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The weekly newspaper for air cargo professionals Volume: 20
Issue: 30
31 July 2017
Volumes continue strong growth path in all regions
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ir cargo has performed strongly volumes wise in 2017 and figures released last week show momentum has continued. The Airports Council International (ACI) published its May results and says the strengthening global economy fuelled growth in volumes at airports of 11.1 per cent. After a period of economic uncertainty regarding US trade policy and risks related to the UK’s vote to exit the European Union, ACI says global commerce is “no longer sidelined”. The association notes the rise in business confidence has translated into a robust recovery in volumes this year, driving the 11.1 per cent year-over-year (YOY) surge in May. International freight traffic was up 13 per cent and domestic 6.3 per cent. All regions saw high growth in May, but Europe and North America saw the highest increases, with uplifts of 12 per cent and 11.9 per cent, respectively. ACI says volumes in Asia Pacific were up 10.8 per cent, Africa 7.8 per cent, the Middle East 8.4 per cent and the Latin America-Caribbean region continued its recovery up 10 per cent. In the first five months of 2017, volumes
industry must undergo digital transformation
across the world’s airports are up by 8.3 per cent. Africa is up 10.6 per cent, Asia Pacific 10.3 per cent, Europe 8.7 per cent, the Middle East 7.6 per cent, North America 8.3 per cent, and Latin America Caribbean 3.7 per cent. Asia Pacific has been a strong market this year and continues to post high volumes. The Association of Asia Pacific Airlines (AAPA) reported last week export orders continue to boost air cargo shipments across the region, leading to growth of 10 per cent in June. Cargo demand measured in freight tonne kilometres (FTK) was up 10 per cent to 5.8 billion helped by high export orders in both emerging markets and advanced economies. FTKs were up 10.4 per cent on a year-to-date (YTD) basis between January and June to 33.7
Carriers to appeal EC price fixing cartel fines
The airlines who were fined a total of €776 million ($904 million) by the European Commission (EC) for operating a price fixing cartel are appealing the decision. In March 2017, the EC re-adopted the cartel decision against 11 carriers after the original decision was annulled by the General Court on procedural grounds. Singapore Airlines, LATAM Airlines Group and Lan Cargo, Cathay Pacific Airways, Deutsche Lufthansa and others, British Airways, Japan Airlines, Cargolux Airlines International, Air Canada, SAS Cargo Group and others, and Martinair Holland have all filed action in the Official Journal of the European
emirates opts for lug in frankfurt
Union to annul the decision made in March. The airlines say the court should annul the decision and pay costs, while others request that the fine is reduced as an alternative. The arguments include saying the applicants’ right to defence was breached by refusing access to relevant evidence, lack of competence applying law to airfreight services, errors assessing the evidence and its conclusions proving participation in a continuous infringement, inconsistent decisions and the belief that the Commission was wrong to fine any of the applicants as “they cannot be liable for the alleged infringement”. Lufthansa and Swiss International Air Lines had received full immunity from the fines for bringing the cartel to the EC’s attention and providing “valuable information”. The other airlines were fined between €8.2 million and €182.9 million. Qantas had been fined but not appealed the decision originally made in 2010 for alleged price fixing between 1999 and 2006.
billion. Capacity measured in available tonne kilometres were up 4.8 per cent in June to 8.8 billion and 3.8 per cent YTD to 52.7 billion. The freight load factor was up 3.1 percentage points in June to 66.2 per cent and 3.8 percentage points to 64 per cent between YTD. AAPA director general, Andrew Herdman says: “Global trade activity has picked up markedly since the middle of last year, with airfreight volumes growing at a robust pace. “Overall, Asian airlines reported a 10.4 per cent increase in international air cargo traffic volumes during the first half of 2017, supported by an upswing in export orders for both the leading emerging markets and advanced economies.” Herdman added that the outlook is positive as momentum in the global economy continues.
Customs app goes live
The Customs Export Application to serve BRUcargo forwarders has gone live to help improve data sharing and efficiency among the cargo community at Brussels Airport. Forwarders who use the app, which went live on 1 July, can improve efficiency by avoiding having to wait in lines at the Customs offices to stamp AWBs, avoiding having to create Excel list reports and having to collect alternative evidence manually, eliminating paper based procedures and the resulting errors. The Customs authorities give clearance priority to forwarders’ shipments handled via the Customs Export App, which is one of the many apps made possible by the BRUcloud. The app combines manifest data made available in the BRUcloud since 2016, with newly added data from forwarders. The app matches collected data at AWB level and reports information to Customs. Six companies are using the app with 25 confirming they will use it soon, covering 90 per cent of volumes at BRUcargo.
japan a key trade lane for american 1st flexport warehouses to open soon
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Strong results in Q2 for Boeing
BOEING has returned to profit in the second quarter (Q2), with net earnings of $1.7 billion compared to a loss of $234 million in Q2 2016. However, revenue was down 10 per cent in Q2 to $15.7 billion and six per cent to $30 billion in the first half. Net earnings were $1.5 billion in Q2 compared to a loss of $973 million in 2016, and up from $60 million in the first half of 2016 to $2.7 billion. Deliveries were down eight per cent to 183 in the second quarter and down six per cent in the first half to 352. In Q2, the first 737 MAX 8 was delivered and the 737 MAX 10 launched. Boeing chairman, president and chief executive officer, Dennis Muilenburg says the outlook for 2017 is positive, saying: “Our robust cash flow enabled us to return more value to shareholders, invest in future growth and in our people, including a plan to accelerate pension funding that also reduces risk and cyclicality in our business.”
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NEWSWEEK
Critical product expanded by IAG Cargo
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AG Cargo’s Constant Climate shipments are now able to fly under its Critical product, enabling emergency medical shipments to benefit from its highest priority service. The new enhancement means shippers sending urgent pharmaceuticals now have access to the non-off loadable status and performance guarantees offered under Critical. Launched last year, Critical has carried over 2000 emergency shipments for businesses across the world and the range of goods moved has been diverse – from pre-launch consumer electronic devices to formula one tyres to factory down machine parts – all have required the ‘must fly’ status guaranteed by Critical. Following successful trials of Constant Climate Critical across India, the UK and Europe, IAG is rolling out this new offering across all 109 Constant Climate enabled stations on its network. Global Head of pharmaceuticals and life sciences, Alan Dorling says: “The development of Constant Climate Critical means that we are now able to build on our offering by providing vital vaccines and emergency lifesaving medicines with a non-off loadable status. “In addition to our highest priority grading, the product continues to safeguard temperature-specific shipment requirements, maintaining the purity, potency and stability of the lifesaving medicines that we carry.”
Commercial director, David Shepherd adds: “Critical has been a real success; demand has come from right across our network and week on week we see both new requests and repeat business. “We know that there is a real demand for guaranteed capacity and a must-fly service for urgent pharmaceutical products and it is crucial that we continue to innovate to ensure that we meet our customers’ needs.” IAG expects the Constant Climate Critical to be popular across key pharma trade lanes, from manufacturing hubs in India and Europe and into rising pharma markets such as Latin America. The service offers guaranteed capacity up to the maximum aircraft operating limit, and a dedicated monitoring service through hubs at Heathrow, Madrid and Dublin.
8.7% tonnage growth at Schiphol
SCHIPHOL Cargo is focusing on pharma and e-commerce as volumes grew 8.7 per cent in the first half of 2017 to 866,713 tonnes. Amsterdam Airport Schiphol welcomed an additional 153 freighter flights in the period, and handled 148,765 tonnes of cargo in June alone, a 9.8 per cent year-on-year increase. Across the different regions, Far East outbound traffic was up 12.2 per cent in the first half to 154,866 tonnes, and inbound increased 8.3 per cent to 149,836 tonnes. Inbound from Europe was up 29.1 per cent to 60,320 tonnes and outbound by 39.2 per cent to 61,641 tonnes. Inbound from Latin America was up 31.4 per cent to 59,817 tonnes though exports were down 6.3 per cent to 35,275 tonnes. Imports from Africa declined 3.5 per cent to 59,409 tonnes and exports were down 15.3 per cent to 24,902 tonnes. North American imports were down 6.3 per cent to 72,739 tonnes while exports were up 10.5 per cent to 82,379 tonnes. Inbound from the Middle East declined 4.4 per cent to 43,557 tonnes though outbound rose by seven per cent to 61,973 tonnes.
Network grown by time:matters TIME:MATTERS has extended its spare parts logistics flight network with services from Karlsruhe/Baden-Baden to Birmingham and Dublin on weekdays. Customers from Southern Germany can now benefit from a faster service for spare parts to the UK and Ireland, with urgently needed spare parts on site from 8am the next day so technicians can get to work straight away. A UK logistics service provider has purchased part of the cargo capacity across the Channel and others are making inquiries. Three Saab 340 aircraft now take off from Baden-Airpark every night for time:matters, with services from the airport starting 10 years ago with flights bound for Scandinavia, and now the route is operated by two aircraft during peak season and a third 340 has been added to the portfolio. Initially offered in all Scandinavian countries and to Italy. Now, time:matters also offers late pick-up combined with very early delivery for France, Spain, Greece, the Baltics and Moscow. The service means companies can offer fast and competent aftersales services, and time:matters provides automated cargo tracking so customers can receive regular updates on shipments. It is popular with producers of agricultural equipment, as well as customers in the medical technology, IT and automotive sectors.
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Performance high for Delta Cargo in the US market
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elta Cargo had the highest average NFD percentage for airport-to-airport shipments among North American carriers over last 12 months at 81.31 per cent. This it says continues the improved operational reliability trend, which has seen it lead the domestic belly carrier market in average NFD performance for total airport-to-airport shipments over the last three quarters. Delta Cargo’s managing director for cargo operations and customer experience, Julian Soell says: “Operational reliability of end-to-end delivery that matches Delta’s world class on time performance metrics, is a key priority. “It is important for our customers to have service predictability and these metrics show that the actions we are taking are moving the needle on delivery time and performance ensuring reliable freight delivery across our global network.” Delta Cargo has made significant investment in its technology systems and infrastructure as part of its focus on operational reliability across the US. These include an Atlanta warehouse transformation, which has seen process, layout and structural changes improving efficiency and cargo processing flow to aid customer satisfaction. At New York JFK there has also been warehouse expansion with
Cool upgrade for Lufthansa
NEWS WEEK WorldNews DELTA Cargo has picked Eric Anderson as director of cargo sales for the Asia Pacific region, taking over from Eric Wilson on 1 August - who has been promoted to managing director of global cargo sales. Anderson will be based in Tokyo, and lead the cargo sales team across Asia Pacific, continuing Delta’s transformation throughout the region with a focus on the customer experience, operational reliability and the implementation of sales modernisation platforms.
nearly 30,000 square foot of space added to aid in the upcoming warehouse redesign and improve the operation’s flow and efficiency to enhance the customer experience. The expansion at JFK has also seen the Delta, Aeromexico and Virgin Atlantic Cargo operate together under “One Roof”, with designated dock doors for specialty services. Other investments have seen Delta and KLM moving under “One-Roof” into warehouse at Salt Lake City and following customer requests a new X-Ray machine allowing full skid X-raying has been installed. RFID tracking technology on cargo shipments is set to be rolled out in 2018, while a new Delta Cargo website and new Cargo Control Centre are to be launched in the summer.
DHL Global Forwarding has named Amadou Diallo as chief executive officer (CEO) for the Middle East and Africa region. His experience includes five years as CEO of DHL Freight from 2011 to 2016, followed by the role of executive vice president of value-added services and integrated logistics at DHL Global Forwarding. In his new role he will focus on expanding and deepening the region’s international trade connections, as well as incorporating innovative technologies into DHL’s services.
LUFTHANSA Cargo is continuing to upgrade its cool chain services by protecting every passive refrigerated shipment with a reflective film without any additional fees. The reflective film produced exclusively for Lufthansa Cargo provides sensitive shipments with optimum protection against unavoidable sunlight on airport tarmacs around the world, even on hot summer days. Lufthansa Cargo board member – operations, Sören Stark says: “Our aim is to offer top quality transport for our customers’ freight, both in the air and on the ground. The free offer of our new special film underscores our dedication to high quality and perfects our refrigeration service.” The innovation follows the expansion of the Lufthansa Cargo Cool Center in Frankfurt getting underway, and the introduction of the Road Feeder Service Cool services.
Seafood service to Kuwait
FRESH Aegean seafood is now being brought to the Gulf country of Kuwait by Turkish Cargo through a Turkish Airlines Boeing 737 belly connection every Saturday. Turkish started operating the passenger route on 30 June from Milas-Bodrum Airport to Kuwait International Airport and says the service aims to deliver fresh fish on to the plates of diners on the same day. Turkish announced the service in May, when it also revealed other new Middle Eastern belly connections to the likes of Saudi Arabia, Iraq, and Jordan.
Asia cant get enough cherries
THE cherry season is in full bloom in Washington State, and Seattle has welcomed a specially painted cherry themed Boeing 777 Freighter transporting the fruit to Asia. The aircraft operated by China Cargo, a division of China Eastern Airlines landed at Seattle-Tacoma International Airport on 24 July, which is expecting to export record volumes of cherries. The five Pacific Northwest states have shipped 18,492,620 twenty-pound boxes of cherries up to 20 July. The total international cherry volume exported from Sea-Tac was 40 million pounds, up 10 million on 2015 with a value of $115 million. Exports to Asia in July can be five times the amount of tonnage shipped on the most active airline at Sea-Tac, and other Asian airlines usually have volume increases of two to three times their normal monthly tonnage. The China Cargo 777F, nicknamed ‘Cherry Express’ can hold about 200,000 pounds of cherries.
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NEWSWEEK
CEIV at Schiphol and new Chicago warehouse
customers, we believe that the pharma product is a product line with continuous improvement cycles. “This means we will keep investing in training our staff, maintaining the best controlled pharma facilities and further develop procedures to ensure a secure and high quality pharma chain.” Meanwhile, Swissport Cargo USA opened a warehouse at the Chicago O’Hare International Airport on 20 July. The Swissport International subsidiary says the 138,000 square foot warehouse is designed with a focus on customer needs as well as on safety and efficiency and includes the first automated material handling system in the region.
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wissport The Netherlands has gained the International Air Transport Association’s (IATA) CEIV Pharma certificate at Amsterdam Airport Schiphol. The cargo handler says the certification reflects its “dedication to offer excellent life science & healthcare shipment handling services” and will increase its contribution to the Pharma Gateway Amsterdam. The subsidiary of Swissport International says the flow of life science & healthcare cargo has been increasing over the past few years, so maintaining a stable and secure supply chain needs specific equipment, storage facilities, harmonised handling procedures and strong cooperation among pharma partners. Swissport The Netherlands started to develop a dedicated product line for handling of life science & healthcare shipments and with the recent acquisition of Terminal 9, the scope was broadened and today, all of Swissport’s operational activities in the Netherlands (both Terminal 9 and 11) have been awarded IATA’s CEIV Pharma certification. Director of cargo, Jeroen Giling says: “The certificate is a validation of the hard work that our team put in the pharma product. But that is not where we stop. In cooperation with our valued
Automated handling
The cargo handler says the automated material handling system makes it first of its kind in the region and can accommodate over 120 10-foot unit ULDs at a time using pallet platforms and electric ULD movers, which can be handled without touching the floor. The warehouse operates with two cold storages: 2-8 degrees Celsius and 18-25 degrees Celsius. Both have been designed to meet IATA CEIV Pharma requirements. The facility also has 35 truck docks able to handle the peak seasons and features adjacent aircraft parking with in-ground fuelling and power units to reduce overall handling time of the aircraft on the ground. In addition, the material handling system is integrated with the back ramp where ULD’s are directly stored into the system or delivered to the customer. These specifications allow Swissport to handle fully-built units from the aircraft to the truck in a considerably short time. Swissport USA chief executive officer, Dany Nasr says: “This new investment highlights our commitment towards our customers’ needs. We raised the bar to become the new operation standard of Swissport Cargo in the US. “This is the first of many steps as we are committed to further invest in our people, facilities and equipment.”
Emirates opts for LUG
LUG air cargo handling has won a contract to handle belly and freighter cargo for UAE carrier Emirates at Frankfurt Airport from October this year. Emirates runs three Airbus A380s and Boeing 777 belly services a day and eight 777F flights a week to Europe’s busiest cargo gateway. LUG runs freight facilities at Frankfurt Airport and Munich Airport covering 33,000 square metres and 3,300 square metres, respectively. It handled about 300,000 tonnes between the two gateways last year. LUG managing director and chief executive officer, Patrik Tschirch (pictured) says: “We are delighted that we have been able to win such a demanding customer as Emirates SkyCargo. The bar is raised very high for ground handling competence as well as innovation in technology and handling. “We are currently expanding our Health Care Centre (HCC) in our terminal in the Cargo City South. In addition, we can offer a first class service for food and flowers as shareholder in the Perishable Centre Frankfurt. This has, no doubt, contributed to the success of our tender offer. “Adding Emirates SkyCargo to our customer portfolio boosts our business growth. We expect an additional handling volume of some 6,000 tonnes per month.“ Emirates cargo manager in Germany, Michael Laschet adds: “We have opted for LUG aircargo handling as they are a professional and reliable GHA that will help us fulfil our customers’ expectations and satisfy our own ambitions in terms of excellent service, an absolutely safe operation, and continued responsiveness to the evolving demands of our customers.”
Three LAX contracts for WFS
WORLDWIDE Flight Services (WFS) has been awarded three new ground handling contracts with Asian carriers at Los Angeles International Airport (LAX). China Southern has chosen WFS for ramp services at the airport for its 10 flights per week connecting LAX and Guangzhou. Xiamen Airlines has also chosen WFS’ ramp services for its new four times weekly Boeing 787 flights. The third contract will commence on 1 September when WFS becomes the ramp handler for Philippine Airlines’ 14 flights per week between Los Angeles and Manila. WFS senior vice president for sales and business development in North America, Ray Jetha says: “Our success in winning these latest contracts in Los Angeles is once again due to our emphasis on safety and security, combined with our team’s strong work ethic and reputation for service excellence. “We are delighted that China Southern, Xiamen Airlines and Philippine Airlines has chosen to partner with WFS and shown their confidence in our operation at LAX.”
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NEWS WEEK
Dreamliners to boost El Al’s global cargo capabilities
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l Al Israel Airlines will have 200 per cent more cargo capacity by 2020 as it welcomes 16 Boeing 787 Dreamliners into its fleet to replace Boeing 767s and 747s as part of a $1.25 billion investment. Two Dreamliners will be phased in this year, while an additional 14 aircraft will be phased in by 2020. The first Dreamliner will join El Al in September and operate to Europe and at the end of October will gradually be integrated into long-haul destinations in North America and the Far East. Speaking earlier this month at El Al’s cargo handling facility operated by dnata at Heathrow Airport, head of cargo Ronen Spira says the Dreamliners will boost cargo as it moves to a pointto-point, transit hub strategy and the capacity growth by 2020 will prove a “challenge” which he is looking forward to. “Now our focus is the market of the world and not just Israel, we are looking for the worldwide market and I am very positive and optimistic about the future. “We have already started a pilot for the transit strategy before the Dreamliners came and are already carrying 400,000 tonnes a year and we will definitely grow as this was with the pilot only and before the Dreamliners arrive,” Spira explains. At Heathrow, he says El Al has seen strong growth since it made the switch to dnata in January from another rival cargo handler. He hails the dnata facility, which he says works much better with its growth plans and business strategy.
Spira says: “The quality we get here is of the highest level and thanks to that we are able to develop the business in and out. We are getting our first Dreamliner in August so part of the reason we moved here was to be prepared for the growth as we will have additional capacity due to the fact we are changing the fleet from Boeing 767s and 747s to Dreamliners. “One of the reasons we moved here is to improve the quality of the transit, more area and space and better quality for the volumes. The last point is the facility can accommodate pharmaceuticals for us. We are very happy here.” The carrier’s main base is at Tel Aviv’s Ben Gurion International Airport where it also operates a Boeing 747 Freighter to Liege Airport five times a week. El Al’s London belly service is double-daily and will soon be operated using a Dreamliner instead of a Boeing 777. Spira sees more growth on the Heathrow lane and he notes exports to London are mainly high-tech products and some perishables, while imports into Tel Aviv are made up of electronics and pharmaceuticals.
He says a big growth area for El Al is e-commerce and this is part of the transit hub strategy as e-commerce and mail are increasing dramatically and it is carrying a lot more mail and e-commerce into Tel Aviv and beyond as a transit hub. Cargo into and out of London will grow he is sure: “I believe with the quality and the additional capacity we wil have, we will definitely grow the business to and from London. “And we are also cooperating with American Airlines from London to other destinations, which drives our business further.” The move to dnata at Heathrow certainly seems to be paying off for El Al and with the arrival of a new Dreamliner fleet, cargo volumes only look like heading upwards.
Dnata looks to upgrade in the UK
CARGO handler dnata is in discussions with airport authorities in the UK as it looks to modernise its infrastructure. Dnata has already built top-notch handling facilities at Heathrow Airport, but wants to now uprrade sites at other airports. Speaking earlier this month at a six-month celebration of dnata’s contract with El Al Israel Airlines at Heathrow, dnata UK chief executive officer, Gary Morgan says he is working with authorities at Manchester Airport, Birmingham Airport and Gatwick Airport. He says: “Part of the problem in the UK is there is a lot of old infrastructure so I am on a campaign and trying to convince airport authorities up and down the country and we are working with three authorities to try to build new facilities for us, which we are then happy to sign up for on long-term leases. “Some of it is difficult as they do not have the space available. We have facilities there at the moment, but we want to modernise. It is hard for us to refurbish some of the buildings as they are too old and they just do not suit modern operations. “I think a lot of cargo facilities in the UK were probably built 20, 30 and 40 years ago and yard depths and turning circles are different and just the way we handle cargo is different. The big challenge for us now is to try and get airport authorities to understand what we need and then try and make some investments.” He says at Manchester dnata has two warehouses, at Birmingham it has one facility, which has recently been expanded and it has one facility at Gatwick which it is about to expand. Morgan says he is hopeful of finalising an agreement for a new facility in Manchester and with Gatwick it has made some progress while Birmingham is keen too. “One of the difficulties for a lot of airports is historically they have sold off infrastructure so it does not belong to them so they cant really control it and as much as they want to help they are a little hamstrung,” he says. Morgan adds: “I think there is not a complete understanding of how vital cargo is to airlines. I think every airport understands the value of the passenger, but very few the value of cargo and most airports probably don’t appreciate cargo supplements seat prices on airlines and without cargo some routes would not be viable. We want to help them understand the value.”
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INFORMATION TECHNOLOGY Air cargo industry must undergo digital transformation
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he air cargo industry must go through digital transformation to stay competitive, and Youredi is committed to help customers go through the necessary processes, chief executive officer Jaakko Elovaara (pictured) tells Air Cargo Week. He says Youredi is intent on helping customers digitalise and automate manual processes to boost efficiency and cost effectiveness, and the power of real-time data with full transparency gives clients the competitive edge they need. Elovaara believes manual processes need to be digitalised to reduce paper documentation, manual labour and errors, and processes need to be automated for maximised efficiency. He says: “The industry needs holistic, digital solutions from the booking process through tracking the entire shipping process to create a great customer experience. IoT [internet of things] sensors for tracking and RFID tags for
replacing existing paper documentation could also make a difference in the industry.”
The simpler the better
He adds: “The more the processes are simplified by digitalisation, the easier it could get for airlines to utilise their empty air cargo space better, so catch up with airlines that are already major air cargo providers.” Youredi has a number of solutions the industry players to improve efficiency including services for digitalisation of e-freight documents and Track&Trace. Head of professional services, Ari Haapaniemi says shippers use Track&Trace for end-to-end visibility, and customers can receive real-time updates through gathering Flight Status Updates (FSU), and the data can be visualised on a map, which is visible in Youredi’s user interface or the
shipper’s platform. He explains: “Some of our customers work with dozens of airlines simultaneously, so having all the data available in one single place for all stakeholders is extremely convenient. Tracking the shipments manually from the airlines’ websites is not an option.”
Focus on efficiency
Efficiency of booking requests is another focus area; shippers send booking requests in their own internal formats to the airlines and Youredi automatically transforms them to the airlines’ format. Youredi also offers services for booking requests, supporting validation of electronic air waybills, freeing airlines of the burden of manual labour and reducing the steps in e-AWBs from 40 to 20. Haapaniemi adds: “All our services and solutions promote the digital transformation of the air cargo industry. Our products are suitable for many other use cases too.” Youredi is also looking at how logistics providers can utilise IoT integrations, and Haapaniemi believes it can be used in the air cargo industry, with IoT and sensors network providing more in-depth, real-time views into supply chain processes. He says: “We are looking to pilot sensor tracking on ULDs on a piece level, providing full real-time traceability for the pharma and perishables industries.” Embracing new technology can be a problem for air cargo, chief technology officer, Sami Tähtinen says it is slowed by the high levels of regulation, and making investment is expensive meaning high financial risks. Running on legacy infrastructures make adopting new technology more difficult and time-consuming as well. He does not think there is resistance to embrace new technology but making the first step can seem risky, though says: “Force adop-
tion to new innovations can help to overcome the resistance to embracing new technologies, just think of how IATA stopped updating Cargo-IMP so that Cargo-XML could become the new standard used industry-wide.” Elovaara says customers want a fully digital service, and the technology to achieve this is already available. Air cargo industry leaders need to find the most suitable services for their needs but technology providers and shippers need to play their part. He says: “Technology providers need to have a better understanding of air cargo, so the solutions could be better tailored to the industry’s needs. Shippers can also provide useful information in terms of their needs and requirements for the air cargo industry.”
Britain could be faced with disaster following Brexit if an appropriate deal is not struck, ASM chairman Peter MacSwiney warns. The UK is negotiating leaving the European Union and will be out in March 2019, but there is a lot of uncertainty over what may or may not happen if no deal is reached. MacSwiney says the UK is “facing a total unmitigated disaster” but thinks a system will be in place that can work. He says: “We have a joint Customs consultation, we are just going to see what do about other customs point of view. There aren’t too many concerns.” MacSwiney says though things have
calmed down since the general election in June, the consensus is companies want to stay in the single market and customs union, and it is difficult to see any advantages to coming out, saying “It will add tremendous costs and bureaucracy for no good purpose.” He fears though consultations have taken place, there are still many unknowns including what happens if the UK resorts to World Trade Organization rules, and how either side of the Channel will cope. MacSwiney says: “We might be able to get goods into the UK but it could be an even bigger disaster the other side of the channel.”
Britain facing post-Brexit customs disaster
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INFORMATION TECHNOLOGY Keeping it simple the way to go to embrace change
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-Cargoware follows what it calls the ‘KISS’ methodology when designing systems, chief executive Ramesh Darbha (pictured) tells Air Cargo Week. KISS, an acronym for ‘Keep it simple, stupid’, in conjunction with Agile development practice ensures that systems and solutions are fit for purpose and evolve over time. Darbha says: “Because we have worked with the air cargo sector for around 25 years, we know what our clients need, and we have been able to follow and meet the demands of the industry’s process evolution.” He says using Agile product development methodology, e-Cargoware is able to continuously enhance its product to ensure clients benefit from technological advancements, and are ahead of the competition. Darbha explains: “We are working on a 24x7 digital sales assistant for the GSAs to promote their products and provide superior customer service, and dashboards with built-in predictive intelligence to help clients make timely decisions and win new business.” He says a lot of companies start with accounting software and add some bespoke functionality to perform basic cargo reservation functions, and then add standalone CRM systems and business intelligence systems in a quest to acquire more customers. They then open new locations and acquire home grown applications or a variety of spread sheet processes, which Darbha says means they quickly become entangled in system chaos, which gets expensive to maintain and slows growth. The integrated e-Cargoware system provides full end-to-end control from sale, through to operations and management of the cargo, and includes CRM, a comprehensive cargo management system with multi-country support, integrated accounting system, analytics and management dashboards. Darbha says: “The integrated e-Cargoware accounting system provides tremendous cost savings and improved business
productivity. It provides process efficiency, improved visibility, significant IT time and cost savings and facilitates future growth.” While embracing new technology can improve efficiency, resistance is a normal human reaction and Darbha believes it is very high in the air cargo industry. He attributes this to fear of
the unknown, so in addition to making new technology, Darbha believes steps must be taken to gradually introduce new technology, including preparing for change by understanding why it is needed, reducing the fear of change through training, delegating champions of change through training the trainer, and reinforcing change through feedback and follow up. E-freight take up has been slower than expected, and Darbha believes the early adopters must champion the cause by communicating the benefits in terms of better customer experience, process efficiency, data sharing and faster transit times. The outlook is increasingly positive though, Darbha says: “We see that the e-AWB has already crossed the 50 per cent point and the IATA Target for this year is 62 per cent. With the rise of the millennial workforce in the industry, I expect the adoption to accelerate in the coming years.” Darbha comments that challenges bring opportunities, and as a technology enthusiast, he is excited to be part of a generation witnessing disruptive technology including driverless trucks, cargo drones and artificial intelligence. He says: “Our industry needs to embrace speed and innovation to meet these challenges and be ready for tomorrow’s air cargo.”
Time to seize the digital revolution
The air cargo industry must seize the digital revolution to remain competitive, urges Mercator chief technology officer, Brendan McKittrick. He says carriers must capitalise on digital opportunities and adapt, upgrade and enhance all aspects of their cargo operations to become more collaborative, intelligent, transparent, responsive and efficient. This, he says will help them become safer, faster and smarter. McKittrick predicts mobile technology and open API platforms are expected to revolutionise the industry and give carriers a real-time digital view of the entire air cargo supply chain. He says: “Such technology can provide much greater endto-end visibility and above all, the ability to simplify complex and challenging processes. Breaking down some of these enabling technologies should help carriers understand how to embrace this new era.” Operational efficiency will increase and productivity gains will be made by the sophistication of digital data interchange and telematics, and advanced data analytics will make air cargo management less laborious, while smart web-based portals are predicted to create connected ecosystems. Though digital technology is considered the long-awaited opportunity to break down silos in the cargo value chain, McKittrick believes the industry has been very resistant to adapt to the demands of the digital marketplace. He says: “The industry is still affected by outdated technology, poor data, and limited information sharing. This in turn impacts the profitability of carriers, creates unnecessary complexity across the supply chain, and drives up costs for customers.” The face of the sector is rapidly changing, and McKittrick describes the digital revolution as “one of the most transformational forces that the air cargo industry has seen in decades”. He predicts a profound shift of importance will occur in the air cargo industry as digitisation progresses, and this means complex choices for carriers. McKittrick says: “It will come down to disrupting themselves or being disrupted. Successful carriers will be willing to combine their offerings with digital sophistication to create new ways to deliver value to customers and differentiate themselves from less adept competitors.”
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JAPAN
Market upswing boosting the land of the rising sun
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apan’s air cargo industry is well positioned for a good year with Japan Airlines (JAL) signaling the recent upswing in the market looks set to remain. There are some quirks in this. “It is expected more especially for international cargo due to high demand as far as with the result of first quarter of FY2017,” Japan Airlines assistant manager of the cargo & mail administration department, Kensuke Tsuchida tells Air Cargo Week (ACW). In the last financial year which for JAL is April 2016 to March 2017 it moved 321,461 tonnes of international cargo and 36,458 tonnes of international mail. Its domestic operations were also still lively posting 390,677 tonnes of domestic cargo and 31,948 tonnes of domestic mail. Japan Airlines financial results don’t offer a
direct comparison, but 2016 was better than 2015. When measured by ton-kilometres - the amount of cargo transported by the distance flown (km) - there is a 7.6 per cent increase to 2,245,659 ton-km from 2,087,791 ton –km (thousands-km). It is though weighted towards international cargo which last year was 109.5 per cent of the previous years total whilst domestic hung on in there at 98.5 per cent of the 2015 volume. Support for this comes from Japan’s other carrier, All Nippon Airways (ANA) who politely were not available to give an interview to ACW. According to their ANA’s results they moved 72,811.5 tonnes and 70,102.9 tonnes of international cargo in April and May respectively that is 116.2 per cent of April and 113.1 per cent of May last year. Domestically it moved 39,240.3 tonnes and 34,780.1 for the same two months 102 per cent and 105 per cent of the same two
months last year. Driving growth at JAL is the usual mix with one slight change. “Auto parts and electronic components from Japan to North America and Asia have pull demand. “The demand of precision machinery from Asia to North America has also been increased,” says Tsuchida. “(The) major parts of the commodities have not been changed, but sometimes we have specific commodity such as electronic cigarette.” Whilst many a non-smoker, and member of the health police might wish to see that trade come to end - JAL has decided to end another one of its own accord: short-nosed dogs, 23 breeds of them.
Bulldogs
Before suspending movement of this type of dog it had already suspended handling of French Bulldogs and Bulldogs throughout the year from the view point of safe transportation. However it felt it could not exclude the same risks for other short-nosed dog breeds and decided to expand the handling suspension, explaines Tsuchida. Such a move though does not dampen its outlook on the coming year. “For outbound, we expect it to be going strong mainly with the demand of auto parts. “For inbound on the other hand, demand from Asia to Japan, North America and Europe seems to be kept well steadily,” says Tsuchida. “We expect it to be steady for domestic cargo and mail,” he adds. Growth as they expect will not force a rethink of strategy. There are no plans for a freighter and JAL’s plan going forward is to increase volumes and maximise revenues by enhancing revenue management, capture mail and express shipments, whose growth is expected to continue, by optimising the advantages of Tokyo Haneda Airport and JAL CARGO’s high quality, Tsuchida explains.
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“Regarding value-added shipments, we will maximise revenue by promoting sales of our new constant temperature container (CC20) and vehicle transport services introduced in FY2015, in addition to promoting outbound shipments of agricultural and marine products. Jupiter Global Limited (JPT) will also play a strategic role to increase use of JAL flights,” he explains.
Container launch
Temperature-controlled services are important in this and in more ways than would first appear. Not only is there the motor of the perishables and pharmaceuticals industry to think on and respond to nearby China offers a huge potential market. For the time being though JAL is taking a cautious approach. “We have just launched the new type of container ‘CC5’, which could keep inside between two and eight Degrees celsius. Just like the current type ‘CC20’, Vacuum Insulated Panel (VIP) is arranged on all six sides inside to achieve high performance temperature control and a temperature logger with GPS is loaded for its condition to be monitored. “We hope more customers would be interested in the series of our special container.” Also on the cards to develop and meet demand on its international network, JAL will launch non-stop services from Tokyo Narita International Airport to Melbourne and Kona in September. And whilst the Japanese economy is picking up the de-facto national carrier is keeping a watchful eye on rest of the world and the risks it might run such as currency turbulence. “Rapid changes of currency exchange rate will impact our revenue which is based on the Japanese Yen since half of our international cargo and almost all of our international mail are sold in foreign currency,” explains Tsuchida.
JAPAN
Japan a key Asian trade lane for American Airlines
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here can be no doubting the importance of the transpacific routes to Japan’s air cargo market or that it has to non-Japanese carriers. Carriers like American Airlines are confident about it, but also noticing changes. “In the past decade, there has been a significant increase in the freight carried to and from Asia as a whole, as well as the freight we carry to and from Japan. “In more recent years, there’s been a noticeable increase in transit shipments as customers take advantage of space on our five daily flights from Tokyo Haneda and Narita direct to the United States,” says American Airlines Cargo managing director for cargo sales in Asia Pacific, Keijiro Ishii (pictured). American offers a wide range of US destinations for cargo with daily flights between Narita and Dallas-Fort Worth, Los Angeles (LAX) and Chicago O’Hare and a daily service from Haneda to LAX. Much of this traffic flows onwards to other locations in the US and Latin America (LATAM). What is important is not so much the variety of destinations, although that counts, but the optimism that there is in the Japanese air cargo market at the moment. “We are confident traffic originating in Japan, and transit shipments from the rest of Asia, will continue to grow this year, driven by increased consumer confidence and spending in the US. And that is always helped by the strength of the US dollar. “Another driver is the kind of commodities Japan is now exporting, including medical equipment, semiconductor parts and mobile parts, as well as the more traditional automobile service parts. Specifically, there are a lot of components moving to LATAM from Asia for final assembly. Into Japan, we move a lot of perishables, especially from LATAM and the US west coast,” says Ishii.
Also increasing is the volume of pharmaceutical and medical products. American focuses on this sector by improving temperature-controlled facilities for healthcare goods across its network and a focus on IATA CEIV Pharma certification in Dallas-Fort Worth, Philadelphia and Miami initially. One of the big seasonal trades is the cherry trade from America to Japan and beyond. The Californian season runs between March
and June every year with American using its LAX base to carry the tasty morsels to Japan’s Narita and Haneda as well as Pudong in China after they are trucked in from Northern California. American is investing some $1.6 billion on new facilities at LAX. Not all of it is going on cargo, but expansion of the freight operations is a clear priority. This is just the starting point according to Ishii as it supplemented by a second season in September to November, when cherries are imported to China, Japan and Korea from LATAM countries, such as Santiago in Chile. “This pipeline has expanded to other commodities as well. We have seasonal goods coming into Japan from all over LATAM, including everything from limes and fresh fish to mangoes and fresh flowers. It’s a very extensive list,” says Ishii. American operates from both Narita and Haneda and admits there are advantages to both. One example is the significant number of forwarders having sizeable facilities around Narita, which provides great access, Ishii explains. “Meanwhile, Haneda is located very close to the centre of Tokyo and is equipped with excellent perishable handling facilities and, so, it is often preferred by our perishable shippers,” he adds.
Antonov targets Far East
ONE company planning to make Japan’s a springboard off the back of a small number of flights is Antonov Airlines. Antonov specialises in large, heavy and generally oversized cargoes and is stepping up its plans for Japan and Asia sharply. “We are working to open an Antonov Airlines office in the Far East this year. This will mean quotations are generated and load planning support provided in a more suitable time zone,” the company explains to Air Cargo Week. “We have this year appointed GSAs in Japan, Australia and India, and are considering a few more territories for GSA appointments,” Antonov says. “We are studying a number of other specific markets in Asia, and we expect to make further announcements during 2017.” Because of the niche services it offers the payload might be huge, but the number of flights involved is small. In terms of Japan flights (excluding Russian routes) for the AN-124 from all operators, over the last five years, Antonov saw a peak in exports of around 36 flights in 2012, the company told ACW. This dipped to few export flights in 2013 and 2014 then climbed to around 14 flights for 2015 and 2016. Import flights were generally around four to six flights each year, the airline adds. “In recent years, we have seen an emphasis on aerospace flights (including satellites) and peacekeeping related flights, we would expect the aerospace sector to remain one of our stronger sectors in Japan whilst peace keeping flights will remain unpredictable, but very significant projects, whenever political decisions are taken to provide such support. “Other sectors (industrial, automotive, etc), may well reflect general cargo trends,” the company adds.
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US FORWARDERS Strong 1st half for C.H. Robinson’s airfreight division
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S freight forwarder C.H. Robinson’s airfreight division has performed strongly in 2017 with double-digit growth in tonnage, transactions, and revenue. This was shown in its quarter two (Q2) results when revenue for airfreight forwarding increased 28.3 per cent to $25.8 million, as figures were boosted by the inclusion of APC Logistics, which it acquired last September. C.H. Robinson director of air services, Tim Reiff says while it set aggressive goals, performance surpassed projections and it could not have predicted how steady the growth in demand would be in the first six months of 2017. Reiff explains more importantly, it has watched customer acquisition momentum “accelerate” as more US customers search for global forwarding partnerships enabling them
to drive their advantages in unique industries. He notes: “Organisations are trending towards lighter inventories. That requires a fast and incredibly consistent supply chain. In addition, while e-commerce is not exactly a new trend, it continues to reshape the airfreight market. Products are being produced around the globe, and many of those products fly using a direct-toconsumer model.” The strongest growth sector for C.H Robinson has been those lining up with the evolving consumer and business demands. Electronics, semiconductor, and e-commerce are all experiencing strong growth. Perishables is an important market as the forwarder has a perishable logistics division, Robinson Fresh, which saw flat revenue of $657 million in Q2 and profits declined 10.3 per cent to $60.8 million. Reiff says: “As globalisation expands, the perishable market is becoming a
critical component of today’s airfreight systems. Airlines and forwarders alike are investing more than ever in temperature-controlled infrastructure and processes, as global consumers demand the freshest perishables. “A significant percentage of the global air capacity is required for seasonal and sometimes unpredictable commodities. The efficient deployment of aircraft to fly perishables is an intricate balance for airlines.” As for the rest of 2017, Reiff says the airfreight division’s investment strategy will align with C.H. Robinson’s organisational strategy. “We will
continue to invest in our people, processes, and technology to ensure our customer and carrier experience is the best,” he adds. There are challenges and opportunities in the marketplace. “Global demand for high-value products has never been higher. Combine that with the trends of lower inventories and directto-consumer logistics systems, and you can see where opportunities exist for airfreight forwarding,” Reiff says. He adds: “Having said that, the marketplace remains challenging as supply growth slows and global regulations become more complex.” There are concerns in the US over potential trade policies planned by the Trump administration, but Reiff believes it is important to keep in mind in times of change that trade will continue around the world. He says: “Global trade drives the world’s economies and will continue to do so - under current or future agreements. “C.H. Robinson believes in free and fair trade around the world, and we continue to invest in strategic neighbourhoods across the globe.”
1st Flexport warehouses to open soon
US-based freight forwarder Flexport will open its first two warehouses next month at Los Angeles International Airport and Hong Kong International Airport and more are set to follow. Having no actual physical freight facilities has led to it being labeled a ‘virtual forwarder’ but global head of airfreight, Neel Jones Shah (pictured) says it is very much a traditional forwarder, but driven by technology and data. The former chief cargo officer at Delta Air Lines says: “The idea when we started (in 2013) was to use software and data to market a better product to the shipper. We have also started Customs services. It is all about the user experience for the shipper. “If you look at the industry as a whole, freight forwarders do not enjoy high customer satisfaction. Shippers are frustrated, as they do not have access to information or know where there shipments are and there are many points in the chain where their shipments ‘go dark’. We are trying to change that. Technology is not everything, but plays a key role.” “One of the services where shippers get most frustrated is in the last mile like where shipments are in the trucking network and everything goes dark. We have a trucking app, which gives real-time visibility so we know exactly where shipments are, bringing transparency to the supply chain.” Shah says Flexport works heavily with partners and has formed strong partnerships, which works well. “I am not going to say Flexport is going to have facilities all
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around the globe, but there will be more. “We feel we need to have our own facilities and will continue to add them where volumes and business dictates. We will see in 2018 several more locations where warehouse projects are started,” he says. Flexport’s workforce is growing and it employs more than 400 people. Shah says having employees meeting its particular needs is vital to future growth. “It is not only the software and technology is great, but having the right people is essential to the user experience. It is about having a combination of both,” he says. As for the forwarding market, Shah says it has been strong since the end of 2016 and yields have been quite high. “Airlines are quite disciplined on the transpacific market – our biggest lane. Business has been quite strong and revenue has been growing ahead of our expectations,” he says. Shah adds: “It is quite intense at the moment with where the demand and where the capacity is. We anticipate a strong end of the year.” He believes companies like Flexport may speed up the industry to change: “E-commerce is going to continue to grow and there is room for everybody.” But he warns: “Those that resist change will not make it, but those that want to embrace change will succeed.”
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NEWSWEEK No business can afford to neglect embracing new technology
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o business can afford to neglect technology, especially when it comes to integrated cargo management systems, Hermes Logistics Technologies chief executive officer, Yuval Baruch (pictured) says. He explains everything is digitised in today’s world, and automation and digitisation will continue to grow in numbers, evolve in functionality and further penetrate into the air cargo industry, while new standards need to be utilised and trends including the internet of things need to be embraced and big data needs to be used better. As Baruch describes it: “Imagine an air cargo handling world where a ULD “knows” it’s a ULD, a location “knows” it’s a location, a door “knows” it’s a door and a truck “knows” it’s a truck; the opportunities are almost endless.” He says growing competition within the air cargo handling industry means different cargo management system providers are being forced to focus on different aspects of technology, functionality and innovation. Baruch explains Hermes focuses on translating the latest technologies into best practices and looks at how air cargo operations benefit in the real world. He says: “We believe that new functionality does not necessar-
ily need to be reliant completely on a tangible technology; it can also simply be a tool that allows a good idea to be implemented quickly and safely.” Baruch does not think the industry is necessarily resistance to change, but cargo handlers can be very traditional and slow to adopt changes. He believes tight operating margins make investments a challenge and a major decision, with costs the main reason to resist embracing technology. He says: “We are starting to see the benefits of new technology as the costs come down and increasing pharma requirements are also driving change. Hermes strongly believes that the acquisition of a quality, process-driven, best practice integrated CMS is the most important investment that a cargo handler can make.” Hermes has been busy upgrading customers, with a major implementation of Hermes Hub Management System at LuxairCargo in Luxembourg, Hermes Cargo Management System at ALS
Cargo Terminal in Vietnam, and upgrades for other companies including dnata, ICCS and Etihad. Baruch says: “Hermes is in the final weeks of releasing its next generation Hermes System. This release is according to the Hermes roadmap and will include technical and functional innovation.” Costs are very important to handling agents as there needs to be an obvious return on investment but sometimes it is not visible. Baruch believes discussing the core operational business and not the technology itself is the way to go, and Hermes prides itself on talking the same ‘language’ as its customers, by explaining complex ideas in a way a warehouse employee or forklift operator understands. He says: “This approach often results in a “change from within” atmosphere where end users internally demand upgrades and enhancements that technology can deliver.” New technology and sophisticated devices are also becoming much cheaper, Baruch comments: “Good, innovative process design that harnesses the availability of smart objects that can communicate with the system and the resources using it present some great opportunities.”
Tracking app for AISATS
Air India SATS Airport Services (AISATS) has launched a mobile app ‘AISATS Cargo’ to improve cargo tracking at AISATS Air Freight Terminal and AISATS COOLPORT at Kempegowda International Airport (KIA) in Bengaluru. AISATS says it is the first and only air cargo operator at Bengaluru to develop a free on-the-go app to provide its customers with detailed cargo-tracking solutions. The app, picks up cargo movement data from COSYS and provides real-time information on flight schedules, air waybill (AWB) shipment tracking and e-delivery order (e-DO) status. The user can input the AWB number and obtain the current status of a shipment such as date of uplift/arrival, number of pieces, weight as well as approval status of the delivery order through its e-DO feature. AISATS says the ‘AISATS Cargo’ app will increase efficiency of the supply chain by relaying relevant information of cargo shipments to key stakeholders.
AMI express imports up 10% AMI UK’s trade-only online express service, click2ship Express Imports has boosted traffic by 10 per cent in its first three months, and is speeding up quotes and saving customers hours of research. The service aims to make handling imports less labour intensive and more profitable for couriers and freight agents, by enabling customers to obtain an online quote for any express import shipment, with an ‘all inclusive’ pricing tool including freight charges, collection at origin, delivery at destination and all customs processing. It takes the place of telephone enquiries – producing accurate, instant quotes that couriers and agents can use to provide instant prices for their own customers based on prime integrator suppliers. Quotes are easily converted into a booking with the system generating all paperwork, which AMI’s agent customer can forward to their customer and overseas suppliers, with regular updates, notifications and tracking information available online, and if collection and delivery points are confirmed prior to booking, an accurate transit time can also be confirmed. click2ship Express Imports is based closely on click2ship Express Exports, and the import service has now completely replaced the former manual express imports system, and has handled an average of over 20 bookings every day since its launch. AMI vice president for the Europe region, Sharon Wright (pictured) explains: “I can only see click2ship Express Imports growing, as more and more customers become aware of its benefits to their businesses.”
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