for unit load devices (ULD) at the Taoyuan and Kaohsiung airports. Siemens had originally installed these systems between 2008 and 2011.

Taiwan Taoyuan International Airport handled more than two million tonnes of freight in 2014. It is served by more than 15 airfreight carriers.

TACT’s warehouses at the airport account for more than 133,000 square metres, and are located near the terminal’s twelve freighter aprons.

Siemens’ postal, parcel and airport logistics business has also installed cargo handling systems at Dubai International Airport and Al Maktoum International Airport in Dubai for Emirates SkyCargo. Siemens has also won a Turkish Airlines contract to equip the airline’s 70,000 square metre cargo terminal at Istanbul Ataturk Airport.

The terminal opened in January.

Vietnam approves new airport

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ong Thanh International Airport has been approved by the Vietnamese government.

On 25 June Vietnam’s national assembly members voted to construct a new international airport in the country’s Long Thanh district in the Dong Nai province, in the South of the country.

Long Thanh International Airport will act as an international aviation hub and it will eventually have an annual freight capacity of about five million tonnes.

The 348.4 trillion Dong ($16 billion) project’s

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first phase is due for completion in 2025, when a runway, a terminal and other support facilities will be operational. At that stage the airport will be able to handle about 1.2 million tonnes of cargo a year. The investment for the first phase is $5.4 billion. In phases two and three, more runways and terminals will be added, taking the cargo tonnage up to five million a year.

The 5,000 hectare airport site will include national defence facilities. Vietnam’s Tan Son Nhat International Airport will receive additional investment while Long Thanh International is under construction.

ASSOCIATIONS REPORT

Improve or go out of business

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mproving competitiveness is one of the urgent actions industry associations are telling their members to achieve at a time when the airfreight industry has been going through unpredictable changes.

The International Air Cargo Association (TIACA) secretary general, Doug Brittin, tells Air Cargo Week (ACW), some markets remain stronger, such as the Middle East and North America, while others, Europe and Latin America, are weaker. “There is still a challenge with yields, as the market remains extremely competitive, so increased volumes are still not reflected in bottom line improvements overall,” Brittin explains.

As for the industry’s challenges, Brittin feels the main one is the uncertain global economic climate. He says it is showing encouraging signs, despite Middle East, and Eastern European volatility, and Eurozone challenges, which have unsettled investor confidence. For Brittin, industry regulations are having a negative impact on business: “Increasing regulatory issues, make it difficult to stay current, and adds to the cost to remain in compliance.”

He adds that the other main challenge is cyber security, and its potential impact.

TIACA wants to see the expansion of advance data regimes, according to Brittin. He explains that with the European Union and US set to implement regulations in 2016, the need to ensure compatibility among systems is paramount. Brittin adds: “Industry can ill-afford a scenario where all of these programmes are dissimilar; that would add impossible cost and complexity to the issue. While we support the concept as a solid layer in the security of the supply chain, it must be done on a fully collaborative basis, and there remain a multitude of details yet to be worked out.”

Brandon Fried, change should focus on regulations. He explains to ACW the, “increasingly expanding web of complex regulations,” waste resources and create confusion, while diminishing transit time for shipments. “Countries and agencies must work together in harmonising rules to avoid duplicative and sometimes conflicting screening and customs protocols have little value while wasting time and money,” Fried says.

Fried explains that top of the list for the AfA is working on how forwarders will meet upcoming advanced data targeting requirements and how US airport cargo facilities, airlines and ground handlers will handle increasing volumes that a growing economic recovery will bring. “There must be an increased focus on electronic messaging and the transparency technology gives our customers,” Fried says. As for the future, Fried says regulations need to be the focus, as they provide little or no benefit and in his view, complex regulatory requirements reduce the industry’s competitiveness.

Airports Council International (ACI) World director general, Angela Gittens, tells ACW there are two forces in the industry pushing the pendulum in opposite directions. “As North America and Europe get back on course, the cyclical slowdown in emerg-

ing markets, such as China, has translated into subdued growth in the global air cargo market,” she explains. Weakness in the market, Gittens says, can be attributed to losing market share to ocean freight and other modes of transport. “Paradigm shifts toward cheaper modes of delivery mean suppliers of airfreight capacity need to rethink their business models to remain competitive,” Gittens feels.

In Gittens’ opinion, liberalisation presents the biggest opportunity to grow cargo across the world as she says it generates direct and indirect economic and social benefits for communities being served. But, improvements need to be made to regulations.Gittens view is that with a focus on making sure the right regulatory environment is in place, “the bottom line is for air cargo to thrive, we need to make sure airlines have the flexibility and capability to operate, and airports have the regulatory and business support they need to be able to provide the facilities to communities they serve.”

Associations are positive about the industry, but to improve competitiveness they want regulations made more efficient, a faster adoption of e-freight and other technical solutions for the harmonisation of business processes through IT.

Technical evolution

Evolving technologically is something Brittin wants to see and he feels the industry must move from a paper intensive environment to one, which shares information across the chain electronically. TIACA is also seeing growing concern about regulatory and training requirements, Brittin says, and it is focusing on the harmonisation of training and compliance.

Cargo Airline Association vice president of legislative policy, Gina Ronzello, feels the main challenges are security, safety, and the environment, mainly noise issues. She explains that the principal issue is maintaining open skies as the industry needs the ability to operate globally: “The US [government’s] departments of Transportation and State need to continue their support of these policies, so the cargo carriers have the ability to operate worldwide freight networks.” Ronzello adds that the association is focusing on the environment, specifically fuel efficiency, and also how to navigate the security challenges through improved communication between government and industry.

For Airforwarders Association (AfA) executive director,

BRITTIN There is still a challenge with yields

ACW 6 JULY 2015

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CARGO HANDLING AGENTS REPORT

Networks is the strategy

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etwork growth remains a key strategy for many cargo handling operators as carriers increasingly emphasise the importance of network capabilities and a preference for well established handlers providing services from multiple stations.

With cargo handling agents becoming more closely integrated partners in the supply chain, the scope of services is also evolving, according to Worldwide Flight Services (WFS) group chief operating officer, Barry Nassberg: “Major carriers, determined to maintain self-handling at their hubs or home base, are finally noting the efficiency gains possible from working with a handling partner, marking another fundamental change in how services can be provided,” he tells Air Cargo Week (ACW).

Nassberg’s WFS is on target to open is own cargo facility at Milan Malpensa Airport in

early 2016, which it says is a first by an international operator in Italy. “Our European network is already fairly dense, but still offers opportunities in a number of countries and our recent award of full ground handling rights in Madrid and four other Spanish airports will complement our existing cargo handling operation.”

Cathay Pacific Services (CPSL) chief executive officer, Kelvin Ko, says it has ramped up its efforts to explore business opportunities with airlines operating at Hong Kong International Airport and has grown its customer base to eight airlines. They are, AirAsia, AirAsia Zest, Air Hong Kong, Cathay Pacific Airways, Dragonair, Eva Air, Royal Brunei Airlines and Thai AirAsia, since starting in 2013. “Meanwhile, launch of a CPSL mobile application has taken shipment tracking functionality to the next level,” says Ko. Frankfurt-based Fraport Cargo Services (FCS) also expanded its range of

electronic services at the beginning of the year.

Customers and forwarding agents can now use a modern track and trace system to check the consignment status of their dispatched import freight.

With ambitions to become a European central hub, Liege Air Cargo Handling Services (LACHS), located inside Liege Airport and owned by CAL Cargo Airlines, offers specialist services for complex and non-standard cargo.

CAL Cargo vice-chairman, and chairman of LACHS executive committee, Muli Ravina, says: “While we are facing competition, mainly from the sea, we have also seen tremendous growth in cargo handling services. We recently doubled our intake of goods like perishables, pharma, dangerous goods, live animals, oversize/overweight and valuables, such as artwork.”

Handling competition

LACHS managing director, Yossi Shoukroun, tells ACW: “Last year ANA Airline Management transferred its business from Ostend Airport to Liege where it uses LACHS services for airfreight and ground handling. In 2015, we expect new airlines to come onboard with a focus on Asia Pacific and South America. Since CAL Airlines expects to open new routes to the Far East and to North America, LACHS will continue to represent the hub for additional route, as well as supporting CAL’s unique charter services.”

LACHS handled some 80,976 tonnes of cargo during 2013 which grew by 30 per cent last year to 105,704 tonnes. For January to May 2015 it handled 50,740 tonnes and expects an increase of 15 per cent by the year end compared to 2014. Last month, Swissport International and Swiss WorldCargo extended their strateWHITEHEAD I don’t believe we can send a clearer signal about our total commitment

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gic handling partnership five years until 2020.

Swissport Cargo Services operates at more than 109 airports worldwide and handles in excess of 4.1 million tonnes annually. The cooperation with Swiss WorldCargo includes 35 stations across the globe and the annual handling of some 130,000 tonnes of cargo and mail.

Korean Air Cargo extended its cooperation with LUG air cargo handling at Frankfurt International Airport in 2014 for a further five years to 2019. LUG has handled freight on behalf of Korean Air for 18 years.

Long term

After signing a new 10 year extension of its handling franchise with the Hong Kong Airport Authority, running from July 2018 when the existing franchise expires, Hong Kong Air Cargo Terminals (HACTL) chief executive, Mark Whitehead, says: “I don’t believe we can send a clearer signal about our total commitment both to the airport and to the future of our business.

HACTL is here to stay.”

But, with future expressions of confidence based on the opening of Hong Kong’s third runway at the earliest possible opportunity, he warns that standing still is not an option. “[The airport] must expand to accommodate the needs of the logistics industry, which is such an important pillar of the Hong Kong economy.”

During its first full year of operations in 2014, Hong Kong-based CPSL handled some 1.4 million tonnes of cargo and expects to see a substantial increase in volumes for the first half of 2015.

Ko describes the air cargo market as being in a constant state of evolution. “Consumers now increasingly shop online from retailers based across the world and this offers the aviation logistics industry an incredible opportunity,” he says. The booming e-commerce market in China continues to generate more traffic and express shipments. “It grew by 31.4 per cent last year, reaching a total market value of more than 13.4 trillion renminbi ($2.1 trillion) in 2014,” explains Ko. “To facilitate the handling of such shipments we have set up an express handling centre in the Cathay Pacific Cargo Terminal (CPCT), both to improve our efficiency and meet the needs of this growing market.” Whatever the ups and downs of the market, global networks for a growing world economy are clearly key.

PERISHABLES REPORT

Bespoke is better by far

C

arriers that can provide consistent and reliable services with precise temperature control of sensitive cargos now offer their own bespoke systems to facilitate the fast and reliable transportation of perishable goods. IAG Cargo’s (IAG) Constant Fresh and Lufthansa Cargo’s Fresh/td product are specifically designed to keep produce fresh and optimise shelf-life.

For IAG Cargo, it involves dedicated and custom built perishable handling facilities at its Heathrow and Madrid hubs to provide speedy and reliable services, along with expertise in the handling of perishable shipments. IAG Cargo’s global products manager, Daniel Johnson, says that despite challenging market conditions IAG has maintained a respectable year on year performance for Constant Fresh. “It has been helped by continued investment in our perish-

ables service underlined in April of this year when we moved our London Heathrow [Airport] perishable handling facility to Worldwide Flight Services (WFS),” he tells Air Cargo Week (ACW). “This has provided customers with a smooth and faster service, with them now being able to collect direct from the airport within two hours of arrival.

Speed remains the fundamental prerequisite for any perishable product and as such IAG has focused on fast handling from aircraft arrival at both Heathrow Airport and Gatwick Airport, through WFS, to the consignee. “We also see a number of our customers upgrading their bookings from Constant Fresh to Prioritise in order to benefit from our same day connecting services at Heathrow, which is of huge value to time sensitive products. Fresh fish, for example, can get from East to West all in the same calendar day.” As the market evolves, Johnson sees cus-

tomers becoming ever more demanding. “It’s about speed and freshness,” he says. “With the arrival of our next generation aircraft we can now set the hold temperature to within one degree centigrade accuracy; all in an effort to extend the shelf life of products.”

In the UK, low cost supermarkets, such as Aldi and Lidl, are one of the driving forces behind market expansion for the long distance transportation of perishable products. “With many consumers moving away from cheaper frozen produce there is an increasing demand for fresh produce on the shelves,” says Johnson.

IAG claims record growth in European seafood, crabs and razor clams from Scotland and crabs from Devon. Shipments to China see demand for premium European products from the increasingly affluent East Asian markets.

Expansion

A further sign of market expansion comes with the planned July opening at Shanghai Pudong International Airport Cargo Terminal (PACTL) of a 3,500 square metre perishables centre, which has been designed with future capacity to expand by a further 550 square metres. It is located near to the first of PACTL’s three terminals and is accessible from Pudong International Airport’s airside and the landside. Of PACTL’s annual volumes, 50,000 tonnes are perishables. Of those, 30,000 tonnes are classical perishables, such as food, with the remaining 20,000 tonnes being pharmaceuticals.

The Biopharma Cold Chain Sourcebook predicts cold chain logistics spending will be $10.1 billion worldwide this year. By 2019, this spend is projected to reach $13 billion. On the back of this growing market, PeriLog, a new conference on food logistics, is to be held for the first time as part of the International Transport Logistics Exhibition in Istanbul from 18-20 November 2015.

According to Cathay Pacific Services (CPSL) chief executive officer, Kelvin Ko, healthcare is another segment that demonstrates growing momentum. “To cope with demand, we recently obtained the [good distribution practices (GDP)] certification, ensuring that the handling of pharmaceutical products at [Cathay Pacific Cargo Terminal (CPCT)] conforms with World Health Organization guidelines,” he says. “We

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also offer customers a comprehensive quality management system, well trained and qualified personnel, a dedicated temperature controlled handling centre and operating procedures to ensure every part of the supply chain handled

by CPCT meets global standards.”

Lufthansa Cargo champions its own Fresh/td system and its product manager, Uta Frank, tells ACW this is being used to transport all kinds of perishable goods, including flowers, plants, fruit, vegetables, meat products and seafood as well as other temperature sensitive perishable goods. “A predominantly temperature controlled environment during flight and storage along with specially trained personnel, make sure perishables arrive freshly,” says Frank.

Flowers and vegetables

“At our main hub Frankfurt we co-operate closely with the perishable centre frankfurt where the goods are being stored. This might be at temperatures ranging between minus 24C and plus 24C in different rooms.

Lufthansa Cargo also offers customers vacuum cooling and fast cooling services, the former being used for products like fresh cut flowers on journeys from Ecuador via Frankfurt to Russia. “Products such as flowers and plants, fruit and vegetables create their own heat during transport,” explains Frank. “For this reason close cooperation between all partners involved in the supply chain is important.

“Generally, development for perishables is stable with some slight increases. Berries, especially blueberries, but also cherries from Middle and South America as well as Egypt are developing well.”

KO To cope with demand, we recently obtained the [good distribution practices (GDP)] certification

TRADEFINDER Freight Forwarders

Airlines Turkey

Hong Kong

Italy

Freight Forwarders Iraq

Freight Forwarders Spain

Charter Brokers

United Arab Emirates

USA

USA

Industry Events

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