ACW daily 16th October 16

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DA ILY NEWS Wednesday • 26 October 2016

The official daily newspaper of Air Cargo Forum 2016

ACF open for business

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he International Air Cargo Association’s (TIACA) 28th Air Cargo Forum (ACF) & Exhibition – the airfreight industry’s premier show for decision makers lands in Paris today.

TIACA’s biennial event will run from 26-28 October and the theme this year is - Air Cargo Vision 2020: An open sky to innovation.

More than 3,000 air cargo professionals and 200 exhibitors from around the world will network and address the principal industry challenges while exploring future business opportunities.

A conference will also take place over the three days and see in-depth sessions on e-business, multimodal challenges, the cargo hub of

the future, as well as practical workshops on the new EU Customs rules and the latest on security regulations.

A Plenary session will kick-off the conference from 09.00h to 10.00h in the Lindbergh Room when TIACA chairman, Sanjiv Edward will welcome delegates and a debate will then take place on what are the most important issues facing the industry.

A ribbon cutting and opening ceremony to mark the start of ACF will then be held outside the exhibit hall’s entrance at 10.00h.

Today will also see two shipper briefings hosted by the Global Shippers’ Forum in the CDG room from 11.00h to noon and 14.00h to 15.00h.

Other highlights are Brussels Airport revealing its Airside Pharma Transporter at Booth 707 at 13.15h. The refrigerated dolly helps with shipping of temperature sensitive cargo on the tarmac. Boeing will also publish its 2016 World Air Cargo Forecast. It will share its views on the industry and give an outlook for the next 20 years. See tomorrow’s ACW Daily for reports on both events.

Heathrow third runway approved The UK government has approved a third runway at Heathrow Airport, a move that has been welcomed by industry figures.

The government appointed Airports Commission, chaired by Sir Howard Davies had recommended the construction of a third runway in his report published in July 2015, with an extended runway at Heathrow or a second one at Gatwick Airport also being considered.

Transport Secretary Chris Grayling says: “A new runway at Heathrow will improve connectivity in the UK itself and crucially boost our connections with the rest of the world, supporting exports, trade and job opportunities.”

Heathrow Airport adds: “Expansion of Heathrow is the only option that will connect all the UK to global growth, helping to build a stronger and fairer economy.”

The Freight Transport Association (FTA) has welcomed the news, having warned that the UK would lose business to European rivals such as Paris Charles de Gaulle Airport and Amsterdam Airport Schiphol.

FTA director of global and European policy, Chris Welsh describes the decision as “excellent news” saying: “This decision is even more vital in a post-Brexit world where Britain’s capability to expand its trade and ability to compete in

markets outside Europe is heavily dependent on connectivity to emerging markets.”

Heathrow, which is exhibiting at the TIACA Air Cargo Forum at Booth 423, handles about 1.5 million tonnes a year, and has seen growth of 2.1 per cent in the first nine months of 2016 to 1.1 million tonnes.

... in partnership with

GSF PUTS SPOTLIGHT ON SHIPPERS AT ACF

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PLACI MOVING CLOSER TO REALITY

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Q&A WITH ALAIN MALKA

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4.8% growth in August Airfreight volumes grew faster than passenger numbers for the first time in 18 months in August 2016 with growth of 4.8 per cent, according to Airports Council International (ACI).

All regions of the world saw growth in August, with the strongest uplift coming from North America at 6.7 per cent, followed by Asia Pacific at 4.5 per cent Europe at 4.4 per cent.

Volumes were weaker on a year-todate (YTD), with 1.2 per cent growth, and a number of regions declining.

Africa saw the biggest slump at 1.8 per cent, followed by North America, which despite a strong August was down 0.6 per cent. Latin America-Caribbean also dipped 0.1 per cent. The Middle East has seen the strong YTD growth of 4.2 per cent.

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Brazil’s Viracopos looks to attract cargo routes

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ao Paulo’s Viracopos International Airport has started an incentive program as it looks to attract more cargo carriers and strengthen the hub’s freight activities.

The gateway’s operator – Aeroportos Brasil Viracopos – wants to increase the number of international flight routes and cargo frequencies at the Brazilian airport, which is one of Brazil’s busiest for airfreight.

Proposals include 100 per cent exemption of landing fees for operations at the airport’s Cargo Terminal as cargo airlines operating in Viracopos get exemption for the first 12 months of operation. For new routes, the program provides a landing fee exemption for the first 24 months.

For new companies with operations of at least two regular weekly frequencies, a landing fee exemption of 100 per cent is for the first 24 months.

Operators already running flights in Viracopos, or intending to do so, may also benefit, provided they meet the eligibility requirements in a cumulative manner. For codeshare flights, only the airline operating the flight will receive the incentive.

The program will be in effect until 31 December, 2017 while other commercial incentives not to do with fees are to be negotiated separately.

Viracopos commercial director, Jorge Lobarinhas says: “The new program offers attractive, transparent and nondiscriminatory incentives and with them, the airport will further strengthen its positions as the largest cargo airport in Brazil. At Viracopos the airlines are always treated fairly and with equality, generating business opportunities.” Representatives from Viracopos are attending the Air Cargo Forum this week, where they are set to network with chiefs from potential new cargo carriers.

GSF puts spotlight on shippers at ACF

The Global Shippers’ Forum (GSF) is putting the spotlight on shippers at The International Air Cargo Association (TIACA) Air Cargo Forum (ACF) to ensure their views are at the centre of discussions.

The GSF is taking part in a number of conference sessions and holding two workshops at the Porte de Versailles show between 26 - 28 October. It is also hosting the Shippers’ Pavilion at Booth 1369.

GSF secretary general, Chris Welsh (pictured) says: “We aim to showcase shippers’ policies and facilitate contact between shippers attending the Air Cargo Forum and their suppliers. Going forward, we will strengthen our links with the air cargo industry.”

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Europe on the up but overcapacity remains Mike Bryant looks into the challenges in Europe for air cargo carriers and how they are reacting to a changing marketplace.

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ne of the prominent features of the European air cargo market, as for so much of the global airfreight market, remains the unwanted overcapacity that the industry seems unable to shake off. It is a feature of the business that continues to put pressure on yields and affect the profitability of so many markets.

“We see a steady increase of capacity all across Europe, whilst the demand is stable or even shrinking in some markets,” explains Lufthansa Cargo’s head of PR and internal communications, Andreas Pauker.

“Freight rate levels are consequently under pressure,” he points out, although he adds more positively: “With our strategy of ‘Cargo Evolution’ which includes new and innovative offers like ‘myAirCargo’ and our company-wide cost-efficiency-programme C40, we are convinced that we have found the right answers to those challenges.”

And a spokesperson for Air France KLM Martinair (AFKLMP) Cargo is even more definite: “Times are presently difficult for all the air cargo industry. There is a slowdown in activity from the Far East/Asia, especially China, and at the same time the lower deck capacity onboard widebody passenger aircraft continues to increase month after month, which is indeed bad news for all operators.

“The result is a strong pressure on yields and a decrease in load factors. All this constitutes a subject of concern for our industry,” he observes.

• A Lufthansa Cargo freighter on the apron at Johannesburg’s O R Tambo airport

• IAG has invested heavily in recent years in the infrastructure and equipment that support its premium product offerings, its Constant Climate Centre at London Heathrow being just one example

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The result on the part of the big European carriers has been to trim freight capacity wherever possible, better aligning it to shifting market demands. Pauker, for example, notes: “Lufthansa Cargo is permanently evaluating the demand situation and steers the capacities in line with the market needs.

“In recent months, we have added a new weekly freighter service from Frankfurt via Moscow Domodedovo to Ashgabat and Baku to our European network portfolio and, within Europe, we are operating freighters out of Manchester, Milan, Istanbul, Tel Aviv and Stavanger into our Frankfurt hub.

“Furthermore, we began selling the cargo capacities of the Eurowings long-haul fleet from Cologne to Miami (starting in

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ACW DailyNews September), Boston, Punta Cana, Puerto Plata, Varadero, Cancun, Mauritius, Bangkok and Phuket. We are also intensifying our collaborations. For example, since 12 July our customers from all European countries can use our joint venture with ANA to send shipments to Japan. Co-operative deals with Cathay Pacific and United Airlines will follow.”

AFKLMP Cargo has been forced to adapt its offering too.

“Faced like many of our competitors to this tough market reality, we took some important decisions a few years ago,” the spokesperson notes. “For example, we have very significantly decreased the size of our full freighter fleet to bring it back, from about 10 years ago, from an overall figure of 24 full freighters to the current five full freighters (two Air France Cargo Boeing 777Fs based at Paris Charles de Gaulle and three KLM-Martinair Cargo B747-400ERFs based at Amsterdam Airport Schiphol), with one B747-400BCF available as a ‘back-up’ aircraft.

“In doing so we have evidenced a wise ‘capacity discipline’ which in turn has enabled us to be more cost-effective and avoid unnecessary expenses in our cargo activities.

In line with this decision, we have also looked deeply inside our full freighter network, looking for cost-effectiveness and thus operating only the destinations which could effectively provide cost-effectiveness and revenue.”

• Unloading a Lufthansa Cargo MD-11F in Turkmenistan launched this summer and then a new direct B747F service connecting Luxembourg to Aguadilla, Puerto Rico, which started on 2 October.

IAG Cargo, the Anglo-Spanish freight combo, began offering

capacity on a new Madrid – Amsterdam Airbus A300 freighter service from 18 August, thanks to its shared capacity deal with DHL. Then, on 24 August, it also began offering freight space on a new A300F link between Frankfurt and London, operating via Paris (thereby increasing IAG Cargo’s freighter operation out of Paris to a twice-weekly operation) – also established through its agreement with the express services provider.

One other big European freight carrier – Turkish Cargo – has run into potential problems not of its own making at all, but has worked through manfully. As of a statement of 21 July, in the wake of Turkey’s president, Recep Erdogan, declaring a threemonth state of emergency in reaction to the attempted coup in the country of 15 July, Turkish Airlines confirmed that all operations and flights were “proceeding uninterrupted and will continue to do so”.

Better news has followed. For example, in August the freight carrier confirmed that it had received Center of Excellence for Independent Validators (CEIV) Pharma certification from the International Air Transport Association (IATA) for its Istanbul hub.

New offerings

But it has by no means been all about scaling back. Pauker at Lufthansa Cargo explains: “We want to give ourselves access to new customer groups and are focusing on introducing new services and products. Since 8 August, we have been offering myAirCargo, a solution for private customers for their freight transport needs.

“Furthermore, we are investing in the growing segment of e-commerce-driven transportation. For standard cargo, a new online offering will be available from September 2016. It offers the high Lufthansa quality at extremely attractive prices. This will be made possible by simpler background processes, booking via the cargo airline’s online channels only and a somewhat longer duration (of transit). As a result, the Lufthansa subsidiary’s new basic product will be suited to any shipments where the customer is happy to accept a transit time of three days more on average than available with the familiar td.Pro standard product, which will still be offered.

At AFKLMP Cargo: “After listening carefully to what our customers say, we decided to simplify our product portfolio, which appeared to be too heavy and varied, in order to better adapt it to the new market reality. The process is not completely finished but is on its way,” the spokesperson informs.

“The airline industry will continue to carry various commodities of all kinds by air, but some product trends are booming more than others. Pharma and express freight shipments are clearly on the up and AFKLMP Cargo has invested significant amounts in pharma logistics equipment and staff training; and, on the other side we have developed at CDG (‘Hub Express’), and tomorrow at Schiphol, state-of-the-art dedicated handling facilities for express and mail traffic.”

Looking ahead

And in terms of the future? “Lufthansa Cargo is leading the way when it comes to digitisation in airfreight,” Pauker insists. “We want to digitise our core processes and touch points with all of our key partners. We will thus increase quality, speed and efficiency within the transport chain. We are targeting the future potential offered by new technologies such as cloud solutions and we want to play a pioneering role within the entire industry in this area.”

And for the Franco-Dutch joint enterprise of AFKLMP the aim is to remain a “significant worldwide cargo carrier”, not necessarily in terms of quantities carried, but certainly in efforts to reach a high standard of quality provided which is expected customers. “Besides we are eager to listen to our customers’ needs and expectations in order to offer them the solutions and service they are looking for,” the spokesperson concludes.

Mixed picture

Other European cargo carriers are having varied fortunes. Cargolux, the continent’s biggest freighter operator, continues to expend its network, despite an ongoing turnover in its senior management structure. The development of its Zengzhou hub operation has been complemented by the addition of other destinations on its global network, including a weekly link to Ashgabat

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in partnership with

PLACI moving closer to reality Doug Brittin TIACA Secretary General

The International Air Cargo Association’s (TIACA) secretary general, Doug Brittin discusses PLACI and other hot topics on the agenda at the Air Cargo Forum. He also reveals what he plans on doing after his role at TIACA, as he looks towards his retirement at the end of 2016.

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ur Air Cargo Forum (ACF) is a unique platform that brings together experts from across the supply chain.

It provides a great opportunity for industry members to meet and discuss the important issues that affect everyone in the air cargo community, and to help shape our future.

This year we have a wide range of topics to cover, and are very pleased with the level of participation.

Although we have heard about and discussed the implications for Pre-Loading Advance Cargo Information (PLACI) for several years, it is now moving closer to reality.

With the European Union (EU) already in the process of implementing its version, much work remains to be done there to ensure a common

are transferred between carriers and others, let alone shipments crossing multiple PLACI regimes, adds to the complexity of the equation.

Industry would prefer to have these issues fully tested and sorted out prior to any permanent regulations being written, which could have a potentially negative impact on industry operations, and we are not there yet.

We, of course, fully support measures that will increase security across the globe, but all agree it should be accomplished through mutual co-operation and testing first, and will continue to encourage regulators to work closely with all members of the air cargo supply chain to ensure impending Advance Data regulations enhance security without impeding cargo flows.

Our Forum will also be an opportunity for shippers to bring their concerns about the

Global Advance Data standards need to be adopted as well, and TIACA is encouraged by the levels of collaboration we are seeing as we work towards a common goal applicability for each EU member state, and that will still take some time and close industry involvement.

Global Advance Data standards need to be adopted as well, and TIACA is encouraged by the levels of collaboration we are seeing as we work towards a common goal, but, as in the EU separately, we still have a long way to go to ensure all of these programs work together. The complications which occur when shipments

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changing air cargo supply chain into the limelight, with the Global Shippers’ Forum (GSF) and European Shippers’ Council (ESC) each hosting debates on quality initiatives and the need for closer collaboration.

Other sessions look at the on the Cargo Hub of the Future, Manufacturing Trends Shaping the Industry, and Disruptive Innovation, as well as workshops on the latest security and Customs regulations.

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in partnership with Many of these sessions will no doubt touch on the impact of the Brexit vote on our industry. While it is too early to speculate on what the actual implications of Brexit may be, the UK vote to exit the EU stirs up the already muddy global picture.

Other contemporary challenges to our industry include modal shift as well as miniaturization and on and near-shoring. 3D printing is here already, but most people don’t see it as a threat yet. It may change the demand for air cargo in the long term, but it will take time.

What is important is that we work together as an industry to deliver an efficient service, reduced transit times, and better communications among all segments to ensure we remain competitive in today’s digital world. Collaboration has never been more important and the ACF is a strong platform for us to do just that.

In times like these, we must also remember that change often act as great catalysts for businesses. They must become faster and sharper at finding efficiencies; they have to look for new solutions to maintain their share of a declining market; and they have to stay very close to their customers.

More often than not, they emerge from this period stronger and more innovative than before. That’s exactly what I expect to see happen to the air cargo industry as we work together for a brighter future.

Finally, it has been an absolute pleasure to be a part of TIACA these past years, working toward our goals of ensuring a secure, yet viable future.

especially in the global regulatory arena, which itself is becoming increasingly complex and inter-related.

We’ve continued to add new members in a time when industry conditions warrant a close look at how money for such activities is spent is even more closely monitored.

Our Forums and Executive Sessions have received strong praise for the high level of topical and relevant content.

And although we’ve heard of it for a long time, I feel that we have done a tremendous job in ensuring that complicated ideas that have evolved from ACAS to a global PLACI, have not been implemented without the engagement of industry leadership. Holding off until we get it right, is by far the most important thing we have done.

I plan to retire in Colorado, and enjoy the great outdoor life of hiking, skiing, golf and tennis it affords, spending time with family (especially my two lovely granddaughters) and friends, and

What is important is that we work together as an industry to deliver an efficient service, reduced transit times, and better communications among all sectors We have come a long way in the past few years, building upon the solid foundation and reputation TIACA has established in the past.

We’ve become a recognised global leader and voice of the full spectrum of industry interests,

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traveling for the sole purpose of enjoyment!

I would like to thank all of you for the support you have given to TIACA and its mission. I hope to see you at the ACF, or that our paths will cross between now and the end of the year.

ACW DailyNews

A world of opportunity awaits Graham Newton explores the challenges in implementing the electronic air waybill (e-AWB) and the prospects for the industry if paperless air cargo processes are properly established.

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n average, the air cargo sector generates nine per cent of airline revenues, according to the International Air Transport Association (IATA). And while industry profits are on the up, by most business standards they are still wafer thin.

Extracting the greatest possible value from air cargo is therefore vital. Key to this effort is implementation of the electronic air waybill (e-AWB) – which replaces the paper AWB with an electronic contract of carriage between the freight forwarder and the airline – and various initiatives that comprise the e-freight suite.

Once e-freight is achieved, time and cost savings, together with

GLYN HUGHES

burgeoning trade volumes, could generate benefits for the entire air cargo supply chain that run into the billions of dollars, a World Economic Forum study estimates.

Cathay Pacific, an early adopter of electronic documentation, experienced a 19 per cent gain in productivity at its Hong Kong hub, thanks to the switch from paper processes. IATA calculates fully functional e-freight could drive productivity in an airline’s import, export and accounting functions by about 50 per cent.

The need for investment

Despite these headline-grabbing figures, the first step on the path – the e-AWB – is proving troublesome for the industry at large. Glyn Hughes, IATA’s global head of cargo, says the current forecast is for about 45-46 per cent adoption by the end of 2016, significantly short of the 56 per cent industry target.

“We often talk about how complex air cargo is and e-AWB adoption sadly reflects this reality,” he says. “There are many different players involved, with different systems, standards and processes, and it is always a challenge for alignment and harmonisation. There are additional challenges when it comes to securing investment, as the last few years have been very much focused on taking costs out. The industry has been faced with decreasing yields and downward pressure on revenues.”

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Worldwide Information Network (WIN) managing director, John DeBenedette argues that it is also a question of desire as much as technology or investment. “We can all stream gigabyte videos on our phones, yet we are paying almost a dollar on a per character basis to transmit a short text message representing an AWB to a partner across the airport,” he exclaims. “This state of play and lack of offerings siphons away our ability to invest in modern cloud and web-service based paradigms that power the booming digital economy in business-to-consumer (B2C) and other business-to-business (B2B) sectors.”

There are no real regional differences in e-AWB adoption to report. There are administrative difficulties in removing paper in parts of Asia and South America, for example, but other regions are not storming ahead either. The ratification of various treaties, Montreal Convention 1999 in particular, is vital in this respect, which is understandably a time-consuming process.

And just as each region has its share of successes and challenges so, too, do the various business models. The only exception to date are the integrators. Their express product was established on fast moving freight and information and built from the outset around digital information.

Hughes contends a critical turning point in e-AWB adoption may be at hand. Many groups are working together to

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ACW DailyNews accelerate the current situation and IATA is supporting these efforts with the launch of the eAWB360 initiative to fast-track e-AWB penetration at the top 50 e-enabled airports. Swiss WorldCargo head of transportation processes, Christine Barden says the initiative “marks another important milestone on the front of paperless cargo”.

Unisys vice president of logistics solutions, Christopher Shawdon also prefers the positives.

“The largest forwarders and leading carriers have achieved a great deal,” he believes. “The average global penetration rates, measured by IATA, of the top 20 forwarders working with airlines using the Unisys cloud cargo system, is over 87 per cent. Compare that with the industry as a whole, which is below 40 per cent on lanes which could do e-AWB, and several findings become clear. The big forwarders and

in partnership with leading carriers see the value of synchronising their supply-chains. They have the technology to integrate, and industry standards are there to do so. The big issue is getting all forwarders and carriers to see the same potential.”

The e-AWB process should reduce acceptance times, increase regulatory compliance, increase data accuracy and thereby the quality of invoicing, and reduce operation costs for both the carriers and the shippers. “It would improve competitiveness of air cargo compared with other modes,” Shawdon summarises.

Moving on from the e-AWB

Digitizing the remaining 20 shipping and trade documents comprising e-freight will stand on the shoulders of the work done to implement the e-AWB. Again, there are roadblocks to navigate

around. Though a unified vision for e-freight exists, the air cargo world remains very local at heart. The cargo community at an airport can be organized in myriad ways, with each player having a greater or lesser role. In some, for instance, airlines may be driving e-freight projects, while in others Customs authorities or a major forwarder may be the torchbearer.

E-freight implementation, therefore, is a laborious document-by-document and case-by-case effort. There are a lot of partners and a lot of paper so never going to be a quick win.

The flip side is a younger generation are taking the reins in the industry. Technologically-savvy and brought up on the touch of a button rather than the push of paper, they are changing the mindset.The work of the Global Air Cargo Advisory Group (GACAG) will also prove important. It has established three core components in paperless transformation. The first involves engaging with regulators and governments to support electronic operations and thereby grow the e-freight network. The second is digitise all necessary documents to ensure airport-to-airport paperless journeys while the third takes the industry beyond the airport parameters and completes a paperless door-to-door journey. All commercial and special cargo documents accompanying air cargo today, in or out of the cargo pouch, would be digitised.

IATA has continued to develop associated messages for each of the commercial documents to support this laudable aim and Hughes describes e-freight as “a door opener to much greater efficiencies and modernized practices”.

He adds: “Advance cargo information is being requested by more regulatory agencies around the world and, coupled with the need for operational information required by ground handling agents and transport providers, a world of opportunity awaits when paper is eradicated. An industry that embraces digital information can then apply operational analytics and dynamically measured key performance indicators, such as those developed by Cargo IQ, the members of which already monitor over 10 million lines of data every month.

“Digital information is a necessity for an industry that prides itself on being agile and dynamic, evolving to meet increasingly sophisticated demands of the shipping community.”

JOHN DEBENEDETTE

The benefits of going digital The move from paper to digital processes often highlights the cost and speed advantages of the latter. It is certainly true that there will be a decrease in the costs associated document processing and document transportation. And the ability to send and receive detailed shipping information in advance of the cargo is expected to reduce the door-to-door delivery times by up to 24 hours.

But there are other important factors at play too: • Quality and reliability: The ability to receive the shipper’s data directly into the forwarder’s system (auto-population) allows

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one-time electronic data entry at point of origin, reducing delays to shipments due to inaccurate or inconsistent data re-entry • Visibility: electronic documents are more easily archived and retrieved, facilitating track and trace functionality and real time visibility of the shipment.

• Simplicity and regulatory compliance: As supply chain stakeholders adopt electronic processes and messages, the movement of air cargo movement will be simpler to execute leading to superior regulatory compliance.

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How has business been so far in 2016 and what are your expectations for the rest of 2016?

The cargo industry is still faced with significant overcapacity, resulting in severe pressure on yield. We have continually adjusted our capacity to market demand, pursuing the same

in partnership with questions answered by ...

ALAIN MALKA AIR FRANCE CARGO EXECUTIVE VICE PRESIDENT

Air France Cargo has been restructured over the last few years, and like many in Europe, battled with overcapacity. However it is back on track, fuelled by investments in digitisation and facilities. James Muir spoke to executive vice president, Alain Malka. policy of capacity discipline we have applied since 2011. Our full-freighter profitability has improved considerably and should reach break-even by 2017. The year to date has been successful, with the strengthening of the North Atlantic joint venture, our CEIV Pharma certification, key investments in digital innovation, a brand-new cargo terminal at New York JFK, and a new focus on express, with the CDG Hub Express facility opening last year.

How do you see AFKLMP performing in the longer term?

Cargo revenues are key for the Air France KLM Group and our goal is therefore to maintain our significant contribution to the overall results. We have already finalised an ambitious five-year investment plan for digital innovation, amounting to several million per year during the 2015-2020 period. This will result in more efficient operations, a new system for inventory and revenue management, as well as new customer services such as a booking engine, portal, brand-new track & trace technology, and automated real-time push-message solutions. We lead the way in e-AWB acceptation and in e-freight. Our hubs in Amsterdam and CDG are ranked 1st and 2nd by IATA in terms of e-AWB volume, with e-AWB penetration in excess of 65 per cent.

We are not only investing in digital innovations, but also working on brand-new facilities at Schiphol and reengineered ones at CDG. Our development will also benefit from strategic partnerships such as the North Atlantic joint venture. We will also be improving our fleet’s efficiency by introducing new aircraft, such as the B787 Dreamliner and A350-900. In terms of product portfolio, we’re striving for greater simplification, which means fewer products that are easier to sell and produce. For this to succeed, dialogue with freight forwarders will be essential.

In what business sectors is AFKLMP seeing the most growth?

We see great potential in pharma, express and other high-value domains like Secure, of course, but our new product portfolio will also focus on general cargo. There is a market for it and room for improvement and new services. We are also engaging with the freight forwarding community. Not just the major players, for whom we will be developing IT-API solutions to ease connections between our booking and tracking systems, but also local specialists, for whom we’ll be investing in ease of business and better rewards. We’ll be offering them new services such as ‘Quote & Book’ (which gives a full week’s overview of inventory and pricing options), enhanced commercial opportunities and rewards, as well as a strong customer presence.

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How is the Perform 2020 program progressing? Is the fullfreighter business still on target for breakeven in 2017?

We have successfully cut costs in recent years (e.g. over 12 per cent in 2016), without giving up our assets. We still have a strong

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realms of traditional shipping. It is about initiating new business flows, as we are doing in Africa with our air-road solutions. It is about leveraging the Air France KLM brand and promoting specific businesses. For instance, by working closely with freight forwarders, Paris-Rungis consignees and the Mexican Export Bureau, we managed to double the tonnage of fresh products we ship from Mexico over the course of two years. New business developments of this kind help and motivate everyone. They demand an in-depth understanding of the business.

commercial presence worldwide, as well as a comprehensive and balanced network, offering main-deck options, and we’re continually investing in IT and facilities, as already mentioned. This enables us to minimise the impact of the general decline in yield.

As a result, we expect our full-freighter operations to break-even in 2017, thanks to an optimised use of this specific fleet.

How have customers benefitted from extending your relationship with Delta Cargo as part of the North Atlantic joint venture?

Our North Atlantic joint venture ensures that we can offer more routes and services: 250 transatlantic flights a day, plus vast trucking networks both in North America and Europe. That means customers get more options in terms of routing and pricing. Our customers in France, Germany, Belgium and the Netherlands are benefitting from our unified commercial teams and, at many stations, handling facilities under a single roof.

How have investments in premium products such as pharma and e-commerce affected business?

Because pharma is a key commodity for Air France-KLM-Martinair Cargo, we have invested intensively in this segment in recent years, obtaining IATA CEIV Pharma certification for our two hubs and their respective operating carriers, diversifying rental arrangements for specialised containers for transporting temperature-sensitive products, such as vaccines and insulin, and investing in facilities and processes for our global pharma network. Given our group’s longstanding experience in this segment and our ambition to transport pharmaceuticals successfully in future, we consider continuous improvement and innovation a necessity to safeguard the quality of time- and temperature-sensitive shipments from end-to-end. These investments have enhanced our credibility as a key player in this niche market and

General overcapacity is the main challenge we face. We are a key player in the cargo industry and will continue to strengthen our presence worldwide. In addition, we’ll be developing opportunities by way of innovative digital solutions, revenue optimisation and new, smart ways of engaging with our customers. We will be going the extra mile to offer added value and go beyond the

Where do you see the air cargo industry in 10 year time?

It will definitely be more digital, but also more reliable and more flexible, in terms of pursuing one-off business opportunities as well as cargo flows that change regularly, such as pharma.

We will have successfully developed new business models that temper the traditional yield-down game and guarantee a fair price for our business.

And we will be more closely connected with our customers and providers.

have broached new revenue streams. These efforts have been acknowledged by our customers, which has safeguarded our pharma yield. We have seen pharma revenues over-performing by six points across portfolios. Express is also over-performing, but to a lesser extent. We are currently working on various local campaigns to promote this premium product.

How does AFKLMP benefit from co-hosting the TIACA ACF? TIACA ACF allows us to team up with our partner Paris Aéroport in promoting the strengths and development potential of CDG, which is still Europe’s number one airport for cargo (in tonnes handled). It also allows us to demonstrate that both our hubs, AMS (Europe’s third-largest cargo hub) and CDG, are continually growing in the cargo domain. In a sense, it allows us to reconfirm our long-term commitment to the cargo industry.

What are the biggest challenges and opportunities facing AFKLMP?

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ACW DailyNews

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Major express players investing to grow The airfreight express marketplace has been thrown on its head with the takeover of TNT Express by FedEx. Mike Bryant takes a look at market developments.

• This DHL B767 freighter was on a special mission – to carry two pandas from China to a Belgian zoo

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his year has brought challenges and change to the world’s big three integrators – DHL, UPS and FedEx. Perhaps the most notable development has been FedEx’s acquisition of TNT, a deal completed in late May. The stuttering performance of the global air cargo market has also hit the integrators’ airfreight businesses. Deutsche Post DHL said in August its freight forwarding arm had been hit over the preceding quarter by a “still weak market environment”, while in late July UPS reported weak prevailing conditions in the airfreight market over the previous quarter.

Nevertheless, UPS chairman and chief executive, David Abney countered the answer was to continue to invest in the UPS global network, new technologies and capture new revenue in highgrowth markets.

The big express service providers operate their own forwarding divisions, and continue to invest in new aircraft, routes for their freighters and ground infrastructure to support airfreight forwarding and express operations. In August, UPS broke ground on a $300 million development of its Louisville Centennial Hub; close to its hub at Louisville International Airport.

UPS has invested in its Worldwide Express Freight service. In August it added nine new countries to the service’s network, supplementing eight other countries added over the preceding year. The service is for urgent, time-sensitive and high-value shipments - carried on the UPS worldwide air network.

FedEx has invested in new freighter connections. It got the green light from the US Department of Transportation in July to operate cargo flights to Cuba and will become the first all-cargo carrier to operate scheduled services in January next year, when it launches daily Monday to Friday B757-200SF services between Miami and Matanzas.

Sourcing capacity additional to its own freighter fleet has also been on the FedEx agenda. In late August, Atlas Air Worldwide Holdings confirmed it had agreed a deal with the integrator that will see Atlas provide it with five B747-400 freighters during peak flying seasons from 2017 to 20121. Atlas has long provided FedEx with freighter services but this agreement represented the first time such a

aircargoweek.com

long period – five years - had been agreed.

DHL has been looking to source freighter capacity, to add new maindeck cargo lanes. In August it launched B737-400F services between Phnom Penh and Bangkok. The 19-tonne capacity freighter flies five times a week, and supplements the pre-existing DHL Express flights between hubs in Bangkok and Singapore.

In terms of adding new maindeck capacity, in July, DHL Express inked a deal with Elbe Flugzeugwerke (EFW), a joint venture of Airbus and Singapore’s ST Aerospace, for the A330-300P2F (passenger-to-freighter) conversion. EFW will convert four A330-300s to a 26-pallet freighter for DHL.The first will join by the end of 2017.

The aircraft is set to “address an important requirement within our global aviation fleet for mid-range, high volume cargo aircraft”, according to DHL Express senior vice president global fleet management Geoff Kehr.

Investment in infrastructure to support air operations has been a priority for DHL. In late summer, DHL Express opened an expanded Auckland Gateway to better support trade. The new $11.1 million facility doubled its capacity.

E-commerce may change the airfreight industry – certainly the expectations of customers in terms of timely delivery. This trend is set to affect express service providers’ business even more so than any other air cargo carriers’. DHL believes B2B cross-border e-commerce is now worth $400 billion, but will rise to $1 trillion by 2020. According to DHL eCommerce chief executive officer, Charles Brewer: “There is barely any other industry that provides such a promising outlook than the e-commerce business.”

Massive opportunities are available and express providers seem uniquely placed to satisfy, as they have global distribution networks and large asset bases geared to rapid delivery of parcels and freight. Yet, there are dangers too.

When it became apparent Amazon was to operate its own freighter fleet there was discussion of Amazon and other retailers moving in on the traditional preserve of the integrators.

The furore over this potential step-change has since calmed and, indeed, for some it always was something of a phantom challenge. However, time will tell if the traditional preserve of the integrators for door-to-door express delivery will be retained.

ACW DailyNews

ACF - how the exhibition was constructed Construction of exhibitor stands yesterday at the 28th International Air Cargo Forum & Exhibition in Paris was something to behold. An army of workers speedily and efficiently put together the array of innovative booths in time for the opening today at the Paris Expo Porte de Versailles.

Making sure everything is in place and ready by the time the show opens and visitors flock through the gates, is what exhibition organisers do many times a year and it was timed to perfection.

Frankfurt Airport is the busiest cargo hub in Europe, handling 2.1 million tonnes in 2015, and is set to be a major attraction for key players in the air cargo market.

These stands will be a hive of activity when industry professionals come together and talk business during a busy couple of days.

The eye-catching WFS, Amsterdam Airport Schiphol, the ECS Group and Air Charter Service stands gradually come together.

Exhibitors have come far and wide, including from as far as Hong Kong (right).

Singapore Changi Airport’s stand is one of the biggest and is set to be a hub for networking.

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