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The weekly newspaper for air cargo professionals Volume: 19

Issue: 16

25 April 2016

Drone hits BA aircraft landing at Heathrow

oncerns have been raised for some time that a drone will soon hit a commercial aircraft and this became a reality last week when an unmanned aerial vehicle hit a British Airways (BA) flight as it landed at Heathrow Airport. UK police are investigating the incident, which took place at around 12.50h on Sunday 17 April, and is thought to be the first of its kind in the UK. The UK has seen a number of near misses over the last few years, with close calls reported at Heathrow, Gatwick Airport, Stansted Airport, London City Airport and Manchester Airport. The Metropolitan Police says the BA Airbus A320 from Geneva was hit by the drone at about 580 metres while flying over the area of Richmond Park, in South West London. The force’s aviation security unit, based at Heathrow, is leading the investigation. On Twitter the Metropolitan Police tweeted it is dangerous to fly in airspace near to commer-

cial aircraft and “also a crime” and adds: “Please be aware of the rules before you start flying a drone.” Speaking after the incident, Heathrow Airport explains anyone operating an unmanned aerial vehicle has an “obligation to know the rules” and ensuring they are capable of operating it safely, and calls for regulations. The airport adds: “Doing so in proximity to an airfield or aircraft is both illegal and clearly irresponsible. Stronger regulation and enforcement action must be a pri-

ority for the Government to ensure that the airspace around British airports remains amongst the safest in the world. “We will continue to work with our industry partners to ensure that any violation of airspace is fully prosecuted.” The UK Civil Aviation Authority has reminded drone users to fly responsibly. “Drone users have to understand that when taking to the skies they are potentially flying close to one of the busiest areas of airspace in the world – a com-

plex system that brings together all manner of aircraft including passenger aeroplanes, military jets, helicopters, gliders and light aircraft.” The British Airline Pilots Association says it had been “only a matter of time before we had a drone strike” and calls for greater enforcement of existing rules. Last month at the International Air Transport Association’s (IATA) World Cargo Symposium in Berlin, delegates talked of their concerns of drones, which could be used in the future to transport airfreight, hitting commercial aircraft and causing an accident. The International Transport Forum’s economist, Alain Lumbrose warned: “There is going to be a killer drone and a human fatality sometime. It is not a matter of if, but when.” IATA’s senior vice president of member and external relations, Paul Steel also called for more dialogue on drones to work out how the airspace is going to be managed in future years with the increasing influx of drones.

Freight forwarder Panalpina outstrips market in Q1

Panalpina says in the first quarter (Q1) of 2016 its airfreight volumes grew five per cent to 216,000 tonnes - in a market that shrank an estimated three per cent. The Swiss freight forwarder says while volumes “contracted substantially in oil and gas“ they grew in all other industries including perishables. In ocean freight it saw volumes fall. Panalpina’s gross profit overall for airfreight rose 0.4 per cent to 148.6 million Swiss francs ($154.1 million), compared with Q1 2015 when it was 148 million, achieving an EBIT (earnings before interest and tax) of 17.8 million francs, down on the 19.6 million in Q1 2015. Panalpina says profitability was affected by lower gross profits in the oil and gas business while revenues are likely to have been hit by

lower pricing across the air cargo industry. Across all sectors, Q1 revenues declined by 13 per cent year-on-year to 1.3 billion francs, EBIT was 24 million, a fall of 5.1 per cent and net profit fell 11.7 per cent to 17.3 million. Panalpina reported an overall EBIT of 24 million francs, down on the 25.3 million in Q1 2015 and consolidated profit was 17.3 million,

a decline on the 19.6 million in Q1 last year. Panalpina chief executive officer, Peter Ulber explains: “In the first three months of the year, we succeeded in counterbalancing the lower transport volumes in oil and gas. This was due to the positive development in the rest of the business as well as the fast adjustment of our cost base.” In his outlook, Ulber says: “The tough comparison due to the decline in the oil and gas business will remain for the second quarter of the year, but we have shown that we can continue to be profitable and ride out the storm.” He adds Panalpina will continue to balance its business and product mix this year. Freight forwarding rival Kuehne + Nagel saw a fall in airfreight demand in Q1 (see page two).

droog: air cargo industry is inefficient

cargologic keeps up pharma investments

pharma flying high and at the heart of plans

expanding chinese e-commerce

ACW to be official title of Air Cargo Forum AIR CARGO WEEK’s show publication ACW Daily News has been endorsed by The International Air Cargo Association (TIACA) as the official daily title of the 28th International Air Cargo Forum and Exhibition in Paris from 26-28 October, 2016. ACW Daily News has been published and distributed at every Air Cargo Forum since 2000 and is seen as the principal provider of news and debate at air cargo industry shows. The newspaper will be published on each of the three days of the Forum and feature reports of conference sessions, industry announcements, workshops, feature interviews and breaking news from across the air cargo industry. The ACW Daily News team will be based on site at the exhibition venue Porte de Versailles, and each each day, the newspaper will be available to delegates, hand-delivered to all the exhibitors’ stands every morning and can also be picked up at the Air Cargo Week booth and the event’s media centre. ACW Daily News also provides extensive advertising and promotional opportunities during the Air Cargo Forum. Contact sales@azurainternational.com for details.

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NEWSWEEK

Indian carriers could get fines scrapped

he Indian Competition Appellate Tribunal (CAT) last week set aside fines handed out to Jet Airways, SpiceJet and IndiGo by the Competition Commission of India (CCI) for an alleged air cargo cartel. This paves the way for the three carriers to have fines proposed in November last year by the CCI scrapped. On Tuesday 17 November 2015, the CCI fined Jet Airways, IndiGo and SpiceJet a total of $39 million for engaging in “concerted action in fixing and revising FSC for transporting cargo”. Fines of Indian Rupees (Rs) 151.69 crores ($23 million), Rs. 63.74 crores and Rs. 42.48 crores were handed out to Jet Airways, IndiGo and SpiceJet, respectively. But the CAT has told the CCI it must

reconsider the decision, ruling the CCI had not given the carriers an opportunity to show they had not formed “any cartel for jacking-up fuel surcharges”. CAT says the director general report found there was no evidence of a cartel and the CCI had failed to indicate it disagreed with the report the carriers had not issued a response.

It also added they would have done if they had known the CCI disagreed with the joint director general’s report. In November, all three carriers said they would fight the fines, and Jet Airways told Air Cargo Week (ACW): “Jet Airways believes that it is not in contravention of the provisions of the Competition Act and shall pursue all available legal steps to defend its position.” Similarly, IndiGo told ACW: “The Company is studying the CCI Order and will take legal steps to challenge the order in the appropriate forum. The Company has been legally advised that it is not in contravention of the provisions of the Competition Act, 2002.”

Official launch of Air Cargo Belgium

AIR CARGO BELGIUM, the official air cargo community organisation of Brussels has been officially launched, with the aim to professionalise and improve the cargo environment at Brussels Airport. The new organisation will work with existing groups and is a more formal group with more possibilities, budget and leverage. Air Cargo Belgium will represent the entire air cargo community to make BRUCargo more attractive, efficient, innovative and successful logistical platform. Steven Polmans, who is head of cargo at Brussels Airport, has been appointed chairman of the organisation, supported by two vice chairmen, Alain De Heldt, who is also chairman of the Belgian Airfreight Institute, and Bas van Goch, Air Cargo Managers Association Belgium chairman. Polmans says he is honoured to take the role and hopes to be able to improve cargo operations for “everyone”.

Q1 boost for Kuehne + Nagel

KUEHNE + NAGEL has increased its airfreight earnings before interest and tax (EBIT) by 7.4 per cent in the first quarter (Q1) of 2016, helped by strong export businesses in Asia, the Middle East and Africa. Airfreight EBIT increased from 73 million Swiss francs ($75.6 million) in Q1 2016 compared to 68 million in the same period of 2015. This is despite the 2015 period receiving a temporary boost from the US West Coast seaport disruptions. Airfreight turnover was down from 1.4 billion francs to 1.3 billion. For the whole group, net turnover was down 2.1 per cent from 4.1 billion francs to four billion, though earnings were up by 10.5 per cent from 153 million in Q1 2015 to 169 million in 2016. Kuehne + Nagel chief executive officer, Dr Detlef Trefzger says: “The result of the first quarter 2016 confirms the successful implementation of our Group strategy. We consider our market proximity and our understanding of current and future customer requirements as a solid basis for the further positive development of our business.”

ACW 25 april 2016

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Singapore hub with robotic shuttles opened by DHL

HL Supply Chain has launched its 160 million Singapore dollar ($119 million) Advanced Regional Center (ARC) in Singapore, which includes 130 robotic shuttles increasing picking efficiency by 20 per cent. The 90,000 square metre facility includes an S$18.8 million multi-customer automation system featuring advanced robotics with the ability to pick and store products from 72,000 locations across 26 levels. The robotics, which are the first deployed by DHL, improve picking efficiency by 20 per cent and utilise 40 per cent less space than conventional warehousing operations. Deutsche Post DHL Group chief executive officer, Dr Frank Appel says: “As an organisation, our spirit thrives on a hunger for new knowledge and innovations that we can bring to customers to meet the challenges of Industry 4.0, the fourth industrial revolution. We see the

Asian region as a swift adopter of technologies for enhanced productivity and efficiency.” “By 2020, Asia will constitute 30% of our total revenue. Facilities like the Advanced Regional Center offer a ready model of innovations that reduce complexity, improve accuracy and maximise opportunities for productivity gains.”

DHL has co-located its first innovation centre outside of Germany inside the ARC, as part of a joint development with the Singapore Economic Development Board. Singapore Economic Development Board assistant managing director, Kelvin Wong says: “We are witnessing a pivotal chapter in the transformation of the Singapore logistics industry, as these best-in-class supply chain practices exemplified by DHL’s Advanced Regional Center start to take off in Singapore.” The ARC is designed to cater for specific industry needs, with clean rooms for life sciences and healthcare, specialised infrastructure for aerospace and customised storage for managing service parts for technology customers. DHL Supply Chain chief executive officer Asia Pacific, Oscar de Bok says: “We’ve seen swift take up from multinational companies using the Advanced Regional Center (ARC) as their regional or global logistics hub.”

NEWS WEEK WorldNews CATHAY PACIFIC AIRWAYS saw a marginal decrease in the volume of cargo and mail it uplifted in March – but it saw better demand in the month. Cathay Pacific and Dragonair combined carried 157,006 tonnes of cargo and mail in March, a drop of 0.4 per cent compared to the same month last year. The cargo and mail load factor fell by 5.4 percentage points to 63 per cent. Capacity increased 4.1 per cent. LEIPZIG/HALLE AIRPORT handled 248,417 tonnes of cargo in the first quarter of this year, a new record at the German hub and a rise of 6.3 per cent on the same quarter last year. In March, the gateway handled 91,258 tonnes of cargo, which was a rise of 8.8 per cent on the same month in 2015.

Partnership to grow airfreight in Russia VOLGA-DNEPR GROUP and Sheremetyevo International Airport have joined forces to grow air cargo in Russia. They have signed an agreement on long-term and mutually-beneficial co-operation to develop cargo at the Moscow gateway, which they say aims to achieve correspondence with high global industry standards. Sheremetyevo International Airport director general, Michael Vasilenko says: “We are delighted to see that it embraces not only the quantitative side where Volga-Dnepr Group guarantees an agreed volume of transit, transfer and import-export cargo flows, but the qualitative side as well with the building of an up-to-date hangar complex for maintenance and repair services, expansion of cargo facilities to offer handling for special commodities and, most importantly, provision of all the resources needed from our side.” AirBridgeCargo Airlines director general, Sergey Lazarev adds: “Both Volga-Dnepr Group and Sheremetyevo airport are strategically oriented towards development of a modern international level air cargo hub at the premises of Sheremetyevo airport.”

Swiss signs container deal SWISS WORLDCARGO has signed a partnership agreement with va-Q-tec for passive cold chain containers to support pharmaceutical manufacturers and forwarders shipping temperature sensitive products. The partnership was signed at SWISS’s Zurich headquarters on 18 April by va-Q-tec managing director, Dominic Hyde and SWISS head of cargo, Ashwin Bhat. va-Q-tec’s portfolio includes five container sizes taking up to two pallets inside and temperature ranges from minus 70 degrees Celsius to plus 25 degrees Celsius. Hyde says: “va-Q-tec has been requested by pharma customers to establish a partnership with Swiss WorldCargo to enable direct container rentals. Many pharma shippers and forwarders see the cargo division of SWISS as a strategic partner for reliably transporting pharmaceuticals and they want the simplicity of ordering the va-Q-tainer containers through the airline directly.” Bhat explains: “With va-Q-tec’s cutting edge containers we welcome the opportunity to offer a more complete, value-added passive solution set to our pharma & healthcare client base worldwide. As a specialist and global leader in the air transportation of high-value and care-intensive shipments, we are excited about the partnership agreement.”

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ACW 25 APRIL 2016

NEWSWEEK Minimal March uplift for Hong Kong

HONG KONG INTERNATIONAL AIRPORT saw ‘mild’ growth of 1.1 per cent in March helped by trade with India and Australasia, but the first quarter was still down 3.5 per cent on 2015. In March volumes were up by 1.1 per cent to 368,000 tonnes, with exports growing by five per cent and transhipments were up three per cent. Despite the growth in March,

Norwegian set to gain US air permit

volumes for the first quarter were down 3.5 per cent to 987,000 tonnes and have declined by 1.4 per cent to 4.34 million tonnes on a rolling 12-month basis. Airport Authority Hong Kong executive director airport operations, CK Ng says in March HKIA welcomed the first Airbus A350 aircraft by Finnair between Hong Kong and Helsinki, which is set to boost business. THE US Department of Transportation has issued an order proposing to grant a foreign air carrier permit to Norwegian Air International. This news is set to boost the carrier’s cargo activities as it looks to expand its freight offering and coverage. When made final, the permit will allow Norwegian to officially operations to the US, including the first-ever service between Boston and Cork in Ireland. Norwegian Group chief executive officer, Bjørn Kjos says: “A final approval, based on the Open Skies Agreement between the US and European Union, will be win-win for consumers and the economy on both sides of the Atlantic. “It will allow Norwegian to expand our US operations. Our continued presence in the US will create thousands of jobs and generate tens of millions of dollars of economic activity for the Group’s US destinations.” Norwegian’s bellyhold cargo arm is ramping up its freight services and in November last year it also signed a two-year framework agreement with Royal Mail’s

Gatwick Air Mail Unit (GAMU). This deal will see the carrier support international shipments between the UK, Scandinavia and the US. Norwegian has increased its cargo capacity this year and it will expand services further when it operates daily flights from Gatwick Airport to New York and flights to Los Angeles increasing to four times a week from Spring 2016. From May 2016, it will also launch Gatwick-Boston flights with further longhaul routes from the UK also in the pipeline. Norwegian’s long-haul destinations are operated by Boeing 787 Dreamliners with each aircraft able to carry up to 15 tonnes of cargo. The carrier offers freight capacity to destinations in Scandinavia and Europe. It also offers capacity to Bangkok, and the US cities New York, Orlando, Oakland, Los Angeles and Fort Lauderdale. Norwegian’s GSA is Wexco Cargo. Norwegian has a firm order of 149 Boeing 737s and 787s valued at more than $18.5 billion at current list prices.

Wings courier contract for Air Logistics

ir Logistics Group has been appointed as the general sales and service agent (GSSA) by the Wings On-Board courier network. The group will provide full sales and customer service support for the Wings network. Air Logistics Group managing director, Helmut Mair says: “We are very excited to be the GSSA for Wings On-Board, one of the world’s leading on-board-courier specialists. Adding this new activity will further enhance our existing cargo product portfolio. “Wings is already a well-established brand

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with the latest technology providing 24/7 full transparency at every milestone via the Wings APP and online tracking options.” Wings On-Board chief executive officer, Tal Haimovich explains that the Air Logistics Group is able to provide the “commercial expertise, quick response times and high service levels that are synonymous with Wings On-Board Courier services”. Wings On-Board is headquartered at Amsterdam Airport Schiphol. It has a network of 1,500 couriers in 125 countries, dedicated to delivering priority and emergency cargo.

Droog: air cargo inefficient

he air cargo industry is too inefficient and fragmented, and all the handling risks damage and theft, according to Tosoh manager supply chain and general affairs Europe, Middle East and Africa, Lars Droog (pictured). Droog, who has been appointed chairman of The International Air Cargo Association’s newly created Shippers’ Advisory Committee says there is a need for change and airlines must improve their marketing towards shippers. During the Nordic Air Cargo Symposium session, ‘(Re)New(ed) collaboration in the air cargo chain’, he told delegates that the current model is inefficient and fragmented, and suffers from high costs, a lack of visibility, inflexibility, a lack of innovation, high risks of theft and inefficient data sharing.

Droog says: “We have a lot of handling, there is a risk of damage and theft. Shipment arrives at airport, move to freight forwarder’s warehouse, then sometimes another, then warehouse of the consignee.” He believes if cargo is not handled so many times by going directly to the consignee then it will be faster, cheaper and reduce the risk of damage as it will not have been handled so many times. “We need collaboration where we sit together, an end to end solution could really improve the overall supply chain and I’m convinced air cargo has enough strength and opportunity for the future. We have to look at solutions, we have to investigate where costs can be cut and become more competitive,” he adds.

NEWS WEEK Fish exports stopping Nordic market from declining If it was not for perishables, particularly fish, airfreight in the Nordic countries would be declining, Lufthansa Cargo director Nordics & Baltics, Alexander Kohnen (pictured) says. Kohnen, who was also conference chairman for the Nordic Air Cargo Symposium, held at the Radisson Blu Waterfront hotel in Stockholm, told delegates that Denmark has seen growth in the past three years though it is slowing. Norway has been growing with fish exports making up for the downturn in the oil and gas industry, while Sweden and Finland are declining, the latter more rapidly. He comments: “In Norway there is rapid growth, the majority is fish, we love fish, it is what is driving growth. The Nordic market is under pressure with the downturn in oil and gas. Fish is what keeps us alive in Norway.” If it were not for fish exports, Norway would have declined significantly since 2008 and the

Nordic region as a whole would have declined 0.6 per cent in 2015 compared to 2014 without fish. Kohnen adds: “One day we may get the fish people to run the show. Stockholm Arlanda Airport flies a lot of fish. How would the market look like without fish? It is a key commodity. It was mobile phones now it’s fish, what comes next?”

Panalpina not worried by Amazon It will be interesting to see how Amazon copes with the complexity of airfreight, but integrators are a bigger threat, Panalpina’s global head of airfreight, Lucas Kuehner (pictured) believes. Speaking at the Nordic Air Cargo Symposium in Stockholm, Kuehner told delegates that new entrants such as Amazon are geared towards disrupting the industry, and once business has been lost to ocean freight, it is not worth chasing. Looking at Amazon’s chances, Kuehner comments: “[The supply chain is] very complex, a lot of people are involved. It will be interesting to see how Amazon and others cope with the complexity, I don’t think it will go smoothly.” Kuehner says: “We have new market entrants such as Amazon who are geared to disrupt the industry. Smaller forwarders are entering into the global sector. “With ocean freight if it takes five weeks the cost ratio is not right, once it’s gone to ocean freight its gone and not business to go after. The threat is from integrators, they can charge higher rates.” He believes that the widely reported entrance of Amazon into the airfreight market is overblown, and will not be successful in the intercontinental market. “Amazon will be domestic and not intercontinental. Maybe it will connect in the future, maybe I am wrong but it will do same day delivery, Europe is all one market.”

Are robotics the future of handling? ROBOTICS could be the future of air cargo handling, Henric Nauckhoff (pictured) told delegates at the Nordic Air Cargo Symposium. The Airis International senior vice president business development for Europe, Middle East and North Africa explains that robotics such as Ahkera Smart Tech could replace humans in handling up to 90 per cent of cargo. He says that the advantages include cargo remaining sterile as they will not be touched by human hands, provide an alternative to exhaustive physical work and be able to operate 24/7 without slowdowns or stoppages. He also notes that robotics would fit the existing infrastructure. Nauckhoff adds: “85-90 per cent of cargo could be processed by robots. One of the most labour intensive processes is building up pallets and containers; it could save up to 60 per cent on manpower in that operation.”

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ACW 25 APRIL 2016

SWITZERLAND

Swiss market heading South as currency changes affect market

he Swiss market has been shrinking since the Swiss National Bank gave up defending the Swiss Franc against the Euro according to the cargo handler Swissport. Swissport Basel’s senior vice president and chief executive officer, Gion-Pieder Pfister tells Air Cargo Week that business performance in Basel has been to the firm’s expectations in what he says is a “declining market” due to the economic conditions. He says the national bank’s move last year led to a strong appreciation of the Swiss Franc and consequent problems for Swiss exports, adding: “This has also led to more volumes being directly shipped from factory to consolidation centres in Frankfurt, Amsterdam and Luxemburg as handling rates in Switzerland increased by 15 per cent within a second compared to our surrounding countries.

“Basel, by contrast, has been taking advantage of the brand new, 18,000 square metre fully temperature-controlled cargo facility and has attracted additional freighters since. “Korean Air Cargo, Emirates SkyCargo, Qatar Airways Cargo, AirBridgeCargo Airlines and LAN Cargo operate full freighters into Basel. This has led to volume growth and a gain in market share among the three Swiss airports in a very challenging environment. “Our traditional clients like SWISS, Lufthansa, British Airways and others have been loyal and continue supporting us. Then there are the four big integrators which use Basel as their Switzerland hub and they continue growing.” Basel has not been affected like other air cargo gateways in Switzerland such as Zurich and Geneva, due to it being a very specialist cargo gateway. Pfister explains: “Concerning Basel, probably

the fact that we are a pearl in the wide ocean, respectively a niche player very much specialised in the handling of temperature controlled pharmaceutical goods.” However, Geneva has been hit he notes, as it has traditionally been a specialist hub for valuable cargo due to its proximity to the main watch manufacturers and has steadily grown in volume and value, there has been stagnation due to the economic conditions. The HNA Group has taken over Swissport, but Pfister says it is very much business as usual as the operating environment has not changed. He explains there is an increased focus on Asia, specifically China, due to the recent acquisition by HNA, but Africa is also a target continent since its global clients continue building up capacity and it is opening Swissport Ghana in Accra soon. The International Air Transport Association’s Center of Excellence for Independent Validators (CEIV) in Pharmaceutical Logistics certificate is considered by many as a must in the industry for pharma handling, but Basel has

yet to certify, but this is set to change. Pfister says the CEIV certification is on the radar: “We have had intense discussions, at least in Basel, within the cargo community whether we should go for the CEIV certification. The intention is now that EuroAirport, along with Swissport and a number of other key players, will shortly apply for the beginning of the certification process. “We are well aware our main cargo providers Roche and Novartis will continue to do their own audits but we have their support and hope, that CEIV will eventually become a recognised global quality stamp.”

High demand for DGR shipments

ASL AIRLINES SWITZERLAND is seeing high demand for specific dangerous goods transportation across the globe. Managing director, Harald Vogels tells Air Cargo Week this presents opportunities and one of ASL’s niche products is to organise the movement of specific high value goods, requiring special approvals. On the ad-hoc charter side, Vogels says demand is a little irregular, busy one week, not the next, and adds: “We experienced a high demand for ad-hoc charters at the end of the 2015, while in Q1 2016 we flew less last minute automotive flights than usual.” ASL Switzerland has seen business picking up after a strong end to 2015. Vogels says: “The European market has been relatively stable. The strongest growth has been on the remote operation. We have implemented a new route in West Africa. “On the charter side we had a modest Q1 but with a strong start in April we are preparing for a busy Spring season.” ASL operates two routes out of Switzerland into Germany for an integrator and Vogels

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says it has recently won the tender for the contracts again. Vogels says ASL is operating in a very specific market providing airlift mainly for the large integrators and demand for express services in Europe has been growing “at a slow but steady pace”. He adds: “We might see a push for larger capacity over the years as some of the routes may be required to be upgraded. As part of the global ASL Aviation Group we are ready to immediately meet any requirement for larger aircraft from our customers.” There are challenges in Switzerland and Europe for ASL, Vogels notes such as limited space for service providers and additional capacity in the market he feels “is not sustainable”, which may lead to further consolidation while the strong Swiss Franc and strong US dollar versus the Euro has had an impact. ASL Switzerland is looking to develop its business in the governmental and express operations sectors, and will be boosted by the Group’s fleet growing through the acquisition in the middle of this year of TNT Airways and Pan Air, adding more than 30 aircraft to its fleet, with another 20 or so operating on ACMI contracts. As for the future, Vogels says: “From our perspective we operate regionally in a specific sector for the major express integrators. This market segment is healthy and stable, with slow but steady growth.”

SWITZERLAND

Infrastructure and pharma plans at EuroAirport

nvesting to grow certainly seems like the strategy at EuroAirport near Basel, where the development of a new freight terminal has boosted traffic. The Swiss gateway, located close to many pharmaceutical firms, saw cargo rise three per cent in 2015 to 101,050 tonnes compared to 2014, and expects to grow by the same rate in 2016, reaching around 103,000 tonnes. Last year, the six weekly freighter flights by AirBridgeCargo Airlines (pictured), Emirates SkyCargo, Korean Air Cargo, LAN Cargo and Qatar Airways Cargo, helped the all-cargo sector post a rise of 86 per cent or 10,918 tonnes. The express segment through DHL, FedEx, UPS and TNT saw a four per cent uplift to 38,102 tonnes, but there was a seven per cent decline for road feeder services cargo to 52,000 tonnes. The opening of the terminal in January 2015 along with gaining the good distribution practice (GDP) certification is driving this growth the airport explains. EuroAirport says: “Put into service in January 2015, the new Cargo Terminal at EuroAirport is a state-of-the-art infrastructure geared to the regional economy’s specific needs.

“Concerted efforts have also been made to improve service quality. The new terminal is certified for GDP for medicinal products for human use and thus meets the stringent requirements of the pharmaceutical industry.” The airport plans on making further investments this year to improve service quality at the gateway. The airport explains: “In order to keep up with high quality demands, especially from the local pharma industry, the airport will drive forward implementation of the International Air Transport Association’s Center of Excellence for Independent Validators in Pharmaceutical Logistics. “Another important project involves renovation of the former freight terminal for the express freight operators through an investment of three million Euros.” EuroAirport bosses say there are major challenges such as the prompt resolution of the tax issue and a definitive solution for the overall package are it says of “paramount importance to the Swiss companies operating in the Swiss sector of EuroAirport”. The airport says in the short and medium term, the ongoing improvement of service quality for passenger and freight

Cargologic keeps up pharma investments

Cargologic is to continue investing in its cooling facilities as it remains committed to Switzerland’s valuable pharmaceutical business, managing director, Marco Gredig (pictured) tells Air Cargo Week (ACW). Gredig says the investment underscores Cargologic’s faith in Zurich Airport as a top cargo airport for pharmaceutical handling. He says: “We already went through the GDP [Good Distribution Practices] and CEIV [International Air Transport Association Center of Excellence for Independent Validators] process. This investment will allow all our customers to benefit from our top-quality pharma processes. We believe this gives a clear signal to the pharma industry to use Zurich Airport as a pharma hub.” The company is running an improvement programme with its management team to generate benefits and cost savings by allowing it to redesign processes and create new services and products. Cost savings are very important, especially in a country as expensive as Switzerland. Gredig tells ACW: “Switzerland is well known as an expensive country, so our cost structure is our business challenge. We

forwarders along with improvements to environmental compatibility of EuroAirport will remain the focus of the airport’s future development.

have to keep a sharp eye on rent, personnel expenses and all the other costs of running our business.” Business in 2015 proved challenging, with cargo turnover down four per cent on 2014. “The decline was primarily due to a weak world economic development and to fierce competition among airlines in the cargo sector, as well as the shift from air cargo to seafreight.” January and February 2016 saw turnover in kilogrammes increase by five per cent though March was down six per cent due to the timing of Easter. Gredig is expecting improvements in 2016, helped by Swiss WorldCargo introducing Boeing 777-300ERs and stabilisation in world trade and Swiss exports though falling imports are worrying. “What gives us a headache is the continuing decline in import figures as the airlines lose more and more shipments to the integrators.”

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ACW 25 april 2016

TEMPERATURE SENSITIVE Pharma flying high at Turkish and at the heart of its plans

urkish Cargo is one of the world’s heavyweight air cargo carriers and a key part of their growth strategy is to increase the number of temperature-sensitive shipments it handles. Central to this is the pharmaceuticals sector, where Turkey’s national airline is targeting strong development this year, as it looks to tap into the opportunities the market presents. Turkish Cargo’s vice president for commercial, Seref Kazanci (pictured) tells Air Cargo Week pharma adds more commercially to the company than other cargoes, as the yields of pharma are higher than the yields for general cargo. Kazanci says the main temperature-controlled products it moves are pharma goods, including diagnostics, vaccines drugs, sera, plasma, protein clinical trials, biotechnological material, pills and all kinds of medicines. He proudly declares: “We transport all kind of

pharmaceuticals. Turkish cargo is an expert in pharmaceuticals transportation for more than 25 years.” “When we analyse the progress, looking to the statistics in 2015, we can see that Turkish Cargo has achieved an 80 per cent increase in transportation of pharmaceuticals shipments in one year. “Turkish Cargo’s strategy in 2016 is to increase our pharma share in all shipments. Owing to our new investments and projects supporting this strategy, we expect a more than 40 per cent increase at the end of the 2016 in pharmaceutical transportation,” Kazanci explains. He says pharma is the fastest growing business in the global marketplace and says Turkish is aware of its huge potential that continues to grow day by day. The carrier will especially be focusing its efforts on the biggest pharma markets in Europe and South Asia to increase its market share.

Kazanci says Turkish has made several investments to improve its pharma service, building local handling expertise and a ‘pharma mindset’ training staff on the handling of goods. He notes this will continue as it looks to further grow the shipments it handles: “We are planning to be a part of global pharma inspection and certification programme - the International Air Transport Association (IATA) Center of Excellence for Independent Validators (CEIV) certification. “The process has already started with IATA and continues for having certificate at Istanbul Cargo Hub and our airlines. We signed the contract last year. The training program completed January 2016.”

New products

And Kazanci says the carrier is planning to launch new specialist products sometime in 2016, especially for shippers of pharma cargo. Turkish operates various services including temperature-controlled active and passive systems and its new cargo terminal at Istanbul Ataturk Airport, which comprises of a 3,000 square metre special storage area and 39 separate special cargo rooms, which have climate-controlled storage units designated for drug, vaccine and medical supply shipments. Kazanci says central to growth is the carrier’s high quality cold chain logistics chain, where shipments are prepared to protect the contents and prevent them from deterioration and all medical supply cargo requests made to Turkish are handled by offices, foreign agencies and the cargo reservation department. In the acceptance stage, he says cargoes are examined and categorised by its cargo and document acceptance unit, according to their destinations, types, weight, amount and size. At the acceptance stage, all transportation of drugs and medical supplies are processed in accordance with the IATA Acceptance Checklist. At the reservation stage, the shipments are assessed for safety,

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portability and packaging in accordance with aircraft type, country regulations, Turkish embargoes, international regulations, IATA regulations and IATA Airport Handling Handbook. Other key handling services are the use of thermal blankets with cooler blocks, remote temperature and humidity tracking using smart sensors, a safe and secure locking system and an automatic alert system, where temperature and humidity values of cold chain storage areas and facilities are monitored. Kazanci says Envirotainer active temperature control containers are used and with the support of Envirotainer, via an active cooling system, the cold chain can be ensured including the hold loading and unloading areas. Istanbul is set to be one of the globe’s air cargo hubs, rivaling Dubai and Hong Kong and Turkish will aim to “take advantage” of the opening of Istanbul New Airport in 2017/18 - which will boost its growth opportunities and potential. Kazanci says Istanbul is one of the biggest players in air cargo trade between East and West, and benefits from its strategic location, which is at the heart of world trade routes of Europe and Asia. But there are operating challenges for Turkish. Kazanci says these include a lack of uniform implementation through the entire supply chain at airports and in his view, not all stakeholders in the cool chain are properly equipped to handle temperature-controlled products. He adds: “There is no common local (global) certification for handling of pharmaceutical cargo in line with existing regulations and standards. “There is a lack of a common audit format leading to a lower audit effectiveness: ground handlers and airlines are being subjected to multiple audits by various pharmaceutical companies and freight forwarders.” Turkish certainly has a clear strategy for increasing the amount of temperature-controlled cargo it handles and it seems pharma is right at the core of its growth targets.

TEMPERATURE SENSITIVE Call for standardisation of pharma handling across supply chain

AL Cargo Airlines has long been at the forefront of the movement of temperature sensitive cargo. The Israeli carrier has its main hub at Liege Airport and was the first to gain the International Air Transport Association’s (IATA) Center of Excellence for Independent Validators (CEIV) pharmaceutical certificate across both airline and ground handling operations. CAL Cargo temperature controlled and special products manager, Navot Hirschhorn says time and temperature sensitive cargo such as pharma is the carrier’s number one product and 35 per cent of its business is temperature-controlled cargo, including pharma. CAL offers specialist products for the transport of pharma and perishables - CAL Pharma and CAL Fresh and in 2015, it saw a 30 per cent growth in the transport of temperature sensitive goods, but expects this will increase in 2016. Hirschhorn explains: “We absolutely believe this will continue to be our core service, and we even recently upgraded our fleet to new Boeing 747-400ERF and 747-400F. “The new aircraft expand our abilities to monitor temperature during the flight. The new freighters also increase our ability to compete on charter flights - no need for technical stop, eg, we can offer direct flights from EU to SA without landing to fuel.” Bouyant trade lanes for temperature sensitive cargo are the transatlantic West route and the import market into Tel Aviv (Israel), but Belgium, Switzerland and Germany, which all have many pharma firms are performing strongly, and are serviced via the carrier’s hub at Liege. In the US, CAL has a station in Atlanta, which supports all pharma (and other cargo) traveling East. This service includes two weekly rotations from Atlanta to Liege. Most of its cargo consists of APIs (raw materials for drugs and pharma), PIP (final product for export), PDI (diagnostic products), while contact lenses is a big segment and it does a lot business for the dental industry such as implants and is seeing a rise in high-sensitive bio-pharma products. Hirschhorn notes CAL is active is encouraging other pharma transporters to certify through IATA’s CEIV certificate to assure product integrity and reassure shippers of the validity of continuing airfreight shipping, despite the cost. CAL also has plans to grow freighter routes and is evaluating possible new stations and routes and the next investments it makes will be in its US facilities. He explains in Israel, TEVA sets the standard for the industry for pharma cargo: “Many diagnostic companies here enjoy the infrastructure that was established and designed to support TEVA’s activities. We see a move towards goods moving from

active packaging to passive packaging and this is due to very good solutions that were introduced to the industry recently. “Regarding perishables, we focus on export of flowers, spices, exotic fruits and seasonal fruits. Import focus is on fresh fish and meats as well as cheese.” The pharma market is going through a transformation and operators are investing to meet the changing demands of ship-

pers, and CAL sees further changes ahead. Hirschhorn says: “The pharma product (especially bio-pharma) will be more sensitive to temperature, humidity, shocks, and there will be a requirement for segregation from some dangerous goods. “We see that sensitive two to eight degree Celsius products will be packaged more and more with sophisticated packaging solutions that will require transportation environment conditions of 15 to 25 degree Celsius. We forecast that the majority of the shipments will require 15-25.” And due to the high cost of the active packaging solutions, and improvement of passive packaging - CAL is seeing transition from active to passive products. Hirschhorn notes green packaging (reusable, recyclable) is getting traction and demand for these is rising, but he feels the main issue is the need for standardisation and certification, specifically in relation to CEIV Pharma. He adds: “We believe the supply chain will need to include full tracking ability from point of origin to point of destination. A positive change is more people along the chain are receiving professional training. Traceability along the entire chain is important.”

New cover launched by Emirates

EMIRATES SKYCARGO has launched an updated version of its innovative protection product for valuable temperature-sensitive cargo, such as pharmaceutical products. The carrier says White Cover Advanced, utilises DuPont’s patented Tyvek material made of high density polyethylene to form a tough protective barrier against varying external temperatures and direct sunlight. The special material is water resistant to prevent moisture damage while at the same time breathable, thereby reducing condensation and dryness. It is also environmentally friendly and is 100 per cent recyclable. The White Cover Advanced is an enhanced offering to Emirates SkyCargo’s existing White Cover. While the White Cover is used for perishables, such as vegetables and fresh fruits, Advanced offers additional protection for packaged pharmaceutical shipments in controlled room temperature range and in insulated packaging. Emirates’ cargo operations worldwide senior vice president, Henrik Ambak says: “The pharmaceutical industry moves products worth over $1 trillion annually. Temperature changes during transportation can pose a serious threat to the integrity of these sensitive products.”

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ROAD FEEDER SERVICES

Expanding Chinese e-commerce driving growth for Hacis

ith the expansion of China’s middle class, Hong Kong Air Cargo Industry Services (Hacis) has firmly focused on the country’s fast growing e-commerce business, managing director Vivien Lau (pictured) tells Air Cargo Week. Though the Chinese economic growth has slowed to single digit figures, this has mainly hit general trade but e-commerce seems unaffected, due to the huge demand for quality overseas produce. Hong Kong is the natural entry point as the airport has the international links. “Hacis’ focus is now firmly on the fast growing e-commerce business in China, driven by rapidly-growing consumer demand for a wide range of

goods produced in other markets,” Lau notes. She says the e-commerce is driving cross border road feeder services between Hong Kong and China, which is driving overall airfreight demand: “E-commerce traffic will make an increasing contribution to our total SuperLink China Direct (SLCD) traffic levels, and we hope this will counteract much of the temporary reduction in general cargo.” The Pearl River Delta economy still relies on the OEM and OBM manufacturing industries creating demand for imports including silicone from Europe and fabric from the USA, but the rise of e-commerce is driving growth for branded products such as clothing, healthcare and baby care. Despite China’s economic growth slowing, it is still considerably stronger than most markets, and rising disposable incomes means consumers are increasingly able to afford high-quality goods from abroad. Lau comments: “This is

manifesting itself in growing reliance on online shopping, leading to a wide variety of goods imports from an equally wide spread of production centres globally.” Lau says: “Most airlines do not operate direct flights to destinations such as Guangzhou, Nansha and Jiangmen; but our SLCD road feeder service allows them to easily extend their coverage to more remote Chinese cities.” Despite Hong Kong being a natural entry point for Chinese e-commerce, transit times and border delays can be an issue. Hacis is trying to streamline road feeder services and improve transit times. Lau explains: “We devote con-

siderable resources to ensuring all paperwork complies with customs procedures, and we are able to identify special regimes that apply to some commodities that reduce duties and processing times.” To improve speed, all cross border trucks are equipped with GPS E-seals so they can use the fast lane at the border without queuing or stopping, which can save up to three hours at peak times. Lau says: “Hacis worked with both HKC&E and China Customs to pioneer the Single E-lock Scheme, and is one of a restricted number of carriers now allowed to use it.”

2016 could be flat, Scholte warns

After a good year in 2015, business in 2016 has not been bad, but the market is predicted to be flat, Jan de Rijk Logistics chief executive officer, Sebastiaan Scholte (pictured) tells Air Cargo Week (ACW). Scholte says acquisitions have helped business but has noticed a slowdown in air cargo, particularly from China to Europe, something that has continued in 2016. Jan de Rijk acquired one pharma last mile distribution company and another in the automotive logistics industry. He notes: “This will give us a better footprint in the assembly and automotive value added logistics and at the same time strengthening our healthcare logistics value proposition. For air cargo we noticed that in particular from China to Europe there was a significant slowdown in 2015, a trend which is continuing during the first months of 2016. Another trend is that more airlines are flying to more airports. Therefore the need for trucking is less. “On the other hand it is a cost reduction

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for these airlines operating to many airports in Europe versus the ones operating from a hub since they save cost on trucking and off line handling.” Scholte says road feeder services are an essential part of the air cargo supply chain and profitability is reliant on asset utilisation, load factors and yield. He says: “The shifting volumes with the resulting imbalances between certain countries is of course an issue in terms of the asset utilisation. The long waiting times at certain handling facilities is also a challenge.“ He says the industry faces threats in Europe, such as the ongoing migrant crisis and security problems throughout the continent. If the UK leaves the European Union, Scholte says this could also make business more challenging. Despite the concerns in Europe surrounding areas such as security, Scholte says Jan de Rijk is seeing increased demand for healthcare and aerospace. He tells ACW: “We have seen an increased demand for healthcare and secure solutions. “Jan de Rijk Logistics continue serving the aerospace market where we continue to invest in the latest technical innovations to carry aircraft engines, a specific niche that we serve as well.”

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ACW 25 APRIL 2016