ACW daily 28th October 16

A

I

R

C

A

R

G

O

W

E

E

K

DA ILY NEWS Friday • 28 October 2016

The official daily newspaper of Air Cargo Forum 2016

Pharma.aero officially launched

T

he pharma.aero organisation has been officially launched to strengthen pharma certified lanes and extend pharma cold chain supply chains to reach new international markets.

Brussels Airport and Miami International Airport were joined by representatives from Changi Airport, Singapore Airlines Cargo, Brussels Airlines and Sharjah International Airport

to formally launch the programme at The International Air Cargo Association (TIACA) Air Cargo Forum yesterday. Brinks Life Sciences is also joining the programme but were unable to attend the launch.

Speaking at the event, pharma.aero chairman, Nathan de Valck, who is also cargo & product development manager sales & marketing for Brussels Airport, explained to delegates that the

vision is to strengthen collaboration, develop pharma tradelanes, share data and expertise and offer innovations.

He says: “I believe this an open door, we all talk a lot. Shippers are telling us air cargo services are not always reliable or meet expectations. There is a mismatch of expectations and service received. We are at risk of losing trust from pharma shippers if we cannot evolve to expectations.”

De Valck’s colleague, Steven Polmans, who is director of cargo at Brussels Airport, joked it was not just an idea dreamt up over some Belgian beer, but out of a genuine interest to help the industry.

He says: “From the beginning we talked to shippers, asked them what were their priorities, expectations and needs. IATA CEIV was driven with the shippers, shippers say there needs to be more consistency and focus.”

Pharma.aero was announced at the TIACA Executive Summit in Miami in May, with Brussels and Miami the founding members, who were also the first airports in the world to gain IATA CEIV Pharma certification.

ACS and Coyne team-up for charity Coyne Airways and Air Charter Service (ACS) announced at the Air Cargo Forum yesterday they are backing War Child, a charity helping children affected by conflict.

Coyne and ACS will donate an agreed amount per transaction on behalf of their customers, starting from next month. Customers will be given the opportunity to match the donation on a quarterly basis.

Coyne chief executive officer (CEO), Larry Coyne says: “The air cargo business supports many charities but none specifically aimed at helping children in conflict areas.

“We want to support a charity which helps

some of the most disadvantaged people during wars – children, and encourage participants in our industry to give, based on a formula which is simple and within their means.”

ACS chairman, Chris Leach says ACS already supports other charities, but when War Child came to his attention he felt it should dig a “little bit deeper”.

He adds: “During our careers in this industry some of us have seen the horrors left behind by conflict first hand. With Syria at the forefront of people’s minds at the moment, we feel that we can do more to help.

“There are some great people in this industry

of ours and if more of us came together we could make a really significant impact.”

War Child supports children in conflict rebuilding lives of children across the Middle East, Africa, and Asia. CEO Rob Williams says money donated will “provide hope for the future for thousands of children in some of the most difficult places on earth”.

... in partnership with

ACF HAILED A ROARING SUCCESS

2

E-COMMERCE IS MOVING FAST

9 Q&A WITH SANJIV EDWARD

12 NETWORKING AND DEALS DONE ON DAY TWO

15

Schiphol backs more projects Schiphol Cargo is backing further projects as part of the Smart Cargo Mainport Program to find innovation to improve flows through Amsterdam Airport Schiphol, underpinned by transparent data exchange.

The Smart Program projects centre on cargo flows, encouraging cooperation between the different parties in the supply chain, as well as data sharing.

A pilot scheme is underway, bringing together all sectors of the supply chain to work collaboratively towards improved services through the hub.

TIACA is holding a Putting Contest today at 2pm at its booth.

The winner will get $2500 off their ACF 2018 stand.

aircargoweek.com

ACW DailyNews

in partnership with

ACF hailed a roaring success in first 2 days

T

his year’s Air Cargo Forum (ACF) in Paris has been a major success, according to TIACA’s executive director Warren Jones.

More than 2,300 delegates flocked through the gates in the first two days to network, attend the conference

sessions, speak to exhibitors and do business.

Jones says the new CargolinX one-to-one meetings, which have been added for the first time have been especially busy with more than 450 held over the first two days between freight forwarders, airlines, shippers and all parts of the air cargo supply chain.

He says CargolinX will be firm fixture in future TIACA ACF events as the feedback has been nothing but positive with airfreight businesses commenting to him how happy they are to have had the opportunity.

Jones notes TIACA’s previous ACF events have sometimes been challenging, but bringing the Global Shippers’ Forum and European Shippers’ Council into the fray has boosted this year’s event.

There has been one negative though he says: “There is a McDonalds being built next door which has been challenging due to the noise, but our host ADP has been great and working with them has been a pleasure.”

Jones is confident the biennial ACF will only get bigger and the 29th ACF in Toronto from 17-19 October 2018 will see TIACA co-locate with Multimodal Americas.

He says this will make ACF “even better” than Paris and will help it meet the demands of attendees who want to see more multi-modal aspects incorporated into ACF. Clarion Events runs Multimodal Americas and event director, Robert Jervis explains the tie-up will help widen the appeal for both TIACA and Clarion and also attract more shippers to Canada which many parts of the supply chain want to see.

Haiti charter flights

Charter operators Air Partner and Air Charter Service (ACS) have been helping the aid mission aftermath of Hurricane Matthew in Haiti.

Air Partner has delivered 40 tonnes on behalf of the International Federation of Red Cross and Red Crescent Societies (IFRC), which included hygiene kits, buckets, tarpaulins, shelter tool kits and kitchen sets for about 1,000 families.

The charter broker arranged for a Boeing 767 Freighter to fly directly from Panama to Port-au-Prince’s Toussaint L’Ouverture International Airport.

ACS has arranged both passenger and cargo charter flights and its global offices have arranged flights on AN-12s and Boeing 767s to deliver aid.

The United Nations estimates at least 1,300 people have died and 350,000 left homeless in Haiti.

2

26 October 2016 28

aircargoweek.com

Tabloid page trim.indd 1

30/09/2016 16:17

ACW DailyNews

in partnership with

Africa on the rise but challenges remain The African continent is seeing solid growth but plagued by overcapacity and infrastructure is needed. David Craik looks into the marketplace.

C

ontinental trade has been a boon topic in 2016.

Whether it’s the machinations in the European Union as it faces up to Brexit or the wranglings over the Trans-Pacific Partnership involving nations from North America, Asia and Latin America.

Africa is also making a play for increased economic freedom across its borders through the Tripartite Free Trade Area. This will unite the three existing trade blocs – the Southern African Development Community, the East African Community and the Common Market for Eastern and Southern Africa – into a single new zone by 2017.

The aim is to develop local economies by boosting intra-African trade and, according to figures from the BBC, stimulate £648 billion ($795 billion) of economic activity. It should mean a lift for the continent’s intra-African airfreight sector which is presently struggling to take share.

According to Boeing air cargo analyst, Tom Crabtree, as of 2013 Africa had annual air volumes of 1.73 million tonnes. Most was on European trade lanes, around 56.9 per cent, with the Middle East coming next at 14.4 per cent. Only 5.8 per cent of volumes are on intra-African lanes.

Again as of 2013 the main nations in the intra-African market were South Africa, Egypt, Kenya, Nigeria and Ethiopia. The top three routes were South Africa and Kenya with bi-directional tonnage flows of 24,915 tonnes, Ethiopia and Nigeria with 22,397 tonnes and Kenya and Nigeria with 12,016 tonnes.

“It is a very small market,” Crabtree says. “It is heavily concentrated in those five key countries with South African Airways, Ethiopian Airlines, Kenya Airways and EgyptAir moving mostly consumer goods. E-commerce could be a growth area for air in Africa given the poor port transport infrastructure.”

Indeed, Crabtree says the long-term potential of intra-African trade is huge given that the continent’s population is equivalent to that of India with 1.2 billion people. “In 20 years time it will

SANJEEV GADHIA

4

28 October 2016

be 50 per cent bigger at 1.8 billion which is more than India and China. I don’t think people have woken up to that fact,” he states.

“There is a sizeable, growing middle class population and they are beginning to afford products we in the West take for granted.”

So given this potential why are intra-African airfreight volumes so low at present? Talking to a range of operators and analysts problems include limited connectivity in the continent, poor airport infrastructure, limited ground handling rights, the lack of trade liberalisation, the high number of one-way trade lanes due to an imbalance of imports and exports resulting in higher operating costs for freighters, the high cost of jet fuel, freight fees and taxes, lack of co-operation between African airlines, ageing freighter fleets. Complex customs regimes and corruption are also an issue.

Panalpina regional head of airfreight for the MEAC region,

aircargoweek.com

ACW DailyNews Slavey Djahov says it is not focused on intra-African trade at present due to these concerns. “There are only a limited number of airlines making these movements,” he says. “They are from Ethiopia, South Africa and Kenya, which have invested aggressively in airport infrastructure. Most of the airport authorities in other countries rely on Government funding. If it is available, then it is more likely to be spent on passenger infrastructure not freight.”

He said private sector involvement is crucial in filling in the funding gap but at present, given the collapse in oil prices, even this source of money could be hard to find.

“There is an untapped consumer market in Africa but we just aren’t seeing distribution centres being developed throughout the continent,” he adds. “It is going in the right direction but realistically there are only a few carriers who have the necessary connectivity at present.”

Better infrastructure needed

African Airlines Association secretary general, Dr Elijah Chingosha says improved air cargo infrastructure is vital to respond to the needs of African businesses particularly those in technology, financial services, pharmaceuticals or services which increasingly require high speed deliveries to respond to customer needs.

“High quality infrastructure is a prerequisite for sustained economic growth and for maintaining competitiveness,” he says.

Liberalisation of air cargo services in Africa is also vital: “There is need for recognition of the important role and distinct features of air cargo operations and for more commercial freedom and business oriented treatment. States need to speedily facilitate the full liberalization of African skies.”

Astral Aviation chief executive officer, Sanjeev Gadhia believes the creation of a “Single African Air Transport Market” in 2017 by 20 African countries, “will improve market access, connectivity and new traffic”.

Even before this introduction Gadhia is upbeat about intra-African airfreight. “The intra-African airfreight sector is the fastest growing region in the aviation sector with an estimated growth of between 10-15 per cent per annum,” he states.

He explains Astral Aviation operates a schedule network of 10 destinations in East Africa and the Indian Ocean Islands from its Nairobi hub and an additional 50 destinations on its charter network using a dedicated fleet of seven cargo freighters. In addition, he says Ethiopian Cargo, Kenya Airways Cargo, SAA Cargo, EgyptAir and DHL are actively promoting the intra-African sector with a diverse range of freighters from their respective hubs.

“We operate a unique consolidation service in Europe, USA, UAE, South East Asia and South Africa which is then moved to the Nairobi hub for a fast-track connection to the regional network,” he adds.

Gadhia says an increase in intra-African trade is helping volumes. “African economies such as Ethiopia and Kenya are growing at good-levels. In addition, the growth of e-commerce and the rise of the middle-class population estimated at 300 million or 35 per cent of the continent, offers excellent demand for air cargo,” he explains.

To take advantage of this growth Astral has developed a “cautious expansion strategy” which involves the acquisition of up to six Boeing 737 Freighters over the next five years and the setting up of new hubs in West and Southern Africa to compliment its East African hub. It aspires to operate the largest cargo network in Africa with 25 schedule destinations and over 75 charter options.

and speeding up logistics processes,” he explains.

Challenges of course remain with Makhetha identifying the imbalance of trade flows as the main issue. “Diversification of African economies and a resultant growth in intra-African trade is the only long-term sustainable solution. We hope that countries will put more effort into it,” he says. “By all accounts the economic growth rate in Africa is above the global average and our young population will ensure that this accelerates. We believe that with

our track record and our knowledge of the way business operates in the region we are best placed to continue supporting the growth of trade within the region.”

ECAir senior project manager, Youri Busaan also makes a call for better continental collaboration. At present he notes intra-regional (CEMAC) airfreight volumes are limited as “most of these destinations are operated by narrowbody aircraft which does not leave a lot of opportunities for cargo on these lanes”.

He adds: “With the current state of the oil prices, volumes on import have gone down. Most larger freighter operators do connect into BZV however they are dropping frequencies and lesser loads per touch down. The future therefore is capacity sharing between operators and improved hub development.”

The open skies agreement he believes is welcome but only the first step. “Equally important will be for all airlines and its civil aviation authorities to be at par with international standards, eased visa processes for passengers and for airports and its ground handlers to improve the quality of cargo handling systems and processes at an acceptable cost,” Busaan says.

It may take years but Africa is getting to set to fly.

Mix of cargo

What of other airlines? SAA Cargo general manager, Tleli Makhetha says around 20 per cent of its cargo business is intra-Africa with destinations including Abidjan, Brazzaville, Dakar, Entebbe, Lagos, Nairobi and Windhoek.

“This is a mix of general cargo, perishables, pharmaceuticals, high tech goods, computers and telecommunication equipment,” Makhetha states. “We use a combination of passenger flights and freighters. In addition, we are currently involved of renewing our long haul passenger fleet that will provide more capacity for our customers. We are also renewing our freighter fleet. Our vision is to have three types – the current medium size freighters that we operate, the 737 fleet, acquiring small size aircraft for the domestic market and medium range aircraft for regional markets.”

SAA is also investing in expanding its routes in Southern and West Africa where it sees high demand for cargo capacity. “We are also looking at further investments in terms of modernising our IT management systems. This is in line with our focus on e-freight

aircargoweek.com

28 October 2016

5

ACW DailyNews

in partnership with

Single digit uplifts the new norm in the ME The Middle East has been air cargo’s booming region, but this has slowed in recent months.

David Craik investigates what is causing the slowdown, speaking to key regional players.

W

e have got used to the Middle East being the growth engine of global air cargo during the last few years of economic uncertainty.

IATA figures for July on first glance appear to show the success story is continuing. It noted airfreight demand had increased by 6.7 per cent year-on-year (YOY), second to only Europe, which recorded 7.2 per cent growth.

As IATA stated the growth rate, while still strong, had eased from the 14 per cent recorded annually between 2012 and 2015. It suggested

in the Middle East region, whose fleets have been growing at double-digit percentages over the last decade, the available airfreight capacity on Middle East corridors has grown even faster than average,” he says. “Competition has driven price discounting, which enabled the ‘Big 3’ to grow cargo at a double-digit rates in previous years. But now with underlying weak demand growth and an increasing capacity surplus, we are starting to see an inevitable business challenge when freight rates fall below an economic level.”

Added to this, he says is the “crisis” of over-

In terms of general air cargo, the economic conditions for the industry are definitely challenging that slower freight growth between the Middle East and Asia was the primary culprit.

Strategic Aero Research analyst, Saj Ahmed says excess global airfreight capacity and the impact of cheaper sea freight had also had an impact. Talking to Etihad Cargo’s senior vice president, David Kerr in local media, he picked up the point on capacity, declaring it had largely been caused by the “low cost of fuel seeing a return to the market of less fuel efficient aircraft”.

And Ascend Worldwide’s, Peter Morris says: “The current market outcome in the Middle East is influenced by both global and local trends on both the supply and demand side.

“Globally, world trade in volume terms has been showing only weak growth for the last year or so with in fact only 0.4 per cent YOY growth in the first quarter. Historically rates of between five per cent and 10 per cent have been common in the good times.”

He adds alongside this weak growth has come a surplus supply of cargo capacity in both air and sea corridors which have significantly impacted freight rates. “With three major airline players

6

28 October 2016

aircargoweek.com

capacity in ocean freight where certain types of products might travel on either mode. “With lower bulk costs it is another source of competition for air,” he states. “Finally, the current generation of widebody passenger aircraft replacements generally have more cargo capacity than the passenger aircraft they replace and this tends to add to the capacity surplus. So overall the underlying demand growth is the basic problem, which is compounded by excess capacity on both air and sea.”

So given this background what do the region’s airlines and freight providers see?

VIKAS CHATURVEDI

Tabloid page unbled.indd 1

26/09/2016 16:17

ACW DailyNews “In terms of general air cargo, the economic conditions for the industry are definitely challenging. Like elsewhere, in the Middle East there’s also a backdrop of overcapacity in the market so there’s lots of competition for business,” says Chapman Freeborn’s head of commercial for cargo in the Middle East, Vikas Chaturved. “Our charter work is often more niche project-based and we’re still very positive about the Middle East as a market - particularly for outsize movements for industries like the energy sector often using aircraft types like IL-76s and AN-124s. As a company we had long-anticipated the scale down of military related business which had been a significant part of the cargo industry’s growth in the ME. “When the decline eventually came a couple of years ago it was steeper and faster than some other businesses had expected – to the extent that we saw the loss of some big cargo airlines.”

in partnership with He says Chapman’s strategy in the Middle East region has largely been based on diversification - for example increasing its focus on project work plus expanding its market share in niche sectors like animal transportation, via its subsidiary Intradco Global.

“We’re also finding that many operators have become more flexible in their business approach – which is another positive for us as a charter specialist because it allows us to respond quickly to new opportunities that arise in the market,” he notes.

Pressures

Emirates SkyCargo has also faced pressure. In the financial year 2015/2016 it saw revenues fall nine per cent to $3 billion despite tonnage rising six per cent to 2.5million tonnes. Freight yield per freight tonne kilometre fell 16 per cent.

The group blamed “fast changing demand

patterns” in a challenging airfreight market.

But it is not standing still. It recently launched a new weekly freighter service from Hong Kong to Dubai via Delhi to tap into increasing movements. Key products being moved include pharmaceutical raw materials, electronics and machinery, leather goods and garments.

In September it officially inaugurated Emirates SkyPharma its new 4,000 sq metres purpose based facility to handle temperature sensitive pharmaceutical shipments at Dubai International Airport.

“Pharmaceuticals are one of the most important products we transport because of the impact on people’s lives and communities across the world,” Emirates divisional senior vice president for cargo, Nabil Sultan says. It is part of the new 11,000 square metre extension of Emirates SkyCentral terminal at Dubai International Airport and features temperature controlled zones and temperature controlled acceptance and delivery truck docks.

Fleet and network expansion

Qatar Airways Cargo recorded an increase in tonnage of 37.5 per cent to 1,520,000 tonnes in 2015 with import cargo into Doha up 29 per cent and exports out up 10 per cent. Chief officer for cargo, Ulrich Ogiermann, says: “We have achieved this phenomenal growth through a combination of fleet and network expansion, creative interline agreements and by deploying capacity on expanding or untapped markets.”

Qatar splits its cargo capacity across its freighters and passenger aircraft with 51 per cent of shipments carried by freighters and 49 per cent in bellyhold, has been busy expanding destinations to offset any worries in the regional sector.

In June it launched daily passenger NABIL SULTAN

8

28 October 2016

aircargoweek.com

flights to Atlanta providing additional belly capacity to its four times weekly freighter services to and from Doha. It now offers 744 tonnes of capacity per week on the route. Ogiermann says: “There is enormous potential for growth in the Americas as our rapid expansion in this market indicates.”

Specialist services

Indeed, it has also started flights to New York and Halifax from its new European hub Luxembourg. The Boeing 777-200 Freighter offers 103 tonnes of cargo capacity transporting products such as lobster and seafood to Europe, the Middle East, South and North East Asia via Doha.

It has also launched new services such as QR Express allowing customers to book time-sensitive shipments and offer high boarding priority and rapid handling. It also offers quick ramp transfer, priority loading and fast retrieval at final destination.

What of Etihad? It is also thinking innovatively combing passenger and cargo services through a new car product. It now offers drivers up to 20 per cent off air cargo rates and their seat when they book in first or business class.

The cargo division is transporting the vehicles in the belly of the Airbus 380, will also arrange hotel accommodation and having the car delivered straight to the driver’s doorstep.

In terms of routes it has started a new twice weekly A330 freighter service to Brussels Airport. It aims to tap into connections around Europe as well as being a “key connector” into Africa.

The Middle East may not be growing as effusively as before but airlines are not standing still until the economic and capacity winds become calmer. They are forging ahead with new routes and services and tapping into opportunities wherever they appear.

ACW DailyNews

E-commerce is moving fast E-commerce has grown 38% since 2013 and presents both an opportunity and a headache for air cargo. David Craik takes a look at the sector.

R

etail has been shaken by a multitude of economic shocks in the last few years but one area seems impervious to change.

According to the United Nations Conference on Trade & Development (UNCTAD) the global e-commerce market was worth $22.1 trillion in 2015 – up 38 per cent since 2013.

UNCTAD said it is becoming “more and more international”.

What does this mean for the airfreight sector?

Deutsche Post DHL Group recently announced a $137million investment in the US domestic and cross-border e-commerce market. It aims to exploit the global B2C e-commerce market for shipments crossing borders which is expected to grow from $400

MICHAEL STEEN

billion today to $1 trillion in 2020.

“There is barely any other industry that provides such a promising outlook than e-commerce. It is expected that one billion people will shop online and across borders by 2020 with the US being the most popular origin for 25 per cent of consumers,” explains DHL eCommerce chief executive officer, Charles Brewer. “With our investments we aim to expand our leading role in cross-border e-commerce logistics, serve our US customers with the best possible infrastructure and solutions, and gain future market shares.”

DHL says consumers are increasingly buying products online that are either unavailable or too expensive in their home country. The biggest share of these cross-border purchases will revert back to US e-commerce businesses.

DHL opened its first order fulfilment centre in Columbus, Ohio, last year, followed by a facility in Los Angeles. DHL eCommerce will now establish further regional centres like this in New Jersey and other locations in 2017 and DHL Express opened a new $1.3 million service centre in Chicago to meet e-commerce demand.

“All these infrastructural engagements will provide merchants with the opportunity to place inventory closer to consumers to speed-up delivery,” says Brewer. “DHL eCommerce utilises air

aircargoweek.com

services both internationally and domestically, and will continue to do so as needed to manage transit. Only a few years ago, delivering in 5-10 days was completely acceptable. Today, the consumer wants delivery options - immediate, same-day, next day, preferred temperature. It is hard to keep up, but what was once something that was a ‘nice to have’, is a ‘must have’ today.”

Responding to these changes Air Transport Services Group (ATSG) announced back in March agreements with Amazon Fulfilment Services, an affiliate of Amazon.com to operate an air cargo network to serve customers in the US. The commercial agreements include the leasing of 20 Boeing 767 freighters to Amazon Fulfilment Services ATSG’s Cargo Aircraft Management (CAM), the operation of aircraft by ATSG’s airlines, ABX Air and Air Transport International, and gateway and logistics services provided by ATSG’s LGSTX Services.

“The integrated express companies have been growing faster than the general cargo carriers for several years. This is

28 October 2016

9

ACW DailyNews in part due to the faster growth in e-commerce, and the shifting supply chain strategies that are seeking to deliver individual packages to global consumers in a quicker, more reliable way,” says ATSG chief commercial officer, Rich Corrado.

“The big difference now is that the consumers in emerging economies are developing more purchasing power which is opening up e-commerce growth in new markets. China is probably the most visible example where the intra-China e-commerce business is booming and it is translating directly to the growth in express parcel delivery, as well as the growth in freighter aircraft.“ He says the networks it is targeting are prime service providers to e-commerce business.

This strategy led to its investment of 25 per cent in the EU and West Atlantic Group in 2014, and the 25 per cent investment in its joint

in partnership with venture airline in China, BrightStar Express.

“We are creating operating platforms to take advantage of express networks, and ecommerce business. Our desire is to leverage these networks to lease 767 and 757 aircraft into these fast growing networks,” he adds. “In China, we are well into our airline certification process and hope to be flying a new airline focused on providing services to the express airlines.”

The Amazon factor

Its logistics business, LGSTX Distribution Services performs all of the airport ground handling and cargo loading for Amazon’s air network as well as Amazon’s main sort hub.

“LGSTX has been growing rapidly thanks to e-commerce. We continue to look for more opportunities to expand our logistics operations particularly where it complements our aviation

businesses,” Corrado states. “We fly 767s for large customers most notably DHL and Amazon.

Our challenge has been finding feedstock and slots to keep up with demand.”

Atlas Air is strengthening its e-commerce capabilities in partnership with Amazon.

Earlier this year it announced it will provide air cargo services to support Amazon’s package deliveries. This includes operation of 20 Boeing 767-300 converted freighters on a CMI (crew, maintenance and insurance) basis.

Chief commercial officer, Michael Steen is bullish. “We are seeing tremendous growth in global demand for e-commerce with some of the fastest growth being seen in China and India,” he says. “We see e-commerce as redefining retail by fundamentally changing the customer fulfilment process. The resultant impact on the air cargo industry is the accelerated movement of cargo through the supply chain and the increased demand for time-definite air networks.”

Time-definite network

Steen says Atlas provides a tailored network solution to its customers to “allow them to capitalise on the underlying e-commerce trends”. Its fleet consists of small and large freighters serving multiple trade lanes – either inter-continental or domestic. “Operating a time-definite network requires precise operational capabilities to ensure high levels of on-time performance,” he adds. “This is a complex solution set to execute. Financing and acquiring feedstock as well as managing the conversion process for small and medium sized freighters requires the ability to invest and special subject matter expertise.”

It is a point picked up by Haclt executive director, Vivien Lau. “The response to e-commerce varies greatly throughout the industry. Everyone is aware of the potential but is not sure how to become involved,” she says. “We see some airports and customs authorities actively collaborating to simplify and speed up procedures, and some airports working on e-commerce distribution centres – while carriers and freight forwarders in other locations are being left to make the incumbent system work. Some carriers are actively working on e-commerce solutions for customers.

“E-commerce customers have been educated to expect supply chain integration and visibility, and is easier to achieve if you are an integrator working with your own ground transport and dedicated airlift. But the fragmented nature of traditional airfreight supply chains means more integration is required, to provide a seamless system. That demands greater collaboration.”

Hactl’s frontline in e-commerce is Hacis, its logistics arm. It is supporting carriers and forwarders with expedited RFS services, streamlined Customs procedures, depots in China, and advanced IT systems that aid tracking.

10

28 October 2016

aircargoweek.com

“E-commerce is maturing. More e-tailers are emerging and competition is increasing; product ranges, geographic markets and volumes are developing and margins are under pressure,” she adds. “Logistics is an area identified for savings, so there is a trend away from the early model of individual packs from origin via courier, towards shipping in bulk and fulfilling customer orders from bases closer to market.

This is the traditional industry’s opportunity, and requires the ‘traditional’ air cargo business to focus on innovation and cooperation.”

She believes a big opportunity for airfreight is in the fast-growing global community of smaller e-tailers: “This will inevitably behave more like an open market, and certainly function better if we all adopt IT systems that allow greater integration and seamless information flows,” she stresses. “Again, the picture is patchy.

Hacis is already successfully working with carriers and forwarders to provide e-commerce solutions and alternative options for carriers and forwarders, designed to make them more competitive and effective in this sector.”

UPS vice president, Stuart Lund also raises the point about collaboration. “There are airports around the world that are trying to promote themselves to e-commerce players and e-tailers by looking at warehousing, airport

VIVIEN LAU access, and even airline service options,” he says.

“That said, there are many players involved in the aspects of global trade that compete in an ever-changing marketplace with different trade regulations and infrastructure requirements.

We have to keep in mind that there is a lot of opportunity for us to work together to help each participant in the supply chain best serve its customers with its core competencies.”

Brewer of DHL calls on airfreight to think more broadly. “For e-commerce to grow unimpeded, we need to re-think how products move and are delivered. It is no longer about track-and-trace, the industry needs to go deeper into every element of the supply chain – the processes, the machines, the people and the experience,” he says. “The way consumers shop has changed forever and to keep up, the logistics industry will need to keep changing too. You need to provide an e-commerce platform that allows anyone to ship anything to anywhere; containers, pallets, parcels and even pandas.”

Tabloid page bled.indd 1

13/09/2016 12:52

QA ACW DailyNews

&

What are the main issues you expect to be discussed and at the forefront of TIACA’s ACF in Paris?

Our Air Cargo Forum is a unique opportunity for all sectors of the air cargo supply chain to come together to discuss the issues that matter, network, and grow business. The theme this year is

in partnership with questions answered by ...

SANJIV EDWARD TIACA CHAIRMAN

TIACA chairman and head of cargo at Delhi International Airport, Sanjiv Edward talks about how he sees the global air cargo hubs of the future and what role they will play in helping to drive airfreight business and ensure the industry has a bright future.

‘Air Cargo Vision 2020’ and we are bringing together the air cargo industry leaders to discuss a roadmap for the future success of our industry. We have put the shipper at the center of this event inviting thought leaders to give us insight into their issues so that we can work more collaboratively together towards a stronger future. We also understand that staying ahead of the curve is important so we have organised masterclass sessions on new Customs and security regulations to help industry better prepare.

Disruptive technologies and the changing e-commerce landscape mean that we have to be more innovative than ever to deliver the best possible service.

Is air cargo a neglected area of investment for many airports who are more concerned with passenger numbers and terminals?

Yes that would be a fair statement to make, air cargo has always been treated as the ‘Cinderella of the business’ – the one having the most potential but given second place by the more influential passenger cousins. However airports that have seen the potential of the cargo business and invested in developing requisite infrastructure have seen tremendous growth and success. Hong Kong is a perfect example, which has undoubtedly one of the best cargo infrastructures in the world and has also gained its rightful number one position.

What will the cargo hubs of the future look like in your view?

Air cargo hubs of the future will have to be driven by strong resolve by all the stakeholders involved to ‘Collaborate to Compete’, if air cargo wants to effectively compete with sea freight as the preferred mode of transport, then collaboration among supply chain players is the key. E-commerce will be

Air cargo has always been treated as the ‘Cinderella of the business’

12

28 October 2016

major driver and airport strategic planning should take this into consideration. Regulators will also need to align to meet the changing environment created by international e-commerce.

Security remains a major challenge and airports hubs will need to have infrastructure and futuristic technology to cater to this.

To succeed, we will have to graduate from a mindset of, achieving brilliance in individual silos, to attaining comprehensive excellence in the supply chain.

aircargoweek.com

ACW DailyNews What role will air cargo gateways play in supporting the industry to meet the demands of e-commerce?

E-Commerce is turning the world into a global market place; the supply and demand created around the globe is creating multi directional flows of traffic. This makes the role of the air cargo gateways important by creating efficient transfer mechanism and pipeline visibility.

To support the e-commerce business the air cargo gateways will need to create infrastructure similar to the integrators hubs,

as well as airport level, since its members constitute the entire supply chain.

What are the biggest opportunities for airports in regards to air cargo?

The biggest opportunity for airports is to take on the role of a business developer and create a business environment that is conducive to growth.

They are most well positioned to act as a facilitator, if they can help the airlines, forwarders, cargo terminals and regulators etc. succeed, their own success is guaranteed.

How do you see the future of operations at air cargo hubs in 10 years’ time?

Additionally, air cargo hubs in 10 years time will see higher concentration of high-value business, with pressing demands on time, security and transparency.

There is a future for air cargo but we need to improve and adapt to the changing needs of the shipper.

achieving quick, efficient and time definite handling. Another important aspect will be to provide enhanced transparency in the supply chain by embracing compatible technology platforms.

What are the principle challenges that airports face in rising to the challenge to be modern air cargo hubs?

The state of the industry has a role to play, the excess capacity and lower yields has put constraints on the ability to bear higher charges for cargo terminal handling, and this in turn affects the ability of the airport to invest in cargo infrastructure development. Having said this, there are good examples to learn from, for example at Delhi International Airport inspite of the

similar challenges , investments over $100 million were made to develop cargo facilities and another $100 million planned over the next five years. We have already seen the benefit by Delhi becoming the number one cargo airport in India.

Are the formation of air cargo community groups key to the future success of the industry?

I am a strong supporter of air cargo community groups; they will be the key to the success of the air cargo industry. I have been one of the founding members of the Air Cargo Forum India (ACFI) which was launched four years back. As a result of collaborative working, majority of the issues are decided across the table, Delhi became the first airport in India to be declared e-freight compliant and the regulators have been receptive since they see the industry talking as “one voice”.

TIACA can play a major role for the success of the air cargo industry since it’s the only association that represents the interests of all the players in the air cargo supply chain.

How is and can TIACA help cargo hubs meet the changing air cargo needs and demands?

We have four board members who represent airports, which are leading the way in terms of shaping and developing the hub of the future. Closer collaboration and visibility in the supply chain will be the key to meeting the changing demands of the industry.

TIACA has the unique ability to promote collaboration at country

aircargoweek.com

28 October 2016

13

ACW DailyNews

in partnership with

Boeing market analyst optimistic for future Airfreight has had a tough few years and challenges remain. Boeing’s air cargo analyst, Tom Crabtree give his views on the industry.

D

espite much pessimism across the industry - Boeing remains upbeat on future growth prospects for airfreight.

The aircraft manufacturer’s air cargo market analyst, Tom Crabtree puts recent struggles in airfreight down to the weakness in

14

28 October 2016

global trade, noting this year is the third worst for growth in the last 80 years, and the slowest rate of trade trade since 2009.

On a positive note he says independent trade authorities forecast that world trade will grow by about four per cent over the next decade, so it is not all doom and gloom.

As for the industry’s performance, Crabtree’s air’s positivity: “Airfreight is still growing compared to last year. The first half of the year was challenging, but this was down to the boost gained from the US West coast port slowdown in the first quarter of 2015, which made air cargo abnormally weak.

“But we had turned the corner by April and in the second quarter. Growth for August is still positive, but not quite as positive as June and July when it was around five per cent in both.

A few major carriers have had negative growth in August, which pulled that momentum down.”

He says Boeing is “cautiously optimistic” that air cargo will also have a good peak season, as operators are showing positive optimism for the last quarter of the year.

In 2015, the International Air Transport Association (IATA) said cargo volumes registered in freight tonne kilometres (FTKs) expanded 2.2 per cent in 2015 compared to 2014, up five per cent up on 2014.

Crabtree says Boeing’s expectations are that airfreight volumes in FTKs will finish up at the end of 2016 by two to three per cent over 2015.

He sees improving growth in 2017 as the first quarter may post better numbers, while the years ahead could see a similar uplift as world trade picks up and forecasts air cargo will grow by around 4.2 per cent over the next 20 years.

Crabtree notes that although some carriers are struggling, some are performing strongly, especially those ideally positioned in the Eastern Hemisphere where more than 85 per cent of the world’s population and about two thirds of the world’s economic activity is located.

He explains airlines with 6th Freedom Rights and global networks are doing particularly well, noting: “They can bridge those population sites with their networks and are uniquely positioned.”

Crabtree also firmly quashes the suggestion that ‘freighters are in retreat’ and he feels that most coverage and statistics do not fully reflect the performance of freighter operators.

He notes IATA puts the figure carried by freighters at 52 per cent, but says the association is missing figures from some freighter carriers and he believes it is somewhere from 52 per cent to 56 per cent.

aircargoweek.com

Crabtree explains: “Freighters are absolutely vital for the health of the air cargo industry.

Freighters still carry the majority of air cargo transported – in excess of 50 per cent.

“The key fact is there about 1,770 freighters in the world, and these represent only eight per cent of the total commercial aircraft of 22,510, yet these freighters carry over half of the world’s traffic, which is a staggering statistic.”

In 2015, IATA said the freight load factor for air cargo carriers fell to 44.1 per cent, which was a fall on the 45.7 per cent in 2014. IATA put this firmly down to the overcapacity that exists in the marketplace.

Crabtree says as this included both passenger bellyhold and dedicated freighters, it is not an accurate reflection and puts the load factor for freighters alone at between 68-70 per cent, and this has been stable for more than a decade.

He notes more than half of the 22,510 commercial aircraft in service are single-aisle aircraft like Boeing 737s, which do not carry much cargo and is the prime reason for so much overcapacity, while the bellyhold load factor alone is somewhere between 30-35 per cent.

Crabtree predicts the number of freighters

TOM CRABTREE will only grow in the future and remain a firm part of the air cargo landscape and estimates 2,370 freighters will be added over the next 20 years, including 1,440 passenger to freighter conversions and 930 factory-built freighters while, the overall freighter fleet will rise by more than half from 1,770 to 3,010 by 2035.

More will be revealed at this week’s ACF when Boeing’s vice president for marketing, Randy Tinseth will reveal the manufacturer’s latest Boeing World Air Cargo Forecast.

ACW DailyNews

Networking and deals done on day two Business deals and networking were the name of the game at The International Air Cargo Association’s (TIACA) Air Cargo Forum in Paris yesterday. It was hand shakes all round on the booths at Porte de Versailles, which were busy as meetings took place and agreements were struck for future air cargo contracts. The new CargoLinX one-to-one meeting area was a hive of activity throughout the day.

Lunch time was especially busy on day two as industry chiefs grabbed something to eat and drink, while talking business.

The Changi Airport and Brussels Airport stands were networking hubs as decision makers talked about the future of the airfreight.

5.3% surge in Asia Pacific

Asia Pacific carriers have seen improvements in September with freight tonne kilometres (FTK) rising 5.3 per cent, the Association of Asia Pacific Airlines (AAPA) says.

The association says air cargo has improved despite weak trading conditions, with FTKs rising to 5.6 billion.

Capacity in available FTK (AFTK) also rose though not as quickly, by 4.4 per cent to 8.8 billion, with load factors increasing 0.5 percentage points to 63 per cent.

AAPA director general, Andrew Herdman says: “Air cargo volumes aggregated for the first nine months of the year match those of the same period last year, reflecting the modest upswing in demand in recent months, bolstered by higher shipments of electronics designated for product launches.”

After a weak start to the year, cargo is picking up again with FTKs at 48 billion, the same as they were for the first nine months of 2015. Capacity in AFTK has grown by 3.3 per cent pushing load factors down two percentage points to 61.2 per cent.

Herdman says: “The lack of impetus for a revival in global trade activity may present some headwinds to sustained growth in air cargo markets.”

aircargoweek.com

28 October 2016

15

Tabloid page bled.indd 1

13/09/2016 12:30