ACW 20 November 17 by Azura International

GLOBAL A

MANAGEMENT

WORLD AIRPORTS .COM ACW Digital is sponsored by FREIGHTERS.COM

FREIGH

The weekly newspaper for air cargo professionals Volume: 20

Issue: 46

20 November 2017

Ethiopian and AZAL pen freighter orders in Dubai

he Dubai Airshow last week saw two of the globe’s expanding air cargo carriers invest heavily in Boeing freighters. Rapidly growing African airline Ethiopian Airlines ordered four B777 Freighters to be used by its cargo arm Ethiopian Cargo - in a deal valued at more than $1.3 billion at list prices. The deal includes a new order for two freighters. It also includes two freighters the carrier announced as a commitment in June that finalised into a firm order. Ethiopian Airlines Group chief executive officer (CEO), Tewolde GebreMariam says: “This airplane order will provide Ethiopian’s Cargo & Logistics business with enhanced cargo capacity and better operating economics as we continue to build one of the largest cargo terminals in the world. “Operating high-performance airplanes such as the 777 Freighter is a reflection of our commitment to expand and support the growing imports and exports of our country and the African continent.” Ethiopian Cargo is the largest network cargo

60 SECONDS WITH MILIND TAVSHIKAR WFS SEES NO SIGNS OF DEMAND DROPPING OFF operator in Africa with six 777Fs and two 757Fs serving 39 cargo destinations in Africa, the Middle East, Asia and Europe. The 777F is based on the 777-200LR passenger aircraft and can fly 4,900 nautical miles (9,070 kilometres) with a full payload of 112 tonnes. This order pushes 777 net orders this year to 57 – 37 of them for the current-generation 777 aircraft – providing further support to a smooth production transition to the new 777X. Another expanding cargo market is the Caspian region and home carrier Azerbaijan Airlines (AZAL) has committed to purchase

two 747-8Fs. The carrier has also ordered five more Boeing 787-8 Dreamliners. The agreement is valued at about $1.9 billion at current list prices. The freighter commitment will be finalised at a later time. AZAL president, Jahangir Askerov says: “Ordering additional 787 Dreamliner airplanes will greatly expand our airline’s capabilities, allowing us to serve new destinations and carry more passengers. “We are delighted to expand our partnership with The Boeing Company, which has been a reliable partner in supplying modern airplanes, and helping us operate and maintain the jets.”

Boeing 787 Dreamliners, taking its widebody commitment with Boeing to 204 units. The order will be delivered from 2022, taking the carrier well into the 2030s and some will be used to replace older aircraft as the carrier looks to maintain and young and efficient fleet. Emirates is by far the largest Boeing 777 operator on the planet with 165 777s in service today.

Hong Kong Air Cargo Terminals Limited (Hactl) broke no less than three records in the first week of November. In its SuperTerminal 1 facility, Hactl handled 31,280 tonnes of exports, beating its previous weekly record of 30,593 tonnes in November 2016. In the same week, its overall total of 42,471 tonnes of cargo handled through the terminal beat its previous weekly best of 41,926 tonnes, also set in November last year. On the ramp, Hactl handled 102 freighters in a single day on 5 November – edging past its previous best of 101 freighters handled in a day, recorded on 23 November last year. Hactl chief executive, Mark Whitehead says 2016 was a year of records, largely fuelled by the boom in Q4 resulting from the collapse of Hanjin. He adds: “We have had no such extraordinary event to boost volumes in 2017, yet our 100 client carriers are all performing strongly and helping us to set new records.”

Flydubai and Emirates make huge belly orders Belly cargo carriers invested heavily in aircraft at the Dubai Airshow last week. Dubai based carrier flydubai signed a deal with Boeing for 225 737 MAX aircraft with a list price value of $27 billion. The agreement represents the largest-ever single-aisle aircraft order by number of aircraft and total value – from a Middle East carrier. It includes a commitment for 175 MAX aircraft, and purchase rights for 50 additional MAXs. More than 50 of the first 175 airplanes will be 737 MAX 10s, the newest and largest member of the 737 MAX family. Flydubai chairman, Ahmed bin Saeed Al Maktoum says: “We welcome the continuation of our long partnership with Boeing. Their airplanes have provided a foundation for the success of our business model, providing us with the operational flexibility and range to build a network of 95 destinations in 44 countries.” Meanwhile, Dubai airline giant Emirates placed a whopping $15.1 billion order for 40

VIRGIN CONTINUES ITS RESHUFFLE

More records for Hactl

DOUBLE DIGIT INTERNATIONAL GROWTH AT PACTL

Eva Air flies its first 777F to Taiwan EVA Air took delivery of its first Boeing 777 Freighter at the Boeing Everett Delivery Center in Seattle on Wednesday, 8 November. The carrier flew its newest freighter from Paine Field to Taiwan’s Taoyuan International Airport, departing shortly after delivery and arriving on Thursday, 9 November in Taipei. EVA plans to put its new 777F in service on routes between Asia and North America in late November. The carrier’s freighter destinations in Asia include Shanghai Pudong, Shenzhen, Chongqing, Hong Kong, Osaka, Singapore, Bangkok, Penang and Hanoi and cargo gateways in the US are Los Angeles, San Francisco, Chicago, Dallas/Fort Worth and Atlanta. EVA now provides airfreight services on 62 routes, including five dedicated cargo gateways, with 35 weekly freighter flights. EVA ordered five 777F from Boeing in July 2015 and will take delivery of the additional four by September 2019. As it adds the new freighters, it will retire its five remaining 747-400F by the end of 2019. Meanwhile, Miami International Airport (MIA) welcomed the first weekly Boeing 777F flight by Etihad Cargo on 7 November.

aircargoweek.com

NEWSWEEK Hong Kong hub expansion for DHL Express

HL Express is to invest €335 million in its Central Asia Hub (CAH) – in partnership with the Airport Authority Hong Kong. The expansion brings DHL’s commitment to the hub to over €520 million, making it the largest infrastructural investment by DHL Express in Asia Pacific to date. The express freight firm says the development is timely as CAH has recorded an average 12 per cent year-on-year growth in its shipping volume in the past decade. As one of three global hubs for DHL, the expanded CAH will continue to act as the core hub of the DHL Express global and Asia Pacific regional network, handling more than 40 per cent of its total Asia Pacific shipment volumes. DHL Express chief executive officer (CEO), Ken Allen says: “Given the expected rise in international e-commerce and intra-Asian trade, DHL is committed to strengthening our global network and services. Based in a strategically important location to DHL, the expanded Central Asia Hub in Hong Kong will not only bolster our operational capacity in Asia Pacific, but facilitate the rapidly-growing international trade demands in the region and around the world.”

When operating at its full capacity, the annual throughput of the expanded CAH is expected to go up by 50 per cent to 1.06 million tonnes per annum. As a dedicated and purpose-built air express cargo facility at the Hong Kong International Airport, the expanded CAH will handle six times more in terms of shipment volume than when it was first established in 2004. The expanded CAH is expected to begin operations in Q1 2022, in time to capture strong demand in the Pan-Pearl River Delta (PPRD) region and completion of the Three Runway System for the Hong Kong International Airport in 2024. The expansion of the CAH will deliver about 50 per cent increase in warehouse space to 47,000 square metres.

Q3 figures boost for CEVA

CEVA says it maintained its “positive momentum” in the third quarter (Q3) ending 30 September this year as revenue grew 5.4 per cent, but the forwarder still remains in the red. In Q3, the freight management division maintained airfreight volume growth at 11.8 per cent versus prior year and CEVA says market volatility in rates continues, notably on routes ex-Asia, but volume planning and pricing measures have enabled it to mitigate that pressure to a “large extent”. The division’s EBITDA in Q3 was $26 million, down $1 million year-over-year (YOY) as a result of margins pressure from rates. Q3 revenues were $1,782 million up 5.4 per cent in constant currency and up 6.1 per cent in actual currency. For the nine months, revenues were $5,099 million up 5.6 per cent in constant currency and up 3.8 per cent in actual currency. In Q3, adjusted EBITDA came in at $85 million, up $11 million in constant currency versus the prior year. For the YTD, adjusted EBITDA came in at $209 million, up $22 million in constant currency versus the prior year. CEVA says cost reductions will support profits in the coming quarters. CEVA registered a net loss for the period of $22 million, which was an improvement on the $41 million loss last year. CEVA chief executive officer, Xavier Urbain says CEVA is on track to deliver a stronger result in 2017.

Virgin continues its reshuffle

VIRGIN Atlantic Cargo has appointed Paul Fallon (pictured above) as director of commercial & business development and Tania Wilson as director of operations. The changes follow Dominic Kennedy’s promotion to managing director of Virgin Atlantic Cargo in August. Fallon began his career in Virgin’s commercial team in 2003 and moves from his post of director of cargo operations & business development. Wilson, who will take up her new post in January 2018, is currently head of safety at Virgin Atlantic.

ACW 20 NOVEMBER 2017

aircargoweek.com

Five projects launched by Pharma.Aero

harma.Aero is to focus on five special projects for its members to improve services. It was founded by Miami International Airport and Brussels Airport as a platform to foster strong collaboration among members including airport communities, pharma shippers and other pharma logistics stakeholders. Five projects are being launched: A Pharma.Aero Shippers Advisory Group; an IATA CEIV Pharma shippers validation; an airside transport benchmark; certified pharma lanes & identification of performance indexes and dashboard; and an IATA CEIV Pharma maturity assessment. The shippers advisory group aims to improve collaboration among pharma stakeholders, ensuring Pharma.Aero stays ahead of industry trends and address any shipper issues, with Johnson & Johnson, MSD, Pfizer and Brussels Airport participating. For the shippers validation, Brussels Airport cargo & product development manager, Nathan de Valck explains the project group will work with pharma shippers to validate and endorse the existing IATA CEIV Pharma checklist and audit methodology. Johnson & Johnson, MSD and Pfizer will participate with Brussels Airport assuming the coordinating role.

Describing the airside transport benchmark, Miami International Airport section chief for aviation marketing, Jimmy Nares says the group will come up with a framework for airports and stakeholders to consider when reviewing airside transport solutions. Brinks, Brussels Airport, Changi Airport Group, Envirotainer, Expeditors, MSD, Mumbai International Airport, Pfizer and Sharjah Airport will participate, with Miami coordinating. The pharma trade lanes involve CEIV Pharma certified operators. Pfizer and Changi will take the lead, with Brussels Airlines Cargo, Brussels Airport, DHL Global Forwarding, Envirotainer, Expeditors, EuroAirport Basel, Johnson & Johnson, MSD, MVD Free Airport and Singapore Airlines participating. The CEIV maturity assessment will aim to improve the programme, ensuring the relevancy of the checklist.

NEWS WEEK WORLDNEWS

VIRGIN Australia is increasing cargo capacity on its Melbourne – Hong Kong services with daily services from 12 November. Volumes have been increasing steadily in both directions since Virgin Australia commenced five Airbus A330-200 flights a week in July. The airline says the extra capacity provided by the new daily service will support the peak perishables season from Australia as well as the e-commerce and courier business from Hong Kong. AERONAUTICAL Engineers (AEI) has signed a contract to provide Mexico-based Aeronaves T.S.M (TSM) with three additional MD-83SF freighter conversions. The first MD-83 aircraft will commence modification on 11 December, followed by the second in February of 2018 and the third in late April, 2018. All the MD-83SF modifications will take place at Commercial Jet’s Miami facility. Including this order, TSM will operate a total of ten AEI MD80SF series freighters.

Tonnage down at Brussels

BRUSSELS Airport’s freight traffic fell by 3.4 per cent in October compared to the same month last year, which it puts down to the departure of several carriers due to noise fines imposed by the Brussels Capital Region. In October, the airport handled a total of 45,018 tonnes, a fall on the 46,603 tonnes on the same month in 2016. In October, the freighter segment saw a sharp drop of 23 per cent – in line with the decline registered in September as 13,186 tonnes were handled. Belly cargo increased 7.5 per cent to 12,472 tonnes, compared to October last year. The gateway says rise was due to the the impact of the terrorist attacks of 2016 and the increasing number of long-haul flights and additional belly capacity they provide. The integrator sector saw 8.3 per cent growth to 19,361 tonnes, continuing the positive trend of the past few months. In the first 10 months of the year, the airport has handled 437,530 tonnes of cargo, a 9.5 per cent rise on the 399,554 tonnes in the same period last year. Freighter traffic us up 7.6 per cent to 137,834 tonnes, integrator 10 per cent to 185,067 tonnes and belly 11 per cent to 114,629 tonnes.

Amerijet expands two contracts NETWORK Airline Services’ (NAS) Paris CDG office has extended its contractual agreement with Amerijet International to include the island of Malta. NAS says customers can now book their shipments on Amerijet’s flights through their local NAS office and transactions will be managed and directed through its team in France. ANA Aviation Services has also been appointed as the general sales agent (GSA) for Amerijet in Dubai, starting 1 January, 2018. NAS and ANA Aviation Services are the GSA branches of the Network Aviation Group. NAS group business development manager, Florent Turlier says: “In 2015, we were able to extend our agreement in the country of France to include South Africa. Today, another milestone has been reached and we are truly proud of our long-standing relationship with Amerijet and look forward to expanding their presence in the Middle East and Malta markets by representing these flights across all of our locations.” Amerijet director of global network development, Simon Pantin says: “Network Airline Services and ANA Aviation are perfectly positioned to meet Amerijet’s needs and we look forward to building a stronger, more successful partnership with them.”

aircargoweek.com

ACW 20 NOVEMBER 2017

60 NEWSWEEK

Justin Burns, ACW: How has demand been for your air cargo products? Tavshikar: We have grown our customer base from three customers to 17 (16 airlines and 1 GHA) over the last four years. And we are soon looking to announce a few more customers which we are excited about.

Seconds with

MILIND TAVSHIKAR SmartKargo is providing IT solutions to air cargo carriers and as the industry continues to digitise its processes is likely to be a key player in the future, as the industry evolves. The latest to use their technology is Oman Air Cargo and SmartKargo is targeting more airline contracts. Air Cargo Week spoke to the company’s founder and CEO, Milind Tavshikar.

Justin Burns, ACW: What are the biggest challenges for SmartKargo? Tavshikar: Changing the status quo mindset is a major challenge. SmartKargo is so innovative in its approach it takes a team with a willingness to take a fresh look at the way air cargo business is being done. Clearly the

market ,has changed significantly. Everything is on the Internet and real-time. Most participants in the business are stuck in the past with legacy IT environments that are more of a record keeping system than a business solution. It’s almost inconceivable for an airline to think they can use SmartKargo technology to directly integrate in the diverse e-commerce delivery chain and increase load factors by a multiple airlines still depend on the traditional channels such as internal sales teams and freight forwarder based partner channels as their only two sales channels.

We find mid-sized and smaller carriers seem to have a bigger appetite for challenging the status quo and are more ready for the fast deployments of SmartKargo. At the larger carriers, there is inherent resistance to change and they are watching how some of the industry players perform before they switch. We are working to overcome these challenges by educating customers about the possibilities and showcasing ROI studies etc. As the need for latest technology escalates as a differentiator and major factor in providing access to new revenue opportunity, I think this will begin to change. Our hope is airlines will start thinking like integrators when it comes to air cargo. Justin Burns, ACW: How do your products improve airline cargo performance? Tavshikar: Oman Air Cargo was looking to provide easy, secure access to real-time information with a robust infrastructure and the advanced technology that enables integration with any business partner across the world, quickly and seamlessly. They accomplished this as the full, end-to-end SmartKargo ERP solution was deployed in less than two months. Oman Air Cargo can now take full advantage of the advanced insights into the business that are made possible in real-time. Let’s face it, critical revenue management decisions need to be informed by immediate access to data—with full shipment visibility and robust reporting functions that make it easy. Basing these business decisions on outdated information, as in the batch processing and reporting of data in hindsight, is more than limiting for carriers. Oman chose our solution to bring digital transformation

ACW 20 NOVEMBER 2017

MILIND TAVSHIKAR to all aspects of its cargo business - and it will improve revenues and customer service.

Justin Burns, ACW: How do your products provide new revenue potential? Tavshikar: SmartKargo opens a direct-toshipper sales channel for Oman Air. Customers can directly book on the Internet and get confirmation of space - getting assured service delivery. We know this ‘ease of use’ builds customer loyalty, thus making a customer book more often with Oman in comparison with others who may not have such a facility. The revenue figures of integrators can stagger the imagination if you are a combination airline. Today, the technology exists to increase revenues dramatically by tapping into this business. Oman is planning to grow revenues by 20 per cent YOY by matching integrator capabilities. Some other customers have implemented SmartKargo’s door-to-door technology. They have initially launched the service with their B2B customers. It’s a great story that should be explored by all airlines who want to catapult their contribution to total revenue. Moving to 10 per cent of airline revenues absolutely changes the game for the cargo business. Enabling the addition of first-mile and last-mile operational capability for an airline, especially for express products is do-able.

Justin Burns, ACW: Is the industry embracing e-freight? Tavshikar: IATA has done a good job of promoting e-freight and eAWB initiatives, for the better part of two decades. There has been growth in the adoption of both. Most carriers would love nothing more than to be onboard with the paperless standard. But the obstacle has not been adoption of the concept, but the lack of technology to consistently implement it. And this is where we come in. We are happy to say that our solution fully provides the technology needed to comply with eAWB and e-freight, including ePouch documentation. The system empowers airlines with all of the most up-to-date IATA electronic messaging types, including C-IMP and 100+ secured web service methods and support for key EDIFACT messages. This results in a system that is both powerful and easy to use.

Tabloid page bled.indd 1

15/11/2017 12:23

CARGO HANDLING

WFS sees no signs of demand dropping off in 2018

017 is shaping up to be a good year for Worldwide Flight Services (WFS), and group chief commercial officer, Barry Nassberg (pictured) says the signs suggest demand is unlikely to drop off in 2018. Speaking to Air Cargo Week at the Air & Sea Cargo Americas conference in Miami on 2 November, Nassberg says volumes are up across the board of all the locations WFS handles cargo. He says WFS has had consistent year-on-year growth and though there is a slight softening,

Nassberg thinks that is probably because of the pre-season lull before the winter rush. He explains: “We’ve had the benefit of integration in terms of some of the projects we’ve done such as acquisitions in the US. All in all a good year, we’re growing increasingly optimistic that we’ll at least see stability in 2018. “We’re not seeing signs that the cycle is going to drop off and go back into some kind of trough. We’re cautiously optimistic that we can maintain the traffic in 2018.” Nassberg says the peak season is looking good, with increasing amounts of work on e-commerce, which is something WFS has not seen in previous years. He says: “We’re working with some of the operators in e-commerce business and their traffic is growing. Starting off from a very low

base they’ve seen really explosive growth both in terms of overall traffic and as more and more try and take control of the air elements of their shipping requirements.” In the past this was tendered out and Nassberg says WFS is working with them to provide support on the airport side of the services, so WFS is growing with them.

Strong Christmas season

“We’re seeing the start of a strong Christmas season. Apple has not disappointed with the launch of a new phone. The introduction of one new product has a very significant impact because it’s all produced in one place, it’s high value, very dense and it’s a just in time release getting into the Christmas season.” The new product must be in shops by December so this creates huge demand, and Nassberg comments WFS has always seen spikes in demand that in years an Apple phone has been released in the fourth quarter. E-commerce is an area WFS sees growing opportunities for cargo handlers, particularly with an intentional pun from Nassberg, “those thinking outside the box”. This includes offering more than just the straightforward cargo terminal but also joining with integrated operators in e-commerce to serve their needs for off airport warehousing, deconsolidation and distribution. “We want to be market leaders on how a cargo handler can move beyond its traditional area of work to specialised products such as perishables and pharma. We’re investing in equipment and facilities, and we want to work closely with airlines in being able to sell those products.” For regions around the world, Nassberg thinks WFS is very well balanced in the US, with some more major stations that WFS is not in, but Nassberg believes that if WFS can get into them we the company will be well developed in the US. WFS is working on next generation facilities, including a new one at New York John F. Kennedy International Airport. This is a brand

ACW 20 NOVEMBER 2017

aircargoweek.com

new green field facility customised to WFS’s needs. Over in Europe, Nassberg says WFS is looking east of central Europe where WFS has not penetrated so that will be an area of focus. WFS is also looking at South America where it owns a big ground handling business, but has not touched on cargo yet, and there are likely to be projects in Asia. He says: “We have a successful operation in Bangkok but we’ve never been able to move beyond that. The cargo market is very hard to break into in Asia but a couple of opportunities have come up so we’re pursuing those.” “We’re trying to round out the geography. We’ve got a few gaps we’re going to try and fill over the next two to three years.”

Move outside the warehouse

Nassberg says the plan over the coming years is to broaden the view of what a cargo handler does, moving outside of the cargo warehouse by understanding customer needs and how WFS fits into the supply chain. WFS is also working on IT, having invested heavily and establishing a global IT department, allowing for the integration of systems with customers down to house air waybill level. WFS is also investing heavily in safety and security, initially in the US and will be moving onto Europe in security systems. He says: “We’ve worked with an outside company to develop a comprehensive management system, for example in the x-ray of shipments, managing that from a central location. We can see into the x-ray machine of every machine we use giving airlines and the TSA access to that system.” Nassberg says WFS is moving airport security from minimal requirements to the “leading edge”, so it can show how using WFS has a clear advantage over using a competitor. “Not only are we compliant we make it much easier for the airline to be compliant. We know there is no other handler out there with anything of the sort.”

CARGO HANDLING

Double digit international cargo growth at PACTL

olumes on international routes at Pudong Air Cargo Terminal (PACTL) have proved very strong while domestic services have been weaker, vice president – production, sales & marketing, Christian Haug (pictured) says. Total volumes are up 12.6 per cent between January and October, having handled 1.5 million tonnes, of which 1.4 million tonnes was international cargo and 82,838 tonnes was domestic. International cargo is up 13.8 per cent in total, with stronger imports, though exports also registered a double-digit increase. Domestic cargo was down 4.7 per cent, with outbound decreasing 8.4 per cent. Haug comments: “2017 has been a very good year so far. International business is growing by more than 10 per cent, domestic is also OK but not so

AAT starts handling for Hong Kong Airlines

much of a factor yet. No doubt we also going to finish strong, for 2018 we are also quite optimistic.” Haug reports all commodities are doing very well, saying: “We get a lot of seafood business inbound. We even had to increase our cool storage capacity to satisfy the demand.” PACTL has been developing projects elsewhere, launching PACTL Nantong Xingdong Airport Cargo Terminal (PACTL-

NTG) in December 2016. Nantong Airport has a 51 per cent shareholding, and PACTL controls the other 49 per cent. In addition to cargo terminal services, it provides passenger baggage handling, aircraft loading and unloading, and freight forwarding. Describing the first year of operations, Haug says: “We are satisfied with our company there. Very successful year, and we also had our first freighter charter flight in September. We still have to solve some issues especially regarding customs procedures between Shanghai and Nantong, we are working on it.” For further expansion projects, Haug says PACTL looks both inside and outside China, though adds: “But our core business is PVG and with PACTL Nantong we already had a successful start. That said 2017 we focused on our core business but we keep our eyes open.” As for the future, he says: “We will continue our path, constantly working on improvements of our PVG operations, focus on digitisation and look into option to further optimise our productivity. As said if options outside Shanghai are available, we are open to look into it.”

HONG Kong Airlines and cargo subsidiary Hong Kong Air Cargo Carrier have moved cargo handling operations to Asia Airfreight Terminal (AAT). It was announced in March 2017 that the airline would make the move and this was completed on 8 November 2017. Hong Kong Airlines was established in 2006, serving more than 40 destinations across Asia Pacific before spreading to North America in 2017 with flights to Vancouver, and it will start Los Angeles services in December. Hong Kong Air Cargo Carrier was established in April 2017 providing international airfreight services to more than 15 destinations using a fleet of Airbus A330-200s, and also plans to expand its network globally. AAT general manager, Kuah Boon Kiam says: “They are the second biggest airline group in Hong Kong and in anticipation of their arrival, we have upgraded our facilities, manpower and equipment in order to better meet their requirements as a hub carrier.”

NAS renews Kenyan deal

NETWORK Airline Services (NAS) has signed a two-year extension to its contract with Africa Flight Services Kenya (AFS Kenya) to provide cargo handling for its four flights a week into Nairobi. AFS Kenya will handle 11,500 tonnes of cargo a year for NAS’ MD-11 and Boeing 747 Freighter operations, which arrive in Nairobi from Liege carrying general cargo and then continuing to Doncaster Sheffield Airport with shipments of fresh flowers, fruit and vegetables for the UK and European consumer markets. Africa Flight Services Kenya chief executive officer, Gonzalo Jacob says: “NAS operates a very successful service to and from Kenya and provides an essential link to and from Europe for companies in and around Nairobi. The recent addition of its fourth weekly freighter service ex Nairobi reflects this demand and AFS is proud to be playing an important role in its success.” AFS Kenya is one of the largest cargo handlers in Kenya, operating a special facility in Nairobi to support customers moving perishable cargo from Kenya. It includes 4,735sqm of dedicated 2-8C temperature controlled storage and an ETV system with 172 ULD storage positions.

aircargoweek.com

ACW 20 NOVEMBER 2017

BELLY CARGO

The belly-maindeck divide continues to widen

ith the air cargo market’s up-turn now rolling for over a year, memories of the long, cold, dark days of flagging volumes and depressed yields may gradually be receding in the collective memories of the industry, writes Donald Urquhart. But parked freighters remain a visible reminder of the painful volatility and begs the question as to what role they will play going forward in an environment where belly capacity increases with each new widebody aircraft. Singapore Airlines (SIA) Cargo is a clear example of this main deck downscaling, that probably is better described as a transformation of sorts. Once a major operator of freighters, times have changed. As SIA Cargo president, Chin Yau Seng notes,

with a sharply reduced freighter fleet there is no longer the imperative to operate as a separate company with a separate AOC which includes cost duplication that can be eliminated through the re-integration with the parent carrier. For SIA Cargo, a “right-sized” fleet of freighters – currently pegged at seven Boeing 747-400Fs – in conjunction with substantial belly capacity of Singapore Airlines’ widebody fleet is a better fit for today’s reality. “Passenger aircraft orders, especially for the new generation wide-body aircraft, have and will continue to drive the cargo capacity in the industry,” he says. But, an important caveat to this he adds that for airlines that operate freighters there still is a need and relevance of these aircraft simply because they cater to the carriage of special-

ised and odd-sized cargo, such as livestock, aerospace and events-related shipments and passenger aircraft don’t always fly to where the cargo is generated, or destined. But no matter what the perspective on belly versus maindeck, one thing is indisputable: The industry has and continues to go through major changes that make the cargo business ever more challenging.

Change is in the air

For some, this new and evolving air cargo market is generally one better served through belly capacity. Peak seasons are here sometimes and sometimes they’re not. Production is shifting and its diversifying and air cargo transport must adapt. Hong Kong Air Cargo Terminals (Hactl) chief executive, Mark Whitehead highlights how rapidly things can change by noting in the latest iPhone release, much less of the iPhone traffic came through HK for the first time, instead flying out of various mainland China points. One significant development that will play an increasing role, is e-commerce. Although its impact is not massive at the moment, it is a portent of the future and how consumers will make their purchases, which also has significant ramifications for production as well. The changing air cargo environment has also been behind a number of interesting tie-ups between both belly and combination carriers, and all-cargo carriers as each seeks to leverage the other to fill the nooks and crannies of its cargo holds, be they main deck or belly. Take for instance the agreement between Cargolux and Emirates SkyCargo, or United and Lufthansa with ANA Cargo, IAG Cargo with Qatar Airways and even Air Canada with Cargojet – all variations on a theme and that theme is the combination of belly and main deck. Strategic Aviation Solutions president and chief executive officer, Stan Wraight says some carriers are ignoring the huge potential belly capacity offers. “If marketed properly and also with a full understanding of its value to today’s demand for, ‘anything, anywhere in 72 hours or less’,” belly capacity can be a significant contributor to the bottom line. But he laments that often this realisation doesn’t occur. “The sad fact is that passenger belly capacity is so undervalued by airline managers that they don’t create premium products that the market is looking for,” he says.

ACW 20 NOVEMBER 2017

aircargoweek.com

He cites the example of HKG-LHR, asking what could be faster than a direct passenger flight – of which there are a good number on that particular route – for a client demanding speed, quality and reliability? “Nothing, no integrator or e-commerce company operating its own freighters could beat that direct point-to-point connection. All that an airline has to do is seek out strategic partners on the ground at both ends, and it exists but is not exploited,” he says. This gives way to a warning: “Unless they change their skill sets, and start to implement products for the market that are demanded, the capacity in the belly will become worthless against those that do.” Freighter fleets should be right-sized as it relates to the size of the passenger fleet, he adds, saying the ‘right size’ is the number of aircraft by type needed to satisfy the new generation of retail, clients demand. “I venture to say that very few combination carriers today are focussed on the future possibilities, and are more reacting to declining margins as the traditional distribution channels demand ever lower prices.”

Combination carrier view

As Emirates SkyCargo notes, its core strength is the cargo capacity provided by its fleet of 252 passenger aircraft operated in a global network and with good support from its substantial freighter fleet. Also key to this is the fact it operates only large widebody aircraft which provides good capacity on all sectors. “The air cargo market has been performing very well recently and we have seen good growth across the majority of the markets we operate to and good utilisation of both our belly hold as well as main deck cargo capacity,” says Henrik Ambak, Emirates SkyCargo senior vice president, cargo operations worldwide. According to Ambak, SkyCargo doesn’t see the day when freighters won’t be needed, citing the fact more than half the of world’s air cargo is still moved on freighter aircraft. “Freighters further allow us to well serve markets where the cargo market exceeds the capacity we have available on our passenger aircraft. We do not always observe a complete overlap between the kind of cargo that gets transported in the main deck of freighters and in the belly hold of a passenger aircraft and our freighter capacity supplements the cargo capacity we offer on our passenger fleet and vice versa,” he says.

BELLY CARGO

The bellies are getting fuller across the globe

n addition to carrying large and outsized cargo that would not fit in the lower deck of a passenger aircraft, Emirates SkyCargo’s freighters also carry cargo directly from manufacturing hubs and growing areas to consumer markets. like flowers from Kenya or Ecuador, directly to Amsterdam. “We are also able to use our freighter fleet to respond to any sudden seasonal increases in demand where our passenger capacity may be insufficient to cater to capacity needs of the market,” says the carrier’s senior vice president for cargo operations worldwide, Henrik Ambak. This surely has come in useful as this year’s peak season continues to roll. But it is through its passenger fleet it is able to offer what the market seems to increasingly be looking for: High frequency, direct air cargo connectivity to not just tier 1 hubs but also to tier 2 and tier 3 cities across a number of geographies, as Ambak highlights, seemingly taking a leaf out of Wraight’s book. “We connect to 41 destinations in Europe. This means a customer in Cambodia can have his cargo airlifted from Phnom Penh to Hamburg or Dusseldorf without having to truck the cargo to an alternate hub either at origin or at destination, eliminating this additional step which adds both cost and transit time.” Another combination carrier with both substantial maindeck and belly capacity, Lufthansa Cargo, is similarly steadfast on the important combination of belly and maindeck capacity. “Our belly capacities are the backbone of our business,” says chief commercial officer, Alexis von Hoensbroech. “They provide a broad and high frequency network across the world and safeguard our position as the leading air cargo carrier in Europe. Our bellies are performing strongly with load factors well above the industry average,” he adds. At its disposal is substantial belly capacity as it markets the belly of Lufthansa Airlines, Austrian Airlines and Eurowings. “Further we have access to the belly capacities of our cooperation partners ANA, Cathay Pacific and soon United Airlines on the tradelanes from and to Europe,” says von Hoensbroech. But while bellies may be Lufthansa Cargo’s backbone, freighters play no less a role in the cargo carrier’s success. “In contrast to the passenger demand, air cargo flows are pretty concentrated on relatively few tradelanes. While the belly capacities provide a very broad network, many belly flights go to destinations, that have only little cargo demand. On the key cargo tradelanes, there is and remains a heavy undersupply of belly capacities. Therefore, we need freighters to cover the remaining demand,” von Hoensbroech points out. He gives the example of Frankfurt, where 60 per cent of all freight is being flown on freighters and this number has been growing over the last 10 years, he says, adding there are no indications, that this will change. The highly volatile nature of the air cargo business with high-demand years quickly followed by much weaker periods also means that the flexibility of operating a freighter network allows for quick adjustment of capacities if the demand drops. “Therefore we expect to continue flying freighters in the future – while the fleet size might vary over time.”

carrier enjoying strong YOY gains on all routes including Lagos, Delhi, Hong Kong, Shanghai and its Caribbean services. And its Virgin Australian cargo partnership – also pure belly – has also performed exceedingly well since its launch in July this year. “The increased business we have gained, however, isn’t just down to higher demand for capacity in the market,” says Kennedy. “More demand in the market is great to see, but you still have to make sure customers choose you over your competitors. Our growth in 2017, I feel, is down to a great team effort by our entire cargo team to ensure we are providing the best possible customer experience.” Kennedy is also optimistic growth can be maintained, pointing to more choices for customers, services and other improvements it is making. He points to the new Pharma Zone at Heathrow, opened on 2 October. “Our pharma volumes have already increased 20 per cent in the first half of the year and our customers are telling us they want to give us more of their business. “Opening the Pharma Zone demonstrates our commitment and the quality of service we can deliver, and I am confident this will boost our pharma volumes even higher. We are also on track for

WDA accreditation by the end of this year/early January,” he says. “I think there is buoyancy in the market we haven’t seen for the past few years so the signs are looking good for 2018. Obviously so many factors influence export and import business, but we have a great network that serves major cargo markets, we will always work hard to deliver the best customer service, and we’re increasing the choice we offer.”

Happy bellies

One carrier that certainly hasn’t neglected the potential of belly cargo and indeed has continually moved to build and improve upon it, is Virgin Atlantic Cargo. And clearly the effort is paying off as the carrier has been keeping its bellies full. Riding the cargo wave the industry has been experiencing since third quarter last year, Virgin’s volumes for the first nine months are up seven per cent up YOY. Managing director, Dominic Kennedy adds his team are seeing and hearing from its customers that demand is going to continue into 2018. Westbound volumes to the US have been extremely strong, which comes down to several factors according to Kennedy: Exchange rates are making UK exports more attractive so there’s more tonnage in the market; and services to the US have increased this year with a daily Heathrow-Seattle service and direct flights from Manchester to San Francisco, Boston and New York. It also helps Virgin along with its joint venture partner, Delta Air Lines – also a belly-only operator – currently offer some 24 per cent of trans-Atlantic cargo capacity, an impressive feat for two carriers bereft of any maindeck capacity. “This means we can provide both a great network and high frequencies on what is the world’s biggest trade lane for pharma and a buoyant market for e-commerce shipments,” says Kennedy. And its not just the trans-Atlantic doing well for Virgin, with the

aircargoweek.com

ACW 20 NOVEMBER 2017

EGYPT

CACC achieves CEIV Pharma at its facility in Cairo

airo Airport Cargo Company (CACC) has handled significantly more cargo at Cairo International Airport in 2017 than last year and has just been awarded IATA CEIV Pharma certification. Since inauguration of ‘Cairo Cargo City’ in December 2016, CACC has reached a market share of more than 30 per cent of the airport’s tonnage, versus a 19 per cent share in 2016. CACC managing director, Mahmud Ibrahim says the cargo city development is spread over 150,000 square metres with direct access to the airport’s tarmac. He notes it is a series of state-of-the-art cargo terminals representing a “new era of advanced logistics operations in the Egyptian logistics market”. Ibrahim explains on the export side, perish-

ables to the European Union (EU) have been increasing while most of the Egyptian imported electronics are from Asia along with pharmaceuticals and garments from the EU. CACC is privately owned and its newly inaugurated temperature-controlled terminal is the first in Africa and second in the Middle East to be awarded CEIV Pharma certificate. CACC handles freight for Lufthansa, Qatar Airways, Etihad Airways, Austrian Airlines, Emirates, Aegean Airlines, Oman Air, Saudia Airlines, British Airways, Alitalia, and others. Ibrahim says the objective is to add to the roster and it is looking forward to being able to attract US carriers back to Cairo by promoting the “high security measures” implemented at its cargo terminals. There are a wealth of challenges and opportunities: “As CACC operates the most advanced

temp-controlled terminals at the airport, it has been reached out by customers to come up with a solution for the broken cold chain caused during the transportation of temp-sensitive cargo from aircraft to our temp-controlled terminals and vice versa, especially during the summer season,” he says. Ibrahim adds: “CACC has started designing various versions of cooling units ‘cool dollies’ to secure a stable temperature range for such consignments, so it would not be affected before arriving to our terminal or after dispatch.” The security situation in Egypt over the last few years has impacted air cargo into and out of Cairo. He explains: “The tonnage has been significantly affected since The TSA and TC have tightened regulations on airborne imports from Egypt (the Egyptian textiles/garments industry

Egypt a vital market for Lufthansa Cargo

EGYPT and Cairo are important trade lanes in the Lufthansa Cargo network in terms of both freighter and belly traffic. The carrier operates a five times a week MD11F service from Frankfurt Airport (FRA) to Cairo International Airport. This is complemented by belly services, including a daily Airbus A321 FRA to Cairo route, a three times a week A320 route from Munich to Cairo and a three times a week Vienna to Cairo through Austrian Airlines. Lufthansa Cargo senior director for sales and handling in Egypt, Andreas Loeffler says Egypt is a vital market as more than 330,000 tonnes of airfreight is flown into and out of the country a year, and it is one of Africa’s biggest. He notes it has been a topsy-turvy year though in Egypt for Lufthansa Cargo: “2017 we expect one of the best years for exports, while imports stagnate slightly below last year’s tonnage due to shortage in hard currency and import restrictions.” For exports, they are made up of approximately 80 per cent by perishable products (fruits and vegetables) followed by textiles

ACW 20 NOVEMBER 2017

has been negatively affected). Also there has been a negative impact on tonnage caused by the Russian ban on flights.” Ibrahim is positive about the future and says the growth strategy of CACC is to expand its business beyond Cairo International’s borders.

aircargoweek.com

(fashion, fabrics) with 12-15 per cent. As for imports, they contain a wide range of products from consumer goods, machinery, electronics, livestock, pharmaceuticals and fashion. Loeffler says the majority of perishable exports go to the Middle East and Europe and the main markets for textiles are Europe and the US. Cargo restrictions and security concerns have impacted Lufthansa Cargo, like for many carriers. Loeffler adds: “The TSA restrictions and the measures resulting from those impacted our business to Northern America.” Further future expansion could well be on the cards for the German carrier and its subsidiaries. “In the past years we have invested lots of time and efforts to further develop our footprint in the region. In particular for the Egyptian market frequencies and capacities have been increased for four consecutive years now,” Loeffler says. He adds: “It is our aim to grow with and to further develop the market in close cooperation with our partners.”

TRADEFINDER Airlines

Charter Brokers

Turkey

United Kingdom

Online Services

Freight Forwarders Hong Kong

Freight Forwarders India

United Arab Emirates

United Kingdom

Industry Events

Freight Forwarders USA

aircargoweek.com 11 20 Nov 2017 PRINT.indd 1

ACW 20 november 2017

11 16/11/2017 15:12

NEWSWEEK The UK’s gateways continue to see strong cargo increases

argo keeps on flying out of Heathrow Airport passing the 150,000 tonne milestone for the first time in the airport’s history. October was the 15th consecutive month of growth, and up 9.2 per cent compared to October 2016, handling 154,492 tonnes. On a year-to-date basis between January and October, Heathrow Airport handled 1.4 million tonnes, up 10.3 per cent compared to 2016. The airport has handled 1.67 million tonnes on a rolling 12-month basis between November 2016 and October 2017, a rise of 9.4 per cent. Heathrow Airport chief executive officer, John Holland-Kaye says: “Record passenger and cargo figures underline Heathrow’s position as a critical national asset. We remain on track to expand Heathrow in a way that is affordable, financeable and which meets all our environmental obligations, securing Britain’s place as one of the world’s great trading nations in the

early years of Brexit.” Last month, Heathrow unveiled its Blueprint for Sustainable Freight outlining practical steps the airport proposes to take to address the impact and number of freight vehicles around the airport whilst increasing cargo volumes. The ten-point plan includes a freight consolidation tool to share capacity, a new cargo village, airside transhipment facilities and consolidation facilities to reduce traffic on local roads, among other measures. Over at London Gatwick Airport (pictured) cargo tonnage soared 32.1 per cent in October compared to the same month last year, as it recorded its busiest ever October. Long-haul route growth fuelled the cargo tonnage uplift and the gateway says it is down to the continually increasing global connectivity at the airport with 22 new long-haul routes added in the last 12 months including to the likes of Cape Town, Kigali, Singapore, Hong Kong, Chi-

cago, Austin, Denver and Seattle. In October, the airport handled 10,316 tonnes, up on the 7,807 tonnes in October 2016. In the first 10 months of 2017 it has handled 92,495 tonnes, a 21.3 per cent increase on the same 10 months last year (76,247 tonnes). Gatwick Airport chief executive officer, Stewart Wingate says: “October’s soaring cargo

growth is the latest by-product of Gatwick’s ever increasing long-haul network.” At East Midlands Airport, the country’s largest airport for freighter aircraft, cargo traffic grew 8.6 per cent in October YOY while Manchester Airport and London Stansted Airport grew 3.6 per cent and three per cent, respectively.

Space centre role for Emirates

EMIRATES SkyCargo has signed a memorandum of understanding (MoU) with Mohammed Bin Rashid Space Centre (MBRSC) to become the preferred logistics partner for the Dubai pace science and advanced technology research and development centre. The MoU was signed during the Dubai Airshow last week. Under the MoU, Emirates SkyCargo will be MBRSC’s preferred partner to provide air transport services for satellites and related equipment relating to the organisation’s space projects. Emirates SkyCargo will work with MBRSC to develop bespoke and innovative air transport solutions that have wider applications in the space science and technology industry. MBRSC will be working with Emirates SkyCargo for the transportation of KhalifaSat, UAE’s most technologically advanced satellite built in the UAE. Emirates SkyCargo will help transport the satellite from Dubai to South Korea to prepare for final launch in early 2018.

Strong start to CLA’s 1st route

CARGOLOGICAIR’s (CLA) first scheduled route has got off to a flying start due to strong demand from the oil and gas industry from the USA to the Middle East. It launched twice-weekly Boeing 747-400 Freighter services in August with Europe-Mexico, Europe-Middle East and USA-Middle East connections, and has carried over 2,000 tonnes in the first two and a half months of service. The flights run from Stansted Airport to Mexico City twice a week via Frankfurt, Houston, Atlanta and Abu Dhabi. CLA is providing road feeder services to provide fast deliveries to Dubai International Airport, Dubai World Central and Sharjah International Airport. CLA’s chief commercial officer, Steve Harvey says: “The level of support from customers in the US for our first scheduled cargo route has been exceptional, and particularly the amount of oil and gas cargo we have carried so far. This reinforces our strong confidence in international demand for high quality all-cargo services as well as the positive growth of the US economy.” Houston Airports chief operating officer, Jesus Saenz says it is another step in the growing cargo operations at Bush Airport. CLA has added routes from London and Frankfurt to Dubai, Hong Kong, and Tel Aviv.