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The weekly newspaper for air cargo professionals Volume: 21
Issue: 11
19 March 2018
IATA sets out four key priorities for the industry
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ccelerating digitisation of the supply chain, enforcing lithium battery regulations, more efficient trade facilitation and developing the next generation of leaders are the four priorities for the air cargo industry. Speaking at the International Air Transport Association (IATA) World Cargo Symposium in Dallas, Texas on 13 March, IATA global head of cargo Glyn Hughes highlighted the four issues. He says electronic air waybill (e-AWB) adoption has been slower than the industry would like; that governments need to take stronger action against rogue shippers breaching dangerous goods regulations including significant fines and custodial sentences; customs procedures must be streamlined and the industry must attract the best and brightest young professionals to lead air cargo in the future. Hughes (pictured) says the air cargo industry had an exceptional year in 2017 with nine per cent growth, and demand is expected to increase by 4.5 per cent in 2018 with great opportunities in e-commerce as well as transporting time and temperature
sensitive goods such as pharmaceuticals. He says: “But we must accelerate the modernisation of processes, enforce regulations for the safe transport of lithium batteries and improve the efficiency of trade facilitation. Longer-term, we also need to inspire the next generation of talent. The air cargo industry has agreed to focus on these key areas and we must follow through.” E-AWB penetration has reached nearly 53
Qatar Airways Cargo and Kuehne + Nagel (K+N) have received their continuing certification from Cargo iQ’s auditor, Menzies has joined the group as a new member and Emirates SkyCargo has been awarded its first certification since joining in 2016. SGS carried out an independent audit for Cargo iQ, with members undertaking a two day on site visit to demonstrate their processes and services are compliant with quality standards for the worldwide air cargo industry, as created and implemented by the Cargo iQ membership. Cargo iQ executive director, Ariaen Zimmerman says: “The response of our members and the industry to our new external audit has been overwhelmingly positive. In an industry which can fall into a cycle of being inward-facing, the value of external validation on our processes and procedures is clear.” K+N received two certifications, one for its forwarding services and for its internal IT platform for Cargo iQ, the Cargo iQ Data Management Platform. Global head carrier and
gateway air logistics, Max Sauberschwarz says: “Continuous process optimisation is a crucial part of our air freight business strategy. We are delighted to be the first forwarder who has received the new Cargo iQ Phase 2 certificate” Qatar Airways acting chief officer for cargo, Guillaume Halleux says: “Air cargo is such an interconnected industry that no success is possible without a consistent and coherent collaboration by all parties in the logistics chain. Emirates SkyCargo joined the group in 2016 and has integrated Cargo iQ shipment cycle management standards as the basis for its live shipment planning and tracking of cargo. It has invested in a Cargo Operations Control Centre to monitor shipments in real time with alerts being automatically generated in real time when there is a deviation along the route. The group has also launched an Air Cargo Intelligence Hub that gives members real-time access to their performance data, enabling them to develop new products and improve processes.
AFKLMP GOES ON A DIGITAL JOURNEY MARKET STARTS NEXT GENERATION TRANSITION AIRLINES LOOK TO CREATE PARTNERSHIPS
per cent and the industry is targeting 68 per cent by the end of 2018 on enabled trade lanes. Goods are taking too long to clear customs and IATA would like countries including Algeria, Bangladesh, Iran, Uzbekistan and Vietnam to implement the Montreal Convention 1999 to enable digital customs documentation. IATA is also calling for revisions to the Kyoto Convention of the World Customs Organization to facilitate smart border solutions.
Cargo iQ welcomes new member and gives out certificates
60 SECONDS WITH ATC AVIATION’S INGO ZIMMER
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Turkish finalises Dreamliner order BOEING and Turkish Airlines have finalised an order for 30 Boeing 787-9 Dreamliners to meet growing demand at the third Istanbul airport. The firm order for 25 aircraft with options for five more 787s was first announced in September, and makes Turkish Airlines the 71st customer to buy the 787. Turkish Airlines chairman of the board and the executive committee, Ilker Ayci says: “We are pleased to finalise a landmark agreement that will bring significant benefit to Turkish Airlines and Turkey’s aviation industry. This firm order adds the 787 Dreamliner, one of the world’s most stateof-the-art airplanes, to our ever-expanding fleet in 2023, our Republic’s 100th year.” Boeing Commercial Airplanes president and chief executive officer, Kevin McAllister says he is confident that Turkish Airlines will appreciate the 787-9’s fuel range and efficiency. He says: “We are proud to extend our decades-long partnership with Turkish Airlines and we welcome them to the growing group of elite airlines who have made the 787 Dreamliner the most preferred mid-sized twin-aisle airplane today.” The 787-9 is six metres longer than the 787-8 and has a range of up to 7,635 nautical miles.
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NEWSWEEK Exhibitors flocking to transport logistic China
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emand for transport logistic China is exceeding all expectation as exhibitors and visitors plan to flock to Shanghai to hear how the market will evolve. The show will take place from 16 to 18 May 2018 at the Shanghai New International Expo Centre (SNIEC) and organisers Messe Muenchen says more international exhibitors have already registered at this stage than two years ago. China is pressing ahead with innovations and has increased financial subsidies for projects that accelerate the process of digitisation within its “Made in China 2025” strategy. The nation’s trading strategy known as “One Belt – One Road” involves massive investment in infrastructure and visitors to transport logistic China will have an opportunity to obtain information and exchange ideas about these developments and trends in digitisation and the New Silk Road. Messe Muenchen member of the management board, Gerhard Gerritzen says: “Companies dare not lose sight of the Chinese market. New developments are taking place too quickly. The two topics of digitisation and the New Silk Road provide the logistics industry with a unique opportunity to adopt a strategic position
and become involved at an early stage. “It’s now essential to be present locally in order to conclude possible cooperation arrangements.” There will be four shows in one at transport logistics China with the main event featuring air cargo China, perilog China and the truck & trailer China exhibitions. The trade fair opens its doors at 9.00am on each day.
Freightalia partners with Pangea
FREIGHTALIA has partnered with the Pangea Group to give its network of more than 300 independent freight forwarders access to an automatic quoting system to help engage with exporters, importers and agents. The white label system is an automatic system for freight quoting and rate management that allows self-customisation from the platform branding to the system notifications. Each freight forwarder has its own Freightalia domain that can be completely incorporated into their current website, and the system is primarily focused on sales, the main bottleneck for a freight forwarder, which presents elevated costs for the company. Pangea says that as customers demand faster pricing, a radical change in digital work systems is necessary as it is no longer feasible to wait for the prices from a supplier in order to send a quote to a potential client. The network says it is necessary to anticipate the input of the rates from suppliers, airlines and shipping companies in an updated and well-organised system, and effective management of rates is the first stop to make the pricing process become automatic and instantaneous.
ACW REWIND
TWO contrasting stories about freighter aircraft - the green light given by EU to DAS Air Cargo’s DC-10Fs and the ill-fated A380F
EU lifts ban on DAS DC-10Fs Vol 10, Issue 10 12 March 2007 LONDON Gatwick and Entebbe-based DAS Air Cargo has been cleared to resume all-cargo flights into the European Union after taking the required steps to improve its safety measures. The carrier said it had “worked tirelessly” to resume its flights into Europe and with the “full regulatory support of the Ugandan Civil Aviation Authority” it has addressed all the safety concerns raised. LESS than 24 hours after a UPS spokesman told ACW that “we will make a decision this year” on the future of the company’s acquistion of 10 A380 freighters, the express logistics supplier announced its intent to cancel the order. “We had felt 2012 was a reasonable estimate of when Airbus could supply the plane,” said David Abney, UPS CEO and president of UPS Airlines.
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Brussels to invest €100m in new buildings
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russels Airport Company will invest €100 million over three years in ultra modern logistics buildings to strengthen its position as a vital logistics cluster in Belgium. The buildings will cover 50,000m2 on the West side of Brucargo with direct apron connection for four different companies, with Kuehne + Nagel, dnata and WFS among the companies making use of these buildings for shipping, packaging and stocking cargo. The new infrastructure will be specifically suited for the handling of high-quality and temperature sensitive products including pharmaceuticals, products which are important to Brussels Airport and Belgium as a whole. Brussels Airport will also redevelop existing handling buildings that have direct access to the tarmac, with the building Swissport is active in being systematically transformed into a modern and energy efficient storage and office space with a surface area of 30,000m2. An additional new building will provide a secured area for the specific transport of extremely valuable goods, with Brinks moving into this building in 2019. Part of the investment will go to an exclusive animal border
inspection area of more than 2,500m2, fitted out in various temperature and/or light areas to create the perfect environment for all types of animals. Brussels Airport head of cargo and logistics, Steven Polmans says: “In recent years we have proven our commitment to cargo and we reconfirmed this in our Strategic Vision 2040 launched last year. This investment is another step in realising this ambition together with all our stakeholders and customers.”
NEWS WEEK WORLDNEWS
IAG Cargo has welcomed MASkargo as the ninth carrier in its Partner Plus programme to interline on each other’s airlines on a commercially booked basis. The partnership comes after Air New Zealand joined the programme in November 2017. The other existing members are American Airlines Cargo, the Avianca Group, China Southern Airlines, Finnair, Japan Airlines, LATAM Airlines and Qatar Airways. QATAR Airways Cargo has extended its cargo handling contract with Worldwide Flight Services (WFS) at Paris Charles de Gaulle Airport. In addition to cargo handling services, WFS will now provide ramp transportation for the airline, moving cargo to and from the warehouse and the aircraft operating Qatar Airways’ three flights a day from Paris to Doha. This follows EVA Air’s decision to extend its contract with WFS in Paris to also include ramp transportation as well as cargo handling for its daily flights to Taipei.
ACL keeps track of ULDs ACL Airshop and CORE Transport Technologies are continuing to roll out their Bluetooth enabled logistics technology to the global air cargo industry. Automated tracking of unit load devices (ULD) for air cargo gives carriers and their shipping customers real-time visibility and new efficiencies. The two companies have concluded extensive field tests with international air carriers and an array of multiple ULDs, with 100 per cent tracking reliability. Regulatory aspects have been addressed and the big data and predictive analytics are managed in the cloud to military equivalent security standards. ACL Airshop executive vice president, Wes Tucker says: “We listened to our customers, and these technical enhancements are the result. Now we are rolling it out. Airlines will be able to track the actual cargo loads by the container and pallet, with real-time ‘dot on the map’ monitoring and status reports.” The companies say the cost of Bluetooth real-time tracking is modest compared to the many benefits it yields, and the continued roll-out is expected to be brisk.
Airlines fined for fixing fuel surcharges in India THE Competition of India (CCI) has fined three airlines for fixing and revising fuel surcharges on cargo operations. The order was passed on information filed by Express Industry Council of India against Jet Airways, InterGlobe Aviation, Spice Jet, Air India and Go Airlines alleging cartelisation. The CCI says that the airlines acted in a concerted manner in fixing and revising fuel surcharge rates, with Jet Airways receiving a 39.81 crore penalty ($6.1 million), InterGlobe was hit with a 9.45 crore fine and Spice Jet received a 5.1 crore penalty, and all were issued with a cease and desist order. While imposing penalties, the Commission applied the principle of relevant turnover and based penalties on the revenue generated from air cargo transport services. The CCI considered the financial positions of the airlines at the time, noting that the fuel surcharge constitutes about 20-30 per cent of cargo revenue, with the penalty being imposed at three per cent of average relevant turnover over the last three financial years. The commission says it does not approve of airlines using fuel surcharges as a pricing tool to mitigate the fuel price volatility.
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NEWSWEEK dnata to implement iCargo terminal operation suite across the globe
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nata has signed a contract with IBS Software to implement the iCargo terminal operation suite across all of its stations. It is the first ground handler to launch a global roll out of iCargo and have its operations on one united platform using unified processes. The system is expected to be gradually implemented by 2020, and iCargo will have a user base of over 5,000 staff members across 27 stations, in 10 countries from the USA to Australia, interfacing seamlessly with a host of other system applications within the IT landscape of the business. Dnata senior vice president UAE cargo & DWC airlines services, Bernd Struck (pictured second left) says: “We are always in pursuit of delivering exceptional service and improving safety and efficiencies. With iCargo as our technology platform, we are confident that we can stay agile and adapt to the fast changing needs of our customers across the globe.” IBS Software senior vice president and head of airline cargo services, Ashok Rajan (pictured left) says: “iCargo is a strong, stable and modern IT platform widely accepted to be best suited to
bring about transformational change in the airline cargo industry. Over the years, significant investment has gone in to give iCargo a strong product roadmap, continuously incorporating technology led innovation and building a collaborative community model of development.
“I am extremely pleased and excited to welcome dnata, one of the fastest growing Ground Handling companies in the world, as our latest customer for iCargo and look forward to a mutually beneficial long-term partnership.” Through iCargo, dnata will automate key business and operational functions including ULD management, quality monitoring and mail management with the single integrated platform. The companies say that real-time availability of operational information through iCargo will help provide actionable insights that will greatly improve revenue generation and operational efficiencies. Three airlines have also signed up to use IBS iCargo so far this year. Lebanon’s flag carrier Middle East Airlines signed up in January, followed by American Airlines Cargo and Korean Air in February. The airlines will all replace existing legacy systems and use iCargo to upgrade various areas including revenue and yield management, product management and real time shipment monitoring.
AFKLMP goes on a digital journey AIR France KLM Martinair Cargo (AFKLMP) is continuing its digital transformation journey with the implementation of the Accenture Freight and Logistics Software (AFLS) platform. The AFLS solution integrates all the commercial functions across Air France and KLM including booking, offer, pricing, rating, capacity & revenue management, flight planning and airway bill control, and will replace AFKLMP’s legacy systems with the AFLS Integrated Commercial Suite. The AFLS Flight planning tool brings optimisation focus for the short-term capacity management window and the AWB control tool enables automatic and guided dis-
crepancy resolution between the commercial order and the operational shipment to prevent revenue leakage. AFKLMP Cargo vice president for customer service, Wijnand de Groot (pictured) says: “With Accenture’s software, we are able to leverage the strength of our network to offer better solutions to our customers. The solution has simplified and transformed our system landscape, bringing tangible benefits on our transformation journey.” Accenture Freight and Logistics Software managing director, Ganesh Vaideeswaran says: “The simplification, transformation and integration of core systems and processes should enable AFKLMP Cargo to improve profitability and further enhance customer service.”
CHAMP joins Air Cargo Belgium CHAMP Cargosystems has joined the Air Cargo Belgium community to share its insights in the IT sector and collaborate more closely with members. Air Cargo Belgium sets out strategic and ambitious goals for the development of air cargo on behalf of supply chain stakeholders. The community of over 100 air cargo organisations implements procedures for improved operations and takes the lead in projects by having contact with all stakeholders and government agencies to address topics of common interest. CHAMP Cargosystems chief executive officer, Arnaud Lambert says: “CHAMP is right at home in an organisation
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like Air Cargo Belgium. The wider organisation is filled with expertise and knowledge throughout the entire supply chain, with the common driver of cooperation, innovation, and shared success.” Air Cargo Belgium chairman, Steven Polmans adds: “As a well-respected member of the industry, the community has much to benefit from its knowledge and leadership in air cargo supply chain IT. The biggest progress and change in our industry in the years to come will be in the area of IT and digitisation, I am sure CHAMP can help us as a community to take the lead in this change and innovation.”
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RUSSIA & EASTERN EUROPE
Sheremetyevo predicts surge in future freight volumes
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oscow Sheremetyevo International Airport’s cargo operator, Moscow Cargo will start constructing a second terminal as volumes are expected to surge in the coming years. The Russian capital’s primary airport is expecting to handle more than 700,000 tonnes of cargo annually by 2024, and to achieve this goal the engineering and construction of a second cargo terminal with a capacity of 380,000 tonnes per year will commence in 2018. Sheremetyevo International Airport chairman of the board of directors, Alexander Ponomarenko says: “The significant growth of cargo turnover at Sheremetyevo Airport and the rising demands of cargo airlines are owing to the worldwide trend that demonstrates a major increase in air freight traffic volume.
Thus, it determines strategic development goals of Sheremetyevo International Airport: to establish itself as the leading European hub for global cargo flows. “We face and welcome this challenge together with our key partners: PJSC Aeroflot, Volga-Dnepr Group and other cargo operators. By 2024, we expect to handle more than 700 thousand tonnes of cargo annually. To achieve this ambitious goal, the engineering and construction of the second cargo terminal with a capacity of 380 thousand tonnes per year is set to commence in 2018.” In August 2017, Russia’s Federal Agency of Air Transport, Rosaviatsiya issued the permit to put the largest cargo terminal in the country in operation covering an area of 43,000m2 with an annual capacity of 380,000 tonnes. Moscow Cargo says this terminal significantly exceeds the level of technical equipment at other similar facilities in Russia and the cargo complex is equipped with a system for automated storage and processing, manufactured by Lodige, with automation levels hitting 60 per cent. Domestic cargo flight operations were suc-
cessfully moved to the new terminal in two months. The new terminal handles about 250 tonnes per day and additional staff training programme on systems and equipment operation was introduced to instruct personnel on running the new machines.
Aeroflot cargo revenue rises in 2017
CARGO revenue at Aeroflot rose more than 30 per cent in 2017 helped by the addition of new wide-body aircraft and a major increase in cargo and mail volumes. The sector’s revenue increased by 31.3 per cent to 16.5 billion roubles ($289 million) and cargo and mail volumes were up by 32.8 per cent to 273,359 tonnes. Total revenue at Aeroflot increased by 7.5 per cent to 532.9 billion roubles but prof-
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its were down 40.6 per cent to 23 billion roubles. Cargo and mail volumes have continued to rise in January with 27.2 per cent to 21,380 tonnes with double digit growth both on domestic and international lanes. Domestic cargo and mail increased by 21.2 per cent to 8,310 tonnes and international volumes by 31.3 per cent to 13,070 tonnes.
RUSSIA & EASTERN EUROPE
DHL to make Vienna the gate to the east with 60,000sqm airport hub
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HL has purchased 60,000 square metres of land at Vienna Airport to act as a freighter hub for Eastern Europe and open up the region to all modes of transport. The contract was signed by DHL Global Forwarding and DHL Freight, and starting in the summer of 2018, the DHL Campus Vienna Airport will be developed in the Fischamend district. The company says that by establishing a joint site, synergies between land, air and ocean transport will be exploited more effectively. DHL Freight chief executive officer (CEO), Uwe Binks says: “The site is in proximity to Vienna airport and as such strategically well-located, providing us with low-threshold access to Eastern European markets and Germany. Through
this project, we will establish an important new logistics hub together, creating a gateway into and out of the east and enabling us to further grow our volumes.” Both divisions will each build a warehouse including office buildings on the new site, connecting them to the airport and linking them to its infrastructure, with the three present DHL Global Forwarding and DHL Freight locations being merged on the new campus. The new site, which will border the A4 motorway that connects the airport with Vienna city centre, will have a higher number of docks and will also have cross-docks for the first time. DHL Global Forwarding managing director for Austria, Christoph Wahl says: “Located directly at Vienna airport, Fischamend perfectly meets our requirements for the DHL Campus, through which we intend to bundle our expertise, improve our service, and consequently further strengthen our market position in Austria.” DHL Global Forwarding CEO for Eastern Europe, Hermann Filz adds: “Good connections to Eastern Europe are particularly crucial for us. Thanks to our shared base with DHL Freight and the proximity to the airport, we will be able to serve this market even more effectively.” The warehouses and office buildings will not only meet the highest security standards but also comply with environmental protection requirements, and the sustainable design and use of renewable energies will contribute to DHL’s goal of reducing logistics related emissions to zero by 2050.
Budapest looks to America and handles record volumes
BUDAPEST Airport has handled record cargo volumes and is preparing for further growth helped by new flights to the USA. The Hungarian hub handled 127,145 tonnes of cargo in 2017, up 13.4 per cent on the previous year and 39.1 per cent on 2015, with imports making up 47.8 per cent of volumes and exports the other 52.2 per cent. E-commerce has been booming, with Budapest Airport director business unit property and cargo, Rene Droese saying: “Our cooperation agreement with STO Express and EKOL last year is testament to our continuous commitment to strengthening links between China and the European Union. As a result of being designated the preferred hub for air cargo by STO Express, e-commerce is set to experience a notable upswing at Budapest.” He also says: “Thanks to our development programme, we will be able to cover the entire cargo catchment zone, from Ukraine
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to the Czech Republic, and from Poland to Bulgaria, where the relevant air cargo industrial production is booming.” Budapest’s belly cargo network is scheduled to grow with LOT Polish Airlines launching two flights per week to Chicago and four a week to New York, while American Airlines is set to start a daily service to Philadelphia. Droese says: “We expect further growth of 20,000 tonnes belly cargo capacity annually thanks to the belly capacity on flights from Qatar Airways, LOT Polish Airlines, and American Airlines.” Budapest opened two new express facilities covering 16,000m2 in the summer of 2017 as part of its BUD:2020 Development Programme, and a 20,000m2 freight centre called Cargo City will be handed over in the second quarter of 2019, expanding the hub’s cargo handling capacity to 250,000 tonnes per year.
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FREIGHTER CONVERSIONS
EFW keeps busy extending aircraft lives
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onverting an aircraft remains the best way to maximise its life, potentially resulting in another 20 years of life, EFW director sales aircraft conversion, Thomas Centner tells Air Cargo Week. He says that some converted aircraft can reach almost 40 years of age, meaning another 15 to 20 years of life after leaving the passenger fleet. In Centner’s opinion, a freighter aged 18 years or older is more valuable than a passenger aircraft as the latter will be coming close to being phased out. Passenger to freighter conversions are usually the cheapest and quickest way to gain access to freighter aircraft. Centner explains: “In the narrowbody segment conversions are the only way to get
freighters as there are no production solutions available from OEM’s. “In the medium widebody segment about 65 per cent of all freighter deliveries are conversions because the typical small to medium utilisation (mainly in Express industry) does justify the high fix cost of new built freighters.” EFW is most active in the narrow and medium wide-body segments. The main customers for freighter conversions are express operators, combination carriers and lessors. Centner says: “The largest part of our customers is in the express business, means they purchase their preferred aircraft for conversion. The second group are combination carriers which own their conversion candidates already. The third group are Lessors which become increasingly interested to find a second
life for their ageing aircraft.” EFW has been remaining busy; after ramping up A300-600P2F/A310-300P2F it was converting up to 20 aircraft a year, and it is targeting the same capacity on the A330 and A320/321 programmes, meaning up to 40 conversions could take place a year at EFW and its partner ST Aerospace’s facilities. The A330-300P2F was certified in November
2017 and released to service in December 2017 to launch customer DHL. It will be joined by the A330-200P2F by the end of June 2018 and the A321P2F after that. Centner says: “The next prototype aircraft is the A321P2F which is entering the hangars in October 2018 and targeted for redelivery about a year later. Hectic times but good busy times for EFW and ST Aerospace…”
HAECO delivers first 757 to YTO HAECO Xiamen redelivered YTO Cargo Airlines’ first Boeing 757-200 converted freighter with Supplemental Type Certificate partner Precision Aircraft Solutions in December 2017. Precision and HAECO have been partners on the 757-200 programme since 2010 and have completed 18 passenger to freighter conversions. At the time, YTO chairman, David Su said: “The introduction of Boeing 757 in the YTO fleet will better facilitate our future expansion into the domestic trunk routes and cross-border e-commerce business.” Precision Aircraft Solutions president, Gary Warner said: “Our combined strengths
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in engineering design, installation and heavy maintenance, have produced a high quality and reliable product. We look forward to building a substantial fleet of converted Boeing 757 for YTO.” HAECO Xiamen chief executive officer, Summit Chan added: “This is a special occasion as we mark the beginning of our collaboration with YTO. “The parties worked seamlessly together to redeliver YTO’s first Boeing 757-200 PCF in a timely and efficient manner. We look forward to continuing the close co-operation with our partners in this burgeoning market segment.”
FREIGHTER CONVERSIONS
Market starts transitioning to the next generation
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ith the surge in global freight volumes in the first half of 2017 and the industry experiencing its fastest pace of growth since 2010, there is potential for aircraft conversions to provide important capacity. Current market conditions still favour older generation aircraft being converted. However, the market is facing a transition to new-generation converted freighters for the long term. That is the opinion of Leatherhead, England-based aviation consultants IBA head analyst – commercial and ageing aircraft, Jonathan McDonald (pictured below). He expects “an acceleration for replacement and growth from 2020, but not before, due to current high market value of new generation feedstock aircraft for conversions.” In IBA’s August 2017 White Paper on aircraft conversions, McDonald writes that new production freighters are available only in the widebody category, above 40 tonnes payload, and include the B747-8F, B777F, B767300ERF and A330-200F. “Active cargo conversion programmes are only for medium widebody aircraft, from 40-80 tonnes payload, and include the B767300ER and the A330-200/-300 under development,” he says. “In the large widebody aircraft, above 80 tonnes payload, the last conversion programme was for the B747-400 with one B747-400 Combi to be converted by IAI for Asiana in 2017.” He notes the B777-200ER/300ER conversion is not yet launched and has been reportedly been under evaluation for over five years.
contract was followed by a Letter of Intent (LOI) with Guangdong Aerocity (GDA) for a potential order of 10 A320 P2F conversions. There is industry talk of converting aircraft to one-pilot operation. Convey says: “This is the first step in introducing drones to our system. Tesla trucks only have one seat as the truck can drive
on its own from point to point. It is regulations that keep the drive behind the wheel and the same will be true for aircraft.” Asked by Air Cargo Week whether there are any aircraft that cannot be converted, Convey says: “No. Enough money and time, you can convert a can.”
Narrowbody shortage
Currently there are no narrowbody, below 40 tonnes, production freighters offered by any Original Equipment Manufacturer (OEM) except for B737-700C (Convertible) at special order. Two were delivered to Air Algerie in 2016. The main barriers to an OEM offering a new narrowbody production freighter is the availability of older narrowbody passenger aircraft that can be at lower prices. If the OEMs developed a new narrowbody freighter it would likely need a price in excess of $60 million. McDonald says: “Narrowbody freighters are mostly operated in low utilisation environments where the acquisition cost of a converted freighter must be low. Widebody freighters, mostly operate in higher utilisation environments, long legs, than narrowbody freighters.” Miami-based Aeronautical Engineers (AEI) focuses exclusively on narrowbody freighters which are not available from any OEM. AEI senior vice president - sales and marketing Robert Convey (pictured) says: “The main reason any airline would consider converting a passenger aircraft to a freighter is cost. Converted freighters can be up to 75 per cent cheaper than buying a factory freighter if available. Most narrowbody freight operators fly less than a 1,000 hours a year and only five days a week so the aircraft sits most of its life. It is this low utilisation that pushes them to find the lowest cost solution for lift.” In contrast, according to McDonald, production freighters are favoured by operators that fly the aircraft for the entirety of its useful economic life. These operators benefit from low direct operating costs and high dispatch reliability and efficiency. The general resale value of a conversion can make the trouble worthwhile. Convey says: “(Resale) is much higher. A passenger 737-400 will sell for $4 million, converted it will sell for $8 to $9 million.” “With 2,000 plus freighters needed to meet demand over the next 20 years, investors, financiers, lessors, operators and converters need to understand the opportunities and risks,” says McDonald. Singapore-based joint venture between ST Aerospace and Airbus, Elbe Flugzeugwerke (EFW), has secured a launch contract from Vallair Solutions Sàrl (Vallair) for its A321 passenger-to-freighter (P2F) conversion. Ten A321-200 passenger aircraft will be converted to a 14-pallet cargo configuration. The
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AEROSPACE
Airlines look to create partnerships with specialists
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he formation of partnerships between airlines and aircraft manufacturers with maintenance repair and overhaul (MRO) and supply chain specialists is a growing trend in the industry, writes Stuart Flitton. Where an airline owns its aircraft, maintenance will involve use of its own spare parts in its own storage facilities and be performed by its own engineers. However, where aircraft are leased from the original equipment manufacturer (OEM) or a third-party lessor, these may provide maintenance and decide where this takes place and where parts are stored. The planning and management of MRO, especially co-ordinating the regular mandatory checks across a whole fleet, is therefore crucial. This is where the specialists come in. Among the world leaders is DHL Supply Chain, which signed a ten-year contract with Cathay Pacific last summer to take overall responsibility for the storage, warehousing and transportation of 80,000 components and equipment used to maintain Cathay Pacific and Cathay Dragon’s 180 aircraft at Hong Kong International Airport. The operation involves 120 DHL Supply Chain specialists
age of components and providing supply chain solutions to the customer requirements. DHL Supply Chain (MRO) vice president David Bruce (pictured) says the Cathay agreement will involve a gradual phasing in of continual improvement to the airline’s MRO while the focus with MRO provider Etihad Airways Engineering would be different. The smaller operations are less complex. But, just like the three bears in the Goldilocks fairytale, the level of service has to be just right.
Service must be just right
working around the clock, managing more than 90,000 sq ft of warehousing space. DHL is moving towards finalising a similar deal with Etihad Airways Engineering in Abu Dhabi and is running smaller operations with the Franco-Italian aircraft manufacturer ATR and São Paulo-based Embraer Executive Jets, mostly concerning the stor-
“There are differences in what’s important to each customer. They all have a solution in place today and that can be good, but the question to the customer’s decision makers is how do you go from good to great with your MRO supply chain solution?” Bruce says. “The (aerospace) supply chain has typically not been the focal point for an airline in terms of investment or trying to deliver strategy, and that’s where we come in because managing complex supply chains is our core competency.” Last month ST Aerospace (pictured), the Singapore-based world’s largest commercial airframe MRO provider, concluded a $30 million five-year exclusive deal to maintain Lufthansa Cargo’s fleet of 12 McDonnell Douglas MD-11s. ST Aerospace has been providing C-checks on Lufthansa’s MD-11s for the past four years but from next year will be the sole service provider for A, B and C-checks. Lufthansa Cargo vice-president, transport management and flight operation, Claus Richter says: “The professionalism and experience of ST Aerospace, especially with regard to MD-11 heavy maintenance, fits well with the performance expectation of Lufthansa Cargo and their customers. This long-term contract is another step in the fruitful partnership of both companies.” ST Aerospace president Lim Serh Ghee said: “This exclusive contract is an affirmation of the quality that ST Aerospace puts into its services and support. We greatly value the partnership we have with all our customers, with whom we strive to develop long-term relationships so that we can leverage the rapport built to create more value-add.”
Engagement can transform business
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ACW 19 MARCH 2018
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Bruce said that engaging supply chain specialists could transform an airline or manufacturer’s business: “It can be seen as high-risk and could be first-time outsourcing. It can take an enormous amount of time for the customers to gain their own internal alignment. We assist where we can but it is ultimately the customer’s project team that has to do that because it is about change management. It could be about changing the way things have been done for the past 30-40 years.” Bruce said that the Cathay Pacific deal took a solid two plus years of preparation and engagement with the business to create the right solution for all parties. “We become quite consultative in engagement at the beginning - deliberately pushing and supporting our customers,” says Bruce. Strategic insight is also needed from the customer to help build the best solution, so that DHL can tailor its services to the customers’ needs. “All contracts can go through last-minute nerves at the altar. We could just sit back, but that’s not what we do. Where we can, we will support the decision makers and business wide stakeholders.” He said the Cathay deal had generated a lot of interest from potential customers, especially in Asia. “What we are beginning to see is that in Asia and the Middle East it is about ‘how does my supply chain support new growth?’ In Europe it seems more about protection – ‘how do I compete against low-cost carriers?’ “Some have got tough times ahead. We work closely with our customers to find the best solution – the planning, co-ordination and control of the operation. “It goes back to asking ‘what’s the problem and what’s the value add that DHL can bring’ and we work to find the right solution,” Bruce says.
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ACW 19 March 2018
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LOOKING AT WHAT PEOPLE IN THE AIR CARGO INDUSTRY ARE THINKING ABOUT
Seconds with...
ACW: Your mission is to be the leading cargo GSSA in the world. Have you achieved that and how do you intend to keep that position? Zimmer: With over €350m in managed airline revenues per year, we have journeyed a long way down that road. In
INGO ZIMMER
As a pioneer in the general sales agent business, ATC Aviation has worked hard to continue being innovative and expand its global reach. The CEO Ingo Zimmer, who has been with the company since 1989 took time out of his busy schedule to explain how ATC remains a market leader, his family’s maritime background, wine, cigars and similarities to George Clooney.
terms of quality we see ourselves as standing apart from our competition. The best measure of our quality is attested by our portfolio of customers, which are some of the leading actors in the airfreight industry. When it comes to our coverage, I can say that with our nine US offices we are the best choice for any airline looking for a GSSA there. In South America, we are active in six countries at present, but by the middle of this year this number will have expanded to nine country organisations.
INGO ZIMMER
ACW: What do you see as the key requirements to get the most from your staff? Zimmer: First of all, ATC’s top management is hand-picked. After 30 years in the GSSA business, I have developed a good sense for what makes a top manager. Prior to joining ATC, Timothy Pfeil was in the top management of SAS Cargo and Lufthansa Cargo in the US while Rene Weinberg, our managing director in Sao Paulo was the Lufthansa country-manager in Brazil before joining ATC. These are but a few examples of the many talented Managers and Directors at ATC. Secondly, we invest in ongoing internal and external training programs and coaching. People are our biggest assets. And together we have a lot of fun. Team building
exercises such as our recent weekend at the Nürburgring serve to develop friendships not to mention a little healthy company competition. So experience, knowledge, customer orientation, ongoing learning and training, respect and a great working environment are the foundations of a winning team at ATC. ACW: In terms of ATC, what are the main opportunities you see over the next five years? Zimmer: We are in the process of becoming more active in Total Cargo Management and we are now able to offer customised service modules to our airline partners. Besides our core GSSA work we offer a menu of supplementary services such as handling, trucking brokerage, and financial services under the umbrella of our holding. ACW: Do you still believe that airfreight spends too much time on the ground? Zimmer: Certainly, one of the biggest bottlenecks lay in the time it takes to deliver cargo to the handling-agent’s warehouse. At some airports, congestion presents the greatest challenge to overcome when it comes to shortening transit times. Last December, some trucking companies refused to deliver to certain ground handlers due to excessive waiting times, sometimes up to 24 hours. While the industry is working on solutions and working groups have been initiated, the results are not yet clear. In my opinion, the process is taking too much time. ACW: What’s the most interesting thing about you that we wouldn’t learn from your resume alone? Zimmer: My family is rather international, with roots in Austria, Germany, Cuba and Lebanon. And even my dog comes from
Asia … she’s a Tibetan Mastiff.
ACW: We finish the interview and you step outside the office and find a lottery ticket that ends up winning 10 million euros. What would you do? Zimmer: I guess a lot of things including a big donation for Plan International, an organisation I am involved with already. I am also a godfather for a little girl in Africa and a boy in Indonesia. But I would continue working and not change my style of living. ACW: If ACW came to your house for dinner, what would you prepare for us? Zimmer: It would be a barbecue with fish and beef on my gas grill. I would be the chef at the grill for you!
ACW: If Hollywood made a movie about your life, who would you like to see play the lead role? Zimmer: That’s easy. George Clooney! He is about my age, and I travel in a style similar to how he portrayed his character in the movie “Up in the Air”. I have had weeks where I start on Saturday in Japan, arrive Sunday in Germany, and the following Tuesday I am found in Brazil and on Wednesday in Argentina. ACW: What’s the last thing you watched on TV and why did you choose to watch it? Zimmer: To be honest, I don’t watch a lot of TV or very many movies. Not even on long haul flights. I cannot remember the last time I watched anything from start to finish on TV. In fact, the remote control at home is managed by the kids. My passion is reading. A good book can fire up the imagination better than the best TV show or movie.
ACW: What did you want to be when you grew up? Zimmer: I wanted to be a captain of a ship. My mother’s family comes from Bremerhaven. Two family members from her side have been captains in the mercantile marine. One grand uncle was the Captain of an Icebreaker based in Hamburg. My father was in fact, in the German Navy. ACW: Beer or wine? Zimmer: Definitely wine. I am a collector of fine red wines, and because of my Cuban wife, I have a nice collection of Habano Cigars in my humidor to complement any wine.
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