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The weekly newspaper for air cargo professionals Volume: 20
Issue: 18
8 May 2017
Air cargo grows at its fastest rate since 2010
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ndustry data reports by the International Air Transport Association (IATA) and WorldACD Market Data have both found global airfreight grew at its fastest rate in March since 2010. Figures for the month finished off a strong first quarter (Q1) as optimism remains high on the eve of the industry’s biggest trade show – air cargo europe - in Munich from 9-12 May. IATA reports in March freight tonne kilometres (FTK) expanded year-on-year (YOY) by 14 per cent, the strongest growth since October 2010 and YOY by 11 per cent in Q1. Data released by WorldACD reveals similar figures and the market analyst says there was a 16.4 per cent YOY increase in direct ton kilometres – the measure combining weight with the geographical distance between origin and destination of shipments. IATA says strong demand is consistent with a rise in world trade and a six-year high in new export orders while an increase in the shipment of silicon materials used in high-value consumer electronics shipped by air, represents a portion of the strong performance. IATA director general and chief executive officer, Alexandre de Juniac says: “March capped a robust Q1 with the strongest YOY airfreight growth in six-and-a-half years. Optimism is returning to the industry as the business stabilises after many years in the doldrums. “There is, however, still much lost ground to
recover while facing the dual headwinds of rising fuel and labour costs.” Capacity in available freight tonne kilometres (AFTK) increased 4.2 per cent around the world, while load factors surged 4.2 percentage points to 47.4 per cent, bringing them back to levels last seen in early 2015. Regionally, Africa’s FTKs grew a sizeable 33.5 per cent driven by rapid growth on the trade lane to and from Asia following an increase in direct services between the continents. Asia Pacific grew 13.6 per cent in March with strong demand on all routes except to trans-Pacific and in Europe FTKs were up 18.2 per cent as the weakness of the Euro helped European exports grow at the fastest pace for six years. The Middle East grew at its most rapid pace since June 2015, up 16.3 per cent due to strong demand to and from Europe, but Asian traffic has weakened. North American growth of 9.5 per cent was driven by international freight demand, ris-
ing at the fastest pace since the US West Coast seaport congestion of 2015 but Pacific routes remain weak and exports remain under pressure due to the strong US dollar. Latin America continued to struggle, with a 4.2 per cent fall in FTKs, falling for the 26th time in 28 months and FTKs in the region are now 18 per cent lower than the 2014-peak. In its monthly report for March, WorldACD says business was particularly upbeat from Hong Kong, Shanghai, Beijing, Guangzhou, London, Milan, Frankfurt and Chicago, which all had a growth of more than 20 per cent. WorldACD notes there was a global USD-yield improvement of 5.1 per cent month-on-month and the yield index for eight of the ten largest region-to-region markets went up. In March, the analyst says perishables, pharmaceuticals, dangerous goods and vulnerable cargo were the main drivers and it forecasts in April there will be global YOY growth of around 10 per cent.
Amsterdam Airport Schiphol’s cargo volumes have boomed in the first quarter with eight per cent growth between January and March to 420,168 tonnes. Figures grew by 9.5 per cent in March to 154,000 tonnes as a result of 7.2 per cent growth in freighter volumes while bellyhold was even higher at 13.2 per cent.
Head of cargo, Jonas van Stekelenburg says: “We are very pleased that our commitment to enhancing the experience of our pharmaceutical, e-commerce, and perishables customers, and our continued commitment to quality and transparency in the supply chain is leading to further growth, especially in the Asia and Europe markets.” He adds: “Our pharma initiatives have lead to boosted pharma volumes both inbound and outbound to the USA, South America, and Asia, and we will continue to work with the Schiphol Cargo Community to develop this further.” Asia remains the largest market with inbound cargo up four per cent to 70,648 tonnes and outbound by 12 per cent to 74,332 tonnes with Shanghai the busiest destination.
Turkish Cargo started another freighter route on 29 April from Izmir to Tel Aviv using an Airbus 310 Freighter. The freighter will be carrying payloads of seafood to meet increasing demand for exports as Turkish says three of the four fishes in the world’s total export of fishery products are exported from the Aegean region. The carrier says the aim is to bring seafood to customers in Israel within the same day, “without losing any quality and freshness”.
VIRGIN AIMS TO CAPITALISE ON PHARMA TIGHT CAPACITIES AND GROWING UNCERTAINTY
Pharma, e-commerce and perishables fuel Schiphol
Izmir seafood freighter
GROWTH SET TO CONTINUE BUT FUTURE UNCLEAR MUNICH CELEBRATES 25TH ANNIVERSARY
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Administration for Alitalia after plan fails
ALITALIA entered ‘extraordinary administration’ on 2 May after staff rejected restructuring plans to save $2.1 billion. Shareholders and Etihad Airways, which owns 49 per cent of shares had created a plan to reduce scosts of which two thirds were not related to labour costs, and were committed to recapitalise and finance with $2.1 billion. The commitment was subject to an agreement with the trade unions, which was rejected by the employees in a referendum. Alitalia says the vote means it cannot relaunch and restructure the company. Alitalia says: “The board of directors, which convened after the shareholders meeting, having acknowledged the serious economic and financial situation of the company, of the unavailability of the shareholders to refinance, and of the impossibility to find in a short period of time an alternative, has decided unanimously to proceed with the filing for “amministrazione straordinaria” (extraordinary administration) in compliance with the Italian law.”
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NEWSWEEK
DSV soars in Q1 as UTi acquisition drives growth
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anish freight forwarder DSV says it has posted a “very strong set of Q1 numbers” which brings it closer to its goal of reaching pre UTi Worldwide acquisition performance levels and margins. The company released its interim report for the first quarter (Q1) of 2017, its first full Q1 since it acquired US freight forwarder UTi in a $1.35 billion deal at the start of 2016. DSV handled 20 per cent more airfreight volumes in Q1 this year than Q1 last year at 147,429 tonnes compared with the 122,817 tonnes it handled in Q1 2016. The Air & Sea division saw earnings before interest and taxes (EBIT) before special terms of DKK 690 million ($101 million) for Q1, against DKK 414 million for the same period in 2016. DSV says growth in the division is largely the result of the continued successful integration of UTi’s activities where synergies are being realised. Several countries with limited DSV presence before the UTi acquisition have become important members of the global network including South Africa, Mexico, Israel and India. The company says in Q1, the market has been characterised by high activity levels, especially in airfreight and several trade lanes have been impacted by periodic lack of capacity and changes
among carriers, leading to increasing freight rates and a challenging pricing environment. Overall in Q1, DSV’s net revenue was DKK 18,223 million (DKK 15,319 million in Q1 2016) and gross profit of DKK 4,220 million, (DKK 3,607 million Q1 2016). DSV chief executive officer, Jens Bjørn Andersen says: “A very strong set of Q1 numbers brings us even closer to our goal of reaching pre-UTi performance levels and margins. “All three divisions have recorded a significant increase in earnings in the quarter, which is very satisfactory. In addition to following our integration plans, we have increased our sales efforts in order to secure future market share gains.”
Singapore expansion for K+N
KUEHNE + Nagel has invested in a new airfreight logistics hub in Singapore to meet demand for growth in the area. The new hub is part of Kuehne + Nagel’s growth strategy to drive airfreight logistics excellence, strengthen end-to-end solutions and enhance service offerings to key industries. The facility went operational in early April and operates 24/7 all year round and covers 5,200 square metres and is located within the Airport Logistics Park of Singa-
pore at Changi Airport. The facility consolidates warehousing and administrative operations for aviation logistics previously housed at three different locations and will support operational synergies and cargo turnaround time for customers with time-critical logistics needs. Kuehne + Nagel president for South Asia Pacific, Jens Drewes says: “Singapore is geographically pivotal to regional trade and a very important location for Kuehne + Nagel. The new airfreight logistics hub is part of our development blueprint to deliver logistics excellence with an end-to-end solution offering. “This investment complements other Kuehne + Nagel infrastructure in Singapore to create value to our customers, especially in the aerospace, technology and pharma & healthcare industries.”
$57m loss in Q1 for CEVA
CEVA Logistics has made a $57 million loss in the first quarter of 2017 despite revenue increasing. The loss compares to a profit of $3 million in the same period of 2016, while revenue grew by 1.9 per cent to $1.59 billion. Airfreight volumes were up nine per cent, ahead of ocean freight on six per cent, resulting in revenue growth of five per cent for the Freight Management division in constant currency. CEVA says revenue margins were under pressure from transportation rate increases but it maintained its EBITDA as pressures were offset through productivity improve-
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ments and cost savings. Chief executive officer, Xavier Urbain says: “Our top-line performance demonstrates the strength of our service offerings and solutions, of our relationships and the confidence customers place in us. We have recently achieved a number of important new business wins, notably in Contract Logistics, which we expect to have positive effects in the coming months.”
NEWSWEEK
Brussels reaches digital milestone
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russels Airport (pictured) has reached the next stage of digitisation with the cloud-based data sharing platform - Nallian - releasing its ‘Slot Booking Application’ to the community. The ‘Slot Booking Application’ will eliminate problems of waiting times and idle times at ground handling facilities by coordinating the match between supply and demand of time slots by streamlining the pick-up and delivery of freight at ground handlers and leads to a better capacity utilisation and elimination of peak and idle-times. The app makes it possible for the booker to request a single or recurrent time slot at a specific facility via the same central web-application for all ground handlers, while the supplier can make time slots for different cargo types available via the web-application or a system-to-system link with its internal slot management system. Brussels Airport head of cargo, Steven Polmans (pictured) says: “It is only a couple of months ago that we started to define the scope of our first release. Today this release has been developed and the first testing-sessions have been extremely positive.” Cargo development manager, Sara Van Gelder, adds: “In the
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meanwhile the conversations and brainstorms with the community keep going on and the next features are already being defined! The Slot Booking App will open a lot of opportunities for future applications.” Nallian chief executive officer, Jean Verheyen says: “This application is our next step in the digital roadmap to make BRUcargo the most efficient, smart and attractive logistical platform in Europe.” The app is available to the stakeholders at BRUcargo via the BRUcloud, and can be implemented in other communities around the world. BRUcloud was initiated in 2015 and Polman’s vision was to enable seamless collaboration between all cargo actors around the airport by installing an open community platform to allow them to easily collaborate through a pool of shared data. Since going live, it has been extended with a dashboard visualising the quality of pharma shipments and a statistical application to create insight in the freight volumes at BRUcargo.
Lufthansa returns to profit in Q1
Lufthansa Cargo has returned to profit in the first quarter due to recovery in cargo demand and its cost reduction program. The Logistics division, which includes Lufthansa Cargo, made an earnings before interest and tax (EBIT) profit of €33 million ($36 million) compared to a loss of €19 million between January and March 2016. Lufthansa Cargo made an EBIT loss of €50 million in 2016. Lufthansa Cargo started its partnership with Cathay Pacific Cargo and started expanding the Lufthansa Cargo Cool Center in the period. Revenue grew 18.5 per cent to €569 million due to volumes increasing and pricing, with revenue cargo tonne kilometres up 6.3 per cent to two billion due to strong growth in all regions of the world except Middle East/Africa, which declined 7.8 per cent.
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Capacity grew by 2.8 per cent to 2.9 billion available cargo tonne kilometres, with reductions in Europe and Middle East/ Africa, and load factors increased 2.3 percentage points to 70.1 per cent. Deutsche Lufthansa chief financial officer, Ulrik Svensson says: “For a period that is traditionally difficult for the airline industry, we have posted our first positive earnings result since 2008. This is mainly attributable to favourable trends at Lufthansa Cargo and strong growth at Lufthansa Technik. This demonstrates the strength of our broad setup as aviation group.” Total revenue for the Lufthansa Group was up 11.2 per cent to €7.7 billion and adjusted EBIT was €25 million compared to €53 million in 2016. Net loss for the period increased to €68 million compared to €8 million last year.
NEWSWEEK “Exciting start” to 2017 for Atlas Air
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tlas Air Worldwide has reported income from continuing operations, net of taxes, in the first quarter of 2017 was $8.3 million compared with $7.7 million in Q1 last year. President and chief executive officer, William J. Flynn says the company is off to an “exciting start in 2017” and is building on its 2016 achievements and growing earnings this year. Flynn continues: “We will have a full year of contribution from Southern Air and expect a positive impact on our full-year results from our service for Amazon. We placed our second 767-300 aircraft into service for Amazon in February, and just added our third and fourth aircraft in May. “In addition to announcing our first-quarter earnings and reaffirming our full-year earnings framework today, we are very pleased to have announced the placement of two of our 747-8 freighters with Cathay Pacific Cargo on an ACMI basis, with service beginning in May. “In addition to Cathay Pacific, we have recently announced other significant new customer agreements with Asiana Cargo, Nippon
Cargo Airlines and FedEx that will all contribute to earnings growth this year.” Flynn adds: “Earnings in the first quarter were in line with our expectations and our outlook for the year. Consistent with our prior outlook, we anticipate that our adjusted income from continuing operations, net of taxes, will grow by a mid-single-digit to low-double-digit percentage compared with our 2016 adjusted income of $114.3 million. “Our view reflects our expanding business base and the ongoing development of our strategic platform. It also reflects solid demand from our customers, the benefits we expect from our fleet initiatives, and the steps we have taken to align our business with the faster-growing express and e-commerce markets.” Atlas expects adjusted income from continuing operations, net of taxes, in the second quarter (Q2) of 2017 to be approximately 15 per cent to 20 per cent higher than Q2 2016 adjusted income of $20.2 million. Atlas Air Worldwide is the parent company of Atlas Air, Southern Air, and Titan Aviation and the majority shareholder of Polar Air Cargo.
Revenue and profits rise at ATSG
Revenue at Air Transport Services Group (ATSG) grew 37.9 per cent to $237.9 million in the first quarter while net earnings were up to $9.9 million. The leasing, transportation and services company says revenue was strong across all business areas, with ACMI revenue up to $144.9 million, ‘other activities’ growing from $55 million in 2016 to $89.2 million this year while cargo aircraft management dipped to $47.9 million from $51.7 million. ATSG president and chief executive officer, Joe Hete says: “Forty-three of our Boeing 767s were dry leased to external customers at the end of the first quarter, compared with 29 a year earlier. Our leasing business revenues from external customers increased seven per cent for the quarter, and we expect accelerating growth in that segment as the year progresses.” “That trend, plus improved profitability in our airline operations and good returns from our aircraft maintenance and logistics
businesses, position us to deliver continued strong earnings and cash flow in the months ahead.” ATSG predicts adjusted EBITDA from continuing operations for 2017 to exceed $260 million based on growth programs and initiatives and assuming the deployment of 10 additional 767s and two 737s with lease customers through the last nine months of 2017. It says the forecast includes the relocation of Amazon hub operations from Wilmington to Cincinnati, and the cessation of operations formerly performed by ATSG’s LGSTX Service business. Hete says: “Strong competition continues to drive e-commerce merchants worldwide to invest in dedicated networks that can achieve faster throughput of the goods their customers need. “Our aggressive fleet investments and expansion into the narrow-body freighter segment expands our leading role in this key growth market.”
EFW launches A321 P2F
EFW has formally launched its 14 position Airbus A321 passenger to freighter (P2F) conversion following an announcement by vice president sales and marketing, Wolfgang Schmid. The configuration allows 14 full container positions in the upper deck compartment and 10 in the lower deck. EFW says its A321 P2F will provide maximum volume capacity in comparison to other narrow body alternatives. The company also says the A320 family is the only narrow body aircraft that offers container loading on the lower deck, not only increasing volume and payload capabilities but also better turnaround times and interlining capabilities as well as less manpower for loading.
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NEWS WEEK
DHL launches e-commerce delivery service in Malaysia
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he expansion of DHL eCommerce continues after it launched a domestic delivery service in Malaysia, which includes a range of customer-centric services catered to the growing e-commerce market. The division of Deutsche Post DHL Group says local online retailers will also benefit from DHL’s range of cross-border shipping and fulfillment network. DHL says the move will further accelerate the e-commerce market in Malaysia which is expected to grow at CAGR of 15.8 per cent to €1 billion by 2020, largely fuelled by recent initiatives such as the National E-commerce Strategic Roadmap, Digital Free Trade Zone and Economic Transformation Program. The Malaysian investment follows expansion of services and facilities this year of DHL eCommerce in Singapore, Thailand, Japan, China, Hong Kong and Australia. DHL eCommerce chief executive officer for Asia Pacific, Malcolm Monteiro says: “E-commerce has become a way of life for Malaysians, with 47 per cent already using their smartphones to shop online. Approximately seven million are already shopping online every month, and with the industry expected to grow to €1 billion by 2020 in Malaysia and globally to $1 trillion in the same
FIATA hails e-commerce
year, businesses need high-quality logistics solutions to leverage this immense growth and meet the rapidly changing needs of online shoppers. This makes the need for a tailored e-commerce delivery service greater than ever before.” The investment in Malaysia includes a 48,000 square foot central distribution hub in Puchong as well as depots in Penang, Johor Bahru, Cheras and Puchong.
“The world’s fastest growing e-commerce region is Asia Pacific, and Malaysia is one of the most exciting countries with enormous opportunities,” says Monteiro. “To win in this space, e-tailers need exceptional customer service supported by seamless and agile logistics. Through our investments, infrastructure and renowned global network, we are well positioned to support the domestic and global growth of local online retailers in Malaysia.”
THE International Federation of Freight Forwarders Associations (FIATA) believes there is room for its members to grow new business alongside the growth of the trading community in the development of e-commerce. FIATA says in its pragmatic approach it is not blind in front of the challenges, but sees the changes as opportunities for its members to grow new business and encourages its members to boldly embrace change with a careful approach. Speaking at the UNCTAD’s eCommerce week in Geneva on 28 April, FIATA director general, Marco Sorgetti says: “There is a change in the identity of our principals: customers are morphing into a larger group of users with greater expectations in terms of services. “Logistics will need to meet the new demands of eTraders, whilst the e-commerce trading community will need to rely on innovative logistics to ensure product sale fulfilment. The need and ability for both to work together will be a critical component for growth.” The week saw debates on the challenges, opportunities and solutions to foment the development of e-commerce. FIATA has published its position on e-commerce’s impact on international trade logistics, highlighting how logistics needs to fit into the e-commerce equation by embracing the solutions on the horizon.
CargoLogicAir adds to top team
BRITISH all-cargo airline CargoLogicAir (CLA) has announced two new appointments to its executive team at London Stansted Airport. John Nicholas has joined the airline as technical director and will be responsible for all technical matters relating to the airline’s Boeing 747 Freighter fleet and air safety programme. He has previously worked for British Airways and for 19 years at the UK’s Civil Aviation Authority (CAA). Prior to leaving the CAA in 2016, he was head of CAA technical services. David Bowden is CargoLogicAir’s new chief financial officer (CFO). He previously held the post of CFO at Fiji Airways Group and was also acting chief executive officer of the airline between June-October 2015. Nicholas and Bowden are based at CLA’s headquarters at London Stansted Airport. CLA is the UK’s only main deck all-cargo carrier and was launched at the end of 2015.
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NEWSWEEK Air Partner profits rise but freight falls
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ir Partner says it freight division’s results were ‘disappointing’ with a downturn in the oil and gas industry, though profits for the whole company were up to £3.2 million ($4.1 million). The division’s underlying operating profits were £0.2 million for the year ending 31 January 2017, compared to £0.8 million the previous year, which had been a high year boosted by a key contract that was not renewed. The downturn in the oil and gas industry, which generally involved transporting heavy pipes and other drilling parts meant a less busy period, and Air Partner says the division is subject to unpredictability of just-in-time logistics, moving aircraft or automotive spares to mobilising at a moment’s notice to assist in disaster recovery.
Cargo remains strong in 2016 for ACS
Revenue for the whole company was down to £42.5 million from £49.9 million the previous year though profits increased to £3.2 million from £2.2 million. Chief executive officer, Mark Briffa says: “I am extremely pleased to be reporting on a year of significant activity and progress. We have delivered an outstanding service for our customers, and in doing so produced strong financial results, with profits and dividend in line with expectations.” “These results are beginning to reflect the last two years’ hard work and commitment by colleagues across the Group to position Air Partner for the years ahead. With a clear long-term strategy to transform our business mix, we intend to improve the quality and visibility of our earnings and consequently the returns we deliver to the owners of our business.”
Gross profits at Air Charter Service (ACS) grew 10 per cent in 2016 to £41 million ($52.9 million) and the cargo division remained strong despite seeing no ‘exceptional events’. Revenue for the company grew eight per cent to £342 million in the year ending 31 January 2017, with gross profit up 10 per cent to £41 million and underlying EBITDA growing 16 per cent to £7.3 million. ACS says cargo results were skewed due to the previous financial year benefitting from a lot of high turnover, large aircraft business due to the US West Coast Port Strike of 2015. Chief executive officer, Justin Bowman (pictured) says: “2016 saw no ‘exceptional events’ and, due to this, our Cargo department suffered a slight drop in terms of turnover, however underlying revenue increased by 5 per cent.”
“Volumes were also up – an increase of more than 6 per cent in cargo charter contracts, coupled with more than 1,000 onboard courier jobs, a growth of 60 per cent on the previous year.” Bowman says ACS arranged almost 12,500 contracts in 2016 and growth was spread evenly across its 20 offices. UK, US and Indian offices were singled out by Bowman as the star performers and Sydney, which opened in February 2016 also got off to a “great start”.
Emirates rose freighter visits Barcelona
Emirates SkyCargo’s rose decal freighter made a special appearance in Barcelona for Day of the Rose celebrations on 23 April, when locals gift roses and books to one another. The Boeing 777 Freighter A6-EFL, nicknamed Rosie was unveiled on Valentine’s Day, highlighting Emirates’ contributions to the global floriculture industry, having transported over 70,000 tonnes of fresh flowers including roses across its network in 2016. The aircraft has flown to over 35 cities in 25 countries carrying over 7,000 tonnes of
cargo ranging from general cargo to perishables and even horses. Rosie has also flown over 550 tonnes of roses on multiple flights between Nairobi and Quito to the global flower hub in Amsterdam. Emirates SkyCargo started weekly freighter services to Barcelona in March 2016, with notable exports including fashion garments, perfume, electrical and mechanical products, and pharmaceuticals. It also operates twice daily passenger services with cargo capacity to the city.
Dubai World Central grows 6.5% in Q1 Dubai World Central’s (DWC) airfreight volumes increased 6.5 per cent during the first quarter of the year with 211,144 tonnes being handled compared to 198,295 during the same three months last year. After first opening for cargo in June 2010, the operator Dubai Airports says DWC is already ranked as the 20th busiest airport globally for international airfreight volumes. Dubai’s second international hub is currently served by 18 belly carriers, operating an average of 103 flights weekly to 24 international destinations and is home to 42 scheduled cargo operators that fly to as many as 108 destinations around
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the world. Dubai Airport chief executive officer, Paul Griffiths says DWC remains an “important element” of its strategy to provide timely capacity to accommodate passenger and cargo traffic growth. Dubai’s main airport, Dubai International Airport grew 3.5 per cent in the first quarter of 2017 to 636,479 tonnes compared to 615,144 tonnes the previous year. The first quarter results were helped by March volumes rising 8.4 per cent to 235,503 tonnes compared to 217,202 tonnes during the same month the previous year.
NEWS WEEK Ambitious WFS preparing to take the business up to the next level
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till less than a year since taking over as chief executive officer (CEO) of cargo handler heavyweight Worldwide Flight Services (WFS) - Craig Smyth has been busy building what he describes as a “suite of centralised services”designed to take WFS to the next level. Like any new CEO of a global company he has travelled extensively to get a feel for what’s happening on the ground, and is happy with what he has witnessed. Smyth is quick to acknowledge the entrepreneurial spirit that flows across a network spanning 18,000 people and stations at 188 airports in more than 22 countries on five continents. He values the importance of local people who understand local cultures and customers, and his focus is to “make them feel even more supported”. To do that, Smyth has been enhancing WFS’ central capability, not to replace what already exists but make WFS’ strong regional presence better coordinated as a network and to deliver the tools, support and direction that will enable its teams to deliver the per-
formance levels its 300-plus airline customers need and expect. Key to this focus are three core central components; safety and security, people and technology. This has seen three new appointments to WFS’ executive team in Paris including David Clark as global head of safety and security after he was snapped up from British Airways where he had spent 17 years. Pedro Garcia was appointed as chief information officer after leaving WFS’ main rival Swissport where he was vice president of cargo information systems. Completing the trio of senior appointments was Fabienne Bricaud as global head of people. She was previously group HR director for Mobivia Groupe. These are all part of the upgrading of WFS to cement its position in cargo handling and to build on its reputation as a leading global provider of ground handling and technical services.
Evolution and not revolution
For Smyth, it’s a process of evolution and not revolution. “What I have seen as I have travelled around the WFS network is an experienced and committed team of professionals working closely with our local customers. “We want that to continue and we want to build on everything WFS has already achieved over more than 40 years by providing the support that will ensure we are working as one global team with common goals. “We want our customers to consistently experience the same high standards wherever in the world they engage with us. “Safety and security is our number one priority and our investments in our people, technology and training are all geared to making us a world class organisation in safety and security. “We also want to harness technology in a more useful and efficient way that benefits WFS and its customers, and want to not only attract the most talented people to WFS, we also want to give our existing employees the best opportunities to develop their careers. We don’t want our best people to feel they need to go
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elsewhere to make personal progress,” he says. He is just as passionate about increasing the footprint of the WFS brand. This is already under way with Consolidated Aviation Services (CAS), the North American handler acquired at the start of 2016 and now fully integrated under the WFS umbrella. Smyth calls the decision by WFS’ parent Platinum Equity to acquire CAS as a “statement of intent”, coming just six months after it also purchased a 51 per cent stake in Fraport Cargo Services at Frankfurt Airport. The future for WFS is likely to prioritise organic growth but Smyth has no doubts that there will be more money available to invest if the right opportunities come along for growth through acquisitions, in either existing or new markets. Smyth makes no secret of his aims to grow WFS’ ground handling capabilities. Ramp and passenger services are already an important part of its business, but its network of services is scattered and still small compared to its cargo handling infrastructure. It’s something he says the company will address strategically but “not at the expense” of ignoring WFS’ cargo business. He states: “We have a strong cargo business and a proven pedigree in the industry. We have a commitment to grow and develop cargo and will continue to invest in the business.” Smyth is sure that this is an agenda that will see WFS establishing footholds in new markets and take extra capacity to boost existing airport operations, while he also does not rule out making future acquisitions. For Smyth and the entire WFS team, taking the company to the “next level” means nothing is ruled out but as CEO he knows whatever steps WFS takes, it will be doing so from a position of strength.
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NEWSWEEK LATAM and Swissport gain Miami CEIV ANA cargo revenue falls in 2016 INTERNATIONAL cargo revenue at All Nippon Airways (ANA) slumped by 17.7 per cent in the 2016 financial year despite freight volumes seeing strong growth. Revenue was 93.3 billion yen ($838 million) compared to 113.3 billion yen the previous year, despite freight growing 17.7 per cent to 954,000 tonnes, and tonne kilometres were up 17.5 per cent to 4.1 billion. ANA says revenue in the first half of the fiscal year was affected by the appreciation of the yen and the decrease in revenue from fares with attached fuel surcharges as a result of the fall in the price of jet fuel. The second half was an improvement and
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ATAM Cargo and Swissport have both been awarded IATA CEIV Pharma certification at Miami International Airport, both becoming the first in their industry sector to do so. Swissport Miami became the first cargo handling company at Miami and the first Swissport station in North America to earn the International Air Transport Association (IATA) Center of Excellence for Independent Validators in Pharmaceutical Logistics (CEIV Pharma) and LATAM Cargo was the first airline to earn certification in the Americas on 19 April. Miami-Dade County mayor, Carlos Gimenez says: “MIA’s growth in the pharma air cargo sector has added new opportunities for business revenue and job creation in our community. We look forward to having an even stronger presence in this global industry, which is one of the fastest-growing in the world.”
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Miami-Dade aviation director, Emilio Gonzalez says: “As the first airport in the Western Hemisphere designated by IATA as a pharma hub, and now as home to America’s first airline and first ground handler certified by IATA for pharma transport excellence, we are proud to collaborate with all our hub partners to be the unrivalled Pharma Gateway of the Americas.” The Pharma.Aero organisation co-founded by Miami and Brussels Airport welcomed eight companies in April, doubling the membership to 16. The new companies were Pfizer, Johnson and Johnson, Merck, Sharp & Dohme, DHL Temperature Management Solutions, Expeditors, EuroAirport Basel, 4Advice and e-Cargoware. They joined Changi Airport, Sharjah International Airport, Chhatrapati Shivaji International Airport, Brussels Airlines, Singapore Airlines and Brinks Life Sciences.
ANA succeeded in capturing demand on flights departing Japan for China and other Asian destinations and flights departing China for North America. Domestic revenue dipped 2.8 per cent to 30.8 billion yen, with freight volumes down 3.4 per cent to 451,000 tonnes due to poor demand for cargo services and bad weather in Hokkaido. Revenue for the airline as a whole was down 1.4 per cent to 1.7 billion yen though profits were up 26.4 per cent to 98.8 billion yen. ANA says it will reduce cargo capacity by 10 per cent and improve efficiency to make a profit.
UPS revenue up in Q1 but profits down
REVENUE at UPS has grown 6.2 per cent in the first quarter of 2017 to $15.3 billion but fuel costs and currency effects affected profits. Operating profits dipped 2.1 per cent to $1.78 billion with declines in the US domestic package and international package sectors though net profit was up 2.4 per cent to $1.16 billion. Fuel expenses increased 43 per cent to $187 million and currency had a $120 million impact on business. UPS chairman and chief executive offi-
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cer, David Abney says: “We are accelerating investments to create the industry’s leading smart global logistics network and value-creating portfolio. UPS customers are benefiting from expanded capacity, choice and improved time-in-transit, while technology solutions continue to deliver efficiencies.” US Domestic revenue was up five per cent to $9.5 billion as B2C deliveries rose, but operating profit fell 2.4 per cent to $1.07 billion. Demand for cross-border shipments helped push international package revenue up 4.9 per cent to $3 billion though operating profits were down 7.8 per cent to $529 million. Supply chain & freight revenue grew 12.5 per cent to $2.7 billion and operating profits by 21.8 per cent to $179 million.
NEWS WEEK Major cargo expansion plans at Moscow’s main gateway
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oscow’s main cargo gateway Sheremetyevo International Airport and the hub of rapidly expanding AirBridgeCargo (ABC) Airlines has big plans to grow freight volumes. The first two months of 2017 have seen dynamic growth and according to the Airports Council International Europe, it handled 27,888 tonnes, a 29.7 per cent year-on-year (YOY) rise on 2016. This included 13,319 tonnes in February (+19.3 per cent) and 14,569 tonnes in January (+41 per cent). Transfer cargo passing through Sheremetyevo is one area seeing a significant uplift and this was part of a policy designed to attract international flows, leveraging Russia’s geographical advantage as a natural link in European-Asian transportation, but domestic cargo flows are also on the increase. In 2016, the airport made serious investments in infrastructure at the cargo terminal, notably for perishable and temperature-sensitive cargo and last year, ABC earned Russia’s first ever IATA CEIV Pharma certificate.
The ABC effect
The airport says this confirms the satisfaction of pharmaceutical-company requirements in shipments throughout the entire route network – first and foremost, through Sheremetyevo. And the gateway also says the steps taken also led to an increase in the flow of perishables and temperature-sensitive cargo, and had a positive impact on the volumes of transfer cargo shipped through Sheremetyevo. The expansion of ABC has fuelled the gateway as it handles more than 50 per cent of cargo flows in Russian civil aviation. “Consequently, any changes in the volume of ABC freight have an impact on the cargo turnover of any Russian airport servicing the airline’s flights on a regular basis. “Nevertheless, the spike in Sheremetyevo’s cargo flow seen in January was made possible not only thanks to ABC (14 per cent turnover growth over January 2016), but also thanks to Aeroflot, whose 51 per cent turnover increase led to a physical-indicator
double the airport’s capacity for take-off-and-landing operations and support the take-off and landing of all aircraft, while a new, high-tech cargo complex is being commissioned. In 2016, work began on building an automated new cargo-complex through an investment of $80 million and planned for commissioning in the third quarter this year. Construction is being done in conjunction with Moscow Cargo LLC - Sheremetyevo’s partner in the terminal handling of cargo. It will cover 42,300 square metres and phase one throughput capacity will be 380,000 tonnes per year, with the capability of increasing this number to one million tonnes.
Improvements needed
gain similar to that of АВС,” the airport says. In 2017, Sheremetyevo intends to build on the growth trend in cargo shipments, which began in 2016. This forecast is based both on massive investments in the airport’s infrastructure, aimed at increasing cargo flows, as well as on the positive expectations of international experts in terms of projected growth in the global economy and trade, stabilisation in the world oil sector, and the start of Russia’s economic recovery. Routes are set to expand further drive cargo and in 2017, Aeroflot will add more in Russia with flights planned to Belgorod, Salekhard and Khanty-Mansiysk. In addition to the expansion of flight geography thanks to the growth of airlines already based at Sheremetyevo, the airport is focused on improving the efficiency of aviation commerce and attracting new carriers. Infrastructure development is a major part of the growth strategy and construction is underway on a third runway, which will
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This will be equipped with an automated system for the handling of cargo, making it the only one of its kind in Russia. It will feature an automated bin system designed to handle 3,198 pallets, an automated ULD processing system with a capacity of 576 compartments, including 60 for temperature-sensitive freight (from +2 to +8 degrees Celsius) and 13 conveyor lines running to the airport, including a line for the receipt/dispatch of 20-foot pallets and 29 points of cargo acceptance/, two for the handling of bulky and oversized cargo and two for acceptance of express shipments. The airport says the volumes Russia handles of air cargo are low considering its favourable geographic location connecting Asia-Europe and Asia-North America, but to attract the international flow of airfreight to Russia, improvements must be made. These include reducing the cost of shipments; improving the quality of logistics services; eliminating administrative barriers having an adverse effect on the speed of customs clearance and other procedures; and developing the infrastructure of Russia’s regional airports to better handle transit airfreight. Others are refining the system for organisation of air traffic along transit routes; introduce an e-freight standard; expand multimodal shipments on the basis of aviation hubs; and ratify the Montreal Convention of 1999.
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NEWSWEEK
Cargolux looking to open up new African markets by the end of the year
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argolux Airlines International is looking at opening up two new markets in Africa by the end of the year, regional director for Africa Jonathan Clark (pictured) tells Air Cargo Week. They will probably be perishable markets and though Clark cannot say where they are, Cargolux has its eyes on two potential ones in East Africa and one in the West, and will hopefully have opened two new markets by the end of the year. Cargolux’s three main markets out of Africa remain Nairobi, Accra and Cairo. It operates seven flights a week from Nairobi, five going to London Stansted Airport and two to Amsterdam Airport Schiphol, with one Stansted flight stopping in Amsterdam as well, primarily covering the flower market but fruit and vegetables are also very important. Cargolux operates one flight a week from Accra going to Luxembourg primarily for one customer, with 60-70 tonnes of produce going into the German market.
It also does one flight a week from Egypt with perishables proving strong from February to July. He says Cargolux works closely with freight forwarders, explaining: “In Kenya the forwarders who bring the business to the airport one or two hours before departure, their premises are very close to the airport and can keep the produce in their refrigerators and as soon as the flight lands then they can start to move the cargo to the aircraft.”
Cargolux wants to open up into new markets and Clark says it needs to diversify, saying: “We have to look for areas we haven’t been before and it really depends on quite a few things. There are some areas we really want to go into but our hands are tied because of government regulations or we can’t get traffic rights.” He uses Addis Ababa in Ethiopia as an example, calling it “a very closed network”, adding, “For us it’s very difficult to get any traffic rights”. He also believes the development is in the hands of the governments to encourage companies to their country by making it easy to do business. Clark adds: “There are also a lot of currency issues in some countries like Angola and Egypt where there is not enough foreign currency so it is difficult for us to collect the fees in the local currency and convert it, and most airlines find this.” He says this raises the question of whether Africa is of interest if they struggle to get the money into their bank account but Cargolux is strong in Africa with 12 destinations. Clark says: “We want to cement our business in Africa and we want to open up new opportunities. As long as the Kenyan market continues to perform then we’ve got loads that can go Northbound as well that can support imports.”
Cargo volumes pick up at Washington Dulles
Washington Dulles International Airport is expecting growth to continue in 2017 helped by new routes and its location at the heart of the East coast pharmaceutical and life science corridor, head of air cargo development, Joe Maly says. He says 2016 volumes were flat both for domestic and international cargo but things picked up from September. The fourth quarter was strong, growing 11 per cent, driven by domestic tonnage, pushing full-year volumes up 1.5 per cent. This momentum has continued in 2017, with 17 per cent growth in January, driven by a 25 per cent increase on domestic routes. Maly says: “Freight volumes began to grow in the latter half of 2016 and that momentum flowed into the first quarter of 2017. We are optimistic the growth trend will continue into 2017.” High-tech and electronic machinery remain the top import and export while the highest value commodity remains pharmaceuticals, with import tonnage growing 270 per cent in 10 years. Air India is due to launch non-stop Washington Dulles – Delhi Indira Gandhi International Airport services using a Boeing 777 from July, which Maly says will open up a new level connectivity to India, a large and growing trade partner. Washington is the primary international airport for the National Capital region, serving a large catchment area on the US East coast, providing access to over 56 per cent of the US population within an overnight drive. It is serviced by 38 airlines providing non-stop connections to 76 destinations in the US and 54 international airports in 42 countries. Maly says: “Dulles International is home to Foreign-Trade Zone #137, enabling business processes and international trade to be conducted in an efficient, low-cost environment.” He adds: “Washington Dulles offers a cargo-friendly environment with 24-hour operations, no night-time flight restrictions and the ability to handle the world’s largest aircraft. The airport also has large tracts of land available for air cargo development.” Maly says the US East coast is quite congested, but this challenge is offset by the abundance of cargo capacity offered at Dulles by airlines offering connections to Europe, Asia, the Middle East, Africa and South America. He says: “This combination of global cargo capacity and Dulles International’s centrally located position on the east coast offers Dulles as an ideal location for air export and import opportunities.”
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NEWS WEEK
Virgin aims to capitalise on pharma and e-commerce growth
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s an airline that has grown up on transatlantic routes over more than 30 years, Virgin Atlantic Cargo says it is perfectly placed to capitalise of two of the industry’s fastest-growing trends; e-commerce and pharmaceutical shipments. Virgin now provides some 30 per cent of all capacity on transatlantic routes, the world’s largest pharma trade lane and a buoyant market for international e-commerce, and 2017 has seen its commitment increase even further. Seattle is the latest destination to join Virgin’s transatlantic network, which also includes Atlanta, Boston, Las Vegas, Los Angeles, Miami, New York, Newark, Orlando, San Francisco, Seattle and Washington. Business from the UK to the US continues to show the most sustained level of growth. Tonnage rose 8.4 per cent in 2016 and this momentum has continued into this year. Tonnage in March alone was up by more than 20 per cent over the previous year, and Virgin says nearly all of its routes to the US were ahead of expectations. On a route sector with such intense competition, Virgin’s ability to consistently ‘punch above its weight’ in a market under constant yield pressure is down to its service. Virgin Atlantic Cargo managing director, John Lloyd (pictured) describes the airline’s commitment to great service as a ‘passion’ and it applies just as much when there’s a problem that needs fixing or to finding a
bespoke solution to meet a customer’s needs. While Virgin may not be able to compete in terms of size alongside the world’s biggest airlines, Virgin Atlantic’s network is made up of many other desirable cargo routes beyond its US stronghold. These include Shanghai and Hong Kong, Dubai, and the biggest airfreight gateway in India - Delhi, South Africa and Nigeria. It has also extended its appeal by offering fast trucking connections over London to more than 50 of the major airports in Europe. Plus, through its longstanding and growing long-haul cargo sales and management contract with Virgin Australia, which began in 2009 and was extended again in 2016, this March saw the addition of Virgin Australia’s new Melbourne-Los Ange-
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les route. The new route joins its existing services connecting Sydney and Brisbane to LAX. Virgin Atlantic Cargo can seamlessly connect Australia to its global network, and vice versa, via the US west coast city. As well as expecting to see a continued increase in e-commerce business on its network in 2017, Virgin is actively developing its solutions for pharma customers, although Lloyd is keen to point out that the airline is no newcomer to the sector. “We’re seeing strong growth in our pharma business because we can add real value for our customers. Once you prove your capability and earn customer trust, they will pay a fair price to guarantee the integrity of their product is maintained throughout the cool chain.” “We’ve been carrying pharma shipments for a number of years and are steadily increasing our market share, particularly from the UK to North America.” “E-commerce also demands speed and reliability. Business to and from the US is growing substantially year-on-year and our high frequencies of daily services connecting major US cities and the UK means we are well placed to benefit from the online shopping revolution.” “The global B2C ecommerce market was worth nearly $2 trillion in 2016 and is forecast to grow to $4 trillion by 2020 so it is going to generate long-term business for airlines that offer the best value/service proposition,” he says. Virgin’s ability to compete will be further enhanced in early 2019 with the delivery of the first of 12 Airbus A350-1000 aircraft following a $4.4bn order placed by the airline in 2016. For cargo, the aircraft promises a significant improvement in lower deck cargo capacity of between 10 and 22 per cent over the aircraft it will replace.
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FREIGHT FORWARDERS
Tight capacities and growing economic and political uncertainty
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ajor airfreight forwarders have been busy updating the market on their performance in recent months. They have revealed a sector buoyed by the continuing advance of e-commerce, strong trade lanes between the US and Europe and Asia, but struggling against the problem of tight capacities and the threat of growing global economic and political uncertainty. So, what have the main players been describing? Panalpina in its first quarter (Q1) update revealed that airfreight volumes had risen eight per cent to
233,000 tonnes driven by Far East trade lanes. This beat market growth of six per cent over the period. Revenues rose 3.8 per cent to 657million Swiss Francs ($662 million) with gross profits off 2.6 per cent to 144.7million Swiss Francs. Chief executive Stefan Karlen (pictured) says: “2016 represented a very challenging year. Much lower volumes from the oil and gas sector meant that we had to restructure that part of our business during the first half of the year. “In the second half, the Hanjin Shipping collapse and the very busy airfreight peak season led to tight capacities and soaring rates which put strong pressure on our margins. While we continued to perform well on volumes, pressure on yields impacted our profits.” It was a similar tale at rival Kuehne + Nagel where Q1 airfreight volumes raced 15 per cent higher to 350,000 tonnes, with revenues up 12.6
per cent to 1.1 billion Swiss Francs. However, its EBIT (earnings before interest and taxes) was down 1.4 per cent at 72 million Swiss Francs. The group said e-commerce, perishables and pharmaceuticals had led to the volumes growth helped by demand from the burgeoning middle class in Asia. UPS’s global freight forwarding division also performed well in the Q1 with volume growth outperformed the market in both its international and domestic airfreight divisions. “Ongoing deliberate diversification and targeted growth of our customer base continues to pay dividends as middle market accounts drove double digit growth,” says UPS vice president of global airfreight, Stuart Lund.
High-tech segment in decline
He explains its current strongest market is Transpacific Eastbound which saw rates rise 18 per cent year-on-year (YOY) to $3.74/kg. However, Transpacific Westbound saw rates fall six per cent from the mark reached in February to $1.67/kg. “The high-tech segment has seen a slight decline. Personal electronic devices are becoming lighter and smaller, therefore less expensive to ship,” he adds. “Laptops are the key reason for sliding high tech air trade, having dropped 105,000 tonnes already compared to last year. Laptop trade has also shifted more to ocean because of fewer options to customise devices.” Lund says other current challenges include the ongoing increase in demand and tightened capacity conditions out of Asia. “This has impacted the airfreight industry,” he states. “The reduced capacity out of Asia, which showed negative growth in February for the first time since March 2013, has been impacted by a significant number of flight cancellations creating a backlog and the ongoing qualified pilot and crew shortage throughout the region,” he states. “There has also been select airport restrictions on adhoc landing rights.” On rising demand, he adds: “Demand out-
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paced capacity growth for the sixth consecutive month in February and it’s expected to continue this trend for future months. “Semi-conductor sales are up which is a leading indicator of future airfreight growth. There has also been a sharp fall in the inventory-sales ratio in the US over the past nine months leading to increased demand for airfreight.” To stoke further growth UPS says it is investing heavily in technology to improve capabilities, extend competitive advantages, and enhance customers’ experience.
The impact of technology
“Technology is disruptive across the supply chain, increasingly so in the Freight Forwarding arena, an environment that has traditionally benefitted from interpersonal relationships and protected data sources,” explains Lund. “UPS Global Forwarding is currently investing in technology to improve customer visibility, reporting, and data management through our Flex Global View platform. “Further investments in systems and tools to enable more flexible procurement and pricing strategies across modes will allow us to proactively manage our business as capacity/ demand/utilisation rates shift. “Our vendor/purchase order management system, UPS® Order Watch, enables customers to take control of their supply chain upstream and mitigate transportation cost increases through better consolidation, just-in-time shipping, and improved control at a more granular level,” Lund adds. Regarding opportunities in the next two to three years, Lund identifies 3D printing as the next big factor to change the airfreight market. “In 2016, 3D printing was a $7 billion plus market and is expected to grow to $21 billion by 2020,” he says. “UPS has partnered with Fast Radius to provide a service that will 3D print customer orders and, in most cases, the customer can receive the order the next day via UPS or they can pick up orders at a UPS store. It is an opportunity for us.”
FREIGHT FORWARDERS Growth set to continue but the future remains unclear
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he air freight forwarders market is as competitive as ever, but how do analysts see the marketplace? Washington-based Airforwarders Association (AfA) executive director, Brandon Fried (pictured below) says the market in his opinion is “bullish”. He explains that on a global basis it is looking better with volumes rising, adding: “But most forwarders I speak to say ‘Yes, business is good, but I wish I was making more money out of it!’ Yields are down because of capacity particularly on the US to Europe and Asia routes.” Transport Intelligence economist, David Buckby is also generally enthusiastic about the marketplace. In 2016, he explains the airfreight forwarding market struggled for both volume and revenue growth and the data it has seen for the first quarter of this year is far more encouraging. “Volumes are seeing robust year-on-year growth and yields are stabilising. Electronics are struggling but e-commerce is indeed driving growth as are perishables, such as food and pharmaceuticals. “We are seeing an important trend in the longer-term rebalancing of Asian volumes. The export leg out of Asia used to dominate with insufficient cargo for the return leg, however the situation now appears to be more balanced, certainly for Asia to and from Europe,” Buckby adds. Armstrong & Associates president, Evan Armstrong also identifies the Asia to Europe and US trade lanes as the main driver in the marketplace. “Take APEX Logistics International which in our studies we placed at Number 21 in the top 25 airfreight forwarders last year. It has benefitted hugely from cross-border e-commerce trade between China and the US after doing a lot of work with [clothing firm] American Eagle Outfitters,” he explains. “Dimerco Express Group is also making good ground through working with [Chinese e-commerce firm] Alibaba in Asia. It is about having the right technology and focusing on pace of delivery. There is a lot more growth to come in e-commerce, on-time retailing and offering more integrated services such as warehousing.” Buckby believes forwarders are responding to competitive threats from tech players such as Amazon. “In response to digital and instant freight quotation and booking platform start-ups we’ve seen forwarders respond by accelerating their own investment in digitisation, technology and automation,” he states. “This will increasingly become a competitive differentiator among large forwarders but I highly doubt we will see any Uber-like disruption in freight forwarding.” Fried believes every forwarder must ask themselves where they sit in the new growing world of e-commerce. Sometimes the answer is not as straightforward as it would seem. “The forwarding niche is now centred around the big, bad and the ugly freight of TVs, fridges and patio furniture which are just as much part of the online infrastructure as the small packages,” he explains. “You have to have top notch automation in this market. The customer wants visibility and to be able to see at what stage their shipment is progressing. They want quick problem resolution and don’t want a lot of human interaction. But some forwarders are just not investing in e-commerce and in fact are turning a blind eye to it.” Another way of trying to stoke growth is through making strategic acquisitions. Buckby anticipates a continuation in the amount of consolidation seen recently in deals such as Panalpina and Airflo, Gefco and IJS and Geodis and OHL. “There has been a clear trend,” he states. Armstrong picks up the point. “Acquisitions have been very helpful to the big players because when it comes to managing costs being bigger is better. Geodis for example has benefited from its OHL deal by cross-selling into its warehousing base. There is plenty of room for more consolidation and we will see more this year,” he says. When it comes to further challenges Armstrong identifies the continued capacity issues which are “keeping a lid on margins” but also highlights growing economic concerns. “We are seeing a slowdown in Chinese growth with more social economic challenges such as Brexit and the French elections potentially taking the lustre off Asia to Europe trade lanes,” he says.
This wider perspective is shared by Fried. “Our forwarders in the US are worried about trade, the Trans-Pacific Partnership, NAFTA, Brexit and our President Donald Trump’s focus on bilateral trade agreements,” he says. “We make our money on trade and we don’t want protectionist policies. These areas of global economic uncertainty are factors, which could have an impact on
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volumes. There is concern.” So it seems air freight forwarders are reaping the rewards of current growth being seen in air cargo, but the future remains uncertain due to a range of technological, economical and political disruptions. (Picture above courtesy of Panalpina)
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PERISHABLES
Salmon trade lanes and a new product for LATAM
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ATAM Cargo has been through challenging times and 2016 was certainly one, but the carrier is targeting more perishable volumes and will launch a specialist new product this year. LATAM’s specialist perishables product ‘Fresh’ is part of its transformation strategy, which includes growing its product portfolio, and will also see it launch ‘Ajato’ in Brazil for door-to-door shipment of packages and targeting e-commerce. There have been major management changes and on 15 April, Andrés Bianchi took over as chief executive officer (CEO) from Cristián Ureta and speaking to Air Cargo Week before he left, Ureta said perishables continue to do well for the Latin American airline group. He says: “In 2016, the Chilean salmon market, specifically to Asia, was very competitive
and, together with the rest of perishable goods transported in our network, they were the protagonists of the first half of the year. “During the second half, southbound markets showed a recovery, especially positive in the case of trade lanes to Brazil.” Perishables along with general cargo made up most of the tonnage for LATAM last year as the region continues to export large quantities of perishable goods. Ureta said in 2017 it will upgrade connectivity to Asia through new and improved connection routes, allowing it to save transportation times from Chile to China for the growing fresh salmon market and at the same time will increase load factors on some belly routes, such as Los Angeles, New York and Europe. As for other routes, this year LATAM will continue to strengthen connectivity within Latin
America with a new flight between Bogotá and Buenos Aires. On the freighter side, it will focus on improving profitability on the current network and may selectively add one or two destinations in Latin America. Ureta said the complex economic situation that the Latin American region faced throughout 2016 made it challenging and traffic decreased about 8.7 per cent versus 2015 and it adjusted capacity by 5.3 per cent, which led to a load factor of 51.7 per cent. LATAM is in the process of freighters fleet resizing, increasing utilisation and relocating its
network capacity and this year it is redelivering three leased freighter aircraft - one Boeing 767 Freighter and two B777F. The carrier says the change in fleet will allow it to improve efficiency, focus the capabilities of its freighter fleet on those routes that are “most valued by our customers” and those from the passenger operations of affiliates that complement cargo operations. The fleet plan by the end of 2017, is it will be operating seven B767F and one B777F with the other B777F being subleased to a third party outside of Latin America.
Perishables acquisition for Panalpina
PANALPINA is to acquire Air Connection – a Kenya-based forwarder which specialises in the export of flowers and vegetables. The move comes after Panalpina’s acquisition of Airflo in Kenya in 2016 and two weeks after it launched its global Perishables Network. Panalpina will acquire Air Connection, subject to conditions. The companies reached a respective agreement on 2 May. The companies have agreed not to disclose financial details of the deal. The acquisition is subject to approvals by the relevant competition authorities. “The acquisition of Air Connection will strengthen our existing global Perishables Network and our position as the clear market leader in the perishables arena in Kenya,” says Panalpina’s chief executive officer, Stefan Karlen. Air Connection is a specialist in the export of flowers and vegetables from Kenya to multiple destinations including the Netherlands
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and the UK. It is Kenya’s fourth largest forwarder in terms of airfreight export volumes. The merged company will handle around 70,000 tonnes of perishables airfreight per year. “While most of Panalpina’s flower exports from Kenya currently go to auctions in Amsterdam, we are specialised in direct shipments to customers,” says Air Connection owner and managing director, Manjit Brar. “And while Panalpina is strong with big charter shipments from Kenya to Europe, our strength lies in smaller shipments on scheduled passenger flights to over 150 destinations worldwide,” he adds. Panalpina Airflo managing director, Conrad Archer: “Increasingly, buyers of perishables want to source directly from the producer and producers want to sell directly to the country of consumption. Direct shipping bypasses intermediaries, reducing touch points in the supply chain. “Joining forces with Air Connection will offer additional opportunities to grow the perishables business in Kenya, especially with the export of vegetables, herbs and cuttings.” The merged company will offer 3,000 square metres of cold storage capacity, which is soon to be extended to 4,000 square metres.
PERISHABLES SATS gains approval for meat shipments from NZ to EU
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sian ground handler SATS has received European Union (EU) approval as an authorised establishment for the provision of meat transshipment services between New Zealand and the EU. Meat shipments from New Zealand destined for EU markets can now transit through Singapore via SATS Coolport, Asia’s first on-airport perishable handling centre. SATS Coolport’s approval from the EU as an authorised establishment was strongly supported by International Enterprise (IE) Singapore and the Agri-Food and Veterinary Authority (AVA). Both agencies facilitated the process to engage authorities in the EU and New Zealand to approve Singapore as a transshipment country and SATS Coolport as the authorised handling centre. Being an authorised establishment, SATS is now able to break down and reconsolidate meat shipments from New Zealand
for redistribution to the EU markets, all within SATS Coolport’s temperature-controlled premises. SATS is also able to present customers with cost-effective multimodal freight solutions giving them a competitive advantage by expediting the sale of perishable products into the European market. SATS successfully handled the first air-sea transhipment of lamb products from New Zealand to the UK in January this year. This newly approved trade route for meat products presents many opportunities for Singapore, as well as SATS as the company establishes itself as a consolidation hub and redistribution centre for perishable products from South West Pacific to the rest of the world. In addition, the cost-effective air-sea transportation option also helps to increase New Zealand’s capacity to export more lamb shipments to the EU. With this new trade flow, SATS is looking at an approximately 10 per cent increase in lamb shipments over the next two years.
Grow trade
With its extensive network in the region and tight connectivity between its cargo operations, SATS is well-positioned to provide end-to-end airfreight handling solutions. This enables it to play a vital part in enhancing trade with speedier and seamless movement of goods, including perishables, across continents. SATS president and chief executive officer, Alex Hungate (pictured) says: “The transshipment of chilled lamb products from New Zealand to Europe is a good example of how multimodal transshipment can help grow trade. “Multimodal transportation enables exporters to transport products with greater speed and economy to Europe. “SATS Coolport helps change the dynamics of exports for countries like New Zealand. This partnership with IE Singapore has been integral in expanding our market by creating benefits for both importers and exporters.” As the agency in charge of trade, IE Singapore has been work-
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ing with the private sector including SATS, to leverage Singapore companies’ capabilities and the country’s excellent connectivity to identify and facilitate new trade flows between demand and supply markets.
Singapore connectivity
Identifying the New Zealand-Singapore-EU trade route as an opportunity, IE Singapore partnered SATS as one of the key Singapore gateway services companies to enable this new trade flow with its perishable handling capabilities. IE Singapore group director for transport and logistics, Law Chung Ming says: “We are happy to partner SATS and AVA to create this multimodal transhipment perishables flow. The new flow reaffirms Singapore’s excellent connectivity, reliable supply chain capabilities and high quality food handling standards. “It further strengthens Singapore as an innovative leader in wholesale trade and supply chain solutions, creating a network effect to benefit Singapore companies in transport and logistics, food trading and financial services. “IE Singapore strongly encourages our companies to leverage on this new connectivity to develop innovative business models to capture growth opportunities.” The approval is not just limited to lamb products, but also extends to other meat types like beef, pork, poultry, wild and farmed game meat originating from New Zealand. Agricultural products constituted New Zealand’s largest export to the EU in 2016. Of this, meat, mostly lamb, formed the largest agricultural export by value (NZ$1.5 billion) followed by fruit and wine. SATS is present in 47 airports, 53 cities and 14 countries across Asia and the Middle East.
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MUNICH Munich celebrates 25th anniversary as leading cargo hub
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s Munich Airport celebrates its 25th anniversary, director traffic development cargo Markus Heinelt (pictured) says it is “taking-off” as a leading cargo hub. The present airport, which replaced the old Munich-Riem Airport in May 1992, has grown significantly since opening, with airfreight six times higher than in the year it opened. Cargo volumes grew 5.4 per cent in 2016 to 334,000 tonnes, or 5.2 per cent to 353,650 tonnes if airmail is included. This has continued in the first quarter, with 7.8 per cent growth to 85,500 tonnes. New capacity has been added with Lufthansa flights to Tehran and Denver, Delta Air Lines flying to Detroit and Emirates adding a third daily flight to Dubai. Qatar Airways has also switched from Boeing 787s and Airbus A330s to an Airbus A350 and All Nippon Airways now uses a Boeing 787-9.
awaiting shareholder approval. Heinelt says future cargo growth depends on expansion projects such as the third runway, and while it is waiting for this, Munich is negotiating expanding cargo infrastructure with interested parties.
Tailor made infrastructure
Further growth expected
Heinelt says: “We expect further growth over the current year. Especially with an additional San Francisco route operated by United. ABC might go for expansion in Munich and we hope for more freighter business to the US.” Exports mainly consist of automotive, chemicals/pharmaceuticals, high-tech and machinery making up 60 per cent of cargo volumes. Imports primarily come from clothing, textiles, pharmaceuticals and high-tech industries. Heinelt says: “Munich Airport can score with 329 weekly longhaul connections which link major international industry centres and
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guarantee a fast and direct delivery. Further, Munich offers over 170 continental connections perfect for all express and e-commerce products.” He expects e-commerce to become increasingly important in Germany in the coming years, commenting: “Germany will continue to play a dominant role in foreign trades. E-commerce tends to develop rapidly especially in the B2C segment due to the fact that Germany builds the largest European consumer market with a population of 81 million.” Heinelt adds: “Since Munich Airport already has a leading position for the consumer market, the increase in sufficient infrastructure capacities needs to be timely focused.” Increasing infrastructure includes a third runway, which is
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Efficient infrastructure is something Munich Airport prides itself on, Heinelt explains: “A ramp links the freight handling facilities of the forwarders with the airline’s cargo facilities located right next to the apron. Export and import processes turn out fast and highly efficient. The infrastructure is tailored to the logistic companies’ and airlines’ needs.” He says freight terminals for airlines, handling and logistics companies are directly linked, practically eliminating overlapping flows of trucked freight. Heinelt adds: “This saves time and costs for our clients and makes Munich Airport one of the world’s fastest and most attractive hub airports.” Talking to customers remains essential, with Heinelt explaining: “Our key account management cargo is also in permanent bilateral talks with the management of the top cargo airlines and forwarding agents in order to retain and provide customised solutions.” There are other projects underway, Heinelt says: “We are going to provide a new web-based cargo service tool, so called “e-learning cargo”. That will be a dedicated proactive information system for the Munich Airport cargo community.” Munich Airport has grown significantly since opening in 1992, with take-offs and landings doubling to about 400,000 a year, and 8.5 million have been handled in 25 years. Heinelt comments: “The once mainly regional airport has risen to take its place alongside Europe’s leading air transportation hubs and for the future, all of the indicators point to continuing growth. With respect to being a leading cargo hub Munich has just started to take-off.”
TRADEFINDER Airlines
Freight Forwarders
Turkey
India
Freight Forwarders Hong Kong
United Arab Emirates
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USA
ACW 8 May 2017
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