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DA ILY NEWS Thursday • 11 May 2017
The daily newspaper published in Munich covering Air Cargo Europe 2017
Cream of the crop crowned
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xcellence in the air cargo industry was celebrated last night at the glittering Air Cargo Week World Air Cargo Awards in Munich. The luxurious Westin Hotel saw a crescendo of cheering and applause for the rep-
utable accolades as ecstatic winners in the 10 categories raised their trophies aloft. Broadcaster and television director Nadia Dunn compered the evening as 500 air cargo professionals enjoyed a sumptuous dinner and fine champagne along with live acts and music.
Cargo Airline of the Year went to Etihad Cargo who beat off strong competition to scoop the prestigious accolade and taking home Airport of the Year was Brussels Airport. ECS Group won Air Cargo General Sales Agent of the Year and Air Cargo Handling Agent of the Year went to Hong Kong handler Hactl. Air Charter Service won the Air Cargo Charter Broker of the Year following on from their triumph last year. The Airfreight Forwarder of the Year went to Dimerco for the second consecutive year after winning it in Shanghai in 2016. Air Asia won the Air Cargo Industry Customer Care Award and Saudia Cargo picked up the Air Cargo Industry Achievement Award. WebCargoNet took home the Information Technology for the Air Cargo Industry Award and ECS Group was the winner of the Air Cargo Industry Marketing and Promotional Campaign Award, their second award of the night.
The best of the best 2017
Airfreight Forwarder of the Year Sponsored by: Heathrow Cargo Presented by: Mr Nick Platts, Head of Cargo Finalists: DHL Global Forwarding, Dimerco, Geodis, Kuehne + Nagel The Winner was: Dimerco
Air Cargo Handling Agent of the Year Sponsored by: Etihad Cargo Presented by: Mr Robert Fordree, Head of Cargo Delivery Finalists: Alha Group, dnata, Evergreen Air Cargo Services, Hactl (Hong Kong Air Cargo Terminals Ltd) The Winner was: Hactl
FLOWER POWER BEING CHALLENGED BATTLE OF THE GSSAS HOTS UP Q&A WITH PAUL BINGLEY THE UNTAPPED CONTINENT IS ON THE RISE COOL CHAIN FOCUS FOR SAUDIA
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These are all of the very well deserving winners of this year’s ACW World Air Cargo Awards:
Air Cargo Charter Broker of the Year Presented by: Mr Stefan Rummel, Managing Director at MESSE MÜNCHEN Finalists: Air Charter Service, Chapman Freeborn, Hunt & Palmer, Neo Air Charter The Winner was: Air Charter Service
Airport of the Year Sponsored by: Saudia Cargo Presented by: Mr Chris Notter, Executive Director Operations Performance Finalists: Brussels Airport, Frankfurt Airport Miami International Airport, Seoul Incheon Airport The Winner was: Brussels Airport
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Air Cargo General Sales Agent of the Year Sponsored by: Air Asia Presented by: Captain Chin Nyok San, Head of Cargo Finalists: Air Logistics Group, ATC Aviation, ECS Group, Kales Airline Services The Winner was: ECS Group
Air Cargo Industry Customer Care Award Sponsored by: Brussels Airport Presented by: Mr Piet Demunter, Director Strategic Development Finalists: Air Asia, Emirates SkyCargo, Thai Cargo, Virgin Atlantic Cargo The Winner was: Air Asia
Air Cargo Industry Achievement Award Presented by: Mr Bernd Maresch, Chairman of the conference sessions at this year’s Air Cargo Europe. Finalists: Emirates SkyCargo, Saudia Cargo, United Cargo, Virgin Atlantic Cargo The Winner was: Saudia Cargo
IT for the Air Cargo Industry Award Sponsored by: Saudia Cargo Presented by: Mr Rainer Mueller, Executive Director Commercial Finalists: Accelya, Cargoguide, WebCargoNet youredi The Winner was: WebCargoNet
Air Cargo Industry Marketing & Promotional Campaign Award Sponsored by: AZura International Presented by: Mr William Carr, Chairman Finalists: ECS Group, Saudia Cargo, United Cargo Virgin Atlantic Cargo The Winner was: ECS Group
Cargo Airline of the Year Sponsored by: ATC Aviation Presented by: Mr Ingo Zimmer, Chief Executive Finalists: Etihad Cargo, Qatar Airways, United Cargo Virgin Atlantic Cargo The Winner was: Etihad Cargo
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Published in Munich 9, 10 and 11 May 2017
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DAILY NEWS Editor:
Justin Burns
Staff Writer:
James Muir
Contributors:
Michael Mackey • Graham Newton David Craik • Mike Bryant
International Sales Director:
Rosa Bellanca
International Sales Manager:
Valeria Curzio
Commercial Director:
Anthony Smith
Development Director:
Michael Sales
Design and Production Manager:
Alex Brown
Operations Manager:
Kim Smith
Data and Accounts:
Sarah Archer
Directors:
Norman Bamford • William Carr • Dawn Jolley
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T +44 (0)1737 645777 • F +44 (0)1737 645888 E sales@azurainternational.com
The views and opinions expressed in this publication are not necessarily those of the publishers. Whilst every care is taken, the publishers cannot be held legally responsible for any errors in articles or advertisements. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by electronic, mechanical, photographic or other means without the prior consent of the publishers. USA: The publishers shall not be liable for losses, claims, damages or expenses arising out of or attributed to the contents of ACW Daily News, insofar as they are based on information, presentations, reports or data that have been publicly disseminated, furnished or otherwise communicated to ACW Daily News.
Printed in Munich by Peschke Druckerei GmbH
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ACW DailyNews
Flower power being challenged Perishables continue to be flown in increasing numbers, but some sectors like flowers are facing challenges. David Craik takes a look at the sector.
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ne of the hottest debates in the world of perishables distribution is the positives and negatives of transport by air or by sea. Each has its advocates citing quicker delivery or ease of transport or more suitable temperature environments.
The debate is even moving into the flower sector which for years has appeared more clearcut with airfreight being the dominant partner. According to FlowerWatch managing director of consultancy, Jeroen van der Hulst flowers are either produced in Europe for the European market or imported into Europe and the US via
South America, (Ecuador/Colombia) or East Africa to Europe particularly Kenya. He estimates, 3,500 tonnes a week are being transported on full freighters between Nairobi in Kenya to Europe alone. However, sea freight is increasingly becoming an option for growers on some routes. “Sea freight is relatively new in the flower sector but successful. For example, six or seven years ago the transport of cut flowers from South America would have been completely air freight,” he states. “But sea freight is now emerging as we have seen on the Colombia to UK route and I believe it is going to grow more
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Sea freight is now emerging as we have seen on the Colombia to UK route
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ACW DailyNews between South America and Europe. That’s because it costs less, meets the sustainable targets of supermarkets and retailers through less use of CO2 in transport and it is easier to store the flowers at the right temperature needed to keep them fresh. Temperature is the most critical point when it comes to flower supply chains and maintaining value and shelf-life.” The challenge from sea is less acute from East Africa to Europe as airfreight there is cheaper and there are less attractive sea routes available. However as Asian imports and exports of flowers grow then the opportunity for more sea freight competition between there and East Africa is very real. In that scenario, Middle Eastern airlines will suffer. Van der Hulst says confronting the challenge of maintaining a healthy temperature for cut flowers is something the airfreight industry must deal with now. “We are working with our airfreight clients to heighten their awareness that temperature abuse can lead to a loss of four cent per stem during transport. Four or five years ago, flowers would turn up at market at a temperature of 20 degrees Celsius and people would say that it was a good shipment. But florists and end users didn’t like it. Flowers really need to be at less than two degrees,” van der Hulst states. “Changing this attitude amongst shippers, growers and retailers is down to more training and more knowledge but also the use of more technology.” One of these is a real-time monitoring system which tracks the journey of a consignment of flowers from a flower farm to Nairobi airport and then to the distribution centre in Amsterdam, the Netherlands. “We get data insight which can show us if all the participants in the supply chain are sticking to prior agreements regarding temperature,” he explains. “We have published a list of best standards in the transport of cut flowers with farms and supermarkets wanting to meet them. Airlines and ground handlers are also wanting to do better and the first airline to sign up to these standards will gain a competitive advantage.” The standards include optimum temperatures, exposure over time and even the stacking of boxes on board to allow air circulation and cooling to take place. Air France-KLM, which shipped over 60,000 tonnes of flowers from Kenya, Zimbabwe, Ecuador
and Colombia to Amsterdam Airport Schiphol in 2016 has been working closely with FlowerWatch in this area. “Amsterdam is the number one destination for flowers from Africa taking a 20 per cent market share,” states KLM director eastern & southern Africa, Noud Duyzings. “It is a good market for us so we have worked with FlowerWatch to see what we need to change and improve. We are now getting our flowers to Amsterdam an average two degrees Celsius lower than any other airline.” Duyzings says KLM looked at its whole supply chain including changing how movements were carried out pre-and during airport distribution. “We used to truck the flowers on to the tarmac and wait for the plane to land before loading. Now we keep the flowers in the cold store until the aircraft is parked and its goods have been offloaded,” he says. “We have also briefed the pilots over the temperatures in the plane. Our old briefings were to set the temperature at between four degrees and eight degrees Celsius. Being pilots they chose the maximum eight degrees so they wouldn’t get cold feet! We said the maximum now had to be five degrees and we have seen a reduction in ambient temperatures.” KLM also last year teamed up with Dutch flower auction Royal FloraHolland, which trades around 12 billion flowers a year, and Schiphol to form the Holland Flower Alliance aimed at solidifying its place as the world’s leading flower hub. It also seeks to ramp up
Temperature abuse can lead to a loss of four cent per stem in transport
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ACW DailyNews research in the cold-chain, packaging materials and a cargo flight data system to plan shipments and monitor trends. At Schiphol, around 15 per cent to 20 per cent of its annual cargo volumes of around 1.66 million tonnes is made up of perishables with freshly cut flowers accounting for much of that. Jonas van Stekelenburg, cargo director at the airport, says: “Flower distribution is all about temperature and we are ensuring on our Kenya to Amsterdam route that the temperature during airport handling in Nairobi and on the plane, does not go above four degrees Celsius. There is also more of a structured flow of data and information of movements between forwarders, handlers, airliners and growers.” He says the Holland Flower Alliance is open for other airlines and forwarders to join and he reveals that it is in current talks with Emirates,
Dnata, Panalpina and Kuehne + Nagel to either formally join the alliance or to work closer together about the transport of flowers from
Africa to Europe. “They are key to this route,” he states. “There is a lot of talk around sea freight but there hasn’t been big growth to date. Up to now it is the preference of most farmers to send by air freight but innovation is vital in the future.” Indeed, Royal FloraHolland has experimented with refrigerated sea containers and has stated that moving from air to ocean freight from Africa could cut costs by 38 per cent and slash carbon emissions. The debate of sea and air will continue to bloom in the months and years ahead.
EMERGING MARKETS
In February, Air India SATS Airport Services launched AISATS Coolport, India’s first integrated on-airport perishable cargo handling centre at Kempegowda International Airport in Bengaluru. The 11,000 square metre facility has a capability to handle 40,000 tonnes per year with 17 dedicated cold rooms with temperatures ranging from -25 to 25 degrees Celsius. It also boasts refrigerated trucking services, cool trollies to ensure temperature main-
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tenance of the cargo to and from the aircraft and thermal blankets and dry ice. “In recent years Bengaluru has witnessed a steady increase in perishable cargo volumes with a CAGR of 15 per cent,” says AISATS chief executive, Mike Chew. “India’s new Industrial and Pharmaceutical policies have also augmented manufacturing, thereby attracting more investment in pharma and biotechnology. The COOLPORT meets this ever-increasing demand of temperature-sensitive cargo and enhances Karnataka’s status as the perishable hub of South India. We can now ensure an unbroken cold chain network.” For perishables, the key global trade lanes from the centre, excluding Bangalore, are mostly to the Middle East, US, Europe, South West Pacific and Far East Asia. The main commodities are fresh stock such as fruits and vegetables, cut flowers and pharmaceuticals. According to Chew the Indian Cold Chain industry is expected to grow at a CAGR of 28 per cent over the next four years. “There is a need for effective, economically viable and integrated cold chain infrastructure and solutions from production centres to the consumption centres,” states Chew. “In addition, there is also a need to have a specialised and trained workforce to ensure that high standards of cold chain perishable handling aligned with international guidelines are adhered to. “This would help reduce physical waste and loss of valuable perishable commodities. We believe trade will focus more on the major hubs where better infrastructure is in place, and AISATS aims to create awareness on the importance of maintaining the cold chain integrity. We will also be looking to explore opportunities for establishing certified trade corridors as per international standards.”
ACW DailyNews
Battle of the GSSAs hots up
The general sales and service agents (GSSA) marketplace is as competitive as ever. Justin Burns spoke to the key decision-makers.
airlines – those cannot invest hugely in technology and expect partners or suppliers bringing new technologies,” he says. Thominet says it is vital that GSSAs provide more services, but these depend on the airline as some want IT, some custom clearances, some security, while regional needs also differ as European, Asian and South American carriers have different needs.
“We would like ideally to develop different new services and this is what we are going to sell to them, and this is the trend as we can no longer as a GSSA just be a reseller,” Thominet explains. There is no doubting that GSSAs will always have a major role to play in the industry, according to Kales Group chief executive officer, Peter Kales. “GSSA are always needed, for large airline to small airlines in offline markets or in difficult markets, but for sure our business will always be there, as we are the experts with many years of contacts and experience which you do not just get in one year, although some airlines think sometimes it is that easy,” he says. However, there are a wealth of opportunities and challenges for GSSAs, Kales notes such as ensuring software systems grow and be linked more and more with the airlines, and to stay active by outgoing sales and marketing activities, but he believes the GSSA principle is still the same as “no matter what internet and emails do nowadays, it is and always will be a peoples business”. ATC Aviation’s CEO, Ingo Zimmer notes the GSSA business has grown over the years and they have proved to be a valuable partner for airlines and agents, while he believes the trend to
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he role of general sales and service agents (GSSAs) is changing as the air cargo industry does, but they continue to be a vital partner and cog within the supply chain. There have been challenging times in recent years for GSSAs as carriers have demanded greater efficiencies and services, but demand has picked up and as yields have recovered a bit, so have revenues. The consolidation continues as big players continue to snap up smaller GSSAs, but it seems each is carving out different opportunities across the globe to tap into. In the view of Air Logistics Group chief operating officer (COO), Stephen Dawkins the future of the GSSA marketplace is quite clear. “There will be continued consolidation and continued requirements from airline customers to provide additional services be it fiscal, sales, or operationally from professional GSSA companies,” Dawkins says. He says the size of the cargo airline market is 55 million tonnes of which the GSSA business is generating over 20 per cent, so there is “ample opportunity” to invest in the future and increase this market share. Dawkins explains: “Representing over 20 per cent of worldwide tonnages, it would be inspiring for IATA to consider a wider role for GSSAs within its organisation. To recognise, as it does very eloquently the airline and forwarding community, that GSSAs are an integral part of the airline cargo industry and will continue to grow their reputation for many years to come.” French-headquartered ECS Group has grown its global network in the last 12 months and COO, Adrien Thominet says its strategy moving forward to meet new demands is to develop new services through different technologies. “It is about how we can go the extra mile. As a GSSA we are meant to be advanced. We are building a team dedicated to developing new technologies and trying to regain in terms of competitiveness and advantages in providing new services for the airlines,” Thominet says. “The big ones (like Emirates, Qatar Airways) are doing it all by their own, but for us it is the other airlines - the middle-sized
ADRIEN THOMINET
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No matter what internet and emails do nowadays, it is and always will be a peoples business PETER KALES
outsource will continue and GSSAs will benefit. He is sure the consolidation process will continue as some of the global GSSAs are still working on their worldwide coverage, and explains: “GSSAs with global coverage dominate the market. Smaller GSSA`s survive in the niche. The trend is that airlines still outsource their cargo sales to GSSAs in order to save costs in a tough market environment.” There maybe plenty if consolidation, but HAE president for the Americas, Ian Hutchinson believes there is still a “significant place” for independent, creative, entrepreneurial companies. ECS has been one of the most active in developing its network especially in Asia where it now represents Jetstar Asia at its 25 stations and Finnair Cargo in six countries (Malaysia, Indonesia, Vietnam, the Philippines, Cambodia, and Singapore). Thominet says: “The market is still complicated there as the rates are low and were of course impacted by the Chinese New Year, but Southeast Asia is working well and we have a very satisfying business out of Vietnam which is a booming market and Thailand is also very satisfying too. We are creating this chemistry between Jetstar and Finnair and then we use Jetstar as a
feeder for the hub and it is working well.” The Americas is another region it has grown and it has won a contract for Qatar Airways for its two weekly Boeing 777 Freighter flights from Doha via Luxembourg with stops at Sao Paulo, Buenos Aires and Quito and Miami. Thominet says South America is a major target of expansion and it is an “interesting market” and despite economic issues, believes it will bounce back. He notes struggling markets only benefit GSSAs: “It is an opportunity for us because when the market is shaking or weak we have more opportunity to represent airlines as they need us, but when the market is good they do not need us as they do it themselves.” North America is also a strong focus and ECS joined forces in February with Canadian GSSA Exp-Air Cargo to consolidate its position in the market across the Americas. In Europe, ECS subsidiary Globe Air Cargo (GAC) was appointed by Leisure Cargo as its GSA in the Netherlands giving shippers access to a global network of 14 airlines under one airway bill. ATC has also expanded its network and has won Air Seychelles for Germany and the Netherlands, and Aerolinas Argentinas for the US, where it now has 10 offices. Zimmer says within the next few months, there might be “some interesting news”, as it is still in the race with some others. “Our network still has to be expanded. Our coverage in Europe and the Americas is quite strong. Therefore our focus in 2017 will be the expansion in Asia,” Zimmer adds. HAE has expanded its presence in the Middle East and Africa, most notably, DHL Aviation and Air Canada in Dubai and American Airlines in Africa and Hutchinson says the Middle East and Africa continue to make strong strides in its network. Dawkins says Air Logistics is targeting more contracts and network growth while Europe has been the strongest region in the last six months: “It is clear that airlines demand a continued improvement in professionalism, fiscal security and an understanding of the market place from its supplier. We see more airline contracts covering multiple countries, which helps to build strong long term relationships with our customers.” Kales says the marketplace is competitive as usual, but buoyant and so far in 2017 business has been better than 2016, but with lots of pressure on space although finally yields are going up a bit. For Kales the US and China have been the strongest, while Kales believes Africa is growing, and only South America is bit weaker
When the market is shaking or weak we have more opportunity to represent airlines as they need us
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then before, but all together markets are “relatively strong”. The company he notes is aiming to grow its market share this year by five per cent and also its yield and revenue by focusing on premium cargo products and new markets. “If our airlines increase capacity big time, we automatically grow with them. “Air cargo volumes will always grow no matter what, as simply the world grows and more people reach higher income levels and have more money to spend,” he says. The focus for GSSAs at the moment is on getting yields up. Dawkins says: “There is more and more demand from airline principals that we focus on verticals and therefore bring better yields to the airlines we represent.” Thominet says ECS is working to find solutions to improve yields and revenues this year. One way is to develop new technologies, which means new services for customers and where it can “regain a bit of revenue and value”. Zimmer feels vertical sales is a “key” to improve the average yields and market shares, while Hutchison adds: “We believe each sector needs to integrate with the next link in the supply chain in a willing and common manner. Our view is that it is too fragmented. The industry is changing, we have to do as much as we can, get ahead of the curve for carriers who want such a partner.”
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How has business been so far this year? Business has been brisk. Following the end of the Ruslan International joint venture in December 2016, we have certainly enhanced our level of flying. Antonov Airlines has been in operation for 28 years and is a proven brand. Aside from a substantial
questions answered by ...
PAUL BINGLEY ANTONOV COMMERCIAL MANAGER
Antonov Airlines went it alone in December after the end of the Ruslan International joint venture and now has a new base at Stansted Airport's Diamond Hangar. This year the Ukraine and US also signed an Open Skies agreement and the bilateral deal has given the airline more opportunities. Commercial manager, Paul Bingley spoke about a busy last six months.
number of charters operated globally, we have performed several from our new base at Stansted Airport’s Diamond Hangar. So far, the location has proved to be extremely convenient. It has allowed us to become more effective in coordination of our flights, and has enabled us to build closer relationships with our customers.
In what sectors has there been strong demand from for Antonov aircraft? 2017 appears to be following the trend of the last few years, with strong demand from the aerospace sector, particularly for the transportation of helicopters and aircraft engines. We expect this trend to continue, especially given the AN-124’s proven track record in the movement of such outsize products. While the oil and gas sector has suffered a global slump, it is expected to improve. Previously, this industry had seen us operating at the same levels as we currently do for aerospace. We are slowly seeing signs of recovery.
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eration, construction and humanitarian sectors have also contributed significantly to our flying programme during the last few months.
What regions is Antonov seeing growth from for charter flights? We are still seeing strong demand on routes from Europe to the Far East, particularly China. Significant growth for AN-124 charters generally follows global events, so recent incidents like Severe Tropical Cyclone Debbie saw a spike in demand for flights to Australia.
How has business and operations been since the ending of the Ruslan International JV late last year? After a decade of joint activities, many would have expected the transition to be extremely difficult, but it’s been anything but. We have re-established some very strong connections with the forwarder and broking communities. The move to our new base was also remarkably easy, and operations remained completely unaffected. The whole process has been seamless. Antonov’s latest aircraft, the AN-132D took to the skies for its maiden flight on 31 March – what are you hoping from for this aircraft? The AN-132D is another example of Antonov Company’s great ability to design and build unique cargo aircraft. It perfectly illustrates Antonov’s future direction, with components sourced from both Ukraine and the West. It is currently being tested before it is presented in Saudi Arabia. With an internal cabin size of L 12.0 x W 2.4 x H 1.8m and a 9,200kg payload, the aircraft is intended for operation on short and medium-haul routes and is expected to fulfil a variety of tasks, including both commercial and military deployments.
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How has the US market been for Antonov since it was granted exemption on charter flights to and from the US? How has this US Open Skies Agreement boosted Antonov’s bottom-line? Our level of flying to and from the US following the signing of the ‘Open Skies’ bilateral agreement between Ukraine and the US has
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ACW DailyNews The industry is not so much competitive, just more focussed than it once was.
Has the fuel price changes impacted operational costs of Antonov aircraft? Fuel is the biggest single factor affecting charter prices. If fuel prices decrease, charter prices follow, and vice versa. Unlike scheduled operators, we are able to react quicker to fuel cost fluctuation by not being locked into seasonal pricing. increased. There has been a great deal of interest from our customers. We would expect the number of US flights and amount of cargo carried this year to outstrip the last two, which saw some strong results.
How is Antonov’s design modernisation programme coming along? Since 2011, the Antonov Airlines AN-124 fleet has been through an extensive modernisation programme. Accordingly, all seven aircraft are now capable of flying for at least the next two decades. Two of the airframes have had their structures and auxiliary supports reinforced, thus increasing the maximum take-off weight to enable them both to carry 150,000kg payloads; while three others have been fitted with advanced avionics, which allows a reduction in the flight deck crew from six to four. Further avionics modifications will be carried out over the next three years using both Ukrainian and western equipment. As the designer of AN-124 aircraft and holder of AN-124 Type Certificate, Antonov Company is the only organisation in the world authorised to make changes to the aircraft structure, extend its life time and approve the airworthiness of AN-124 aircraft for flight operations worldwide.
changed the air cargo environment markedly. While the AN-124 has predominantly been a heavy and outsize cargo transporter, it could sometimes supplement its core business by carrying general cargo. Nowadays, the aircraft plays more of a role in project forwarding for sectors such as for the aerospace industry (satellites to launchpads etc.), large construction projects (generators, turbines etc.) and emergency situations (humanitarian disasters).
How does Antonov see air cargo in 10 years time? With the current pace of technological advancement, drones could play a significant role during the short term. It is quite possible there will be substantial changes in the long term, as well, with airships likely to come to the fore. However, their speed (or the lack of it) is likely to outweigh the benefits. It is entirely possible that by the time airships are in full production, a replacement for the AN-124 may well have been designed by Antonov Company.
Is Antonov building any more aircraft – if so what and how many? In recent years, Antonov Company’s production facility has constructed AN-148s and AN-158s. Construction of these aircraft is temporarily halted as we complete migration from Russian-made vendor items to Ukrainian and Western equivalents. Manufacturing will resume thereafter. Last year, Antonov completed construction of the prototype of a new light transport aircraft, the AN-132. The AN-132 programme
2017 appears to be following the trend of the last few years, with strong demand from the aerospace sector is being developed in partnership with other Ukrainian and Western companies, following a contract with a customer from the Kingdom of Saudi Arabia. Antonov is currently preparing to launch serial production of this aircraft. Manufacturing of a new AN-178 jet cargo aircraft is also underway at Antonov Company. 2017 marks the 70th anniversary of the AN-2’s maiden flight, the world’s biggest bi-plane. On Tuesday 11 April, the AN-2-100, an up-to-date modification of the AN-2, performed a test flight at Antonov Company’s test base in Kyiv, lifting cargo weighing a total 3202 kilogrammes and breaking the record for such class aircraft. Is the air cargo industry more competitive and difficult market for Antonov now than 10 years ago or not? There is no doubt that times have changed. Increased capacity passenger aircraft used on extensive airline networks have
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The untapped continent is on the rise Africa's air cargo market is on the up, but over-capacity remains an issue, reports David Craik.
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t is fair to say that 2016 was a mixed year for African air freight. According to IATA figures there was an encouraging annual growth in freight demand of 3.1 per cent during the year, while capacity also surged by 25.5 per cent. But the annual freight growth paled in comparison with the 4.5 per cent recorded in 2015, whilst the boom in capacity has also put intense pressure on yields throughout the region.
There is limited liberalisation here with lots of protectionism Air France KLM Cargo is well aware of the struggles in the African airfreight sector in 2016. Excessive capacity combined with domestic economic uncertainty particularly in South Africa have hit volumes and revenues throughout the industry. “We, and others, took the decision to reduce capacity into Kenya and South Africa taking out two freighters. That took us from six freighters a week to four,” explains Noud Duyzings, director for Eastern & Southern Africa. “Volumes were hit as were yields which were down by about 30-40 per cent in the Southern African market. However, our performance was ahead of the industry and still manageable.” Duyzings says the continued weakness in oil prices has generally affected volumes hitting Angola, Nigeria and Tanzania. “The traffic is just not there at the moment,” he states. I n conp e r -
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trast ishables sector
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surging with volumes growing out of Africa last up this year. Air France KLM tends to fly high value imports into South Africa and take perishables back out. Pharmaceuticals is also a strong sector for KLM helped with a joint venture with Kenya Airways taking in Nairobi and South Sudan. “It is crucial to have partnerships with other airlines in Africa,” he explains. “There is limited liberalisation here, with lots of protectionism, trade barriers, government owned airlines and hard to get intra-Africa traffic rights. The Open skies agreement depends on government attitudes and policies. But most governments recognise the need for airfreight to do well in Africa given that road and rail infrastructure is very weak.” Duyzings says challenges also remain in the “monopoly of cargo handling companies and subsequent lack of competition”. He says: “The cost of doing business in Africa is quite high compared to other regions. But we try and be smart with our partners. We use their freighters and we also take part in think tanks to improve infrastructure and use our expertise and knowledge to support handling companies.” Duyzings also points to the importance of developing technology in the African air cargo sector. It has recently launched a new digital platform called myCargo enabling its customers to more easily check schedules, get quotes, make bookings and find information about their shipments. “It’s an online personal toolkit for track and trace. We’ve created a much better e-commerce platform,” Duyzings states. “Technology is a game changer for air cargo. We need to be more agile, customer focused and digitally focused.” So, what of 2017?
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ACW DailyNews Duyzings says its capacity in Africa will remain the same and hopes to see “stability in yield and an increase in load”. He adds: “We hope the South African economy increasing will help as will our new services including Paris to Accra in Ghana and Amsterdam to Freetown in Sierra Leone and Monrovia in Liberia. We are also going year-round from Charles de Gaulle to Capetown, so not seasonal as it was before.” What then of the continent’s airports? How have they performed during the last few months? What challenges have they faced? The South African based airport operator, O.R. Tambo International Airport, has routes to over 140 international destinations. Its main cargo carriers include SAA Cargo, Emirates, Lufthansa, MartinAir, Cargolux, Ethiopian and Kenya Airways. The products being moved range from perishable items such as fruit and vegetables to vehicle parts, pharmaceuticals, electronics and live animals. It says airlines have experienced challenging trading conditions over the past year as global trade has come under increased pressure. According to the airport cargo volumes in South Africa declined by around 10 per cent last year compared to 2015. Volumes through O.R. Tambo declined from 391,647 tonnes to 354,505. “We have noted some improvement in the first few months of this year but the growth rate remains in the low single digits,” says general manager, Bongiwe Pityi. The airport has identified infrastructural opportunities to capitalise on any industry upturn. “Our current facilities at the airport are close to saturation, especially our landside road access. We’ve embarked on a process to optimise infrastructure across the airport,” Pityi states. “We are in the process of redesigning our access roads into the cargo area in an effort to smooth the flow of traffic in and out of the area.” The plans for O. R. Tambo International Airport also include
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BONGIWE PITYI the development of a state-of-the-art cargo terminal which will ultimately be developed to process two million tonnes of cargo a year. “The vision is to build a terminal which will have dedicated specialised cargo handling and forwarding facilities. We are currently in the planning phase of the project and working hard to ensure that it can be delivered in the medium term,” Pityi explains. Some of the challenges are inherent in the African air cargo sector. “The distance from major global markets and the associated transport costs remain the main challenges. In addition, volumes of air cargo are a good indicator of overall business activity which is influenced by a variety of global and local economic policy actions,” Pityi adds. “To address the current challenges in growing air cargo, we have partnered with our provincial and
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municipal governments to attract new industries and business through the burgeoning Aerotropolis around the airport.” In essence this is a concept which uses inter-modal connectivity as the basis for generating economic development particularly in the sectors of perishables, bio life sciences, advanced manufacturing, aerospace, innovation and ICT research and development. O.R. Tambo can play a key role in this by helping move goods, services and people efficiently and effectively and connect the city of Ekurhuleni with the rest of the country, Africa and the globe. It is certainly a progressive policy and one that shows the importance of every player in the African air cargo sector from airport, to carrier, the local and regional economy and the Government coming together to drive forward the same strategy. It is no doubt one of the many reasons why so many carriers remain intensely optimistic about African airfreight. “I have patience in the continent,” Duyzings states. “The average GDP growth is around five per cent and the business environment will also improve in the next four to five years. We want to be present in Africa.” Recent figures show that an upturn may be approaching. According to IATA, African carriers saw freight demand rise by 24.3 per cent in January this year compared to the same month in 2016. It was helped by very strong growth on trade lanes to and from Asia. This demand, up 57 per cent, has been driven by rapid longhaul expansion and increased direct services. It shows that the previous reliance of African freight on the still recovering major economies of the West – hit even further by turbulence over Brexit and Trump – is not the only way forward when it comes to seeking global regional markets. If the South African economy gets motoring again and the oil and gas markets get anywhere close to a bounceback then the region will grow even faster. African freight still has a long way to go but despite some wobbles it remains a serious player on the global stage.
ACW DailyNews
More events and new members on the agenda for TIACA in the future VLADIMIR ZUBKOV
Vladimir Zubkov took over as secretary general of TIACA in January and has big plans for the air cargo association
Zubkov explains he is targeting a 10 per cent increase in TIACA membership by the end of 2018, which would add to the current 600 members that it has around the world. Another area that Zubkov sees an opportunity to grow TIACA is through developing more events as he feels TIACA’s Air Cargo Forum and Executive Summit is not enough, which would in turn boost revenue, membership and advocacy and awareness of TIACA. “I don’t think an Air Cargo Forum every two years and one AGM (Executive Summit) every year is particularly remarkable and before I was secretary general I was promoting a need for additional activities, to the calendar,” he says. The first he explains is that TIACA is to collaborate with ICAO to hold an air cargo conference in Addis Ababa from 27-29 June this year. This new air cargo conference will be held to coincide with the official opening of Ethiopian Airlines’ new state-of-theart $150 million airfreight terminal and Zubkov says it will help grow the awareness of TIACA in Africa. Air Cargo Development in Africa is the second such ICAO event, but it will be the first that TIACA is directly involved with.
T
he International Air Cargo Association (TIACA) is looking to grow its global presence and work with other aviation agencies as part of a new strategy. TIACA's new strategy is to increase it industry focus and revenues, which is based around the three central pillars of advocacy, connectivity and networking, and training. Leading the fresh approach is the new secretary general, Vladimir Zubkov who only took over the reins of the Miami-headquartered association in January 2017 from Doug Brittin and is already stamping his mark on the role. The experienced air cargo professional is looking to use his 40 years gained in the air transport industry through working for the International Civil Aviation Organization (ICAO) and the Volga-Dnepr Group to good affect. One of the key objectives at the top of his priorities he explains is to work together and better and more with other associations like ICAO and the Airports Council International (ACI). He is also going to work in much closer cooperation than other secretary generals before him with global trade, aviation and regulatory bodies while he is also looking to strengthen and build even stronger relationships with the World Customs Organization, the World Trade Organization (WTO), International Air Transport and SITA.
Developing closer ties with WTO Zubkov certainly sees as being particularly important because of the global Trade Facilitation Agreement (TFA), which was only recently ratified earlier this year when the required number of two thirds of states signed up. The TFA is very likely to have significant implications for air cargo by boosting the flow of goods by air and providing more trade opportunities. TIACA is often seen by many as being a bit of a North American and European-centric association, but one of Zubkov's other major priorities is to grow TIACA’s membership in regions that is does not have a presence and members. Zubkov wants the association to have new members in the Middle East and Asia Pacific, but a key priority is to also add members in new frontiers that TIACA is not represented in and where there is a lack of awareness, such as in the African and South American regions of the globe.
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ACW DailyNews The Ethiopian Civil Aviation Authority and Ethiopian Airlines will host the event in Addis Ababa, which along with Nairobi and Johannesburg is one of Africa's principal air cargo gateways. Zubkov explains: “I have been to African countries in the last few months twice and the objective will be to bring more information on air cargo to the African continent. “It will be special and different to other conferences as it will bring together the regulators like ICAO, civil aviation authorities and the industry.” The conference will focus on the implementation of the Lomé Declaration on Air Cargo Development in Africa, adopted in Togo in August 2014 by 22 States, international organisations and aviation stakeholders. Zubkov explains the partnership with ICAO
provides a chance for TIACA to provide “knowledge and information” about the association to Africa – a key region where it is looking to gain
members. But this is not the only event planned and in addition to global events he wants to start some regional events in areas where TIACA does not have any events while it is also looking to start an event with ICAO in China, similar to the Ethiopian conference. “It is not the only one as at the end of this year or the start of next year I am promoting a conference in Morocco, which is at the other end of Africa in the north and I am also discussing some regional events – one with a Middle East airport and some Asian countries,” Zubkov explains. As for specific sectors and segments of air cargo is looking to promote and discuss, e-com-
communication lines with them as he feels it is important to show why they should to be associated with TIACA while also explaining to them how it can benefit them. Another area of focus Zubkov identifies as being important for air cargo moving forward like many, and an often reoccuring theme at conferences is technology, whether than be in investing in new systems or simply embracing the technological world. Zubkov says: “I want to find a way to help the supply chain with the introduction of new technologies. I have been talking to people at CHAMP Cargosystems who are always at the forefront and have a new platform they are launching.
I want to find a way to help the supply chain with the introduction of new technologies merce is an area he is looking to focus on and develop good conversations and build bridges. However, Zubkov believes e-commerce means a lot to different people across the supply chain but he feels air cargo needs to meet current shortcomings of the industry in this rapidly expanding sector. He adds: “Together we need to come together to see what it means. Also, I observe we very often talk about the same things and it is vital that those that decide on priorities are in this room and we need to be more in touch with the governmental organisations who make many of the decisions.” And Zubkov says he is himself using contacts within and outside the air cargo industry to get in touch with e-commerce heavyweights such as Amazon and Alibaba to develop direct
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“I believe that there maybe mutual interest for them it is the implementation of the technology and for us it is to make sure that all those who want this technology are aware of it and within the TIACA framework we will be assessing it and maybe helping people implement it.” Air cargo has picked up this year and has carried its momentum from a strong peak season in 2016 and Zubkov certainly has a positive impression for the future of the industry and where it is heading. “I believe that there are signs that the economy is not going to be worse and is recovering which is good for air cargo and also there is a joint optimism shared between my colleagues. I believe that these are signs that air cargo will be recovering from the not so good days,” he concludes.
ACW DailyNews
Strong start for Europe after challenging 2016 2016 proved to be a difficult year in Europe, but 2017 has started well following a strong peak season James Muir writes
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€1billion with tonnage down 2.9 per cent to 849,000 tonnes. When releasing its results back in February, the group, which consists of British Airways, Iberia, Aer Lingus, Vueling and bmi, said yields were down 9.3 per cent though cost management and premium product growth managed to offset some yield pressure. It was not the only airline to struggle, revenue for Lufthansa Cargo was down 12.7 per cent to €1.98billion and it made an adjusted EBIT loss of €50 million as load factors and yields slumped. Airlines are working hard to make up for this by reducing costs and focusing on premium products such as e-commerce and pharmaceuticals. Lufthansa Cargo has introduced new products including myAirCargo allowing private customers to send bulky goods internationally by air and td.Basic, offering high quality service with lower rates but slower transport times. The German flag carrier is postponing construction of its new freight terminal in Frankfurt instead focusing on upgrading existing facilities. The first three months have been better for a number of airlines, with strong volumes following a good peak season. After challenging times Air France KLM Group’s revenue
fter a strong end to 2016, European airlines and airports are continuing to put in strong results so far in 2017. The International Air Transport Association (IATA) reports that European freight tonne kilometres grew 9.6 per cent in the first two months of 2017, and by 10.5 per cent in February, the latest figures available. IATA says it has been helped by the on going weakness of the euro and strong export orders, particularly from Germany, with healthy trans-Atlantic cargo and to and from Asia. Figures from Airports Council International (ACI) Europe show the airports are performing well with 3.4 per cent growth in February, the latest figures the association has made available, and 5.4 per cent in the first two months of the year. A number of airports that have released March figures have been growing strongly. Frankfurt Airport grew 9.8 per cent to 205,443 tonnes, the highest monthly growth rate in six years, while London’s Heathrow Airport soared 12.6 per cent to 148,269 tonnes, which it says was its best month for five years, helped by emerging markets including Mexico, Brazil and India.
This makes up for 2015 being a difficult year, while 2016 started slowly, though growth picked up later in the year and by the end of the year European airlines were posting the highest growth rates among all the regions. Airports also reported similar results, with ACI Europe reporting 10.2 per cent growth in December and 4.3 per cent for the year. In the IATA Cargo Chartbook Q1 2017, the association says the industry has seen strong freight tonne kilometre growth (FTK), driven by European and Asian carriers, with fast traffic growth between Europe and Asia. Asia-Europe FTKs grew 11.9 per cent year-on-year on a rolling three month basis while Europe-North America FTKs were up 8.5 per cent. IATA says: “Asia Pacific and European airlines accounted for more than 70% of the annual growth in FTKs over the three months to February.” Airlines have been posting generally positive results for the first few months of 2017, with high year-on-year growth, after a challenging year in 2016 with falling yields and declining volumes. IAG Cargo for example saw revenue decline 6.6 per cent to
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ACW DailyNews
tonne kilometres grew 0.5 per cent in the first three months of 2017 to two billion, with 5.6 per cent growth in March to 751 million. Much of the growth came from Air France, up 4.5 per cent in the first three months and 10.6
per cent in March, with KLM down 2.3 per cent in the first quarter but up two per cent in March. Other major players have had a good start; IAG Cargo’s cargo tonne kilometres are up 3.6 per cent in the first quarter and Lufthansa Group airlines have seen cargo surge by 8.3 per cent measured in freight tonne kilometres. Airlines with more specialist services have also been performing well, Volga-Dnepr Group, with its charter and scheduled airline flights got off to a buoyant start with its ‘Cargo Supermarket’. Volga-Dnepr Airlines remains as busy as ever after 26 years in the outsize and heavyweight market, putting its Antonov AN-124-100s and modernised Ilyushin IL-76TD-90VDs to good use, including flights to Europe’s Spaceport, fire-fighting helicopters to Chile and continuing its ‘ice runway’ services to support research
projects in Antarctica. The group’s scheduled airline, AirBridgeCargo (ABC) Airlines has grown consistently over the last 13 years and has taken delivery of its 17th Boeing 747-8 Freighter. It does not show any signs of slowing down, serving any point in its network within 48 hours via its Moscow hub including handling. ABC operated over 1,000 flights from both Amsterdam Airport Schiphol and Frankfurt Airport and has been rapidly expanding its Asian network, topped off with Taipei flights in April. It became the first airline Russia and only the seventh in the world to be awarded International Air Transport Association Center of Excellence for Independent Validators in Pharmaceutical Logistics certification at its Moscow Sheremetyevo International Airport hub in November. Volga-Dnepr says its unique fleet can help customers with complex requirements, particularly when dealing with heavy and outsized cargo, while experts are on hand to deal with components of the delivery process such as trucking, crane hire, customs clearance and insurance, and design and manufacture of special frames
We use in-house technology to prepare loading plans
to transport irregular pieces of cargo. Volga-Dnepr commercial director, Alexander Kraynov says: “We use in-house technology to prepare loading plans using 3D modelling software. This enables us to conduct ‘virtual’ loadings in advance and eliminates any likelihood of delays caused by unexpected challenges on the day of the actual transportation. “Our engineers have also created patented loading systems for our freighter fleet to facilities the loading of a multitude of different cargoes.” Planning and communication are essential to avoid delays and unexpected costs. Kraynov explains: “Some companies that want the speed and reliability of air cargo often rule it out as a mode of transport because they think it is impossible for their big, heavy cargo to be flown. We always say do not assume this without speaking to us as we can very often create a solution.” Air cargo around the world is benefitting from world trade picking up, and Europe is posting healthy results. The weak Euro is helping exports, particularly in Germany, with a focus on premium products including e-commerce and temperature sensitive cargo going some way to make up for low yields and overcapacity. After a strong start to 2017, it will be interesting to see if European air cargo remains as positive as the year progresses.
ALEXANDER KRAYNOV
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ACW DailyNews
Antonov to expand in the US and Hong Kong
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ntonov Airlines will establish a presence in the USA and Hong Kong as part of its ongoing expansion plans. The Ukrainian carrier has established a new office at London Stansted Airport and appointed general sales agents in Japan and Australia, and has plans for the USA having been granted rights to operate in the country more freely. Antonov Company vice president, Oleg Orlov (pictured left) says: “We are excited to be growing our presence globally in some of the world’s most dynamic economies.” “Ukraine has developed excellent links with the USA as a result of an Open Skies Agreement, that has granted Antonov freedom to operate to and from the USA without the need to obtain U.S. Department of Transport (DoT) statements of authorisation.” Antonov is also working with Ukrainian and Western
suppliers to modernise its fleet, working with a number of suppliers to upgrade its seven AN-124 and the AN-225 with its 250 tonne payload. It has introduced Dunlop tyres to its fleet enabling the AN124100M-150 to operate at their designed maximum payload of 150 tonnes, have a much improved lifespan, leading to lower tyre costs per landing. Antonov is also working with US Honeywell for its avionics, Pratt & Whitney, Dowty Propellers, and Zodiac Aerospace in addition to other Western suppliers. Antonov Airlines managing director, Graham Witton (pictured right) says: “Our AN-124s will be flying for the next quarter of a century and we are making sure they are at the cutting edge of aviation technology and design.” He adds: “We are working with some of the most respected suppliers in the world for the modernisation of our fleet.”
Cool chain focus for Saudia
Saudia Cargo is focusing on optimising its processes for handling cargo - especially for temp-sensitive shipments. Chief executive officer, Nabil Khojah says as part of this focus it is showcasing its latest equipment investments for handling high-value temp-sensitive goods at the Saudia booth at air cargo Europe. He notes quality and safety are paramount in operations and he continues to promote innovation. Saudia Arabia is a challenging cargo handling environment due to the extreme weather in some months. Executive director, Rainer Mueller says there is no escaping technology in the digital age and by embracing it, customers will benefit more in terms of "speed, reliability and accuracy”. He adds Saudia has invested in specialised containers with varying temperatures.
Schiphol launches checker Amsterdam Airport Schiphol launched a new Compliance Checker at air cargo europe yesterday - which will speed up cargo flows by detecting data errors in air waybills. Schiphol says the technology decreases delays, the need to repeat work, and increase data quality, efficiency and predictability in the supply chain.
New GSSA network A new network for independent air cargo general sales and service agents (GSSAs) was launched at air cargo europe yesterday and is aiming to take on the 'bog boys' and boost independent GSSAs. 1GSA says it will enable independent GSSAs to "compete more effectively against the major, centrally-owned GSSA companies". The network already covers Bangladesh, the Czech Republic, India, Madagascar, Mauritius, Pakistan, Singapore, Spain, Sri Lanka, Turkey and the UK. A recruitment drive is under way to develop the geographic coverage. Members signed up include Select, CRS, GCAir, Kargo Sistem, and M&C Aviation. Select Airline Management founder David Lee is the first president, and Pilot Marketing MD Derek Jones the first MD. 1GSA says there is around 300 independent cargo GSSAs.
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