Payload Asia | February - March 2021 by Harvest Information Pte Ltd

Thank You for Making AAT the GROUND HANDLER OF THE YEAR Asia Airfreight Terminal Co., Ltd. (AAT) is proud to receive the prestigious award ‘Ground Handler of the Year’ at the 7th edition of the Payload Asia Awards this year. This success marks an important milestone in our ongoing commitment to service quality, operational excellence and innovation to exceed our customer expectations.

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Editor’s note

EDITORIAL/PUBLISHER Dear reader, Raymond Wong Publishing Director raymond@harvest-info.com Giullian Navarra PLA Editor editor-pla@harvest-info.com

OPERATIONS Mari Vergara Head of Operations mari@asiantvawards.com MARKETING Franco Rafael Marketing Manager mktg@harvest-info.com SALES Simon Lee Hong Kong, Europe and Middle East sales@harvest-info.com Chua Chew Huat Asia Pacific sales-sg@harvest-info.com

We all saw how the coronavirus swept through the globe and put a standstill to aviation, and through it all the world saw the vital importance of everyone in the air cargo supply chain. From the transport of essential and humanitarian shipments by airlines to maintaining cold temperature throughout airports during vaccine transport rehearsals and the actual deal, it has become even more evident what role the wider air cargo and logistics industry will play in the near future. With vaccine drives slowly taking off, we talked to Glyn Hughes, who recently joined TIACA as first director general, to hear his thoughts on vaccine logistics, industry collaboration and modernisation. Read the full interview on page 20. Whilst most of us adjusted to remote work setups and shorter working days, e-commerce exploded and provided a much needed revenue channel for the carriers and logistics providers. Now the industry is keeping up with new product offerings and new additions to their fleet to sustain the remarkable demand. IATA identified the top 50 companies in e-commerce to better understand how air cargo can help in developing their logistics models through business alignment and customer-focused solutions. Turn to page 26 to learn more about this. In the cover story, we take a look at the new customs transit system implemented in the ASEAN with the help of the European Union, which freight forwarders see as a boon for multimodal transport. Learn which countries in Southeast Asia are benefiting from the new system on page 18. This issue also covers the recently concluded 7th edition of the Payload Asia Awards, with Turkish Cargo winning the Overall Carrier of the Year, AirBridgeCargo bagging the Best-e-Commerce Carrier and Asia Airfreight Terminal walking away with the Ground Handler of the Year. Find out which air cargo and logistics companies have stepped up despite an unprecedented 2020, and flip over to page 24. Of course we have the latest industry updates, analysis and opinion pieces on e-commerce, logistics and air cargo to keep the issue interesting. We hope you enjoy this one and look out for the upcoming April/March issue.

TECHNICAL SUPPORT Michael Magsalin tech@harvest-info.com Pte. Ltd. 1100 Lower Delta Road #02-05-8, EPL Building

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Febuary 2021

Content Page

Forwarders to benefit with new customs portal

NEWS 04

HKIA cargo stays resilient as passenger volume collapses

06 Amazon adds to fleet with 11 B767s 09

Forwarders bullish about Asia Pacific free trade deal

COVER STORY 18 Forwarders to benefit with new customs portal

FEATURE 24 Air cargo celebrates excellence, resilience at 7th PLA Awards

IATA outlines strategic models for e-tailers’ operations

Most read: Liege Airport weathers 2020

Opinion: How to protect vaccine shipments

EVENT COVERAGE 10

Industry leaders assess challenges at 10th ALMAC

INTERVIEW 20

Glyn Hughes on vaccine logistics and collaboration

OPINION 22

How to protect vaccine shipments: an insurer’s perspective

INSIGHTS 14 Air cargo trends of a pandemic world 16 Keeping up with eCommerce: Key trends to focus on for air cargo

News - Carriers twin-aisle cargo jet, amidst growing demand for dedicated freighters as the industry tries to offset the pandemic’s impact on the passenger business. The airline aims to increase its cargo capacity by 15 percent in 2021 and is planning to launch the 777F on routes connecting Taipei with North America. China Airlines’ all-Boeing freighter fleet debuted its new freighter during a ceremony in Taipei to mark its 61st anniversary.

China Airlines takes first Boeing 777F order China Airlines welcomed its first Boeing 777 freighter order out of the six announced during the 2019 Paris Air Show, as the airline looks to

increase freight capacity and enter new markets. The Taiwanese carrier became the 20th operator of the world’s largest and longest range

First batch of Covid-19 vaccines arrive in Singapore Singapore Airlines (SIA) delivered the first shipment of vaccines to Singapore after carrying out a successful trial a few days prior. The cargo, which was the first shipment to be delivered to a country in Asia, arrived at Singapore’s air hub on December 21 where DHL handled the

New air cargo route links Changsha to Osaka A new air cargo route between Changsha (capital of Hunan province) and Osaka in Japan was launched on 17 November using a Boeing 757 freighter operated by Chinese cargo carrier SF Airlines, according to Xinhua News. The maiden flight carried mainly electronic components, clothing and lithium batteries. The service has a load capacity of 25 tonnes and is

scheduled five times a week. Yang Li, head of the logistics office of the Changsha municipal government, said this was the first time that lithium batteries have been transported from Hunan by an international cargo flight, indicating a positive sign for the development of Changsha’s international air cargo service.

It now has 18 747Fs and one 777F that can carry tall and outsized cargo on 3-metre pallets. This common maindeck pallet height capability enables interchangeable pallets

customs clearance and final delivery to a designated location in Singapore. DHL Global Forwarding arranged for the collection of vaccines from the manufacturing site in Puurs, Belgium, and said it will also handle the return of shipper boxes to Europe. SIA and DHL is part of a task force led by the Civil Aviation Authority of Singapore and Changi Airport to handle the transport of Covid-19 vaccines across the cold chain.

10 international air cargo routes so far in 2020, according to Changsha Huanghua International Airport.

The new air cargo route is expected to give a further boost to the economic opening up of Changsha and promote manufacturing ties between China and Japan. Changsha has established

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Febuary 2021

News - Airports HKIA: Cargo stays resilient as passenger volume collapses Hong Kong airport’s cargo operations are slowly getting back to the preCovid levels as December saw only a 0.2 percent year-on-year drop in cargo handled.

cargo flights during the year went up 18.3 percent. Meanwhile, transshipments decreased significantly due to shortage of belly capacity on passenger flights.

Total cargo volume in 2020 remained relatively stable at 4.5 million tonnes, recording a 7 percent year-on-year drop. Cargo imports and exports climbed 18 percent and 8 percent, respectively, as the number of

Despite adding new destinations in Lebanon, Australia, Germany, Russia and the US, 2020’s passenger traffic and number of flights fell 87.7 percent and 61.7 percent, respectively, no thanks to the impact of Covid-19.

outbound traffic fell 11.7 percent to 687,161 tonnes during the same period. Outbound cargo volumes from Schiphol dropped across regions, with Asia down 8.21 percent to 238,889

tonnes. Meanwhile, inbound cargo volume declined 0.58 percent to 266,688 tonnes. The three biggest destinations for cargo tonnage were Shanghai, Doha and Chicago.

Schiphol airport’s cargo volume slips 8 percent in 2020 Figures for 2020 were in line with management’s expectations as Amsterdam Airport Schiphol saw its total cargo volume drop 8 percent from 2019 to 1.44 million tonnes. Last year, full freighters accounted for 61 percent of total volume, whilst passenger flights with belly space as well as passenger flights with only freight on board (pax-cargo-only) accounted for 29 percent and 10 percent, respectively. Inbound cargo volumes slid 4.7 percent to 754,361 tonnes in 2020 against 2019, whilst

Dubai Airports and GMR Hyderabad launch vaccine corridor Dubai Airports and the operator of India’s Hyderabad airport, GMR Hyderabad, have signed an MoU to set up an air freight corridor to aid in the distribution of Covid-19 vaccines, following India’s recent approval of two vaccine candidates for emergency use. The air freight corridor between DXB and HYD is expected to handle up to 300 tonnes of vaccines per day. The vaccine corridor between Dubai and Hyderabad is expected to handle up to 300 tonnes of vaccines

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per day and will connect vaccine manufacturers in India with other markets through the DXB cargo hub. The agreement will lead tocustomised and simplified processes and infrastructural support, which include working on an IT solution that will provide end-to-end visibility of vaccine shipments. With five major vaccine producers in its vicinity, Hyderabad is emerging as one of the world’s vaccine capitals. Pradeep Panicker, CEO of

Febuary 2021

Hyderabad airport, said that the air cargo hub has always been the preferred gateway for India’s vaccine exports.

News - Airports However, Liege said there was a lot of pressure on full cargo planes given the impact of Covid-19 on passenger transport, and airlines had to find alternatives to transport shipments given the lack of belly capacity. Large quantities of medical equipment were flown by jumbo jets and freighters through the airport during the pandemic, which led to the increase in tonnage. Another factor that drove growth was e-commerce, Luc Partoune, CEO of Liege Airport mentioned.

Liege Airport weathers 2020; tonnage up 24 percent Liege Airport was one of the few airports in Europe and the world to perform well despite the nightmarish 2020, thanks to its full cargo operations. The cargo hub saw a 24

Malaysia Airport launches new hub with Alibaba The Cainiao Aeropolis eWTP Hub, Malaysia, a joint venture between Malaysia Airports and Alibaba, has officially started operations at Kuala Lumpur International Airport (KUL). Formerly known as KLIA Aeropolis DFTZ Park, the e-fulfilment hub spans 60 acres (2.6 million sqft) with 1.1 million sqft of warehouse space and is expected to double KUL’s cargo volume to 1.4 million per year by 2029.

Hainan launches international air cargo route

percent increase in tonnage to 1,120,643 tonnes from 902,480 in 2019. The total number of cargo flights grew 10.7 percent to 34, 264 flights, with an increase in daytime flights.

Passenger traffic, as in all airports, decreased sharply, with a 74 percent drop, whilst aircraft movements remained stable with 40,300 flights (landings and take-offs) in 2020, compared to 39,886 flights in 2019.

Operated by Cainiao Smart Logistics Network (Cainiao Network), the new facility is expected to reinforce Malaysia’s cargo and logistics ecosystem for air, sea and land connectivity. The e-hub promises seamless cargo entry and exit movement with an internal customs inspection point set up within its grounds to increase security and efficiency whilst reducing cargo handling time. Group CEO of Malaysia Airports, Dato’ Mohd Shukrie Mohd Salleh, said the airport operator is targeting vertical markets from the

automotive, sporting goods, fastmoving fashion and lifestyle, retail electronics and medical equipment sectors, with e-commerce giant Lazada as the hub’s first customer.

The free trade port in southern China’s Hainan province has launched an intercontinental air freight route to Europe, marking the first step of the country’s largest special economic zone to build an air cargo network and hub, according to Xinhua News.

(HAK) bound for Amsterdam Airport Schiphol (AMS) on 8 November, with outbound cargo consisting mainly electronic products and inbound cargo comprising auto parts and e-commerce parcels. Chinese authorities on 1 June released a master plan to make Hainan an international trading centre by 2050, which will make way for tariff-free imports and duty-free shopping.

An all-cargo flight carrying 110 tonnes of goods took off from the Haikou Meilan International Airport

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News - Express Amazon adds to fleet with 11 B767s

E-commerce and logistics titan Amazon made its first-ever purchase of Boeing 767-300 aircraft, bringing in 11 of the aircraft type from Canadian

carrier WestJet and Delta Air lines. The B767s will join the network in 2021 and 2022, and will be operated by thirdparty carriers. Amazon opened its first

international air hub at Leipzig/Halle Airport in Germany in November. It also launched regional operations in Florida, New York, San Francisco, Chicago, Virginia, Texas, Puerto Rico, Hawaii, Los Angeles and New Orleans. Amazon is also investing in sustainable solutions to power its network, purchasing 6 million gallons of sustainable aviation fuel and introducing electric ground service equipment and solar rooftop panels at some facilities. Payload Asia learned that Amazon is scheduled to open a large hub in San Bernardino, California, early this year and its $1.5 billion national hub at Cincinnati/Northern Kentucky International Airport this summer.

DHL Express orders eight more B777 freighters DHL Express has ordered eight new additional Boeing 777 freighters as it looks to expand its global network to meet customer demand in the fast growing international express shipping markets. First deliveries are scheduled for 2022, with purchase rights for four

additional planes. DHL Express had already received the first 10 new B777F aircraft as part of an original order of 14 aircraft made in 2018. Boeing’s 2020 World Air Cargo Forecast anticipates significant increase in demand for new and converted freighters with a fleet growth of more than 60 percent over the next 20 years.

FedEx facility to open in Clark starting April

infrastructure projects expected to cut travel time and decongest traffic in the capital of Metro Manila, FedEx said the facility would reduce the delivery time to Northern Luzon by 2 hours, and will extend the cut-off time for customers in Northern Luzon and Cebu. The unveiling marked the express transport company’s 36 years of operations in the country.

FedEx Express on 6 October revealed its newest gateway facility in Clark, Philippines, north of Manila, which is valued over US$30 million and scheduled to open in April 2021. The 17,000-square-meter facility, equipped

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with state-of-the-art technology, is expected to speed up sorting capabilities to 9,000 documents and parcels per hour and will have dedicated areas to process large heavyweight freight. With ongoing

Febuary 2021

FedEx said the facility is the latest in a series of strategic investments made in the region, which include a software development centre in Taguig and a trade centre in Clark for clearance preparation to support markets like Japan and Singapore, worth around US$2.15 million.

News - Logistics

Hong Kong-listed firm to open world’s first cargo drone facility in Japan Hong Kong-listed ESR Cayman, a logistics real estate platform, has started construction on a distribution centre in the greater Tokyo area which is expected to be

the world’s first cargo drone logistics facility. Together with UK-based drone developer VRCO, ESR will design and demonstrate the ESR Higashi Ogishima DC–Phase 1, which will cover around 365,000 square metres of floor area and is expected to be the base for the electric vertical take-off and landing (eVTOL) airframes touted to move commercial cargo for ESR’s future tenants. Working with local regulatory authorities, government agencies and the local tech supply chain, the collaboration will demonstrate how a fleet of automated drones controlled by a command centre can take a “scalable” approach to volume delivery by air, factoring in weather and changing demand. This proof-of-concept will be tested at ESR’s Higashi Ogishima DC before it

is rolled out to other distribution centres and facilities in Japan and Asia.

month in Australia alone, which has seen a threefold increase in delivery volumes over the past 12 months, according to co-founder William On.

e-commerce in the Asia Pacific, and this capital raise will enable us to advance our core business of providing the technology retailers need to grow,” said William.

Daniel Hayes, co-Founder of VRCO said the move is both relevant and timely now that Japan has published a road map embracing the use of drones for transport and mobility. The nine-storey, double-ramped facility, scheduled for completion in March 2023, will partially generate its own sustainable energy and reduce pressure on the national grid, according to ESR. Payload Asia learned that the US$1 billion facility upon completion will come equipped witha fleet of at least 24 drones capable of delivering around 14 tonnes of cargo on a daily basis.

Logistics tech startup Shippit eyes Southeast Asia with US$22m funding Sydney-based logistics startup Shippit has raised US$22.4 million (A$30 million) in a series B round led by US-based tech investment firm Tiger Global, as it looks to tap new markets in Southeast Asia. The e-commerce and logistics company said it will use the funds for product development and new hires, aiming to add another 100 people to double its staff across Asia Pacific, including 50 software developers. Shippit’s technology automates tasks related to order fulfilment and returns and allows e-retailers and shippers to choose couriers, control how shipments are delivered and track orders in a single platform. The company said it currently handles 5 million deliveries each

After launching in Singapore and Malaysia in 2020, Shippit is eyeing expansion into the Philippines and Indonesia in response to the rapid growth in e-commerce and online buying amidst the coronavirus pandemic. “Scalable logistics is one of the fundamental enablers for

Shippit partnered with SingPost to offer discounted rates for SMEs to boost parcel deliveries across the city-state. The company is targeting 100 percent annual growth for its Southeast Asian business over the next three years.

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Febuary 2021

SEE YOU AT THE 8TH EDITION IN 2021 Congratulations to all the winners and nominees of the 7th Payload Asia Awards. We take pride in putting the spotlight on all the participants that showcased their excellence in the air cargo industry.

News - Freight Forwarders well as establishing a more unified market for its firms and consumers,” said secretary-general, Lim Jock Hoi. “The ACTS could also support post COVID recovery to accelerate the transit movement of medical supplies, vaccines and personal protective equipment within the member states,” he added. Special arrangements allow reliable traders to load their goods at their own premises in the country of departure and to deliver the goods to their own premises at the destination.

New customs portal in Southeast Asia, a boon for freight forwarders The Association of Southeast Asian Nations (ASEAN) on a virtual event last November launched a new online customs portal that could help forwarders move freight by road easily across borders in Southeast Asia. The ASEAN customs transit system (ACTS) was developed to allow transport

operators to make a single customs transit declaration across multiple ASEAN countries, without the need to make repeated customs declarations or change vehicles at each border. “I believe the system would be an excellent tool in enhancing ASEAN’s trade and production networks as

Freight forwarders bullish about Asia Pacific free trade deal

percent of the world’s total GDP. This marks the first time that China, Japan and South Korea are all part of a trade deal, which also involves 10 Southeast Asian countries plus Australia and New Zealand.

Logistics service providers in Asia Pacific are bullish about news on the Regional Comprehensive Economic Partnership (RCEP), which is poised to become the world’s largest free trade agreement. “So many countries across the Asia Pacific region agreeing to the RCEP has significance of historic proportions,” said Onno Boots, GEODIS APAC regional president and CEO. Signed at a summit in Hanoi on 15 November after 8 years of negotiations led by Indonesia, the RCEP is set to facilitate cross-border commerce amongst a population of 2.2 billion people, accounting for nearly 30

“We have full confidence in forecasting robust economic growth and supply chain evolution across the region with the conclusion of RCEP. The inter-state cooperation that it represents will also aid the post-Covid recovery of damaged economies,” expressed Boots. Dr. KC Chang, regional director of customs brokerage, explained the agreement will result not only in the reduction of import tariffs but will also encourage efforts to remove non-tariff barriers, noting this will “accelerate crossborder trade movement between all signatory countries and further boost economic growth.”

Cambodia, Lao, Malaysia, Singapore, Thailand and Vietnam have formally started using the system after pilot studies. The first successful ACTS transit on 23 and 24 October saw a truck travelling from Singapore to Thailand via Malaysia. ASEAN said the system will soon be available in Myanmar and may be expanded to Brunei, Indonesia and Philippines. The customs transit system is managed by a permanent team based in Jakarta, with support from the EU-funded ARISE Plus programme.

The terms of the agreement will be effective sixty days after the legal ratification of RCEP by at least nine of the signatory nations. The 10 Southeast Asian nations joining the trade agreement include Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand and Vietnam.

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Febuary 2021

EVENT: Asian Logistics, Maritime and Aviation Conference

Industry leaders address challenges at 10th ALMAC

he 10th Asian Logistics, Maritime and Aviation Conference (ALMAC), jointly organised by the government of Hong Kong and the Hong Kong Trade Development Council (HKTDC) saw more than 60 leaders from the logistics, maritime and aviation sectors share their insights in 35 topical sessions at the event. ALMAC had its debut as an online event (ALMAC Online) in 2020, with more than 10,000 viewers from close to 60 countries joining the global live streaming, including Hong Kong, China and nine out of 10 countries in the ASEAN bloc. The online format offered networking opportunities with newcomers from Austria, Brunei, Brazil, the Czech Republic, Egypt, Hungary, Rwanda, Slovakia and Uzbekistan. ALMAC Online provided several interactive channels to connect different industry players and attendees could pair up with business partners through one-on-one virtual meetings. This allowed easy communication between potential business partners and generated more than 5,300 connections. Insight

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Exchange, Meet the Experts and Meet the Shippers sessions helped participants search for leading service providers in innovation and technology. Meanwhile, key trade associations provided advisory on regional supply chains under the pandemic, changing trade flows and logistics technology.

faced by the industry now is the reduction in air cargo capacity, with about two-thirds of passenger fleets grounded. Hong Kong has been less impacted by the capacity crunch because of its hub status and the continued flow of freighter traffic.

Mr Léger spoke about preparing for Preparing for COVID-19 vaccine the shipment of COVID-19 vaccines air logistics particularly given the significant The pandemic has brought supply-chain challenge in providing unprecedented one dose for each challenges to many “Factors depend of the world’s 7.8 sectors, including billion people, which on where the the air cargo would require cargo vaccines will be industry. In the Air capacity equivalent Freight Forum of the produced, where to 8,000 Boeing 747 conference, cocargo aircraft. they are going, organised with where they will Airport Authority “The key factors Hong Kong, air transit, how many depend on where cargo community the vaccines will be doses per stakeholders produced, where they person, and the discussed the are going, where they time between industry’s outlook will transit, how many and outlined doses per person, injections.” a roadmap for and the time between business in injections,” Mr Léger the current environment. explained. Frédéric Léger, Director APCS Products, IATA, said the major issue

Febuary 2021

Infrastructure requirements

and should

staffing also be

considered. For example, transporting vaccines requires storing at ultralow temperatures of minus 80°C, and there must be appropriate tracking and handling procedures, facilities, equipment, packaging and extra capacity on the ground.

Nevertheless, Ms Shum said strict procedures to reduce risks during the pandemic would affect airlines’ ability to efficiently deploy crews, leading to additional costs and, in some cases, flight cancellations. She said Hong Kong authorities and HKIA had launched relief measures to At the same time, air crews and help airlines keep flying, whilst HKIA ground staff must be authorised was working with the Civil Aviation to support vaccine transport, with Department to increase capacity sufficient training on risk, quality and out of Hong Kong by expanding handling procedures to deal with time- slot approvals for chartered flights, and temperature-sensitive pharma especially on high-demand routes products. Mr Léger carrying medical “Strict procedures supplies. said collaboration b e t w e e n to reduce risks governments would This resulted in a 25 during the be crucial, suggesting percent YoY increase pandemic would in freighter capacity authorities work to arrange vaccine from March to affect airlines’ corridors to expedite September of 2020, ability to the release and with some airlines efficiently deploy refitting passenger clearance of goods. crews.” aircraft to operate Alaina Shum, them for all-cargo General Manager, Aviation Logistics, services. Airport Authority Hong Kong, estimated that COVID-19 vaccines Expanded role of e-commerce would generate about 65,000 tonnes during pandemic Ms Shum said of air freight but with challenging the pandemic led to rapid growth in requirements such as ultra-cold medical-supply shipments, including storage, cool dollies, apron shelters personal protective equipment, whilst and airport-wide IATA certification. the increase in work-from-home She noted Hong Kong International arrangements had boosted demand Airport (HKIA) was already fully for e-commerce electronic products. equipped to meet these requirements Overall, she said, the pandemic had well before the pandemic outbreak. accelerated the shift to online shopping,

which would have a long-lasting effect. William Xiong, Chief Strategist and General Manager for Export & Global Logistics, Cainiao Network, discussed the growth of e-commerce during the pandemic. He said Cainiao could handle 400 million packages a day with its global delivery network and has also helped international brands and companies leverage the power of big data to allocate their inventories intelligently and cut costs. Demand for such services had increased more than 10-fold in recent months, he explained. Mr Xiong said the company had already handled more than 130 million medical-supply shipments this year, serving about 150 countries and regions as well as many international organisations such as the United Nations. With prices for freight fluctuating heavily during the pandemic, Cainiao looks forward to prices stabilising in the future. The company is expanding its capacity and building connections in cooperation with partners to boost its existing capacity and expertise. By 2021, the logistics firm intends to add 3,000 chartered flights and expand scheduled freight services with a 72hour turnaround time. With this move, Cainiao aims to reduce costs through digitisation and optimisation for more affordable and accessible services that contribute to the industry’s development.

Left to right: Alaina Shum, General Manager, Aviation Logistics, Airport Authority Hong Kong, and Frédéric Léger, Director APCS Products, IATA

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Febuary 2021

FedEx Express to open US$30 million hub in Clark

MOST READ WWW.PAYLOADASIA.COM

Zuellig Pharma adds more cold storage capacity in Asia

Cainiao gives last-mile boost in Malaysia FedEx, through subsidiary TNT Australia, has signed a six-year deal with Qantas Freight to meet growing domestic demand spurred by rapid e-commerce and online shopping. The estimated US$266 million deal will give FedEx access to freighters as well as belly space on Qantas and Jetstar domestic routes.

DSV Panalpina boosts Europe-Asia air cargo bridge

Healthcare distributor Zuellig Pharma is expanding its cold storage capacity in Asia’s key markets over the next 12 months as the company prepares for the anticipated storage and distribution demands of COVID-19 vaccines. In the Philippines, the company will add 10 medical grade freezers to augment its existing capacity in -80°C storage, to store Pfizer’s vaccines.

The Cainiao Aeropolis eWTP Hub, Malaysia, a joint venture between Malaysia Airports and Alibaba, has officially started operations at Kuala Lumpur International Airport (KUL). Formerly known as KLIA Aeropolis DFTZ Park, the e-fulfilment hub spans 60 acres (2.6 million sqft) Hong Kong still busiest with 1.1 million sqft of wareair cargo hub as virus house space and is expected to depletes H1 volume double KUL’s cargo volume to Hong Kong International Airport 1.4 million per year by 2029. (HKG) defended its position as world’s busiest air cargo hub, despite seeing cargo volume drop 10.6 percent compared to the first half of 2019, data from Airports Council International revealed. Memphis Airport (MEM) and Shanghai Pudong Airport (PVG) took second and SAL launches Riyadh third spots, respectively.

Swissport under new owners following €1.9 two billion debt-equity swap

DSV Panalpina added 747Fs to its Europe-Asia cargo air bridge in September and will operate one of the freighters on the existing route between Shanghai (PVG) and Luxembourg (LUX). The logistics provider has three scheduled weekly services with monthly capacity of up to 1,000 tonnes to and from Shanghai.

Malaysia Airport opens new hub with Alibaba

cold storage facilities

Cargo and ground handler Saudi Arabian Logistics (SAL) revealed its new pharma and perishable facilities at Riyadh Airport’s CarSwissport will be under new go Village in November, with management following a 5,000 sqm of storage space. “lock-up”deal with senior secured creditors, which in- Expected to handle up to cludes a debt-for-equity swap 365,000 tonnes of cargo a year, worth €1.9 billion. SVP Global, the facilities have four docks for Apollo Global Management, loading refrigerated containers TowerBrook Capital Partners, and 12 cold storage warehousAres Management, Barclays es, as well as special area for flower shipments. Bank, 13

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Febuary 2021

Insights

Hi-Fly was one of the first to convert the A380, which most airlines have retired, stripping off seats to provide more cargo capacity.

AIR CARGO TRENDS IN A PANDEMIC WORLD By Dominic Hyde

revious predictions in pharmaceutical transportation trends, highlighting declining air passenger numbers and air freight demand increasing, have been pandemic propelled. Coronavirus continues causing worldwide disruption and it is anticipated its industry impact will continue throughout 2021 and beyond. Preighters take off When the capacity crunch came as the number of passenger flights plummeted, the ensuing scramble to transport pandemic payloads saw the deployment of hundreds of passenger planes as freighters or ‘preighters.’ Portuguese charter operator Hi-Fly led this trend and was the first to convert an A380 for freight, taking out the majority of seats to provide more cargo capacity.

There’s not going to be a modal shift from air to sea because the sea option cannot meet the temp requirements necessary for these shipments.

“

After seeing the grounding of hundreds of passenger planes earlier than had been initially forecast, which led to a reduction in available belly cargo space in these aircraft, we’ve seen more planes undergo conversions to freighters. The preighter’s prevalence looks set to continue throughout 2021 and beyond. IATA predicts an anticipated 25 percent rise in freight tonnekilometres this year, whilst Boeing projects growth in the global freighter fleet with the number of cargo aircraft in service forecast to increase more than 60 percent over the next two decades.

Febuary 2021

Lean is in Before COVID-19, it was predicted airlines would start cutting flights from schedules, mothball larger aircraft, decline production options and look to utilise smaller, more efficient aircraft in the future for environmental and economic reasons. All of those decisions have been massively accelerated. The forecast to park some of the larger, widebody aircraft has been brought forward significantly, due to the COVID-19 crisis. The ongoing impact of the pandemic has meant the majority of all 747 freighter aircraft have or are being retired. The A380, which Airbus had previously announced it would stop deliveries of in 2021, has also been retired across the board by numerous airlines, except Emirates. Increasingly airlines are globally grounding their A380s in favour of more modern, smaller jets, which can fly more efficiently than their four-engine aviation counterparts. What we will continue to see is a lot more interest in leaner aircraft, like the A220. Which mode to go? When China returned to approximately 98 percent of its production output in April, other countries were then in lockdown, with some like the US hold-

However, while freighter aircraft are still present

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and working hard, fleet growth takes time, so there will be a slower response to replacing some of the capacity lost from the passenger side of the industry. Some of the 747s which have comparatively low hours on their airframes will undoubtedly become converted freighters to backfill some of that loss in capacity.

ing containers for two weeks in ports to quarantine them, compounded by shorthanded work forces operating in the docks. As sea containers started to pile up in their markets and with exports to China impacted, shipping lines cut sailings from schedules, which saw sea freight prices spike up 50 percent. Uncertainty in sea and air freight availability saw pharma companies initially ship everything they could, by any mode of transport available, to get it out to the markets. Following months of disruption passenger airlines eventually started flying with cargo in the lower decks and loose load cargo on the upper decks. Given the sea freight situation we will continue to see the utilisation of air freight to transport pandemic payloads. When it comes to economics, having no passengers on the main deck is a much more expensive operational option. However, pharma customers are prepared to pay those premiums to move their product. With air freight capacity a dwindling resource, it is even more important to have the efficient packing density of temperature controlled products on such limited space. Temporary or new norm? As the world’s first approved vaccines are being administered as part of ongoing mass vaccination programmes, temperature-controlled packaging manufacturers continue to play a pivotal part in the global deployment, leading to a scramble to qualify existing solutions for shipping at specific ultra cold temperatures. There has been an impetus for innovation to support these temperatures in volume, and suppliers stepped up to meet the vaccine temperature requirements by adapting existing solutions and the capacity is there, so I don’t anticipate it will be an issue going forward.

There has not been as much displacement as pharma companies would have liked, which pushed the prices up in the region of the $23 a kilo figure for air freight.

“

Pharmaceuticals that have more normal temperature shipping requirements, like 2–8°C or 15–25°C, get displaced and in that situation, when the air freight rates get so high, sea freight would normally be seen as a shipping solution. However, there has not been as much displacement as pharma companies would have liked, which pushed the prices up in the region of the $23 a kilo figure for air freight we had seen previously in the market. 2021 will see the industry learning to operate in the new norm with everyone getting used to that new norm. Next year we might start to see some improvements and efficiencies but I think this year is about adjusting our planning, our capacities and our operations around this spike in demand and the gradually improving capacity picture. Almost like fitting in a new pair of shoes.

CONTRIBUTOR

The focus is reverted back to the capacities in the transport modes, and given the nature of these drugs, people are paying whatever it costs to ship them, with rates rising sharply from $2.5 a kilo to $23, but that’s starting to calm down. There’s not going to be a modal shift from air to sea because the sea option cannot meet the temperature requirements necessary for these shipments. You get a displacement, whereby COVID-19 shipments, whether vaccines, test kits and reagents or some of the therapies which help with recuperation, like Remdesivir, are flying at almost any cost on a dwindling resource.

Dominic Hyde is the Vice President for Crēdo™ On Demand at Pelican BioThermal. He is well experienced in global cold chain logistics, in which he has worked for 20 years, developing worldwide rental programmes for transport of temperature-controlled pharmaceuticals. He was previously managing director at va-Q-tec Ltd. and at MBI aero and former chief operating officer at Envirotainer AB.

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Febuary 2021

Insights

KEEPING UP WITH ECOMMERCE: KEY TRENDS TO FOCUS ON FOR AIR CARGO By Jason Wilson

he increase of work from home activity has accelerated digital adoption in many industries, with eCommerce, in particular, benefiting immensely. For many within the industry, it has been a year of record volumes as consumers moved purchases to online channels and organisations looked to diversify from traditional models. The benefits of growth have helped advanced plans for many in strengthening their eCommerce capabilities. Integrators have been busy extending infrastructure, whilst some larger eCommerce brands have continued to invest in building their global networks. Other transportation modes, such as ocean freight, have also increased their share of eCommerce traffic. All these scenarios may impact the share of eCommerce traffic handled within the air cargo industry. Integrators have always been a strong source of eCommerce traffic, viewed as a traditional one-stop shop with standard processes making it simplified for both merchant and consumer. With eCommerce brands, while many have sought to build their networks for commercial benefits, it is also on the back of their desire to increase consistency and transparency in controlling the data flows which directly impact the consumer experience.

Whilst air cargo may not necessarily be the last mile that physically hands the package to the consumer, its role is vital in the visibility and speed customers are seeking.

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What can air cargo industry stakeholders do to accommodate this growing channel? How are the needs of a B2C market catered for in an environment where B2B is the majority? What do eCom-

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Febuary 2021

merce brands look for specifically? Here are a few trends that air cargo providers can focus on to capitalise on the eCommerce boom. Customer-first approach Whilst many organisations have values that place customers at the centre of their business, few deliver to this mantra-like eCommerce brands. Every proposal and its impact on customer experience can influence future website visits. When evaluating new initiatives, air cargo stakeholders need to demonstrate to eCommerce leaders how they will physically improve the experience for ultimate end consumers. Importantly, it must happen quickly with many driving start-up type agility to react rapidly to changing consumer expectations. Data Transparency eCommerce merchants place data and technology above all else (aside from customers)! In many respects, the data is just as important to the physical movement of the package. eCommerce brands are looking to spend time on monitoring customer satisfaction rather than logistics processes. Process areas, such as booking, routing, commercial, labelling and tracking data sets, are already instantly exchanged via API as information changes. Plugging into eCommerce needs timely and accurate data supplied from all air cargo stakeholders coupled with an ongoing commitment to digitising

operations and systems. A positive international cross-border movement is largely based on transparency and available data which ultimately provides convenience to the consumer and likely improves re-purchase rates in the marketplace. Open collaboration Whilst air cargo may not necessarily be the last mile that physically hands the package to the consumer, its role is vital in the visibility and speed customers are seeking. The various touchpoints between authorities, forwarders, airlines, ground handling agents and customs brokers are all vital components in the physical performance and data exchange. Promoting a truly open collaboration to understand and improve each milestone together will deliver greater visibility and shorter transit times for end consumers. The ability to link these components effortlessly together will ensure air cargo competitiveness for eCommerce. Agile campaigns eCommerce promotions such as Prime Day, Double 11, Cyber Monday and Black Friday can deliver high-velocity spikes in a very short period. However, despite the best forecasting, everything can be changed instantly depending on how consumers react to promotions. Building models and routings that are flexible to scale at short notice are critical during these periods where delays can be more visible for brands and consumers. The variable activity comes with the territory of handling eCommerce; it is about how best to adapt. Converging B2B/B2C Businesses looking for greater operational and procurement synergies are finding ways to integrate B2B and B2C supply chains that have traditionally been separate with different requirements. Air cargo procurement, handling and cross-docks need processes, capability and systems that can be optimised to support or consolidate both business (B2B) and consumer (B2C) commodities. In particular, the ability to scan, label, pack and sort a high volume of small packages will be most efficiently performed by investing in automation. Air Cargo Experience Brands are experts in their marketplaces, and they are looking for air cargo stakeholders to become partners in developing solutions which can expand their business be it through new products, enhanced visibility or geographical reach. Marketplaces are

The variable activity comes with the territory of handling eCommerce; it is about how best to adapt.

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looking for recommendations on how to create an advantage such as simplifying processes, increasing visibility, reducing costs or improving transit times to name a few. The success in penetrating additional market share will be in how the industry can apply a focus collaboratively to meet the expectations of speed, data sharing and transparency that the eCommerce world is accustomed too. Ultimately, as brands continue to focus on consumer experience it’s up to the industry to connect seamlessly in helping deliver the best solutions that meet the specific needs of eCommerce products.

CONTRIBUTOR Originally from Melbourne, Jason Wilson has taken up a variety of positions within the Air Cargo Industry across international trading hubs in Australia, Asia, Europe, the UK, and the United States.

Having worked for multinational organisations such as DHL and Toll, Jason is currently based in Singapore as the Head of Global eCommerce Fulfilment for Singapore Post. In this role, his responsibilities involve identifying the latest technology and transport solutions that improve performance and access to international markets for B2B and B2C customers worldwide. Jason graduated from SP Jain School of Global Management, earning an Executive Masters degree in Business Administration, with recognition on the Dean’s list for academic achievement.

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Febuary 2021

COVER STORY

FORWARDERS TO BENEFIT WITH NEW CUSTOMS PLATFORM By Giullian Navarra

t is no secret that import clearance of fleet size, equipment usage and in customs is a cumbersome pro- hours of operation, as well as foreign cess in most countries and even so firms being prohibited from operatin developing markets like Southeast ing fleets with less number of vehicles Asia. Whilst member states in the per district. Customs procedures and ASEAN have the basic transport in- inspections that rated very significant frastructure, regulatory bottlenecks were the lack of border crossing coorand inadequate intermodal connec- dination, inefficient inbound clearance tions pull them back processes, arbifrom fully utilising the trary independent “An efficient, region’s transport carulings, volatility in automated pacity, which results in border traffic, mulregional customs tiple uncoordinathigher transport costs and long, unpredictable ed offices and imtransit regime waiting times for forproper penalties. acts as a warders and shippers. cornerstone In an effort to adA study by ASEAN and dress these conand catalyst EU experts, involving cerns, the regionfor economic various players in the al body, together integration.” logistics supply chain in with the European the region found that Union, developed inefficient customs procedures and and launched the ASEAN customs inspections are the greatest barrier to transit system (ACTS) that would allow logistics services, and off these bottle- transport operators to make a single necks what they found unnecessarily customs declaration across member burdensome were time-consuming states, without the need to make redocumentation and inconsistency in peated declarations or change vehiclassifying goods and requirements. cles at each border. Significant barriers to the provision of logistic services were land transport regulations related to the limitation

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Cambodia, Lao, Malaysia, Singapore, Thailand and Vietnam have formally started using the system after pilot

Febuary 2021

studies, and back in October last year, the first successful transit under the new system saw a truck travelling from Singapore to Thailand via Malaysia. Pro forwarding The ASEAN Federation of Forwarders Associations (AFFA) sees the new system as a boon as it offers simplified customs and transport control procedures between different member states, as well as predictability on delivery times and most importantly reduced transport costs. “It is not a secret that in some countries, import clearance is a time-consuming process. From the perspective of logistics service providers, AFFA has seen the necessity of a common platform for cross-border transport which links countries initiated and agreed upon by all ASEAN states member under a single-entry transit system,” said Iman Gandi, Executive Director of AFFA. “A single-entry transit system will improve the clearance process at borders, and will definitely increase the productivity of forwarders with shorter transit time. Moreover, the system

can also facilitate the visibility of available capacity of transport for shippers who may be looking into backhaul cargo options for return,” he added. Facilitating trade Glyn Evans, transit adviser for the ARISE Plus Programme (the EU body facilitating the rollout of ACTS within ASEAN) said the primary components for an international customs transit system include a single, harmonised customs declaration, a single guarantee valid throughout the movement of goods no matter how many countries are crossed, a set of simplified procedures to recognise and assist traders with good records and an automated system linking all contracting parties for paperless trade facilitation. “An efficient, automated regional customs transit regime acts as a cornerstone and catalyst for economic integration... The potential benefits for AMS are highlighted by the experience of the EU in regional economic integration as set out in two research papers produced by Ernst & Whinney which looked at the potential impact of the creation of a European Internal Market in terms of the transport of goods by road,” Evans noted. “From there, it was concluded that removal of regulatory barriers could increase overall regional trade by up to 3 percent, or 15 billion euros, in Europe, and similar savings could be expected in the ASEAN context,” he added. Win-win With intra-regional export volumes forecast to hit US$375 billion by 2025, according to PwC, AFFA thinks the successful implementation of platforms such as ACTS will benefit all stakeholders in supply chains within the region, and any initiative to reduce logistics cost would increase the competitiveness of conducting intra-ASEAN trade. AFFA’s Gandi said logistics service providers will be able to better optimise assets for cross-border transport,

whilst authorities will benefit through standardised infrastructure and facilities development in border areas and gaining visibility into the movement of goods through IT-based platforms such as the ACTS.

its multimodal service to link its road network across Singapore, Malaysia, Thailand, Vietnam and China.

“In 2019, DHL Global Forwarding launched DHL ASIACONNECT+ with the addition of Indonesia to the network, “This platform shall support the consolidating shipments from various standardisation of clearance Indonesian cities, including Balikpaprocesses for cross-border transport pan, Bandung, Batam, Lampung and and will definitely create a foundation Semarang, in Jakarta by air, ocean or to drive digitalisation efforts for the road before being air-freighted to Sinaspect of goods movement within gapore,” Selmoni added. DHL’s road ASEAN,” Gandi freight service can also stated, noting link customers in Europe “In a nutshell, that shippers and by trucking cargo to ChiACTS is a clear business owners na and embarking on the will benefit from win-win, not only China-Germany express this visibility rail. to logistics into capacity providers but also “In a nutshell, ACTS is a and cargo track to exporters, and clear win-win, not only and trace, which ultimately will to logistics providers this will be lower logistics further enhanced but also to exporters, costs. and this will be further

in the region with the recently signed RCEP.”

Other modes A study on ASEAN logistics development by the Asian Logistics, Maritime and Aviation Conference (ALMAC) found that logistics time can be improved through the introduction of faster modes, particularly truck and rail. ASEAN said ACTs will soon be available in Myanmar, which is connected by road, but archipelagos like Indonesia, Philippines and Brunei would require other modes to transport goods. Whilst AFFA’s Gandi suggests alternate multimodal transport like RoRo and sea-air should be in place to fully enjoy ACTS, DHL Global Forwarding sees the full implementation of the platform to enhance efficiency and reliability for road freight movements in the region.

enhanced in the region with the recently signed RCEP,” said Selmoni.

Bruno Selmoni

Glyn Evans

Bruno Selmoni, head of road freight & multimodal ASEAN & South Asia, DHL Global Forwarding Asia Pacific, said exporters in Indonesia can leverage on

Iman Gandi 19

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Febuary 2021

C-SUITE INTERVIEW

Glyn Hughes on vaccine logistics and collaboration

ith the vaccine jabs being What are the challenges that lorolled out in the world’s top gistics providers, shippers and air nations and soon to find its cargo carriers face during vaccine way across emerging and developing transport? Have we come close to markets, logistical challenges still per- checking all the unknowns? How sist and the spotlight will continue to important is worldwide inoculafocus on air cargo and its importance- tion? With the current level of and quick decisive global Covid infections moves in trans“Air cargo has showing no signs of porting time-senproven itself as slowing down and with sitive life-saving having the new strains demonstratshipments and inoculating the globrequired quality ing even higher rates of transmissibility it is crual population. levels and cial for the global comprocedures in munity that the vaccines Payload Asia reached out to place to support approved for inoculation programs be transGlyn Hughes, one this logistical ported and distributed of the industry’s challenge.” in the safest most comhighly acknowlpliant fashion possible. edged leaders, for some timely insights on vaccine Air cargo has proven itself as having logistics, modernisation and collab- the required quality levels and proceoration as he embarks on a new role dures in place to support this logistical as the first director general of TIACA. challenge.

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Febuary 2021

WHO and other health experts have indicated that herd or community immunity may require 70% or perhaps more of the global population to be vaccinated. This means the various vaccination programs will be present throughout 2021 and perhaps beyond. Therefore, air cargo will play a pivotal role for some time. There are several challenges which will be encountered as the distribution intensifies. Capacity challenges, particularly in countries where cargo is traditionally carried in bellies of passenger aircraft will be a significant one. Carriers will therefore probably continue to operate passenger aircraft for cargo only operations to help address this capacity issue. A second challenge will be the capabilities to manage cold chain operations in some countries which may not have the required level of infrastructure in place. Governments need to assess national capabilities urgently so that measures can be introduced. Product integrity is of paramount importance.

It can be said some carriers and integrators have benefited with the higher freight rates during the pandemic. How long do you think this inflation would last and what would be a good advice to shippers? It is true that the balance of capacity supply and cargo demand has presented a challenge to keep in balance. Overall cargo capacity was down about 40% vs the pre Covid situation as a result of so many passenger flights cancelled due to the pandemic.

What are some of the ‘new normal’ trends that we’ll be seeing more of? Are we about to see mergers and consolidation? More freight booking apps? Possibly. Sadly, some passenger carriers haven’t been able to survive the crisis, but cargo operators have managed much better as cargo demand remained buoyant, firstly with PPE and then vaccine transport.

Inevitably the pace of technical innovation will continue, and we can hope that trans“Collaboration lates into new efficienhas certainly cy tools and analytical improved, but it solutions. Smart data exchange will progreswill never be sively replace traditional finished. The messaging standards.

Carriers have addressed this lack of capacity as much as possible through increased freighter utilization and industry should using passenger always focus aircraft for cargo What should be the only operations. priority of airlines and on continual These measures other players in the improvement.” have helped the air cargo industry? Is supply / demand it getting CEIV pharma balance to some degree. or piloting ONE Record? Would you say collaboration has become secThe key advice to shippers is to noti- ond nature in the industry, or do we fy their freight forwarders as early as have a long way to go? possible regarding upcoming shipments. This will enable the freight forwarder to identify and secure the most cost effective and timely capacity.

Collaboration has certainly improved, but it will never be finished. The industry should always focus on continual improvement. As to industry programs such as CEIV that is really for each supply chain entity to evaluate based on their specific business model and strategic objectives. ONE record is certainly an area where I would anticipate becoming an industry norm as it will enhance efficiency and accelerate information exchange. How would you describe your tenure with IATA, and what are your expectations on the new director general role with TIACA starting next month? My 30 years with IATA have been exceptional. I have been very fortunate to have worked with some truly spectacular industry leaders and I have learned a lot from each. I now hope to be able to take what I have learned and help the great organization that TIACA is to deliver on its goals and objectives. The two organizations have a proud history of collaboration and I fully expect that to continue as we all strive for a safe, secure and sustainable air cargo industry.

If indeed digitization has been accelerated by 10 years as brought about by the pandemic, what kind of modernization is air cargo likely to realize in the near term? Air cargo has been very innovative during the crisis as non-paper-based data became quite critical. With the lack of passenger flights likely to remain for a while the cargo industry will continue to develop cargo specific solutions. Facility constraints will result in accelerated moves towards automation and possibly robotics. Data sensors and interactive devices will also likely to increase in prevalence as they can be instrumental in assuring product integrity during the journey.

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Febuary 2021

Pressure to deliver the vaccine as quickly and widely as possible is expected to bring new, less-experienced operators to assist in their distribution.

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Opinion HOW TO PROTECT VACCINE SHIPMENTS: AN INSURER’S PERSPECTIVE By Philip Clayton and Andy Bowman

OVID-19 vaccine distribution may be an exciting opportunity for cash-strapped airlines, but carriers will need to work with their insurers to ensure any policies are suited to the new risks, even if they are experienced in the transport of pharmaceuticals. The sheer size of the logistics operation now required to deliver the vaccines across the globe and into its most remote regions is daunting. Indeed, the scale of the challenge is unprecedented. The International Air Transport Association (IATA) suggested in October that the equivalent of 8,000 B747Fs (each capable of carrying 100 tonnes) would be needed to deliver enough vaccines for the earth’s 7.8 billion inhabitants. Others believe the entire global fleet may be needed in some capacity, as well as many more ground-handlers who may not be specialists in the ‘cold’ supply chains that move temperature-sensitive goods. Traditionally, less than a fifth of global pharma shipments are transported by air to end-user destinations, but the ‘speed-to-market’ requirements of the COVID vaccine is expected to put unprecedented strain on the cold supply chain, which includes airports, ground-handlers and freight forwarders. Three of the vaccines’ biggest manufacturers AstraZeneca, Pfizer and Moderna—are expected to have the collective capacity to have produced 5.3 billion doses by the end of 2021, enough for about 40 percent of the world’s population (acquiring immunity will require two doses for some vaccines). For air-transport providers and their supply-chain partners, the pharmaceutical industry has always required specialist infrastructure and knowledge; at a minimum, temperature-controlled environments (Pfizer’s vaccine must be stored at -70°C until used, for example) and a secure chain of transport are required.

Philip Clayton Head of Claim Advocacy, Aviation & Aerospace Willis Towers Watson

Andy Bowman Claims Advocate, Aerospace Willis Towers Watson

Rights’ (SDR) per kilogram, or a value equivalent to US$30-$32, depending on currency fluctuations. The market has yet to establish how those vaccines will be valued; the possibilities range from the vaccines’ manufactured or replacement costs, to their retail costs. The latter has been estimated by some manufacturers at $20-$25 per dose. Given that the vaccines are comparatively lightweight cargo, many shipment liabilities will far exceed the cover available under the limits of the Convention. Those limitations on liability can be broken, however, if a claimant can prove the carrier has acted recklessly, and with knowledge that their actions were likely to lead to the loss or damage of the cargo. In such circumstances, claimants can seek an indemnity based on the actual loss, which could be the current market value of the goods. The Convention also allows for freight to be transported under Special Declarations of Value (SDV), often the market value of goods; however, most carriers prefer not to offer SDVs in order to limit their legal exposure and that of their insurers. It remains to be seen if parties contracting to transport the new vaccines will lean on the carriers to move them under SDVs. Until then, in the event of loss or damage to vaccines, insurers will anticipate having to offer compensation based on the weight limits set by the Convention.

This has kept the greatest proportion of the pharma market in the capable hands of a handful of experienced ‘cold’ cargo carriers. But pressure to deliver the vaccine as quickly and widely as possible is expected to bring new, less-experienced operators to assist in their distribution, adding a series of new supply-chain risks. Logistical challenges are far from the only liabilities that carriers and insurers will need to consider. Shipment values are expected to be significantly higher than those for standard international shipments covered by insurers in accordance with the limits of the Montreal Convention (‘the Convention’). The Convention limits damage-related insurance cover to ‘22 Special Drawing

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Febuary 2021

AIR CARGO CELEBRATES EXCELLENCE, RESILIENCE AT THE 7TH PAYLOAD ASIA AWARDS resented jury panel were taken into account in deliberating the winners. A tight race for the Ground Handler of the Year category saw Hong Kongbased Asia Airfreight Terminal take home the award. The cargo handler was commended by one of the judges for its focus on special cargo handling. The air cargo terminal said it became the first in Hong Kong to be accredited with the ‘Class A’ security certification under the enhanced TAPA FSR 2020 standards. It is also certified by IATA CEIV Pharma and GDP Pharma which have become the benchmark in the handling of pharma and vaccine shipments.

n 22 January, the most outstanding companies in the air cargo supply chain were once again hailed at the 7th edition of the Payload Asia Awards. More than 80 industry professionals attended the digital awards ceremony, graced by representatives from airlines, cargo handlers, IT providers and express operators. In its 7th edition, the awards ceremony recognises the remarkable companies that have stayed resilient and kept the supply chain connected amidst a pandemic. In a unique format, votes from online readers and scores from the well-rep-

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“2020 has been a year of constant challenges and difficulties in the airfreight industry, and it is a tremendous honour for AAT to receive this award this year,” said Mr Kuah Boon Kiam, general manager of Asia Airfreight Terminal. “This success marks an important milestone in our ongoing commitment to service quality, operational excellence, innovation, and to exceed our customer expectations. Despite the challenging airfreight market, AAT will keep on striving for top quality services in the ever-changing cargo industry,” he added. This year’s winners were judged by an elite panel that included Ariaen Zimmerman, Executive Director of CargoiQ; Brian Wu, Chairman of HAFFA; Dr Paul Tsui , Managing Director, The Janel Group of Hong

Febuary 2021

Kong; Glyn Hughes, outgoing Global Head of Cargo for IATA; Henrik Kofod-Hansen, Co-founder of Novosensus; John Peyton Burnett, Managing Director, TAC Index; Niall van de Wouw, Managing Director, CLIVE Data Services; Stan Wraight, President and CEO, Strategic Aviation Solutions International (SASI); and Vlad Zubkov, Special Advisor on Industry Affairs at TIACA. Congratulations to all the winners!

Overall Carrier of the Year Turkish Cargo Best e-Commerce Carrier AirBridgeCargo Airlines Ground Handler of the Year Asia Airfreight Terminal Global Express Provider of the Year DHL Express Asia Pacific Asia Pacific Airport of the Year Hong Kong International Airport European Airport of the Year Liege Airport IT Provider of the Year IBS Software Belly Carrier of the Year Vietjet Air Low-Cost Carrier of the Year Vietjet Air

AirBridgeCargo Airlines

IBS Software

Asia Airfreight Terminal

Liege Airport

DHL Express Asia Pacific

Turkish Cargo

Hong Kong International Airport

Vietjet Air

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Febuary 2021

Feature IATA outlines strategic models for e-tailers’ operations ter understand how air cargo can help in developing their logistics model, by aligning to e-Commerce businesses and ultimately offer customer-focused solutions. For this reason, IATA analysed not only their e-shop or marketplace profiles but also their “air cargo potential.” This calculation is based on the gross merchandise value (GMV), geographical coverage, and their remote shipping potential, a subjective and qualitative assessment of the categories shipped and the type of operations.

he COVID-19 crisis has accelerated the expansion of e-Commerce towards new companies, customers, and product types. The pandemic has added diversity in a sector that was already very dynamic, with many different players, big and small, and various business models. How can the airline industry capitalize

on the growth of e-Commerce and cater to a very diversified market? Top 50 e-Commerce players To know more about the needs and requirements of major e-Commerce players, IATA has identified the top 50 companies in the game. The final objective was to bet-

Whilst e-shops sell their own products online, e-marketplaces serve as a platform to connect buyers and sellers. E-shops are usually in control of their supply chain, occasionally outsourcing parts of it. On the other hand, e-marketplaces outsource most of their transportation, allowing them to grow or scale-up exponentially by building sellers’ networks. Two large companies are an exception to this rule: Amazon and JD.com. Both are pure marketplaces which control their own logistics.

Top-50 e-commerce players

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Febuary 2021

The four e-commerce logistic models

Four logistics models Through our research on the top-50 online retailers, we could develop a matrix and identify four unique e-Commerce logistic models. These models are distinguishable by variations in the level of owned versus outsourced capability and whether they ship single parcels or freight. However, the e-commerce landscape is changing rapidly. E-Tailers everywhere are continuously assessing their level of control over their logistics operations. The efforts to counter the effects of the pandemic are bringing in new trends into e-Commerce logistics. The focus on building more resilient supply chains is making many companies consider re-localizing or multi-sourcing their productions. The number of e-commerce fulfillment centers is expected to increase to bring goods closer to the consumer. These and other similar trends may negatively impact airlines by reducing the demand for high-speed air cargo offerings.

Adapting to e-Commerce needs For airlines, transforming to capture e-Commerce volumes can represent a lifeline in an otherwise dire situation for air transport. IATA forecasts that air cargo will represent 36 percent percent of airline revenues in 2020. E-Commerce is the fastest-growing segment within cargo, and likely, their volumes have well exceeded the 15 percent of cross-border air cargo figure estimated before the pandemic. In recent years, as many air cargo carriers finally realized the significant impact of online retail on their business, they started designing products and services dedicated to this segment. Transforming to adapt to the different e-Commerce logistics models is critical for the industry and will be more so in the coming years. Air cargo carriers will benefit heavily from technological advancements and data integration to unify, smoothen, and accelerate their services for e-Commerce. Creating new strategies to become more agile and embracing transformation trends will allow the industry to build a resilient supply chain with tailored solutions for this critical segment.

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Febuary 2021

CHARTS

Global Express And Parcels 2020 By: Transport Intelligence

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Febuary 2021

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