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The weekly newspaper for air cargo professionals Volume: 20
Issue: 33
21 August 2017
Big loss announced by Cathay, but cargo performs strongly
egacy carrier Cathay Pacific Airways has announced a sizeable loss in the first half of 2017, but a major plus was that the cargo arm performed strongly. The Hong Kong-based airline was two billion Hong Kong dollars ($255 million) in the red for the six months, which it put down to intense competition and higher costs for both Cathay Pacific and Cathay Dragon creating “difficult operating conditions”. The loss compares to a HK$353 million profit in the same period of 2016. Costs included a fine of HK$498 million by the European Commission in March, over agreed cargo surcharge levels prior to 2007, which it said had infringed European competition law.
However, the carrier’s cargo revenue in the first six months of 2017 increased a significant 11.7 per cent to HK$10.5 billion. Chairman, John Slosar hails the performance of cargo in the first half of the year and says the segment is “looking good”. He adds: “The outlook for the cargo business is good and we expect robust demand and growth in cargo capacity, yield and load factor in the second half of this year. “We expect to see the benefits of our transformation in the second half of 2017, and the effects will accelerate in 2018.” Cathay Pacific says tonnage grew faster than capacity, and yield benefitted from resuming fuel surcharges and improved demand for mainland China exports, while demand for
shipments within Asia was stronger and European routes grew. The continued strong performance was shown in July as Cathay Pacific and Cathay Dragon carried 179,691 tonnes - an increase of 13.7 per cent on the same month last year. In July, the load factor rose four percentage points to 68.7 per cent. Capacity was up by 4.5 per cent while revenue tonne kilometres (RTKs) increased by 11 per cent. In the first seven months of 2017, tonnage rose 11.9 per cent to 1.14 million, against a 2.6 per cent increase in capacity and a 9.2 per cent increase in RTKs. The average load factor for the period was 66.6 per cent, up four per cent. Cathay Pacific director of commercial and cargo, Ronald Lam says the cargo business continued to show “strong momentum” in July, and this has been driven by increased demand in key markets. He adds: “Our strategic partnership with Atlas Air Worldwide has allowed us to increase freighter capacity to capture some of this demand. “Tonnage growth was well ahead of capacity growth in July, with both inbound and outbound sectors to and from Hong Kong performing well. “Overall cargo yield continued its positive improvement trend.”
Germany’s second largest carrier Air Berlin last week filed to commence insolvency proceedings in Berlin after leading shareholder Etihad Airways withdrew its financial support. Air Berlin says in a statement it will continue flying with the help of government loans. It has a net debt of €1.2 billion ($1.4 billion). Lufthansa and another unidentified airline are “far advanced” with plans for a partial rescue and a deal could be finalised in the coming weeks. The government is providing a €150 million bridging loan through its Kreditanstalt
fuer Wiederaufbau promotional bank. Air Berlin chiefs are in negotiations with Lufthansa and other partners regarding the acquisition of business units of Air Berlin and the negotiations it say may be finalised shortly. Air Berlin subsidiary, Leisure Cargo, a ‘virtual cargo airline’ which manages the carrier’s cargo business, says despite the financial situation of Air Berlin, its operations are not “negatively impacted” as all flights operated by airberlin and NIKI will continue as planned. Etihad bought a 29 per cent stake in Air Berlin in 2012, but last month it also announced huge losses of $1.87 billion for 2016. Etihad says “business has deteriorated at an unprecedented pace”, preventing it from overcoming challenges and it cannot offer funding that further increases its financial exposure.
The new IATA FIATA Air Cargo Program (IFACP) has been launched in Canada and will be rolled out globally after the Canadian pilot. The program replaces the Cargo Agency Program (CAP). It will be jointly managed by forwarders and airlines. An IATA-FIATA Governance Board (IFGB) has been established to run it. Existing CAP members will join IFACP with no further assessment and continue their existing enrollment in Cargo Account Settlement Systems (CASS). IATA members will automatically transfer to IFACP on the date on which IATA declares IFACP effective in any given region or country. IATA director of FDS operations, Juan Antonio Rodriguez says simplifying the governance structure “reduces the administrative requirement to manage the program”.
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Air Berlin files to start insolvency proceedings IFACP starts in Canada
2017 could be an exciting year for united american investing in south america 60 seconds with marco del giudice strong peak forecasted by iag cargo
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Best year since 2010
FREIGHT traffic across European airports had their best first half year since 2010 with 8.7 per cent growth, Airports Council International (ACI) Europe reports. Gateways inside the European Union (EU) registered growth of 7.8 per cent while those outside were up 14.4 per cent, with major hubs in Turkey and Russia performing well. In Turkey, Istanbul Ataturk Airport was up 15 per cent in the first half to 485,754 tonnes, and in Russia, volumes at Moscow Sheremetyevo grew 32.8 per cent to 102,897 tonnes, Moscow Domodedovo was up by 12.6 per cent to 60,178 tonnes. Frankfurt Airport retained its place as the busiest cargo airport in Europe, handling 1.04 million tonnes of cargo in the first half, up 5.7 per cent on 2016. Paris Charles de Gaulle remained the second busiest, handling 965,704 tonnes, an improvement of 2.5 per cent. Freight volumes grew 8.7 per cent at Amsterdam Airport Schiphol to 866,713 tonnes and Heathrow Airport registered growth of 9.1 per cent to 823,320 tonnes. In June, freight was up 10.4 per cent year-on-year, with 8.8 per cent growth at EU airports and 20.3 per cent outside. Second quarter growth was 9.2 per cent in total, with EU airports up 7.7 per cent and non-EU airports by 17.8 per cent.
aircargoweek.com
NEWSWEEK
Brexit proposals welcomed by industry
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he UK government’s paper on trade and customs arrangements post-Brexit published last week is a “step in the right direction” according to freight asociations, but they say forwarders still want more detail on Customs plans. The UK voted to leave the European Union (EU) in June 2016 and triggered Article 50 in March this year and will leave the EU in March 2019. According to the government’s paper, the UK could ask Brussels to establish a “temporary Customs Union” after it leaves the EU in March 2019. But during this period, it would also expect to be able to negotiate its own international trade deals, something which cannot be done as an EU Customs Union member. Once this time expires, the government says it will hope to establish either a “highly streamlined” border with the EU or a new “partnership” with no Customs border at all. Freight Transport Association deputy chief executive, James Hookham says: “The Government has recognised that it cannot drive the British economy off the cliff edge of Brexit. “But to secure the best possible deal for British business will take skill and understanding of how trading relationships work, in order to obtain the buy-in of the rest of the EU27 countries, as well
as the EU’s own bureaucrats.” The British International Freight Association (BIFA) director general, Robert Keen says that this focus shows how important the subject is to the UK government’s Brexit negotiations. He explains: “Having read and digested the paper thoroughly, BIFA believes it shows for the first time that there now appears to be a united position in the Cabinet in favour of a more business-like approach to Brexit and the need to facilitate trade with the EU.” He adds: “the devil is in the detail” and BIFA will continue to work with government to find out more details on how the proposals will work and keep the UK trading.
Hactl to train staff using VR
Hong Kong Air Cargo Terminals (Hactl) has introduced a Virtual Reality (VR) training environment, enabling new staff to gain experience before working on the ramp. The COSAC-VR provides users with an interactive, fully immersive, 360 degrees, four-dimensional experience, with the first phase covering aircraft cargo compartment operations, and other areas of Hactl operations will be included in future modules. COSAC-VR overcomes the limitations of on-the-job-training in preparing new staff for working in ramp handling, the fast pace of work, and the restricted opportunity to practice on real aircraft and ramp equipment. The VR is expected to speed up the learning process, enable trainees to experience a wider variety of scenarios such as handling odd-sized cargo pallets and special loads, and enhance safety awareness. Meanwhile, air cargo volumes at Hong Kong International Airport (HKIA) continue to soar with 11 per cent year-on-year growth in July. The airport handled 422,000 tonnes of cargo in July, coinciding with an improvement in global trade, with exports leading the way, up 15 per cent and transhipments by 10 per cent.
15% growth at Heathrow CARGO volumes grew at their fastest ever rates in July at Heathrow Airport with a 15.1 per cent year-on-year growth to 143,259 tonnes. American Airlines Cargo helped boost volumes by 44 per cent, increasing trade with North America by 16 per cent, while East Asian cargo increased 14 per cent with strong growth to China, Hong Kong and Singapore. Volumes were up 10 per cent to 966,580 tonnes between January and July and by 7.7 per cent to 1.6 million tonnes between August 2016 and July 2017. Heathrow Airport chief executive officer, John Holland-Kaye says Britain’s global gateway is hard at work this summer holiday season and July was the best month in Heathrow’s history and the airport is helping Britain show the world the country is open for business.
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NEWSWEEK
WFS targeting even more US growth as volumes rise 17%
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orldwide Flight Services’ (WFS) total volumes across its near 60 cargo stations across the US rose by more than 17 per cent in the first seven months of
2017. WFS won a further 37 new airline contracts in the period as well as 10 contract renewals from existing customers. In 2016, it handled over 1.8 million tonnes in North America. New agreements included contracts with Avianca Cargo in Miami, Atlas Air/Polar Air Cargo in Cincinnati, and AirBridgeCargo Airlines in Los Angeles as well as China Airlines in Chicago, LOT Polish in Newark and Los Angeles, and Swiss
International Air Lines in San Diego. 2017 has also seen the full and successful integration of Consolidated Aviation Services (CAS) following its acquisition by WFS at the start of 2016. CAS rebranded as WFS earlier this year, making WFS the largest cargo handler in North America. WFS North America senior vice president of sales and business development, Ray Jetha (pictured) says there are plenty more opportunities in the US. He adds: “The air cargo industry is experiencing an uptick and we feel we are in a good position to accommodate this growth with our current operations. As predicted, we will see an increase in the e-commerce market and this will certainly put some pressure on regular air cargo shipments. “We are ready to take on this challenge and have put the necessary infrastructure in place to
minimise the impact and also take advantage of the opportunities we expect to be created. “We are also looking to grow our role as a partner to our airline customers in terms of providing value-added services for pharma/ AVI/perishables etc, because we aim to provide airlines and their customers with a hassle-free, fully-controlled logistics chain under one roof.” WFS is working with the Transportation Security Administration (TSA) to develop ‘best in class’ systems and processes for screening,
monitoring and tracking cargo in the US, backing this commitment with investment. Further significant spend has been allocated to ground handling equipment and continued development of its ePic cargo management IT platform. As for the market outlook, Jetha predicts: “2018 will be interesting as we will see the full fledged emergence of the low-cost carriers (LCCs) in the US and how that will affect the current airlines operating widebody aircraft and the freighter market. Most long-haul LCCs will be operating aircraft which can carry some 20-25 tonnes of cargo. “We are experiencing a lot of growth organically and our customers are now asking us to open operations at second Tier airports across the US to accommodate their service requirements, which we are keen to explore as part of our long-term and growing commitment to customers.”
CARGOLUX Airlines International and lux-Airport have launched the first phase of the airline’s new headquarters building at Luxembourg Airport. The building will be located adjacent to Cargolux’s maintenance hangar, and connected by a glass bridge. It will house administrative staff with parking spaces. The airline’s training organisation, including crew training and its two Boeing 747 simulators, will also be located there. The Cargolux administrative staff is currently spread over several locations, but the new building brings all staff under one roof. Cargolux employs close to 1,400 staff in Luxembourg, including crews and maintenance staff. The design includes the glass wall of the
training facilities as well as ‘floating top floors’ housing the conference and meeting centre. The new building will be constructed and owned by lux-Airport, the management company of Luxembourg Airport. Cargolux has committed to a long-term lease contract. The first works will begin at the end of 2017 and it is set to move into the building in early 2020.
New stylish HQ in Lux for Cargolux
Picture perfect Picasso charter for ACS AIR Charter Service (ACS) was entrusted with flying 11 priceless paintings by Pablo Picasso from France to Morocco for a special exhibition and back again two months later. The pieces of art, insured for €150 million ($176 million), were transported on an Antonov AN-12, but the aircraft had to fly below its usual cruising speed and altitude on order to maintain a steady temperature and for the cabin to remain pressurised. The boxes containing the paintings were reinforced and had to be kept upright at all times. ACS France managing director, Francois-Xavier Camus says: “Our cargo director from ACS Paris personally oversaw the loading and arranged for the truck carrying the canvasses to have direct access to the tarmac
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and to load straight onto the aircraft. The precision of the operation ensured that the boxes arrived in perfect condition.” He adds: “The exhibition was a great success and similar diligence for the return flight meant that they arrived back in France safely last week.”
NEWS WEEK
Recovery of the LATAM market bodes well for MIA
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he pick-up in the Latin American (LATAM) air cargo market is boosting Miami International Airport (MIA) and helping it grow this year. Although LATAM and the Caribbean region had the lowest growth rate, up 2.7 per cent through May, it still remains MIA’s largest region in tonnage and value by far. Marketing division director, Chris Mangos explains: “Additionally, another good sign among our south of the border activity is the consistently positive growth rate from Brazil. “Consistently our number one market in trade value, Brazil had been in decline for the last two years. “We are now seeing month-over-month increases in cargo activity in Brazil, perhaps a gauge that the market has begun its rise again after bottoming out for an extended period.” Overall, in the first five months of 2017, MIA’s freight tonnage was up 5.8 per cent to 934,639 tonnes, with domestic freight leading the way at eight per cent growth and international freight not far behind at 5.5 per cent. Mangos notes from the international sector, the strong bounceback in high technology goods from Asia are making their way to the local and in-transit market.
“The Asia to Latin America via MIA flow is performing far better than a year ago. In domestic activity, e-commerce is in fifth gear at MIA and is boosting what was a very slow sector (domestic freight) of our overall cargo activity,” he says. Mangos says in the first five months of the year the top growth regions are: Mexico, up 308 per cent; the Middle East, up 114 per cent; Europe, up 11.7 per cent; and Asia, up 9.8 per cent. Of these growth percentages, he explains Europe represents the more impressive results given the growth rate on the high baseline of volume among the regions. MIA is seeing healthy volumes from Germany, Spain and the UK, both on belly services as well as freighters. Mangos says aside from Pharma.aero efforts to link pharma hubs via belly or freighter services, MIA is also looking at new freighter routes. He adds they are primarily in cities or areas where no service
is available at this time or where belly operations do not provide enough capacity for cargo demand and MIA has identified three such places that are “being contemplated at this time”. Freighters are a core part of growth, but the importance of belly cargo is also clear. Mangos cites the launch of the Aer Lingus (pictured) Dublin service from 1 September: “We not only anticipate good two-way cargo activity on the route, but also foresee healthy pharma inbound loads from pharma-production in Ireland.”
Delta gets container approval DELTA Cargo has been given approval to use Envirotainer RAP e2 containers on domestic and international widebody aircraft services. The airlines says the container is ideal for shipments requiring strict temperature control between +0C and +20C, and follows the news that Delta Cargo has been awarded International Air Transport Association (IATA) Center of Excellence for Independent Validators (CEIV) Pharma logistics certification. The approval of the e2s enhances Delta’s pharma product offering, which is available in ‘Pharma 1’ locations around the world, and the active container expands flight options beyond those using the Envirotainer RAP t2, as it does not require dry ice as a coolant, while also offering significantly more capacity for goods than the Envirotainer RKN e1. Delta Cargo aircraft can also carry CSafe, the entire Envirotainer active container line including the e1 and e2, and va-Q-tec passive containers.
Americas shuffle for Swiss
SWISS WorldCargo is to reorganise in the Americas with two sales regions instead of three as of October. The two regions will now consist of Northeast/Midwest USA and Canada, and the newly created Western, Southern USA & South America, and there has been a shake up of management. Hendrik Falk joined Swiss on 10 July as head of the region Western, Southern USA & South America, bringing nearly 30 years of industry experience with him, most recently as vice president for North and South America at AirBridgeCargo Airlines. He will be based in Atlanta. The Northeast/Midwest USA and Canada will continue to be led by New York-based Michael Ganz, who joined the American organisation two years ago, having held positions at Swisscargo and Swiss WorldCargo in Zurich. Rene Brechbuehl, who was head of the Southeast USA & South America region for three years will be retiring in October following 44 years with Swissair and Swiss. Swiss WorldCargo says: “We would like to take this opportunity to thank René for his outstanding dedication and outstanding contribution, and to wish Hendrik and Michael much success in leading the Swiss WorldCargo organisation in the Americas.”
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US AIRPORTS Tonnage growing strongly at DFW with more to come
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allas Fort Worth International Airport’s (DFW) strategy of positioning the hub as a gateway between Latin America (LATAM) and Asia is proving fruitful. Through June 2017, DFW handled more than 435,900 tonnes, a rise of 12 per cent on the same period last year, which has put it on track to surpass the 829,800 tonnes moved in 2016, itself a 12.8 per cent uplift on 2015. DFW executive vice president for global strategy and development, John Ackerman (pictured) says the airport is pleased it is performing above the global pace of about 10.4 per cent for the period reported by IATA and tonnage is
slightly ahead of this year’s goal. Due to its geographic positioning, DFW is the main US gateway between LATAM and Asia, which creates advantages in trade lanes from Chile, Brazil, and Mexico to Asia. Ackerman says an example is goods produced in Mexico are trucked across the US-Mexico border to DFW and exported to Asia and Europe. “In terms of total landed cost for perishables DFW has distinct advantages in trade lanes from Chile and Brazil to key Asian markets in China, Taiwan, Japan, and Korea,” he adds. In 2016, DFW’s top 10 transit markets between LATAM and Asia saw a compounded annual growth rate (CAGR) of nine per cent for the period 2012-2016 and the top five trade partners and eight of the top 10 are Asian nations led by China. Ackerman says these eight Asian markets accounted for 66 per cent of all DFW trade in
2016 and against that background, it is stepping up efforts in LATAM, focusing on markets it has a distinct lower landed cost advantage, such as Mexico, Chile, Brazil, Peru, and Colombia. He adds: “Adding a perishables centre to our capabilities will further enhance our strategy connecting these two regions. Other markets are also reflecting strong growth for the same period with Ecuador to Vietnam (CAGR +43 per cent) and China to Guatemala (+27).” For 2012-2016 transit flows, there was strong growth in semiconductors and integrated circuits (+23 per cent), agricultural products (+27), and transportation items (+17). Ackerman says by value, the top five exports in 2016 were computer chips, semiconductors & integrated circuits, aircraft parts, cell phones and related equipment and computers. The top five imports were cell phones and related equipment, plasma, blood fractions, computers, aircraft parts and semiconductor machinery.
New cool chain facility
Growth in perishables and pharmaceuticals is another target and will be driven by a new cold chain facility opening later this summer. The 3,400 square metre facility will be operated by Dnata and feature 24/7 service, varying temperature ranges, a refrigerated dock with truck doors, and airport ramp access. As facilities expand, Ackerman anticipates the top perishable commodities will be salmon, flowers, fruits, vegetables, pharma, and life science products. He says with increased capabilities for highvalue products and efficiencies perishable shippers will gain, especially in LATAM to Asia trade lanes, DFW expects to see increased flows of temperature and time-sensitive products. Ackerman explains: “This new on-airport ability to store commodities such as seafood, flowers, fruits, vegetables, pharma, and life science products will open numerous doors for DFW’s cargo and logistics partners. “In particular, pharma and biomedical handling expertise has become especially valuable
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to the Dallas/Fort Worth region. “We are pursuing development of an IATA CEIV Pharma certified community, which will further strengthen DFW’s position in the global supply chain as it relates to this high value sector.” The gateway is working with the DFW Air Cargo Association and logistics firms to create an IATA CEIV-certified community as a step toward establishing a viable pharma gateway.
Strong community interest
Ackerman says there is a lot of interest in the local cargo community: “We are reaching out to all stakeholders across the supply chain and the process begins with awareness and education about the CEIV program’s benefit to the public, and its value to each individual company, the industry and to the community at large.” In the last 18 months, DFW has welcomed Qatar Airways Cargo, Qantas Freight, Air Canada Cargo, and Cargolux Italia and network expansion is on the radar. Currently, 15 freighters and three integrators operate and two carriers also operate as Prime Air for Amazon. Ten of those freighters fly to China, Korea, Japan, Singapore, and Hong Kong with 40-plus flights weekly. Ackerman says as the need for cargo capacity continues to expand, the airport is looking forward to adding more carriers to this roster. DFW is a major economic engine for the entire North Texas region and Ackerman says cargo is a “very big deal”. Domestic cargo volumes have risen more than 15 per cent this year, largely due to growth in e-commerce and more is set to follow, as Amazon plans to expand its 149,000 square metre distribution centre at DFW to 446,000 square metres in 2018. Unsurprisingly, Ackerman is upbeat about future prospects: “With the best first half year result for global airfreight since 2010, along with the current growth trends in food perishables and pharma and life science products, DFW is well positioned to grow from these opportunities and further contribute to the economic vitality of the North Texas region.”
US AIRPORTS
Cherry bloom helps to drive tonnage at Sea-Tac
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eattle-Tacoma International Airport (Sea-Tac) has bloomed this year as a bumper cherry harvest and increasing seafood shipments have helped drive tonnage. In the first half of 2017, volumes were up 19.6 per cent as it absorbs additional capacity from four new services added in 2016 and embarks on a potentially record-breaking cherry export season. Cargo operations manager, Tom Green says the gateway expects lower rates of growth in the second half of 2017, but he forecasts overall growth could be in excess of 10 per cent for the year, on the 366,000 tonnes in 2016. He notes overall, domestic growth has outperformed international, but it has seen a slight uptick in Europe traffic through June, and Asia has been flat year-over-year, but July was strong to Asia with the cherry season still in progress. Sea-Tac’s main focus lanes through its belly and freighter connections are Asia but also Europe and the Middle East while perishables and e-commerce have performed the strongest. Green says the airport plans on growing further by leveraging facility renovation and expansion to attract more airline capacity growth. Washington state cherries are boosting cargo volumes and Green says it has seen significant growth and intends to support an expanding industry seeing increasing harvest levels as they pursue new international markets.
is working to complete a current Master Planning exercise regarding airfield facilities. “Seeing significant off-airfield facility development including Des Moines Creek Business Park and temperature-controlled facility development in Burien, both anticipating future development phases.” As for the airfreight market in the US in general, Green says there is continued strength and growth potential, especially with e-commerce, but he feels Sea-Tac must continue to grow its offering to tap into opportunities. “Facilities capacity must be increased and modernised along with having one of the smallest footprints of any major US airport, which make space an even greater premium,” he adds. Sea-Tac saw cargo surge for the fifth consecutive year in 2016 as it handled 366,000 tonnes – an increase of 10.2 per cent on 2015 tonnage levels. Domestic airfreight shot up 20 per cent to 194,754 tonnes last year as the gateway became the first in the US to welcome Prime Air.
Returning charter flights
In July, Sea-Tac recorded 230 international freighter operations and the total average monthly freighter activity during its peak cherry season has increased in excess of 20 per cent due to the influx of the international operations above its strong year-round domestic activity. In 2016, DHL, Prime Air for Amazon, Aerologic and AirBridgeCargo Airlines were welcomed on the freighter side with Xiamen Airlines and Virgin Atlantic on the belly side. Green says returning seasonal charter operations include Asian carriers China Cargo Airlines, Nippon Cargo Airlines and All Nippon Airways while in 2017 it also received a new freighter service from Yangtze River Express. Sea-Tac welcomed a specially painted cherry themed Boeing 777 Freighter named ‘The Cherry Express’ on 24 July transporting the fruit to Asia by China Cargo Airlines. He explains Sea-Tac will invest more into air cargo: “The airport
Atlanta to host huge logistics event in 2018 The logistics world will descend on Atlanta next year when Messe München enters the US for the first time when it holds Transportation & Logistics Americas (TLA) from 9-12 April. The spin-off from the hugely successful Transport Logistics events in Munich and Shanghai, which are each held every two years - will see exhibitors attending from the across the supply chain including key players from the air cargo industry. Taking place at the Georgia World Congress Center, TLA represents the first active involvement by Messe München in a logistics event in the US as part of a cooperation with the well-established MODEX intralogistics exhibition, who will hold the Georgia Logistics Summit. The organisers expect to welcome more than 30,000 logistics experts to Atlanta. Messe München deputy managing director, Gerhard Gerritzen says: “The trend is increasingly moving towards conferences that are accompanied by small trade shows or exhibitions. The rising number of exhibitors and visitors to our partner MODEX shows, however, that there’s a real demand for transport and logistics exhibitions. We’d like to satisfy this need with the TLA.” The Atlanta area is an important logistics hub in the US, and for international trade. It is home to Hartsfield-Jackson Atlanta International Airport and surrounding ports, and the region offers a wealth of opportunities for airfreight and maritime shipments. Visit http://www.tl-americas.com for more information about the event next year.
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CHILE & ARGENTINA
2017 could be an exciting year for United Cargo
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nited Cargo is excited by the opportunities 2017 could bring, especially with new routes boosting export capacity, regional sales manager for Latin America, Carlos Medrano (pictured) tells Air Cargo Week. A major source of excitement is new widebody non-stop service from Buenos Aires Ministro Pistarini International Airport to New York’s Newark Liberty International Airport. The service begins on 29 October, providing export capacity in the middle of the October to December high season for perishables. Medrano says: “Along with our current daily widebody to Houston, we will
be able to transport a daily average of 30 tons from Argentina.”
Ready for the peak season
Chile is also getting ready for the high season, Medrano adds: “In Chile, we are also prepared to support the October-through-February high season for perishables with our daily widebody from Santiago to Houston – while we also protect our year-round business and commodities.” So far this year cargo has been strong out of Argentina, with enzymes to Chicago and Shanghai, and fresh salmon from southern Chile boosting volumes and revenue. A lot of salmon is trucked to Buenos Aires for transportation to the US on United’s daily Buenos Aires – Houston Boeing 777 service. Fresh salmon exports from Chile are recovering, Medrano says: “A toxic algae bloom
devastated the stocks of salmon last year and exports dropped considerably. Both the commodity and our export traffic to the US and China have recovered nicely in 2017.”
High expectations
Medrano has high expectations for both countries. Describing Argentina, he says the signs point towards more flexible and friendly rules for investors, which would help exports. He says: “The economy is getting healthier and the business climate is improving, and if these trends continue we anticipate an increase in import traffic as well.” The economic indicators in Chile are mixed: “Chilean salmon remains very popular throughout the world, and exports of this commodity to China should continue to grow.”
Medrano believes both countries offer great opportunities for business, but challenges need to be overcome, such as poor road infrastructure making multimodal transport difficult in Argentina, while the weather can be a problem, especially in the south. He says: “The same adverse road conditions delay salmon shipments from the southernregionofChile,andairportsarefrequently congested during the high season for perishables.” Medrano explains that with economic conditions in the region stabilising, there is great potential for growth if these infrastructure challenges can be addressed. He says: “Demand for the two countries’ export commodities should continue to increase in Europe and China and remain strong in the US.”
Small improvement for LATAM
Cargo volumes for LATAM Airlines Group improved in July, as did load factors, with capacity seeing significant cuts. Revenue tonne kilometres were up 0.8 per cent in July to 276 million but were down 3.1 per cent to 1.88 billion for the first seven months of 2017. Cargo load factors were up 3.1 percentage points to 51.9 per cent in June and by 3.3 percentage points to 53.1 per cent in the first seven months. LATAM Airlines Cargo cut capacity by 5.3 per cent to 533 million available tonne kilometres in June and by 9.1 per cent in the first seven months to 3.5 billion.
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LATAM Airlines Group will launch the first non-stop flight from Santiago to Australia with services to Melbourne from 5 October. The 15 hour flight will operate three times a week, and will join Sydney services, which are operated via Auckland. When the news was announced, the Australian Ambassador to Chile, Tim Kane commented: “The Australian Government is strongly committed to increasing relations with Latin America and these new non-stop flights between Santiago and Melbourne will play an important role in strengthening our relationships.”
CHILE & ARGENTINA AA Cargo investing heavily in South American facilities
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merican Airlines Cargo is investing heavily in South American facilities because the market will grow strongly, regional manager Andean Region – cargo sales, Waldo Fuentes (pictured) tells Air Cargo Week. The airline has been upgrading facilities and operates Boeing 777-200 flights from Santiago to Miami International Airport and uses a Boeing 787-8 on services to Dallas Fort Worth International Airport. It usually operates a second seasonal flight to Miami using a Boeing 767-300, and all these flights offer significant cargo capacity. Fuentes says: “American’s global network is a huge benefit to our customers and the local market. With direct access from Chile to the US, we can quickly and efficiently reach as far as Asia and Europe. And that’s especially beneficial to our market, which deals heavily in time-sensitive perishable exports.” Technology remains the main import to Chile, though e-business from Asia continues to grow. Salmon and fruit are the main exports and general freight represents around 10 per cent of the total exports. Fuentes says the commodities shipped have remained stable, adding: “Although we have seen an increase in demand from Santiago to Asia over the past couple of years, while more and more
fruit is being trucked to Buenos Aires for more flights to the US and Europe.” He says exporters from Chile have learnt to utilise all the airline’s available options in the region, primarily using Santiago but also Buenos Aires. Fuentes says: “More and more Chilean exporters are also using Buenos Aires as an option, since it’s the same hours distance-wise from the US.” Another interesting trade lane American Airlines Cargo operates is moving technology shipments between Santiago and La Paz. Fuentes explains: “These are flown on American from Santiago to Miami and interline from there to La Paz. This is a somewhat unusual route, but customers prefer it, as it is secure and can provide full-pallet shipments.” Fuentes describes doing business in Chile as “simple and fruitful”, saying: “The economy and political climate are generally very stable and we have great customers who rely on us, our network and our efficient fleet. “However, the strong dependability of perishable commodities can also be a challenge, as they’re subject to consumer demand and are very price sensitive.”
Premium products and new routes for IAG
The first half of 2017 has posted “robust results” for IAG Cargo, and regional commercial manager for LATAM, Rodrigo Casal (pictured) believes the airline group is ideally positioned for a strong second half. He says the Constant Climate temperature sensitive product has performed very well, helped in part by an increase in healthcare and vaccination programmes that have been rolled out in Latin America. New routes have also helped, with London – Santiago services seeing good load factors, something that is expected to continue. Casal says: “The combination of good capacity, broad network and diverse products has placed us in a good position to capitalise on the peak seasons for fruit growers, while continuing to deliver for our “year round” customers.” The export commodities IAG Cargo carries from Chile and Argentina remains varied, with fish including fresh salmon and hake, blueberries and other fruits and seeds, while leather and meat remain important in Argentina. Casal comments: “We are handling increasing volumes of pharmaceutical products travelling under our Constant Climate product. Finally, our recently launched Critical service, which offers the highest level of guaranteed capacity has seen excellent take up, particularly among forwarders looking to move autoparts.” IAG Cargo operates a number of flights from the region, from Buenos Aires it operates two a day to Madrid, one to London Heathrow Airport and three a week to Barcelona, a new service launched in June using an Airbus A330. Santiago’s Comodoro Arturo Merino Benitez International Airport is served by one flight a day to Madrid and four a week to London, IAG Cargo’s longest direct flight, which started in January using a British Airways Boeing 787-9. Casal is optimistic about the future of both the Chilean and Argentinian markets, and IAG Cargo’s network plays an important role with customers looking to trade with European and Asian markets. He says: “Greater volumes of fresh salmon and fresh fruits are being air freighted from Chile to China, a trend that we believe will continue over the coming years.” Seasonality is a major challenge for the region, with export demand during the second and third quarter decreasing, but most varieties of fruit come into season and demand exceeds scheduled capacity in the fourth quarter of the year and first of the next. Casal explains: “The challenge and opportunity consist in providing ad-hoc capacity or connections via other gateways across Latin America and USA during this peak time. With 59 gateways across North America, Latin America and the Caribbean this is something that IAG Cargo is well placed to deliver on.”
aircargoweek.com
ACW 21 august 2017
9
60 NEWSWEEK
Seconds with
Marco del giudice
Air cargo’s share in the transportation of pharma has shrunk due to lack of standardisation and compliance across the supply chain. The IATA CEIV Pharma program was established to counter this. MDG Consulting managing director, Marco Del Giudice has carried out a number of the audits for IATA and spoke to Air Cargo Week about how the program has developed.
ACW: How did you get involved in the IATA CEIV programme? Del Giudice: I got involved IATA CEIV program in 2014. At that time I was involved as a private consultant with my company MDG Consulting in the ‘Pharma Program’ of Bcube for the airports of Milan and Rome. IATA approached me and asked me to make the training of them in order to become independent validator, and I accepted.
ACW: Why was IATA CEIV set up, and what role did you play in setting it up? Del Giudice: IATA CEIV was born due to the fact that the pharmaceutical industry was using airfreight less and less as a shipping method. The cause was that they couldn’t rely any more on the ground handling and the airport activities. There were major temperature excursions happening at that time in airport handling.
MARCO DEL GIUDICE IATA reacted by issuing the special certification in order to raise the quality bar in the airfreight industry in order to show to the pharma industry that airports are not a “black hole” any more. I was involved as the third independent validator contributing together with my colleagues (the other independent validators) to improve the program with our expertise.
ACW: What is involved in the process of a company gaining IATA CEIV certification? Del Giudice: All sectors of the company are involved in the certification process. The quality management system, the personnel and the training sector. All the operations, transportations and the infrastructures and their organisation are checked from us and are involved in the detailed gap analysis that we do during the process.
ACW: As a senior validator, what is your role when certifying companies? Del Giudice: I have the same role as the other independent validators. In a certification process we need to check with the four eye principle many aspects of the company that wants to be certified. We are not all involved in each certification, but in each certification process at least two independent validators are involved.
ACW: How can undergoing IATA CEIV help companies? Del Giudice: The IATA CEIV certification is impacting all the companies and it helps them significantly to restructure their organisation for the pharma industries’ needs. They start to speak the same language using tools like “Risk analysis, CAPA Systems, NC reports, mapping procedures etc”.
ACW: Are you happy with the way the air cargo industry has embraced IATA CEIV? Del Giudice: Yes I am very proud and happy to see how the industry is moving. A lot of work was done and a lot needs to be done in future, the certification process is not simple piece of paper on the wall but needs to be worked out day by day. After three years in the re-certification will be another step further to improve quality. It is a never ending process.
ACW: Are pharmaceutical companies happy with IATA CEIV? Del Giudice: The pharma industry is very interested in this kind of certification because it gives them the chance to have an overview of the companies that are working in compliance to the GDP standards without checking them directly.
ACW: Do you see a time when having IATA CEIV certification is considered essential? Del Giudice: It is becoming more and more “known” in the pharma industry and I can easily imagine that one day it will be an essential requirement in order to be a supplier for pharmaceutical shipments.
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ACW 21 august 2017
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ACW: How do you see IATA CEIV further developing in the future? Del Giudice: The process is moving rapidly forward and is also changing in regards to the experience that we as independent validators are collecting in the years. I can imagine that it will become more and more structured in the future.
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Industry Events
aircargoweek.com 11 07 Aug 2017.indd 1
ACW 21 august 2017
11 15/08/2017 13:52
NEWSWEEK Strong peak season forecasted by IAG Cargo money men
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AG Cargo posted some stronger cargo numbers last month for the second quarter (Q2) last and is forecasting a strong peak season. Commercial revenue increased 7.6 per cent in Q2 to €260 million ($304.3 million) while volumes were up 6.4 per cent. Cargo revenue in the first half of 2017 was up 2.6 per cent to €516 million. Financial director, Lewis Girdwood says Q2 was “robust”, but notes while it is pleased with the year to date it is “cautionary” and needs to remain focused on business performance. Growth was heavily fuelled from cross-border e-commerce and pharmaceuticals, and strong performances in both Asia Pacific and Europe. Commercial director, Dave Shepherd (pictured) says: “We are seeing considerable strength in the Asia market (volumes up 8.7 per cent) and there was a bounce from sea freight due to congestion between China and Europe
and e-commerce is helping drive growth in our network. “The European market has been very strong. Asia – Europe is up for the second year in a row. There has been good directional growth on that particular route. “We are also seeing growth on the westbound transatlantic lane from Europe into the US and Latin America (LATAM).” The LATAM market growth bodes especially well for IAG with the vast Iberia network out of Spain and Shepherd says Brazil is showing strong improvements, while the US is growing outbound, but he notes inbound has been slow. The US lane is set to grow further, as last week, IAG added a new five-weekly route from Heathrow Airport to Nashville, starting from May 2018 utilising a Boeing 787-8 with a payload of up to 15 tonnes a flight. Shepherd explains the service will open up a
new sub-market in the US where there is a lack of connectivity. He says Tennessee has a “burgeoning” automotive industry and anticipates this new capacity will be welcomed by businesses looking to move spare auto parts into Europe and beyond. IAG’s Critical service is also driving growth and this is now available to forwarders transporting Constant Climate shipments. Girdwood says this will boost business further in the service and it is becoming the product it “thought it would be”. Further investments in its premium cool chain facility at Heathrow will see it nearly
double capacity when it is opened in late 2018. Shepherd says it will provide IAG with more opportunities to grow business in the segment. He also notes freighter charters started from Basel via Madrid and to LATAM this year have worked well and been commercially “viable” and added demand to the LATAM network. IAG’s new low-cost long-haul operation, LEVEL, has also been integrated into the cargo network, providing more long connections from Barcelona and added to the bottom-line. However, Shepherd says it is limited in the amount of cargo it can fly due to weight restrictions from operating Airbus A330s on the lengthy routes to Los Angeles, Punta Cana and Buenos Aires. Overall, Shepherd is optimistic IAG will post a strong finish to the year and he is forecasting a strong second half to 2017. “Some of our major customers are seeing strength in the rest of the year and there is good demand for charters. It feels to me that we are going to have a proper peak season,” but he adds: “There will be a tightening in capacity from all markets, especially Asia.”
NEW long-haul routes have helped cargo volumes at Manchester Airport grow by 20.6 per cent in July, with other Manchester Airports Group (MAG) operated hubs also growing. MAG says Manchester is playing an increasingly important role in international trade, with more direct long-haul route connections to destinations including Beijing, Singapore, Houston and Muscat. London Stansted Airport (pictured) grew 2.1 per cent to 21,255 tonnes while East Midlands Airport was up 2.6 per cent to
27,856 tonnes. MAG plans to invest more than £1 billion in terminal and airfield facilities in the coming decades, to allow the airports to play a greater role in providing the runway capacity the UK needs in the coming years.
MAG’s airports all see July surges
Cargo figures continue to climb at Gatwick
GATWICK Airport handled 7,865 tonnes in July – a year-on-year (YOY) increase of 20.4 per cent on same month in 2016 – as it was boosted by new long-haul belly routes to Asia and the US. In the last 12 months, the gateway has processed 86,544 tonnes, up 18.4 per cent on the 73,096 tonnes in the previous 12 months. The growth comes as Gatwick continues to focus on developing the airport’s connectivity with Asia, with flights to Taipei and Singapore
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also set to launch later this year. Cargo could also get a further boost as more transatlantic routes are starting with Norwegian’s direct flights to Denver and Seattle taking off from September, and to Austin, Chicago and Buenos Aires launching early next year. Gatwick Airport chief executive officer, Stewart Wingate says July figures show the “growing role” Gatwick is playing in bringing Britain and Asia closer together.