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The weekly newspaper for air cargo professionals No. 1,175
11 APRIL 2022
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Taking stock of the pandemic ...
Page 8
INSIDE
AIR CANADA CARGO EXPANDS
AIR CANADA CARGO will expand its freighter network, including the start of service to Halifax with the entry into service of a second aircraft ... PAGE 2
GEODIS TO ACQUIRE KEPPEL
FEDEX TO TEST AUTONOMOUS DRONE WITH ELROY AIR
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edEx Express is teaming up with California Bay Area-based Elroy Air, the company building the first end-to-end autonomous vertical take-off and landing (VTOL) aerial cargo system. In what it describes as a first of its kind agreement in the US, FedEx Express will test Elroy Air’s Chaparral autonomous air cargo system in its ‘middle-mile’ logistics operations, moving shipments between sorting locations. FedEx and Elroy Air have been working together since January 2020 and will now pursue certifications and begin flight testing in 2023. Elroy Air’s Chaparral autonomous aircraft, unveiled in January 2022, is an eVTOL aerial cargo system that can autonomously pick up 300-500 pounds of cargo and deliver it up to 300 miles. The Chaparral is capable of
longer-range flights without the need for additional infrastructure, such as airports or charging stations. Senior vice president, global planning, engineering and technology, Joe Stephens, said: “FedEx was built on innovation and we are always looking toward new technologies to help enhance the logistics industry through improved safety, efficiency and customer service. We look forward to continued testing and learning throughout our collaboration with Elroy Air.” Elroy Air’s vice-president of business development and strategy, Kofi Asante, added: “When you’re not limited by challenging infrastructure, traffic, or airports, logistics can reach more people, faster than ever before. We look forward to working together to create a new future for how we get goods to people around the world.”
GEODIS has signed a binding agreement to acquire Keppel Logistics. The global forwarder said it would significantly increase its contract logistics footprint ... PAGE 4
CHANGE AT THE TOP FOR ...
TURKISH carrier Pegasus Airlines has made changes to its top management. Mehmet Nane, who has been serving as CEO since 2016 ... PAGE 6
NEW MD FOR EFW ...
JORDI BOTO has been appointed CEO of Airbus-ST Engineering joint venture conversion specialist, Elbe Flugzeugwerke (EFW) ... PAGE 7
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Air Canada Cargo expands freighter network to Europe and Atlantic Canada AIR CANADA CARGO will expand its freighter network, including the start of service to Halifax from April 19. The entry into service of the second Boeing 767-300ER freighter will allow Air Canada Cargo to add freighter service to Frankfurt, Cologne, Istanbul, Madrid and St. John’s, starting in May. “The new routes complement Air Canada Cargo’s regular freighter service to Latin America. Five flights a week will operate from Toronto to Halifax and, from May 1, six to St. John’s. The European schedule from Toronto will comprise two flights per week to Frankfurt, one a week to Cologne and Istanbul and three flights a week to Madrid.
Qatar’s all-electric pallet truck is ready to roll QATAR AIRWAYS CARGO and engineering company Gaussin have completed testing and commissioning of a fully-electric cargo pallet transporter ahead of the delivery of production models in the second half of the year. The AMDT FULL ELEC multi-directional offers zero-emissions, 100% electric and is compatible with all types of unit load devices (ULDs). It has a payload of up to seven tonnes with a battery life of up to six hours. Capable of operating both inside and outside the cargo terminal in minimal space, the AMDT will reduce the normal footprint required for manoeuvring, making additional storage space available and increasing the readiness of cargo to be loaded onto the aircraft. The AMDT is powered by LMP lithium metal polymer batteries capable of operating in high temperatures, and has been specifically designed for use in Middle East weather conditions. Its equipment includes integrated weighing scales that can check pallet weight against tag weight, in line with Qatar Airways Cargo’s safety and security standards. Gaussin and Qatar Airways Cargo signed a contract in 2020 for the delivery of six AMDTs including an option for 50 units. The aim is to gradually replace the cargo airline’s diesel pallet carriers, marking another step towards Qatar Air-
ways Cargo’s goal of achieving net zero carbon emissions by 2050, in line with the Qatar National Vision 2030. The series production version will be assembled in Qatar. Gaussin designs, assembles and sells innovative products and services in the transport and logistics field for cargo and passenger transport, specialising in electric batteries and hydrogen fuel cells. It now has over 50,000 vehicles in operation worldwide, in airports, port terminals, logistics and passenger transport. The group has developed strategic partnerships with major global players including Siemens Postal, Parcel & Airport Logistics. Qatar Airways Cargo chief officer cargo, Guillaume Halleux, said: “We at Qatar Airways Cargo are proud to be using this innovation and to have played a part in its design, taking us a step closer to a more sustainable industry. Qatar Airways Cargo is aware of the challenges of tomorrow and is fully committed to building a greener future with its partners.” Gaussin CEO, Christophe Gaussin, commented: “Gaussin is pleased to be a partner of Qatar Airways Cargo, supporting it in its sustainable goals through its expertise in designing, assembling and offering smart, connected zero-emissions vehicles for freight transportation.”
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Kales Airlines Services brings Red Cross relief to Ukraine KALES GROUP bought two truckloads of medical relief goods to the Polish Red Cross on March 31 for transport to people affected by the war in Ukraine. Kales Group CEO Sebastiaan Scholte, said: “The terrible reality of the war in Ukraine is that the needs are growing every day. It is great to see that not only our company but so many other companies and individuals in the world are helping with donations and relief goods. I want to thank our management in Poland under the leadership of Sebastian Kraucki for arranging these transports. Our thoughts are with all the innocent people who are affected.” Managing director of Polish Red Cross Mazovian district Honorata Krzywoń, thanked the Kales Group for organising delivery of the aid to its central warehouse, from where they
were d u e to join a convoy direct to Ukraine. The first truckload has already been delivered to Lviv. Managing director for Kales in Poland, Sebastian Kraucki added: “I’m very proud we could find such high demanded medical and sanitary equipment which will save many lives of the innocent people of Ukraine. The trucks will deliver professional disposable items used for surgeries and hospitalisation.”
IAG Cargo announces recordbreaking Q4 and 2021 results IAG CARGO the cargo division of IAG (International Airlines Group), has reported record financial results for 2021, with annual revenues of €1,673 million for the period from January 1 to December 31 2021. It said the results reflected surging demand for air cargo as global trade rebounds. The 2021 revenues represent an increase of 30 per cent at constant currency versus the same period last year. Overall yield for 2021 was up 11.3 per cent at constant currency versus 2020. Sold tonnes were up 21.4 per cent. Throughout 2021, IAG Cargo reshaped its business to take advantage of the strong cargo market and actively repurposed Group capacity where appropriate. Demand for air cargo exceeded 2019 levels throughout 2021. The business continued to align its network to customer demand, supporting customers with cargo-led flying, increasing frequencies on important trade routes and implementing an active charter programme of 745 rotations. In the second half of the year IAG Cargo
said momentum built with capacity starting to return as the economic recovery from the COVID-19 pandemic gained ground. IAG Cargo closed the year very strongly, achieving a Q4 quarterly record revenue of €499 million, up from €389 million in Q4 of 2020. Commenting on 2021, IAG Cargo Managing Director David Shepherd said: “Since joining the business in August 2021 I’ve been extremely impressed by the way in which the talented team at IAG Cargo have optimised the opportunities which the market has presented. In 2021 the role of air cargo remained very much in the spotlight. Our people went above and beyond to find solutions to the global capacity crunch and airfreight restrictions. These results are a reflection of their determination and creativity. “I’m also proud of our work in the fight against Covid-19. In 2021 our cold chain, Constant Climate, service was responsible for shipping millions of doses of life-saving COVID-19 vaccines to almost every corner of the world.”
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GEODIS to acquire Keppel Logistics GEODIS has signed a binding agreement to acquire Keppel Logistics. The global forwarder said it would significantly increase its contract logistics footprint and e-commerce fulfilment services in Singapore and Southeast Asia. Based in Singapore, Keppel Logistics is a contract logistics specialist with close to 500 employees. Active throughout Southeast Asia, Keppel Logistics (ranked in the top five contract logistics players in Singapore) owns over 200,000sq m of warehouse space in Singapore, Malaysia and Australia. The company offers end-to-end B2B
and B2C logistics solutions, from warehousing to last mile delivery, with strong skills in e-commerce omnichannel service offerings thanks to its fast-growing UrbanFox platform. In the Asia Pacific region, GEODIS currently employs 3,700 people spread over 76 sites. The acquisition will reinforce GEODIS as a leading logistics service provider, further expanding its footprint by adding to recent investments in contract logistics sites in India, South Korea and Australia. The acquisition is subject to regulatory review and approvals, which are expected to be obtained by end of the second quarter of 2022. Both companies will operate as independent businesses and run their operations as usual until that time.
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DHL strengthens global aviation network with Cargojet partnership
DHL EXPRESS and Cargojet have signed a long-term strategic agreement to further strengthen the global DHL aviation network. Under the five year deal, with a renewal option for an additional two years, Cargojet will provide ACMI, CMI, charter, and aircraft dry lease services to support DHL’s international requirements for Europe and North, South, Central and Latin America, as well as Asia. Cargojet currently utilises 12 freighters to service DHL’s requirements. DHL will add five more B767 freighters during 2022-23 to fulfil its anticipated network requirements, building on the rapid expansion of the company’s air network in the last two years. In the Americas, DHL increased its overall aviation capacity by 18% for the 2021 peak season in response to surging demand, particularly in the e-commerce segment. It recently added a new weekly air connection
from Vietnam to the US, adding 102 tonnes of additional capacity for customers shipping out of Asia into the Americas region. DHL also intends to be Cargojet’s inaugural launch customer for the B777 wide body long-range converted cargo aircraft, expected to be deployed in late 2023 or early 2024. The more fuel-efficient freighter will support DHL’s efforts to improve the carbon footprint of its transportation operations while enabling customer growth. Since 2018, DHL has purchased 28 new Boeing 777Fs for its global fleet, many of which serve points between the Americas region and the rest of the world. To align interests and strengthen the longterm strategic relationship, Cargojet will also issue to DHL warrants to acquire up to 9.5 per cent of its outstanding voting shares over seven years.
Raj Subramaniam to head FedEx Corporation RAJ SUBRAMANIAM will be promoted from president and chief operating officer to president and CEO of FedEx Corporation on June 1, taking over from Frederick W Smith who will become executive chairman (pictured). Subramaniam was elected to the FedEx board in 2020 and will maintain his seat. He joined FedEx in 1991. Fred Smith said: “FedEx has changed the world by connecting people and possibilities for the last 50 years. As we look toward what’s next, I have a great sense of satisfaction that a leader of the calibre of Raj Subramaniam will take FedEx into a very successful future. In my role as executive chairman, I look forward to focusing on board governance as well as issues of global importance, including sustainability, innovation and public policy.” “Fred is a visionary leader and a legend of
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the business world,” Subramaniam added. “I am immensely proud of our 600,000 team members around the world. Together we will unlock new value for our people, customers, and shareholders.”
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Change at the top for UPS appoints new Singapore and Malaysia Pegasus Airlines managing director
UPS has appointed a new MD to lead its Singapore and Malaysia markets. Chika Imakita brings over two decades of experience within the organisation. Based in Singapore, she will spearhead UPS’s express delivery, logistics operations and strategic growth initiatives in both countries. She plans to empower small and medium-sized businesses and drive UPS’s global environmental, social and governance (ESG) goals. A firm believer of environmentalism and giving back to the community (she is a member of the SAF Volunteer Corp), Imakita will also look to step up UPS’s ESG initiatives in her new role. This includes upscaling electric vehicle utilisation to over 40% of the Singapore fleet by 2026, and driving UPS’s volunteer initiatives. Chika will also lead the initiative of explor-
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of Pegasus for many years. I wholeheartedly believe that she will continue to wave the flag of Pegasus brightly in the skies. This appointment holds great value and significance also as Güliz Öztürk is to become the first woman CEO of an airline in the history of Turkish civil aviation.”
cially begin their new roles from May 1, 2022. Öztürk is the first woman CEO in the air transport industry in the history of Turkish civil aviation Nane said: “I am delighted to be passing the CEO baton, which I received in 2016, to Güliz Öztürk, who has made significant contributions to the growth and development
Öztürk said: “As Pegasus Airlines, we have accomplished many firsts and pioneering projects under his leadership since 2016, and we have made our country proud many times in the international arena. Together with all my colleagues, we will work tirelessly to progress our company further and crown its achievements.”
ing urban logistics solutions to complement cleaner modes of last-mile transportation and support the transition to zero-emission logistics. She said: “I am excited by this opportunity to continue supporting the growth of our customers in Singapore and Malaysia, both of which are home to a huge number of small businesses looking for the tools and support they need to grow their business regionally and globally. “While the last couple of years have presented challenges that continue to evolve, there’s also tremendous optimism and opportunity for business owners in both countries in areas such as cross-border e-commerce and intra-Asia trade. We’re looking forward to helping our customers realise and capitalise on those opportunities.”
One billion COVID-19 vaccine doses: Emirates SkyCargo surpasses a historic landmark EMIRATES SKYCARGO has transported more than a billion doses of COVID-19 vaccines on its aircraft. The carrier has achieved the milestone within 18 months from the first shipment of COVID-19 vaccines trialled in October 2020. More than 4,200 tonnes of COVID-19 vaccines, equivalent to over 1 billion doses, have been moved to over 80 destinations on over 2,000 Emirates flights. Close to two-thirds of the 1 billion doses were transported to developing countries. Nabil Sultan, Emirates divisional senior vice president, cargo, said: “From the start of the COVID-19 pandemic, Emirates SkyCargo has been focused on supporting global communities in their recovery from the devastating effects of the virus and we have prioritised assistance to developing countries. The strategic location of our Dubai hub combined with the strengths of our modern fleet of widebody aircraft, our purpose built facilities and capabilities in moving temperature sensitive pharmaceuticals allowed us to transport COVID-19 vaccines securely, reliably and rapidly from one corner of the globe to another. Ahead of World Health Day, we’re incredibly proud of our global Emirates SkyCargo team who have pulled out all stops during the pandemic to keep supply chains for essential goods like vaccines up and running.” As early as August 2020, Emirates SkyCargo was one of the first global air cargo carriers to begin mapping out the global logistics for the movement of potential vaccines for COVID-19 transport. In October 2020, Emirates announced that it would be setting up a dedicated GDP-cer-
TURKISH carrier Pegasus Airlines has made changes to its top management. Mehmet Nane, who has been serving as CEO since 2016, has been elected to the board as vice-chairperson (managing director). Güliz Öztürk, who has been serving as the company’s CCO since 2010, will succeed Nane as CEO. Both will offi-
tified airside hub for transport of COVID-19 vaccines. During the same month, working with its logistics partners, the cargo division transported trial shipments of COVID-19 vaccines through Dubai. In January 2021, Emirates SkyCargo teamed up with leading Dubai-based companies to form the Dubai Vaccine Logistics Alliance to speed up distribution of vaccines through Dubai to developing countries. In February 2021, the carrier signed an MoU with UNICEF to prioritise transport and delivery of COVID-19 vaccines in support of the COVAX initiative. By early April 2021, Emirates SkyCargo had already transported more than 50 million doses of vaccines. In June 2021, Emirates SkyCargo expanded its pharma cool chain infrastructure at Dubai International Airport, allowing it to store an additional 60-90 million doses at any time. With the global scaling up of vaccine distribution and administration, Emirates SkyCargo facilitated transport of larger volumes of COVID-19 vaccines from manufacturing origins to destinations, reaching 250 million doses by September 2021 and 600 million doses by December 2021. Emirates SkyCargo is one of the leading global air cargo carriers for the transport of temperature sensitive pharmaceutical cargo. In addition to COVID-19 vaccines, the carrier transports other critical life-saving medicines and treatments on its flights to more than 140 destinations across six continents. An estimated 200 tonnes of pharmaceutical cargo are flown every day on Emirates’ aircraft.
New platform to foster industry innovation in Belgium IT specialist CHAMP Cargosystems and the Air Cargo Belgium community have set up an innovation platform to harness ideas from the industry to increase inclusivity and bolster new developments. The new platform, which debuted on 31 March at the Air Cargo Belgium Innovation Forum in Brussels, will allow the Air Cargo Belgium community to share information, ideas, and best practices, bringing broader collaboration to the benefit of the Belgian air cargo community and the wider industry. The initiative builds on the original memorandum of understanding signed in September 2020 which named CHAMP as the preferred partner in the roll-out and testing
of any new technologies and innovations. CHAMP joined Air Cargo Belgium in 2018. Air Cargo Belgium director, Geert Keirens, commented: “This initiative is a positive step forward for the community and will give a voice to all stakeholders – big and small - in our air cargo community. Air Cargo Belgium is excited to continue its relationship with CHAMP and bring its community together on one platform for our mutual benefit.” CHAMP Cargosystems CEO, Chris McDermott added: “Innovation requires not just the idea and drive to deliver it, but also the feedback to ensure its success. CHAMP is excited to push that into practice for the air cargo supply chain with this platform.”
Air Canada now on CargoAi AIR CANADA CARGO is now offering bookings on the CargoAi eBooking and eQuote platforms to freight forwarders. As well as making and managing instant bookings for their shipments customers can also use the built-in eQuote tool to send quote requests on any product or shipment size. The carrier’s managing director, Commercial, Matthieu Casey, said: “We continue to invest in our digital transformation, which is
a key pillar of Air Canada Cargo’s strategy as it continues to adapt to the changing landscape in airfreight. We’re looking forward to further leveraging our API capabilities and the opportunity to reach out to additional users via the CargoAi marketplace. We’re continuing to grow our distribution reach and we’re confident that the features available on CargoAi will be well suited to the large range of our product portfolio.”
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New MD for freighter converter EFW JORDI BOTO has been appointed CEO of Airbus-ST Engineering joint venture conversion specialist, Elbe Flugzeugwerke (EFW). Boto succeeds Dr Andreas Sperl, who has left the company after more than 15 years. Prior to the appointment, Boto was COO, responsible for driving the ramp-up of the conversion from passenger to cargo aircraft at EFW since November 20. “Dr Sperl was the architect of the EFW joint venture, which was set up in 2016 between Airbus and ST Engineering,” says Jeffrey Lam, president of commercial aerospace at ST Engineering. “Since then, EFW has grown from strength to strength and undertaken many challenges and new developments. With Jordi, who has over 20 years of experience in the aviation industry, taking over Dr Sperl, we look forward to him driving the future growth of the company, and taking it to greater heights.” Boto’s experience in the aviation industry to EFW includes key positions at Airbus. Under his leadership, key milestones have been achieved, both at Airbus as
well as at subsidiaries and supplier companies. This includes ATR, now the world’s leading manufacturer of regional turboprop aircraft. From 2006, under the direction of Boto, ATR was able to increase its construction rate from just six to over 70 aircraft per year. He then became SVP head of the Power8 programme for the Airbus group from 2009 onwards, the largest and most successful restructuring and change programme ever implemented in the aeronautical industry. The result of this and its follow-up programmes was a centralised managed company, able to achieve significant improvements in time, efficiency, costs and quality. In 2012, Boto became CEO of PFW Aerospace Speyer, an Airbus supplier that was in a financially critical situation, successfully turning it around into a leading aviation supplier. In 2020 he led the acquisition of PFW Aerospace by the Hutchinson Group, a 100% subsidiary of the multinational oil company TOTAL.
Virgin and Woodland form a batting partnership
VIRGIN ATLANTIC CARGO and freight forwarder, Woodland Group have teamed up with the Bat For A Chance (BFAC) charity to make cricket kit donations across the world in 2022. Courtesy of sponsor Energy, a construction equipment manufacturer, and with the with support of Virgin Atlantic Cargo, the charity has launched its first project in Pakistan in partnership with FemGames, a female empowerment initiative. Originating in the UK, FemGames is implementing a five-year plan to bring ‘empowerment through sport’ to 100 girls’ schools across Pakistan. It hopes to eventually bring in other sports, including football and tennis, using them to give the next generation of Pakistani women valuable life skills, through quality sports and life coaching. FemGames is the brain-child of Ebba Qureshi, a recently appointed Trustee of BFAC and the wife of former Pakistan all-rounder Azhar Mahmood. A donation of cricket equipment was transported to Lahore by Virgin Atlantic Cargo last week and delivered to Roshan Sitara Primary School. Energy has sponsored the purchase of kit for projects in Barbados, Sri Lanka, India and Pakistan, alongside equipment collected for BFAC by Lydia Greenway, founder of the Female Cricket Store in England. Phil Wardlaw, managing director of Virgin Atlantic Cargo said: “We couldn’t be more thrilled to support Bat For A Chance with their second shipment of cricket equipment to Lahore. It is an honour to bring our expertise in transporting cargo to such a worthy project, and we’re grateful for the support of our freight forwarding partner, Woodland Group, in supporting this shipment. “At Virgin Atlantic, our purpose is to empower everyone to take on the world and use our business as a force for good, through our communities, our people, and our partners. Partnering with Bat For A Chance means Virgin Atlantic Cargo can bring a real opportunity for children to participate in this wonderful sport, in Pakistan and across the world.“
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VIEW FROM THE MAINDECK TAKING STOCK OF THE PANDEMIC’S IMPACT ON GLOBAL AVIATION
GLOBAL management consultant McKinsey has released an overview of global aviation’s performance during the pandemic, by subsector. Compared with passenger flights, airfreight essentially had a good pandemic. Covid 19 wreaked financial devastation across the aviation value chain, most notably on airlines. All subsectors reported massive losses in 2020 - except for freight forwarders and cargo airlines. Although air cargo soared on the tailwinds of increased demand and high freight rates, airlines continued to be the worst performers in the aviation sector. The pandemic hit airlines harder than any other aviation subsector, but they weren’t doing particularly well before then. From 2012 to 2019, despite a favourable environment of strong economic growth and low fuel prices, airlines were bleeding $17 billion in economic profit a year, on average. Of the 122 carriers McKinsey studied, 77% were value destroyers. But the average losses of airlines before the pandemic were only around one-tenth of their $168 billion in losses for 2020. Their revenues plummeted by 55%, setting the subsector back, in nominal terms, roughly 16 years—to 2004. The pandemic is entering its endemic stages in some parts of the world at the time of writing, and airlines haemorrhaged $168 billion in economic losses in 2020. Although it is tempting to pin the blame solely on the pandemic-induced plunge in passenger traffic, that ignores the airline industry’s underlying and long-term health problems. Fiscal year 2021 data is not yet available for all the companies covered in this analysis, so insights are mostly from the 2012–20 data, supplemented by observations of key developments in 2021. Since 2005, McKinsey, often in collaboration with the International Air Transport Association (IATA), has assessed the performance of the entire aviation value chain—that is, the degree to which each subsector earns its cost of capital. McKinsey has looked at all value chain players: original equipment manufacturers of aircraft; lessors; air navigation service providers; airports; catering operators; ground services; maintenance, repair and overhaul companies; airlines; and freight forwarders. As a measure of value creation, McKinsey looked at economic profit. This is the difference between the returns a company makes after taking into account its invested capital and the alternative returns of equal-risk opportunities investors have access to, measured by the weighted average cost of capital. As McKinsey has noted, the pandemic wreaked financial devastation across the aviation value chain, most notably with airlines. All subsectors reported massive losses in 2020, except for freight forwarders and cargo airlines, which benefited from a rise in demand for air cargo. Even previously reliable value creators, such as airports and manufacturers, were not spared the pandemic’s economic impact.
Freight forwarders and cargo airlines The sole bright spots are the freight forwarder and air cargo subsectors. In 2020, both managed to generate healthy economic profits: for freight forwarders, 4%; and air cargo carriers, 9%. In fact, the only five airlines that reaped profits in 2020— AirBridgeCargo, Atlas Air, Cargojet, Cargolux, and Kalitta—were cargo carriers. Before the pandemic, the performance of the freight-forwarding subsector was high and relatively stable, with an annual economic profit averaging $2 billion from 2012 to 2019, or a margin of 2.2%. Despite some consolidation and mergers over the years, this is still a largely fragmented market in which the top five companies by revenue had a 27 per cent share in 2019. Many companies have an asset-light model, which improves their return on invested capital, thanks to low levels of invested capital. Large players, such as Expeditors and Kuehne+Nagel, enjoy consistently impressive profit margins. During the pandemic, robust demand for air cargo was initially driven by protective personal equipment and medications, and later by challenges in the ocean-shipping supply chain and strong growth in e-commerce sales. The supply of air cargo fell as the number of grounded passenger planes rose, constricting belly capacity and raising rates (and profits for freight forwarders). Globally, air cargo yields rose by 40 per cent year on year in 2020, and by an additional 15 per cent last year. Load factors were also up significantly, by ten percentage points in 2021 compared to 2019. McKinsey expects cargo yields to drop over the next two to three years but remain above 2019 levels due to a continuing gap between supply and demand.
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