AAL September 2015

SEPTEMBER 2015 volume 1 • issue 4

E-FREIGHT

In the digital realm

SINGAPORE The island’s status is being challenged

FREIGHT FORWARDERS ASIA Fighting against the odds

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CONTENTS 3

September 2015

NEWS Editor Rob Coppinger Assistant Editor Justin Burns Contributing Editors Tara Craig Isabel Lesto Helen Massy-Beresford Leithen Francis Clive Simpson Commercial Director Anthony Smith Sales Director Rosa Bellanca Development Director Michael Sales International Sales Executives Nova Abbott Marketing Manager Kim Smith Finance Director Dawn Jolley Directors Norman Bamford • William Carr • Brian May

4 HNA’s $2.8bn Swissport buy

E-freight

China advances into worldwide handling

5 China Southern joins Partner Plus

Linking up with IAG Cargo

8 Changi Airport’s cargo dips

Relentless growth slowing

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AAPA: June slows down for Asia Pacific

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Airfreight demand softens

10 EVA Air finalises 777 deal

More Boeing freighters for the airline

Singapore

AZura International Robert Denholm House, Bletchingley Road, Nutfield, Surrey RH1 4HW, United Kingdom T +44 (0) 1737 645777 F +44 (0) 1737 645888 E sales@azurainternational.com W www.azurainternational.com

14 Shanghai

Freight forwarders Asia

© AZura International 2015 The views and opinions expressed in this publication are not necessarily those of the publishers. While every care is taken, the publishers cannot be held legally responsible for any errors in articles or advertisements.

No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by electronic, mechanical, photographic or other means without the prior consent of the publishers. USA: The publishers shall not be liable for losses, claims, damages or expenses arising out of or attributed to the contents of Asia Air Logistics, insofar as they are based on information, presentations, reports or data that have been publicly disseminated, furnished or otherwise communicated to Asia Air Logistics.

Translated by Shanghai Snap Printing Co Ltd. The photo on the front cover was provided

by Saudi Arabian Airlines cargo division also known as Saudia Cargo.

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September 2015

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22 Asia Air logistics

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4 NEWS

HNA’s $2.8bn Swissport buy

HAWAIIAN AIRLINES is to introduce a new cargo revenue accounting system. The carrier will use Accelya’s Revera cargo revenue accounting technology, which it says will, “seamlessly,” interface with its cargo operations system. It will enable the airline to perform data quality checks on information coming from the cargo system. Hawaiian says the system will also enhance cash flow through accurate and timely billing, maintain integrity and reconcile all cargo revenue accounts and reduce cycle time of cargo revenue declaration. Hawaiian vice president of cargo, Tim Strauss, says: “Hawaiian’s cargo business has more than doubled in the past three years, so finding the right partner for our cargo revenue accounting needs is extremely important to the enterprise.”

CARGO handling will be in the spotlight when the 7th Air Cargo Handling (ACH) Conference takes place at the Shangri-La Hotel in Bangkok from 1-3 September. The conference will be held outside of Europe for the first time, in the heart of Thailand’s capital, on the banks of the Chao Phraya River.

This year, there will be scheduled one-to-one meetings, panel discussions, workshops and presentations, covering airport cargo operations and freight handling. Among the topics will be security, processes and technology, interfaces between cargo handlers, ramp handlers, customs authorities and other parts of the chain, emerging markets, and case studies on how to optimise efficiency.

On Tuesday 1 September, working groups will take place discussing unit load device management, IT messaging bottlenecks and electronic air waybill (eAWB) implementation case studies.

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wissport International has been bought

by Hainan Airlines’ parent company the HNA Group for 2.7 billion Swiss francs ($2.82 billion).

The cargo handling and services firm has been bought by HNA from its owner, the private equity firm PAI Partners (PAI).

HNA says, under its ownership it will continue to expand Swissport’s global footprint and, “deliver the highest quality and value added services to existing and future customers”.

Closing of the transaction, which is subject to anti-trust approvals and approval of Chinese authorities, is expected to occur around the end of the year.

Swissport chairman, Thomas Staehelin, says: “We are pleased to become part of HNA Group and to continue to further strengthening our service offering and global network.”

Swissport handles 4.1 million tonnes of cargo a year on behalf of around 700 clients. The company is active at more than 270 stations in 48 countries. Last year, it generated an operating revenue of three billion Swiss francs.

HNA president, Adam Tan, explains: “HNA is excited to support Swissport’s world class management team as they continue to provide the highest quality service to the airline industry and their passengers. HNA is committed to Swissport’s future success in the global aviation market.”

In 2014, the HNA Group had revenues in

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excess of $25 billion.During the period of PAI’s investment, Swissport increased its exposure and developed positions in markets in Latin America, the Middle East and Africa. It closed and integrated several acquisitions, including Flightcare, a ground handling operator in Spain and Belgium, IAS in Costa Rica and ground handler Servisair.

PAI partner, Ricardo de Serdio, explains: “The acquisition by HNA of Swissport confirms the strategic value of the company as being the worldwide leader and consolidation platform in the still fragmented airport services market.

The acquisition by HNA will enable the company to grow in the under penetrated Asian markets and in China, in particular, thanks to HNA’s strong roots in the region.”

On 26 November last year, Swissport lost an appeal at Ukraine’s Supreme Court on Economic Affairs, which legitimised Ukraine International Airlines’ (UIA) purchase of a 70.6 per cent stake in Swissport Ukraine. It is now named Interavia. Swissport had fought a long battle since losing its share of the joint venture on 27 March 2013. The company claimed it was the victim of a raider attack followed by a flawed legal process led by UIA. Later this year, Swissport will enter the market in Accra in a joint venture with the Ghana Airport Cargo Centre. In July, Swissport formed a joint venture with Flughafen Graz Betriebs, called Swissport Cargo Services Graz. It will operate at Graz Airport.

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NEWS 5

China Southern joins Partner Plus

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hina Southern Airlines is the latest member of IAG Cargo’s Partner Plus Programme. Partner Plus is an interline agreement where airlines agree to carry each other’s cargo. Membership means that from this month IAG Cargo customers’ freight has access to confirmed space booked on China Southern Airlines aircraft to a range of destinations, including Auckland (New Zealand), Urumqi (China) and the Australian cities of Brisbane, Melbourne and Perth.

They will also be able to track shipments from origin to destination via track and trace functionality through Partner Plus. IAG customers can also rely on a recovery guarantee ensuring that their freight will be recovered

within 48 hours, in the event of an operational offload. IAG Cargo chief executive officer, Steve Gunning, says: “Our focus is now shifting away from adding new members and onto deepening our commercial relationships with the existing members of the programme.” China Southern joins existing members Qatar Airways, Japan Airlines, the Avianca group, American Airlines, and Finnair.

China Southern’s cargo senior vice president, Zhao Fengsheng, says: “IAG Cargo has a strong global network reach and will prove an important partner in helping us to connect our customers with markets in Europe, the Americas and elsewhere. We look forward to working with them on what we believe will prove a highly effective and beneficial partnership.” China Southern’s involvement in the programme follows that of Finnair, which signed up to Partner Plus in February.

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PROMOTIONAL FEATURE

Cargolux advances with China’s Zhengzhou

Cargolux executive vice pesident sales and marketing Niek van der Weide took time out from his busy schedule to talk about his all-cargo Luxembourg airline’s strategic move into flights to Xinzheng International Airport.

Niek, you have started your flights into CGO a little more than a year ago…Can you give us some feedback on your operations there?

We operated our first flight into CGO in mid-June 2014, by October, we had four weekly flights between Luxembourg and Zhengzhou and barely five months after the start-up, we celebrated the first 10,000 tonnes of freight carried between the two hubs! We are now operating 10 weekly flights between Luxembourg Chicago and CGO and the demand for our CGO flights to date has proved to be very robust.

In May of this year, we have introduced two trans-pacific flights between CGO and Chicago which have also proven to be extremely positive in terms of volumes, with loads that are better than anticipated. Recently, Cargolux Italia has introduced a week-end flight between Milan and Zhengzhou to take advantage of the

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shipping industry’s needs to move its weekday production overseas. Commodities on this route include Italian fashion goods, machinery and mechanical spare parts.

IATA statics show that Zhengzhou’s Xinzheng International Airport, CGO, is the fastest growing cargo airport worldwide All in all, our operations in and out of CGO are taking off and we remain optimistic that this trend will continue or even accelerate, we anticipate carrying an annual tonnage of 200,000 between the hubs Luxembourg and Zhengzhou by 2016/2017.

What are CGO’s main advantages?

Zhengzhou is ideally located in central China with daily road feeder services to coastal cities such as Beijing and Shanghai. Its catchment area also reaches far inland providing faster and more economical services to inland cities such as Xi’an, Wuhan, Chengdu and Chongqing.

IATA statics show that Zhengzhou’s Xinzheng International Airport, CGO, is the fastest growing cargo airport worldwide. With a population of 1.4 billion, China has become the world’s second largest economy after the United States and is expected to become the largest economy in the world by 2024.

Cargolux has established itself as an important air freight specialist between Europe and China and we will continue to invest in our operations at Zhengzhou with the aim to become the number one carrier between the

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PROMOTIONAL FEATURE

2 regions. The support from our shareholder and local authorities to foster the development of the airport represents a healthy soil for the growth for our operations with a newly-built international cargo terminal with an area of 45,000 square meters; a new e-commerce platform and a 4PL offering will soon complete our service offering in China.

The airport also offers an excellent infrastructure with 24/7 express customs clearance and the ability to process and accommodate any product type. CGO is truly a multimodal logistics hub, with a high priority for air cargo; ideal for seamless and efficient operations.

What are some key challenges that the air cargo industry brings along, also specifically for the Chinese market?

The key challenges would mostly be linked to regulatory barriers in obtaining the required traffic rights to open new markets and to smoothly operate in those markets. Many trade barriers are still hampering the industry. Some are simply insurmountable and put off potential investment projects, others completely distort the free trade rules and destroy fair completion.

Simplifying and harmonizing the trade rules worldwide is definitely high on our agenda and is most certainly a similarly important topic for the industry in general.

venture cargo airline, based in Zhengzhou, is currently undertaken and Cargolux will further invest in the ground handling and transportation networks in Europe and China with the goal to provide market leading transit times and highly reliable door-to-door services from any place in

Cargolux’s pure freighter aircraft are able to carry a variety of dangerous goods that cannot be flown on passenger aircraft Europe and China, far beyond our dual hubs in Luxembourg and Zhengzhou.

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The air cargo is a competitive industry, how can firms compete effectively, and how does your firm stand out in doing this?

Cargolux’s business model is extremely strong with a proven track of 45 years of experience in the industry. The company has a long history of expertise in transporting a large variety of

items and our new product range reflects the know-how we have gained over the years. CV Fresh for the transportation of perishables (fruit, flowers and meat etc…), CV Pharma tailormade to the transportation of pharmaceuticals that travel in state-of-the-art cool containers, enabling staff to monitor the precise temperature throughout the flight. Cargolux has also gained a worldwide recognition for its expertise in transporting a large variety of animals and our CV Alive product is recognized as one of the best in the industry.

Cargolux’s pure freighter aircraft are able to carry a variety of dangerous goods (CV Hazmat) that cannot be flown on passenger aircraft.

Every day, Cargolux’s team of experts makes sure that flammable, toxic and radioactive materials, explosives, oxidants and poisons are swiftly, safely and efficiently carried by air.

With its long history and experience in the transport of big and heavy cargo, Cargolux has also positioned itself as an outsize specialist. Its nose-door equipped 747 freighters can deal with even the most extravagant cargo. CV Jumbo is brining solutions to our customers carrying the big and heavy freight across continent.

Our product portfolio is completed by CV precious for the transportation of valuables such as paintings or semi-conductors and by CV Power aimed at offering the best transportation solutions to the automotive sector. Additionally Cargolux offers charter service (today, the company operates around 150 charter flights per year in addition to its scheduled services) as well as Road Feeder Services. Airfreight spends only 10% of its journey in flight and the company’s extensive trucking network ensures that shipments arrive at their ultimate destination quickly, efficiently and at competitive rates.

What are the main upcoming milestones for your operations in China?

As foreseen in the cooperation agreement between Cargolux and our shareholder HNCA, a feasibility study for the set-up of a joint

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8 NEWS

Changi Airports’ cargo dips Qatar responds

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hangi Airport’s monthly cargo volumes dipped in June for the second consecutive month.

The airport handled 151,300 tonnes in June, which was a 2.2 per cent year on year (YOY) fall on the same month in 2014.

Changi Airport saw more positive news for the first half of 2015, as cargo volumes increased YOY by 0.2 per cent to 912,300 tonnes.

This growth was driven by rises in imports and transhipments across Changi’s top five markets, China, Australia, Hong Kong, US and Indonesia.

This year the airport has seen unpredictable monthly volumes due to the Asia Pacific slowdown and the impact on cargo markets of the weakening Chinese economy.

June’s figure was down on the 157,000

tonnes in May, which itself was a YOY decline of 0.3 per cent. It was also down on April when 153,400 tonnes were processed, when Changi posted a YOY rise of 1.6 per cent.

The record month for the year so far is March, when 162,7000 tonnes were handled, which was still a 4.2 per cent YOY on fall.

February remains the slowest month of the year for volumes at Changi when 136,000 tonnes were processed, but this was still the biggest YOY monthly increase of the year at 7.3 per cent.

In January, Changi handled a similar amount of cargo to June with 150,300 tonnes, which was a YOY uplift of one per cent on January 2014. Changi Airport Group (CAG) assistance vice president for cargo and logistics development, James Fong, has told Asia Air Logistics that the airport plans on developing its cargo operations and “leveraging” its location in South East Asia. He said growth will come from North East Asia and South West Pacific markets and also highlighted the opportunities for Changi in pharmaceuticals and perishables.

Traffic is set to rise at Changi, and last week, CAG signed a memorandum of understanding with Xiamen Airlines to grow bellyhold traffic and connectivity between Changi and China.

Losses fall at Singapore Airlines

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ingapore Airlines Cargo halved its operating loss in the first quarter (Q1) of the financial year compared to Q1 last year. For that April to June quarter, the loss was down 50 per cent to nine million Singapore dollars ($6.5 million), compared to 18 million Singapore dollars in the financial year’s Q1 of 2014/15.

SIA Cargo carried 282,000 tonnes in Q1, which was a year on year (YOY) increase of 0.4 per cent on Q1 last year, when it handled 278,500 tonnes.

Capacity saw a YOY rose in Q1 of 2.6 per cent to 2.56 billion tonne kilometres, up from 2.5 billion in Q1 last year. The cargo load factor fell YOY by 1.3 percentage points in Q1 to 61.1 per cent.

The carrier says despite lower revenue stemming from a 7.6 per cent reduction in cargo yield, this was more than offset by the fall in expenditure, mainly from lower fuel costs.

As for the future outlook of the business, SIA Cargo, explains: “Air cargo yields are unlikely to see an upturn as industry overcapacity persists.

SIA Cargo will continue to manage capacity carefully, while actively pursuing opportunities in special product segments to stimulate yields.“ The Singapore Airlines Group as a whole earned an operating profit of 111 million Singapore dollars in Q1. This was 72 million higher than Q1 last year. Group revenue declined by 117 million Singapore dollars to 3.5 billion, a YOY fall of 3.2 per cent.

Cargo revenue in the Group saw a decline over last year by 37 million Singapore dollars or 7.2 per cent, due to a 7.6 per cent yield fall. The Singapore Airlines arm made a profit of 108 million Singapore dollars in Q1, up from the 45 million profit in Q1 in 2014/15 financial year.

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to subsidy claims

QATAR AIRWAYS has responded to the allegations of subsidy and unfair competition made by US airlines in recent months, five weeks after Emirates published its own response.

Qatar is refuting allegations made

by American Airlines, Delta Air Lines and United Airlines in their joint white paper, Restoring Open Skies: The Need to Address Subsidized Competition from State-Owned Airlines in Qatar and the [United Arab Emirates] UAE, published in March. The White paper accuses Qatar, Emirates and Etihad Airways, of profiting from unfair subsidies and benefits. The US airlines have been calling for changes to the open skies agreement the US government has with the Qatari, Dubai and Abu Dhabi authorities.

In the white paper, the US airlines cite studies they claim show that the Middle Eastern airlines are driving down yields on long haul routes to and from the US with their fleet investment. Qatar points out that it: “does not compete with any member of the [three US airlines] in any nonstop market.”

In its response, Qatar also challenges the claim by the US airlines that they are being harmed by pointing to recent US airline financial results that show, what the Qatari carrier says is those airlines’: “best financial years on record”.

In June, Emirates published its own response. Its president, Sir Tim Clark, said: “The [US airlines’] white paper is littered with self-serving rhetoric about fair trade, [a] level playing field, and saving jobs.”

The US white paper, released by American, Delta and United, was produced along with the Air Line Pilots Association, the Allied Pilots Association, the Association of Professional Flight Attendants and the Airline Division of the International Brotherhood of Teamsters.

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NEWS 9

AAPA: June slows down for Asia Pacific

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he slowdown in Asia Pacific continues with June seeing a slight 0.5 per cent fall in demand, compared to the same month last year, according to the Association of Asia Pacific Airlines (AAPA).

The association says preliminary figures for the month show air cargo markets have, “softened,” and the recent moderation in the region’s airfreight volumes extended into the month.

AAPA says demand in freight tonne kilometres (FTK) in June was 5.3 billion. Capacity in available freight tonne kilometres (AFTK) was 8.3 billion, up 2.5 per cent. The freight load factor in June fell by 1.9 percentage points to 64.1 per cent.

The FTK figure in June was down on the 5.4 billion in May, but slightly above the 5.3 billion in April, and down on March when FTK was 5.9 billion. It was up on February and January when FTK was 4.8 billion and 5.1 billion, respectively.

The AFTK total in June was a decline on the 8.5 billion in May, the 8.4 billion in April and the 8.6 billion in March. June’s figure was up on the 7.4 billion in February and the same as the 8.3 billion achieved in January.

Demand for the first half of the year has risen compared to the same period last year. FTK for the first six months of 2015 was up 4.8 per cent to 32.1 billion. AFTK is up by 4.9 per cent to 49.9 billion.

The freight load factor for the first six months of 2015 was 64.4 per cent, which is a 0.1 percentage point rise on the same six months in 2014.

AAPA director general, Andrew Herdman, says: “Air cargo demand grew by 4.8 per cent during the first half of 2015, but the pace of growth has moderated during recent months after the earlier boost in demand due to the US West Coast ports strikes wore off.” Looking ahead, Herdman explains the outlook for air cargo markets is uncertain, with signs of a slowdown in global trade. “In general, Asian carriers remain focused on improving profitability, including careful adjustments to route networks in response to changing patterns of demand,” he adds.

The AAPA data follows on from Airports Council International’s figures which showed that worldwide cargo volumes in May fell year on year (YOY) at 15 of the world’s 30 busiest airports - by total tonnage. The airport association revealed the figures in its FreightFlash statistics for May.

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10 NEWS

First quarter cargo fall for ANA in 2015 ALL NIPPON AIRWAYS (ANA) international and domestic cargo revenues both fell in the first quarter (Q1) of the financial year.

For the quarter ending on 30 June, the airline saw international cargo drop year on year (YOY) by 1.6 per cent or 0.4 billion Yen ($3.2 million). Domestic fell YOY 0.4 billion Yen or 5.4 per cent.

The carrier’s international cargo revenue in Q1 was 28.8 billion Yen. It carried 191,000 tonnes of freight and its cargo tonne kilometres were 828 million.

ANA says internationally it: “Worked to capture trilateral traffic demand between North America and Asian cities via Japan, but as a result of the stagnant cargo market, both on flights departing Japan for China and other Asian countries, and also on flights to Japan, freight volume and revenues decreased YOY.” The airline’s domestic revenue in Q1 was 7.2 billion Yen. It carried 104,000 tonnes and its cargo tonne kilometres were 106 million.

ANA says domestically it: “Introduced a new sales system designed to facilitate space availability at the real-time.

“However, as a result of a decrease in the supply for fresh produce because of typhoons and other inclement weather and a reduced volume of international cargo transferred to domestic flights due to yen depreciation, both freight volume and revenues decreased YOY.” ANA’s total revenues increased by seven per cent in Q1 compared to the previous year, reaching 413.8 billion Yen. The airline says the overall performance reflected expansion in its network and capacity along with improved efficiency and cost restructuring, which drove strong increases.

ANA explains: “Despite downside risks to the economy in overseas market, the Japanese economy continued to recover gradually with signs of a rebound in capital investment and personal consumption during the first quarter.”

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EVA Air finalises 777 deal

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VA Air has finalised a $1.5 billion deal with Boeing for five Boeing 777 Freighters which will become the first to join EVA’s fleet and the first delivered to Taiwan.

Boeing announced an intent to order at the Paris Air Show, last month. The freighters will join EVA’s fleet of Boeing 747-400 Freighters, Boeing MD-11 Freighters and bellyhold capacity.

“Airfreight is an important link in global trade,” says EVA Air chairman K.W. Chang. “We are investing in the most advanced aircraft and committing ourselves to continuing to ensure an efficient and reliable service. Quality service and flight safety are our top priorities at EVA and we apply the same high standards to cargo services. We are determined to make EVA the world’s best airline for both passenger and cargo services.”

The 777 Freighter is the world’s largest and longest range twin-engine freighter, capable of flying 4,900 nautical miles (9,070 kilometers).

The range translates into significant savings for

HACTL passes first WHO GDP audit

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ong Kong Air Cargo Terminals (HACTL) has passed its first World Health Organization (WHO) Good Distribution Practices (GDP) annual surveillance audit.

Last year, the cargo handler, became the first handling agent in Hong Kong to achieve GDP accreditation, which covers the provision of handling, logistics and storage services for pharmaceuticals.

The 2015 annual audit was conducted by Geneva-based independent GDP auditor SGS and included full surveillance of Hactl’s staff competence, premises, equipment, processes, quality control system and hygiene standards.

During the year, HACTL created a new quality assurance supervisor post within its GDP management team to strengthen the observance of GDP-governed operations.

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cargo operators - fewer stops and associated landing fees, less congestion at transfer hubs, lower cargo handling costs and shorter cargo delivery times. The airline plans to use the new freighters, which will be delivered between October 2017 and September 2019 - to bolster its fleet on trans-Pacific and Asian routes in an effort to meet growing demand.

In April it launched EVA Pharmacare in collaboration with Envirotainer to carry pharmaceuticals, vaccines, healthcare products, food and semi- conductors. The service started in Europe and Asia before North America was added in June.

EVA was a launch customer of the Boeing 777-300ER and is flying 21 Boeing 777-300ERs and has 13 more on order. “We made the right choice and our experience with this aircraft’s advanced technology and excellent performance indicates what we can expect from the Boeing 777 Freighters,” says company president Austin Cheng. “These freighters will be the backbone of our air cargo service for the next decade.”

The audit found there had been no deviation events since HACTL’s original accreditation, and there no non-conformities. It confirmed that Hactl’s cold chain management system continues to meet specified standards.

HACTL chief executive, Mark Whitehead, says: “Pharmaceuticals is an increasingly important part of the total airfreight market. I am very pleased with the direction of the GDP initiative, and its positive impact on airfreight’s ability to serve this sector.”

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12 FEATURE E-FREIGHT

In the digital

realm

While the paperless office remains some way off, air cargo is ahead of the field. It would be wrong to say that the industry has wholeheartedly embraced the concept of e-freight, but great strides have been taken The International Air Transport Association (IATA), is behind the ongoing push towards industry-wide e-freight adoption. It has issued a multilateral e-AWB agreement providing a single standard agreement for airlines and freight-forwarders to sign. To date, more than 80 airlines and 2,095 freight forwarders have signed it.

IATA defines its efforts as aiming, “to build a paperless, end-to-end transportation process for air cargo”. E-freight has three pillars, the organisation says. Firstly, to create a network of locations and airports, where it is possible to remove paper from the transportation of air cargo from a legal environment and e-customs procedure standpoint.

Secondly, to digitise and remove the key air cargo transportation documents used today, in particular the air waybill (AWB). This would be replaced by the electronic air waybill (e-AWB).

Finally, e-freight would involve digitising the accompanying documents transported with air cargo shipments, in other words, removing the air cargo document pouches.

E-freight is beneficial in a number of ways. The potential for improved operations is enormous. IATA case studies have found that implementing e-freight can bring operational efficiency of 19 per cent to 48 per cent in an airline’s export, import and transit processes. Freight forwarders introducing e-freight can expect operational efficiency of between eight per cent and 44 per cent, the same studies concluded.

IATA also claims that e-freight will drive growth in air cargo, prompted by the improved service shippers will received. Improvements will include better transparency and tracking of goods, and a reduction in average end-to-end transfer time - it is hoped that this will be cut by 24 hours.

Documentation will be more accurate, as e-freight will eliminate manual entry errors. Electronic documentation will also make it easier for the industry to comply with national and international regulations.

Improving operational efficiency is undoubtedly the main benefit of e-freight, but the environmental advantages are not to be overlooked.

IATA figures estimate that the average airfreight shipment generates up to 30 different paper documents. It estimates that e-freight, “will eliminate more than 7,800 tonnes of paper documents annually”. This, the organisation says, is , “the equivalent of 80 Boeing 747 Freighters filled with paper”. IATA is focusing on replacing the air waybill with the electronic equivalent. Its initial target for penetration of the e-AWB across valid trade lanes was 22 per cent by 2014. In December of that year, penetration hit 24.9 per cent. The target for 2015 is 45 per cent and for 2016, an ambitious 80 per cent.

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Uptake of the e-AWB has slowed, however. IATA figures, released at the Fourth IATA e-Cargo and Technology Conference in Geneva, Switzerland in June, showed that the rate of global penetration has fallen for a second consecutive month. To hit 45 per cent penetration by the end of the year, growth of 2 per cent a month is required. Uptake of the e-AWB fell by 0.7 per cent and 0.3 per cent in March and April, respectively.

“The industry needs to accelerate the transformation process, and we need disruptive innovation and change management to make this happen,” says IATA. May figures are slightly more encouraging. The overall e-AWB penetration rate rose to 27.9 per cent, a rise of two percentage points from April.

“The efforts by the industry to increase e-AWB uptake continue to bear fruit. We now have over 400,000 e-AWB shipments monthly, a 17 per cent increase in volume compared to December 2014” says IATA. “Unfortunately, the percentage rate of e-AWB penetration has increased at a slower rate than the growth in volumes”, he says.

He adds that this slowing of uptake is due to two main factors. Firstly, countries that ratified the Montreal Convention 1999 are being counted as potential e-AWB volumes this year. Secondly, IATA says, volume from Chinese carriers is now also counted, following Shanghai and Guangzhou opening to e-AWB. While the focus is on the air waybill, there are other documents to bear in mind. IATA considers the cargo manifest, the house waybill, the shipper’s declaration for dangerous goods, the packing list, and the invoice, suitable for conversion to an electronic format. The rate of uptake may be inconsistent, but stakeholders continue to convert to e-freight.

In May, a number of countries saw increased e-AWB penetration. The most significant growth was in India, where e-AWB use rose by 3.3 per cent month on month to 60.2 per cent. Usage in the US increased by 2.6 per cent to 20.3 per cent.

The top three airlines by e-AWB volume in May 2015 were Cathay Pacific Group, Emirates, and Air France KLM Group. The three biggest increases in usage that month were recorded by Lufthansa, up 2.4 per cent to 20.6 per cent, International Airlines Group British Airways, up 2.3 per cent to 39.2 per cent and Qatar Airways whihc was up 1.7 per cent to 39.1 per cent.

Lufthansa Cargo is particularly committed. Among its focuses is Shanghai, where the German airline is carrying out e-AWB trial shipments with some 20 customers.

“We are still working on some challenges, together with Shanghai

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FEATURE E-FREIGHT 13 Airport, Shanghai Pudong International Air Cargo Terminal, IATA, customs and other authorities, but we are confident to have an entire roll out by end of this year”, says Christian Haug, director North and Central China, Lufthansa Cargo.

Lufthansa continues to add to the number of its stations capable of receiving cargo without a paper AWB. Among those where it is already possible are Bangkok, Hong Kong and Tokyo Narita.

SAS Cargo is to make airfreight business easier, stresses president and chief executive Leif Rasmussen. He says: “SAS Cargo has identified that our customers, the airfreight agents, and their customers expect us to be more innovative, in regard to customs handling, e-freight and e-AWB handling in order to improve their door-to-door time and service.”

Rasmussen adds that SAS Cargo has introduced an online booking portal with an instant confirmation feature which will improve the service the airline’s customers offer their own customers, shippers. “Our online booking system is different from most other, similar, initiatives, as we have decided to offer truly dynamic pricing, a 30-days booking window for all the products we offer the market. On top of this, we offer an instant booking confirmation solution which include price and capacity,” explains Rasmussen. He says that despite the service’s newness, it was launched in early June, penetration figures are already significant. SAS Cargo expects that 30-40 per cent of all bookings will be made online before the end of the year.

Hong Kong Air Cargo Terminals Limited (HACTL) (pictured below) has long been an advocate of e-Freight. Executive director, Cindy Ng, says: “Our self-developed cargo community system, COSAC Plus, has been exchanging air waybill and house waybill information with airlines and forwarders using the FWB and FHL messages for over 10 years, as well as all airport-to-airport status messages, such as RCS and RCF, relating to handling agents.” HACTL is developing the Airline Pouch, designed to streamline export cargo document acceptance. This will launch this later this year. Ng says: “HACTL is a strong proponent of e-cargo which embraces e-AWB, e-freight, and Cargo XML [extensible machine language].” “We

believe that the digitisation of paper processes in airfreight will improve the industry’s efficiency and reliability, so we continue to develop new services and standards to serve our customers and the community,” she concludes.

Fumio Gunji, deputy vice president, cargo business department, Narita International Airport Corporation, says that his company has, “no specific plan in hand,” but that it always, “willingly supports industry ideas related to IT as well as e-freight”. He adds that IT initiatives at Narita have been carried out primarily by Nippon Automated Cargo and Port Consolidated System, which provides a system for the online processing of customs procedures and related private-sector services, from the aircraft’s arrival to the unloading of its cargo.

In addition to getting the uptake of the e-AWB back on track for its 45 per cent target, IATA wants to see the e-AWB network grow. One of its priorities for 2014-2015 is to enable e-AWB at all key airports in the BRIC countries, such as Brazil, Russia, India and China.

In March, a number of organisations announced their joint commitment to e-freight in Shanghai. Among them were IATA, Shanghai Airport Authority, China Eastern Airlines, Shanghai E-port, and Shanghai Customs.

They undertook to phase out the need for a security check stamp on paper air waybills, and to eliminate the need for paper air waybills and facilitate the implementation of paperless customs clearance at Shanghai Pudong Airport. The group also committed to optimise and streamline data sharing with each other.

Shanghai was declared open for e-AWB on import and export as recently as October 2014, so the speed with which these organisations have committed to e-freight is encouraging. Shanghai is China’s main cargo hub, so its adoption of the e-AWB is seen as a significant development.

As well as developing the e-AWB’s global footprint, IATA is keen to see greater industry collaboration at airport level this year. This would help make e-AWB processes more consistent locally, which would, in turn, help all stakeholders. Business process modernisation is also a priority, in particular the adoption of a single process.

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14 FEATURE SINGAPORE

The island’s status is being

Challenged Singapore remains one of the largest air cargo hubs, but it faces enormous challenges due to increased competition and changing economic circumstances.

The city-state in recent years has shifted from being a manufacturing centre to a services-based economy with a strong emphasis on financial services.

Cargo carriers serving Singapore have also been adversely affected because Singapore’s international trade-dependent economy has taken a dip due to lower growth from China. With growth slowing in China, there is less demand for components and parts manufactured in Singapore.

Singapore’s purchasing manager’s index (PMI) has been reporting negative figures since late last year. PMI is Singapore’s index for manufacturing activity.

Singapore Airlines Cargo, which contributes 14-15 per cent of SIA Group revenue, had been on track to record a small profit for the year ending March 31, but the fall in Singapore’s manufacturing activity in the last two quarters, meant it ended up posting a loss, say market analysts. Last fiscal year it posted a net loss of $22 million Singapore dollars ($16 million), which is an improvement over the previous fiscal year’s loss of S$100 million. The airline improved its financial performance by cutting capacity 2.4 per cent last fiscal year, while cargo carried increased 0.6 per cent in the period.

SIA Cargo experienced an increase in exports out of Europe and strong

FONG Operators are also shifting capacity from dedicated freighters to bellyhold on passenger aircraft.

growth from the Vietnam market, but this was not enough to offset the decline in Chinese exports. The airline has six Boeing 747 Freighters in operation, as well as two that are parked. In terms of new services, it launched a weekly Singapore-New Delhi service via Bangkok. But, this was partly to make up for the loss in bellyhold space from SIA’s passenger airline which switched from Boeing 777-300 extended range to Airbus A380s on routes to New Delhi and Mumbai. Besides operating freighters, SIA Cargo also makes use of the bellyhold on SIA passenger aircraft and with effect from 1 April started managing the bellyhold on SilkAir, SIA’s narrowbody passenger airline. There have been very few new cargo services launching to Singapore’s Changi Airport. The only new service in recent years has been All Nippon Airways (ANA) Cargo’s six times weekly Okinawa-Singapore-Tokyo Haneda service. ANA launched the Boeing 767 Freighter service May last year, because it saw a market for the sale of high value Okinawa fruit and vegetables into Singapore; which has a large, wealthy Japanese expat community.

But, there is one small bright spot for Changi Airport Group (CAG).

Russia’s AirBridgeCargo Airlines does plan to launch a twice-weekly Moscow-Hong Kong-Singapore service in September using 747Fs. CAG says in June 2015, there were 22 freighter carriers operating to Singapore’s Changi Airport, accounting for 322 weekly freighter flights.

This represents a 5.8 per cent decline in flights year-on-year, it adds.

When asked about the decline in freighter services to Singapore; James Fong, CAG assistant vice president cargo and logistics development, explained that some cargo carriers have been rationalizing capacity in order to boost yields. This means the cargo carriers may still be operating to Singapore, but with a lower frequency. Fong says: “Operators are also shifting capacity from dedicated freighters to bellyhold on passenger aircraft. But there are still some routes that dedicated freighters can cover that bellyhold can’t cover,” he adds.

The passenger network, and thus the cargo network out of Singapore using bellyhold, continues to grow. Air New Zealand launched a daily non-stop Auckland-Singapore service on 6 January using Boeing 777s.

New Zealand is the largest exporter globally of dairy products.

Oman Air launched a daily non-stop service on March 29 from Muscat to Singapore using Airbus A330s. Oman is a country that relies heavily on imported food stuffs and other goods.

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16 FEATURE SINGAPORE Myanmar National Airlines, meanwhile, is launching a daily non-stop passenger service on August 17 from Yangon to Singapore using Boeing 737-800s. And Thai Lion Air is launching a daily non-stop passenger service from Bangkok to Singapore on August 15 using Boeing 737-900ERs. Narrowbodies have very little spare cargo capacity in the bellyhold, after passenger baggage is taken into account, but cargo in the bellyhold underpins the profitability of some airlines’ long-haul widebody services.

This may explain, for example, why there is such a high frequency of services between Singapore and London and Singapore and Shanghai, says CAG’s Fong. He says airlines operating on those two routes enjoy high demand for cargo.

The emergence of short haul and long haul low-cost carriers has also been a boon for freight forwarders using Singapore, because it has provided new international connections. Fong says some of the cities the LCCs are operating to are industrial cities, where demand for freight services is high. He cites as an example, Scoot’s 777 services to Shenyang and Qingdao in North East China. Shenyang is a major centre for machine, aircraft and automotive manufacturing; while Qingdao is a centre for the manufacture of white goods.

Fong says demand for airfreight to far flung industrial cities helps to underpin long haul LCC operations and make long haul LCCs more financially viable. For example, he says A330s, after passenger bags are loaded, usually have 15-20 tonne of spare capacity in the bellyhold that can be used to carry cargo.

But, cargo is far less significant for short haul low-cost carriers, because once passenger bags are loaded into the bellyhold, there is only 1-3 tonnes spare capacity for cargo, says Fong, adding that on average there is usually only 1.5 tonnes available.

Singapore’s connectivity is certainly a boon for freight forwarders. Toll Global Forwarding chief executive officer, Paul Coutts, says Singapore is holding up well as an air cargo hub and that he is impressed with the infrastructure that Singapore has in place.

Singapore is Toll’s main hub in South East Asia. It already has several warehouse facilities in the city-state, but in late July announced that it is building a $288 million Singapore dollar ($209 million) logistics complex in Tuas, next to Singapore’s main seaport.

In terms of new infrastructure coming up in Singapore, CAG has a fourth passenger terminal already under construction and it is due to open in the coming years. Land has already been cleared for Terminal 5 which is due to open in the mid-2020s. And CAG is planning to open a thirdrunway in the early 2020s. It is in fact a military runway, already at the

airport, which will be converted to commercial use. While Singapore has some impressive airport infrastructure, it faces a challenge from the big middle eastern air hubs.

The fact that Singapore’s manufacturing sector is shrinking, means there is less cargo originating from Singapore. Therefore, Singapore is now very dependent on being a transit point for airfreight.

Singapore is trying to develop its transient business, but the challenge is that the middle eastern carriers are putting so much capacity into Singapore and this is reducing yields.

For example, Qatar Airways launched a third daily service into Singapore on 1 June and has switched aircraft on the route to the Airbus A350 from the smaller capacity Boeing 787-8. These two changes represent an increase in cargo capacity of 67 per cent.

Emirates is increasing services in August with a fifth daily service. Etihad are decoupling its Brisbane (Australia) service from Singapore, so this represents an increase in capacity to Singapore.

“It [increase on capacity from Middle eastern carriers] is forcing yields down big time,” says Mike Hewitt, industry executive and former regional manager Asia for ECS Group.

“All three Middle eastern carriers are government-owned and are working to shift transfer traffic out of Singapore and Hong Kong to the Middle East. There is lower yields, but greater market share. And once they have secured greater market share, they will work to push yields up,” he adds.

Singapore’s ground handlers are trying to develop higher-yield cargo businesses. Singapore Airport Terminal Services (SATS) has built, for example, a cold storage facility to serve the high-value pharmaceutical sector.

But, Hewitt argues that for Singapore to remain competitive it also needs to find ways to improve turn around times.

He says having modern, state-of-the-art cold storage facilities is good, but, customers do not want to be paying for their goods to be sitting in an airport warehouse. Instead, they want to get their goods from a to b as soon as possible, he adds.

Even though Changi Airport is one of the largest airports in the world, it only has two ground handlers – SATS and Dnata.

CAG has tried to increase competition by issuing a license for a third ground handler. It issued a license to Swissport, but then that company pulled out in 2009. CAG then issued a license to Aircraft Services International Group (ASIG), which earlier this year lost Jetstar as a client, its only airline customer in Singapore.

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18 FEATURE FREIGHT FORWARDERS ASIA

Fighting against the

odds

The evolving needs of shippers and the advent of e-commerce has led to enormous changes in the freight forwarding industry in Asia Pacific, but the industry’s low profit margins and cumbersome government regulations are impediments.

The changing needs of shippers and the advent of e-commerce has led to enormous changes in the freight forwarding industry in Asia Pacific, but the industry’s low profit margins and cumbersome government regulations are impediments.

“As an industry we have been slow to embrace new technology over the years. We have struggled as an industry in areas of technology that is game changing. But, I also understand the reasons why this is the case.

We are a low margin business and as a consequence of that, we as an industry have been slow to invest in research and development,” says Toll Global Forwarding chief executive, Paul Coutts.

He adds: “Things are changing, because the cost of technological development is coming down, so in more recent years we have seen more happening in terms of new technology.”

He cites as an example, the advent of pick to voice technology where personnel working in some freight forwarding warehouses no longer have to refer to paper documents in order to pick products from the warehouse shelves. Instead, the personnel, when they walk down the aisle, automatically receive a voice message telling them what products to pick from the shelf. The personnel can then acknowledge they have completed the task by talking into a phone that makes use of voice recognition technology.

Coutts says robots are also becoming more prevalent in warehouse operations, reducing the need for so much warehouse space.

CEVA Logistics’ executive vice president for South East Asia, Elaine Low,

agrees that low profit margins are an impediment. “The industry has been quite slow to embrace new technology because it is a low margin business,” says Low. She says in terms of new technology, the one area where there has been a lot of investment made is in trace and track technology.

But, today the biggest cost to freight forwarders is still personnel costs, says Low. Freight forwarders generally have a lot of administrative staff, because to ship goods from point a to point b involves getting a lot of approvals and processing a lot of paperwork.

Some have wondered why the industry does not streamline by introducing a paperless system.

It is difficult to go paperless because there are so many parties involved in the supply chain and all parties would need to agree to adopt the same paperless system in order for it to work, says Low, adding that, “I wish every country went paperless.”

She also says it hard to automate freight forwarding because it is not standardised. “Customer needs are different,” she says. However, she adds: “I think one trend in future may be to try to get the customer to standardise their requirements.”

Another reason it is hard to go paperless is because there are so many government agencies involved in regulating the flow of goods between nations, and not all government agencies are willing to adopt the same paperless system.

The amount of industry regulations, meanwhile, is rising. “The regulations are increasing in all areas, but it seems to be happening even more in air cargo,” says Low, adding that this is, “because of recent air disasters.” She says, having more regulations equates to an increase in costs to business.

Despite there being more regulations and an inability to move to a completely paperless system, the freight forwarding industry is having to find ways to work faster.

Coutts says one key trend in the industry is that customers are less willing to carry excess inventory. Freight forwarders have to be more responsive, so as to cater to increasingly time-sensitive shipper requirements, he says. But, freight forwarders need to also bear in mind that cost and reliability of service is crucially important, he adds.

The fact that some customers are expanding into e-commerce is creating opportunities for freight forwarders in Asia Pacific.

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20 FEATURE FREIGHT FORWARDERS ASIA Coutts says Toll has a new service offering, “e-commerce forwarding’, that it developed in response to customer demand. “We had a client in Australia. They were happy with the transit time of the express product, but not happy with the price. As for Australia Post, they were happy with the price, but not happy with the transit time.”

“So, what we have done is establish a product that is positioned between the two. It is slower than the express product, but cheaper, and it is faster than the postal service,” Coutts explains.

When asked what percentage of group revenue this new service offering contributes, he says: “At the moment, the volume is fairly small.

We only launched this service in the last six months. I don’t even think it would even come up on the radar, but it is growing significantly. The volumes have grown 3,000 per cent since it started. So, we have a lot of hope for that product. If it achieves five per cent of group revenue in a year’s time I will be happy. I think it could achieve 25 per cent of group revenue in three to five years.”

Besides e-commerce, another key trend has been modal shift and flexibility in use of modes. Coutts says Toll has developed some new services that combine different modes of transport. Goods are transported from Asia to Dubai by sea and then from there transported on an airline to Europe. He also says the trans-Siberian railways is growing in popularity as a way to get goods from Asia into Europe.

Agility International Logistics executive director, Eddie Sng, says: “Freight forwarding …in some respects, is becoming more predictable as advances in supply chain management, forecasting and demand planning tools offer more visibility to organisations. One example of this is the switch to slower modes of freight, such as ocean freight, as companies get better at inventory management and forward planning.

Sng adds: “The industry is moving towards data sharing and capturing data at source, so freight forwarders have to cope with increasing demands for e-services. Moving freight is no longer the key, sharing information as the freight moves through the supply chain is.”

C. H. Robinson’s director of global air services, Matt Castle, says: “As the world becomes more globalised and interconnected, comprehensive technology offerings that integrate data along each point in the supply chain are changing the way that companies maintain visibility and access analytics. The amount and types of data that these technologies are able to manage is vastly different today than it has been in the past.”

Castle says freight forwarders in Asia Pacific are still expected to be price

REDDINGTON Logistics companies need to be one-stop shops

competitive, but another way freight forwarders in the region are able to differentiate themselves is by providing shippers with supply chain technology that enables advanced visibility and reporting capabilities.

FedEx president for Asia Pacific, Karen Reddington, says one way freight forwarders are seeking to differentiate themselves is by offering valueadded services that effectively turn these logistics companies into onestop shops. “Examples of such value-added services include warranty processing, returns management, customs and insurance brokerage, and trade and transportation management.”

She says in the freight forwarding industry, key differentiators can be categorised under: flexibility, expertise in customer industries and use of IT to put the customer more in control. Flexibility relates to factors such as timeliness and ability to provide door to door. Industry expertise is an important differentiator because knowledge of the customers’ industry, allows freight forwarders to better advise customers, for example, on business strategy. IT solutions, meanwhile, allows customers to get better supply chain visibility.

Market consolidation is another trend taking place in Asia Pacific’s freight forwarding industry, says Low at CIVA. “There are a lot of players looking to grow their market share and service offerings. So, for example, you have seen strong regional players, from China and Japan, trying to become global players. They are trying to gain competitive strength through consolidation.”

Low says the consolidation in the industry may also be driven by customer demand, because multinational customers generally prefer to work with the global freight forwarders.

Sng at Agility says: “As growth rates slow in more developed markets, companies are looking to new markets for growth and many times these are emerging Asian markets. In addition, rising incomes in these emerging markets is creating new demand from consumers. Products once produced in emerging markets are increasingly finding a market in emerging markets, rather than just being exported. In China, for example, domestic distribution capabilities are key as China focuses on domestic demand drivers of growth.”

But the shift to intra-Asia does create its own set of challenges.

“Increasing levels of income and the rise of a consuming middle class are driving domestic consumption and forwarders need to overcome the challenges that come with domestic distribution in places such as China, India or Indonesia,” says Sng.

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22 FEATURE SHANGHAI

Record

volumes

It is no coincidence the International Air Transport Association (IATA) picked Shanghai as the venue for its World Cargo Symposium in March.

As a cargo hub, Shanghai is booming.

China is the world’s second largest market for international freight by air, accounting for seven per cent of volumes. According to IATA’s current forecast, which covers up to 2018, air cargo volumes to, from and within China will grow by 4.9 per cent a year over the next three years. IATA director general, Tony Tyler, speaking at the World Cargo Symposium, stressed that this was, “comfortably ahead of the global average for this period, of 4.1 per cent.” Tyler added that, “the growing Chinese middle class is driving demand for foreign goods, which will help create a more sustainable and balanced economy.” This would be good news for air cargo flows, he says.

Shanghai has two key airports, Shanghai Pudong International Airport and Shanghai Hongqiao International Airport, the latter concentrating on domestic flights. Both are state-owned and managed by Shanghai Airport Authority.

The larger of the two, Shanghai Pudong International Airport, saw cargo volumes grow by 10.7 per cent year on year in May. This is the latest in a series of record volumes, and there is every sign that the future will remain rosy for Shanghai’s cargo stakeholders.

Shanghai Pudong International Cargo Terminal (PACTL) recorded its strongest annual tonnage yet, 1.5 million tonnes in 2014, and the strongest first quarter ever - with 362,497 tonnes in the first quarter of 2015. The terminal handled 262,189 tonnes of import cargo in the first five months of this year, a year on year increase of 14.3 per cent. Export cargo volumes grew by 9.8 per cent to a figure of 369,978 tonnes in the same period.

Shanghai is clearly on a roll where air cargo is concerned. There are a number of reasons for this. The airport is well-positioned geographically to capitalise on Chinese industry. “There are plenty of factories surrounding Shanghai and the cargo can be easily trucked to the airport and then transported via airfreight,” explains MASkargo global sales senior manager for Orient, North Asia and Americas, Lee Chee Eng. The September 2013 establishment of the Shanghai Free Trade Zone (FTZ), the first in China, dispensed with much of the bureaucracy that had previously proved daunting to overseas shippers and potential investors.

Simplified processes, in the customs and quarantine departments in particular, have proved so effective in Shanghai that they are set to be rolled out at other major ports.

This applies to both export and import for general cargo, but does

not as yet include express cargo. Cargo shippers have benefited not only from better processes, but from the creation within the FTZ of a cross-border e-commerce platform, buyeasi.com. It was intended to put an end to smuggling and customs duty evasion, but has also boosted cargo volumes. Perhaps of greater significance to the air cargo sector is Shanghai’s push towards the adoption of e-freight. The port was declared open for electronic air waybills (e-AWBs) in October 2014. In March 2015, several key organisations announced their joint commitment to promoting e-freight in Shanghai. Among them were IATA, Shanghai Airport Authority, China Eastern Airlines, Shanghai E-port, Shanghai Customs, Shanghai Entry-Exit Inspection and Quarantine Bureau.

They undertook to phase out the need for a security check stamps on paper air waybills, to eliminate the need for paper air waybills, and to facilitate the implementation of paperless customs clearance at Shanghai Pudong Airport. The result will be faster, cheaper and more effective processing of cargo, which will in turn lead to cost and operational savings that will attract new shippers and encourage shippers already using the Shanghai airports to continue doing so.

Facilities at Shanghai are another draw. Among the amenities attracting shippers to PACTL are a strong room for vulnerable and valuable goods, a live animals room, and a dangerous goods storage house. The terminal also features a facility for cargo cooling and freezing, and an area for cargo build-up or break-down. “PACTL is the most important air cargo gateway in China and one of the biggest cargo airports in the world,”

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FEATURE SHANGHAI says Lufthansa Cargo’s North and Central China director, Christian Haug.

“Due to the good relationships and trust it has built up with customers over the years, PACTL now ranks among the leading airfreight terminals worldwide. It’s the only airport in the Lufthansa Cargo freighter network that is served with a daily Boeing 777F service,” he adds.

SAS Cargo president and chief executive officer, Leif Rasmussen, agrees.

“Shanghai is the major gateway in and out of mainland China, regardless of the many upcoming logistics centres we see popping up around, and we are confident that Shanghai will continue to be the mainland China powerhouse in regards to airfreight both as a destination, gateway as well as the main point of export,” he says.

“There are many things which work well in Shanghai Pudong Airport, one of them being our cargo handling company, PACTL, which we are very satisfied with.”

PACTL’s vice president Lutz Grzegorz puts his terminal’s effectiveness down to, “the state of the art infrastructure and well trained staff members,” it offers. He adds: “When it comes to opening new routes, we are flexible. We are in close contact with our customers, able to quickly react to their demands by starting new routes on an ad hoc basis and ready to transfer these to scheduled routes as soon as volumes allow an efficient operation. Right now, we are strengthening our road feeder network in the Northern part of China in close collaboration with our partners.”

However good the offer though, there is always room for improvement. And what needs to be better will vary from stakeholder to stakeholder. Haug is looking at the big picture. “We have a state of the art infrastructure and Lufthansa Cargo is very well settled in Shanghai.

However, the airspace around Shanghai is quite busy, so we do face delays from time to time,” he explains.

The airport and its processes need further work, according to Lee Chee Eng. He says: “We wish to see Shanghai Airport turn into a major transshipment hub. In order to achieve this, the airport will need to reduce and simplify its processes for faster connections; there is a need for more flexibility, speed and efficiency for cargo handling and logistics infrastructure”.

From PACTL’s point of view, collaboration needs to be better. “We always aim at closely collaborating with all of our partners. Therefore, we are involved in the development of a joint IT platform linking all the relevant parties of the supply chain at Shanghai Pudong International

Airport which is supposed to allow a quick and safe data exchange online, and therefore to significantly strengthen the supply chain”, says Grzegorz.

Rasmussen wants to see greater efficiency in the common value chain, “from booking to billing”. SAS Cargo has identified that our customers, the airfreight agents and their customers expect us to be more innovative, in regards to customs handling, e-freight and e-AWB handling in order to improve their door to door time and service. We are therefore also committed to improve those parts of the journey which we as an airline are involved in and partly responsible for,” he says.

While stakeholders may have their gripes, there is no doubt that they are committed to Shanghai as an airfreight hub. In Lufthansa’s case, this can be seen by its use of e-AWB, the result of a joint initiative with PACTL, customs and IATA. Export trial shipments are being undertaken with some 20 customers, Haug explains: “We are still working on some challenges together with Shanghai Airport, PACTL, IATA, customs and other authorities, but we are confident to have an entire roll out by the end of this year,” he adds. MASkargo’s investment in Shanghai is evidenced by its commitment to providing a regular freight service.

“We have a five times weekly freighter services into Shanghai Pudong International Airport using the Airbus A330 freighter. This is in addition to the cargo space available on the bellyhold of our passenger flights, which operate into Shanghai twice daily,” Lee Chee Eng says.

PACTL continues to plough funds and energy into its facilities. The company is working towards winning the IATA Center of Excellence for Independent Validators (CEIV) certification for pharmaceutical logistics.

It is already an IATA approved training center and is developing a new training course based on the IATA temperature control regulations. “After gaining the CEIV certification, we will open a new perishable centre. It’ll be the first one of its kind in mainland China, enabling us to provide the whole range of temperature conditions needed for handling perishables and pharmaceuticals any time,” Grzegorz explains.

There can be few other airports looking at as promising a future as that of Shanghai. It continues to attract airlines which are prepared to invest significantly in it, while reaping the benefits of China’s booming economy and strides to dispense with unnecessary bureaucracy. It is difficult to imagine a scenario which would prevent Shanghai from continuing on the path it is on today, that of setting a very high bar for other air cargo hubs to reach.

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