ACW daily 27th October 16

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DA ILY NEWS Thursday • 27 October 2016

The official daily newspaper of Air Cargo Forum 2016

Pledge for a bright future

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irfreight chiefs pledged to collaborate more to ensure a more efficient and safer supply chain on the first day of TIACA’s Air Cargo Forum in Paris yesterday.

Delegates in the opening plenary heard TIACA secretary general, Doug Brittin, International Civil Aviation Organization (ICAO) secretary general, Dr Fang Liu, and World Customs Organization (WCO) deputy secretary general, Sergio Mujica given their commitment on cooperating to secure a bright future for air cargo.

Delegates also heard he airfreight industry must digitise and works towards a paperless environment to ensure competitiveness, notably for e-commerce, while advanced screening technologies are also vital to make sure there is an efficient and secure network.

Brittin says: “We are living in a period of great transition for our industry, and collaboration among all members of the air cargo community has never been more important.

“Together we can work towards a common goal to ensure that new legislation does not impact air cargo flows, as well as to find solutions to ongoing challenges such as cargo delays,

Cargo to rise 4.2% Cargo traffic in revenue tonne kilometres is expecting to grow by 4.2 per cent by over the next 20 years, Boeing Commercial Airplanes predicts in its World Air Cargo Forecast.

In a presentation yesterday at TIACA’s Air Cargo Forum, vice president for marketing, Randy Tinseth, says tradelanes with an emerging economy on one end will see the strongest growth.

Boeing predicts 930 new freighters will be needed worth $270 billion, with half coming from replacements, such as early 747-400s, classic 747s and MD-11s being retired and the other half from the market growing.

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restrictions on the transport of lithium batteries and the impact of big data on our industry.”

Mujica feels efficiency and success is “all about coordination” but says “nobody likes to being coordinated”. He also explains the WCO is aware that Customs can be “an obstacle” if it cannot be modernised.

He notes the two biggest challenges are Pre-Loading Advance Air Cargo Information

(PLACI) - in working together to solve some of the operational problems and the e-commerce boom, which is proving especially challenging for air cargo.

ACF was opened yesterday by TIACA chairman, Sanjiv Edward; ADP deputy chief executive officer, Edward Arkwright; and AFKLMP executive vice president, Alain Malka (pictured above).

GSF and Cargo iQ sign quality MoU

The Global Shippers’ Forum (GSF) and Cargo iQ have signed a memorandum of understanding (MoU) to implement the latter’s Quality Management System (QMS) and promote sustainability in the air cargo supply chain.

The MoU, which was signed at TIACA’S Air Cargo Forum in Paris on 26 October, is designed to promote Cargo iQ standards, share information and best practices, identify and promote ways performance data can be better accessible for customers, and share details of forthcoming events where progress can be reviewed.

GSF secretary general, Chris Welsh MBE says: “Our new cooperation with Cargo iQ will make sure industry performance standards meet shippers’ needs, and also help shippers understand the improvements the air cargo industry is making.” Welsh signed the MoU with Cargo iQ executive director, Ariaen Zimmermann.

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Brussels launches airside pharma

Brussels Airport launched its Airside Pharma Transporter at the Air Cargo Forum yesterday, which has been developed to solve issues airside for pharmaceutical cargo.

Brussels has acquired four dollies that can be rented by operators at the airport through a booking system.

The gateway and its cargo community collaborated to develop the dolly.

The dolly has solar panels, and can be used for 36 hours in the summer and 24 hours in winter. It is for lower deck usage and the temperature can be set from +5 to +25 degrees Celsius.

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Hactl improving efficiency to help customers

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hile Hong Kong International Airport (HKIA) starts constructing its third runway, Hong Kong Air Cargo Terminals (Hactl) is working on making its processes more efficient for customers, chief executive Mark Whitehead (pictured) tells Air Cargo Week (ACW).

Speaking at The International Air Cargo Association Air Cargo Forum in Paris, Whitehead explained to ACW it is working on efficiency.

He says over Hactl’s 40-year history it has always strived to meet customer needs such as changing hours when freight forwarders can deliver or pick up cargo.

He says: “We have recently changed the hours when a freight forwarder can deliver the cargo or pick that cargo up from Hactl

and shaved off two hours.

“He can now deliver cargo three hours before the flight departure so that allows him to consolidate in his warehousing, be more efficient in consolidating and then delivering to us.”

Whitehead says Hactl is constantly enhancing IT capabilities with apps to assist people in way they operate, noting: “Truckers that have a mobile phone can have an app to give them information when the flight that they are meant to be meeting, when its arriving, where their truck will be so they can drive straight in, take receipt of cargo and drive out.”

He says the aim is to load cargo on an aircraft as quickly as possible: “We don’t want it sitting there for two days, if that’s what people want then it can happen, but that’s not what its intention is. We are always looking at speed through the terminal,” he adds.

Turkish receives CEIV certificate The International Air Transport Association’s head of cargo, Glyn Hughes presented Turkish Airlines officials with the Center of Excellence for Independent Validators’ (CEIV) Pharma certificate at the Air Cargo Forum yesterday.

A ceremony was held at the Turkish Cargo stand where Hughes was joined by key figures at the carrier.

IATA’s CEIV certificate covers not only the freight arm Turkish Cargo, but also for bellyhold operations on Turkish Airlines’ services and for all its pharma facilities it operates at Istanbul Ataturk Airport.

Turkish Airlines senior VP of cargo, Seref Kazanci says gaining CEIV means customers can have the “confidence that their sensitive cargo will be handled at every stage in the process – in accordance with the very best practices”.

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Asia on the up after tough start to 2016 Michael Mackey reports on how Asia is fairing and what air cargo operators are doing to improve their bottom lines and adapt to the new norms.

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sian airlines are using a variety of niches to deal with a market generally described as challenging, industry sources have told Air Cargo Week.

Air cargo volumes for Asian airlines in July 2016 grew by 3.9 per cent as measured in freight tonne kilometres (FTKs), according to industry trade body the Association of Asia Pacific Airlines (AAPA).

Offered freight capacity increased by 3.4 per cent in July, leading to a 0.4 percentage point increase in the average international freight load factor to 62.1 per cent. Asian airlines have seen relatively weak market conditions for international air cargo during the first seven months of the year, with year-to-date demand registering a 1.5 per cent decline compared to the same period a year ago, it added.

“We have seen a modest pickup in air cargo volumes during the past couple of months, but overall cargo revenues remain depressed as a result of significantly lower yields which have fallen by around 15 per cent compared to last year. Air cargo operators are focused on cost containment by carefully managing capacity deployments, with still weak demand for dedicated freighter services given the steady growth in passenger aircraft fleets and associated belly cargo capacity,” AAPA’s director general, Andrew Herdman explains.

There are three twists in this. One is a striking illustration of how growing airlines supplemented by even more growing low cost carriers’ complicate life for airlines, but not for facilities such as airports keen to take the opportunities more flights offer.

“Examples of routes that have seen an increase in bellyhold capacity are those between Singapore and South Asia, with Indiabased airline Jet Airways’ recent change to a widebody aircraft, and Scoot starting services to the Indian cities of Chennai and Amritsar in May 2016,” notes Changi Airport Group’s assistant vice president for the cargo & logistics development division, Phau Hui Hoo. This is an extra resource for logistics companies and facilities as she acknowledges. “In fact, we have seen some initial results with Changi’s South Asia market growing steadily in the first half of 2016.”

The second is specifically South East Asian rather than all-Asian.

This past year, the ten members of the Association of South East Asian Nations (ASEAN) moved towards becoming an eco-

ANDREW HERDMAN

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nomic community with freer trade between them including air transport. “Over capacity in/out BKK due to open sky policy,” was cited by one Thai Airways official for weaker cargo results.

The third comes from Hong Kong-based Hactl where there is a permanent challenge in attracting new staff to the out-of-town airport against better-paid and less demanding jobs in Central, Hong Kong’s glitzy business district, according to Mark Whitehead, Hactl’s chief executive.

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ACW DailyNews Another Hong Kong twist is “the short-term challenges of working at an airport that is near full capacity, until our third runway is open” says Whitehead, adding this gives it the problem of remote parking and limited night-time work windows.

Nor is the future likely to be much different or less ‘challenging.’

Trade flows remain weak reflecting an uncertain global economy and the joint problem of overcapacity ensuring cut throat competition on rates complicates matters still further and is set not just to remain stubborn and worsen as carriers grow.

None of these are entirely new although several sources pointed out last years figures especially first half result were probably lifted by the port dispute at West Coast ports in North America whereas this years figures, even with growth, won’t have that boost however mild.

“Cargo figures for Sept-Dec 2016 are not expected to increase higher than in Jan-Aug 2016” an official with Thai Airways International says, as the end of season rally which traditionally was profit is seemingly no more.

More telling still is the response of Japan Airlines. “We expect almost same demand as last year for the rest of 2016,” says Yosuke Takano, assistant manager for international route marketing for cargo and Mmail. “We have carried about 195,270 tons from January to August in CY 2016, which is 96% compared to last year,” he adds.

Such a tight situation is seeing any number of carriers and facilities focus on existing strong points and growth spots – which the market does have: “Our top segments are perishables, express, pharmaceuticals, aerospace parts, and live animals. There has been healthy growth for niche segments such as pharmaceuticals

MARK WHITEHEAD Express South Asia Hub and SATS eCommerce Hub. “DHL’s 24-hour express facility will be able to support five times more flights in Singapore and three times more tonnage per day. SATS will be the first ground handler in the world to own such an airside facility, with automated processes for single scanning and sorting to save cargo processing time and increase efficiency,” says Phau.

Longer term there are also plans for dedicated facilities for

airfreight and air express services to be developed as part of the Changi East development.

Whilst this shows is the advantage of an economically activist government who plan there are concerns about how policies, or the lack of them, elsewhere impact the air cargo market.

In the first category is Japan where the strong yen is causing concern: “More than a half of our cargo revenue is earned from our sales office overseas. Current exchange rate of JPY is much stronger than we expected and it has affected our revenue on JPY based. But we still strive to achieve our original target by looking for new demands,” explains Takano.

It has also moved the Cargo Department’s Asia and Oceania headquarrters to Bangkok from Tokyo to enhance marketing.

“We strive to gather as much as information from the front line,” adds Takano - strive one suspects will be the industry motto for the coming years.

Conversely the issue in Thailand is not so much the usual concerns over the economy such as fuel costs, overcapacity, possible world recession and policies, which restrict trade but the lack of a government policy to protect the aviation sector.

Air cargo operators are focused on cost containment by carefully managing capacity deployments, with still weak demand for dedicated freighter services and perishables – For the period of January to July 2016, Changi Airport moved 14,000 tonnes (+22 per cent) of pharmaceutical cargo and 155,500 tonnes (+13 per cent) of perishables,” says Phau.

To this list can be added e-commerce very much in everybody’s sites but especially so in China: “The most attractive prospect is the e-commerce sector, which is very active throughout Asia but particularly vibrant into China, as comsumers buy more and more online,” says Hactl’s Whitehead. “We are actively engaging with airlines and forwarders involved in this sector, and assembling a suite of support services, through our value-added logistic arm HACIS, to enable them to maximise.”

One of the ways Japan Airlines captures value here is J LINK, a service connecting international and domestic flights at Haneda.

For example for an intact ULD has a connection time of 1.5 hours between international flights and 3.5 hours between domestic flight and international flight.

To build on its strengths Changi has launched, a community of partners whom it will support to get the International Air Transport Association’s Center of Excellence for Independent Validators on Pharmaceutical Handling (CEIV Pharma) certification and is also boosting its position an e-commerce hub.

This means towards the end of the year, Changi, already the airport with the most will see two new facility openings – DHL

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The ‘big three’ carriers in the US reacting to market Falling yields have hit the US air cargo industry, while other factors have had an impact. Mike Bryant reports on what carriers are doing.

• Seafood is just one of the many types of perishable product flown by United Cargo

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he big American cargo carriers, and they don’t come any bigger than United, Delta and American, are enjoying some good times of late – at least, by comparison, with what went previously. Of course, while the fall in fuel prices has helped to cut costs, the situation is still less than perfect.

United Cargo’s vice president for sales in the Americas, Jim Bellinder explains: “United Cargo’s business is in very good shape right now, even though there’s no doubt the yield environment continues to have a substantial impact.

Demand growth is sporadic while capacity growth is constant – with long-idle freighters flying again due to low fuel costs and the steady increase in passenger travel serviced by new cargo-friendly passenger aircraft.

“But United Cargo’s story is a positive one, even in this challenging market. Our year-overyear percentage gains in CTMs (cargo ton-miles flown) have increased each month since April, and our July worldwide cargo volumes were up

Latin American and Asia-Pacific.”

Modifying available capacity to try to best balance supply with demand is an ongoing issue for all carriers, especially as their networks expand.

“In managing the cargo business of a passenger airline, we recognise that passenger business potential will be the primary element in United’s decisions to add new cities to the network, to increase frequencies, upgrade equipment, and so on,” says Bellinder. “However, cargo has a ‘seat at the table’ in these discussions, and at times cargo’s contribution is a significant factor in determining whether a route or upgauge will be profitable.”

And adding new destinations and new aircraft types at the behest – of passenger-related considerations can benefit freight customers, too.

“Our fleet upgrades will have a major impact on our capacity in North America,” observes Joyce.

“We have several new widebody flights coming into our system with the A350, along with additional A330 aircraft that come with strong cargo uplift capabilities. We have also increased our domestic cargo capacity with the reduction of some 50 seat regional jets.”

Value-add

JIM BELLINDER 10.1 per cent over July 2015. A major differentiator is our operations performance, which continues to improve as verified by key metrics.”

Available freight space is also an issue for fellow US freight carrier Delta. “There is much more capacity in the market this year compared to last, so industry-leading products and exceptional service are more critical than ever,” informs Delta Cargo president, Gareth Joyce.

“We are focusing our investments on enhancing these offerings.

“Additionally, we continue to drive incremental opportunities with our significant domestic narrowbody and widebody lift. As for exports, we have a large focus on opportunities to all global regions with our strong lift to Europe,

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It’s not all about fleets and networks. US cargo carriers are also seeking to differentiate their products and offer high levels of value to freight clients.

At Delta, Joyce remarks: “My team and I are working to lead a shift in Delta Cargo that will position our logistics offering among the best in the business. That starts with an understanding of what our customers need. I have been visiting with cargo customers to help build our business around their needs. The feedback has been consistent – high quality and predictable performance at competitive prices is a winning formula.

“Our challenge will revolve around the increased capacity in the market for exports, along with the trucking network for domestic volumes. But, by differentiating our product and ensuring that the same customer service Delta is known for on the passenger side is experienced by our cargo customers, we will build a brand that is more competitive.”

For United: “A key to maintaining our positive trend throughout 2016 and into next year is continuing to develop our value-added

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• United Cargo offers its dedicated TempControl product for flying temperature-sensitive shipments

in partnership with products,” says Bellinder. “We’ve won major awards for, and achieved sizable growth in, our TempControl product for pharmaceuticals and other temperature-sensitive commodities and our PetSafe service for live animals. We’re also focused on enhancing our EXP express service, QuickPak and QuickPak International small package service, TrustUA for funeral shipments and UASecure for highly valuable cargo.

“We plan to upgrade these products in the same manner as we have with TempControl – by listening to what our customers say they need and tailoring our advancements to whatever will serve them best.“ Bellinder is upbeat about future prospects.

“From what our customers have been telling us, we have hopes that we will see an upswing in volumes as we work toward the end of the year.

We don’t expect anything like what used to be the traditional peak cargo season prior to the holidays, and there are too many unpredictable factors to say whether the increased volumes will be enough to equal capacity growth, but I’m fully confident that United Cargo is well positioned to capture our share of any increased business that emerges.”

Investments

While the cargo business for North American carriers remains difficult – as it does for airlines right around the world, thanks to today’s overcapacity on so many sectors – it is not stopping the likes of another of the big US airlines, American Airlines Cargo, investing heavily in its networks, fleets and products, explains managing director global and key accounts Roger Samways.

Right now, American is in the midst of a massive fleet restructuring programme that is taking in the acquisition of no less than about 1,000 narrowbody aircraft as well as the introduction into service of new widebodies on an almost monthly timeline.

The new widebodies – B777-300s, B787-8s

and -9s and A350s – represent a huge increase in capacity for the cargo wing of the carrier.

An American B777-300 has carried a huge 45 tonnes of cargo on the long-haul Los Angeles – Heathrow sector as well as a full passenger load, while the B787-8 represents double the freight capacity of the B767s that this model and the other new widebodies are generally replacing.

The 787-9 offers greater capacity than the -8.

Network expansion

Alongside the fleet overhaul has come network expansion. New routes to locations such as Sydney, Auckland and Tokyo-Haneda have expanded American’s reach. Many new lanes are being opened up to Asia, with American having been well covered in terms of its traditional Latin American connections, while the integration of US Airways in 2014 brought many new European links into the American fold.

“The cargo side of the business very much has a role to play when decisions are made on new routes and the aircraft that will operate them,“ Samways confirms. Freight can represent as much as 20 per cent of the revenue on some lanes, he points out.

American has also invested heavily in certain specialised freight offerings, Samways observes.

For example, the ExpediteTC cool-chain pharma product it introduced about eight years ago has been steadily expanded and improved, and has proved a great success.

American’s Philadelphia station is about the biggest and best pharma facility on the East Coast, Samways suggests, while other stations across the US and further afield, from San Juan to Heathrow, have been developed as key handling stations in the ExpediteTC cool chain.

Alongside investment in ground facilities for pharma has come investment in training and equipment, says Samways: “That is why we’re seeing the growth in this product and why we envisage this trend to continue in the future.”

The cargo side of the business very much has a role to play when decisions are made on new routes ROGER SAMWAYS

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ACW DailyNews

The sector of opportunity The pharmaceuticals market is growing and this is only set to continue. Michael Mackey looks at challenges in meeting high demand.

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MARK SUTCH

ne of the bright spots in the air cargo industry at the moment is pharmaceuticals – with the general view that despite some specific problems there is more growth to be had by carriers who resource the trade properly.

“In 2015, Changi Airport moved 22,000 tonnes of pharmaceutical cargo, a 45 per cent year-on-year (YOY) increase. This rep-

resents a 5-year compound annual growth rate of 12.9 per cent.

In the first seven months of 2016, pharmaceuticals continue to post a robust growth of 22 per cent,” notes Changi Airport Group assistant vice president for the cargo & logistics development division, Phau Hui Hoo. It is not alone though. Asia’s other great hub, Hong Kong and especially Hactl is also reporting sharp growth “Pharma traffic through Hactl has tripled in five years,” explains Hactl’s chief executive, Mark Whitehead.

A more revealing comment comes from Hong Kong de facto national carrier Cathay Pacific. “In 2015, Pharma LIFT accounted for 14,000 tonnes of cargo; an equivalent to over 300 million HK dollars ($38.6 million) in terms of revenue,” says the carrier’s general manager for cargo sales and marketing, Mark Sutch.

Cathay’s pharma lift tonnages grew by over 58 per cent, com-

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pared 2015 against 2011, while 2015’s growth against 2014 was at over 26 per cent, Sutch says, adding it is “anticipating a growth rate similar to that of the industry’s expectation at +6 per cent.”

More than 70 per cent of pharmaceutical cargo arriving in Singapore is by air – a fairly typical figure throughout the industry. Some of the key origin markets are Europe and India, where the products are transported to countries in Southeast Asia and Southwest Pacific via Changi Airport.

Other airlines uses different bases. Germany’s Lufthansa gains from the German, Swiss and French producers but has been able to leverage well India, a strong producer of generics which drives exports from Asia. “We still benefit from our Pharma Hub that we introduced in Hyderabad in 2010,” Lufthansa observes.

More astounding still, and those of a tender disposition maybe should sit down now, is what is being reported elsewhere

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ACW DailyNews in the Asia region even though there is a certain shyness about it.

“Though we can’t disclose our result, the revenue has been growing since 2011. The average growth rate is around more than 150 per cent vs PY,” notes Japan Airlines’ assistant manager for international route marketing, Yosuke Takano.

Dizzying statistics keep coming though as the figure was six times what it was in the 2011 financial year, Takano adds.

Equally surprising is the impact this is having on route planning and rosters: “We have launched a Haneda Sydney route since 2015 December, and also changed aircraft type of Narita-Bombay from B737 to B787 in 2016 summer schedule. Pharmaceutical shipments have been increasing 24 per cent YOY especially ex Sydney or Bombay,” ANA comments. Driving this market and not just in Japan is the rise of

in partnership with an middle class with real purchasing power that uses e-commerce to acquire the medicines and health products it needs.

The growth of those two things, wealthy people with connected computers, means there is optimism about the future although maybe not quite like in the past. “It won’t grow so much based on the several forecast,” JAL’s Takano says when asked what future figures would be like.

Some of the issues the sector must face are linked to the nature of the product with infrastructure particularly cool chain facilities being key. Pharmaceuticals are often time-sensitive products needing to be shipped along a cool chain throughout. To make matters worse sometimes at precise temperatures and sometimes at specific times: temperature breaks are a real industry-wide worry.

The right infrastructure and supporting soft-

ware is not the only issue as Hactl notes: “The main challenges are security (to prevent theft and also preclude forgeries from the supply chain); temperature maintenance (necessitating additional equipment and improved processes): hygiene (necessitating strict procedures); and visibility (so shippers can track and monitor product in transit, which demands sophisticated IT and, increasingly IoT technology).”

Not all carriers or facilities have that although those that do are well-positioned to make the most of future growth. One of the limits on the growth of pharmaceuticals by air might not be so much economic, although there are some worries about that, but those who have the fairly substantial infrastructure it needs are a small and high profile group.

Infrastructure

Already in the infrastructure club indeed its probable president is Changi who manage to have two dedicated cool chain handling facilities – Dnata Coolchain and SATS Coolport - the first facility in the world to attain IATA’s CEIV Pharma certification.

Others are joining in though with the upcoming member of the club likely to be Helsinki and Finnair who will content themselves with one facility for the time being.

“We have specifically invested in this and will open our new COOL Nordic Cargo hub here in Helsinki in May 2017,” says Finnair’s global head of sales, Fredrik Wildtgrube.

The new state-of-art terminal is 3000 square metres given over to the handling and storage of pharmaceutical goods. The temperature monitoring of this area will be connected to Finnair’s new cargo management system to ensure pro-active operations as needed as well as to enable transparency for the customers, he added.

This raises another issue as identified by Cathay’s Sutch: “It is vital that a comprehensive quality management system is in place to deliver the consistency that is needed every time.”

This links back to another problem, the lack of

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one set of globalised standard for the handling, storage and transportation of pharmaceuticals and the uneven standards of adoption across various stakeholders in the air cargo supply chain “may pose a risk for the air cargo industry,” as Changi’s Phua put it.

CEIV

IATA’s CEIV Pharma helps to interpret these standards for the air cargo industry and translate them into specifics for each of the stakeholders in the supply chain. Changi Airport Group launched its community of cargo partners whom it will support to get IATA CEIV Pharma certification – in order to strengthen its pharma capabilities.

“As part of the certification process, companies will undergo training, as well as an assessment of their facilities and processes by independent, IATA certified auditors to satisfy strict requirements on pharmaceutical handling before receiving the certification,” Phua says.

It is definitely value-adding as well as work-adding and but probably only within the capabilities of some facilities and carriers.

And there is in it further niche opportunities: pharma whilst it does not trigger volumes is not essentially a standalone product.

“Taking best practices validated in pharma related processes enables process development for other kinds of cargo shipments too.

Therefore, high service quality for the pharma segment also supports other product segments transported by air,” says Finnair’s Wildtgrube.

He did not elaborate but others such as JAL’s Takano did. “It could support chemicals which require temperature control.” Dietary supplements requiring a temperature control were another example given as was mentioning no names wine and perishables.

The dissenting voice on this comes from Hactl’s Whitehead. There are commonalities between pharma and other perishables but as he points out pharma shipments under its procedures are handled and stored separately – making it effectively a standalone product.

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Are there any particular issues and concerns you expect shippers to raise at TIACA’s ACF in Paris?

Shippers present at the ACF have huge logistic interests in air cargo and the air cargo supply chain does not always work as efficiently as we’d like. Foremost, I think shippers are looking

in partnership with questions answered by ...

DENIS CHOUMERT EUROPEAN SHIPPERS COUNCIL CHAIRMAN

Shippers are playing a major role in this year’s Air Cargo Forum and The International Air Cargo Association (TIACA) has set-up its own shipper committee. The European Shippers Council’s chairman, Denis Choumert, who is now on the TIACA board gives the shippers view on air cargo. at ways to get more grip on the air cargo proposition and see how they can benefit from the developments in the market on speeding up the supply chain, reducing administrative burdens and lowering boundaries to raise the attractiveness of air cargo.

Shippers would also like to have more transparency within the air cargo supply chain, each party has its role to play, but some shippers have no idea what happens throughout the entire chain, it would help in understanding each others role if we have more

transparency. Obviously, shippers will also question the dominance of the logistics service provider in air cargo. This shouldn’t be an issue, because LSP’s should have a wide range of answers on their merit in air cargo for shippers.

What are your main priorities now you are on TIACA’s board?

We have set out the goal that shippers should be an integral part of the air cargo supply chain. Over the last couple of years we have worked hard on establishing that. Now that we are part of the TIACA community we should work on making air cargo as attractive as possible for shippers and see that we can finally implement some of the innovations that are still only based on paper. Furthermore, we would also like to know from the air cargo supply chain what shippers in general could do to align more with the air cargo proposition.

How is TIACA’s new Shippers’ Advisory Committee helping build relationships and better meeting the needs of shippers?

It is good that there actual shippers with different backgrounds from different countries involved in the Shippers’ Advisory Committee. This creates a unique position for TIACA, because it is on the platform that has the actual customer on board. The members of the Shippers’ Advisory Committee are also very active within the European Shippers Council and the various national shippers councils. Together with the TIACA-board position of the

European Shippers Council, this should create a flywheel effect in which we combine market and policy developments in improving the attractiveness of air cargo for shippers.

What do members of ESC and the Global Shippers Alliance generally feel about air cargo?

Some see air cargo as necessity, because of time sensitive cargo.

Others make a distinct choice for air cargo where other modalities (mainly sea) could be used as well, but it focusses on the way you shape your own supply chain. I think the main concern of shippers that cargo is sometimes is seen as 2nd rated goods, they feel it is all about passengers and less about cargo, this is of course mainly with belly cargo. Also investments in the major airports are often focused on passengers, while cargo still has to deal with infrastructure form the 1960’s. On the other hand, we feel that air cargo is on a tipping point, where it is becoming more and more attractive as modality.

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What are the main challenges for shippers using airfreight?

I think it is good for the air cargo supply chain to understand that our members are very heterogenous in their logistic interests. We represent from multinationals to one man companies and from the chemical industry to perishables and high-tech to

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ACW DailyNews live animals. Some members focus on outsourcing others firmly believe in insourcing their logistic activities. This poses a challenges in advocating one single interest, because of the diverse background of our members. The main challenges would probably be are shippers getting the best deal in air cargo and do they really get a competitive offer from the market. When we say competitive the market is thinking about cost, but it is not always about the price, it is also about lead times, handling of the goods and advice. The diversity of shippers needs in the various sectors of the economy is levelled out by freight forwarders who deliver a few single service offers, disregarding some of these specific needs: that would be ok if such standard offers were the performance level of integrators, but it is not the case.

Are shippers a neglected part of the air cargo supply chain and are there needs and demands being met in the industry?

They are not neglected, perhaps sometimes overlooked, but there is much to win on aligning the logistics of the individual shippers with the air cargo supply chain. More and more we see segments in the market working together from shipper to carriers, those are positive developments.

How can TIACA and the industry make airfreight more attractive to shippers?

Develop mutual guidelines on how the supply chain can optimize one the needs of the other parties in the chain. What does every party needs and how do we exchange the information in a right way. TIACA should be the director of this process.

How can industry and customers work together to make a smarter and better airfreight business?

More cooperation within the supply chain, but also make relationships more fluid. It is now very static, the shipper goes to the LSP and the LSP to the carrier. The shipper almost never talks to the carrier directly, why not. This does not many we have to bypass the LSP, they could play a unique role in combining the wishes of the shipper and carrier.

What relationship in the future would you like to see between shippers and air cargo operators?

Of course there is a traditional customer-relationship, but we can work together on improving the attractiveness for shippers, but

also work on getting more cargo into the aircraft, this should trigger especially carriers to see how we can tackle the problem of overcapacity. Fleets are being downsized, but still cargo is leaking and overcapacity is in the market.

Why not work on a proposition with the shippers in getting more cargo on the aircraft?

What do shippers want to see improved in the air cargo industry?

Reduce the paper trail and administrative burden and therefore improve time management. There are a lot of innovations on this issue, but the coming years we need to achieve the breakthrough to get air cargo finally in the 21st century, this digitilisation will also help in further stimulating co-modality with the other modes. Furthermore working together on standardisation of packaging in the supply chain could have a huge positive impact on improving air cargo as a whole.

Do shippers get better service and quality from other modes and are many shippers put off by the cost of air cargo compared to other modes?

There has been a lot of developments in the container industry, especially on cool chain, this makes other modalities more

attractive and already you see developments in which traditional supply chain switch from modes. Roses from Africa are now put in a special container and transported by a sea going vessel.

Electronics manufactured in China can be transported by rail to Europe. Each modality has its own problems and characteristics.

The container is a threat to the industry because it can be use for every modality except air. There is a lot of focus on multimodal developments, but with air there will always be an extra transfer for the cargo, because it has be moved into a ULD. It is said that air cargo represents one per cent of the total volume of cargo, but 30 per cent of the value of cargo. Because of that of course prices in air cargo are higher, but it is the fastest way ship goods over a longer distance and there is a price to pay. Probably every shipper complains about price, just as much a carrier complains about the fuel prices, it is always to high.

Do you think the relationships between shippers and the air cargo industry is improving?

Yes, for one we are here at ACF and involved with TIACA and we are here to stay. We can keep complaining on everything the air cargo supply chain is doing wrong, or we step onto the pitch and actually start playing the game and work together on improving the air cargo proposition.

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A region ripe for Cargolux to pick as tonnage grows France is a growing region for Cargolux and one of its most important in Europe. Justin Burns spoke to the carrier’s country manager.

C

argolux Airlines International is now firmly established as the number two air cargo carrier in France with about a seven per cent share of the market and is an invaluable service for exporters in the country.

All inbound and outbound cargo shipments are carried via road feeder services to connect with more than 70 destinations in Cargolux’s worldwide network from Luxembourg.

Since early 2016, the carrier has operated a weekly flight from Los Angeles to Toulouse each Friday with import loads for the aerospace industry, which also gives its customers in this area an airfreight service purely for export shipment.

The Luxembourg airline’s country manager for France, Nicolas Desnoyers says as a major player it has invested in the “position of strength” and it is growing faster than home carrier Air France.

France is an important market for Cargolux, he observes: “The French market is the third most important European market for Cargolux, right behind respectively Germany and Italy.

“We aim to be the major air cargo provider in

NICOLAS DESNOYERS all three markets, a goal that we have already achieved in Italy. Cargolux has the highest productivity and the lowest cost base in theses markets. France is also one of our main cargo source on our Africa network.”

But what does Cargolux generally transport to and from France?

Desnoyers notes 33 per cent of the export production is generated by specific products like pharmaceuticals, cosmetics, perishables foods, live animals, helicopters and cars, luxury goods as well as all types of oversized cargo and

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he says Cargolux puts a strong focus on these products, while on the import side, 23 per cent represents these kind of products.

Key trade lanes Desnoyers says out of France are in African such as Brazzaville, Abidjan and Bamako as well as Singapore, Johannesburg, Hong Kong, Sao Paulo, Mexico City, Shanghai or Beijing. Cargo to France mainly originates in Los Angeles, Shanghai, Hong Kong, New York, Chicago, Hanoi, Singapore and Sao Paulo.

Cargolux runs operations in France from three offices. Paris is the main office, while it also has offices in Lyon and Marseille further south, and all three are seeing steady and continuous growth.

Desnoyers adds: “Our focus is on serving our customers in the provinces better, so we build on our commercial presence and relieve our stations from the operational workload the would result from centralizing reservation only at Paris Charles de Gaulle Airport.”

But Cargolux is targeting further growth and the aim is to increase market share by building on the “human factor”.

By this Desnoyers means it will always aim to be closer to the customer in personal dialog and creating “customised solutions” for any requirement they may have.

He believes this helps Cargolux to implement a better organization and to deliver the high service levels that freight forwarders expect from an air cargo carrier.

However, there are challenges in France for the likes of Cargolux, but Desnoyers is quietly confident it will grow in the future and happy with the carrier’s position in the marketplace.

He explains: “Cargolux operates in a very competitive environment. We see massive overcapacity, led by the many bellyhold carriers with the resulting decline in yields. In this environment, our main challenge is to remain competitive.

“However, for bellyhold carriers, cargo is always the number two priority and cargo customers come last.

“Not so with Cargolux, we concentrate on cargo, we go where the cargo customers need us to go, we make no compromises and can offer a reliable and customized service. ‘You name it, we fly it’ is not just a slogan for Cargolux, it is the way we work and the way we do business.”

ACW DailyNews

ACF - Party atmosphere as show kicks off The International Air Cargo Association’s Air Cargo Forum landed in Paris on 26 October.

Air cargo professionals descended on the Paris Expo Porte de Versailles for the 28th edition of the event. It was a busy day of networking and lively discussion as industry leaders met to talk about the challenges and opportunities air cargo faces presently and in the future.

The hall was heaving with people eager to visit company stands, meet key players in the industry and see what companies have to offer.

On an action packed first day, delegates were busy doing business as well as relaxing in the company of friends.

NAC starts charter flights from Miami

US freighter carrier Northern Air Cargo (NAC) will operate four weekly charter cargo flights from Miami International Airport (MIA) to the Caribbean from 1 November this year.

This will include two weekly round-trip freighter flights on a triangular route between MIA, San Juan and Saint Martin; one weekly flight between MIA and Santo Domingo; and one weekly flight on a triangular route between MIA, Port-au-Prince and Santo Domingo.

NAC will use a Boeing 737-300 Freighter aircraft for services.

Miami-Dade Aviation director, Emilio T. González says: “We look forward to welcoming Northern Air Cargo to MIA, and we wish them success on their expansion to the Latin American and Caribbean region.”

NAC is the third all-cargo airline to start service at MIA this year. In April, Canadian carrier KF Cargo launched charter flights between MIA and multiple points in South America.

In November, US carrier 21 Air will begin eight weekly round-trip freighter flights to Latin America, from MIA to Bogotá, Panama City and Guatemala City.

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