GLOBAL A
I
R
C
A
R
G
O
W
E
E
K
MANAGEMENT
A
I
R
C
A
R
G
O
W
E
E
K
WORLD AIRPORTS Sponsored.COM by FREIGHTERS.COM
FREIGH
FR
The weekly newspaper for air cargo professionals Volume: 19
Issue: 5
8 February 2016
IATA warns industry to adjust to the ‘new normal’ growth
A
irfreight growth slowed to 2.2 per cent in 2015 with weak load factors, though data suggests early declines have bottomed out and things are getting better, the International Air Transport Association (IATA) reports. Among the regions, the Middle East saw the biggest growth in 2015 measured in freight tonne kilometres, up 11.3 per cent. The other regions seeing growth were weaker, with Asia Pacific up 2.3 per cent, Africa rising by 1.2 per cent and North America increasing by 0.1 per cent. Europe declined marginally by 0.1 per cent and Latin America plummeted six per cent. The load factor for the industry remained weak, at just 44.1 per cent, down from 45.7 per cent in 2014. By region, Asia Pacific had the highest load factor at 53.9 per cent, followed by 44.9 per cent in Europe. The Middle East was the only other region with a load factor above 40 per cent, at 42.8 per cent. The load factor in Latin America was 38.3 per cent, above North America at 34.3 per cent, while Africa was 29.7 per cent. IATA director general and chief executive officer, Tony Tyler (pictured) explains: “2015 was another very difficult year for air cargo. Growth has slowed and revenue is falling. In 2011 air cargo rev-
enue peaked at $67 billion. In 2016 we are not expecting revenue to exceed $51 billion.” “Efficiency gains are critical as the sector adjusts to shortening global supply chains and evermore competitive market conditions. We have to adjust to the ‘new normal’ of cargo growing in line with general rates of economic expansion.” The association says Middle Eastern carriers saw strong growth helped by network expansion into emerging markets like Africa and the strength of local economies, despite falling oil prices. Asia Pacific saw declines in the first half of 2015 and by the middle of the year to and from emerging Asia was eight per cent down on the end of 2014. The fall rebounded in the third quarter and IATA says earlier declines appear to have bottomed out, because of improvements in advanced economies such as Japan.
Africa saw a small rise in FTK, up 1.2 per cent with the weakness in Nigeria and South Africa proving challenging. IATA says trade to and from the region expanded slowly in 2015. IATA is also not very optimistic about North America, having seen a 0.1 per cent expansion in 2015. The year started well due to the US West coast seaport strike, but recent results suggest exports could be nose-diving. Meanwhile, across in Europe, there was a contraction of 0.1 per cent despite the Eurozone showing some improvement. Exports have been weak, but IATA says imports have improved. IATA also says the Latin American slump of six per cent mirrors the weakening consumer sentiment in key economies. The economic and political situation in Brazil has got worse and regional trade has been volatile in recent months.
CargoLogicAir has been cleared for take-off, having received its air operator certificate (AOC) from the UK’s Civil Aviation Authority (CAA). The Volga-Dnepr Group subsidiary is based at London’s Stansted Airport and has taken delivery of one Boeing 747-400 Freighter from Air Castle, with a second to be added in July. It expects to have five 747Fs in its fleet by April 2018. Its routes and operations schedule will be announced “in due course”. Ruslan International vice president sales, Dmitry Grishin has been appointed chief executive officer, where he will be joined by Peter van de Pas as chief operating officer and accountable manager, and Steve Harvey as chief commercial officer.
Grishin says: “We are proud to have been awarded our AOC after meeting all of the UK CAA’s strict requirements. We are grateful to all involved in the certification process who helped us to make the company stronger, particularly the helpful and professional team at the CAA.” He says the all-cargo airline has its place in the market specialising in outsized cargo. Grishin adds: “We are open to cooperation with all who share the same passion for cargo as we do. We are also very grateful for the help we have received so far from partners such as Boeing, Stansted Airport and Aeropeople, who have supported us in building the company and its capabilities.” Harvey says: “We believe this is the right time to launch a new UK cargo airline. We created
the company in the UK, which has a rich heritage of all-cargo specialist carriers including big names like HeavyLift, AirFoyle and others.” He says the size and strength of the UK makes it ideal: “We have been extremely encouraged by the level of interest from our customers and expect this to result in us attracting the level of business we need to support our growth strategy over the next three to five years.”
CargoLogicAir set for a fleet of five Boeing 747F’s by 2018
CARGO 2000 REBRANDING ON TRACK
4
60 SECONDS WITH HANSGEORG EMMERT
5
INDIA: EMERGING AIR CARGO POWERHOUSE
7
FTA WELCOME £180m cargo investment
8
FedEx takeover of TNT clears another barrier BRAZIL’S Conselho Administrativo de Defesa Econômica, the country’s competition authority, has approved the FedEx acquisition of TNT Express. FedEx and TNT made a joint statement to reveal the news and it comes after the European Commission and US gave the green light for the 4.4 billion euro ($4.8 billion) takeover of the Dutch courier delivery firm last month. Under Brazilian law, the decision may be appealed within 15 calendar days of the official publication of the decision. FedEx and TNT say they continue to work with the regulatory authorities to obtain clearance of the transaction in the relevant jurisdictions, including China. Both add they are making progress and continue to anticipate that the offer will close in the first half of calendar year 2016. The integrators reached a conditional agreement on the deal in April, before FedEx made the offer in August and TNT shareholders approved it in October. The takeover would give FedEx a significant foothold in the European express market. Industry forecasters say the two firms will have a combined 17 per cent share in Europe.
aircargoweek.com
NEWSWEEK
Industry misses IATA e-AWB target by 8.6%
T
he airfreight industry has missed the 2015 electronic air waybill (e-AWB) penetration target of 45 per cent set by the International Air Transport Association (IATA), managing just 36.4 per cent. This is in contrast to 2014, when the industry beat the target of 22 per cent target, hitting 24.8 per cent. Penetration rose quickly from January to September, rising from 24.9 per cent to 34.2 per cent. Growth at the end of the year slowed, rising from 35.1 per cent in October to 36.4 per cent in December. By country, the USA processed the most e-AWBs, followed by Hong Kong and Singapore. By airport, Hong Kong International Airport processed the most, followed by Singapore’s Changi Airport and Incheon International Airport. Cathay Pacific Airways handled the most e-AWB, followed by the Air France
KLM Group and Emirates. Among freight forwarders, DHL Global Forwarding processed the most e-AWBs, followed by DB Schenker and Panalpina. Among airlines, flydubai managed 100 per cent e-AWB penetration, followed by Ethiopian Airlines at 75.4 per cent and FedEx Express at 71.1 per cent. Expeditors Group had the highest penetration among freight forwarders, at 59.5 per cent, followed by Panalpina at 57.5 per cent and UPS at 56 per cent. Among the regions, the Middle East led the way with penetration at 63.4 per cent, followed by Africa at 52.7 per cent. By volume, Asia Pacific handled the most e-AWBs followed by Europe. Last month, Descartes said 15 carriers are to switch to the e-AWB from 1 March this year as the preferred method for shipping airfreight, but explains there remains barriers to adoption notably from
forwarders. Descartes vice president of its global logistics network, Scott Sangster said this is a significant milestone in the air cargo industry and “creates a new level of urgency for forwarders to move toward the e-AWB” but on the carrier side, the benefits of e-AWB are clear, but less so on the forwarder side.
”
Dubai tops 2.5 million tonnes in 2015
DUBAI INTERNATIONAL AIRPORT (pictured) has seen cargo volumes increase by 3.4 per cent to 2.5 million tonnes despite pure cargo operators moving to Dubai World Central. In 2015, Dubai International welcomed new airlines including Air Canada to Toronto, Eurowings to Cologne, and China Southern to Wuhan. Emirates and flydubai also increased their network. Indian services were increased with daily Spice Jet flights from Kozhikode and Amritsar. Nearby Abu Dhabi International Airport saw cargo volumes rise by 3.8 per cent in 2015 to 827,456 tonnes despite the end of the year declining. In December, volumes fell by 3.9 per cent to 66,987 tonnes and having seen a year-on-year fall in November of 7.2 per cent to 70,276 tonnes. This is following a fall of 4.4 per cent in October to 69,005 tonnes, and down 1.1 per cent in September to 67,163 tonnes.
Double-digit rise for UPS
UPS saw profits rise by 12.2 per cent in 2015 to $4.9 billion, with all business areas boasting large operating profit rises. For 2015, international packages saw the largest operating profit increase, up 14.5 per cent to $2.2 billion. US domestic packages saw the smallest rise in operating profits, up 7.1 per cent to $4.8 billion, while supply chain and freight increased by 8.1 per cent to $776 million. In the fourth quarter, net income increased by 23.2 per cent to $1.4 billion. US domestic saw operating profits rise by 18.4 per cent to $1.3 billion, international packages rose by 16.4 per cent to $624 million and supply chain and freight increased by 11.2 per cent to $199 million. UPS chief executive officer, David Abney says: “Our flexible integrated network, close collaboration with customers and the extraordinary efforts of UPSers enabled us to achieve great service and record financial performance this quarter.” Revenue grew marginally, increasing by 0.2 per cent for the year to $58.3 billion, and up one per cent in the fourth quarter to $16.1 billion.
2
ACW 8 february 2016
aircargoweek.com
Yields plunged a massive 15% in 2015, WorldACD reports
A
ir cargo yields measured in US dollars fell by a “whopping” 15 per cent in 2015 compared to 2014, according to WorldACD Market Data. The report adds: “The impact of that remarkable drop has yet to be established, as the cost of fuel decreased dramatically over the year, to the point where even consumers of fuel begin to worry about the disruptive effect this price fall may have on economies at large.” WorldACD says there was marginal year-onyear (YOY) growth despite an exceptional first quarter (Q1) and volumes increased by a “meagre” two per cent on 2014. In that year, the industry saw growth of six per cent compared to 2013, while there was only a drop in yields of 2.5 per cent. The report notes: “YOY volume increased by a meagre two per cent, which would have been even lower had our industry not had a windfall on the Transpacific in Q1 of 2015. “What a difference a year makes: we hardly
see any growth in the business, but unit income and unit cost changed considerably.” WorldACD says worldwide volumes growth dwindled from one quarter to the next including from four per cent in Q1 to 2.5 per cent in Q2, and petered out to one per cent in Q3 and Q4. The year did end brightly and December saw a YOY volumes uptick of 2.1 per cent, combined with a decrease in US dollar yield, in line with
the regular December pattern. In 2015, the performance differed between regions and the Americas showed negative growth for the year as a whole, while Asia Pacific entered this danger territory in the last quarter only. Africa just stayed in the positive figures, while the Middle East and South Asia showed up-and-down growth across the four quarters. WorldACD says Europe bucked the worldwide trend from a growth of 1.1 per cent in Q1, via growth varying from three to four per cent in Q2 and Q3. It ended the year strongly with a six per cent growth in the last quarter. The report adds “A trend we already noted a while ago, was continued: the top 20 forwarders saw their worldwide market share further decline, from 44.5 per cent to 43 per cent. Kuehne + Nagel and Nippon Express were the high flyers among the big guys, chalking up serious increases in their shares, directly followed by the likes of DSV, SDV, CEVA and Expeditors.”
NEWS WEEK WorldNews CHEP AEROSPACE SOLUTIONS has renewed its unit load device (ULD) management contract with Fiji Airways for another five years. The ULD management firm will provide Fiji’s national airline with new lightweight containers to help reduce fuel costs and lower CO2 emissions. Fiji Airways general manager for freight, Watson Seeto says the outsourcing agreement has reduced costs and improved efficiencies. FINNAIR CARGO has signed an agreement with Mercator for a new air cargo management system and will use the firm’s airfreight system, SkyChain, which is set to be implemented by October 2016, six months ahead of the opening of Finnair’s new 80 million euro ($87.7 million) Cool Nordic Cargo terminal in spring 2017.
HACTL signs MoU with CKS
HACTL Development Holdings – the business arm of the Hactl Group – has entered into a memorandum of understanding with Chu Kong Shipping Enterprises (CKS). The objective is to explore the joint development of logistics links and infrastructure in and around Hong Kong International Airport and the Pearl River Delta (PRD) region supporting the air cargo sector. The cooperation aims to leverage CKS’ wide-reaching logistics network, and Hactl’s expertise in operating a cargo terminal. CKS and Hactl will form a working group looking into a feasibility study focusing on future opportunities.
WFS scoops JAL contract
WORLDWIDE FLIGHT SERVICES (WFS) has won its first-ever contract with Japan Airlines. WFS, which provides ground handling services to more than 300 airlines across its global network, has been awarded a cargo handling contract by the airline at New York’s John F. Kennedy International Airport (JFK). The handler will manage Japan Airlines’ twice-daily Boeing 777 and 787 services to Tokyo. WFS expects to handle over 15 million kilogrammes of cargo a year for the carrier. WFS vice president for ground handling and cargo in the US East Region and Canada, Sydney Stephenson says: “This is a milestone contract for WFS to be working with another of the world’s most respected airlines. “This contract follows our move into cargo building 75 at JFK International Airport, which helped to demonstrate to Japan Airlines our commitment to consistent improvement and service quality. “We hope this will be the first of many more contracts between the airline and WFS in the future.”
aircargoweek.com
ACW 8 FEBRUARY 2016
3
NEWSWEEK Graz and Swissport join forces
SWISSPORT INTERNATIONAL and Flughafen Graz Betriebs, the operator of Austrian airport Graz – started a new cargo services joint venture on 1 February. Swissport Cargo Services Graz will see Swissport holding 51 per cent and Graz Airport 49 per cent, and will initially have
12 employees providing cargo services. It is expected to handle about 10,000 tonnes of airfreight per year on behalf of its airline and forwarding clients. Graz Airport managing director, Gerhard Widmann says: “We are convinced forming a joint venture was the most sustainable and future-oriented solution for Graz Airport but also the economy of Styria.” Both say the benefits of the joint venture for airlines and logistics companies is its location on the premises of the airport, offering direct access and handling facilities for air cargo. Swissport Cargo Services Graz will operate in a 4,000 square metre warehouse with two truck docks capable of handling seven tonnes of cargo. There will be 15 resident freight forwarders and two airlines – Austrian Airlines and Air France/KLM.
Cargo 2000 rebranding on track CARGO 2000 (C2K) is getting a revamp and will soon get a new name as the focus of the International Air Transport Association (IATA) interest group changes. C2K’s executive director, Ariaen Zimmerman took over in September 2015 and tells Air Cargo Week the rebranding comes at a perfect time, as the industry needs innovation and a game-changer “more than ever”. The rebranding is on track: “We have the name ready, but will run it officially by the membership in February and it will go public then. In March, the presentation, brand and positioning will be done at the World Cargo Symposium in Berlin.” The revamp is part of the change programme, which involves a revision of door-to-door specification, a Smart Data project, and revised audit and certification programme. Before taking over, Zimmerman was director of global key accounts, for Saudia Cargo. He says when on the outside looking in, he wanted Saudia to be part of it for operational reasons, but explains he knew little about it, only it focused on quality. However, once onboard he knew there needed to be an overhaul to move it forward to innovate and impact the whole industry. Zimmerman says: “People looked at C2K like it didn’t do much and was a big boys club for carriers and forwarders.” “For us to reach out to the rest of the industry away from the big guys – we need a brand. We need them to recognise this is what C2K does. There has been so much done, but it was done for people in C2K.” “To create the relevance we need to speak to people and must have a package to take into companies, this is C2K.” He notes the rebrand is going back to the core, back to wanting to touch the whole in-
dustry, creating a brand it can carry to small and medium sized forwarders, and create credibility. “We have five values: trust, reliability, quality, innovation and collaboration – this is what we think we are and everything we do should breathe these and is the message we want to bring to the market. “A new thing is scalability. We are testing everything we do and it should work for now and in the future for both small and big companies,” Zimmerman says. The membership structure will see changes, as in the past carrier and forwarder members decided everything. Zimmerman says this will change and the whole chain is set to be full members: “Once you are a C2K member you should be proud and able to carry that flag. We will be more outspoken as we realise part of our value proposition is the brand we offer.” He enthuses C2K is in his view the group that covers the whole industry in a global setting, focusing on innovation and quality. Membership numbers will be grown. The now 78 C2K members include carriers, freight forwarders, IT providers, cargo handlers, a road feeder provider, and one airport, Amsterdam Airport Schiphol. Zimmerman says C2K is looking for more members: “We have big global carrier joining us soon and are already talking to their key accounts department. We are also talking to cargo handlers who are asking us what is the relevance of C2K? We say you want to be measured in the end on what you do and talk about quality. We are talking to airports to join and can announce in March a few airports will join.” Exciting times at C2K as it looks to play a bigger industry role.
Three Boeing 737 conversions for AEI
A
eronautical Engineers (AEI) is converting three Boeing 737-400SFs for ASL Aviation Group, to be redelivered in May, June and July this year. The three aircraft, registrations MSN 25177, MS24917 and MSN 26025, are being converted at Commercial Jet’s Miami facility.
4
ACW 8 february 2016
aircargoweek.com
The aircraft will have 11 pallet positions and AEI says it is the only 737-400 passenger to freighter conversion with 10 88 x 125 inches positions, because the main deck cargo door is 40 inches further back than competitors. The firm says this increases capacity by 10 per cent. In other P2F news, Singapore Technologies Aerospace (ST Aerospace) has completed its investment of the additional 20 per cent equity interest in Elbe Flugzeugwerke (EFW). The investment was completed following the receipt of regulatory approvals and fulfilment of customary conditions precedent. EFW becomes a subsidiary of ST Aerospace, with the latter owning 55 per cent of the shareholding and Airbus Defence and Space (Airbus) holding the remaining 45 per cent.
60
60 SECONDS
Seconds with
HANS-GEORG EMMERT
One of the first changes at Fraport Cargo Services (FCS) after it was taken over by Worldwide Flight Services (WFS) was the appointment of Hans-Georg Emmert as managing director. Emmert was promoted from head of sales and marketing and took over on 1 December. He spoke to Air Cargo Week about how he sees the industry and the impact of the takeover.
James Muir, ACW: How will your experience as head of sales and marketing help now you are managing director? Emmert: First of all I know the business and the company. I am very much supported by the trust and motivation of our entire workforce. I am very well connected to our customers and completely aware of their needs and requirements. Since the establishment of FCS I have been working for the company what saves me time in straightly attacking the issues, which shall be improved.
James Muir, ACW: How is business in Germany? Emmert: The challenges we face in Germany lately have not very much changed, but we need to continuously demonstrate our strengths in the competition with other airports and local players. We will continue providing excellent service quality which our customers do expect. Given our new shareholder, we are also focusing on a future expansion in Germany by opening at some potential other German airports.
James Muir, ACW: What is the future for air cargo? Emmert: I am convinced the market will keep its importance and there will always be enough business, e.g. the development of e-commerce has a very strong impact on the cargo business. It probably may change in the direction that only the big will survive but opportunities for business will always remain.
Hans-Georg Emmert
James Muir, ACW: How was business in 2015? Emmert: The situation in the air cargo industry remained in 2015 very competitive, but due to our new customer China Southern Airlines and the increase of volume with established customers a considerable increase in volume and turnover was achieved. On the other hand there were companies which had to withdraw their traffic because of economically difficult circumstances. We are looking forward to increasing our customer portfolio in 2016.
James Muir, ACW: How will your partnership with WFS affect business? Emmert: The partnership between WFS and FCS impacts the business only in a positive way. But what does this mean for our customers? Some may worry this will have an impact on the handling services. Yes, certainly this will have an impact, but only a positive one. All contracts will remain unaltered and our customers will benefit from an even more diversified professional service. Handling network for several destinations in the world are a possible benefit as well as the support and the experience of WFS as a global player. The Fraport Group, holding 49 per cent company shares at FCS, will also in future support our development at Frankfurt Airport (FRA). In cooperation with the Aviation Ground Services of Fraport we can offer the whole ground handling services to our common airline customers. The global network of WFS, its experience in cargo handling, together with the competence of Fraport as an airport operator and ground handler, are the perfect backing for our business.
James Muir, ACW: What are your priorities for 2016? Emmert: Lots of challenges are lying ahead of us for 2016. The volume handled by FCS will increase as we will take over the customer of WFS Germany. Our first priority is to guarantee a smooth transition and to continue to provide further excellent service to our existing customers. Our main target has always been to do our utmost to meet our customer’s requirements. We will continue to focus on service and performance. James Muir, ACW: How do you see the Chinese market? Emmert: We highly appreciate the cooperation with our Chinese customers. Both could significantly increase their volumes at FRA. Air China belongs to our top customers in terms of total cargo volume and growth. We expect the same development with China Southern Airlines. Despite a slowed increase of exports from China in 2015, we saw a considerable growth of volumes here at FRA which emphasises the carrier’s strong market position. China will also in future be a major market for our company.
James Muir, ACW: What are your expectations for 2016? Emmert: For 2016 I expect to increase our number of customers and consequently the volume of handled cargo. We will start to offer enhanced handling packages as part of the global WFS network. Our signs are set on the growth of the company, and we will start to explore the possibilities very soon. The WFS Group is focusing strongly on global growth.
aircargoweek.com
ACW 8 february 2016
5
AIR CARGO INDIA PREVIEW India set to showcase its expanding air cargo market
I
ndia is emerging as one of the fastest growing air cargo markets across the globe and presents abundant opportunities for industry operators investing in one of Asia’s economic powerhouses. The 6th Air Cargo India International Biennial Networking Conference and Exhibition at the Grand Hyatt in Mumbai from Tuesday, 23 February to Thursday, 25 February, will place the spotlight firmly on India’s rapidly expanding airfreight market. When it was last held in 2014 (pictured right and below), hundreds of delegates packed into the Bombay Exhibition Centre in Mumbai. The theme of this year’s conference being run by the STAT Media Group is ‘Make in India - air cargo makes it happen’. India certainly is a land of opportunity and the International Air Transport Association (IATA) forecasted in its 2014-2018 report, that the South Asian country will grow at a com-
pound annual growth rate of about seven per cent over the next five years. According to IATA, this expected market expansion ranks it second only behind the Middle East region. Industry analysts also predict that India will be among the ten largest international freight markets by 2018 led by the United States supplying more than 10 million tonnes and China with around 5.6 million tonnes. This forecast is supported by a number of factors, such as the rapid growth of international trade, India’s huge manufacturing engine and a growing population of more than 1.2 billion, which commentators say all bode well for significant air cargo market development. India is also now a key aviation market and its potential for growth is supported by policy reforms by the Indian government like privatisation of airports and foreign investment in airport infrastructure around the country. The Government of India’s minister for civil
aviation, Ashok Gajapathi Raju says the air cargo industry is very crucial and plays a vital role in the development of any economy in the world, especially India. He explains: “The air cargo industry plays an important role in the development and growth of any country. It has contributed a lot in the Indian economy as a result of which India is considered to be the second fastest growing air cargo market.” Raju adds that Air Cargo India will prove a “valuable platform for networking the players in the airfreight industry round the globe”. The minister will open Air Cargo India on Tuesday, 23 February and address delegates after a welcome address is given by the STAT Media Group’s editor-in-chief R.K. Patra.
Make in India
The first round table discussion of the event will be ‘Delivering the make in India vision to the world the air cargo way’ - which will be moderated by IATA’s global head of cargo, Glyn Hughes. Panelists joining Hughes for the discussion will include Emirates Airline’s senior vice president, Nabil Sultan; Chapman Freeborn chief executive officer (CEO), Russi Batliwala; Atlas Air Worldwide’s executive vice president and chief commercial officer, Michael Steen (pictured); the International Air Cargo Association’s (TIACA) chairman and Delhi International Airport head of cargo business,
6
ACW 8 february 2016
aircargoweek.com
Sanjiv Edward; and Mumbai International Airport’s vice president and head of cargo, Manoj Singh.
Pharma hub
One of India’s major growth markets is pharmaceuticals and India is now one of the world’s global players with the size of the market expected to reach more than $85 billion in 2020. The second round table event of the day will see a Pharma Air Shippers’ Forum, where a debate will discuss why India is one of the prominent global export hubs for pharma, how this is being achieved and also how there is growing healthcare awareness in India. Much of the discussion will be on how India has grown its pharma business, what the future holds for the industry, any opportunities that exist, putting this important sector into a global perspective and marketplace. In the evening there will be a welcome reception poolside at the Grand Hyatt, where delegates will have the chance to discuss the day’s sessions and network with other delegates in the warm weather. Delegates will be able to unwind with some canapes and drinks, discussing any positive and negative aspects of India’s growing airfreight market.
AIR CARGO INDIA PREVIEW India: one of the globe’s emerging air cargo powerhouses be vying for accolades across various categories such as best carrier, cargo handler, freight forwarder, airport and more awards. The final day of the conference and exhibition on Thursday, 25 February will kick-off with the sixth round table session where e-commerce will be under the spotlight in the session ‘E-commerce – delivering the future’.
Wealth of opportunities
T
he second day of Air Cargo India on Wednesday, 24 February will start with the third round table discussion entitled ‘India a global air cargo force – potential and pitfalls’, which will be moderated by GMR Airports’ chief operating officer for aero commercial cargo and Asia Pacific Flying School, Hemanth DP. Among those discussing the opportunities and challenges of airfreight in India will be Lufthansa Cargo’s executive board member, Alexis von Hoensbroech; Saudia Cargo’s vice president for commercial, Rainer Mueller; Qatar Cargo’s chief cargo officer, Ulrich Ogiermann, and Air Charter Service’s chief executive officer (CEO), Justin Bowman. Freight forwarding will then be the focus of debate in the fourth round table of the event in a session entitled ‘Evolving paradigms and embracing global best practices’. IATA’s former head of cargo and long-time industry stalwart, Des Vertannes (pictured) will be the moderator of the panel, where he will be
joined by a stellar line-up. These include National Air Cargo president for the Middle East and Asia Pacific, Jacob Matthew; Fast Logistics Solutions Group CEO, Peter Scholten; SkyTeam Cargo vice president of its cargo alliance, Eric Hartmann; and the Sri Lankan Freight Forwarders’ Association’s chairperson, Tania Polonnowitta Wettimuny.
E-commerce is rapidly becoming a way of life for the Indian consumers and the sector provides a wealth of opportunities in India as the economy expands. The market is seen as one of the biggest growth sectors for the air cargo industry supply chain as a whole with e-commerce set to grow and grow, especially in India and across the Asian region. Indeed, this is another emerging feature of the Indian air cargo market as consumers are
Shippers forum
The final session of the day will be the fifth round table centering on a key part of the supply chain, who some people feel are often overlooked, shippers. The Air Shippers Forum ‘Air cargo adding value to the global economy’ will be the last discussion of the day, and panellists have yet to be decided. In the evening, there will be a Gala Award event, which will take place at the Grand Hyatt’s, Grand Ballroom. This will feature the Air Cargo India International Award for Excellence in Air Cargo awards ceremony, where operators will
aircargoweek.com
increasingly becoming click-happy and making purchases online, and the topic is set to be reoccurring theme at the event. Vertannes will once again moderate and be joined by the likes of Celebi Delhi Cargo Terminal management India’s CEO, Ramesh Mamidala; Alibaba.com India E-Commerce head of business, Nahiyan Gangani; and Jeena & Company express and commercial country head, Rajiv Khanna. Bringing the conference to a close will be the seventh round table discussion ‘Indo-Africa trade link waiting to be unlocked’, where Liege Airport’s director, Steven Verhasselt will moderate. Panelists will include Boeing Commercial Airplane regional director for airline market analysis, Tom Crabtree; Kenya Airways general manager for cargo Dick Murianki; Astral Aviation CEO, Sanjeev Gadhia; Cargo Airports Company South Africa group manager, Christa Soltau German; Ogiermann; Scholten, Mueller; and Bowman. In the evening there will be a reception at the Novotel Hotel in Mumbai to launch Air Cargo Africa 2017, which will take place from 21-23 February 2017 in Johannesburg (South Africa) and is run by the STAT Media Group. Running alongside the conference is an exhibition where operators from across the air cargo supply chain will showcase what they are offering customers, give details of their latest products and network with delegates. Stands will include by Air India, Lufthansa Cargo, Emirates SkyCargo, Etihad Cargo, Saudia Cargo, Brussels Airport, Turkish Cargo, Cargolux Airlines, Ethiopian Cargo, Airports Authority of India, and Indigo Airlines.
ACW 8 february 2016
7
CARGO GATEWAY HEATHROW
FTA welcome £180m cargo investment
M
embers of the Freight Transport Association (FTA) are eagerly awaiting an announcement on runway expansion in the UK, but in the meantime welcome the £180 million ($257.3 million) investment in cargo facilities. The FTA, like a number of other business groups, was angry with the UK government for putting off a formal decision on expanding runway capacity in London until at least the middle of this year. The government appointed Airports Commission released its final report in July 2015, recommending a third runway at Heathrow Airport, and at the time the government said it would formally respond by the end of the year. A decision was put off for further consultation on the environmental impact of expansion. The FTA published its own report in 2014,
compiled by York Aviation, focusing on the importance of airfreight for the UK as a whole. It said Heathrow is a vital cargo hub, with access to 191 destinations and handling 1.5 million tonnes annually but it was operating at 98 per cent capacity, and needs to expand to meet demand. FTA head of global policy, Alex Veitch (pictured) tells Air Cargo Week: “The delay in a decision on future investment in airport capacity is damaging the UK’s international competitiveness. Approximately 40 per cent of Britain’s imports and exports are dependent on airfreight. “The UK’s ability to access existing and new markets is in danger of being seriously impaired by a failure to invest in Britain’s core infrastructure capacity.” He continues: “Worse still, as the government dithers, is the damage done to our international
reputation and the signal it sends to overseas investors who are likely to question the UK’s capability to invest in vital infrastructure required to maintain and enhance the UK’s connectivity.”
Heathrow investment
While the government dithers, Heathrow plans to invest £180 million in its cargo facilities, including a specialist pharmaceutical storage area and other improvements. Heathrow Airport says the improvements will reduce congestion and smoothen processing, halving process time from nine hours to four. Veitch comments: “The announcement that Heathrow is planning to double the volume of airfreight cargo is excellent news for industry and the UK economy. The plans are to revolutionise its cargo facilities, processes and people. FTA has said that Heathrow’s proposals recognise the vital importance of airfreight to UK plc.” Veitch says: “Time sensitive goods such as
medicines rely on airfreight transportation and can’t realistically travel any other way. There have long been insufficient controlled temperature arrangements to move pharmaceuticals. “The proposed improvements to provide this and to accelerate implementation of e-freight are essential in halving door-to-door air cargo movements. These are vital steps to enhance the competitiveness of UK exports and to make Heathrow a world-class air cargo hub.” Veitch is happy because the investment shows Heathrow is committed to freight, a business area that often gets overlooked. “The significance of airfreight is often overlooked, but this plan illustrates that Heathrow Airport has listened very carefully to ourselves and the freight industry. The improvements it is proposing are essential to the growth and success of the UK economy.”
BIFA members want expansion
members of the British International Freight Association (BIFA) want expansion at Heathrow Airport, and are disappointed by the government delaying the decision, its director general, Robert Keen (pictured) says. Keen tells Air Cargo Week: “BIFA has made no secret of its disappointment in the government delaying a decision on UK aviation hub capacity. BIFA members need an expansion and improvement of airport infrastructure at Heathrow so that the airport maintains its position as one of Europe’s most important aviation hubs.” He says a third runway (pictured above) to the North
8
ACW 8 february 2016
aircargoweek.com
of the existing two should not impinge existing cargo activity, as that is around the South and West of the airport. He says: “If it secures Heathrow’s status as Europe’s premier aviation gateway, it can only be good for our members. If given the green light for expansion, Heathrow says it can double its freight capacity from 1.5 million to three million tonnes.” While waiting for news on the runway, Keen says BIFA members will benefit from the £180 million ($257.3 million) to be spent on cargo facilities. He says Heathrow’s cargo terminal was built in the 1960s and badly designed. “If the improved infrastructure reduces congestion and provides smoother processes, enabling freight to flow better through the airport and halving processing times, as was promised at the time of the announcement, it will be of great benefit to BIFA members that are active at Heathrow.”
CARGO GATEWAY HEATHROW Third runway essential to clear export limiting bottleneck
H
eathrow Airport is full and freight cannot be transported directly on a number of services to destinations including China, head of cargo, Nick Platts tells Air Cargo Week (ACW). Heathrow Airport handled just under 1.5 million tonnes of cargo in 2015, a 0.2 per cent dip from 2014, though Platts says the results were skewed by 2014 being particularly strong. Without runway expansion, Platts says Heathrow is forecasted to handle 2.1 million tonnes of cargo by 2040, though with more capacity, it could process 3.1 million tonnes. Platts says 39 connections are constrained meaning not all freight for these destinations can go direct. “Heathrow’s full and over the past decade we’ve seen several of our freight routes fill up too – there is no more freight capacity from Heathrow on routes to China, for example. This results in a bottleneck that limits export potential and increases our freight costs.” Heathrow has just two runways, in comparison Paris Charles de Gaulle Airport and Frankfurt Airport both have four runways and Amsterdam Airport Schiphol has five. Platts says: “Britain is handling export growth to European competitors – France, Germany and the Netherlands. By 2030, we estimate that without a third runway at Heathrow 57 routes will be freight-constrained. This represents around one third of all routes.” The majority of the UK’s trade is in the European Union but in 20 years emerging markets could represent a greater share, making extra capacity more urgent. Platts says: “Transport links to distant markets, including airfreight, will play an increasing
role for UK exporters and importers. With unconstrained capacity at Heathrow, the value of exports to China would overtake the USA as the biggest export destination from Heathrow within two years.” The USA remains Heathrow’s biggest export market, worth £14 billion ($20 billion) with China in second at £7.6 billion. Platts comments: “Exports to China now represent 15 per cent of the total goods exported via Heathrow but with the airport now at capacity and several freight routes full, businesses access to China is being constrained.” He says forecasters at HSBC predict that emerging economies, particularly China, will see the strongest import and export growth.
“Releasing freight capacity constraints on these trade lanes with the expansion of Heathrow could facilitate the delivery of this success for export and import firms in the UK.” Heathrow is hoping to get government approval for a third runway this year. In the meantime, it is investing £180 million in improving cargo facilities to process it more efficiently. The plan, announced in November 2015 includes a specialist pharmaceutical storage area, a valuable business segment for Heathrow worth £2.8 billion in exports. Platts says Heathrow handles 91 per cent of the UK’s pharmaceutical exports to India, 70 per cent to Hong Kong and 34 per cent to China by value. For time sensitive exports as a whole,
aircargoweek.com
Platts tells ACW: “Airfreight is critical for time sensitive industries such as pharmaceuticals, biotech and food. Exports to medicines have risen by 97 per cent and 87 per cent over the past two years due to world health crises.” Fresh salmon, primarily from Scotland, is another temperature sensitive product Heathrow handles a lot of. Platts says it is the largest export by weight and second biggest food export. “With the majority of salmon coming from Scotland, producers rely on Heathrow as a hub airport to get the product to market as quickly as possible.” It also wants to improve infrastructure to reduce congestion and halving process time to four hours. The project should be delivered by the end of 2017. Platts tells ACW: “In 2016 we will develop detailed plans to deliver a call forward facility for HGVs, an airside transhipment facility, fasttrack access for cargo to airside areas and an improved security process. Additionally we’re revising plans to install stillage for the cargo operators.” “Our blueprint plan is an opportunity for us to invest in improving our existing freight operation to make it more streamline and quicker for businesses.” “With expansion, we can offer exporters more direct connections and more frequent flights on existing routes to and from Heathrow, whilst also increasing freight capacity to allow more freight to fly direct.” “This would reduce time and cost barriers for businesses looking to export abroad, making the UK more globally competitive and driving trade, helping Britain to meet its export targets.”
ACW 8 FEBRUary 2016
9
GREEN AIRFREIGHT
Sustainability a top priority for Finnair Cargo
F
innair Cargo’s new 80 million euro ($87 million) Cool Nordic Cargo terminal at Helsinki Airport, set to open in spring 2017 will be the one of the most environmentally-friendly facilities of
its kind. Sustainability is key in the construction and operations and its aiming to gain the BREEAM environmental building certificate for the proj-
ect, according to Finnair Cargo’s manager of marketing and sustainability, Milla Nyholm. She tells Air Cargo Week: “Construction is done by following sustainable construction principles, including environmentally-friendly methods used in the planning and the implementation of the terminal, for recycled materials, waste management, energy saving design where available and utilisation of existing materials from the current terminal.” The 31,000 square metre terminal will be divided into three temperature zones with separate areas for pharmaceuticals and perishables of 3,000 and 3,500 square metres, respectively. Nyholm says the impact construction will have on the environment compared to its current cargo operations is not possible, as it will serve higher volumes, but it is striving for more efficiency across freight services. Fleet renewal plays a big part for Finnair in
reducing its carbon emissions and since 1999, it has reduced emissions by one quarter. It is targeting a further 20 per cent fall by 2017, in pursuit of carbon-neutral growth by 2020. Nyholm explains: “The most significant step towards this goal is the introduction of the new Airbus A350 aircraft, which brings a significant increase in cargo capacity and substantially raises the bar for both environmental performance and operational efficiency, thanks to its superb payload/range capability and usage of lighter materials across the aircraft.” Finnair is operating the A350 to Shanghai (China) and will soon use it on services to Bangkok, Beijing, Hong Kong and Singapore. It has 19 A350 aircraft on order and plans to phase out its Airbus A340 by the first half of 2017. Generally, Nyholm feels more can be done in the industry to reduce emissions: “Environment-related industry endeavours have
traditionally focused on environmental reporting, but more cooperation between different stakeholders in the whole supply chain could boost development in concrete actions to reduce environmental impact of freight transport.” She says carrier’s can reduce emissions by using lighter materials for shipping (pallets or containers) and adopt e-freight to cut paper used to handle and move shipments. Nyholm says there are challenges affecting environmental development such as high costs, and feels closer cooperation with relevant stakeholders would need to be enhanced to find new sustainable solutions, such as making the the use of biofuels financially sustainable. Staff are also a priority, Nyholm adds: “For employees we plan access to the terminal as well as facilities to promote environmentally friendlier and healthy alternatives for commuting between home and work.”
Biofuel initiative launched at
Oslo Airport
OSLO AIRPORT began offering biofuel to all carriers refueling at the Norwegian gateway from 22 January – making it the first airport in globe to offer this service through the normal supply mechanism. Air BP is the supplier and the Lufthansa Group, Scandinavian Airlines (SAS) and KLM have signed to purchase the biofuel, which is produced from the Camelina plant. Airport operator Avinor and Air BP says it the start of a trend toward making biofuel a commercial option worldwide. So far, Air BP has entered into an agreement for delivery of 1.25 million litres to Oslo Airport. The goal is to increase this volume in the years ahead and establish regular commercial delivery of biofuel to Oslo Airport. Avinor chief executive officer (CEO), Dag Falk-Petersen says: “We are extremely pleased that we can offer jet biofuel at Oslo Airport. This is in line with climate objectives set by both Avinor and the aviation sector. “We hope that this will inspire other airports to follow suit, so that we can all work towards a common goal of climate-neutral aviation.” Aside from Lufthansa, SAS and KLM, Oslo hopes more airlines will join in the future. Each are rewarded with lower CO2 taxes on domestic flights in Norway. Air BP CEO, David Gilmour says: “This is the
10
ACW 8 february 2016
aircargoweek.com
first time jet biofuel is being delivered through the normal supply mechanism, thus reducing logistics costs significantly. “We want to demonstrate that airports can readily access biofuel with relative ease, utilising existing physical infrastructure. “We anticipate that this will increase interest and demand, as well as contributing to a sustainable biofuel future for the aviation sector.” Biofuel is also exempted from the European Union (EU) quota system. Biofuel is only produced in small quantities and costs more to produce than fossil jet fuel. However, prices are expected to fall as demand rises. The Avinor and Air BP initiative is in line with ambitious environmental targets the aviation industry has set for itself of climate-neutral growth by 2020 and a 50 per cent reduction in emissions by 2050, compared with the 2005 level. The EU has set a target for 3.5 per cent of all aviation fuel to be biofuel by 2020.
TRADEFINDER Airlines
Associations
Cargo Handling
Charter Brokers
Turkey
Worldwide
United Kingdom
United Arab Emirates
Freight Forwarders Hong Kong
Freight Forwarders Iraq
United Arab Emirates
USA
azfreight.com : Featured Company Listings
ACW 8 FEBRUARY 2016
11