ACW13 March 17 by Azura International

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The weekly newspaper for air cargo professionals Volume: 20

Issue: 10

13 March 2017

2017 starts well as exports fuel growth

he air cargo industry has continued its momentum in the first month of the year after a strong finish to 2016. Latest figures from the International Air Transport Association (IATA) say airfreight markets saw demand in freight tonne kilometres (FTK) rise year-onyear (YOY) by 6.9 per cent in January 2017 compared to the same month last year. IATA says growth coincides with a steady rise in new export orders, which reached their highest level in February since March 2011. Other positive factors have an increase in the shipment of silicon materials typically used in high-value consumer electronics shipped by air, while the timing of the Lunar New Year (28 January) may also have contributed to higher demand in the month. IATA’s director general and chief executive officer, Alexandre de Juniac (pictured) says: “It’s been a good start to the year for air cargo. Demand growth accelerated in January, bolstered by strength-

PHARMA GROWS BUT CHALLENGES REMAIN

ening export orders. “And that outpaced the capacity growth which should be positive for yields. And, longer-term, the entry into force of the Trade Facilitation Agreement (TFA) will cut red tape at borders for faster, cheaper and easier trade. “The onus is now on the industry to seize the opportunity to accelerate the modernisation of processes to make air cargo an even more compelling option for shippers.” FTK growth was down from the 10 per cent recorded in December 2016, but was still well above the average annual growth rate of three per cent over the past five years. Africa’s FTKs grew by 24.3 per cent, Asia Pacific six per cent, Europe 8.7 per cent, the Middle East 8.4 per cent, and North America by 6.1 per cent. The only region seeing a fall was

Latin America where FTKs fell by 4.1 per cent. Growth in freight capacity, measured in available freight tonne kilometres (AFTK), did slow to 3.5 per cent in January 2017. And the latest report by WorldACD Market Data says YOY cargo growth was 4.9 per cent in January, noting the early Chinese New Year created a flurry of activity before falling away after the big day. WorldACD says origin Asia Pacific and North America registered volume growth of over seven per cent, and origin China was up over 16 per cent. Asia Pacific as a destination was up 2.7 per cent with China down 1.4 per cent. And yields held up surprisingly well the market analyst explains, only dropping 2.9 per cent in January compared to December, compared to eight per cent in previous years.

administrative procedure.” It says analysis used by the Commission was “based on an econometric model different from that which had been the subject of an exchange of views and arguments during the administrative procedure” and made non-negligible changes to the analyses discussed with UPS. The court says by not telling UPS it was using this econometric analysis, it infringed UPS’ rights of defence. UPS says the decision will help preserve a competitive environment in Europe, while FedEx says it has no bearing on the acquisition.

Tickets are selling fast for this year’s Air Cargo Week World Air Cargo Awards in Munich. The glittering event celebrates excellence and achievement in the air cargo industry, and takes place during air cargo europe on the evening of Wednesday, 10 May at the stunning Westin Grand Hotel. Guests will enjoy a champagne reception, a sumptuous meal with fine wines, live music, entertainment acts and of course the presentation of the awards themselves. Awards are up for grabs in 10 categories: including Airfreight Forwarder of the Year, Air Cargo Handling Agent of the Year, Air Cargo Charter Broker of the Year, Airport of the Year, Air Cargo General Sales Agent of the Year, and Cargo Airline of the Year. Contact sales@azurainternational.com or visit www.worldaircargoawards.com/tables. cfm to get tickets to the industry’s premier awards event.

Express merger decision annulled, but too late for UPS The blocking of the merger of UPS and TNT in 2013 has been annulled by the General Court of the European Union due to “a procedural irregularity”. UPS notified the European Commission of its intention to buy TNT in 2012 for €5.2 billion ($5.5 billion) under the Merger Regulation, but the move was blocked by the Commission on 30 January 2013 - as it said the takeover would “restrict competition” in 15 member states for express delivery of small packages, leaving DHL as the only alternative to UPS in some markets. TNT was later acquired in May last year by UPS’ biggest rival in the marketplace FedEx for €4.4 billion. The Commission did not object, unanimously approving it saying the deal did not “raise any competition concerns”. Europe’s second highest court says: “The Commission infringed UPS’ rights of defence by relying on an econometric analysis which had not been discussed in its final form during the

60 SECONDS WITH HEATHROW’S NICK PLATTS

WACA tickets selling fast

COOL CHAIN IMPORTANT FOR AMERICAN ROCKY 2016 FOR THE UAE’S CARRIERS

e-AWB penetration rate falls 0.7% ELECTRONIC air waybill (e-AWB) penetration rates have gone down in January to 48.5 per cent, compared to 49.2 per cent in December. Penetration has risen from 37.6 per cent in February 2016 and the International Air Transport Association is now setting a target of 62 per cent by December 2017 where legally feasible. Kenya Airways and flydubai were the only airlines to achieve 100 per cent e-AWB penetration in January, followed by SriLankan Airlines with a rate of 94.1 per cent. Cathay Pacific continues to the highest number of e-AWBs by volume, and also had the fifth highest penetration rate at 79.3 per cent. Among freight forwarders FedEx was top at 89.9 per cent, followed by Hellman Worldwide Logistics at 70.1 per cent and Expeditors Group at 67.9 per cent. DHL Global Forwarding remained the top freight forwarder by e-AWB volume, with Schenker in second and Expeditors Group in third. The Middle East continues to see the highest penetration rates at 74.3 per cent, followed by Africa and the Middle East both at 61.4 per cent. Hong Kong International Airport processed the most e-AWBs by volume.

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NEWS WEEK CEVA’s losses deepen in 2016 while revenue falls

osses at CEVA have grown to $224 million for 2016 while revenue also dipped to $6.6 billion. Total comprehensive loss for the period net of income tax was up from $196 million and revenue was down 4.5 per cent from $6.9 billion. Freight management revenue was down from $3.1 billion in 2015 to $3 billion in 2016 and contract logistics declined from $3.7 billion to $3.6 billion in the same period. Chief executive officer, Xavier Urbain remains positive about the company’s performance saying: “I am very pleased with the Q4 performance where CEVA demonstrated healthy growth in all business lines and visible impact of our excellence program which supported us to deliver robust EBITDA in spite of the difficult peaks trading. The quarter also saw an impressive recovery in net working capital and strong cash flow.” He says CEVA made significant progress in transforming the company with important business wins and addressing legacy issues. Urbain says: “The strong improvement in results, in many of our markets, were overshadowed by weaker performance in some countries, which we continue to address. We enter 2017 in a stron-

ger position and I am confident that we will have a much better performance with our excellence program leading to further cost savings.” CEVA’s airfreight volumes grew 6.7 per cent in 2016 but net revenue margins were down in the fourth quarter due to “difficult peaks trading and a general increase in rates following the Hanjin bankruptcy” for both air and ocean freight. The company comments it has seen a shift from air to ocean freight, particularly in Asia, softening airfreight volumes and negatively impacting margins and net working capital requirements. CEVA says these trends may be cyclical in nature but there are no assurances that the trend from airfreight to ocean does not continue and it may not be able to prepare or predict future shifts in demand for particular transport services.

Elieson the new president at AA

RICK Elieson (pictured) has been promoted to the role of president of American Airlines Cargo, taking over from Jim Butler. Elieson, who joined American in 1994 on the Japanese desk of the Fort Worth reservations office, will report to Butler, who has taken over as senior vice president for international and cargo, following the retirement of Art Torno. Commenting on the new appointment, Butler says: “His history in leading large-scale strategic partnerships, pricing and revenue management and complex technology implementations, combined with his goal of building collaborative and empowered teams, is the perfect recipe for supporting the future success of our Cargo division.” Roger Samways is also being promoted from managing director of global sales and key accounts to vice president of global sales. There will be other management changes, with vice president of customer experience Tim Ahern retiring in April after almost 40 years. Vice president for Charlotte hub operations, Terri Pope will retire in June, and Dec Lee will succeed her, while John Beavers will take over Lee’s previous role as vice president of engineering, quality & training.

Strauss set to replace Turpin HAWAIIAN Air Cargo’s vice president of cargo – Tim Strauss (pictured) – is set to take over from the retiring Lise-Marie Turpin at Air Canada Cargo from 1 April. Turpin has been vice president of cargo for the Canadian carrier since 2008, but is to retire at the end of April. Strauss joined Hawaiian Air Cargo in 2012, and previously to that occupied senior roles at both Northwest and Delta Cargo. Meanwhile, Air Canada Cargo has added a frequency to its direct freighter service between Toronto and Bogota from 1 March. The service will now run three times a week to the Colombian capital. The carrier also started new widebody bellyhold services to Italy. A Toronto to Rome service started on 2 March and Montreal to Rome on 4 March, while services will run from Toronto to Venice from 4 May, Montreal to Venice from 5 May and Toronto to Milan from 17 May.

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ACW 13 MARCH 2017

NEWSWEEK DPDHL profits and earnings rise despite revenue falling 3.2%

eutsche Post DHL Group posted record earnings and operating profit climbed by 45 per cent, but revenue fell in the 2016 financial year. The Group’s revenue fell by 3.2 per cent year-on-year (YOY) in 2016 to €57.3 billion, but earnings before interest and taxes (EBIT) reached €3.5 billion, up 44.8 per cent over the prior-year figure, while all divisions generated operating profit of €2.4 billion (2015: €1.7 billion). Consolidated net profit increased 71.4 per cent to €2.6 billion (2015: €1.5 billion). The German logistics giant says its carbon efficiency target was reached ahead of schedule and in the future, it will focus its activities even more intensively on emission-neutral logistics concepts. The Group aims to achieve net zero logistics-related emissions by 2050. As for specific divisions in 2016 – it says the Express division performed well in terms of volumes, revenue and earnings in 2016 – as revenue increased by 2.7 per cent to €14 billion. The company says the success of DHL Express was again mainly attributable to strong growth in time-definite international (TDI) shipments, reflecting a volume increase of 7.6 per cent, coupled with effective yield management.

As for its Global Forwarding division – revenue declined by 7.7 per cent to €13.7 billion but in the fourth quarter (Q4), the division registered a recovery in airfreight volumes. Volumes fell YOY by 1.3 per cent in 2016 to two million tonnes. However in Q4, demand increased by 5.7 per cent to 578,000 tonnes. DHL says the upward trend was not reflected in revenue performance due to generally still low selling rates in air and ocean freight. In terms of operating profit, the division’s EBIT improved from a loss of €181 million in the previous year to €287 million in 2016.

The company registered a slight increase in total Group revenue to €15.4 billion in Q4 alone (+0.5 per cent). Group revenue was up by 3.2 per cent over the previous year. Group EBIT increased by €154 million in Q4 to €1.111 billion. This was the best quarterly operating result in the company’s history. In Q4, consolidated net profit grew to €841 million (2015: €670 million), mainly due to the increase in EBIT. Deutsche Post DHL Group chief executive officer, Frank Appel (left) says: “2016 was a very successful year for us. The company has never before achieved higher earnings in its current structure. We invested substantially in all four divisions and made strong progress in the implementation of our Strategy 2020. “Thanks to our targeted approach to e-commerce, the entire Group is benefiting increasingly from the dynamic international development in this segment. We are in an excellent position to maintain our profitable growth.” DHL expects further improvement in earnings in 2017 and it anticipates only moderate growth in the world economy during the current year. Earnings are expected to increase significantly based on additional operating improvements in the divisions. It forecasts an EBIT increase to around €3.75 billion in 2017.

3 AEI 737-400s for Vallair

VALLAIR has signed a contract with Aeronautical Engineers (AEI) for three 11 pallet position Boeing 737-400SF freighter conversions, to be delivered this year. AEI will start modifying the first aircraft in March, with the other two following in June and September, with the work taking place at Commercial Jet’s Dothan, Alabama facility. The 737-400SF offers 10 full height 88×125” container positions and its main deck cargo door is 40” further back than the competition, and AEI says the additional container position increases volumetric carrying capabilities by 10 per cent. Vallair is a Franco-Luxembourgish aviation group with its sales and administrative office in Luxembourg, operations facility in Chateauroux and MRO and paint division in Montpellier and Toulouse.

CO2 standard adopted

THE 36-State International Civil Aviation Organization (ICAO) Council has adopted a new aircraft CO2 emissions standard – which it says will reduce the impact of aviation greenhouse gas emissions on the global climate. Contained in a new volume III to annex 16 of the Chicago Convention (environmental protection), the aircraft CO2 emissions measure represents the world’s first global design certification standard governing CO2 emissions for any industry sector. The standard will apply to new aircraft type designs from 2020, and to aircraft type designs already in-production as of 2023. Those in-production aircraft which by 2028 do not meet the standard will no longer be able to be produced unless their designs are sufficiently modified. ICAO Council president, Dr. Olumuyiwa Benard Aliu says: “International civil aviation has once again taken pioneering action to address the impact of aviation CO2 emissions on the global climate.” ICAO secretary general, Dr. Fang Liu adds: “This historic accomplishment places aviation in an even better position as we look forward to a greener era of air transport development.”

ACW 13 MARCH 2017

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NEWSWEEK Finances at ATSG impacted by Amazon costs and ABX strike

ir Transport Services Group’s (ATSG) revenue increased 24 per cent to $768.9 million in 2016 and was up 22 per cent in the fourth quarter (Q4) of the year. ATSG’s earnings from continuing operations fell though, as were $21.1 million in 2016 down

from $39 million in 2015 – while it posted a $755,000 in Q4. Results include the non-cash effects of warrants issued in March 2016 to Amazon Fulfillment Services for operating and lease agreements. Q4 and full-year earnings were also impacted by a $7 million reduction in revenue and pre-

tax earnings from continuing operations, due to the strike by Teamsters-represented ABX Air pilots in November. Earnings before interest, taxes, depreciation and amortization (EBITDA) rose seven per cent to $211.8 million for 2016. Q4 adjusted EBITDA was $56.4 million, even with the prior year. ATSG president and chief executive officer, Joe Hete says: “In 2016, we completed a major set of long-term agreements with Amazon in support of its new dedicated air network, and by year-end began leasing 14 of the contracted 20 Boeing 767s for that network. “A 15th Boeing 767 was leased to Amazon in early January 2017. Our aircraft leasing, maintenance, and logistics businesses met aggressive targets from Amazon and other customers while generating good margins. “However, our airline operations, particularly those at ABX Air, incurred significant pilot train-

ing and premium pay related to expanded CMI operations, along with lower revenues due to a November ABX pilot work stoppage.” Looking ahead, he says: “Taken together, these factors reduced our second-half 2016 pre-tax earnings by approximately $20 million. After first quarter 2017, we anticipate costs at our airlines to be normalised. “That, along with minimal non-cash pension expense in 2017, is projected to result in a profitable year for our ACMI Services segment.” Last year, ATSG penned an agreement with Amazon – to operate an air cargo network to serve its customers in the US. The aircraft lessor leased 20 ATSG-owned Boeing 767 Freighters to Amazon. ATSG is the holding company for cargo airlines ABX Air and Air Transport International and maintenance, repair and overhaul firm Airborne Maintenance & Engineering Services, while it has other subsidiaries.

Asia targeted for hybrid

LOCKHEED Martin is targeting the Chinese and Asia Pacific markets for its hybrid aircraft, and will establish a base in the region. The aircraft is operated by Straightline Aviation, and will carry up 20 tonnes of cargo with a range of 1,400 miles with 30 per cent less fuel burn and 80 per cent lower carbon emissions than traditional heavy lift helicopters. Straightline chairman, Brian Kessler says the hybrid aircraft can move freight to remote areas without the need for infrastructure like roads and airports. Straightline has signed a $850 million memorandum of understanding to provide Canadian mining company, Quest Rare Minerals with seven aircraft along with significant expressions of interest from customers and investors in the Asia Pacific region.

Airlander 10 set to fly again

HYBRID Air Vehicles (HAV) have made a number of modifications to the Airlander 10 aircraft including improving its ability to land, as it gets ready to return to the skies. HAV has added an auxiliary landing system to allow it to land safely at a greater range of attitudes than previously and ground support equipment improvements including the ability to recover the mooring line once it has been released from storage. Telemetry data has also been reviewed to understand how the aircraft performed and results were fed into the simulator to allow much more realistic training in normal and emergency conditions, which it says will help the crew in unexpected circumstances including last August’s unplanned steep approach to the airfield caused by the mooring line hanging down. A testing and training programme has now started, and HAV chief executive officer, Steven McGlennan says investor and customer support has remained strong, saying: “We have every confidence that, in delivering the key learning points that we have identified, we will be in a great position to deliver a safe, robust and effective flight test programme when we get back into the air.”

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60 SECONDS

Seconds with NICK PLATTS

Heathrow Airport looks set for cargo growth in the years ahead if it gets a 3rd runway built and UK exports grow as forecasted by some due to the UK leaving the European Union. The UK hub’s head of cargo, Nick Platts spoke to Air Cargo Week about what Heathrow is focusing on operationally in 2017, future plans and how business is.

Justin Burns, ACW: How would you sum up Heathrow’s air cargo performance in 2016? Platts: 2016 was a successful year with results above expectations. Heathrow saw 1.54 million tonnes - up three per cent up on 2015.

Justin Burns, ACW: What trade lanes did you see the most buoyant growth in? Platts: At the regional level Heathrow saw growth year-on-year in tonnage within Europe (+9 per cent), on South Asia routes (+9 per cent) and the Middle East/Central Asia (+9 per cent). Latin America also grew by six per cent.

Justin Burns, ACW: Do you work with other hubs on cargo? Platts: Heathrow already has a strategic partnership with Hong Kong and I see great growth potential in further partnerships. Heathrow works closely with HK and we are exploring ways to work with them and learn from them. We are exploring how we might collaborate to make our trade lane more efficient. In late 2015 the Cargo Service Quality index was set up at Heathrow with the aim to encourage improvement in the quality

NICK PLATTS of the airport system as a whole by looking at eight measures across safety, quality and performance. To date, Amsterdam, Brussels, Frankfurt and Vienna are involved, with interest being shown by Paris CDG. The cargo teams from these key EU airports are working well together and share a passion for driving quality improvements to customers. We have agreed KPIs we believe apply at all our airports so we will be able to benchmark against each other.

Justin Burns, ACW: What are your focus areas to improve your air cargo operations in 2017? Platts: This year Heathrow is focused on reducing the traffic congestion in the cargo area, installing stillage in the cargo area and creating an area airside for transiting freight. At the same time, we will work closely with the expansion team to ensure the needs of our cargo customers are clearly understood so we are able to deliver our strategic programme through to 2025. Justin Burns, ACW: What markets do you expect to be the strongest this year? Platts: We expect to see continued growth in the Europe-Asia flow, and in the Middle East and Oceania markets. If poor weather continues to impact European food production, then we could also see a bounce in food from Africa and Latin America as part of the continued growth in perishables. As there is a level of uncertainty surrounding Transatlantic trade it is challenging to accurately predict growth levels for that region. Justin Burns, ACW: How are you going to grow in 2017? Platts: Our core focus is to make Heathrow more efficient and predictable. With our strong punctuality figures over the last 12 months set to improve further, we will continue to work with the cargo area landlord, along with our operational colleagues to explore what else we can do to reduce throughput times. Justin Burns, ACW: AirBridgeCargo (ABC) Airlines started a twice-weekly freighter from LHR to Moscow in November. Are you looking to operate more freighters in the future? Platts: ABC has demonstrated Heathrow can absorb some additional freighters without impacting runway operations. Heathrow is always looking for ways to accommodate additional freighters within the operational constraints we have. There are a few limited opportunities in the schedule we could fill – especially the winter schedule from mid-October to the end of March. Given the scarcity of slots, this is not possible around passenger peak times. We will continue to talk to our network and capacity planners about the benefits of more freighters. Justin Burns, ACW: Do you think Brexit provides a great opportunity for air cargo growth at Heathrow? Platts: Heathrow will be an essential part of the Government’s Global Britain strategy. We are already looking at ways we can take advantage of new export and import opportunities, but it will largely depend on the trade relationships put in place.

Justin Burns, ACW: Will a 3rd runway give a significant boost to air cargo at Heathrow? Platts: Absolutely yes. By 2040, Heathrow are aiming to double cargo volumes (based on 2015 figures). More importantly though, Heathrow will open up additional long-haul routes and increase frequency on the constrained routes we have today – both of which will strengthen UK trade.

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ACW 13 MARCH 2017

NEWSWEEK Moon service on Amazon chief’s radar

BOLLORE Logistics has picked CHAMP Cargosystems to comply with Canadian Customs requirements for eManifest Advance Commercial Information (ACI) reporting. Bollore will be able to file air cargo consignment details prior to arrival in complete compliance with eManifest regulations for freight forwarders using CHAMP’s Traxon Global Customs (TGC) service certified by the Canada Border Services Agency (CBSA). CHAMP vice president global sales & marketing, Nicholas Xenocostas says: “We are delighted to welcome Bolloré Logistics to the growing numbers of air cargo trad-

mazon’s boss reportedly plans to start a cargo service shipping packages to the Moon by 2020 to help set up a human settlement, according to a report in the online edition of the Washington Post. The online retail giant is reportedly targeting operating a cargo spacecraft Earth-to-Moon delivery service. This the Post claim will be able to transport as much as 10,000 pounds of goods to the Moon’s South Pole, and could be lifting off in 2020, according to reports. The Post reports that Amazon chief, Jeff Bezos as saying he wants to start delivering equipment to the moon to help set up the first human settlement with private space company Blue Origin, which would be the lunar equivalent of Amazon Prime. He says the mission could only happen as part of a partnership with Nasa.

CHAMP wins the faith of Bollore

ACW 13 MARCH 2017

The Post says he has already “reserved his spot” near the Moon’s Shackleton Crater on the South Pole, which reportedly is a prime spot because it has constant sunlight and water nearby could be used as a source of hydrogen for rocket fuel. The Post is owned by Bezos, who reportedly attained a white paper written by Bezos where he explained his plans and quoted him as saying: “This cargo service would help to enable ‘future human settlement’ of the moon. ‘It is time for America to return to the Moon – this time to stay.” Blue Origin has a range of rockets. As well as sending goods to the Moon in 2020, it is still on schedule to send paying customers into orbit as soon as 2018. (Picture credit: Blue Origin - 4th launch of the New Shepard vehicle begins with an ascent to an apogee of 331,504 feet before a successful descent and landing on June 19, 2016.)

ers who trust our TGC service with some of the most critical activities in the air logistics supply chain.” “This is particularly significant for TGC, as Bolloré Logistics is the first freight forwarder to use our customs service which supports over 110 airlines and handlers for customs border management and compliance.” Bollore Logistics head of project data management, Arnaud Fryda says: “We are extremely happy with the quick adaptation CHAMP could offer with their Traxon Global Customs, to integrate freight forwarders. The solution ensures us smooth customs filing fulfilling Canadian Customs’ requirements.”

Heathrow record again for American

AMERICAN Airlines Cargo keeps breaking records at Heathrow Airport, handling a record near 1.1 million pounds (489,849 kilogrammes) of freight in a single day. It transported over 600,000 pounds of exports and almost 475,000 pounds of imports with shipments including fresh salmon, vegetables and pharmaceuticals, and heavy metal industrial forgings. Imports from the US and other locations

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include lettuce and asparagus, and oil and gas equipment destined for Aberdeen and the North Sea oil fields. This is the fourth time American Airlines has broken its daily record since August 2016. American Airlines manager for cargo operations in UK and Ireland, Paul Griffin says with further enhancements now under way to both buildings, including enhancements to ambient storage offerings, it is “strongly positioned to handle even more growth in the future”. The airline’s major hubs from the UK had consistently high outbound load factors with strong demand for services to Charlotte, Philadelphia, New York and Dallas/ Fort Worth.

NEWS WEEK Revenue dip for West Atlantic

weden’s West Atlantic Group saw revenue fall 6.3 per cent to 1,320 million Swedish Krona (SEK) ($146 million) in 2016 – down on the 1,409 million SEK in 2015. Earnings before interest, tax, depreciation and amortization (EBITDA) was 127.5 million SEK – a fall on the 177.9 million SEK in 2015. West Atlantic has also been awarded an extended contract with Royal Mail UK. The new five-year deal started in January this year. West Atlantic Group is the holding company for two European cargo airlines, West Air Sweden and Atlantic Airlines of the UK with its head office in Gothenburg. Chief executive officer and president, Frederik Groth says: “Our fourth quarter included a successful year-end operation, but the rate of cost reductions seen earlier in the year was halted some, due to the need to ensure we had all the resources to deliver a quality service to our clients during their peak period. We are seeing an improving operation, and stable cash flow. “Costs related to non-flying ATP aircraft, excess aircraft maintenance facilities, and indirect personnel cost are still preventing us from

reaching the EBIT levels we are aiming for. We are continuing to implement our aggressive cost reduction plan. “This effort, combined with the implementation of the Royal Mail UK contract (which commenced partially in January), will lead us to a stronger 2017 and beyond.” He adds: “We are adding a total of seven B737-400 as a result of the Royal Mail UK contract award. Two of those have been delivered to date, and the additional aircraft are coming on-board over the next five months. We are working on finding new opportunities to grow our CRJ and B767 fleet, while also ensuring our ATP fleet increases its utilisation. As for the future, Groth says: “2016 was a year with lots of difficult changes, a terrible aircraft accident, cost reductions, and new contracts. “We have come a long way from where the year started, but we did not reach all our objectives. “We have entered 2017 with a solid plan in hand for how to complete the Group turnaround and ensure we remain competitive and can deliver on our financial and operational promises going forward.”

FCS wins Astana handling extension

AIR Astana has extended its handling contract with Frankfurt Cargo Services (FCS) for its daily flights between Frankfurt and Astana. The airline operates a daily Boeing 757 flight on the route during the winter, and uses a Boeing 767 during the summer.

FCS managing director, Hans-Georg Emmert says Air Astana’s cargo volumes have doubled in recent years and says: “We very much appreciate the extension of our cooperation reflecting the estimation and trust in our high standards, especially security, quality and service. We will do our utmost to meet these requirements also in the future.” He adds: “FCS is very pleased to be a partner of such an expanding airline by supporting with professional service and high quality standards.” Astana International Airport offers 420 flights per week, and Astana is home to 800,000 inhabitants.

Antwerp forwarding office for GEFCO GEFCO has launched a new freight forwarding office and warehouse facility in Antwerp - Belgium. The forwarders explains it will help optimise the movement of both air and ocean activities in the region and reinforce the existing network and strengthen GEFCO’s footprint for GEFCO Freight Forwarding. This is part of the company’s strategy to further develop its freight forwarding activities in high potential markets, and the Benelux region is seen as one of them. The Benelux region is a key sector for logistics in Europe. Close to Antwerp and Rotterdam ports, Zaventem and Schiphol

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airports for the import-export operations, and to Brussels, Antwerp and Amsterdam for distribution. GEFCO says it has chosen it to create an effective network that meets its industrial partners growing demand. The Antwerp freight forwarding branch provides warehousing space and is specialised in industrial project cargo by offering integrated solutions dedicated to high and heavy projects as well as out of gauge shipments. Over a third of GEFCO’s shipments from the Antwerp branch consist of industrial project cargo.

ACW 13 MARCH 2017

COOL CHAIN

Pharma logistics grow while challenges remain

016 has been a challenging year but pharma logistics are still growing, and Air France KLM Martinair Cargo (AF-KL-MP) is working on improving processes, director of pharmaceutical logistics, Renate de Walle (pictured) tells Air Cargo Week. The start of the year was volatile but the final three months of 2016 made up for this, and compared to 2015, pharma logistics kept growing. De Walle says AF-KL-MP has been working on improving processes and investing in new facilities, and that global quality, specifically flown as booked and maintaining the cool chain, requires attention. She says: “With all the efforts of the colleagues in the origins, the AMS & CDG Hub’s and the final destinations, we realised better kpi’s compared to 2015.” De Walle says AF-KL-MP is seeing the largest growth under pharma 15-25°, up 40 per cent and for pharma containers. The former is sold under the brand and solutions “Pharma Controlled Cool Chain” composed of 2-25, 2-8 and 15-25. The containers are sold under the name “Pharma Closed Cool Chain” developed with four container suppliers, CSafe, Dokasch, Envirotainer and Va-Q-Tec. Modal shift remains a concern to de Walle, who says: “[The] worrisome part is still the ongoing modal shift from air into ocean from our core shippers.” This year started at the same level as 2016, with double-digit growth in France and the Americas. Asia has been slow but AF-KL-MP will have a more complete picture at the end of the quarter. Describing the outlook, de Walle comments: “All in all we expect to achieve a better semester than 2016 due to positive developments in Europe and Americas and also globally on the +15+25°C solution because there is a high demand on that temperature range.”

Wide range of solutions

De Walle says AF-KL-MP has been able to integrate and sell a wide range of temperature and solutions, from -60 to +40°C, and that customers not only benefit from the choice but the different services. “We highly enhanced our pharma stations capabilities so that we cover more than 280 destinations able to offer one of our pharma products.” She adds: “Thanks to our close cooperation with our customers and pharma industry we are also working on new tools and new products taking into consideration a more and more regulated pharma world.” De Walle says pharma products are in safe hands with AF-KL-MP, with its wide network with direct destinations and it is constantly enhancing and analysing processes to adapt to the supply chain. She says: “You have with our pharma solutions the capacity to choose best products and you are under dedicated teams hands. Our commitment is to provide you with the right information based on a close collaboration.”

IATA CEIV in both Paris and Amsterdam

To further ensure pharmaceuticals are handled properly, AF-KL-MP underwent and achieved International Air Transport Association (IATA) Center of Excellence for Independent Validators in Pharmaceutical Logistics (CEIV) at both its hubs - Amsterdam Airport Schiphol and Paris Charles de Gaulle Airport. De Walle says IATA CEIV is very important, explaining: “It brings transparency, standardisation and efficiency to all the stakeholders. This certification is the insurance of quality and compliancy to the regulations.” AF-KL-MP is part of programmes including Schiphol’s Pharma Gateway Amsterdam, to create a ‘closed’ pharma chain at the airport. De Walle says the benefits include better communication, saying: “Raising issues we are all facing and sharing best practices can only benefit to all and especially to the shippers. PGA and other associations in which we participate (Pharma Logistics Club in France) are a need in an ever so specific and complex supply chain.” De Walle believes pharma by air will always exist and will increase over the coming years, though modal shift, more air cargo players and complex regulations are making the market very challenging and demanding. She says: “We believe it cannot go without more certifications and compliancy towards Good Distribution Practices. We are preparing ourselves to improve and make our offer and product the more reliable and connectable possible.”

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COOL CHAIN

Cool chain remains important for American Airlines

he cool chain remains an important part of business for American Airlines (AA) Cargo, and new routes means it can offer the service to more destinations, acting managing director – cargo sales, Roger Samways (pictured below) tells Air Cargo Week. AA added Tokyo Haneda and Auckland to its network in 2016, with additional flights to Hong Kong, and Samways says this has resulted in strong two-way cool chain traffic. He comments: “We are bringing New Zealand lamb directly into the US and we have fresh fish traffic in both directions notably to and from China and then there’s our fresh flower business which involves bringing cut blooms up from South America and sending them onward right across our network.” Samways says flower shipments bloomed for Valentine’s Day while South American teams saw noticeable increases in movements of mangoes and papayas. He adds: “Fish traffic in all directions continues to perform well and we are gearing up for even more enhancements to our specialist pharma offering in 2017 with additional service to Philadelphia and new CRT (cool room temperature) rooms at key international locations.” To ensure cool chain products are kept in optimum condition, AA offers active and passive solutions with its ExpediteTC product.

The active solution employs advanced, temperature-controlled containers to actively regulate temperature levels, and AA is the first passenger carrier approved to carry the full suite of Envirotainer products. The passive product protects pre-packaged shipments requiring additional temperature control during transport. Samways points out that the customer can choose the service that best suits their requirements, adding: “If they are shipping

though our pharma hub at Philadelphia then they have all the benefits of utilising one of the world’s most advanced pharmaceutical handling facilities and a highly trained team of dedicated professionals to deliver the highest service standards so that we can deliver uncompromised product integrity every time.” The entire supply chain needs to work together, and Samways says: “We’ve built a reputation for developing partnerships with specialist pharma freight companies around the world and we back that up with the scope of our own facilities globally.” He adds: “It’s about the whole package, being able to provide the end to end service and showing that best practice in cool chain must be delivered every time in order for this premium product to be delivered in the right condition every time.” Drug manufacturers expect their goods to be in safe hands at all points of the journey, and Samways says this is why AA striving to install CRT facilities across key locations around its network. Samways says: “Too many so-called cool chain products are actually only viable at one end of the chain, not both. But that’s something the pharma companies are very aware of and they make their choices accordingly.”

Call for more collaboration

THE pharma sector needs to embrace supply chain concepts that have transformed other industries, TEAM-UP founder Alan Kennedy says. Speaking at the 15th IQPC Coldchain Logistics Summit in Toronto, Kennedy says other ground-breaking supply chain platforms succeeded due to collaboration. He adds the sector lacks a common platform for collaborative working and to enable supply chain integration and TEAM-UP, a pharma-logistics initiative has been designed to fill this gap. He explains “By taking a lead and driving supply chain integration, pharma companies can position themselves to better assimilate technology, drive efficiency, facilitate transparency and, ultimately, deliver improved, safer, outcomes for patients.” TEAM-UP says it is based around the pillars of community, resources and accreditation and conceived as a not-for-profit body fostering collaboration and integration between all stakeholders in the pharma-logistics supply chain.

Market worth $381b by 2025

THE global cold chain market is expected to be worth $381.7 billion by 2025, and advances in technology have helped service providers penetrate emerging markets with solutions to solve complex transportation issues. According to research by Grand View Research, emerging countries such as India, Brazil, China and Mexico are undergoing a rapid transition to consumer-led economies. It says investment in warehouse automation has increased in recent years to meet customer requirements and the growing application of telematics in logistics and transportation is likely to spur the refrigerated transport market demand. The report also says the lack of cold chain facilities in less-developed economies made retailers invest heavily in developing their own cold chain logistics systems.

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UAE

Rocky 2016 for the UAE’s heavyweight players

016 was a topsy-turvy year for Middle East airfreight. August saw just a 1.8 per cent increase in demand, the slowest since 2009 as the region was hit by weak volumes on Asian and North America routes. Increases in airfreight capacity, sea freight and world trade volatility were contributory factors. The year ended strongly and according to the Airports Council International, cargo throughput in the Middle East was up 10.4 per cent in December and 5.8 per cent for the year. Dubai International Airport was one of the star performers with cargo up 3.4 per cent to just under 2.6 million tonnes for 2016. Emirates Group subsidiary dnata closed the year with 419,133 cargo tonnes at the airport, up eight per cent on 2015. Emirates SkyCargo is also powering forward. In late December, it revealed it was looking to expand its network of cargo destinations in the US with a new daily service to Fort Lauderdale in Florida - its 13th destination in the US. The Boeing 777-200LR heading to Fort Lauderdale is offering up to 15 tonnes of bellyhold cargo capacity per flight. SkyCargo

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said the rationale was to open up trade opportunities with goods being moved including surgical and lab equipment, electronics, aerospace components and pharmaceuticals. The group is also thinking more creatively. In November, it launched SkyWheels for the specialist transport of high value classic, luxury and sports cars. This includes door-to-door transportation of the vehicle from select origins and destinations in addition to export and import customs clearance processes. It follows a similar service launched by Etihad Cargo last summer. Etihad offers drivers of luxury cars up to 20 per cent off air cargo rates and their seat with their car delivered “straight to their doorstep”. Etihad Cargo senior vice president, David Kerr (right) says the service was driven by demand in the Middle Eastern markets from people who “like to take their cars on holiday with them” or people relocating abroad. He adds: “We carry vehicles predominantly from the UAE but also from neighbouring countries. The main destinations are Europe mainly the UK and Germany.” It transported 250 cars in 2016 including Bugatti and Lamborghini sports cars. It also carries Formula 1 and Super Sport cars, for manufacturers who need to ship their new releases by air for car launches or auto shows. “The attention to detail that goes into moving these cars is amazing – you don’t want to get one tiny scratch on it,” he states. “The 4WDs still have to go on a freighter aircraft as they have the bigger cargo doors which can accommodate larger vehicles. We have a combined fleet which means we operate freighters as well as passenger aircraft so we are able to accommodate any vehicle.” Both Etihad and Emirates are tapping into more personalisation in air cargo. “One of the other services we offer which was driven by demand in this region is the transport of falcons,” Kerr explains. “Falconry is hugely popular in the GCC countries and we ship thousands of them a year as cargo, or even in the cabin of the

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aircraft. When they go in the cargo hold they travel in IATA approved containers or on pallets in a temperature controlled, pressurised environment. The most popular destinations for our falcon traffic is within the region and the UK, Germany and Spain.” However, overall in 2016, Etihad Cargo carried 592,700 tonnes, which was flat yearon-year. During the period, it expanded its freighter services to several new markets including Columbus Rickenbacker, Ohio in the US, the East Midlands and London Stansted; Copenhagen; Brussels; Addis Ababa and Casablanca in Africa; Colombo, Muscat, and Zhengzhou in China. It now has 15 freighter-only destinations. “We saw some of the strength from the back of 2016 flow into 2017 but it is still a little early to talk definitively about the second quarter. There is nothing pointing to a major upswing but the good news is we are not seeing a decline,” says Kerr. “Both Europe and the US are strong export markets for us thanks in no small part to their favourable exchange rates. The US is a very good market for us, but our capacity is limited. Our Rickenbacker freighter operation has been very successful. We also manage all of Airberlin’s capacity to the US including on major trade lanes such as Dusseldorf to JFK and Los Angeles and Berlin to JFK and Chicago, and can feed on to Abu Dhabi.”

Cargo mix is changing

So more customer focused services and US growth are helping Etihad and the Emirates cope with market pressures. What of Lufthansa? Director of sales & handling for the Middle East & Iran, Thorsten Braun, says the UAE is a very competitive market at present. “The volumes aren’t going down but the cargo mix we are carrying is changing,” he says. “Sea to air coming from China into Dubai and off to Europe is declining because there is more belly capacity at an affordable price and there are more rail freight trains heading into Europe from China with a big cargo capacity. “We have managed to replace some of that missing cargo from China via Dubai, mainly garments, with other sea to air cargo from Sri Lanka, Bangladesh and Pakistan.” He says Lufthansa is looking at working closer together with Far East or South East carriers to help drive more volumes in via Dubai to Europe and beyond and fill capacities. “There are a lot of discussions going on around interlining,” Braun states. “How can we help get say fish from Sri Lanka to Europe? We can do it through Dubai or Kuwait through collaboration.” In January, Lufthansa announced a new two weekly main-deck connection from Sharjah International Airport to Hong Kong operated with LCAG’s MD11 freighters. It is carrying a range of products from perishables, healthcare products, live animals, to general and special cargo. “We want to make more efficient use of our existing resources and maximise our revenues,” Braun says. “It is doing well but Hong Kong is not the strongest import market in the world and the Middle East is not the strongest export market but we can make this a success.”

OMAN AND IRAN

Three pronged strategy for Oman Air in 2017

man Air Cargo marketing manager, Mahmoud Al Musili says that the group has a “three-fold” focus for its business in 2017. “We are working on expanding our product and service offerings, introducing more specialised services and better tailored solutions to our customers,” he explains. “We are using the “Cargo Wings” system at present but in the first half of the year we are launching a 100 per cent cloud-based cargo management system to provide reliable, transparent and realtime data throughout our logistics chain from drop-off to delivery. “A cloud-based system offers us a robust set of tools for managing warehouse and ramp operations, accessible from any device with a secure Internet connection. Every partner in the Oman Air Cargo chain will have instant access to shipment information.” The second element is its new state of the art cargo facility at its Muscat International Airport hub which is on schedule and ready to start operations in the second half of the year. With an initial annual capacity of 350,000 tonnes, the 38,000 square metre cargo facility will provide loading and unloading functions, export and import handling activities, air-to-sea and air-to-road services, and screening and customs inspection procedures. “It is capable of build-up, break-down, transfer, staging, storage, and tracking of all inbound and outbound cargo in the form of pallets, unit load devices, in-house pallets, and bulk cargo,” Al Musili explains. “The facility accommodates frozen and chilled storage, secure and dangerous goods storage, bonded storage and quarantine facilities, as well as a live animal centre. This allows us

to further compete with other regional airlines and direct more consignments through Muscat.” Oman is also focusing on customer service “striving to offer best-in class professional services to every client, partner and

stakeholder”. In addition, it is looking at introducing leased freighters under the management of Oman Air Cargo, to better service its main destinations in Europe, Indian Sub-continent, and the Far East. Al Musili is confident of cargo tonnage growth this year despite a challenging environment. “Oman Air Cargo does not, of course, operate in isolation and global economic changes can have a significant impact on our work,” he states. He adds: “Significant among the changes witnessed in the past two years was the major drop in oil prices. And although this may have adversely affected international trade and commerce, we continue with our growth plans.” Oman is certainly on the up and looking to grow in future years and provide an alternative to nearby UAE and Saudi Arabia.

A market of opportunity

IRAN is a market that offers huge opportunity for the air cargo industry and has opened up since economic sanctions were lifted and carriers and forwarders are targeting the market. The Iran Airports Company says 495,000 tonnes of cargo was transported during the 10 months to January 19, 2017 up 12 per cent on the same period last year. Showing how Iran is opening up internationally - of that 178,000 tonnes were moved abroad, up two per cent on the same period the year before. The busiest airport was Tehran’s Mehrabad International Airport with 93,800 tonnes. The figures reveal the continued attraction of Iran post-sanctions and a calming of any nerves that newly arrived President Trump’ s harder views on sanctions could lead to demand souring. Lufthansa has a Munich to Iran service and a regular charter freighter coming from Amsterdam. Austrian Airlines also flies into Iran. Director of sales & handling for the Middle East and Iran, Thorsten Braun says: “We have high expectations of Iran. Inbound there has been an increase but exports have not really picked up yet,” Braun states. “Iran is spending money on industry and there is a growing demand for commodities. We are looking to partner with local and international freight forwarders when they develop their presence in Iran. There is so much potential here and we are committed to growing our business.” Meanwhile, national carrier Iran Air is sure to play a major role in the marketplace and in years to come it is set to have a huge fleet. This year it has ordered 20 turboprop aircraft from Franco-Italian firm ATR, worth $571 million. And last year, it ordered 118 aircraft from Airbus including 73 widebodies and 45 single aisle aircraft and a further 80 aircraft from Boeing valued at $16.6 billion, including 30 777s.

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ANIMAL TRANSPORTATION Animal centre opens at JFK

THE Ark at JFK - a multi-purpose animal handling and air cargo facility has opened up at New York’s JFK International Airport. ARK Development - a subsidiary and portfolio company of private equity firm Racebrook Capital, constructed The ARK at JFK as part of a private investment of $65 million. Approved by the board of the Port Authority of New York and New Jersey, it is North America’s only animal terminal and the first full-service 24-hour privately owned airport quarantine facility (pending USDA approval) for the import and export of horses, pets, birds, exotic animals and livestock. Racebrook is responsible for developing, financing, constructing, operating and managing the 108,650 square foot animal handling centre and additional 63,515 square foot cargo handling facility. It features everything from a splash pool, overnight kennels, and pre-flight micro-chipping services to track animals, and it will one day even have an in-house pet spa. The ARK provides both airside and landside

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services to board, kennel, quarantine, import, export and transport large and small animals. Additional services include transportation in dedicated climate-controlled vehicles to and from aircraft, terminals, cargo facilities and other airport locations. In addition to the Pet Oasis, an Equine & Livestock Export Center and an Aviary In-Transit Quarantine have both just opened. A full-service import-export centre for horses, as well as an ARK aviary, will also be ready in a few months time. Here, pets will be fully groomed, tucked in to bed, and allowed to share photos or FaceTime with their owners. The ARK sits on 14.4 acres of land in a cargo area that is situated for easy access to aircraft at one of JFK’s runways. It is expected about 5,000 horses, 10,000 small pets like dogs and cats and hundreds of thousands of birds and livestock will come through the facility each year. The ARK is focused on the safe and humane transportation of animals and replaces the outdated and ageing Vetport, which opened at JFK in 1951.

Horse handling a thriving sector

THE handling of competition horses is a thriving sector of live animal transportation at Hong Kong Air Cargo Terminals Limited (Hactl). Executive director, Simon Fu explains moving such high-value animals presents challenges and it sometimes handles 60 in a single aircraft movement, as is the case with the annual Longines Hong Kong Masters event. Fu says these valuable animals are always prone to nervousness and Hactl staff know the “little touches” through the right training that help de-stress them in what can be the very frightening environment of the live ramp. “For example, we tow their stalls facing backwards, as this is less stressful for them. We also use shallow angle ramps for loading them onto vehicles, which avoids injury to knees,” Fu says. He explains there is close cooperation between Hactl and The Hong Kong Jockey Club to ensure the success of all equine operations. The IATA Live Animal Regulations (LAR) is

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the basis for processing this traffic, which is periodically updated - as they were most recently with the issue of the 43rd edition at the start of 2016. Fu says the checklist helps ensure all personnel involved in live animal movements fully comply with the LAR requirements. IATA also coordinates the Live Animals and Perishables Board (LAPB), which provides input to the airline sector about animal welfare, identification, and behaviour. He explains Hactl regards the LAR as a “minimum standard”, and implements its own enhancements and, when required, the additional instructions of its customers; if those require enhancements to facilities, it is flexible in meeting requirements. Fu says Hactl has no plans to build more live animal infrastructure as its Livestock Handling Centre within the new SuperTerminal 1 facility opened in 1998 has all the handling technology and practices needed. It was enhanced with a special horse handling unit in 2008. He notes despite all the procedures and best practice already present within the air cargo sector, Hactl still encounters occasional shipments where there are deficiencies in the presentation by shippers. Fu says these include the inappropriate import/export/transit licenses and health certificates, incorrect quarantine requirements at each departing, transiting and arriving airport, inadequate cage/crate size, and others.

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