ACW 12 December 16

The weekly newspaper for air cargo professionals Volume: 19

Issue: 49 12 December 2016

IATA: demand grows at fastest rate for 18 months

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ir cargo demand grew at its strongest pace for 18 months in October - surging by 8.2 per cent over the same month in 2015, according to latest figures released by the International Air Transport Association (IATA).

The association says the growth in freight tonne kilometre (FTK) growth was helped by the collapse of the Hanjin Shipping Company in August and companies having exercised caution earlier this year.

European freight was the strongest of all regions, as FTKs grew year-on-year (YOY) by 13.4 per cent due to strong German exports and

the weakness of the euro. The Middle East grew 9.2 per cent, Africa by 7.4 per cent, Asia Pacific by 7.8 per cent and North America by 3.7 per cent, but Latin America fell 0.1 per cent.

IATA’s director general and chief executive officer, Alexandre de Juniac welcomed the news at a media day in Geneva on Wednesday, 7 December. “After the very difficult year we have experienced, the sector is recovering slowly. We have to welcome that figure because it has not been the case for a long, long time,” he said.

He notes that global trade remains weak, but there are encouraging signs and 2016 should be a better year than 2015, adding: “The peak

has been stronger than expected. And purchasing managers are reporting a pick-up in new export orders.

“So we will enter 2017 propelled by some much-needed positive momentum.”

IATA says market shifts such as the growth of cross-border e-commerce and pharmaceuticals is helping also helping growth, along with popular sales marketing events including Black Friday and Cyber Monday.

De Juniac explains: “The drivers of stronger growth are sending a major signal for change to the air cargo industry. Whether it is e-commerce or the trade in pharmaceuticals, shippers are demanding more than current paper processes can support. The shift to e-freight is more critical than ever.”

But de Juniac warns of the need to modernise and digitise the air cargo logistics chain, which he says is a “key issue” and it is vital the industry goes paperless, citing how there are 30 bits of paper when smartphones are shipped by air, which he feels is “stupid”.

De Juniac adds: “We need to standardise, simplify and advance systems to get the cargo industry into the 22nd Century, not the 21st Century and get freed up from the 16th Century.”

The study found to improve air cargo connectivity, legislative priorities must include ratification and implementation of the 1999 Montreal Convention to enable countries to adopt e-freight; and the World Trade Organization (WTO) Trade Facilitation Agreement and World Customs Organization (WCO) revised Kyoto Convention to implement smart border solutions.

Industry modernisation priorities identified

include facilitation of electronic processing through electronic air waybills (e-AWB) and e-freight; and implementation by governments of ‘single window’ processing.

The study found a need for co-ordinated border agency procedures to reduce duplicative controls; implementation of risk management controls at borders to combat illicit activities and facilitate compliant traders and processes to approve release of cargo in advance of arrival.

IATA’s head of cargo, Glyn Hughes adds: “Facilitating trade with efficient air cargo processes requires a strong partnership between governments and industry. Governments have the important role of implementing global standards and agreements to facilitate trade and make it possible for airlines to modernise processes. The industry needs to embrace these opportunities to improve competitiveness and provide customers with enhanced shipping quality, service and better predictability.”

Study finds air cargo connectivity and global trade go hand-in-hand

A new study by the International Air Transport Association (IATA) has found a quantitative link between a country’s air cargo connectivity and participation in global trade.

Research carried out by Developing Trade Consultants, found a one per cent increase in air cargo connectivity was associated with a 6.3 per cent increase in a country’s total trade.

IATA’s chief economist, Brian Pearce says: “Air cargo is key in supporting the current global trading system. In 2015, airlines transported 52.2 million metric tons of goods, representing about 35 per cent of global trade by value.

“That is equivalent to $5.6 trillion worth of goods annually, or $15.3 billion worth of goods every day. We now have quantitative evidence of the important link between air cargo connectivity and trade competitiveness. It’s is in the economic interest for governments to promote and implement policies for the efficient facilitation of air cargo.”

quality programme eyed by new tiaca sg growing demand from customers for visibility air logistics predicting an interesting 2017 mag - china trade booming

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Atlas to operate B747-400F for NCA ATLAS Air Worldwide has entered into an agreement to operate its first Boeing 747400 Freighter for Japanese carrier Nippon Cargo Airlines (NCA).

As part of the deal, NCA has the opportunity for additional aircraft in the future.

The contract is initially for one aircraft to be flown in key global routes across the transpacific connecting Asia and the US service and is scheduled to begin in January 2017.

Atlas Air Worldwide president and chief executive officer (CEO), William J. Flynn explains: “Nippon Cargo Airlines is an important addition to our customer portfolio.

“We are very pleased that NCA has chosen Atlas Air to manage an important part of its international network.

“NCA is very focused on high service quality, and we look forward to providing it and its customers with unmatched service and a platform for future expansion.”

NCA president and CEO, Fukashi Sakamoto adds: “We are delighted to begin this strategic arrangement with Atlas Air, and we look forward to having a long, mutually beneficial relationship.”

Atlas Air Worldwide posted a loss net of taxes, of $7.5 million for the third quarter ending 30 September 2016.

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NEWS WEEK Bismillah Airlines to service Hong Kong

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ong Kong Air Cargo Terminals (Hactl) is to handle Bismillah Airlines’ first scheduled service to Hong Kong.

The Bangladeshi carrier is to operate two Boeing 747 Freighter flights a week from Dhaka and Hactl will provide services including ramp handling, cargo terminal operations, crew transportation and cargo documentation. SmartTrans will be the general sales agent for the flights.

Bismallah Airlines managing director, M.A. Mannan says: “We are excited to launch this new service to Hong Kong, which is a strategic step in our country’s international trade plans.

“We are also very happy to be working with a handling agent of the high standing of Hactl, and are confident it will play a key role in the success of our services.”

Hactl chief executive, Mark Whitehead (third left) adds: “The Bangladesh-China-India-Myanmar (BCIM) Economic Corridor is a component of the Belt and Road initiative, and all additional transport links which are introduced to serve it will benefit from the increasing cooperation between the countries it connects. We congratulate Bismillah Airlines on this major and visionary step in its development.”

Imports are likely to include fruit, seafood, marine products and

textile products. Bangladesh is developing manufacturing industries and the new freighter is expected to provide important trade links with the entire Asian region.

In North America, Mexican freighter carrier AeroUnion began Miami International Airport (MIA) services on 2 December with two weekly round-trip flights on a triangular route between Mexico City, Mérida and Miami.

AeroUnion will operate an Airbus A300 Freighter or Boeing 767200 Freighter aircraft on the new route. AeroUnion is the fourth all-cargo carrier to begin services at MIA this year. US freighter airline Northern Air Cargo launched four weekly charter flights on 1 November, adding to services by 21 Air and KF Cargo.

Calgary opens new cargo facility

CALGARY International Airport’s new 100,000 square foot Specialised Cargo Facility was officially opened with a ribbon-cutting at DHL Express Canada’s expanded warehouse and logistics operation.

Those attending the ceremony (pictured above) included Calgary Mayor Naheed Nenshi, Calgary Airport Authority chair of the board, Mel Belich, and DHL Express Canada chief executive officer, Andrew Williams.

As part of the facility at Calgary, DHL has moved into a new 38,000 square foot space – which triples the size of its operations in Calgary. The gateway’s newest air cargo facility provides direct access to the new dedicated cargo apron and will allow DHL Express to grow in Calgary.

This development is part of the Global Logistics Parks, which connects commercial, airside and cargo handling, freight forwarding and logistics companies on more than 330 acres of land. Calgary is the main air cargo gateway in Alberta. In 2015, freight handled rose to 134,695 tonnes, which represents more than 75 per cent moved in the province.

Digital adoption team for CHAMP

CHAMP Cargosystems has created a new team to drive digital adoption across the air cargo supply chain.

The industry IT provider has appointed Wojciech Soltysiak as its new chief technology and innovation officer, who will lead the team which will be dedicated to driving innovation through digital technologies.

He will be responsible for creating and maintaining CHAMP’s digital strategy.

CHAMP says with e-commerce on the rise, there is a clear and big opportunity in the supply chain sector to embrace new and more digital technologies.

Chief executive officer, Arnaud Lambert says: “We are working with a wealth of data. We not only have technological capabilities to uncover the data and insights that our customers need, but also to help them be more efficient and competitive in a highly diverse market.”

He adds customers will soon benefit from new digital elements further streamlining their day-to-day activities and the air cargo community will then reap the benefits of a digital logistic chain.

Soltysiak says: “We see a lot of opportunities in new technologies to further expand our portfolio, focusing as priority on the Big Data area.”

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NEWSWEEK

WorldACD: strong air cargo growth of 6.2% in October

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irfreight volumes grew strongly year-on-year (YOY) by 6.2 per cent in October - driven by the Asia Pacific region, according to market analyst WorldACD Market Data.

The analyst says the month was up on the five per cent YOY growth in September, while yields also saw improvement.

WorldACD says the “undisputed” driver in October was Asia Pacific, in particular China and Taiwan, with YOY volume growth of 12 per cent and 19 per cent, respectively.

This it notes was accompanied by a monthover-month (MOM) yield growth of 12 per cent and five per cent, respectively, while Korea also saw a nine per cent yield increase.

The analyst also says South America saw yields improve MOM by 10 per cent and saw YOY volume growth of 3.6 per cent.

The MESA and Africa regions also held their own with volume growth in line with the worldwide average, though losing a little in MOM yields, while Europe and North America were “rather flat”.

In terms of volumes, European carriers performed best with a YOY increase of 6.4 per cent over the last three months, followed by airlines from Asia Pacific with 4.8 per cent, while WorldACD also explains two of the largest African carriers in its database saw double-digit growth.

US and European carriers also contributed most to the three per cent MOM growth in yields, a higher MOM growth for this month than in previous years.

WorldACD has introduced a new measure – direct ton kilometres (DTK) – which multiplies weight with the shortest distance between origin and destination of shipments.

It says the October YOY growth in DTK was higher than the pure volume growth – 7.4 per cent versus 6.2 per cent in freight tonne kilometres (FTK), which was more in longer haul markets than short haul.

WorldACD says the measure was started as FTKs are “insufficient to tell us what happens in terms of true market development - as a change in FTKs combines market changes with purely operational routing changes”.

GPS tracking device for Amerijet

AMERIJET has approved Starcom Systems’ Kylos Air GPS tracking device for air cargo use aboard its freighter aircraft.

The carrier says it made the move after identifying the need for the latest in tracking technology to better serve its shipping clientele.

Starcom Systems Americas designs and manufactures a variety of GPS-based tracking devices that are battery operated or direct wire applications for vehicles.

Amerijet senior vice president of business development, Pamela Rollins says: “Being able to know exactly where cargo is, and being able to track or monitor it on your smartphone, desktop or via your own tracking platform is critical to the next generation of services we intend to provide.”

Rollins adds it allows close monitoring of high value air cargo, temperature sensitive products and equipment, while also helping minimise the ramp time of sensitive cargo.

Asiana signs IT deal with IBS Software IBS Software (IBS) has signed a 10-year multi-million dollar contract with Asiana Airlines Cargo for the implementation of its cargo management software – iCargo.

This will manage the end-to-end cargo function of Asiana Cargo. Under the deal, IBS will implement the full scope of business operations – including sales, revenue accounting, ULD management, mail management and mail revenue accounting.

Asiana Cargo executive vice president, Kwang-Suk Kim: “By selecting iCargo as our technology platform, we are hopeful that we would be able to cater to the demands of fast changing logistics services environment and improve our market share.

“We are sure that it will also bring a ground breaking improvement opportunity in reinforcing cargo operation safety and customer services.”

IBS chief executive officer, Rajiv Shah says: “This selection by Asiana Airlines highlights IBS’ ability to conceptualise and build industry leading global solutions which bring tangible business benefits.

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“IBS continues to invest in innovative offerings for the airline industry to ensure that our customers stay ahead in this disruptive environment.

“This partnership with Asiana is also a testament to our commitment to the Korean market as we continue to expand our presence in East Asia.”

NEWS WEEK

Air cargo quality programme eyed by new TIACA secretary general

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he International Air Cargo Association’s (TIACA) new incoming secretary general, Vladimir Zubkov (pictured) takes the helm at arguably one of the most pivotal and challenging times for air cargo.

The next few years are set to be vital period for the industry as it looks to go paperless, modernise its processes, adapt to the challenges and opportunities of e-commerce and recover yield prices.

Zubkov will take over formally as secretary general in January, with Doug Brittin remaining in an advisory capacity during the handover.

He certainly seems like the man perfectly experienced to take over the mantle from the retiring Brittin and will no doubt call upon his 40 years in the air transport industry, including senior roles with the International Civil Aviation Organization (ICAO), and, most recently, as vice president of the Volga-Dnepr Group.

Zubkov explains to Air Cargo Week: “I want to bring all this knowledge in a new way and use my wide network and facilitate better communication and understanding of the industry. This is very important. We need to work together.”

He says there is much more opportunity for the supply chain to work together and collaborate and feels at present it is insufficient and there is a lack of it in the industry.

An area where many airfreight critics feel more should be done is on creating as much standardisation of processes as standards of various aspects of air cargo vary across the globe.

This is something Zubkov wants to focus on as he says there are incompetent processes across the supply chain, but he says there is currently not the mechanism to facilitate this. He feels there is a need to work closer with regulators, international associations and agencies to develop this.

Zubkov says he wants to develop a quality initiative, along the lines of the Airports Council International’s (ACI) Airport Service Quality (ASQ) benchmarking programme, explaining: “We have nothing like this in air cargo and there is a need and an opportunity for this as the standards are not uniform across the

industry and we have plenty of room for improvement.

“I want to strengthen the cooperation between TIACA with other international associations. We want to develop and we are going to discuss this with ICAO.”

Quality programme

Zubkov also believes that promotion of the air cargo industry and the important role its plays in global trade and society needs to be ramped up, as currently there is a lack of information and understanding of what airfreight brings, and in his view “something needs to be done”.

“We need to bring it to the level of the decision-makers and build the knowledge of air cargo with CEO’s of businesses. The value of air cargo almost equals the amount airlines makes from business class passengers – there is comparable revenue,” Zubkov says, adding: “I want to focus on increasing the awareness and importance of air cargo.”

Another focus area is to continue the work Brittin has done on working to get air cargo security regulations standardised across

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the industry. Zubkov feels there are too many inconsistencies and too much confusion and there needs to be a uniform approach. He adds: “There needs to be a common database on the regulations and all the participants – the regulatory agents.”

He is aiming to work closely with ICAO, the International Air Transport Association, ACI, World Customs Organization, freight forwarder organisations and other partners, to ensure that new regulations are implemented in a uniform way across the industry.

More members in different territories

As for TIACA’s membership, Zubkov says there is a need to add members from across some regions like Africa, Latin America, the Far East and Middle East.

He says TIACA needs to engage with more territories and he wants to make sure “no-one is left behind” and all regions and parts of the supply chain are represented and have a voice.

In general, Zubkov is optimistic about the future of the industry and believes it is embracing e-commerce and e-freight, but says even more work needs to done.

He says the industry must continue to push for modernisation, championing e-commerce, drive e-freight penetration and engaging with the World Trade Organization, the United Nations Conference on Trade and Development, regional development banks, and relevant regional organisations to “form new alliances” to drive faster and more complete adoption of e-freight.

He concludes: “I believe that the high level of people we have in the industry is remarkable at different levels. We have so much knowledge and talent in the industry and we need to see these people who are in the field at the conferences – we are then bound to succeed.

“We need to work together and have the ideal engagement in the proper fashion and then I believe the air cargo industry can continue to blossom and then there is no doubt we will be a success.”

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PERISHABLES

Air battling with sea for increased market share

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etting food to a customer’s plate as fresh, tasty and nutritious as possible has been the mantra of retailers and growers for hundreds of years.

Where in the past this may have involved a quick cart ride from farm to village market, today’s globalised world means making the best use of freight options either by air or by sea.

Sea freight is increasingly the dominant mode of choice. Kuehne + Nagel’s global business development manager perishables logistics Natasha Solano, customers being attracted by improved reefer technology, lower emissions and fewer temperature fluctuations than air.

Again, according to World ACD between 2014 and 2015 the share of sea in the movement of flowers and plants from Europe and Qatar grew from 80 per cent to 82 per cent. Air reight dropped from 20 to 18 per cent. The movement of vegetables between Europe and the UAE grew 50 to 53 per cent by sea and dropped from 50 to 47 per cent by air.

But there are plenty of positives for airfreight.

It dominates in sector specific movements such as 100 per cent share of flowers freight between Ethiopia and Europe and has a lead in the share of fish movements between Europe and the US.

One of the few growth areas

Perishables is one of the few growing categories in the airfreight sector. The Seabury Group says between January and July this year there was eight per cent growth in the movement of temperature-controlled goods such as flowers and salmon by air with LCD screens down 22 per cent and plastics down 10 per cent.

Seabury senior vice president, Marco Bloeman says: “Who would have said a year ago, that salmon, flowers and milk powders going in to China are the key commodities for growth, rather than the high-tech sector that we are used to. In that sense, we are seeing a shift; perishables will be the commodities that cater for airfreight growth in the years ahead, be it fish, flowers or fruit.”

Gerard de Wit of World ACD says the growth in perishables is being driven by factors such as the world’s largest retailers growing bigger and seeking year-round freshness for their customers and growing middle class populations in developing countries mainly India and China stoking that demand while countries such as Qatar, Singapore, Hong Kong, UAE and Saudi Arabia are beginning to shift from sea and instead move more perishables by air.

So, how are freight forwarders, airports and airlines responding to this evolving market?

Panalpina took a decision in 2014 to increase its focus on the perishables market. According to Colin Wells, who was brought in to the group as global vertical head perishables, there had

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been “pockets of success” in the sector prior to this mainly the movement of fruit by air from South American nations Peru and Ecuador.

“The reason behind the drive to increase perishables is because it is a solid growth market which contrasted with other challenging sectors such as oil and gas. It has a recession proof factor because even in suppressed markets people still need to eat,” he explains. “The only thing that changes is that people go from the luxury to the more staple type perishables such as apples and pears.”

Indeed, one of its big recent moves came in November 2015 when it acquired a majority stake in Airflo, an airfreight forwarder based in Kenya and the Netherlands specialising in the export handling of fresh cut flowers and vegetables. At the time of purchase it organised up to 1,500 temperature-controlled shipments per week from Kenya, totalling more than 40,000 tons of fresh cut flowers, especially roses, each year.

“We have developed that business in the last year with a better mix of Kenyan vegetables, fresh herbs and fruits going not just to Europe but also APAC,“ Wells explains. The boundaries of perishables are changing, with ever increasing demand from Asia.

“The Asian market has a bigger appetite for food with provenance so they are now buying from markets which used to just supply Europe.

We are seeing growth in China of fresh milk from Australia and Chilean cherries.”

It also moving more “artisan foods” such as bread and cheeses and responding to new customer trends such as blueberries and other super-foods.

Global platform for artisans

“In the next two to three years small artisan producers will start to get platformed into the global stage and they will move their products by air rather than sea,” Wells says. “That’s because it is a very high value product and because to fill a 40 ft container you need a lot of product which these producers don’t have. Also, you are finding that some products are pushing back into air freight because people want fresher, more tree ripened products. Taste is coming more into play and the only way to maintain that is by air.”

Indeed, the global growth in perishables air and ocean freight is between 8-10 per cent with an expectation of double-digit growth continuing for at least the next three years. Wells says Panalpina is exceeding that growth figure as it moves to meet the sector’s challenges.

“Currency fluctuations, especially recently after Brexit and the election of Donald Trump, can be very negative for some of our customers and positive for others,” says Panalpina regional business development manager, Quint Wilken.

“That is a challenge to manage.”

PERISHABLES

Growing demand from customers for ‘visibility’ of perishables

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nother major issue in airfreight is providing customer visibility throughout the entire supply chain.

Panalpina’s regional business development manager for perishables, Quint Wilken says showing temperature deviation is vital in keeping product quality.

He notes: “Customers want to see what is changing in their supply chain at a day-to-day level to save themselves money and show their consumers that they are also targeting waste and protecting the environment.

“The biggest barrier to this though is airport handling where there is still a big gap in origin countries such as those in Latin America.”

As part of this improvement in airport perishables infrastructure, Panalpina is now operating two facilities at Amsterdam Airport Schiphol – one for healthcare products and the other to perishables and general cargo.

The perishables facility has been upgraded with new cold storage cells and ensuring everything from handling to customs clearance takes place under one roof to reduce transit times.

Edmonton International Airport has also increased its focus on perishables similarly highlighting a decline in oil and gas cargo as a key driver, and director of air service development Norm Richard says perishables is its strongest performing sector and it is focusing on improving capacity and flow-time.

Miami International Airport (MIA) is also making strides combining both air and ocean capabilities. In October, it announced plans to create an ocean to air perishables trans-shipment program, to allow the airport to receive freight imports by sea as well as by air.

Customised Brokers will co-ordinate the ocean shipment of perishables from Latin America to PortMiami or Port Everglades and transport them to MIA. They will then depart via KLM Cargo or Centurion Cargo to Europe and Asia. US Customs and Border Protection (CBP) has also granted approval for quicker processing.

Miami said it will strengthen the airport’s business adding to the 1.92 million tonnes of international airfreight already handled every year and ensure customers get Latin American produce at the “peak of freshness”.

Marketing director, Chris Mangos says the pilot program had been approved but “we are not there yet with announcing first shipments” and is set to have more news in January.

MIA handles over 66 per cent of all perishable imports and almost 90 per cent of all flower imports into the US. Mangos did raise concerns about the limited number of CBP and USDA inspectors assigned to the airport causing inspection delays.

So, what of the airlines?

Lufthansa Cargo has a special product for perishables called Fresh/td. It covers transport planning, ensuring temperature controlled environments during flight and storage, specially trained personnel and direct deliveries to customer doorsteps using refrigerated trucks.

Lufthansa Cargo’s head of operations Fresh/ td, Oliver Blum sees development of perishables through its time:matters service. “It has established itself in recent years as the leading specialist for sameday delivery and emergency logistics in Europe. With taking full control we are aiming to grow our business in the special segment as well,” he says.

Staple product

He adds: “Our focus is all about maximum reliability, exceptional service and customised solutions. We have already been co-operating for years and are looking forward to gaining further benefits for our customers.“ Etihad Cargo has an established presence in perishables but is eyeing up future growth opportunities. “Fresh has been a staple product for us with key routes including Africa to Europe out of Kenya and chilled meat moving

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out from Australia to Europe,” says senior vice president. David Kerr (pictured). “The UAE is a net importer of food so being able to get the products by air is an important driver for our business. Generally, consumers are looking for fresh products all the year around. It isn’t as seasonal as it used to be, the demand is constantly there.”

Developing markets are helping boost demand with Kerr highlighting China and India but also Vietnam. “It’s growing well above market rate. We are sending both passenger and freighter perishable loads into Hanoi,” Kerr says. “We move 50-50 when it comes to belly and freighter.”

Kerr acknowledges some products such as those “where part of the process is to leave them to ripen on a longer journey” are suited to ocean freight. But it can challenge in other areas where perishables have a shorter shelf life.

“Speed to market and to a customer’s door is critical as is getting quick clearance by food control regulators,” he states. “Getting the process right is fundamental by reducing dwell time and avoiding double-handling. It means planning where loads come in and out to reduce ramp time. Technology also plays its part with thermal blankets needed to keep temperature control, particularly in the heat of UAE.” “It’s about maintaining the cool chain and adding another layer of risk avoidance. You have to keep competitive and responsive,” says Kerr.

“Perishables need airfreight solutions because of growing trans-continental demand. It is about showing your competence and creating trust and having a clear dialogue with customers.”

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GLOBAL GSSAs HAE targets expansion in Africa and Indian Subcontinent in, we are extremely happy with our performance thus far.”

The Middle East is proving very strong for HAE when it comes to services into Africa, Gulf Cooperation Council (GCC) countries and areas with difficult trading environments.

Investment in automation

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frica and the Indian Subcontinent are the target markets for HAE in 2017, as it eyes new general sales and service agents (GSSA) contracts and acquisitions.

The company’s vice president of senior management, Peter Kerins says having opened up GSSA services this year in South Africa, Canada and Iraq, it expects to see expansion in the Indian Subcontinent and further development in Africa in particular, where it believes its “niche services” such as its ‘total cargo management’ service has great potential.

He adds: “We are in negotiations in various locations with both airlines and acquisition targets alike that will fuel our expansion in the region.”

As for 2016, Kerins says: “While everyone understands the increased pressure on yields, the massive imbalance in capacity globally and the very competitive environment we are operating

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Kerins says it is where its “value-added services” to airlines have allowed them to gain “valuable revenues” into specific regions with HAE applying the final sectors via existing operations.

“South America is still a healthy market for HAE and although there are the ongoing pressures with currency exchange rates and overcapacity, our offices in the region still are performing well above budget for 2016,” he notes.

Kerins says globally, while HAE is producing more kilos than in previous years, yields have declined, which mean commissions have declined for GSSAs. “To combat this HAE has invested heavily in automating our GSSA offerings, which gives our airlines partners greater emphasis on sales, and a lot of our back office activities are now completely automated, supported by an extremely strong customer service team,” he says, adding: “This had led to substantial increases in activities and market share for the airlines we represent.”

HAE acquired South African neutral consolidator Groupair in 2015, and once it started to look at their capabilities beyond their core ‘neutral wholesale’ air cargo products, it found massive opportunities beyond Johannesburg (JNB).

“This has led to introduction of gateways services feeding in from our global network beyond JNB into 10-plus countries in Sub Saharan Africa. This has led to significant increases in revenue and contribution not only for the group, but also for the bottom line for Groupair who provide the line-haul purchasing locally,” Kerins explains.

HAE has always had a strong presence in Africa, but had concentrated on West, East and North Africa, so the acquisition of Groupair was the missing piece from its footprint in Africa – giving it access into Southern Africa.

This move has allowed it to offer its network and partner ser-

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vices reaching almost the whole African continent under one roof. Kerins says this was vital in HAE’s appointment as GSSA for most of Africa for American Airlines (AA) Cargo this year.

He notes this contract has been a success, considering the market forces, offline nature of the product and the aggressive competition in the African market.

Kerins adds: “The team both in Europe and the US have been extremely innovative in establishing routings ex Africa not only via Europe, but also via South America to feed the USA network.

“The pressure in massively on yields particularly in the high volume markets such as JNB etc, but AA has managed to secures good lanes of traffic thus far. It’s early days, but the signs thus far have been very encouraging.”

Pressure on yields

HAE was appointed GSA for DHL Aviation in the UAE this year, which was an important win as the UAE acts as a regional commercial hub for all its activities in the GCC, Africa and the Indian Subcontinent.

Kerins says: “We have seen significant increases in revenues on their network ex-UAE within the first three months and are positive this will lead to new areas of expansion as their network continues to grow over the coming months and years.”

He says HAE is seeing massive overcapacity on the ‘traditional’ high traffic lanes globally, the effect of currency volatility, unforeseen variables such as Brexit, US elections, and oil prices, which all impact air cargo.

Kerins says: “GSSAs are tending to take on contracts with very little return, which is only forcing returns for GSSAs down in order to stay competitive. I believe by automating the GSSA business, applying more resources to sales, will ultimately lead to satisfactory returns for both the GSSA and airline partners.

“With all the doom and gloom we hear in the markets nowadays, I think its important to remember this isn’t the first time airfreight, airlines, GSSAs and all divisions of air cargo have taken a hit, and won’t be the last. This is quite cyclical. We are sure we are in a strong position as the world economies recover.”

GLOBAL GSSAs

Air Logistics predicting a very interesting 2017

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he changing global political landscape could make for an interesting year in 2017, Air Logistics Group chief executive officer, Stephen Dawkins (pictured) tells Air Cargo Week (ACW).

He says the market this year has been similar to 2015 with yields continuing to come under pressure, but the UK voting to leave the European Union, dubbed ‘Brexit’, and Donald Trump being elected US president “could mark a turning point for the world economy”.

He tells ACW: “2017 could be a very interesting year, it could continue as per 2015 and 2016 and remain static, or the new economic climate created by Brexit and new US President could see a

significant year on year improvement.”

Dawkins predicts the next six months will remain uncertain as overcapacity continues and yields remain under pressure. He describes Europe as remaining static while Asia is growing.

More immediately, he says Air Logistics Group has not seen an end of season rally for the last five years, which he attributes to shippers being savvier in their ordering processes and marketing to the end user.

He comments: “Stocks are maintained throughout the year to avoid the last minute rush at the end of the season, allowing shippers to take advantage of lower cost transportation methods.”

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“However the recent difficulties at a large sea container company have resulted in a small uptick in October and November.”

E-commerce is also causing changes, with Dawkins explaining to ACW: “It is clear that the weight of shipments is becoming smaller due to improvements in technology and e-commerce will certainly have a significant impact on the size of shipments in the years to come.”

Consolidation in the industry is also predicted to continue, with Dawkins saying: “There has been consolidation in our industry for the last 10 years by airlines, handlers, forwarders and GSA companies. It is a normal evolution in the globalised world we live in today.”

Air Logistics Group is also working on improving efficiency, Dawkins says: “We continue to invest in IT and back office functions as the demand from our airline clients is to have revenues and yields as quickly after flight departure as possible.”

The company has 88 offices worldwide, and Dawkins says it aims to have 100 before its 25th anniversary in 2019. It is opening three to five new offices a year, and recent additions have included Oslo, to cater for the important fish export market.

Dawkins tells ACW: “All sales in Norway were previously managed by our office in Denmark but now there is a local sales presence on the ground in Norway working in co-ordination with the support team in Denmark.”

The GSSA represents 12 airlines in Norway including American Airlines, Cargolux, Icelandair (above), Pegasus Airlines and PIA, with the key commodities consisting of fresh fish, oil and gas, and electronic equipment.

The Oslo office was opened on 1 September, and is being overseen by regional director for Scandinavia & Finland, Henrik Spove, and on a local level by station manager for Norway, Frank Da Cruz.

ACW 12 DECEMBER 2016

9

PHARMA NEWS ROUND-UP

More companies gaining IATA CEIV Pharma certification

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HE International Air Transport Association’s (IATA) Center of Excellence for Independent Validators (CEIV) Pharma certification is helping drive pharma business across the air cargo supply chain.

CEIV has helped industry operators grow relationships with pharma shippers, and allay any concerns over goods not being moved and handled to the required standard.

The debate over whether to go for CEIV or Good Distribution Practice (GDP) remains, but CEIV is clearly growing fast.

More and more air cargo supply chain operators are getting certified such as Cyber Freight (see below), as they look to cash in on the opportunities that pharma presents.

Last month, AirBridgeCargo Airlines (ABC) became the first Russian airline to be certified at its Moscow Sheremetyevo International Airport hub. It is the seventh carrier to gain the certificate and it feels CEIV will raise standards for pharma shipments in Russia to a new level.

In November, Yusen Logistics Benelux became the first freight forwarder at Amsterdam Airport Schiphol to receive CEIV. In October, Turkish Airlines, Turkish Cargo and its Istanbul hub were awarded CEIV and the carrier was presented with the certificate at TIACA’s Air Cargo Forum in Paris.

In September, Lufthansa Cargo gained the certification for airline operations and the 4,500 square metre Lufthansa Cargo Cool Center in Frankfurt.

Other supply chain businesses are also working towards gaining CEIV including the likes of Rio Galaeo Airport in Brazil, SAS Cargo and American Airlines Cargo.

Hubs are also working towards getting members of their freight

communities certified. EuroAirport is the latest to implement CEIV and the Swiss gateway will work to achieve it in co-operation with other stakeholders operating in Basel. It believes the certification will help “reinforce” its position as one of the major airports handling pharma shipments in Europe.

Air Cargo Community Frankfurt is also aiming to make Frankfurt Airport the largest CEIV certified hub in Europe by early 2017.

At present, Perishable Center Betriebs and Bollore Logistics Germany are certified and others embarking on the nine-month process include Celebi Cargo, FCS Frankfurt Cargo Services, LUG and Swissport. International airlines and freight forwarders are also working to become certified.

Other hubs are investing in pharma such as Brussels Airport and Miami International Airport, which in May launched the Pharma.

Aero organisation and has added members including Changi Airport, Sharjah International Airport and others. Any joining must have achieved CEIV, which Brussels and Miami are certified at.

And Schiphol, is developing Pharma Gateway Amsterdam as it looks to get CEIV awarded across the freight community.

Investments in pharma and in gaining CEIV is a trend set to continue into 2017.

CEVA to manage distribution centre

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edical technology firm Medtronic has started construction of a new 33,000 square metre distribution facility next to its existing Centre of Excellence in Heerlen.

This centre will enable it to reach over 15,000 hospitals and clinics in Europe within 24 hours. Medtronic will establish and operate the facility in close collaboration with CEVA Logistics.

Around 140 new jobs will be created in addition to the existing 1000 Medtronic employees in Heerlen. The first activities at new facility are expected to start mid-2017.

The new distribution centre, developed by real estate partner WDP and managed by CEVA, is dedicated to the storage and distribution of Medtronic’s medical devices, such as implantables, surgical instruments and patient monitoring systems.

This new facility provides a springboard for the continued growth of the medical logistical activities already underway in the region and the future development of Medtronic’s Medical Logistics Campus in Heerlen.

CEIV for Cyber Freight Amsterdam

CYBER Freight Amsterdam a subsidiary of Cyber Freight International and a member of Pharma Gateway Amsterdam, has been awarded the International Air Transport Association’s CEIV Pharma certificate.

The company says CEIV is in line with the goals set by Pharma Gateway Amsterdam, the initiative of ACN and Amsterdam Schiphol Airport, of which Cyber Freight is a member of.

Cyber Freight director of operations, John Twisk says: “Next to our GDP, ISO9001 and AEO certificates, this CEIV certification will enable us to extend the quality standards of our airfreight service for our clients in the pharmaceutical industry.

“That is exactly the reason why we are very active in Pharma Gateway Amsterdam.”

Cyber Freight says together with the other Pharma Gateway Amsterdam members, it will continue the efforts to “optimise and improve the handling of pharma-shipments through Schiphol”, and to “secure the strong position Schiphol and its partners have in this sector”.

Amsterdam Airport Schiphol head of cargo, Jonas van Stekelenburg says: “Schiphol Cargo congratulates Cyber Freight with obtaining the CEIV certificate.”

He also adds: “With this certificate IATA confirms that Cyber Freight executes the storage and handling of medicines and other pharmaceuticals products with the utmost care.”

10

ACW 12 december 2016

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ACW 12 DECEMBER 2016

11

NEWSWEEK Lufthansa to double FRA Cool Center

Lufthansa Cargo is to nearly double capacity at its Frankfurt Airport Lufthansa Cargo Cool Center, with the expanded facility due to open in late summer 2017.

The 4,500 square metre facility was completed in December 2011 with four cold-storage rooms for temperatures between 2-8C, 15-25C, -12 – -20C, and 5-15C, as well as a deep freeze room and direct access to the apron.

Lufthansa Cargo board member product & sales, Dr Alexis von Hoensbroech says:

“After five years of success, we want more.

That is why we intend to further upgrade and significantly expand our Cool Center in the coming year.”

The 3,500 square metre expansion will mean the facility covers 8,000 square metres, with construction due to start in February 2017, and existing infrastructure will also be upgraded.

Von Hoensbroech adds: “The expansion is driven by continuous growth in temperature-sensitive cargo. We are pleased that our customers are benefiting from our comprehensive experience. We want to be their first choice in the future as well.”

Lufthansa Cargo has also signed an agreement with the German Red Cross to work closer on transporting aid as air cargo in the event of humanitarian disasters.

The cooperation will simplify flight preparations and facilitate effective support.

MAG - China trade booming

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hina has become the second most important non-European Union trading partner for Manchester Airports Group (MAG) airports in the first half of 2016, with markets in Asia making up most of the top five.

According to figures released by the group, which operates Bournemouth Airport, East Midlands Airport, Manchester Airport and London Stansted Airport, exports to China have grown 358 per cent in 10 years to £406 million ($515 million) in the half year from April to September 2016, while imports are up grew 250 per cent to £531 million over the same period. China is now the second biggest import market at East Midlands, while it was not even in the top 10 in 1996.

The US remains the biggest market, with exports up 92 per cent to £2.9 billion and imports rising 17 per cent to £3.2 billion. Exports to Qatar have boomed; in 2006 MAG airports exported £8 million to the Gulf state but this had grown by 6,190 per cent to £377 million.

MAG head of cargo, Conan Busby (pictured) says: “Global trade has never been more critical and these figures demonstrate the growing importance of having good quality air links to

our key trading partners.

“When you look at a market like Qatar, where we are now sending over £60m worth of high value cargo every month, the importance of efficient and direct air links is easy to see.”

He says the UK government needs to help the air cargo industry and Heathrow Airport’s capacity is limited. Busby also adds: “Brexit may make trucking goods out of the country to fly from mainland Europe more difficult, so it is important that these facilities are nurtured and helped to compete and thrive.”

Traditional markets have lost out, with exports to Switzerland and Turkey suffering the most from the growth of China and Qatar. Switzerland remained the five biggest import market due to strong demand for Swiss watches, but the significance has diminished over the years.

Other interesting details include MAG exported over £260 million of precious metal to Macedonia, with the Balkan nation using platinum for manufacturing catalytic converters. Over £30 million of pharmaceuticals flew from Manchester to Brazil and over £17 million of knitted clothing was imported from Pakistan.

India outperforming expectations at IAG IAG Cargo says it peak season volumes out of the Indian market have so far “outperformed expectations” – primarily as a result of a surge in the carrier’s e-commerce prioritise traffic from the region.

IAG saw tonnage rise by 15 per cent between August and October in 2016 with volumes up 41 per cent in October compared to the same period last year. The US and the UK are the key destinations for freight departing India, with commodities including printed and packaging materials, clothing and household goods.

IAG commercial director, David Shepherd says: “India has seen an exceptionally strong start to the peak. Not only have we

aircargoweek.com

seen an increase in the number of consignments being carried, we’ve also seen increases in the average weight of those consignments.

“This strong start to the peak is being driven, to a significant extent, by the cross-border growth of e-commerce which has meant a corresponding rise in the need for express shipments.”

IAG services five gateways in India with a fleet of next generation aircraft including the Boeing 787-9, and says it is well placed to manage the high volume demand. India’s e-commerce market is booming and is forecasted to be worth $119 billion by 2020.