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WORLD ACW Digital is sponsored by AIRPORTS.COM FREIGHTERS.COM
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The weekly newspaper for air cargo professionals No. 1,012
17 December 2018
Season’s greetings to readers and advertisers Best wishes for a successful 2019
Tenth year of profits ahead
Ho, ho, ho
INSIDE UNDER THE TREE IN TIME
TO COPE with the large volume of Christmas mail and parcels between Germany and the USA, Lufthansa Cargo is increasing capacity ... PAGE 3
AIRFREIGHT FORECAST FOR 2019
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emand growth is expected to slow in 2019 due to weaker world trade conditions, with tonnage predicted to increase 3.7%, the International Air Transport Association (IATA) says. The association is predicting that, following an increase of 4.1% in 2018, growth will slow to 3.7% to 65.9 million tonnes, the slowest pace since 2016. Cargo yields are expected to grow 2%, well below the “exceptional” 10% growth in 2018. IATA says this continues to recent strengthening of the cargo business since cost increases are lower. Overall cargo revenues are expected to reach $116.1 billion in 2019, up from $109.8 billion in 2018. IATA director general and CEO, Alexandre de Juniac says: “We had expected that rising costs
would weaken profitability in 2019. But the sharp fall in oil prices and solid GDP growth projections have provided a buffer. So we are cautiously optimistic that the run of solid value creation for investors will continue for at least another year. But there are downside risks as the economic and political environments remain volatile.” The association forecasts that global airline net profits will be $35.5 billion in 2019, up from $32.3 billion in 2018, making 2019 the tenth year of profit and fifth consecutive year where airlines deliver a return on capital exceeding the cost of capital. Trade wars and uncertainty surrounding Brexit remain concerns but IATA says this will not offset the “positive impetus” from expansionary fiscal policy and growing investment in major economies.
Average Brent oil prices are expected to fall to $65 in 2019 following US output rises and rising oil inventories. Jet fuel prices are expected to average $81.3 a barrel in 2019. All regions of the world are expected to report profits excluding Africa. North America will account for half of total airline profits, increasing to $16.6 billion due to high load factors and ancillary revenues. Asia Pacific profits are expected to increase to $10.4 billion. Profits for European carriers are predicted to fall slightly to $7.4 billion. In 2019, high levels of hedging will mean the positive impact of lower oil prices will be delayed. Middle Eastern net profits will increase from to $800 million while LATAM net profits are expected to rise to $700 million with economic conditions recovering slowly.
WITH the benefit of hindsight, I can now safely say I know what we did wrong, as well as having the insight in the possibilities to correct these mistakes ... PAGE 4 WHEN AIRFREIGHT SET RECORDS
WHEN data from over 2,500 airports in more than 175 countries, ACI (Airports Council International) 2018 World Airport Traffic .... PAGE 8
Cold comfort for Polar bear on way to new home A POLAR bear born at Novosibirsk Zoo flew with AirBridgeCargo Airlines from Krasnoyarsk to Beijing to his new home using a Boeing 747-8 Freighter. Transportation was arranged by Avanti, a Novosibirsk logistics company, and complied with IATA Live Animal Regulations, and the cargo
was handled at Krasnoyarsk Airport by Sibir Cargo Services Company. The temperature on the four hour flight flight was maintained between 4-15C, to maximise comfort for the polar bear. The flight performed as schedule and took place on the bear’s birthday.
The un-named creature celebrated his fourth birthday on the flight. Avanti Logistics director, Renold Nikolin says Krasnoyarsk airport, which is 2,500 km from Beijing, meets all international standards of cargo operations. Sibir Cargo Services is a key cargo terminal in Siberia.
THE SEASONAL BEST 60 SECONDS
EACH month we ask the personal questions that show the person behind the business mask. Who is Pocahontas’s relative working in airfreight .... PAGE 12
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ACS celebrates 10 years in Hong Kong
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ir Charter Service’s Hong Kong offices has celebrated its 10th birthday, with a lavish party being held to recognise a successful decade. Group CEO Justin Bowman and group commercial director, Justin Lancaster flew out to Asia to get celebrations under way, with Asian Business Aviation Association (AsBAA) board members also being invited. ACS APAC region managing director, Stephen Fernandez says: “This is a proud day for Air Charter Service Hong Kong. Thanks goes out to all our suppliers and partners throughout Asia and beyond over the past decade. The office has experienced year on year growth every year over those 10 years and is now one of ACS’s largest offices.” He says the office has been involved in some memorable charters, including flying VIPs in and out of the region, and helping out in humanitarian crises. Fernandez says ACS was on hand for customers after the tsunami and earthquake in Japan in 2011, when the company helped evacuate more than 800 personnel and their families from the region. He says: “The cargo department has also been entrusted with arranging aircraft carrying aid over the years. Major operations
have included flying relief cargo to Patong in 2009, in the aftermath of the earthquake in Indonesia, and in 2013 we flew in humanitarian goods for the victims of Typhoon Haiyan in the Philippines.” Bowman adds: “I’m extremely proud of our team here in Asia – from a starting point of nothing 10 years ago, we have grown to become the largest company of our type in the region. I’d like to thank AsBAA for the plaque and their recognition of our 10th year in Asia – we look forward to supporting them for years to come.”
Volga-Dnepr sets up base in Houston VOLGA-DNEPR Group has opened an Operations Base at Houston George Bush Intercontinental Airport to serve customers across North and South America. The base is an expansion of the group’s sales office, which opened in 2001, and will ensure customers will benefit from immediate local expertise and services to meet their logistics requirements. Volga-Dnepr Group executive president – charter cargo operations, Konstantin Vekshin says the group will dedicate one Antonov AN-124-100 as well as crew, technical support teams and loading equipment to the Houston facility. He says: “The Base will be staffed by load planning engineers and loadmasters, operations, navigation and ground handling specialists, and provide unique and specialised on-site engineering and delivery solutions to enable the safe and secure transportation of heavy and outsize cargoes.” Houston Aviation director, Mario Diaz says the operations base will create 30 to 40 jobs in the local area. He says: “Houston Airport remains committed to developing and improving intermodal connectivity, and new service offerings such as Volga-Dnepr’s operations base help us achieve our mission by further connecting the people, business, cultures, and economies of the world to Houston.”
ACW ON THIS DAY
Kids search for Santa Vol 8 Issue 40
12 December 2005
MANCHESTER Airport Cargo Executive Club is among a number of organisations to have raised money to help send a group of 175 children on last Saturday’s annual Santa Flight, taking off from the airport to fly around the north-east in serach of Father Christmas. The children started their day out with a party at the airport and after the flight visited Santa’s grotto, where they were each given an early Christmas present, a selection box and a goodie bag. The annual event is organised by Manchester airport’s adopted charity Childflight, with the aircraft provided by First Choice. The charity initiative continues to this day, with flights to find Father Christmas and to Florida for disadvantaged and troubled children. Flights are normally full within 48 hours of availability.
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Koch to join Coyne Airways as managing director
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ristan Koch will join Coyne Airways as managing director in January 2019, as part of the airline’s ongoing expansion plans. Based in London, Koch’s responsibilities will cover original markets Coyne pioneered around the Caspian, as well as 50 markets in the Middle East and Africa, which the airline now serves. Coyne Airways founder and chief executive officer, Larry Coyne says: “The appointment of Tristan marks an important landmark in Coyne’s history as we celebrate 25 years of serving niche markets. We are expanding our existing business and extending our operations to new territories, and Tristan is very much part of that planned growth.” Koch has 18 years of experience in the air cargo industry, including senior roles at British Airways and most recently at American Airlines, where he was managing director cargo sales – EMEA ISC. Koch says: “Coyne has built a class-leading reputation for delivering freight solutions in the Caspian and elsewhere based on true collaborative partnerships with its customers, and I am excited to be given the opportunity to help grow the business further.” Coyne Airways operates to difficult-to-reach destinations includ-
WORLDNEWS AERONAUTICAL Engineers (AEI) has received Transport Canada approval for the AEI CRJ200SF passenger to freighter conversion. AEI received the original FAA STC for the CRJ200 SF at the end of 2016, and was granted approval by the EASA in May this year. DAVID Cunningham will retire from his role of president and CEO of FedEx Express on 31 December, to be succeeded by Raj Subramaniam. Subramaniam will take over on 1 January 2019, and has been with FedEx for more than 27 years, having held executive positions across various operating companies and international regions.
ing the Caspian, Afghanistan, Iraq, and Africa, with headquarters in London and a hub in Dubai. Chief operating officer, Liana Coyne says: “Our aim is to increase frequency into the Caspian and control the movement of a greater proportion of the freight on the capacity we control. We are happy to consider full or part-load capacity of carriers serving China, the Middle East, and Africa to achieve this.”
MICHAEL Kerkloh will retire as Munich Airport president and CEO at the end of 2019 after 17 years in charge. He started his aviation career at Frankfurt Airport in 1987, before joining Hamburg Airport in 1995 as CEO, then moving to Munich in 2002.
Formula E comes to Saudi Arabia
SAUDIA Cargo brought the FIA Formula E championship to Riyadh by transporting cars and equipment for the season opening race in Ad Diriyah. The ABB FIA Formula E Championship season opener was held in the historic city from 13-15 December and sponsored by Saudia Airlines. The cars, spares and equipment were carried from several European destinations into King Khalid Airport, a total of 58 cars aboard several aircraft with a combined load exceeding 220 tonnes. Formula E is a class of racing using only electric-powered cars, utilising electric energy and touring iconic cities since the inaugural championship started in Beijing in September 2014. The championship has toured cities including New York and Paris, and this year the Saudia Ad Diriyah E-Prix will start the season, taking place in the UNESCO world heritage site and historical capital of the Kingdom. The three-day festival provides a variety of entertainment activities, from the Formula E races to live music performances to the Allianz E-Village, an area full of innovative electric cars and gaming platforms. In addition, Saudia Cargo transported Jaguar i-Paces (pictured) for the eTrophy, which will be acting as the support race to the Formula E series.
Under the tree in time
TO cope with the large volume of Christmas mail and parcels between Germany and the USA, Lufthansa Cargo is increasing capacity in co-operation with Deutsche Post. From mid-November until 3 January, an MD-11F is taking off each weak on the Frankfurt – New York/JFK route. The Atlantic will be criss-crossed seven times exclusively for Deutsche Post to make sure Christmas presents are under the tree in time. Lufthansa Cargo executive board member for product and sales, Dorothea von Boxberg says: “There is great demand in the run-up to Christmas for our Airmail/eCommerce product in particular for short-notice deadline-sensitive shipments. “ “Therefore, we have ramped up capacity exclusively for our close partner Deutsche Post in recent years already. This year, for the first time, we have even been able to provide the support of seven charters during the Christmas period due to growing parcel volumes.” Deutsche Post senior vice president of international operations, Thomas Kling says: “During the Christmas period especially, it is particularly important to us that we ensure excellent reliability in global transport so that our customers receive the goods they ordered and presents from family and friends on time for the holidays.”
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What does 2019 hold for airfreight?
Industry veteran, consultant and ACW A-Lister STAN WRAIGHT is repeating his call not to make the mistakes made 25 years ago when dealing with the likes of Amazon, JD.com et al today
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aving the benefit of hindsight, I can now safely say I know what we did wrong, as well as having insight in the possibilities to correct those mistakes. Twenty-five years ago we, through ineptitude, gave away the express and small package market to integrators who understood the customer’s needs, and how to organise around that. Through airline incompetence we, through IATA, gave away the rest of the possibilities to retain yield through pallet pricing and giving away customer relations - the only true source of information on needs and demands so the customer can succeed - to forwarders. Imagine what that decision to go to pallet pricing, which was totally driven by reducing handling costs at airports, has done to intermediaries positive profit margins at the expense of airlines’ ability to finance investments and support the high capital costs of running an airline. Today we see another revolution in logistics where airfreight is one of the major tools in shipper and consignee satisfaction, and that is e-commerce and all other verticals requiring speed, security, safety and transparency. Will the airlines and their critical partners like airports, GHA, GSSA and IT companies now understand the opportunity this presents, or again fall back into load factor, FTKs and cost reduction modes so typical of the past? These are not anti-forwarder statements, as they also struggle and look to scale in network and services to meet expectations.
It is not anti integrator either as they also struggle with B2C, extremely high costs and less than efficient hub systems to be competitive. Nothing on earth is faster than scheduled airlines point to point (PTP) flights, nothing, but we don’t have the ability to leverage that unless we focus on ground logistics, not airplanes. I have said it before, and will repeat as an example there is nothing different between a BA or Cathay 777 non-stop flight between Hong Kong and London except what they do on the ground at both ends to leverage that advantage. These are obvious facts re capabilities, will we understand that? Airports and all associated industries such as GHA, forwarders and shippers/consignees can benefit if the industry gets out of the silo approach and understands what is now possible. If we do not do something soon to enable what I call our “virtual integrator” possibilities in the scheduled air cargo business, we are doomed in the future to be bit players serving only low yield and high volume business. Verticals such as pharma and others will
not save the scheduled cargo business – they are too small a niche. GHA and property developers need to work harder in meeting what airports are demanding, build a facility that will attract and support the airlines who are here, or who want to be here, or do not bother bidding for access. Airline route development managers are telling airports that, on average, 20 per cent of revenue on trans-border flights is coming from cargo. We must engage the major suppliers of material handling systems (MHS and ASRS) that support e-Commerce and express, less than 300 kilos, plus larger consignments as well in this strategy. The last component will be linking this together to allow “virtual integration” of services where all parties in the chain will benefit and ground capabilities in logistics is a must to achieve that. If we do not do this, Amazon and large Asian entities such as Cainiao, JD.com, SF Express et al will want this capability in-house. They will do it themselves as integrators were forced to do 25 years ago with express.
Ready and relishing the challenge THIS year will be another challenging but very exciting year for the air cargo industry. There are a number of factors on the short/medium-term horizon such as economic tension, trade wars, inflation, the instability of the fuel price, Brexit and currency volatility that are quite unpredictable but they will definitely bring opportunities for our industry. The key to success when facing the coming new economic cycle is be ready to adapt accordingly. The market has recovered since the last crisis but we may be coming to the end of another economic cycle and a new and even more dynamic cycle is about to start. Our industry has been relying on retrospective information to manage its business; the key is to take the business intelligence we hold
and start to predict where the business is coming from and flowing to. For Air Logistics Group, after two very strong years, we anticipate steady growth for 2019 by continuing to expand our network, consolidate our position as the market leader and to invest in our employees and business intelligence to become a predictor. We must continue to maintain the highest service levels for our Forwarding and Airline clients, while focusing on digitalization and expanding our vertical product offerings to Airlines, primarily in training, compliance, and back office functions. Air Logistics Group is ready and relishes the challenge that 2019 will bring. Stephen Dawkins, CEO, Air Logistics Group
Optimism in abundance at Nallian AT MACRO level, although the impact of Brexit can be significant for the parties involved, we believe that the trade wars between US and China can potentially have a much higher impact on the growth of global trade and hence global GDP. The jury is still out on the direction this will take. At meso level, we’re quite optimistic. We see that airports around the world are preparing for growth and are building capabilities for pharma, perishables and e-commerce. While at the end of last year we had interest from five airports; today we are engaging with some 50+ airports that are considering to deploy
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smart infrastructure based on data-sharing to cope with growing volumes without having to accelerate investment in physical infrastructure. Working in a digitally-facilitated network “as one” instead of in non-coordinated siloes is slowly but steadily becoming the new normal. In some cases, it is the only way of delivering economically on the new market requirements driven by growing pharma, perishables and e-commerce traffic. And in the end, building these capabilities will help drive growth for air cargo too. Joke Aerts, head of marketing, Nallian
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We asked for forecasts about what lies ahead in the New Year for the global industry.
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-commerce is booming and that requires a lot of shipping so, for our members, there is a lot of business out there for package delivery. But, of course, we face a challenge in meeting our customer’s needs primarily because of the pilot restrictions. Our members have no choice but to be as resourceful as possible by using aircraft size and routes that will create as much lift as possible with the fewest pilots. I am guardedly optimistic. We are all learning to do more with less. That plays to our efficiency to put the right aircraft on the right routes and
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iege Airport is definitely looking forward with optimism to 2019. The investments in additional warehouse capacity, and new systems to speed up both the physical and data movement of the cargo, guarantees more space for growth for current and future partners of Liege Airport. Being the Flexport, we are convinced the flexibility of Liege Airport will be just perfect to accommodate the uncertainties and ad hoc logistic challenges of Brexit and other disruptors of the market. The #freightersfirst guarantees capacity for freighter operators and their customers, in 2019 and beyond. Our first press release in 2019 will be a positive one, as we already know it will report 2018 was a record year for cargo throughput in Liege. We will thank the LGG Cargo Community, airlines, handlers, trucking companies, freight forwarders, customs brokers, shippers for their confidence, and invite them to keep working and growing in Liege.
use our pilots as efficiently as possible. Business is very robust but unfortunately members are having difficulty cashing in on increased demand because of the shortage of pilots and maintenance technicians. Are we worried about our business prospects? No. In fact, we’re a bit overwhelmed by all the business out there which puts our primary goal on meeting customer needs. As for future customer needs that is something we have to face down the road. Stan Bernstein, President, Regional Air Cargo Carriers Assoc, United States
We definitely hope we can continue on this path, and prepare the same announcement for 2020. Steven Verhasselt VP Commercial Liege Airport
Remaining vigilant for airfreight AIRFORWARDERS Association (AfA) members view the upcoming year with general optimism with the understanding that potential headwinds including higher fuel costs, increasing interest rates, and import tariffs could adversely impact cargo volumes in the upcoming months. The industry showed positive results this past year, keeping pace with the robust economy despite forwarders having to deal with the truck driver shortage and significant airport cargo truck congestion here in the US. Recently, in one of the most impassioned mid-term elections we have seen in recent history, the Democrats seized control of the House of Representatives by a convincing margin. As a result, our industry can expect to see the House majority to begin to question the Trump administration’s oversight of the Transportation Security Administration and the US Customs and Border Protection agencies. We expect to be called to appear before Congress again as cargo-related issues come into question. The new political dynamic brings trade agreements into the spotlight. While the President can levy tariffs, he will need Congressional approval to ratify trade agreements meaning that the administration could face tough political headwinds. However, no trade pact will ever reach its full potential without the significant road, water and airport infrastructure improvements so we remain optimistic that the new Congress will finally face the issue through an upcoming investment
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package focused on improving cargo access to vital transportation hubs. Of course, with the Republicans in control of the White House and the Senate and the Democrats controlling the House, the spectre of gridlock remains a very real concern. Vigilance will be more important with this new dynamic and the Airforwarders Association will make its voice heard. Brandon Fried Airforwarders Association, United States
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ext year is probably going to be the most challenging year that we have seen in decades. It will be a year that we will have to take a day at a time and be in a firefighting mode. I am neither optimistic nor pessimistic about the next year. Between the US/China trade war where there will be no winners and the Brexit chaos, we will probably have an interesting Q2 and Q3. February and March are going to be very good for air cargo. Traditional cargo market will be quite flat. The higher growth effect of e-commerce business will be on the domestic fronts in US and China. Intra-Asia business is likely to continue to be strong, so will LATAM markets. Freight forwarders are likely to be a lot busier in the EU/UK market because of No-Deal Brexit. Presuming that there will be some sort of air services agreement between UK and EU, air capacity will be in high demand because of the congestion on the UK/EU borders where road traffic is going to be extremely congested because of the border control process delay. Ram Menen, aviation consultant I THINK 2019 will be very good for airfreight. We are not seeing anything from our customers that would indicate otherwise. I think it will be as good as it was in 2018 or slightly better for us in 2019. I am concerned about tariffs that have the potential to increase costs which affect demand. We would love to expand but we are very conservative because of the lack of qualified pilot and maintenance professionals. Tim Komberec, President Empire Airlines Hayden, Idaho, United States
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Cautiously optimistic
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espite potent i a l trade w a r escalation, increased protectionism and a potential hard (or no deal) Brexit, we remain cautiously optimistic about the outlook for 2019. If the trade war between China and the USA further escalates, it may even be positive for a short term for Europe, mainly due to relatively cheaper imports from China and a stronger competitive position thanks to a stronger dollar. Obviously, it is not good for the world economy in the long run. Car manufacturers in the US are already downsizing operations and laying off people for a large part because of increasing steel imports. At Jan de Rijk we are expanding. We will purchase 80 new trucks in 2019 and we are expanding at our aerospace department where we see increasing demand from engine manufacturers and airlines. We have seen capacity shortages in the last year and we foresee that labour will continue to be scarce in the coming years. Fortunately, we are still able to attract talent
to continue to fuel our growth. The market equilibrium caused by labour shortage will continue to put an upward pressure on cost and prices. We will also further grow our intermodal operations by increasing our train operation between the Benelux and Italy. Our last mile pharma distribution to pharmacies and patients at home has tripled in the last three years and we foresee more growth in the future. The automotive truck industry continues to increase its production and as a result requesting more specialised logistics services from Jan de Rijk, ranging from just-in-time linehauls, factory distribution to assembly. We will also continue to focus more on value added contract logistics and hope to expand our 130,000 square metres of activities. Sebastiaan Scholte CEO, Jan de Rijk Logistics
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Changi keeping watch on trade tensions in 2019 CHANGI Airport has seen a good year in terms of air cargo throughput so far, though we do not expect total annual throughput to be as strong as in 2017, which was an exceptional year. The on-going trade tensions and upcoming Brexit are likely to have an impact on the airfreight industry and we are keeping a close watch. Though the current trade tariffs and protectionism do not directly affect Singapore’s exports, they are likely to have a spill over impact due to Singapore’s role in the global supply chain. As Singapore is a small and open economy, it is likely to be affected by any escalation of global trade tensions. Notwithstanding the above, with accelerated re-shoring of production houses from China to lower cost Southeast Asian manufacturing hubs and emergence of new perishables source markets in Asia Pacific, Singapore is well-positioned to capture these new cargo flows from the region. We remain optimistic on key verticals such as e-commerce, pharma and perishables alongside the rise of the middle income in Asia. Singapore is at the crossroads of global trade flows for the ASEAN region and coupled with our extensive air connectivity, we are well-positioned to capture and facilitate air cargo growth for these verticals in the region. Lim Ching Kiat, Changi Airport Group managing director for Air Hub Development
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Swiss WorldCargo will focus on its core business in 2019
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n 2019, Swiss WorldCargo will aim to continue following the successes of the last years, and operating within the unique position that our team has carved out for our brand within the air cargo industry. For 2019, we aspire to continue meeting the diverse needs of our customers across the globe, thus solidifying our reputation in ensuring that goods are shipped in a secure, reliable and efficient manner. Alongside this, the industry continues to change. Digitalisation is not just the word of the times, but happening around us every day. To maintain a competitive edge, we along with our partners will continue investing in new technologies and platforms that allow us to stay abreast of ongoing technological changes to reap the benefits in terms of effectiveness and efficiency. Brexit, trade uncertainty, and economic volatility were all part of 2018, and will likely continue to be in 2019. It is unclear what specific repercussions the airfreight industry and Switzerland will feel as a result of these. But for myself and my team, I want to ensure that this does not detract from the core of business. We need to be flexible and agile to manage all the changes and our focus will remain on providing the reliable, stable and quality-driven service for our customers that they expect from us.
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and Customs and Border Protection) have incorporated improved security and clearance processes that shorten wait times and make air transportation more efficient. The ARK at JFK at New York’s JFK International Airport faces both opportunities and challenges in 2019. Equine travel is experiencing strong growth WE ARE completing another strong year of growth in 2018, with international and confidently planning more expansions in 2019. With competitions becomunprecedented levels of investment and system improveing more abundant ments, we are successfully transforming ACL Airshop into a and horse sales have true solutions-capable ULD Logistics Services company, far become an international beyond our core heritage of leasing. business. Likewise, the Our upward pace continues. We have now doubled to demand for movements more than half of the world’s Top 100 airports, our own of other animals, includULD fleet has doubled in less than three years, and we are ing pets, continues to hiring key technical and business staff in various locations. grow. Our customers said grow the network, and indeed we are. Pet ownership in the US has expanded Steve Townes, CEO of ACL Airshop and founder of rapidly – requiring pet Ranger Aerospace. air transport for both
he ARK at JFK anticipates that global air transportation – both passenger and cargo – will increase in 2019 despite Brexit and global trade tensions. Additionally, US Federal agencies (particularly Transportation Security Administration
MORE EXPANSION IN 2019
commercial (breeding) and personal purposes. Challenges facing The ARK relative to other significant ports in 2019 include deficient infrastructure (runways, etc.), higher costs from wage increases, state, local and airport authority taxes and increased restrictions on pet travel. Elizabeth A. Schuette, Managing Director of The ARK at JFK. Further forecasts will be published in our next issue, Jan 7, 2019
Ashwin Bhat, Head of Cargo, Swiss WorldCargo.
What airfreight needs in 2019 IN 2019, the airfreight industry will need to address a number of challenges related to reducing risk. New technologies will be crucial to improve screening. Over a billion lithium batteries are flown across the world each year. As the chosen power source for many electric devices, this will continue to grow – and so will the risks. In the coming year, the air cargo industry will need to prioritise the detection of lithium batteries. Airfreight is clearly the fastest way to transport these batteries, but having the potential to ignite while airborne (particularly low quality or possibly counterfeit batteries) is a real threat to the aviation sector. Understanding these risks, Smiths Detection along with global airfreight companies, have developed a lithium battery detection algorithm capable of identifying lithium batteries that are safe to transport versus those which pose a danger. This feature will soon be extended to include gas lighters, currencies and contraband. Another area of focus for the air cargo sector in 2019 will be the integration of X-rays and trays. Integration doesn’t only mean the material handling system. It will also involve integrating into their global shipment tracking system, and also various other management and monitoring systems. Harald Jentsch, Head of Baggage Handling Solutions, Smiths Detection
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Why 2017 set airfreight records In 2017, airfreight set a record when 118 million tonnes of cargo moved through airports, an encouraging increase of 7.7 per cent on 2016.
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ith data from over 2,500 airports in more than 175 countries, ACI’s (Airports Council International) 2018 World Airport Traffic Report remains the authoritative source and industry reference for airport traffic trends and rankings. According to ACI World director economics Stefano Baronci: “Over the past year, the air cargo sector has shown remarkable resilience to the tense climate that has descended over international relations and trade. The link between aviation and global macroeconomic conditions remained strong in 2017, despite the prolonged period of diplomatic and market instability that the industry has witnessed. “As key industry players, we must constantly monitor and be cognizant of these threats and downside risks. For instance, the full impact of the erected tariff walls set by major economies such as the US and China, which unfortunately materialised in the recent days, is yet to play out before our eyes. Trade wars between the major economies could potentially have a recessionary consequence on the global economy thereby jeopardising advances in air transport and cargo demand in particular.”
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In 2017, air transport set a record for another year when 118 million tonnes of cargo moved through airports, an encouraging increase of 7.7 per cent from 2016. The most significant growth in terms of volume was in the US and China. Total air cargo volume at the 30 busiest cargo airports grew 7.3 per cent in 2017. These airports handled a combined 62 million tonnes of cargo, representing 52 per cent of all global air cargo volume. Hong Kong leads the ranking with five million tonnes of cargo handled in 2017, a 9.4 per cent increase over 2016.
Two decades of air cargo
Over the past two decades, the air transport industry has faced significant challenges. In the mid-1990s, ACI’s data shows that the industry was in a tailspin, experiencing stagnant passenger and cargo traffic, huge financial losses and mounting debt levels. Despite a recent revival in the air cargo market, which was fuelled by a strengthening of global trade and the US economy, the air cargo industry has remained relatively sluggish from a long-term historical perspective. Until late 2013 air cargo volumes barely exceeded the volumes seen in the pre-Great
Recession era and they remained flat from 2010 to 2013. Some of the weakness in the air cargo market over the past decade can be attributed to a loss in market share to other competing modes of freight shipment, such as ocean freight. Notwithstanding, ongoing recovery in certain key economies helped stabilise the air cargo market by the fourth quarter of 2013. A rapid rise in volumes was especially evident in 2017. Baronci said: “The core issue for our industry remains how we respond to this demand at a local, national, and international level as physical capacity considerations and potential bottlenecks in air transport infrastructure pose challenges in accommodating future air transport demand. “To help to ensure communities continue to reap the social and economic benefits of air service growth, national policy should be focused on facilitating growth over the long-term, setting out clear objectives for their aviation sector.” Despite the backdrop of economic uncertainty regarding trade policies between the US and China, two of the world’s largest aviation markets, business confidence persevered throughout 2017. All regions posted robust growth in cargo volumes. Spurred by strong gains in cross-border trade, Europe, Asia-Pacific and North America— the largest markets— experienced overall cargo volume increases of 8.6 per cent, 8.3 per cent and 7.1 per cent respectively. A longer version of this article will appear in our Jan 7, 2019 issue
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O’Hare takes #1 in value in US
AS A leading international cargo gateway, Chicago O’Hare sees all kinds of freight pass through on a regular basis. In 2017, the airport record cargo volume at O’Hare, about 1.8 million tonnes. Through autumn of 2018, the airport will near an all-time-high of two million tonnes of cargo by year’s end. Last year, Chicago O’Hare became the number one airport in all of the Americas in cargo value, at about $190 billion per year. That figure is so high, it puts O’Hare on par with top sea and land ports that process exponentially more volume, says the Chicago Department of Aviation (CDA). Being a top general freighter gateway for the Americas, the majority of cargo volume at O’Hare is via main deck, but thanks to dual global passenger hubs for United Airlines and American Airlines plus many more international passenger airlines from all over the world, our belly hold cargo volume is also substantial. Two of three phases of the new Northeast Cargo campus are now completed, and the third phase is currently being planned and designed. The airport will also see the completion of O’Hare’s second FAA Group VI, Runway 9C/27C, within two years. This runway is specifically designed to handle B747-8F aircraft and is adjacent to our Northeast Cargo ramp. Although there are no new cargo buildings in the O’Hare 21 plan, cargo operations will definitely benefit in addition to the expansion of our Northeast Cargo campus underway separately.
Italy’s ‘first line’cargo airport
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ilan Malpensa Airport is the main cargo hub in Italy handling approximately 55 per cent of total Italian airfreight traffic, said airport operater SEA. Rome Fiumicino counts for 18 per cent and Milano Bergamo, a current base of DHL and UPS, represents a further 11 per cent. In 2017, Malpensa Cargo volumes reached 577,000 tonnes, up 7,4 per cent versus 2016 with an average rate of growth of eight per cent in the last four years. Q4 2017 was indeed a record one with export demand exceeding the freighter capacity. This brought an increase of yield for airlines that continues in 2018. The grounding of Nippon Cargo Airlines from June to October 2018 negatively affected the capacity offered, however other airlines invested in Malpensa putting more flights or wider aircrafts. Freighter aircrafts represent nearly 70 per cent of total volumes at the airport, with 110 flights per week operated by 21 leading freighter airlines. Bellyhold capacity is 30 per cent with more than 30 scheduled airlines operating with widebody aircrafts to 95 extra European destinations. “An increase in the bellyhold capacity is expected thanks to the developments of the long haul carriers and to the new Air Italy fleet of A330 based at Malpensa, already operating flights to New York, Miami, Bangkok and from December 2018 to India,” says SEA. A new ‘first line’ warehouse has been inaugurated in the last months, a total of 15,000 square metres, for two new cargo handlers - WFS and Beta Trans. DHL has started the construction of its new warehouse of total area 46,000 sq m to be available in mid-2020 the completion of which will end the first-line facilities of the current Cargo City.
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In the meantime, SEA is carrying on negotiations with several freight forwarders who have already expressed interest for the development of “second-line” warehouses inside the airport grounds. An area of 125,000 sq m has been made available, where about 60,000 sq m of building can be built. There are expressions of interest for 70 per cent of the available area. The new buildings are expected to be available at the beginning of 2022. The complex of “first line” cargo infrastructures, combined with the availability of “second-line” warehouses will bring the total capacity of the airport from the current 650,000 tons/per annum, to over one million within the next 2-3 years.
Malpensa Master Plan
Further development plans for cargo area are included in the new Malpensa Master Plan that will cover the horizon 2020-2030. A new apron for freighters (eight positions for code “F” aircrafts) and additional first line warehouses on an area of 100,000 sq m are forecast to be built during the next ten years to accommodate market growth. A new ICT system has been made available for all the air freight operators working in Malpensa Airport. The system allows the sharing of data about departing and arriving cargo among interested parties and to book time slot for trucking unloading. This “cargo community eco-system”, named “Malpensa Cargo Smart City”, adds a very useful enhancement to upgrade Malpensa operations aligning the airport to the best European practices, said SEA. An operational service line for e-commerce parcels has been established inside one of the air cargo handling terminals and other similar initiatives are going to be started in next months.
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Schiphol’s smart idea
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chiphol’s boast is that it is “shaping Europe’s smartest cargo hub.” What it means is the ability of the Cargo Community around Schiphol to co-operate and work together in order to enhance the flow of freight through the Schiphol hub. Our Smart Cargo Mainport program is our biggest example of how to effectively drive innovation by co-operation. “Within this program we tackle three kinds of cargo related bottlenecks - digital information centrally accessible; landside logistics such as truck planning; and, vertical optimisation,” said the airport. The Dutch gateway has “plenty of space available for cargo expansion.” It has land available with direct airside as well as plots at second tier. As well, they develop Logistics Parks in close proximity of the cargo areas of Schiphol. This is mainly done by Schiphol Airport Development Company (SADC). “We keep track of what other cargo airports around the world are doing. And we keep receiving other airport delegations from all over the world. Our policy is to share best practices. Frankfurt, of course, we consider our (friendly) competitor,. “However, we have a clear view of what Amsterdam Airport Schiphol needs to do in order to become Europe’s smartest cargo hub,” said the airport. “Therefore our main focus is on the co-operation between our airline partners, cargo community, and all projects in the Smart Cargo Mainport programme in order to ensure smart and efficient cargo flows through Schiphol.”
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Fraport makes history with first haz-mat eDGD
ACCORDING to Fraport senior vice president cargo Max Conrady, Frankfurt was pleased when Lufthansa Cargo, using the INFr8 platform, handled the first dangerous goods shipment with an electronic Dangerous Goods Declaration (eDGD). Conrady says: “Frankfurt Airport plays a major role in dangerous goods handling. Fraport AG, responsible for providing and operating the airport’s infrastructure, has contributed significantly to the development of the portal INFr8. We started this project, we co-developed and co-financed the platform and finally brought all launching and pilot partners together – and that’s why the first shipment was handled at Frankfurt Airport.” Despite significantly higher purchasing costs for electric vehicles, Fraport is increasingly focusing on electromobility. Ten per cent of Fraport’s vehicles at Frankfurt Airport use electric propulsion. He says: “This summer Fraport AG joined forces with Lufthansa to co-test a remote-controlled aircraft tug. Fraport Ground Services at Frankfurt Airport has been using the electric vehicle manufactured by Mototok International for several months. Electromobility has many advantages: “The e-vehicle is just a third of the size of many conventional tugs, and it can be stationed and charged in a fixed parking position. “
Changi’s strategic approach to pharma pays off ACCORDING to Changi Airport Group managing director for Air Hub development Lim Ching Kiat, Changi Airport Group (CAG) joined Pharma.Aero as one of the strategic members at an early stage. He says: “We wanted to ensure that our air cargo supply chain met stringent requirements of pharmaceutical air cargo handling, as well as to ensure reliability of trade lanes. Fostering collaboration with other CEIV-certified airport communities that shared the same vision as us was important. “In October last year, Changi formed the Pharma@Changi initiative, which brought together nine other IATA CEIV certified companies spanning each node of the air cargo supply chain. We also endeavour to trial some of the projects conceptualised at Pharma.Aero with our local community to enhance our pharmaceutical handling capabilities. Changi Airport is ranked seventh globally by international freight. Air cargo is important for Singapore’s trade and industries. Over the years, several industries such as high value pharma, semiconductor equipment, aerospace manufacturing have established a strong presence in Singapore.”
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ACW 17 DECEMBER 2018
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WORLD AIRPORTS
Soekarno cargo area set to treble
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ore details of plans by Indonesia to build a new cargo facility at Jakarta’s Soekarno Hatta Airport – emerged at the recent Clear View 3.0 Industry Summit in Bangkok. The new cargo village will have a 90-hectare site, PT Angkasa Pura Kargo managing director Denny Fikri told the industry thought leadership summit. PT Angkasa Pura Kargo focuses on services in the cargo and logistics sector as a cargo terminal operator across Indonesia’s principal airports. Currently thought is being given to building the facility on land outside the airport whilst allowing access to the airport. Soekarno Hatta currently has only 30 hectares for cargo, limiting its throughput. Capacity is to be 1.5 million tonnes and will allow for nine operators, Fikri said. “We would like to minimise this to be three,” he said. The timeline is tight as befits a country both in the middle of a sustained economic boom and one where infrastructure development in the past has been slow. “We expect it to be ready in two years,” said Fikri. Air cargo in Indonesia is under a lot of pressure and in the case of Angkasa Pura it is coming on two fronts. South East Asian e-commerce giant Lazada recently signaled it would look to other modes of transport to move goods into Indonesia. Another is the sheer pressure of airfreight as the e-commerce boom continues. Having asked for a 20,000 square metre facility for e-commerce , the rise of the sector had seen the industry ask for one of 160,000 sq m he said in a later session on Clear View 3.0.
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ACW 17 DECEMBER 2018
Germany’s capital cargo future
BERLIN is to build two new complementary cargo facilities at its still-to-open airport, Flughafen Brandenburg Berlin product manager air cargo Torsten Jueling told Air Cargo Week. “We want to build a new express, a new integrated facility for them,” Jueling said mentioning by name Fedex, TNT and UPS. This will be to the south west of the main terminal he added. Complementing this, and diagonally across on the other side the future BER, is to be a new facility for consolidators. “Additionally we try to develop a consolidation centre to make them move out of the midfield,” he said. Consolidators will be concentrated in a logistics park near the airport with cargo being brought into the airport one or two hours before departure, he added. Commencement of the two facilities is dependent on the long overdue opening of the new airport, Berlin Brandenburg that is scheduled for October 2020. The timeline for the two cargo facilities is the integrator, “which should be ready” to open in 2021 with the consolidator
planned to open one year after in 2022. Berlin Brandenburg’s October 2020 opening is something Jueling and his staff are “positive” about despite it having a history of delays – it was at one point going to open in 2012. At the same time, Berlin believes alliances between low cost carriers (LCC) and established carriers will help it grow its business substantially in the years to come, Jueling also told ACW in an interview. Pointing to a just-inked partnership between Emirates and easyJet, which gives passengers more possible connections, Jueling’s view is LCCs with their extensive route networks could move cargo in time. This he said later was likely to be within the next five years. LCCs he pointed out are starting to mature their market and will soon need to find other sources of revenue such as more use of their bellyhold space. The need for quick turn arounds will rule out large shipments but their multiple second and third tier destinations are an ideal for smaller packages such as e-commerce.
“It could be an advantage for Berlin……with our dense LCC networks to distribute e-commerce either from Asia or the Americas,” he said giving as example Amazon. Berlin can offer itself as an alternative to more overcrowded and established airfreight hubs such as Frankfurt, he said. BER is keen to build up its Asian links – some 50 per cent of its 100,000 tonnes of cargo throughput is to there. One country very much in the frame is Vietnam. “We are working on flights to Hanoi.” Other unserved destinations are principally Chinese cities such as Shanghai, Beijing and Hong Kong. It recently opened up Singapore with a flight from Scoot and reports good business on its niche service to Ulan Bator in Mongolia. Likely to be left unserved is the freighter market. Berlin sees itself as passenger-driven market, sitting in a metropolitan area of some 10 million people which it believes it will be able to tap more effectively once it ends its infrastructure limitations.
CARGO activity at Paris-Vatry Airport is exclusively by freighter aircraft, said cargo sales manager Yoann Maugran. Belly-hold is non-existent as passenger activity at the airport 161 km from Paris as it is mainly LCC without bellyhold freight. According to Maugran, the airport has its eyes on a green prize. He says: “In terms of runway equipment and replacement or expansion of the fleet, we are looking to move towards cleaner or electric vehicles. We already have electric
equipment/lifting platforms/crew transport buses. We are also looking to go “paperless” when processing cargo documentation, and we offer our customers the option to use an e-AWB. The proximity of the freight warehouses to the taxiway and the runway helps save up to 20 minutes taxiing time for a large cargo carrier compared to the main European hubs, which is also an indirect benefit for the environment.” In 2017, the airport handled 18,000 tonnes of freight. The figures for 2018 “seem to have fallen”, although it has experienced an increase in activity at the end of the year noted Maugran. “We are now focused on 2019, with an expected increase in regular cargo flights. Recruiting cargo ground staff to work at the airport is an issue being confronted by airport managers. “Of course, this is a concern for all airports during this peak period and as part of future developments,” said Maugran. “The problems relate to our ability to recruit reliable staff with industry knowledge. The re-
quirement to speak several languages is also often an obstacle. In order to improve the process, we need to rethink our training, notably by working in close collaboration with airline companies, or by working together with other airports.” Airport managers are working on land transport solutions shared between site employees to reduce the airport’s carbon footprint. It also hopes to reduce the fuel bill for site employees, which can be an obstacle to recruitment. Vatry mainly competes with the largest European cargo hubs. “We do not think about competing with other French airports due to our airport type. We actually collaborate with other regional airport platforms to form synergies and potential shared areas for development. Our aim is to gain a share of the hundreds of thousands of tonnes of French airline freight which is transported to European platforms beyond our borders. We need to convince the cargo community that Paris-Vatry is a valid solution on their doorstep,” said Maugran.
Green matters as much as cargo for Paris-Vatry
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HE PRETENDS TO KNOW WHAT HE’S TALKING ABOUT
60
The seasonal Best Of
Seconds
with
Maaike van der Windt, Rick Elieson, John Batten, Lisa Oxentine, Sebastiaan Scholte, Christian Haug, Dominic Hyde, Ingo Zimmer, Adrien Thominet, Shawn Cole, Derek Jones, Chris Notter, Nicole Verkindt, Richard Charles, Tim Strauss, Dominic Kennedy & Glyn Hughes
Each month, we ask the personal questions that show the person behind the business mask ACW: What’s the most interesting thing about you that we wouldn’t learn from your resume alone? Adrien Thominet: I had breakfast with Barack Obama. Joseph Notter: I was tattooed in Amsterdam while not being in control of my senses. John Batten: It wouldn’t be interesting if I told you! Lisa Oxentine: That I love sport, especially the Dallas Cowboys. Dominic Hyde: I was born in Botswana. Dominic Kennedy: My wife and I organised a surprise wedding Derek Jones: I am a compulsive do-it-yourselfer. Richard Charles: I am a life-long vegetarian. Tim Strauss: My great, great, great, great, I don’t know how far back ... uncle was John Rolfe, he was married to Pocahontas. ACW: Johnny Hallyday or Daft Punk? Adrien Thominet: Johnny Punk.
ACW: If Hollywood made a movie about your life, who would you like to see play the lead role? Ingo Zimmer: That’s easy, George Clooney! He is about my age, and I travel in a similar to how he portrayed his character in the movie “Up in the Air”.
ACW: You’re on Death Row, what would your last meal be? Glyn Hughes: An all-you-can-eat buffet which I would proceed to continue with forever. ACW: American football or soccer? Rick Elieson: I know it is sacrilege for someone who grew up in Texas, but definitely soccer.
ACW: Are you afraid of clowns? Joseph Notter: Having known and worked with a few, the answer would be no. ACW: What was your worst purchase? Christian Haug: My first packet of cigarettes that made me start smoking when I was young!
ACW Best Seller List 2018
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