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The weekly newspaper for air cargo professionals Volume: 20
Issue: 4
30 January 2017
Trump pulls US out of TPP, but will China step in?
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S President Donald Trump signed an executive order on Monday, 23 January to pull the US out of the Trans-Pacific Partnership (TPP) dealing a blow to the trade agreement and leaving its future in doubt. Trump withdrew the US from the 12-nation trade pact, which was signed in February 2016, and gave member states two years to ratify, calling it a “potential disaster for our country”. There are also reports Trump plans on renegotiating the North American Free Trade Agreement between the US, Canada and Mexico,
as he steps up his protectionist trade policies. This leaves Pacific Rim countries Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru in the TPP. The regional free-trade agreement of 12 countries with the US would have covered around 40 per cent of the global marketplace TPP includes a series of member agreements to lower tariffs, modernise their customs border clearance and ensure a level playing field for competition to help boost trade. The TTP was five years in the making, and
requires ratification by at least six countries accounting for 85 per cent of the combined gross domestic product of the member nations. However, the TPP may not be dead in the water, as on Tuesday January 24 the Australian and New Zealand governments reportedly approached a number of other countries in the group and discussed bringing in China or possibly Indonesia to replace the US, while Australia also thinks it is possible to push ahead with a 12-minus-one agreement. Others remain skeptical and Japan is reportedly sure the US leaving is a major blow to the TPP and the trade agreement is meaningless without the world’s biggest economic engine. FedEx founder, chairman and chief executive officer, Fred Smith says Trump’s decision to withdraw from the TPP is “unfortunate” and he believes China will benefit from the move. When the TPP was signed it was backed by operators including UPS who said it was vital to the US economy, supporting global growth and job creation. The trade pact was also given the seal of approval by freight forwarders, the Airforwarders Association, and Boeing as they said it would help drive the movement of goods through Customs and increase trade.
India the “darling” emerging market, but China still top India has the “most logistics potential”, but China was ranked as the top emerging market again in the Agility Emerging Markets Logistics Index 2017. Transport Intelligence (Ti), compiled the Index along with Agility, and says when ranking India in second it is the “Index darling for the second consecutive year”, while India and China remain the top two emerging markets due to their size and dynamism. In the survey of more than 800 supply chain industry executives, India was the leading pick for investment, which the Index found was an indication of the enthusiasm generated by some of the reforms made by the Modi government. The UAE was ranked third in the Index, Malaysia fourth, Saudi Arabia fifth, Indonesia sixth, Brazil seventh, Mexico eighth, Turkey ninth and rounding out the top 10 was Russia. The biggest mover was Iran in 18th place
and up eight places, while the biggest faller was Nigeria in 24th spot, down nine places. The Index found big geopolitical events across the globe have an impact on emerging markets, which remain “essential areas for growth and investment despite global realities”. And 24 out of the 50 countries in the Index – including seven of the top 10 – experienced
a year-over-year deterioration in their Index scores, “reflecting stagnation in global trade growth and turbulence in emerging markets”. Emerging market growth was 4.1 per cent in 2016, and forecast to reach 4.6 per cent in 2017. The Index estimates airfreight shipments from the 50 emerging markets to the EU will increase 3.3 per cent in 2017, but shipments to the US will decline by 6.2 per cent. Agility Global Integrated Logistics chief executive officer, Essa Al-Saleh says logistics providers and their customers are concerned that anti-globalisation feeling and populist policies in the UK and United States could spread and harm trade in emerging markets that rely heavily on exports. “Emerging markets continue to deliver the highest growth rates in the world, but as links in the global supply chain, countries can be extremely hard to evaluate,” Al-Saleh adds.
60 SECONDS WITH JOHN LLOYD
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ACW SPEAKS TO DELTA CARGO PRESIDENT
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FRA TO INNOVATE AS IT TARGETS A BRIGHT 2017 STRONG SECOND HALF HELPS ASIA GROW 1.6%
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Bittner appointed as MD of Globe Air Cargo
ECS Group has appointed Martin Bittner as its new managing director (MD) of Globe Air Cargo, Germany. Bittner took on the role on 1 January, taking over from Mark Grinsted who will retire after 14 years with ECS. Grinsted will hang his boots up on 31 March, but will now run special projects for the group. Bittner joins from DHL Global Forwarding Germany where he was head of key account management. He was responsible for all sales, marketing and retention activities for key accounts in Germany. Bittner says: “I am very proud to join the ECS group especially because of the strong and professional image in the market. I hope the experiences gained during my career will add value to the group for even greater success for the future.” Previously, he held roles at Expeditors International, Air Canada Cargo, Continental Europe and Lufthansa Cargo.
aircargoweek.com
Digitisation progress branded “dismal”
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ake up rates for e-freight and electronic air waybills (e-AWB) has been branded “disappointingly dismal” while progress has been “glacial”, CHAMP Cargosystems principal industry consultant, Steve Hill (pictured) tells Air Cargo Week (ACW). The International Air Transport Association set an e-AWB penetration target of 56 per cent for 2016, but despite a pick-up towards the end of the year, it only reached 48.9 per cent in December. Hill tells ACW: “For an industry which prides itself on the speed, efficiency, and offering a quality product we are consistently falling short of targets, year-on-year despite the best efforts on all fronts to try and improve the uptake of e-AWB and e-freight. “Certainly there are bright spots of success, but overall the drive for digitisation via dematerialisation is disappointingly dismal.”
Messaging system boost
NEWS WEEK
He says there is no lack of technology to support e-AWB and e-freight, and CHAMP is providing tools to support digitisation, but comments: “However what has not fundamentally changed is the business – the approach has been to electrify the paper-trail. One has to now ask – ‘is this the right approach even though it did seem right at the time?’’ Variation in standards support is blocking progress, and forwarders, airlines and handlers, even regulators can support different messaging standards, with the only harmonised set of data is on paper. Hill says: “It continues to be the case that the ‘one-truth’ data is on the paperwork, and is the safety net which the industry needs to have the confidence and trust to eliminate with not only systems to support e-Business but with the people, procedures, processes and platforms aligned to deal with a paper-free world.” He thinks the industry needs to look differently at data: “While we have an acceptable standard for e-AWB, FWB/16 suffices at a basic level while the XFWB is a truer representative of the AWB content, other paperwork, invoices, packing lists, certificate of origin and not to mention some customs documentation, all add to the e-freight cohort of documentation for transportation.”
THE International Air Transport Association (IATA) and the United Nations Conference on Trade and Development (UNCTAD) say IATA’s Cargo-XML messaging standard has now been fully integrated into ASYCUDAWorld. The integration of Cargo-XML in ASYCUDAWorld – the UNCTAD automated customs management system used by 90 countries for customs procedures – standardises the electronic communications between airlines and customs authorities using the program. The new data standard reduces message duplication and simplifies communication across the supply chain facilitating trade growth, improving cargo security, modernising customs operations and fostering participation in global commerce through advance electronic data submission for air cargo shipments. Cargo-XML makes it easier for airlines, freight forwarders and shippers to ensure that the information being provided to the customs authorities is technically correct and in line with standards of industry bodies such as the World Customs Organization (WCO) and regulators. It also facilitates custom risk assessments for air cargo shipments and improves compliance with security regulations. IATA’s head of cargo, Glyn Hughes says having a standard digital messaging system in the supply chain is “fundamental” to enhancing efficiency, driving trade growth and maximizing safety and security across the industry.
Hogan to step down at Etihad
JAMES Hogan (pictured above) is to step down as president and chief executive officer of the Etihad Aviation Group in the second half of 2017. Hogan, who took the helm of Etihad Airways in 2006, will join an investment company along with Etihad Aviation Group CFO, James Rigney, who is also leaving the company, and the search for replacements is underway. Etihad Aviation Group board chairman, H.E. Mohamed Mubarak Fadhel Al Mazrouei thanked Hogan for his work, saying the company had grown from a 22 aircraft regional carrier to a 120 aircraft global airline.” Hogan says: “Along with the board and my 26,000 colleagues, I am very proud of what we have built together at Etihad and of the company’s substantial contribution to the UAE and to the development of Abu Dhabi. “The last decade has seen incredible results but this only represents a first chapter in the story of Etihad.”
aircargoweek.com
ACW 30 JANUARY 2017
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NEWSWEEK Europe role for D’Cruz at ACS
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ir Charter Service (ACS) has promoted Tracy D’Cruz (pictured above) to regional director for the company’s European offices. She will start her new role in February and
chief executive officer, Justin Bowman explains: “Since Tracy joined ACS almost 10 years ago she has worked in both the marketing and sales teams in the UAE and UK offices, before starting up our Indian operation in 2012. “This gives Tracy an extremely broad range of experience across the business as well as an understanding of many cultures. “Under her leadership the Mumbai office has become one of the most profitable businesses in the Group which is an incredible achievement in less than four years. “We are delighted to be promoting Tracy to regional director of mainland Europe, covering our offices in France, Spain, Germany and Switzerland. “The charter numbers of these operations have grown by 80 per cent in the last five years, and Tracy will oversee the future development.”
Leipzig passes 1m mark
FREIGHT volumes at Leipzig/Halle Airport in 2016 passed the magical one million tonne mark for the first time as the airport handled 1,052,372.4 tonnes. This was a 6.5 per cent increase over the previous year at Europe’s fifth largest cargo hub,
Germany’s second busiest by volumes after Frankfurt Airport. The sterling year for tonnage was capped off with a strong peak season as Leipzig set a monthly record was set in the history of the company in December when the airport handled 97,105.7 tonnes of cargo. Leipzig becomes the fifth European gateway to pass one million tonnes in 2016, joining Frankfurt, Amsterdam Airport Schiphol, Heathrow Airport and Paris Charles de Gaulle Airport. Freight rose at Leipzig strongly, but passenger traffic fell sharply by 5.6 per cent as the slump in demand was caused by various geopolitical factors and scheduled flights were also affected by strikes at other airports yet again, which led to cancellations of service.
Cathay and Lufthansa under 1 roof at FRA CATHAY Pacific Cargo is relocating its cargo handling activities in Frankfurt to the Lufthansa Cargo terminal as part of the cooperation agreement between the airlines. The relocation of Cathay’s freight handling into the Lufthansa Cargo Center (LCC) in Frankfurt is a core element of the carrier’s joint business agreement (JBA) announced in May 2016. The merging of freight handling for imports and exports was concluded on 17 January 2017 and customers of both carriers are set to benefit. As part of the cooperation agreement,
both airlines are closely working together on network planning and sales as well as IT and service expansion. Both partners plan to transport the first joint shipment on 1 February 2017 – initially from Hong Kong to Europe. The ability to also book eastbound shipments from Europe to Hong Kong will follow in 2018. Cathay Pacific director of cargo, Simon Large says it will lead to more efficiency and time savings, and Lufthansa Cargo chief executive officer, Peter Gerber says its customers at Frankfurt will now benefit from the advantages of the cooperation.
FedEx appoints Bronczek and Cunningham
DAVID Bronczek (above) is to take the helm at FedEx Corporation with David Cunningham filling his position in charge of FedEx Express from 1 February. Bronczek will be president and chief operating officer of FedEx Corporation with responsibility for marketing, sales and all FedEx operating firms, while Cunningham will take over as president and chief executive officer of subsidiary FedEx Express. FedEx Corporation chairman and chief
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executive officer, Frederick Smith says: “He is uniquely qualified to take on the position of president and chief operating officer (COO). Under Dave’s leadership for the past 17 years, the FedEx Express team has achieved outstanding financial results and service levels.” Cunningham previously served as regional president of the Asia Pacific region and as executive vice president and COO. He will be responsible for leadership and direction of FedEx Express, including TNT, and will also serve on the Strategic Management Committee of FedEx Corporation. Smith adds: “Beginning more than 30 years ago at the Memphis World Hub, David Cunningham has progressed through the FedEx ranks and served in leadership roles in finance, as well as domestic and international operations. These experiences have prepared him to lead FedEx Express.”
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60 SECONDS
Seconds with JOHN LLOYD
Virgin Atlantic Cargo is one of the top transatlantic freight carriers. Last year, it announced a handling partnership with Delta Cargo and dnata grew its route network while also penning a deal for 12 Airbus A350s. Virgin’s senior vice president for cargo, John Lloyd spoke to Air Cargo Week about how business is and how he sees the marketplace.
Justin Burns, ACW: How was business in 2016? Lloyd: We’ve actually managed to increase our market share in what is still an extremely competitive, challenging and unpredictable global cargo market. We expected 2016 to be difficult because of all the economic factors impacting trade and consumer buying. We’re working hard to meet our budget for the year and have certainly seen a welcome improvement in tonnage and revenue in the second half of 2016. It’s not often July and August are strong months for air cargo volumes but that was the case and I am pleased to say this has continued for us, although the strong pressure on yields is still very evident. We’re close to our target for the year.
Justin Burns, ACW: What are the biggest cargo challenges? Lloyd: Generally, it’s a simple case of overcapacity on major routes and not enough cargo so that impacts yields. It’s hard to see this changing in the short term so we have to focus our customer service and performance to make sure we maintain and, hopefully, grow our market share. Another challenge is it is becoming increasingly difficult to forecast the market accurately because there are so many factors impacting global trade.
JOHN LLOYD Justin Burns, ACW: Where do you see air cargo in 10 years? Lloyd: The world is changing and we live in a consumer society where customers expect products to arrive quickly and securely. Speed and predictability are what sets air cargo apart from other modes so what I hope to see is a greater appreciation of the value of air cargo and a more sustainable and predictable business environment. And I hope we don’t have to wait 10 years for that to happen.
Justin Burns, ACW: What trade lanes performed the best? Lloyd: We’ve seen further improvement in business from the UK, particularly to some of our US North East destinations as well as Miami and Los Angeles. We have also seen an increase in the amount of cargo we are generating using our trucking services from mainland Europe for our flights ex London. Inbound, these same markets are ahead of target and we are achieving revenue improvements ex Dubai, Johannesburg, Lagos, Delhi, Hong Kong and Shanghai. Justin Burns, ACW: How has pharma performed? Lloyd: We have seen our market share increase this year, particularly on our transatlantic routes. We see a good opportunity for growth, partly because of the strong capacity share we have, the biggest pharma trade lane, and based on our service levels. However, we cannot rely solely on pharma. We’re also seeing growth in our high value, perishables, fish and express volumes and in specialist markets, such as automotive. We’ve committed more resources to developing our Cool Chain business this year. The world’s biggest pharma market is transatlantic so with our 30 per cent share of cargo capacity to and from the US we are in a good position to target new pharma business. This is something we see continuing to grow over the next few years as we enhance our pharma product. The reason there is so much focus on pharma is it has a sustainable future given the growth projections from the healthcare sector. The UK to US pharma market is forecast to grow seven per cent a year to 2020. We also see new opportunities for our daily services to other major pharma markets such as India and China.
Justin Burns, ACW: Tell me about your tie-up with Delta Cargo for dnata cargo handling facilities? Lloyd: The new agreement we signed with dnata covers cargo handling for Virgin and Delta at Heathrow, Gatwick, Manchester, Glasgow and Edinburgh as well as at six regional UK airports. In the US, we have previously co-located our handling in Atlanta, Boston, Las Vegas, Miami, New York (JFK and EWR), Orlando and Washington Dulles. There are efficiencies to be gained from having both operations under ‘one roof’ but we expect the biggest benefit to be for our customers. Our ‘door waiting’ times, are among the best at Heathrow, but dnata is looking to implement new technology to reduce truck turnaround times. We’re also looking to further improve our premium products. The ‘one roof’ strategy with Delta enables us to leverage our combined business and make us easier to do business with as the JV develops.
Justin Burns, ACW: How will having A350s boost cargo? Lloyd: The A350 is a very good passenger and cargo aircraft and another step in our fleet modernisation programme. Our new $4.4 billion order for 12 Airbus A350-1000 will see the first join our fleet in early 2019. We expect the A350s to deliver a significant improvement in lower deck cargo capacity of between 10-22 per cent, depending on configuration.
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NORTH AMERICA
ACW speaks to Delta Cargo president Gareth Joyce
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elta Cargo’s president, Gareth Joyce has been at the helm since the middle of 2016 and has big plans to grow business.
ACW: What have been the biggest challenges since you joined Delta Cargo? Joyce: Delta Cargo has the potential to redefine the product and service we offer. We have an opportunity to make this business far more customer-centric and consumer-oriented, as well as being solution orientated. Until now, Delta Cargo has operated on very transactional lines - fill the bellies of the planes we’re flying, move the product from A to B on time and on target. But there is a consumer component that we need to bring to the business. We need to listen to our customers and understand what they are trying to get from where to where. We must have empathy for the demand that’s out there and be sensitive to what would delight our customers, because if you want to be great in the cargo game you have to go beyond transactional. You have to get to a more relationship-driven operation that understands what the customers need out of the business. And that’s not just being the most affordable. It’s much more about being solution-orientated. ACW: How has working for Delta Cargo compared with previous positions you held? Joyce: Prior to joining Delta, I held a variety of leadership posi-
tions with Mercedes-Benz throughout Africa, Europe and North America. At Mercedes-Benz we led a very complex network of business functions that included moving 60 million parts around the country, doing 2.5 million services on cars and supporting nearly two million call centre customer interactions each year. More than logistics, Delta is centred on service. Great service is delivered when three components hit the target simultaneously: strong and stable processes and systems combined with highly capable and motivated people. All three of these apply to our challenges within the cargo business. ACW: How would you sum up your performance in 2016? Joyce: There were a lot of things that went well in 2016 but I think probably the most important thing was that sense of teamwork, that sense of understanding what we’re trying to achieve as a group of people working together towards a common goal. We need strong processes to make sure that we can utilise our network capacity to get our customers’ product from A to B successfully, on-time and with the best possible quality. In 2016 we began a multi-million dollar investment and upgrade of our systems, tools and processes that our customers will begin to meaningfully benefit from in 2017. We need good systems to make sure processes run seamlessly with minimal human interaction. This enables the people to focus their energy and efforts on taking care of the customers’ interests and creating value. ACW: What were Delta Cargo’s strongest freight trade lanes? Joyce: Delta’s strong network coupled with our joint venture alliances and partnerships, performance, fleet, capacity, reliability and brand gives us a strong market position across the globe. Through this we continue to see strong performance in the US as well as from Latin America, Pacific and Europe. ACW: What types of cargo did you see strong growth in?
Joyce: We saw growth in the transportation of high-end goods such as fashion and cars, as well as pharma and our express product, DASH, continues to be a key performer for us across the US.
ACW: What are your aims and objectives for 2017? Joyce: We need to double down on our greatest strengths. There are two key priorities. Priority one: operational reliability of delivery end-to-end that matches the airlines world class on time performance metrics. Priority two: develop systems, tools and people focus to ensure customer focus develops in all we do, from bookings to delivery. I want our customers to come to us with new business because they know we’re the best. When you’re delivering a product that your customers celebrate, you’re doing it right. I’m challenging my teams to ask questions and deliver ideas that will make Delta Cargo head and shoulders above our competition in service delivery. In a market that is oversaturated with capacity, if we get this right, we have a better chance that customers will bring their business to us through value creation and not just price.
ACW: What trade lanes and sectors are you targeting growth in? Joyce: Delta is continuing to grow its foothold internationally and as the airline looks into new opportunities to connect the world, Delta Cargo is becoming more connected with global trade. This year Delta will launch seven new routes with three new markets including Lisbon, Berlin, and Glasgow. We will also be launching new Pacific service Atlanta - Incheon and resuming service between Atlanta and Brussels in April. These are both large cargo markets for Delta. Add to that we have invested in CEIV certification in our major hubs in the US and internationally and have completed all training requirements as we grow our pharma offering globally in conjunction with our joint venture and alliance partners. We will continue to enhance and differentiate our DASH products to enrich our domestic offering. Internationally, we are testing new services that better meet the needs of our customers and we look forward to sharing more details throughout 2017.
ACW: Are you welcoming any new aircraft in 2017? Joyce: This year we will receive 53 aircraft deliveries. We will begin taking delivery of 25 A350s enabling further expansion of our cargo offering in the Asia Pacific region. We will also receive A330-300s, 737-900ERs and A321-200 aircraft in 2017.
ACW: Where is Delta Cargo investing in 2017? Joyce: Delta Cargo will be making significant investment in our technology systems as well as focusing on operational reliability and the rollout across the system of RFID tracking technology. With Delta’s strong operational performance we need this to translate into our cargo operations ensuring reliable freight delivery right across our global network. We will also be focusing on our innovative product and service offering as well as listen and work with our customers and freight forwarders to make Delta Cargo much more customer centric. We will also be investing heavily in the customer experience including training and customer experience tracking Net Promoter Score measurement, as well as expansion of our trucking network. ACW: How do you see the future of the air cargo industry? Joyce: Continue to be robust with capacity, and additional technology entrants will make it a fiercely competitive environment. Integrated logistics services will be crucial to provide customers with more seamless end-to-end solutions.
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NORTH AMERICA WestJet revenue grows as expansion plans are implemented
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evenue at WestJet improved in 2016 as it continued growing and expansion plans were implemented, director of WestJet Cargo and charter operations, Heidi Grigg tells Air Cargo Week (ACW). She says revenue grew in 2016 despite economic challenges and the air cargo industry suffering from lower yields, but these should see some improvement in 2017. WestJet has introduced new routes such as services to London’s Gatwick Airport from Vancouver, Edmonton, Winnipeg and St. John’s on a seasonal basis, and Toronto and Calgary all year round. Grigg tells ACW: “The launch of our London Gatwick service (six routes) started summer of 2016, when we see other operators also with capacity on that route. As
a new entrant, it took some time to build the business and we are pleased with the performance to date.”
For 2017 she continues: “We are continuing to expand WestJet Cargo in 2017. We have plans to expand into existing WestJet cities that WestJet
Cargo does not yet serve, expand in some of our product offerings and potentially open into new WestJet cities as well.” On domestic routes, transporting animals is an important business area while perishables are proving popular internationally. Grigg comments: “Perishables, such as seafood, is also one of our key products in Canada that has seen excellent growth in the recent years.” She also says: “The key opportunities of doing business in Canada is the import/export opportunities with other countries as well as the Canadian dollar in relation to other countries.” WestJet Cargo provides shipping services across Canada, the US, Mexico, the Caribbean, Ireland and the UK, and has a fleet of Boeing 737s and Boeing 767s. 2017 looks set to be strong year for WestJet.
Chinese develop taste for Nova Scotia lobster THE Chinese have developed a taste for Nova Scotia lobster, helping hard-shelled live exports grow over 400 per cent in five years, Halifax International Airport Authority (HIAA) tells Air Cargo Week (ACW). HIAA, the operator of Halifax Stanfield International Airport, has been very busy catering for the Chinese demand for lobster for Chinese New Year festivities. Yangtze River Express has been operating Boeing 747-400 Freighter charter flights throughout January, and other airlines have been busy carrying fresh Nova Scotia lobsters. HIAA tells ACW: “Besides, Air Canada, WestJet and CargoJet carry a high number of lobsters on their scheduled services from YHZ too. CargoJet is flying to their Hamilton hub twice daily with a B757 and operates to Cologne in Germany with a B767-300F every Saturday.” Hard-shelled live lobster remains the primary export, and the European Union the key market, but HIAA says China has developed a taste for it too. HIAA comments: “Exports have grown more that 400 per cent over the past five years, which is the primary driver for Korean Air, Qatar Airways and now Yangtze River Express. “We realise this a true niche product but one that offers volumes – and more importantly, sufficient yield – for carriers to operate routes from our airport at a profit.” Halifax has been welcomed new services in 2016 such as Qatar Airways Cargo starting a weekly Doha-Luxembourg-Zaragoza-New York-Halifax-Zaragoza-Doha round trip on 20 July. HIAA says: “Qatar Airways responded to the needs of customers by offering the stop in Zaragoza for fresh fish exports to Spain and Portugal, as well as the ability to connect live lobsters via Doha to several key cities in the Middle East and beyond.” HIAA says the whole region benefits from better connections, telling ACW: “This is not just about some extra revenue for the airport, more so we see our role as a facilitator to local economic growth. In the past few weeks alone, we have exported $25M worth of live lobsters!” It says global demand for quality seafood offers opportunities, and Halifax has a currency advantage compared to the US competition. “Canada has an excellent global reputation; it’s a safe and secure place to do business presently with a 30 per cent currency advantage, which is a real benefit for our exporters when competing against US lobster suppliers.” Dollar fluctuations can make business challenging though, with HIAA saying: “Most airlines have a large portion of their operating costs in USD, so that’s a big challenge for us to overcome when convincing carriers to come and serve the Gateway to Atlantic Canada.”
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WORLD AIRPORTS
YYC to build, as it targets strong cargo growth
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YC Calgary International Airport (pictured) is expecting the growth it saw in 2016 to continue this year as it focuses on providing infrastructure for cargo partners and the logistics
sector. YYC is located just over 10 miles from downtown Calgary, one of Canada’s expanding cities and moves the majority of air cargo in the province of Alberta and has been enhancing facilities and infrastructure so growth continues. The airport tells Air Cargo Week: “YYC continues to support the movement by air of a full range of industrial and commercial goods. We move three-quarters of all air cargo in the province and are the courier gateway in Alberta as well.” “There are no limitations on the type of
cargo or aircraft that can be handled at YYC, including full capability to handle out of gauge oversized pieces.” It also says: “YYC Calgary International Airport is a strategically located hub airport with
great access north/south (CANAMEX corridor) and east/west inter-model transportation infrastructure, offers scheduled freighter service to both Asia and Europe, and specialises in the receiving, transferring, storing and distributing
of any kind of cargo.” In November, Calgary opened its 100,000 square foot Specialized Cargo Facility, with DHL Express Canada taking 38,000 square feet. The airport comments: “Cargo and logistics are an important focus for both YYC and our entire region, and the work we’ve done to build infrastructure and services to support the sector over the years have supported the service expansions we saw this past year, and are expected to further enhance cargo operations at YYC in coming years.” The gateways adds: “This includes development of Canada’s leading integrated, multi-modal business parks, significant new warehouse facilities with apron access and a new 520,000 square foot dedicated cargo apron and associated services.”
LUX becomes 6th busiest EU cargo hub
LUXEMBOURG Airport has become the sixth busiest cargo airport in the European Union with 8.2 per cent growth in 2016, with camels, lynx and tigers among the animals to travel through the hub. It handled 821,000 tonnes of cargo, overtaking Cologne-Bonn Airport and is behind by Frankfurt, Paris, Amsterdam, London Heathrow and Leipzig-Halle. Cargolux remained the largest customer with 675,000 tonnes, with Qatar Airways
in second at 44,170 tonnes, Atlas Air was third with 39,000 tonnes and Silk Way West was fourth at 19,100 tonnes. 139,766 animals passed through Luxair Cargo’s doors including 10 brown bears, four bulls, two lynxes, 65 swans, nine tigers and 12 zebras. Luxembourg Airport is expanding facilities with extending the cargo apron to allow for 12 Boeing 747-8 Freighter positions when completed by mid-2018, and a further expansion is possible to allow for 16 at the same time. Luxair Cargo has invested in a fast lane truck-loading terminal for ULDs and is extending the outsized and heavy shipment handling area with a new 3,000 square metre building. Pharmaceuticals continue to grow, passing 30,000 tonnes. Cargolux and Luxair Cargo recently renewed their GDP certificates.
Slight tonnage rise for MIA of 0.37% in 2016 CARGO at Miami International Airport (MIA) grew 0.37 per cent to 2.18 million tonnes with domestic volumes making up for an international slowdown. Total international cargo volumes were down 1.2 per cent to 1.9 million tonnes, with freight down 1.2 per cent to 1.89 million tonnes and mail by 3.5 per cent to 13,521 tonnes. Domestic cargo was up 11.9 per cent to 314,481 tonnes, with freight up 12 per cent to 256,891 tonnes and mail by 10.1 per cent to 26,528 tonnes.
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Miami-Dade aviation director, Emilio Gonzalez says: “With sustained growth by hub carrier American Airlines, more international carriers on the way, and new business opportunities for our cargo airlines, we expect another prosperous year in 2017.” Miami welcomed 10 new airlines in 2016: AeroUnion, Dominican Wings, Eurowings, KF Cargo, Northern Air Cargo, Pan American World Airways Dominicana, Scandinavian Airlines, Silver Airways, Surinam Airways and 21 Air. Among key sectors at MIA are perishables and pharma.
WORLD AIRPORTS
FRA looks to innovate as it targets a bright 2017
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strong final quarter boosted Frankfurt Airport (FRA) to a pleasing result in 2016. Senior vice president for cargo, Dirk Schusdziara (pictured) says after a very slow start to the year, it got better and better, handling 2.2 million tonnes in 2016 – 2.1 million tonnes of freight and 85,000 tons of mail. He explains: “While we had a decrease in the first quarter (Q1), Q2 and Q3 showed an increase by 2.3 and 2.4 per cent and in Q4 figures grew by 3.3 per cent. If it hadn’t been for the pilot strike of Lufthansa, the result would have even been higher.” Schusdziara says FRA was strong in general cargo pushed by Germany’s export-oriented industry, while pharma grew and due to huge demand companies are expanding their facilities. At the end of 2017, FRA will have more than 10,000 square metres of temperature-controlled areas, up from the 7,000 it has now. BRIC countries were growth drivers trade lane wise in 2016 up 10.9 per cent for these four countries. China, India and Russia recorded double-digit growth rates and Brazil recovered well. The strongest regional market was the Far East with almost 900,000 (+4 per cent) tonnes of cargo, making up more than 40 per cent of business, followed by North America and Europe. But Schusdziara sees challenges, notably the need for digital transformation as integrators are already dominating the market with integrated logistics. He adds: “In contrast, the traditional air cargo process is very fragmented and characterised by many individual players. In this context, digital development provides the
opportunity to offer faster processes as well.” FRA will continue to support its cargo community system Fair@Link - which allows electronic exchange of data between participating companies. He says users say it helps reduce costs from shorter waiting and loading times and higher employee productivity. “The number of new customers is steadily growing ever since the platform was officially launched. Nevertheless, it is often still challenging to get companies on-board and convince them of the opportunities digitalisation can offer. “But in order to stay competitive as an industry, everyone has to be willing to exchange data, has to agree on common standards and has to push forward digitisation,” Schusdziara adds. Innovation is the priority in 2017. Schusdziara says FRA wants to keep its role as the “innovation leader in the air cargo supply chain”. He says: “We are planning on adding some additional functions to Fair@Link. The German Customs’ system is already linked to Fair@Link and want to integrate the local EU border checkpoints for plant protection and veterinary examinations as well as the German Federal Office for Agriculture and Food. “Documentation and clearance can be digitalised speeding up
the whole process. We also want to connect the shippers to the system, so they can enter data to the system. This proves interesting for special handling products like perishables, animals and DGR where data has to be transmitted. “We are developing a digital access control system to facilitate access to our cargo area. The new system will allow them (visitors) to register online beforehand so they can directly proceed to their destination without stopping at the gate.” FRA is to build another truck parking area, is expanding CargoCity South by 100,000 square metres and the new T3 will add cargo capacity and improve access to cargo areas via a new highway junction, all leaving Schusdziara optimistic for 2017.
Oman looking to be a bigger player
OMAN’s four airfreight gateways saw growth of 15 per cent last year, primarily driven by Muscat International Airport where volumes were up 20.4 per cent to 162,000 tonnes. Salalah International Airport (above) saw a freight fall of nine per cent, but the airport’s cargo facilities are being expanded and it is targeting better figures in 2017, while Duqm and Sohar airports were fairly stable. Oman Airports Management Company (OAMC) cargo development director, Massimo Roccasecca says the strongest trade lanes were India-Oman and Europe-Oman. 2016 did not come without challenges, he notes: “In general there has been a slowdown in the national economy due to the fall of oil price in Muscat, given the delay of the opening of the new airport we have been facing some constraints due to congestion. Especially in what we normally consider the typical cargo peak hours.” OAMC is opening a new airport that includes a state-ofthe-art cargo centre. Roccasecca says: “We are talking about infrastructure able to handle 300,000 tonnes, fully air conditioned, with separate cool chambers, live animal dedicated premises, fully automated warehouse shelves. “Also, OAMC is evaluating other potential projects related to cargo, (free zones, cargo village etc) but not only limited to it. There is a growing interaction with the Ports and Customs to develop new means of transport to/from Oman.” Roccasecca the new cargo centre is only the “tip of the iceberg” for investment projects as similar ones are ongoing in Salalah and Duqm. He adds: “We are working with other government stakeholders to increase the awareness of the potentiality of this market in the international arena.” Belly capacity continues to expand, but Roccasecca is targeting freighters into Oman and is sure it will happen soon. He adds: “The level of commitment from the entire logistic sector in the country is so strong that I am confident Oman will soon be more, much more, than an alternative to the congested hubs of nearby countries. “We are also working close with the home carrier Oman Air, in order to develop their cargo capacity plans of growth.” As for the Middle East market, he says it is very tough and competitive. He adds: “However, there is still room for growth and, thanks to its geographical positioning, the commercial proposition, and the service capabilities we are putting on the table, I trust Oman will play, an active role.”
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E-FREIGHT
Industry set to miss e-AWB target for 2016
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he airfreight industry looks set to miss the electronic air waybill (e-AWB) penetration target with rates where hitting 46.1 per cent in November. The International Air Transport Association (IATA) had set a target of 56 per cent for 2016 as a whole and though penetration rates rose two per cent from October to November, the industry is set to miss the yearly goal. This is the second year running the industry has missed the target, as it aimed for 45 per cent by the end of 2015, but only achieved 36.6 per cent. The association is still aiming for 62 per cent penetration by the end of 2017 where legally feasible. Penetration rates have picked up over the past few months, rising from 40.6 per cent in August to 42 per cent in September, 44.1 per cent in October and 46.1 per cent in November.
The US continues to process the highest volume of e-AWBs, with 86,873 in November, followed by Hong Kong with 80,143.
Hong Kong International Airport handled the highest number of e-AWBs, followed by Shanghai Pudong International Airport and
Descartes’ GLN powers IATA eAWBLink
THE International Air Transport Association (IATA) is using Descartes’ Global Logistics Network (GLN) to help small and medium sized freight forwarders electronically communicate and receive electronic air waybill data and status messages through its eAWBLink. IATA says there has been significant eAWB adoption among larger forwarders but small to medium sized ones, who generate approximately 25 per cent of AWBs, have been slower to adopt eAWB. The association says eAWBLink, supported by Descartes’ GLN will make it easier for them to adopt eAWB and benefit from efficiency gains it can produce. IATA global head of cargo, Glyn Hughes says: “We launched eAWBLink as an easy-to-use solution to accelerate global electronic air waybill (eAWB) adoption and to compliment the current portfolio of high quality solutions developed by industry technology partners.” He adds: “We’re pleased to partner with Descartes to use the GLN as the tool that will connect eAWBLink to over 100 carriers. Descartes is a leading provider of value-added network services for electronic logistics
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Singapore Changi Airport. The Middle East had the highest penetration rate by region at 70 per cent followed by North Asia at 60.1 per cent. North Asia handles the highest number of e-AWBs, with 186,219 in November, Europe was in second with 161,484 and Asia Pacific was third with 155,829. Flydubai and Kenya Airways are the only airlines to have 100 per cent penetration rates, though others have seen considerable improvements over recent months. Air China for example has risen from 5.7 per cent in March to 70.9 per cent in December. Among freight forwarders, FedEx has retained the top spot with an 87.1 per cent penetration rate, followed by Hellmann Worldwide Logistics at 69.3 per cent and Expeditors Group at 65.1 per cent. DHL Global Forwarding handled the highest volume of e-AWBs, followed by Schenker and Panalpina.
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communications and a strong supporter of industry digitalisation.” Descartes vice president of Global Logistics Network, Scott Sangster says: “We’re pleased to help IATA modernise and streamline the air cargo industry through the adoption of the eAWB. Descartes has a long history of supporting IATA’s strategic partner initiatives such as e-Freight, Cargo iQ, and others in addition to the eAWB.” “We look forward to our continued collaboration with IATA to help standardize and digitise air cargo processes that can improve the productivity of all participants in the air cargo community.” Descartes’ revenue rose nine per cent in the third quarter to $51.5 million and net income increased by 13 per cent to $5.9 million, which chief executive officer Edward Ryan said at the time was helped by the success of GLN. He commented: “We believe that Descartes’ strong margins continue to demonstrate the leverage in our business model and the stability of the Global Logistics Network to efficiently deliver quality services to all our global participants.”
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NEWSWEEK Strong second half helps Asia grow 1.6% AIR cargo volumes across Asia Pacific grew 1.8 per cent in 2016 with business picking up in the second half, making up for a slow start to the year, the Association of Asia Pacific Airlines (AAPA) says. Cargo recorded in freight tonne kilometres (FTK) contracted 2.2 per cent in the first six months of 2016 before a 5.7 per cent rebound in the second half, pushing FTKs up 1.8 per cent to 66.2 billion. AAPA director general, Andrew Herdman (pictured) says: “After a lacklustre start to the year, air cargo markets picked up pace in the second half
of the year, with expansion in manufacturing production and international exports, supplemented by growth in demand from expanding consumer markets in Asia.” Capacity for the year in freight available tonne kilometres (FATK) was up 3.5 per cent to 106 billion and the load factor was down one percentage point to 62.5 per cent. In December, FTKs were up 8.7 per cent to 6.1 billion and FATKs by 4.9 per cent to 9.3 billion, with load factors rising 2.3 percentage points to 65.7 per cent. Describing the outlook for 2017, Herdman says the outlook remains positive though any boost in demand due to falling oil prices are in the past. “Market conditions remain highly competitive, and airlines are focused on active cost management, whilst continuing to invest in future growth opportunities.”
Aeroflot’s cargo jumps 31.6%
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eroflot’s cargo and mail volumes have recovered after two difficult years, handling 205,795 tonnes, a figure not seen since 2013. Cargo and mail had been 204,554 tonnes in 2013, before falling 18.7 per cent in 2014 to 166,262 tonnes, and another six per cent in 2015 to 156,335 tonnes before the 31.6 per cent recovery in 2016. International volumes were up 27 per cent in
2016 to 97,968 tonnes and domestic cargo and mail was up 36.2 per cent to 107,827 tonnes. In December, cargo and mail rose 50.2 per cent to 24,698 tonnes with an international surge of 78.8 per cent to 13,095 tonnes and a domestic increase of 11,603 tonnes. Aeroflot added six Boeing 737-800s, two Boeing 777-300ERs, six SSJ100s, 12 Airbus A321s and nine A320s to its fleet in 2016, and phased out five Airbus A319s, two A320s, and six A321s.
AirAsia picks SmartKargo AIRASIA India has selected the SmartKargo IT system to support its end-to-end cargo business processes. Air Asia India’s, Madhukar Salla says the SmartKargo system has become an “industry standard in this part of the world” and a large number of users in the air cargo community use the product and like the intuitive user interface. He adds: “All local requirements like taxes are built-in and the product operates in a global environment too. The company’s ability to scale up on demand will be very useful as we add aircraft and extend our network.” SmartKargo executive vice president for sales and marketing, Jay Shelat says it is a good fit for Air Asia India who want to capture the system’s benefits without having to make a large upfront investment in infrastructure. He adds: “SmartKargo is built upon the world’s leading global cloud infrastructure, Microsoft Azure. Because the Azure platform is continually evolving with emerging technology, the SmartKargo solution also updates with the platform, which means the solution is always cutting edge.”
Vietjet picks Hactl in HK
VIETJET has chosen Hong Kong Air Cargo Terminals (Hactl) to provide cargo terminal operations for its Ho Chi Minh City – Hong Kong flights. The daily service will be operated with an Airbus A320 and Vietnam was Hong Kong’s fifth largest export market, with major commodities including telecom equipment, meat products and electronic components. Imports from Vietnam grew nine per cent in the same period with major items including electronic components, telecom equipment and footwear. VietJet vice president, Nguyen Thi Thuy Binh says: “Hong Kong is a very important market for Vietnam, and also a key step in our airline’s development. We look forward to playing our part in facilitating increased trade on this route.” Hactl chief executive, Mark Whitehead (pictured) adds: “We congratulate Vietjet on the launch of this exciting new service to Ho Chi Minh, which provides access to an important destination for our customers.”
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