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WORLD AIRPORTS Sponsored.COM by FREIGHTERS.COM
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The weekly newspaper for air cargo professionals Volume: 19
Issue: 28
18 July 2016
Farnborough Airshow sees solid flow of freighter orders
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he freighter market was given a boost at the Farnborough International Airshow last week as orders were placed for converted freighters, the new Lockheed Martin aircraft and Boeing 747-8 Freighters. Arguably the biggest news was Brazilian logistics and defence group Bravo Industries signing on the dotted line to purchase 10 LM-100J Super Hercules (pictured) commercial freighter aircraft from Lockheed Martin - for air cargo operations in Brazil. The LM-100J is the civil-certified version of Lockheed Martin’s C-130J Super Hercules aircraft. The first LM-100J is in production and will undergo Federal Aviation Administration type certificate prior to delivery in 2018. Bravo’s air cargo services include scheduled and route-specific services (same-day, next-day), as well as special cargo handling (heavy, odd-shaped, hazardous, refrigerated) and custom operations. Bravo Industries president and chief executive officer, JR Pereira
says: “When we examined the market and regional demands for our logistics operations, there was only one aircraft that could do all the jobs we needed it to do to serve our customers: the LM-100J. “The LM-100J is uniquely suited to reach Brazil’s underserved regions where we do business. These are areas that lack ground support and certain critical infrastructure required by other commercial freighters.” The passenger to freighter (P2F) conversion market is growing fast and expanding, as operators see the aircraft as a cost-effective way to run and grow air cargo operations and there were further orders placed at Farnborough. Boeing gained an order for 10 Boeing Converted Freighters (BCF), of which six are 737-800s and four at 767s. Bulgaria-based Cargo Air and Columbian airline, Lineas Aereas Suramericanas Cargo will both receive two 737-800BCFs each and Air Algerie has signed for two 737-800BCFs. The 767BCF customer has not been identified.
The 737-800BCF programme was launched in February and will be modified at facilities near the demand. The first 737-800BCFs are scheduled for delivery in the fourth quarter of 2017. Both the 737 and 767 are being converted to cater for demand in the express market. Boeing has received 22 firm orders for 767s and 59 orders and commitments for the 737. Meanwhile, DHL Express signed a contract to be the first customer of the Airbus A330-300 P2F conversion with Elbe Flugzeugwerke (EFW) and ST Aerospace.
Dresden-based EFW will convert four A330-300s to a 26-pallet configuration capable of carrying up to 61 tonnes of cargo, with the first aircraft going to EFW in July 2016 and redelivery in 2017. Volga-Dnepr Group finalised a deal to acquire 20 Boeing 747-8 Freighters after signing a Memorandum of Understanding at the Paris Airshow last year. The aircraft will grow AirBridgeCargo’s fleet and replace 747-400s, and will be acquired over the next six years through purchases and leasing, and includes four it has already received.
Airbus: 645 freighters greater than 10 tonnes needed by 2035 Over 33,000 new aircraft worth about $5.2 trillion will be needed in the next 20 years up to 2035 - including demand for 645 freighters with a capacity of greater than 10 tonnes, according to Airbus’ Global Market Forecast. Airbus released the forecast at last week’s Farnborough International Airshow and says there is also trend moving towards the widebody market of higher capacity aircraft, meaning 9,500 (29 per cent) widebody passenger and freighter aircraft will be required with much of the demand from the Asia Pacific region. In the single aisle market, Airbus forecasts a need for over 23,500 new aircraft, the remaining 71 per cent, and again Asia Pacific will receive much of the deliveries.
The French aircraft manufacturer says by 2035, the world’s aircraft fleet will have doubled from today’s 19,500 aircraft to almost 40,000, while some 13,000 passenger and freighter aircraft will be replaced with more fuel efficient types. Airbus predicts that China’s domestic air traffic will become the world’s largest aviation market within 10 years. Airbus chief operating officer for customers, John Leahy says: “While established European and North American markets continue to grow, Asia-Pacific is the engine powering growth in the next 20 years. China will soon be the world’s biggest aviation market and together with emerging economies, further population concentration, and wealth creation, together
these will help to fuel strong air traffic growth. “We are ramping up production to meet market demand for our leading aircraft products and we will also ramp up our customer service offerings to meet the increasing demands of air transportation.” Boeing has also released a forecast (see page four) with similar findings.
$5.9t of aircraft needed by 2035
4
wild card events and tsunami of regulations
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cargonaut targets full digitisation
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Pelican eyes service centre expansion
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North America the hotspot for freighters THE Americas is a hotspot for freighter activities with Cathay Pacific Cargo, Qatar Airways Cargo and Emirates SkyCargo all adding routes or frequencies. Cathay Pacific will increase its US presence with the start of twice-weekly Boeing 747-8 Freighter services to Portland International Airport from 3 November. Portland, in the state of Oregon, will be Cathay Pacific’s 18th cargo station in the Americas, and operate on a Hong Kong – Anchorage – Los Angeles – Portland – Anchorage – Hong Kong route. The service will cater for demand of semi-finished footwear and apparel, electronics and perishables from the Portland area to Asia. Halifax International Airport Authority will welcome Qatar Airways Cargo on 20 July when the carrier launches a weekly Wednesday service to Doha with a stop in Zaragoza, Spain. Qatar will operate with a Boeing 777-200 freighter, which can carry up to 103 tonnes of cargo. Much of that cargo will be Nova Scotia lobster and silver hake. Emirates SkyCargo has added a third frequency to Rickenbacker International Airport to meet rising demand.
aircargoweek.com
NEWSWEEK
UK keeps growing despite EU exit
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anchester Airport Group (MAG) has seen cargo income increase by seven per cent to £22.7 million ($29.8 million) with group volumes up 4.8 per cent due to new routes and online shopping. The group, which operates Manchester, East Midlands, Stansted (pictured) and Bournemouth airports saw revenue between 1 April 2015 and 31 March 2016 increase by 5.5 per cent to £778.8 million and total income for the year across the group was £134.7 million. East Midlands Airport handled over 300,000 tonnes and DHL is spending £90 million expanding its logistics hub facility on site while Stansted Airport handled over 240,000 tonnes during the year. MAG chief executive, Charlie Cornish says the results stand it in good stead following the UK voting to leave the European Union
(EU). “MAG’s business strategy has a longterm focus with resilient foundations. This will stand us in good stead to respond to any adverse consequences that may be felt by the UK economy following the country’s decision to the leave the EU.” Heathrow Airport grew 2.1 per cent in June to 125,636 tonnes, with strong growth
to China which was up 11 per cent, India up 3.3 per cent and Turkey up three per cent. Volumes have increased by 1.7 per cent in the first six months to 754,597 tonnes. Heathrow chief executive officer (CEO), John Holland-Kaye explains: “With cargo volumes at Heathrow growing, our next Prime Minister has a real opportunity to secure Britain’s legacy as an outward-looking trading nation. Now more than ever, a decision on Heathrow expansion must be at the top of her in-tray.” Gatwick Airport had its first strong month for a long time with a 62.5 per cent year-on-year increase in June to 6,494 tonnes. Gatwick CEO, Stewart Wingate says: “June’s results show the benefits a two runway Gatwick would provide for Britain - guaranteed growth with reduced environmental impacts and no taxpayer funding. Let’s get on with it and deliver for Britain.”
Strong growth for Frankfurt and Munich
FRANKFURT Airport has seen cargo and mail volumes increase by 3.3 per cent to 179,808 tonnes in June, helping to boost first half results. June is only the second month of 2016 to see a year-on-year increase apart from April, when volumes soared by five per cent due to strong growth in China, Japan and India. The strong months in June and April mean volumes for the first six months are up by 0.7 per cent to 1.04 million tonnes. Munich Airport (pictured) has seen cargo volumes continuing to grow with volumes increasing by four per cent to 163,000 tonnes in the first half of 2016. The airport has seen take-offs and landings increase by 2.5 per cent to 191,000 and expects to see this increase by four per cent in 2017. Munich Airport chief executive officer, Dr Michael Kerkloh says the growth reinforces the need for a third runway as it is getting harder to find slots during busy periods. He says: “As the operators of this airport, we continue to plead passionately and tirelessly for our expansion project to be implemented in the near future.” All legal challenges against expansion have been dismissed and once shareholders have approved the plans, it will be up to the state government and city of Munich to give it the go ahead.
Strikes and freighter volumes hit Brussels CARGO volumes at Brussels Airport fell by 6.8 per cent to 40,243 tonnes as it was hit by strike action and falling full-freighter volumes. The Belgian hub says a large reason for the 6.8 per cent fall was due to having to cancel several flights following the Brucargo blockage on 24 June. Cargo volumes carried on freighter aircraft fell by 13.4 per cent compared to June 2015 to 11,886 tonnes due to KF Aerospace ceasing operations, Yangtze River Express transferring part of its activities to Amsterdam Airport Schiphol and Saudia Cargo reducing operations. The return of Ethiopian Cargo and arrival of Etihad Cargo reduced the fall in volumes. Bellyhold fell by 16.6 per cent in June to 10,249 tonnes following the departure of Jet Airways and the strike action. Integrator traffic grew by 5.4 per cent helped by e-commerce.
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ECS invests in Asia by buying majority stake in AVS
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CS Group has bought a majority stake in AVS GSA Group, a general sales agent with a strong presence in the Asian and South East Asian region. The deal was signed in Singapore on 21 June by AVS GSA Group chairman, Monchai Jirakiertivadhana (pictured right), ECS Group chief executive officer (CEO), Bertrand Schmoll (pictured middle), AVS GSA Group CEO, Thomas Ong (pictured left), and ECS Group chief operating officer, Adrien Thominet. AVS GSA was founded in 2007 and focuses on growing Asian economies to consolidate cargo in the ASEAN region using network flights and interline with the rest of Asia, Europe and the US. Jirakiertivadhana says: “AVS GSA is determined to offer high quality services to our partners day after day. We are delighted about our partnership with ECS Group and the association with the global leader in GSA will help us enlarge our portfolio of airlines.” We decided to come together based on
mutual trust. AVS GSA and ECS Group share common objectives, have high degree of professionalism, tremendous inclination for innovation and, top it all, we are extremely passionate about airline business.” Schmoll explains: “It is important to have a local partner, who shares a common vision, and has an experienced team of professionals with deep knowledge and extensive network into the local market. In AVS GSA Group we have found the right chemistry for mutual growth.” Ong says AVS GSA Group compliments perfectly the network of ECS Group as both represent DHL Aviation in each of their own territories and they share other principals like Oman Air, Malaysian Airlines, and others. He adds: “There was a perfect understanding among all key people involved in this deal. ECS Group has a strong reputation and global leadership position in the airfreight industry and we are proud to be part of the team.”
NEWS WEEK WorldNews
ALITALIA and va-Q-tec have signed an agreement for transporting temperature sensitive goods, meaning the airlines’ customers can rent high-performance passive containers. As part of the deal, Alitalia customers now have access to containers, which can control temperatures between -60 and +25 degrees Celsius. Pharma shippers and forwarding agents can order the Load & Go service through the airline. DHL GLOBAL FORWARDING has been awarded an airfreight contract by Transsion Holdings, a major mobile phone manufacturer in Asia. DHL will provide services from the firm’s manufacturing base in South China to 28 countries around the world across Asia, the Middle East and Africa.
Sankyo and Rhenus form JV THE Rhenus Group and Sankyo Corporation have set up a joint venture - Rhenus Sankyo Logistics K.K. Sankyo is part of the Fujiki Group, a network of firms with more than 20 companies in Japan and worldwide. Rhenus Asia and the American Sankyo subsidiary Clearfreight have already been working together for many years. The level of co-operation is now set to be expanded in the joint venture, where Rhenus holds two thirds of the shares. The joint venture will mainly handle imports and exports to and from Japan, but also provide domestic services like distribution and warehousing in the country. Rhenus and Sankyo are also introducing existing Japanese business to the joint firm. Rhenus board member, Tobias Bartz says: “Japan is the fourth largest importer and exporter in the world. Because of its specific business culture, however, it’s difficult for foreign companies to establish a foothold in the market; so an experienced local partner is an enormous support. “The Sankyo Corporation is a renowned company in Japan and will enable us to expand our Asia-Pacific network.”
FCS has the WOW factor
WOW air has appointed Frankfurt Cargo Services (FCS) to operate as its cargo handler for the carrier’s six times a week Reykjavik – Frankfurt services. The low-cost Icelandic airline, which was founded in November 2011 has been expanding rapidly and the Frankfurt services will help further growth, particularly on routes to North America. WOW plans to increase its fleet from 11 to 12 aircraft this year. FCS managing director, Hans-Georg Emmert says: “FCS Frankfurt Cargo Services – being a part of the worldwide network of the WFS Group – is the best partner for an airline focusing on growth and success. We will support our new customer on a sustained basis with our professional and high quality services.” Meanwhile, WOW air signed a firm order for four Airbus A321s at the Farnborough International Airshow last week, strengthening its international network. The airline’s founder and chief executive officer, Skúli Mogensen says the carrier looks forward to expanding even further through its partnership with Airbus.
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NEWSWEEK $5.9t of aircraft needed by 2035 Boeing projects a demand for 39,620 new aircraft worth $5.9 trillion over the next 20 years, with most of this coming from single aisle units. The manufacturer released its Current Market Outlook at the Farnborough International Airshow on 11 July, and is an increase of 4.1 per cent over last year’s forecast. It predicts the single aisle market will be particularly strong, with low-cost carriers and emerging markets seeing the most growth. The passenger market is predicted to grow by 4.8 per cent per annum over the next 20 years with cargo increasing by 4.2 per cent. Boeing Commercial Airplanes vice president marketing, Randy Tinseth (pictured) says: “Despite recent events that have impacted the financial markets, the aviation sector will continue to see long-term growth
with the commercial fleet doubling in size.” Of the aircraft, Boeing predicts 28,140 will be single-aisle aircraft worth $3 trillion, 5,100 small widebodies worth $1.3 trillion, 3,470 medium widebodies worth $1.2 trillion and 530 large widebodies worth $220 billion. The manufacturer also projects the need for 930 new freighters and 1,440 converted freighters. Most of the demand will come from emerging economies, with Asia predicts to need 15,130 aircraft, with North America next at 8,330 aircraft, Europe in third with 7,570 and the Middle East needing 3,310. Latin America is predicted to need 2,960, with 1,150 for Africa and 1,170 for the CIS. Boeing also predicts that the large widebodies will be replaced between 2021-28 with a shift from very large aircraft to smaller ones such as the 787, 777 and 777X.
CLA to transport speed record car
CargoLogicAir (CLA) has signed a memorandum of understanding with the Bloodhound Project to transport the World Land Speed Record attempt car to South Africa. The new airline, a subsidiary of Volga-Dnepr Group will use its Boeing 747-8 Freighter it took delivery of on Friday 8 July to transport the Bloodhound SSC from the UK
to South Africa, where it will attempt to break the record on the Hakskeenpan dried lake bed in the Northern Cape. The team hope exceed 800mph in 2017 before breaking the 1,000mph mark in 2018. The deal was signed by CLA chief executive officer, Dmitry Grishin and Bloodhound team project director, Richard Noble OBE at the Farnborough International Airshow. Grishin says: “What better way to alert people to the fact that there is a new British all-cargo airline than to support such an exciting and entrepreneurial project as BLOODHOUND, which already has followers in over 220 countries.” Noble broke the land speed record in 1983 driving at 633.4 mph, a record broken by Andy Green in 1997 when he to the Thrust SSC to 763 mph, as part of a team led by Noble. Volga-Dnepr Group had helped the 1997 attempt by transporting the team and equipment to the US using an Antonov AN-124-100. Noble says: “In September 2017 we’re taking BLOODHOUND SSC to South Africa and we’re delighted that CargoLogicAir are supporting the transportation. It means we can fly the project direct from the UK to Upington in South Africa, just a short 120-mile drive to the desert.” He thanked Volga-Dnepr: “It’s true to say without the use of the Antonov 124-100 in 1997, the 763mph World Land Speed Record could not have been achieved and we would have failed. We are delighted the relationship with our good friends, CargoLogicAir, will give us the opportunity to make history again.”
Boeing MAXimises orders of 737s
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oeing Commercial Airplanes increased its order book for 737s with Kunming Airlines, Air Lease Corporation, Standard Chartered and an unidentified Chinese customer all ordering aircraft at the Farnborough International Airshow. Kunming signed a memorandum for 10 737 MAX 7s, Air Lease ordered six 737 MAX 8s (four for Cayman Airways) bringing its 737 order to 118, while Standard Chartered requested 10 Next Generations and the unidentified Chinese customer committed to a mixture of 30 MAXs and Next Generations valued at $3 billion. Boeing has orders for more than 3,200 737 MAXs. Boeing says the MAX 7 uses five per cent less fuel and has 500 miles more range than a 737-
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700, while the MAX 8 uses 20 per cent less fuel than first Next Generation 737s and has the lowest operating costs in its class. Boeing Commercial Airplanes president and chief executive officer, Ray Conner says the deal will help Kunming expand its presence in China and globally. “We look forward to welcoming Kunming Airlines as a 737 MAX 7 launch customer in China and finalising the deal in the near future.” Standard Chartered head of aviation finance, Kieran Corr says: “Our key markets are Asia, Africa and the Middle East, with a focus on emerging markets. We want to help the aviation sector grow in those markets to drive regional trade and investment and we can only do that with an expanded diversified fleet.”
Boeing nets Chinese orders
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hinese carriers formed much of the aircraft orders for Boeing at the Farnborough International Airshow last week. Among them were Donghai Airlines which is to buy 25 737 MAX 8s and five 787-9 Dreamliners, valued at more than $4 billion. This is part of Donghai’s plan to fulfill its plan to convert its business model from cargo services to passenger services. The Shenzhen carrier started out with
freighter operations in 2006, but expanded to passenger services in 2014. Xiamen Airlines has signed a Memorandum of Understanding with Boeing to purchase up to 30 737 MAX 200 aircraft, valued at up to $3.39 billion. The carrier sees the MAX 200 as a fit for its low-cost subsidiaries, including Jiangxi Airlines and Hebei Airlines. Both parties will work to finalise the agreement, which requires the approval of the Xiamen Airlines board, the China Southern Airline Group board, and the Chinese Government. Xiamen plans to grow its fleet to 200 aircraft from the 140 now - by the end of the decade. Ruili Airlines finalised an order for six 787-9 Dreamliners, valued at $1.59 billion. The Yunnan-based carrier plans to build Yunnan as the gateway between Southwest China and the rest of the world. It is aiming to expand its fleet to 70 aircraft by the end of 2025, from nine today.
NEWS WEEK 100 A321neo for AirAsia
AIRASIA has signed a firm order with Airbus for the purchase of a whopping 100 A321neo aircraft. The contract was announced at the Farnborough Airshow on 12 July by AirAsia Group chief executive officer (CEO), Tony Fernandes (pictured wearing a cap above) and Airbus president and CEO, Fabrice Brégier. Fernandes says the AirAsia Group currently operates close to 1,000 flights per day to
more than 120 destinations in 24 countries and is confident of maintaining this momentum going forward. He adds: “The A321neo will be operated on our most popular routes and especially at airports with infrastructure constraints.” Brégier says “This is another strong endorsement for largest member of our single aisle family, which is now the clear market leader in the 200 plus seat category.”
A350s for Virgin Atlantic
VIRGIN Atlantic has penned an agreement valued at $4.4 billion, for 12 Airbus A350-1000 aircraft. The deal was made at the Farnborough International Airshow on 11 July. This is part of fleet modernisation program, which will see 50 per cent of Virgin’s aircraft replaced over six years. Of the 12 firm orders, eight will be purchased and four leased, as Virgin Atlantic continues its investment into increasing the mix of owned and leased aircraft. Virgin Atlantic chief executive officer, Craig Kreeger says: “The size of this order demonstrates our absolute focus on investing in the future for our customers and our people, and confirms the strength of our business. “The A350-1000 plays a pivotal role in our fleet programme, helping to create one of the youngest, cleanest, greenest fleets in the sky. “We’re looking forward to introducing this aircraft to our customers, as its impressive economics, fuel performance, and quiet flying offer an irresistible proposition.” The A350-1000 will replace Virgin’s remaining Boeing 747-400s and A340-600s, is due for delivery from early 2019. They will be based at Heathrow and Gatwick airports.
Qatar buys stake in LATAM
QATAR Airways is take an up to 10 per cent stake in LATAM Airlines, the group’s chief executive Akbar Al Baker announced at the Farnborough International Airshow. He says the two carriers have entered into a ‘subscription agreement’ and as part of the agreement it will invest $613 million in the Latin American airline. Al Baker explains it is making the investment as it enhances the Qatari carrier’s network and reach, while LATAM says it helps it tap into new markets and connect to more places. LATAM and Qatar Airways expect to complete the deal in the fourth quarter of this year. Both airlines are oneworld alliance members. Qatar Airways already has a 15.01 per cent stake in the International Airlines Group (IAG).
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NORTH AMERICA
Wild card events and tsunami of regulations
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ir forwarders are seeing flat growth as they face wild-card events this year and ever more regulation, Airforwarders Association (AfA) executive director, Brandon Fried (pictured) tells Air Cargo Week. For the year so far, Fried says: “While the larger forwarders tend to be experiencing flat to modest growth, small to medium niche-oriented companies appear to be prospering in specialised areas including trade show, e-commerce related delivery and special projects. In general, however, growth has been relatively flat.” Fried says members are optimistic that they will see a ‘slight improvement’ for the rest of 2016, and there are areas of hope, such as the Trans-Pacific Partnership Agreement (TPP). The TPP was signed by 12 countries, the US, Japan, Malaysia, Vietnam, Singapore, Brunei, Australia,
New Zealand, Canada, Mexico, Chile and Peru, and aims to deepen economic ties between the nations by slashing tariffs and fostering trade. Though Fried says lifting and reducing barriers is good for the trade community and will increase commerce, it still needs to go through Congress. “Our primary concern is that given the state of politics in Washington, we may not see Congress passing the TPP in this session although the (US) President remains optimistic.” As well as the opportunities posed by the TPP, the opening up of Cuba offers potential in both directions, and the AfA has been making sure cargo is not forgotten about. “The US Airforwarders Association has advocated for the awarding of increased air service between all major Cuban cities and the US but only to airlines with cargo departments since our future with Cuba is not only about personal travel,
but trade as well.” AfA members have the fun of dealing with events outside of their control, such as the UK voting to leave the European Union, known as ‘Brexit’, and the US presidential elections later this year. So far, Fried says Brexit has not caused members too much concern. “Those members with whom I have recently spoken remain cautiously optimistic and feel its true impact will not be seen immediately.” Members also have to contend with what Fried describes as “the seemingly never ending tsunami of regulation” becoming a major cost of doing business. He says: “This has led to the need for forwarders to maintain cadres of compliance specialists, reengineered process, recording keeping, audits, all adding cost and negatively impact productivity.”
Carriers eager to reconnect Cuba
EIGHT US carriers have been given permission to fly to Havana by the US Department of Transportation, filling the 20 daily flights agreed by the US and Cuban governments. Twelve airlines applied to serve the island nation’s capital, and Alaska Airlines, American Airlines, Delta Air Lines, Frontier Airlines, JetBlue Airways, Southwest Airlines, Spirit Airlines and United Airlines received tentative awards. Each country will be allowed to operate up to 20 daily round trips between the US and Havana, and up to 10 daily flights to Cuba’s other nine international airports. US Transportation Secretary, Anthony Foxx says: “Today we take another important step toward delivering on President Obama’s promise to reengage Cuba. Restoring regular air service holds tremendous potential to reunite Cuban American families and foster education and opportunities for American businesses of all sizes.” Under the agreement, Alaska Airlines has been awarded one Los Angeles - Havana flight a day and American plans four
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Miami - Havana and one Charlotte - Havana flight. Delta is planning daily flights from New York, Atlanta and Miami, and Frontier also intends to operate a Miami - Havana service. JetBlue plans daily flights from New York and Orlanda and twice-daily from Fort Lauderdale with Southwest also intending to operate twice-daily services from Fort Lauderdale and one from Tampa. Spirit also plans two Fort Lauderdale flights a day while United intends to operate a daily Newark Liberty service and one flight a week from Houston. The Havana flights followed the department granting permission to American, Frontier, JetBlue, Silver Airways, Southwest and Sun County Airlines to operate to services to other Cuban airports. Between them, they received permission to connect Miami, Fort Lauderdale, Chicago, Minneapolis/St.Paul and Philadelphia with the Cuban cities of Camagüey, Cayo Coco, Cayo Largo, Cienfuegos, Holguín, Manzanillo, Matanzas, Santa Clara, and Santiago de Cuba.
NORTH AMERICA
Pockets of opportunity despite slow growth rates
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merican Airlines Cargo has faced the same headwinds with slowing growth rates, but senior manager – cargo strategy and partnerships, Lori Sinn Sr says there are pockets of opportunity. Sinn says American is expanding its Los Angeles hub into the Pacific, while investments in facilities like Dallas Fort-Worth (DFW) and San Juan will increase its perishables and pharmaceutical markets. Describing the year so far, Sinn says: “2016 has not been too different than 2015 thus far. But we will continue growing and expanding, by working hard to leverage our new aircraft deliveries and utilise our expansive global network. We’re also developing more strategic trucking and interline partnerships to deliver even more valuable trade connections worldwide.” For the rest of 2016, American will be receiving new aircraft, facility improvements and focusing on electronic air waybills. The airline is also working on expanding cold chain facilities. Sinn tells Air Cargo Week: “We have also been expanding our cold chain capabilities across the network, so in Philadelphia we see a higher volume of pharma shipments thanks to the new dedicated temperature-controlled coolers, while the cooler expansion in DFW will allow us to accommodate higher volumes of perishable goods.” Investment in areas such as perishables and cold-chain are part of American’s plan to invest in operations across the globe. “In addition to our temperature-control network, we’ve made many other needed investments to benefit our customers, includ-
ing the purchases of new ground equipment, the hiring of additional staff members, and the reorganisation of some of our warehouses to accommodate our growing network.” American network expansion plans include Los Angeles flights to Auckland, Hong Kong, Tokyo Haneda and Sydney, and it has submitted applications for Los Angeles – Peking and DFW – Tokyo Haneda services. The airline is also looking to Europe as well as Asia; Sinn says: “This summer, we have a great schedule to Europe, also, with more of our 777s flying to Frankfurt, Rome, Barcelona, Madrid and London - as well as the expansion of our seasonal flying (e.g. Dublin, Athens, Venice, etc.). These are all great, highly-valuable options for our cargo customers.” Sinn says all carriers are facing the challenge of overcapacity, with more passenger aircraft to cater for demand, and freighters
returning to fleets, but American is in a strong position. He explains: “We are able to leverage our network—we’ve grown a lot into Europe through the past year, and have the best connectivity to/from Latin America. “Pockets of opportunities exist for even greater growth to and from the US, such as ecommerce, and we look forward to developing a supply chain solution that allows us to work closer together with our customers to deliver a more competitive option.”
Delta continues upgrades
Delta Air Lines is upgrading both its narrowbody and widebody fleet while focusing on its pharmaceutical and perishable businesses, director – Delta Cargo sales, Andy Kirschner tells Air Cargo Week. He says for intra-North American services, Delta is focusing on shipments to take advantage of its widebody network in the US, and narrowbody capacity has increased with the introduction of Airbus A321s, Boeing 717s and Boeing 737-900s. “We work very closely with our courier partners on medical movements. We also are working closely with our customers moving perishable and with customers on a variety of products, making use of our transcontinental service and expanded service up and down the West coast.” For the market as a whole, Kirschner says there is much more capacity than last year, but Delta will look to expand where there are the opportunities. “We continue to have a large focus on opportunities to all global regions with our strong lift to EMEIA, Latin and Pacific in addition to our strong domestic narrowbody and widebody lift.” Delta has restarted services to Moscow’s Sheremetyevo International Airport and increased capacity between Seattle and Anchorage, and will continue Anchorage – Minneapolis flights. The Olympic Games in Rio de Janeiro offer opportunities for South American services. “With our daily service from Atlanta to Rio Galeão and connections throughout the world, we have had much interest in our capacity for cargo leading up to and post the Olympic Games. We continue to perform well to and from South America with our cargo opportunities.” Kirschner says Delta’s fleet upgrades will have a major impact on North America. “We have several new widebody flights coming into our system with the Airbus A350 along with additional Airbus A330 aircraft that come with very strong cargo uplift capability. In addition we have increased our domestic cargo capacity with the reduction of some 50 seat regional jets and continued increase of domestic mainline.” Kirschner is though happy with business: “Our challenge is around the increased capacity in the market for exports along with the trucking network for domestic. We continue to have strong opportunities with domestic business that makes use of both our narrowbody and widebody flights.”
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CARGO TECHNOLOGY
Cargonaut targets full digitisation and paperless system
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msterdam Airport Schiphol’s information platform, Cargonaut is reinventing itself. In January this year it was given two million euros ($2.2 million) to modernise the system with half the money coming from a Top Sector Logistics grant, with the remainder provided by Dutch Customs, Logius, Air Cargo Netherlands, Schiphol Group and Cargonaut. The cash will be invested in the next two years to renew the community information platform and applications. Cargonaut says large-scale information sharing is among the challenges that lie ahead. Cargonaut chief executive officer, Nanne Onland (pictured) explains: “It is challenging and exciting, which it has been for some time and we are busy with the project. We need to modernise Cargonaut and for the benefit of
Schiphol. It is important for the industry we are reinventing ourselves and we reinvent processes for the industry.” Onland says the target at Schiphol in two years time is to be 100 per cent paperless, fully digitised, and to have developed standardised trade lanes. He notes: “We need to prove it can be done in a number of trade lanes, and try to standardise in trade lanes with a new platform and work with airport friends and work together sharing data, best practice and information. “Hopefully in two years time we have the quality and the value is there and the model is then copied by other airports.” Onland adds: “All parties at Schiphol will reap the fruits. With the help of a renewed Schiphol Community information platform, better and faster processes will be supported with modern tools, and can also be further developed towards
the creation of new ‘Green Fast Lanes’. “Strong co-operation, well-managed processes and maximum support from the stateof-the-art IT resources are the keys to increase the competitiveness of Schiphol, and therefore of all stakeholders, including the government.” Air cargo needs modernising across the entire supply chain, and although much is being done, many feel it is well behind where it should be. Onland feels the industry has to work together in a new way and upgrade processes: “The supply chain for the great majority is a process that was developed in the past century and to redo it again - we have to reinvent it as we would not redesign the way it is now. “The way we get to that is experimentation and there are no big bangs. Big programmes will not get us there, we need small steps, but need to reinvent the supply chain. Think big, start small and innovate.” Onland says the goal is to make Schiphol “the smartest airport by 2018” and it is working with other gateways with the aim of improving standards and processes across trade lanes. He says: “We are working with Heathrow Airport, Frankfurt Airport and Brussels Airport - talking about cargo performance, processes and need to work together.
“We can only make ourselves ‘smart’ but we have to develop standards and must share to others so they can put it into their network. We can work together on this. “It is all about making trade lanes smart with standards, sharing data and information to improve efficiency and processes. “We need collaboration, to reach out to other network communities, check the boxes so things are more efficient across the supply chain, with standardised processes, and so boost trade.”
New e-booking platform launched WEBCARGO has launched an e-booking platform in partnership with the ECS Group – directly within the system that forwarders have been using for years. This means instead of having to learn how to use each airline’s individual online systems or sending emails with no structure, forwarders can send in booking requests directly from their pricing platform. WebCargo chief executive officer, Manuel Galindo says: “WebCargo then integrates with ECS’s system, eliminating costly maintenance and data entry for all parties involved. The booking status can then be seen from both the forwarder’s interface and the GSA’s in real time. It’s a huge time saving for forwarders, GSA’s, and airlines.” Galindo says the system is flexible in how messaging is passed between the forwarder and the airline/GSA and ideally it uses FFR/ FFA messaging as the method of communication between systems, although there are many ways of getting the information. Time savings seem to be the biggest benefit as the same shipment details used to initially generate pricing is also then used for customer pricing quotations, and then sent in to the airline or GSA - eliminating duplicate and triplicate entry. Galindo says add to that the ease of being able to process all bookings from the same
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platform, and you have made forwarders’ “lives worlds easier”. He says it has also launched a new product within its interface called the ‘Online Shop’, allowing forwarders to give customers access to their own pricing details in a safe and secure online environment. WebCargo has gained the ISO 27001:2013 certification and Galindo says this is an integral part of what it does. Galindo feels the biggest challenge is a lack of industry standardisation. He explains: “A technological development that works extremely well in one country, may have little to no positive influence in another for a variety of factors. We believe where other types of technology fall short is that there is no “one size fits all” solution.” He adds systems should “work for them” not the other way round and operators need to be the ones in the “driver’s seat” of any technological innovation, while there is resistance to new technology as many have closed minds and want to do things the way they always have, while some are sceptical due to data security concerns. As for if airfreight has fallen behind in technology adoption, he says pricing, structure, and rate management is “light years ahead” of sea freight which is more advanced for documentation.
CARGO TECHNOLOGY
Technology adoption too slow leading to market leakage
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echnological advancements in air cargo are increasingly being adopted, but the industry is still lagging behind where it should be, while the need for upgrades has never been so pertinent. Mercator’s chief product and technology officer, Brendan McKittrick tells Air Cargo Week that new and emerging technologies are disrupting the air cargo landscape and fueling the urgency for digitisation. He says “countless” opportunities exist for carriers to take advantage of advances in cloud computing, the Internet of Things and mobile technology, open messaging platforms, and data analytics to transform business and define the future of air cargo. McKittrick says Mercator for its part, is always looking to enhance its products: “We constantly augment our existing enterprise product set with new and emerging technologies to enhance user experience and effectiveness, as well improve revenue potential, reliability, operational efficiency, cash flow, partnership opportunities, and regulatory compliance. “We are positioned for expansion, and further investments planned for the near future in this space further solidify our commitment to the broader industry.” Every day, over 70,000 tonnes of cargo are processed with Mercator products, which the firm says enable customers to access and analyse large streams of data and deliver insights that drive value across the supply chain. McKittrick says Mercator’s acquisition of Catapult, was an investment to provide the right extension into the ocean and ground carrier market and is key to Mercator’s strategy of optimising critical transportation processes through a combination of technology, managed services, analytics, and data management. “With Catapult, we will enable enterprises to make smarter, real-time decisions at that point in the transportation lifecycle where accurate and fast quotation can make the difference between profit and loss on a shipment,” McKittrick says. Mercator’s RAPID Cargo Revenue Accounting product is used by 30 airlines and aims to support their “tactical, operational and business decision-making”.
collaboration and information transparency in the fragmented air cargo supply chain. “However, to be truly successful, air cargo stakeholders must go paperless and convert traditional paper-based processes to digital information. Yet, the industry’s main initiative to take
the paper out of air cargo and to replace it with the exchange of electronic data and messages remain the e-AWB and e-freight projects, which have involved a lengthy process of implementation owing to the scope, scale, and structural complexity of the air cargo supply chain - notwithstanding the need for investments in technology by all players for its success. “Only once paper-based data has been converted to digital data, can it be converted to valuable information, intelligence, and predictability that will drive air cargo competitiveness.” Mercator, is the International Air Transport Association’s strategic partner for e-Cargo, and is working to up digital penetration and adoption of e-AWB and e-freight. McKittrick believes the prospect of upgrading to a new technology platform brings significant opportunities, but warns: “They might also bring about potential risks and challenges, which if not effectively dealt with can undermine existing performance. “Airlines are not built to take on big risks, and as such initiatives are not frequent or common. The core to a successful migration is to treat the upgrade as a change management program from its onset and ensure it covers every single component of change, planning and transition.”
Rapidly changing industry
McKittrick says key capabilities and benefits include the determination of sources of revenue that help drive commercial strategies, maximise cash flow through accurate and timely billing, declaration of accurate and reliable revenue while adhering to strict financial controls, protection of revenue by auditing sales for potential revenue leakages, monitoring and addressing potential bad debts and staying ahead of SIS and tax billing rules. In a rapidly changing industry, he says Mercator’s air cargo and logistics products enable carriers to reduce cost in two ways. Firstly, productivity benefits are achieved through automation and simplification of organisational business processes that eliminates paperwork and reduces manual actions, rework, disputes, and potential bad debts, while allowing the flexibility to quickly respond to emerging and innovative business opportunities. Secondly, asset utilisation is maximised, and via segmentation, monitoring, steering and control, as opposed to expenditure on unnecessary CAPEX costs in purchasing new ones. This also applies to aircraft capacity, warehouse and related equipment, and unit load devices. The air cargo industry is moving too slow on technology for many and McKittrick feels despite the rate of technological advancement being “exponential”, the rate of adoption of newer generations of technology has been slow, leading to a wide “expectation chasm” over the years. He explains: “In comparison, though slower adopters on the onset, other modes of transportation have been quick to uptake the technological innovations that facilitated secure, reliable, and profitable transportation. This, along with the cost differential between air and other modes of transport, has led to a growing trend in market leakage for air cargo. “There’s no doubt that air cargo leaders recognise this threat, and are quickly responding by accelerating the rate of emerging technology implementation.” Many legacy systems have been ditched in favour of digital technologies to improve performance and meet changing market needs. McKittrick says in future, advancements will be needed in technology to help the industry not only survive the difficult conditions of today, but thrive when trade volumes grows to earlier expectations. He notes: “The industry has responded with its intent to establish a central data backbone as one key mechanism to improve
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CARGO GATEWAY DUBAI Volumes into Dubai slow but growth set to be maintained
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ubai continues to be one of the world’s fastest growing and centre points of air cargo as new routes and facilities are opened, but volumes have slowed a bit. Dubai International Airport (pictured) saw tonnage continue to grow steadily in May reaching 226,916 tonnes compared to 216,712 tonnes in May 2015, a rise of 4.7 per cent. During the first five months of 2016 Dubai International handled 1,055,850 tonnes, a four per cent uplift on the 1,015,482 tonnes in the same period in 2015.
However, it was not so positive at Dubai World Central though as volumes fell in the first quarter (Q1) of 2016, to 198,295 tonnes compared to 213,006 tonnes in Q1 of 2015, down 6.9 per cent. Operator Dubai Airports’ chief executive officer, Paul Griffiths said despite the fall he was pleased with the growth of DWC and he expects growth, based on two key factors: “First is the planned move of flydubai’s entire operation to DWC by end of 2017. Second is the sheer convenience of using the facility.” Meanwhile Dubai cargo carrier Emirates SkyCargo launched a weekly Hong Kong – Delhi – Dubai Boeing 777 Freighter services
on 1 June with a capacity of 100 tonnes. The airline is expecting key exports from Hong Kong to Delhi will include pharmaceutical raw materials, electronics and machinery. Key exports from Delhi, will include leather goods, garments, pharmaceuticals and perishables. The Delhi service will compliment Emirates SkyCargo’s twiceweekly Shanghai – Mumbai – Dubai flights and 18 services from Hong Kong and Dubai. Emirates has also enhanced its bellyhold network in China with flights a week to Yinchuan, which then flies onto Zhengzhou using a 777-200LR with 14 tonnes of cargo capacity. Popular commodities are expected to be electronics such as mobile phones, and from Yinchuan it is expected to move agricultural products such as goji berries and cashmere. Emirates is to also increase capacity to Africa by upgrading its four times a week Dakar services to Boeing 777-300ERs from 2 September, adding an additional 80 tonnes per week. Emirates says Senegalese exports include seafood for destinations including Athens, Larnaca, Beirut, Rome and Hong Kong, along with vegetables for European markets. Imports include oil industry equipment from the UAE, textiles from Asia, electronics from East Asia and Europe, and garments from India.
Rhenus sets up in Dubai
DUBAI continues to attract new investments in infrastructure from freight forwarders and other part of the supply chain as its appeal continues to grow. These include the Rhenus Group, which has now set up its own country organisation in the United Arab Emirates (UAE) and has opened its first business site in Dubai. It operates there through Rhenus Logistics Gulf DWC, a wholly owned subsidiary of the Rhenus Group, which has been operating since 1 May 2016. Rhenus Logistics Gulf DWC specialises in handling air and sea freight and providing customs clearance for imports and exports. Other products include project business, warehousing and road transportation to the Gulf Cooperation Council countries. Rhenus Logistics Gulf DWC managing director, Gerrit Kloezeman says: “By establishing a new national company with its own management structures, it’s possible to develop new transport routes and expand our spectrum of products.” The business site is located in Dubai Logistics City, one of six clusters in the Dubai World Central (DWC) free trade zone. Different modes of transport, production and logistics space are all linked to each other through the strategically favourable location between what will be the world’s largest airport, Al Maktoum International Airport, and the Jebel Ali Seaport. Once the final stage of the expansion has been completed at Al Maktoum, the facility is aiming to handle 16 million tonnes of freight and 220 million passengers every year. Kloezeman adds: “We’ll particularly focus on import business at our company. Our conditions for air and sea freight are very attractive, particularly to Dubai; and we’ll also enable other business units to obtain a foothold in the market here.” The services are provided for the whole of the UAE and Rhenus has also earmarked developing in more areas within the Middle East. “We’ve been able to expand our freight forwarding business to include Doha in Qatar earlier than planned because of the high level of demand,” Kloezeman explains.
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PHARMA NEWS ROUND-UP Vaccines and oncology drugs driving IAG cool chain growth
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AG Cargo’s cool chain product Constant Climate continues to thrive and pharmaceuticals are the main driver. The carrier’s global head of pharmaceuticals and life sciences, Alan Dorling says the cool chain sector has seen a double-digit volume uplift over the past 12 months. He explains: “Over the past year we have opened up five new Constant Climate-enabled stations, most recently in Dusseldorf and Kuala Lumpur. This has allowed our pharmaceutical customers to reach more key markets in the most time efficient way.” IAG’s Constant Climate product is a significant part of its business and it now has 110 network stations. In the first quarter (Q1) this year it posted a 22 per cent increase in volumes compared to Q1 of 2015, which Dorling puts down to the quality of service it offers and well-trained staff. Dorling says: “We invest in our people to ensure they can meet the needs of our customers at all times. The temperature-controlled sector needs people who understand the nature of the medicines they are shipping. It is only through an understanding of the properties of the
drugs being transported provisions to maintain quality can be made.” He says three classes of pharma are driving growth. The vaccine market - from governments increasingly taking a more preventative approach to immunisation. It is seeing significant volumes of vaccines exported from India and into Latin America and Mexico. Secondly, the continued rise of diabetes in developing and emerging countries has led to a growth in insulin being shipped across the world. Finally, it is seeing more demand for oncology drugs used for the treatment of cancer. IAG’s best performing pharma export hubs are Hyderabad and Mumbai in India.
They export to the US with most shipments going to Chicago, Philadelphia and New York. They also export to Asia Pacific and Europe, which are important lanes. Dorling says shipments from Singapore to Latin America, predominantly to Sao Paulo, Rio de Janeiro and Buenos Aires, also represent vital trading lanes for cool chain products, while in Europe strong hubs are Barcelona, Brussels and Amsterdam exporting to the US and Latin America. From the UK, IAG primarily exports to the Middle East, the US and Far East, while it is seeing an increase in oncology products to Japan and Korea. There are ongoing battles in such a specialist cargo sector, Dorling explains: “One of the main challenges is ensuring all personnel across the supply chain are operating with the correct level of knowledge needed to safely and effectively ship these high value products. It’s true to say a supply chain is only as good as its weakest point so ensuring a unification of understanding is vital for the safe shipment of these products.”
Pelican eyes service centre expansion THE strongest demand for temperature-controlled packaging is between the European Union (EU) and North American trade lanes. This is the view of Pelican BioThermal’s director of strategic development global transport and logistics, Ira Smith (right) who says the most amount of pharma cargo is moving in that direction. He adds: “However we do know that there are, and will continue to be emerging markets. Those markets are China, India and Brazil. They will also have to adhere to what is becoming a given set of global GDP’s (good distribution practices).” Pelican provides pharma firms with passive thermal protection packaging products for the transport of vaccines, blood supplies, tissue, insulin, and all types of medicines. Smith says with the advent of Good Distribution Practices (GDP), there is now a strong incentive especially within the EU for product to be shipped as labeled. He adds: “Because of GDP rulings within the EU, traditional pharma products that used to go without temperature protection are now demanding temperature protection to keep product at controlled room temperature.” Smith says Pelican designs packaging always with the “patient in mind”. All the firm’s temperature-controlled transport packinging is entirely passive, and its target markets have traditionally been vaccines, specialty medicines, testing kits, blood products, and clinical trials. Smith says: “These markets continue to require highly engineered transport pack-
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aging due to the sensitivity of the product itself, as well as the very high dollar value of the goods being transported.” Pelican’s most important target is the “bulk transport market”, which Smith says are often dominated by a few “active container” companies, but pharmacy companies are embracing their line of totally passive pallet shippers. Pelican works closely with supply chain partners; forwarders, airlines, 3PLs, specialty couriers, and contract logistics companies, and Smith says co-operation is vital between all parts of the chain. And he feels one of the key challenges is getting the customer to understand the concept of reusable packaging: “A large part of our business strategy is about trying to be good stewards of the environment. There is a growing trend for pharma manufacturers to drive logistics costs down while maintaining expected quality during transport. Because of our advanced Credo technology we now have a proven alternative to more expensive active containers.” Pelican has opened rental program centres and Smith says within the next year it will be launching three more service centres, adding: “These will be primary rental locations being capable of performing cleaning, inspection, refurbishment, as well as accepting and dispensing of our entire product line. We also have temperature control facilities to pre-condition our rental units. The goal is to be in every key region where pharma companies are shipping.”