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The weekly newspaper for air cargo professionals Volume: 20

Issue: 50

18 December 2017

Delta and DHL expand CEIV certified networks

ompanies are continue to invest in pharma, with DHL Global Forwarding and Delta Cargo expanding their IATA CEIV-certified networks. DHL Global Forwarding has certified seven of its airfreight stations in the USA to International Air Transport Association (IATA) Center of Excellence for Independent Validators (CEIV) in Pharmaceutical Logistics standards. DHL began the certification process of its global stations to IATA CEIV Pharma standard in the third quarter of 2016. Following audits by third parties and training courses for employees on site, Chicago was the first to be certified, with Cincinnati, Los Angeles, Philadelphia, Miami and San Juan in Puerto Rico also receiving the quality label. DHL Global Forwarding chief executive officer, David Goldberg says: “We at DHL place great emphasis on improving our service quality and demonstrate through IATA CEIV Pharma Certification, that we are the right partner for transporting vital and temperature sensitive products.” Delta Cargo has expanded its IATA CEIV

network across Europe with the addition of Dusseldorf Airport, operating the facilities in conjunction with Air France KLM. The airline has 50 pharma approved stations around the global with seven IATA CEIV approved facilities all connected to Delta’s Atlanta hub, which is also certified. The European CEIV stations are Amsterdam, Brussels, Dusseldorf, Frankfurt, Milan, Paris Charles de Gaulle and Rome, creating a trans-At-

lantic CEIV network to the United States. Delta vice president for cargo, Shawn Cole says: “Delta has made significant investments in Pharma facilities across its global network, so as to ensure that we are compliant with the highest industry standards. Our priority boarding and quick connection times minimise exposure to outside temperatures ensuring the integrity of the product – vital for transporting medicine to patients.”

Turkish Airlines has taken delivery of its first Boeing 777 Freighter – the first of two 777Fs it has on order and set to receive this year. Turkish Airlines chairman of the board and executive committee, İlker Aycı says delivery of the 777F is a milestone event in the carrier’s cargo business. He adds: “As a prominent sub-brand of Turkish Airlines, Turkish Cargo increased its freighter destinations served from 55 to 73 from the beginning of this year, reaching to approximately one million tonnes of cargo with 29 per cent increase compared to the previous year same period. It is surely beyond doubt that this a remarkable success. “We’re sure that this significant delivery which will bring great value to our rapidly growing cargo operations will also enable our leading sub-brand to further compete, expand and reach new short and long-range destinations from our hub in Istanbul.” Boeing Commercial Airplanes senior vice

president of sales for the Middle East, Turkey, Russia, Central Asia and Africa, Marty Bentrott says: “This aircraft’s range capability, combined with its enhanced cargo capacity, makes it a perfect airplane for Turkish Airlines to continue to profitably grow its global cargo service.”

The 777F – the world’s longest-range twin-engine freighter, is based on the technologically advanced 777-200LR (Longer Range) passenger aircraft and can fly 4,900 nautical miles (9,070 kilometres) with a full payload of 112 tons.

ASIA PACIFIC CONTINUES TO RISE NO SIGN OF E-COMMERCE BOOM SLOWING AMEDEO PLANS TO LAUNCH A380 AIRLINE HEATHROW FLIES CARGO IN TIME FOR CHRISTMAS

Turkish Cargo welcomes first Boeing 777 Freighter to its fleet

New year, new team FROM this isssue of Air Cargo Week (ACW), a new editorial team will see the newspaper into its 20th anniversary year. James Graham (pictured), who worked on ACW as staff writer at its launch in 1998 before leaving in 2001, has become editor, replacing Justin Burns. James Muir, who was staff writer, has been promoted to the position of ACW deputy editor. James Graham says: “I am excited to be at the helm as the newspaper celebrates its significant milestone next year. I have returned to the publication I left in 2001. There may be new staff and a new office but ACW remains the global market leader in the airfreight world that I left those years ago. “As editor, I look forward to getting out and meeting our readers at industry events as well as working with James on the industry’s leading global trade newspaper.” Since leaving ACW, Graham has been mainly freelance in the maritime, shipping, rail media, as well as interested in the drinks industry. He hopes to build on the success of his predecessor’s, driving the paper forward.

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NEWSWEEK

Braille faces record $1.1m HazMat fine

he Federal Aviation Administration (FAA) is proposing its largest civil penalty recorded against Braille Battery for alleged Hazardous Materials Regulations (HazMat) violations in 2016. The Sarasota, Florida-based company is facing a penalty of $1.1 million for allegedly offering four shipments, each containing a 24-volt lithium ion battery, to FedEx for transportation by air between 14 July and 3 August 2016. One of the batteries is said to have caught fire while it was being transported on a FedEx truck, after it had been transported on an aircraft, resulting in the destruction of the vehicle. The FAA alleges the lithium batteries did not meet testing standards contained in the UN Manual of Tests and Criteria or the US Hazardous Material Regulations, were not equipped with a means of preventing dangerous reverse current flow, and were not in a proper condition for shipment. Braille is also said not to have provided its employees with required hazardous materials training. “Improperly shipped

hazardous material can pose serious threats to aircraft and the people on board. Adhering to the Hazardous Materials Regulations is critical to ensuring safety,” says FAA administrator Michael Huerta (pictured). On 8 June 2016, Braille were informed by the FAA about concerns in its training programme. The US Department of Transportation’s FAA previously handed Braille an $8,000 penalty in 2013 for shipping undeclared lithium ion batteries. Braille has 30 days after receiving the FAA’s enforcement letter to respond to the agency.

CNS signs payment partnership

IATA subsidiary Cargo Network Services (CNS) has partnered with online payment system provider, PayCargo to offer the US air cargo industry a new payment solution for imports into the US called the PayCargo-CNS System. The new PayCargo-CNS System will be the online payment processing engine for expedited payments at US stations of participating Airlines for Import Service Fees, as well as other incidental fees normally collected before an importer can retrieve their cargo from the airport facility. Importers using the system will be able to make online payments within minutes, and payment data will flow to the airline immediately allowing the importer to pick up their cargo at the airport facility within one hour for a flat fee of $5 per transaction, and airlines will receive their funds from PayCargo-CNS overnight and see their funds in their bank account the next morning. PayCargo chief executive officer, Eduardo Del Riego says: “With CNS’s longtime relationship with the Airlines, and PayCargo’s adoption by the importers to expedite their payments for urgent release of cargo, it was a natural for the two companies to offer an innovative solution to connect the payer and vendor on a real-time payment platform for Import shipments.” PayCargo operates an online payment system providing overnight settlement of invoices between shippers and carriers.

Info needed to ease congestion RECENT truck congestion at London Heathrow’s Cargo Terminal underscores the pressing need for a universal advance information system that will alert handling agents to arriving vehicles, and speed up their processing, according to the CCS-UK User Group. This is the key message that will be delivered in a series of road shows being organised around the UK in early 2018, by the group – the body which manages, and commissions enhancements to, the CCS-UK community system. In addition to setting out the problem, CCS-UK User Group will also update delegates on progress with its ‘Advance Information’ project. This new function will enable freight agents, and transport companies working on their behalf, to pre-alert handling agents of loads being delivered or collected as well as providing the ability to submit electronic Security Declarations.

ACW 18 DECEMBER 2017

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NEWSWEEK

Freightos gives CO2 estimates with quotes in marketplace

reightos will provide a CO2 footprint estimate on every shipping service offered on the Freightos Marketplace, allowing customers to optimise their route and mode selection according to CO2 emissions. It says incorporating CO2 footprint calculations with freight quote options, as well as offering a free Application Programming Interface (API) and embeddable CO2 calculator, Freightos is enabling enhanced visibility of carbon emissions per shipment, continuing the company’s mission to introduce transparency to the global shipping sector. Freightos says as an example, a 200-kilogramme freight consignment from Shanghai to London would produce 1.1 tonnes of CO2 by air cargo or 20kg by ocean. It says cost savings and the sustainability goals of the Paris Accord have resulted in movement towards greater environmental awareness, including in the freight industry. International trade-related freight transport is

responsible for nearly one third of global carbon emissions from transport. Israeli venture capital fund ICV which is dedicated to investing in clean technology companies, partner and co-founder, Glen Schwaber says: “Based on OECD data, international trade-related freight transport accounts for a full 30 per cent of all transport-related CO2 emissions from fuel combustion, and more than seven per cent of global emissions.” He adds: “Accurate, transparent calculations of carbon footprint within supply chain and logistics is an increasingly critical

element for companies with aggressive sustainability goals. It’s thrilling to see our portfolio company Freightos enable simple tracking of international shipping emissions.” Freightos founder and chief executive officer, Dr Zvi Schreiber (pictured) says Freightos’ mission is to make freight shipping transparent at every level, including its environmental impact. He says: “Large shippers and logistics companies are introducing sustainability targets, but transportation is often the most opaque part of global supply chains.” “We’re proud to support sustainability targets and bolster environmental awareness and accountability in industry by providing the necessary tools for our customers to manage their carbon footprint. After all, what good is transparency if you can’t see through the smog?” Heathrow Airport has welcomed its 50th electric vehicle to its fleet as part of its ‘Go Electric’ pledge. The London airport plans to have an all electric or plug-in hybrid car and van fleet by 2020 to improve local air quality. It says the 50 electric vehicles have saved 165 tonnes of CO2 annually, the equivalent of 18 homes for a year. Heathrow has invested over £4 million in charging infrastructure, with £5 million committed by the end of 2018.

Shippers look to the sea as air rates rise

SHIPPERS are increasingly looking to switch from airfreight to ocean as air rates continue skywards and congestion at airports around the world, according to the Freightos International Freight Index. In its Freightos Index Update W49 2017 report, it says rates are sky-high, with significant congestion in the runup to Christmas affecting domestic and international freight movements at US airports. Air cargo hit capacity in Europe two weeks ago, with Heathrow Airport experiencing severe backlogs and bad weather is affecting other European airports including Frankfurt, Zurich and Amsterdam. Freightos reports that airlines are not expecting congestion to abate and prices to return to normal until 15 January, just in time for the next rush with shipments vying to get out of port before the Chinese New Year shutdown. This congestion, it says, appears to have encouraged shippers to switch modes to sea, which is not suffering the same capacity issues. Freightos WebCargo chief executive officer, Manel Galindo says: “Airfreight hit capacity late last month and with bad weather in Northern Europe, the situation is getting worse. “I expect this auction-like market behaviour to continue. I’ve seen forwarders paying more than 18€ per kg (over $20/kg) for Europe to South America, and even one offer around 30€ per kg. These prices aren’t realistic – or at least they shouldn’t be! “Excepting pharma and tech products, which have enough margins to absorb high air freight costs, many shippers are no doubt reviewing their mode mix and looking to shipping by ocean next year.” In the same report, Freightos says on seafreight lanes, China-US West coast is rising again but still 26 per cent below last year, and it is a similar story for China-US East coast lanes, having risen 10 per cent in a week but still 25 per cent below a year ago. China-Europe is slightly better but 19 per cent below last year and and Europe-US East coast has fallen for the fourth consecutive week, and is 30 per cent down on last year.

ACW 18 DECEMBER 2017

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NEWS WEEK

Cargo in symphony as American flies orchestra for tour

merican Airlines Cargo has transported musical instruments for the Orchestre Nationale du Capitole’s three-city tour of Latin America. 694 pieces of cargo including violins, cellos, double basses, three harps and a conductor’s podium were shipped from Paris to Buenos Aires on a wide-bodied flight, then on to Quito and finally Sao Paulo for the Toulouse-based orchestra. Working in partnership with French forwarder Excess Events, American was charged with not only moving the instruments, but also performance clothing for the 120-strong ensemble that all needed to be completed as one movement to ensure all items arrived together for each concert. The concerts took place at the French embassies in all three Latin American locations. The sensitive nature of the instruments meant that they were transported by temperature-controlled truck from Toulouse to Paris Charles de Gaulle Airport for the first leg of the journey. Philippe Ledain of Excess Events says: “Musicians hate to be parted from their instruments for any length of time, so it was

essential that they were moved to the Latin America tour in the quickest possible time. Their instruments are their passion, and working with American, we were able to achieve this movement for them.” American Airlines Cargo regional manager, Kathleen Lesage

says: “The orchestra has an exceptional reputation so we were very pleased to have been chosen as the carrier to deliver their precious instruments to the venues across Latin America. And working in partnership with the team at Excess Events, we were able to ensure everything ran exactly to plan.”

Rescue dogs fly to Canada

FOLLOWING its closure of a tenth South Korean dog meat farm, animal protection body Humane Society International (HIS) is transporting severely neglected dogs to North America and the United Kingdom. Forty-six of the dogs arrived at Pearson Airport in Toronto and were moved to partner shelters in Quebec. Another four of the rescued dogs were placed with an Ontario rescue group. Forty-eight of the dogs travelled as cargo on Air Canada and two on Korean Air. Air Canada gave a ten per cent discount to the charity for the movement. Last year, it helped bring rescued dogs from China for the charity. “This horrific dog meat farm is one of the worst HSI has ever seen and I am thrilled we are shutting it down for good. More than 170 dogs and puppies were intensively confined in cramped, filthy, barren wire cages positioned over months of accumulated waste,” says Rebecca Aldworth, executive director of HSI/Canada. The dog meat trade is most widespread in China, South Korea, the Philippines, Thailand, Laos, Viet Nam, Cambodia and Nagaland in northern India. It is well-organised, with dogs being stolen or taken from the streets, transported over long distances, housed in gruesome conditions and brutally slaughtered. In South Korea, an estimated 2.5 million dogs are slaughtered for the meat trade annually.

ACS save hurricane animals AIR Charter Service (ACS) has been involved in a number of flights following hurricanes in the Caribbean, including helping animals find new homes across the US. ACS Americas president, Richard Thompson says while the company was arranging charters for people to get out of the affected regions in September before the hurricanes hit, and getting relief goods to those in need, it has also been arranging flights to special passengers’ He explains: “Our Los Angeles office received calls from a number of rescue centres who had to be evacuated from Florida, as they lay in the direct path of the storm. “The charities were looking to fly the rescue cats and dogs to their new sheltered accommodations. We arranged for Beech 1900 and Metro aircraft to fly the animals to Nevada, Oregon and California.” Thompson adds the animals have settled into their new centres and they will all get new owners soon.

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ACW 18 DECEMBER 2017

ASIA PACIFIC

Region continues to rise as emerging markets open up, but cap

he current peak season may be stealing the lime light, but underlying it all has been a solid year for the industry and for one market in particular – SE Asia – air cargo supply chain executives are upbeat on the market’s solid future despite the challenges. It is not hard to see why the optimism remains so strong for the region. Economic growth continues to thrive – particularly from countries as diverse as the fast-rising star Vietnam, with somewhat surprising growth from nations like the Philippines and Indonesia, and of course the more established stalwarts of Singapore and Malaysia. From his vantage point as a Bangkok-based GSSA, AVS Thailand (part of the ECS Group) deputy managing director, Chirasak Chandratat, points to Thailand, Singapore, Vietnam, Cambodia and Myanmar, respectively, as being the top destinations in the region for new foreign investment. For the export-oriented economies of the region, the global economic recovery translated directly to their growing GDPs and growing domestic prosperity backed by vast, young populations has positioned them ideally as e-commerce consumption spreads like wildfire throughout the region. “The growing young middle class population, especially in Thailand, Vietnam, Philippines and Indonesia will certainly continue to help their economies grow,” notes AVS Group chief executive officer, Thomas Ong (pictured). Indeed this growing regional prosperity has seen a gradual shift in trading patterns away from Asia to Europe/North America to trade with itself. Asia’s share of trade with Europe and North America dropped from 40-33 per cent in the decade between 2003 and 2013, but at the same time its share of intra-regional trade grew from 50-54 per cent – both trends that are expected to continue to deepen, and at a rapidly growing pace. The intra-Asia air cargo trade lane is forecast to grow at 6.5 per cent in the decade between 2013 and 2023, up significantly on the world air cargo growth forecast of 4.7 per cent. Currently the top five intra-Asia air cargo routes are China- Korea, Japan-Korea, Hong Kong-Korea, Hong Kong-Taiwan and China-Japan. Further down the list of ‘top tens’, emerges Southeast Asia’s Singapore (with Australia) and Thailand (with Japan). Likely soon to appear will be Vietnam as it rockets up the charts in both economic and air cargo tonnage terms.

ACW 18 DECEMBER 2017

Economic growth across the region is expected to continue at least at 3-4 per cent per year on average across the region until 2020 at least. “The Southeast Asia region is doing very nicely,” says Shukor Yusof, founder of Endau Analytics, a Malaysia-based aviation and economics consultancy firm. The region he says, is notable for its “stable economic growth in emerging markets while some, like Malaysia, Philippines and Indonesia are seeing higher GDP growth which is fueling demand. Southeast Asia is a hub of air activity, buzzing from growing middle class,” he adds. “Improved trade relations amongst the ASEAN nations are helping cargo become more important,” Yusof notes, adding that the ASEAN Free Trade Area (AFTA) will also further drive this trade as it picks up momentum. For cargo handler Hong Kong Air Cargo Terminal Ltd (Hactl) the year has delivered solid numbers with total traffic up 16.6 per cent at the half-way point. Southeast Asia has been a significant contributor, with volumes from this particular region growing 22 per cent in the first half year-on-year – the best performance of Hactl’s big five markets. This is a key reflection of the “underlying trends of growing intra-Asia trade, on the back of strengthening economies in the region,” says chief executive Mark Whitehead (pictured right). One country in particular stands out, he adds: “We see huge potential for Vietnam and we were pleased to welcome Vietjet to our carrier family in 2016.” Electronics products feature strongly in Vietnam traffic along with shoes and apparel. Agreeing on the potential of Vietnam, Ong highlighted the country’s stunning economic growth – with its GDP averaging over six per cent from 2000 through to 2017 and hitting a high

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of 7.46 in the Q3 of this year. A portion of this growth in recent years, was the spill-over from China, as manufacturers sought to diversify their production away from the single-source of China. But changing production patterns is also occurring in other ways as well, Ong notes, citing the example of semiconductors. “There has been an upsurge in transfer of semiconductor wafer fabrication mainframe equipment since last year, especially from Singapore to China,” he says in reference to China’s building up of its wafer fab capabilities. This is on top of the components moving within Southeast Asia and China, he adds.

Intra-Asian demand to remain strong

Intra-Asia demand has been strong over the past few years, and is expected to remain so going forward with general expectations of healthy growth in trade among Asian economies, says Singapore Airlines Cargo president, Chin Yau Seng. Traditionally a substantial portion of these intra-Asia volumes have been sub-component manufacturing out of Southeast Asia and into China for final assembly. “While sub-component cargo into China, as part of consolidated shipments, remains a key contribution to intra-Asia volumes, there has also been strong performance in other segments such as perishables, e-commerce and finished goods, particularly electronics,”

ASIA PACIFIC

ut capacity challenges and other issues still need to be overcome Chin says. Whitehead concurs saying this sub-component traffic is likely to continue, “but there is also growth in exports of finished hi-tech goods such as solid state drives (SSDs) and mobile phones which would once have been assembled and finished in China. “While labour costs remain lower in these other countries, they will have an advantage; and, as robotics gradually take over production their costs will remain competitive, but the significance of lower costs will logically become less material,” he cautions. “There is every reason to expect continuing above-average growth throughout Southeast Asia, as emerging markets like Vietnam, Cambodia, Laos, Myanmar and others develop industry and exports,” says Whitehead. But while growth rates continue skyward throughout the region and in turn, drive air cargo demand, significant challenges remain. “In recent years, industry overcapacity has been an issue for a number of intra-Asia lanes, as a result of the significant growth in bellyhold capacity within the region which outpaced the growth in demand,” says Chin. “However, the gap between capacity and demand has progressively narrowed since the later part of last year,” he adds.

Infrastructure remains an problem

Airport infrastructure constraints remain a challenge in several countries, he notes, with congestion mounting in a number of airports around the region, Hong Kong and the Philippines being two pertinent examples. The related issue of traffic rights will also remain an issue on the intra-Asian for some time to come, according to president, CEO and co-founder of Hong Kong-based Strategic Aviation Solutions, Stan Wraight, and this “still has to be fully liberalised if Jack Ma’s [Alibaba CEO] statement of ‘anything, anywhere in three days, or less’ [to deliver products], is to be fulfilled.”

The rapid rise of e-commerce is a salient trend in the region, highlights Chin. “We anticipate accelerating growth in e-commerce volumes in Southeast Asia with the expansion, as well as greater purchasing power, of a digital-savvy middle income segment in the region. “Given the importance of short delivery times for e-commerce movements, air cargo is expected to benefit significantly from this growth. Recognising this trend, we have created a dedicated e-commerce team to build partnerships and design customised solutions for customers,” he adds. Similarly, Wraight highlights that e-commerce is clearly a factor in the region’s trade growth, with Singapore by far and away the most aggressive commercially, adding, “it won’t be long before Malaysia and Indonesia see the benefits and make the necessary infrastructure investments in last mile and facilitation centres at the airports to serve the major shippers.” In Malaysia that is already a work in progress, with Alibaba establishing an e-fulfilment centre at Kuala Lumpur International Airport (KLIA) in conjunction with the government. “The tremendous investments of Alibaba in Lazada and other platforms in Singapore, the very progressive work of Singapore Post and the Changi Airport Authorities, are good examples of their confidence. DHL Aviation has also upped its game and made strong investments,” he says. But he also warns not to disregard the appetite in Asia for goods produced in the Americas and Europe. “If airlines are progressive in opening up their capacity and developing transparent and easy to use products, I see no end in the possibilities,” he says. On the ground, this trend is being clearly felt at the handling point in the chain. Hactl’s Whitehead points to the clear trend

towards smaller shipments and loose cargo, “and we are adapting to this,” he adds. “We are now handling over 1,000 mail bags every day, containing e-commerce shipments, as a result of Hacis’ successful collaboration with the postal authorities which has brought new traffic to our carriers. Our staff have meanwhile honed their pallet build-up skills to accommodate this changing cargo profile and the growth in small parcels,” he said noting that mail used to be loaded in containers, but now must be built-up on pallets. Indeed this is a theme that Wraight echoes as he underscores that ground handling will have to be more in tune with new realities, smaller shipments, direct shipper products and with a lot of value adding needed. This however means that a strong airline and ground handling agent combination, with new relationships based on quality and service can be mutually lucrative for both parties.

ACW 18 DECEMBER 2017

MARKET FORECAST

No sign of e-commerce boom slowing down

he growth of e-commerce shows no sign of slowing, and will continue to benefit the air cargo industry, the International Air Transport Association (IATA) reports. Speaking at IATA’s Cargo Media Day in Geneva on 6 December, chief economist Brian Pearce (pictured) told journalists that while traditional cross border trade was growing slowly until relatively recently, e-commerce has been consistently much stronger. The global e-commerce market was worth $1.9 trillion in 2016, and is expected to be worth $3.5 trillion in 2019. Parcel delivery volumes have more than doubled in the past decade. He told journalists: “E-commerce has benefitted the air cargo industry. Traditional cross border trade was growing very slowly until relatively recently but e-commerce was much

stronger. The economic recovery of the last 12 months was not expected as the geo-political situation looked unstable but we are in the midst of a strong economic upturn.” Pearce added: “There has been a slowdown in China but consumers are still spending a lot. Air cargo has benefitted disproportionately from the economic upturn and freight tonne kilometres have grown faster than world trade volumes.” He says the upturn is like 2010/11 when companies sold more than they expected and inventories fell sharply, meaning they had to restock quickly. Pearce explained: “Companies need components back on shelves and in production facilities quickly, this is where air transport is a benefit. The upturns don’t last forever but there is still more steam left in this particular one.”

The recovery has been felt evenly across all trade lanes with more balanced growth that in the past. Pearce said: “One of the strongest regions to benefit is Europe, in the past aircraft used to come back full from Asia then empty the other way, now it is more balanced.” He said the other positive development is traffic is growing faster than capacity, revers-

ing the trend seen between 2011 and 2016 when a considerable number of aircraft joined fleets. Pearce explained: “We are past the peak of freighter deliveries. Average freighter hours are up, load factors are up very sharply and we are back where we were a few years ago. We will probably see a profitable cargo business that has not been seen for a very long time.”

Industry must embrace new practices

CARGO facilities globally have antiquated machines with outdated processes and they must embrace new practices to cope with change, International Air Transport Association (IATA) head of cargo operations, Brendan Sullivan (pictured) says. The global freighter fleet is likely to grow 70 per cent in 20 years and passenger numbers are forecast to double in that period, which will cause capacity issues. Traditionally facilities have been expanded horizontally before moving location but Sullivan warns that there needs to be a rethink. Speaking at the IATA Cargo Media Day in Geneva on 6 December, he explained: “There is no one size fits all approach but we need to change how we handle things. Parcels need a different mix of space.” Safety and security will continue to remain very important in the future but the industry is also likely to see big changes in equipment use and data. The new technology could be used to prompt the user with data provided, and other innovations including autonomous vehicles could be used to help staff.

ACW 18 DECEMBER 2017

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He said shippers and freight forwarders want more data, and though air cargo is collecting it, it is disjointed, and information needs to be shared more effectively. Technology that can help staff is already available such as smartphones to provide prompts and information, such as how to do certain actions and how to correct problems. Wearable technology including smart glasses are already being used by some companies, and Sullivan said: “They can tell you what to do next, if something is rather complex they can give step-by-step processes.” Sullivan also gave a presentation on e-commerce, which he described as “a substantial opportunity for air cargo”. It is a big growth driver for the industry, with parcel deliveries doubling in the last decade. There are issues the industry will need to tackle, such as volumes changing as letters are replaced for parcels, limited capacity on aircraft, routes and at airports, and new trends in the supply chain. Sullivan said: “E-commerce is driving new trends, it requires a much more customer centric approach. The numbers start to change, so does who the customer is and what they want. He says the industry needs to engage with e-commerce players, explaining: “We need to make changes that make sense for everybody. We have got to change our own mindset and get together and coordinate more effectively and embrace technology together.”

MARKET FORECAST

Growth to return to normal and profits to rise in 2018

irline profits will rise to $38.4 billion in 2018, while cargo volume growth will return to a normal pace after booming in 2017, the International Air Transport Association (IATA)

forecasts. Net profits will rise from the $34.5 billion expected to be seen in 2017, which has been revised from $31.4 billion in IATA’s June forecast, with strong demand, efficiency and reduced interest payments likely to improve airline net profits in 2018 despite rising costs. Cargo continues to benefit from a strong cyclical upturn in volumes, with expected growth of 4.5 per cent in 2018, down from 9.3 per cent in 2017, and cargo revenue is predicted to increase 8.6 per cent in 2018 to $59.2 billion. Volumes in 2017 were helped by companies needing to restock inventories quickly to meet unexpectedly strong demand, resulting in cargo volumes growing at twice the pace of the expansion in world trade, which was 4.3 per cent. Cargo yields are expected to improve by four per cent in 2018, slower than the five per cent improvement in 2017, and IATA adds though restocking cycles are usually short-lived, the growth in e-commerce is expected to support continued momentum in the cargo business beyond the rate of expansion of world trade in 2018. IATA director general and chief executive officer, Alexandre de Juniac (pictured) says these are good times for the global air transport industry, saying: “The demand for air cargo is

at its strongest in over a decade. Employment is growing. More routes are being opened. Airlines are achieving sustainable levels of profitability.” “It’s still, however, a tough business, and we are being challenged on the cost front by rising fuel, labour and infrastructure expenses.” All regions are expected to report improved profitability in 2018 and demand growth is predicted to outpace capacity expansion. North America is expected to lead the way, accounting for nearly half the industry’s total profits, generating $16.4 billion in 2018. Net profit margins of 7.1 per cent are expected to be down from 7.2 per cent predicted in 2017, though will still be the high-

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est in the world. Load factors for passengers and cargo are predicted to rise to 65.3 per cent, with breakeven load factors up to 57 per cent. Asia Pacific is forecast to see profits of $9 billion, with improved cargo volumes expected to make up for rising costs due to higher fuel prices. Profit margins are likely to dip from 3.8 per cent in 2017 to 3.7 per cent, though load factors are likely to increase from 70.7 per cent to 70.9 per cent, and breakeven load factors are expected to remain at 63 per cent. The breakeven load factor is expected to remain at 63.7 per cent in Europe, the highest in the world due to low yields caused by a competitive market and high regulatory costs. Net profits are predicted to rise to $11.5 billion in 2018 from $9.8 billion that IATA is forecasting for 2017. Latin America is expected to continue its recovery in 2018, with profits of $900 million, compared with losses of $1.6 billion in 2015. IATA says airlines in the region have faced a harsh environment, with weak home markets and currencies but this has been turned around and further recovery is expected in 2018. The Middle East has been hit by low oil revenue and regional conflicts leading to slowdown in capacity growth. Net profits were $1.3 billion in 2016, but are expected to fall to $300 million in 2017, before partly recovering to $600 million in 2018. Africa is predicted to continue making losses of $100 million due to regional conflict and the impact of low commodity prices. IATA says breakeven load factors are relatively low as yields are a little higher than average and costs are lower, but few airlines in the region are able to achieve adequate load factors. The association also says though performance is improving, it is only doing so slowly.

ACW 18 DECEMBER 2017

WESTERN EUROPE

KLM starts package service for BlueBiz members

LM has launched a small package delivery service called Shipping Blue, allowing BlueBiz loyalty programme members to ship packages around the world. The service has been developed specially for small and medium-sized enterprises (SMEs), and members are able to ship packages of up to 30 kilogrammes around the world. The packages can be delivered door-todoor within three to five working days, and for each shipment, customers will receive Blue Credits, which they can exchange when booking

a ticket. Shipping Blue is facilitated and supported by KLM’s international network, and once the booking is made, the package is collected by the courier, then the shipment is flown by Air France or KLM to the closest airport, where it is picked up by a courier and delivered to the addressee. Air France KLM Martinair Cargo executive vice president, Marcel de Nooijer (pictured) says: “This service once again shows that we are investing in our future with new products and that we respond swiftly to opportunities in the market. It also reaffirms our cargo strategy to invest in digitisation, infrastructure and strategic co-operation in order to maximise our contribution to the Air France KLM Group.” Air France KLM Cargo vice president area

Europe, Gert Jan Roelands adds: “The business of small packages, which is mainly driven by sales via the internet, is growing strongly. We see an average increase of 20 per cent worldwide when it comes to cross border E-commerce.”

The service was launched on Thursday 7 December 2017, and made available to as many as 29,000 BlueBiz customers in the Netherlands, and will be extended to all BlueBiz customers of Air France KLM.

Amedeo plans to launch A380 airline

DUBLIN-based aircraft leasing company Amedeo is set to create an A380-only airline as it runs out of customers for the aircraft. Amedeo chief executive, Mark Lapidus (pictured), says: “The issue is cargo space in a passenger aircraft flying passenger service. The A380 is not a 777 in this sense, but there is space and ability to take say 15-18 tonnes on a full

aircraft. Another more interesting topic is the A380 as an aircraft that can take a lot of iPads. Potential cargo conversion is also a possibility, but needs to be FAA certified and FedEx, DHL or Amazon attracted to it. “During 2018/19 we will prepare the infrastructure, perhaps an AOC in the USA and Europe by 2019, may be start flying in 2020 or 2021.” Amedeo counts eight A380s among its fleet and has a further 20 on order from Airbus but has found the leasing market has moved against the giant aircraft.

Cargo at Frankfurt flies past 200,000 tonnes CARGO volumes at Frankfurt Airport continue to see strong growth passing the 200,000 tonnes mark in November, airport operator Fraport reports. The German airport, which is the busiest freight hub in Europe, handled 200,827 tonnes of airfreight and airmail in November, year-on-year growth of 4.9 per cent, and has handled 2.04 million tonnes year-to-date, an increase of 4.3 per cent.

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Fraport says the month was helped by a favourable distribution of weekdays, with one additional high volume Thursday and one fewer low volume Tuesday, and no pilot strikes, unlike in November 2016. It says traffic to and from the USA made a major contribution to the growth rate in Frankfurt, up 11.7 per cent, helped by a weak euro compared to the US dollar.

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ACW 18 December 2017

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NEWSWEEK Heathrow flies cargo around the world in time for Christmas A

eathrow Airport is expecting to fly over 143 million kilos of cargo around the world for Christmas, with goods including lighting sets, frozen lobster and dried flowers. The London airport, which is the biggest port in the UK by value, has released data showing the spike in cargo and some of the interesting exports transported in the run up to the 25th December. The data from November and December 2016 showed a spike in certain products coming into the airport and out to non-European Union (EU) destinations including 27,467 kg of Christ-

mas lighting sets compared to the monthly average of 7,203 kg from January to October; 443,146 kg of frozen lobsters compared to an average of 163,312kg; 31,316 kg of calendars compared to 3,382 kg, and 310,677 kg of dried flowers including decorations, compared to 109,796 kg in a normal month. Salmon is the most popular export to non-EU destinations by weight in November and December, with 6,070,000 kg flying in November and December 2016, with exports of books the second most popular, with 4,834,000 kg going through last year. Heathrow Airport head of cargo, Nick Platts (pictured) says: “Heathrow is at its busiest time at Christmas – and this year, we not only expect record numbers of passengers to fly through, but also a record amount of cargo to be flown in the holds under their feet.” “Santa may still have the claim on the most deliveries on Christmas Eve, but for the months

before it, Heathrow is doing its bit to export our British Christmas across the world.” By export destination outside the EU, the USA was the biggest market with 15.3 million kg of exports, followed by China at 6.2 million, the UAE with 3.7 million, Australia at 3.3 million

and Hong Kong with 2.7 million. Heathrow handled a record 290,340,803 kg of exports flying through January to October to non-EU destinations, an increase of 8.5 per cent on last year, worth £39.6 billion ($52.9 billion).

Operation Christmas drop returns for another year

RESERVE Citizen Airmen from the 44th Aerial Port Squadron (APS) have worked alongside the people of Guam to fill boxes with critical supplies as part of Operation Christmas Drop. For the first time the operation used a US Air Force C-130J Super Hercules to air drop bundles to 56 islands in Micronesia on 11 December, to continue the longest running humanitarian airlift operation in the history of the Department of Defense impacting the lives of more than 20,000 islanders. Each year since 1952, islanders located in remote locations have seen their annual Christmas bundles of rice, fish hooks, educational materials, clothing, toys and other items dropped from military aircraft in the same way troops receive supplies during combat operations. Air transportation specialist, Staff sergeant Kaija Garrido of Sinajana, Guam says: “I love being able to see everyone from the community, active duty and Air Force Reserve come out as one to take part in this operation. I love that we are helping people from the outer islands who can use all of these supplies.” After the boxes were filled and the volunteers went home, members of the 44th APS and their active-duty counterparts at the 734th Air Mobility Squadron worked together to load the cargo onto the aircraft. Technical sergeant Josephine Superales-Garridao from Mangilao, Guam says: “We assist the rigger team by tying the rigs onto the boxes and doing the weight measurements. It’s important to know how much the boxes weigh to prevent any mission mishaps [during the drop].” The operation also gives air transportation specialists the opportunity to learn new skills, with Supergales-Garrido saying: “I have experience in passenger services so this gives me an opportunity to cross-train. I’m doing a lot of hands-on training on the cargo and airfreight side of the house helping me become well rounded in my career field.” 374th Airlift Wing were able to use the new C-130J, which has a redesigned airframe and utilises new technology. Unit vice commander, colonel Sergio Vega Jr says the newer C-130J is an improvement over older aircraft, and very useful for this kind of mission. He says: “This year we will be able to fly farther, faster and with more cargo allowing us increased flexibility as we complete our mission and training objectives.”