MCI (P) 002/07/2016 ISSN 2010-4227
THE TRADE MAGAZINE FOR THE ASIA-PACIFIC AND MIDDLE EAST REGION VOL. 38, APRIL/MAY ISSUE 2021
ASIA PACIFIC TO LEAD
E-COMMERCE LOGISTICS MARKET AIRLINES DISCUSS FUTURE ON SUSTAINABLE FUEL
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EDITOR’S NOTE
EDITORIAL/PUBLISHER Raymond Wong Publishing Director
In this issue, we take a closer look at the growing e-commerce logistics and feature some of the sustainability initiatives that are transforming the industry. On page 16, Cainiao’s head of green initiatives walks us through the technologies and innovative processes that the company is implementing to ensure proper handling of packaging and waste reduction. As leading airlines set their ambitious targets toward highly sought after carbon-neutral operations, decarbonisation has been at the forefront of the discussions in aviation. We sit in with some of the leading stakeholders as they discuss the future of sustainable aviation fuel and other technologies at the recently concluded World Aviation Festival. Turn to page 12 to find out where the industry is headed. In the cover story, we put the microscope on Asia Pacific’s e-commerce logistics market with data from Transport Intelligence. With China leading the way, are manufacturers shifting operations elsewhere or is this a temporary retreat? Find out more on page 18. This issue also covers a special feature on women in aviation and logistics, a Q&A with Qatar Cargo’s Guillaume Halleux, as well as the latest industry updates and insights on Asia Pacific trade. We hope you enjoy this issue and watch out for the next one in July.
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
TECHNICAL SUPPORT Michael Magsalin
Giullian Navarra
tech@harvest-info.com
Chief Editor
Harvest Information Pte. Ltd. 1100 Lower Delta Road #02-05-8, EPL Building Singapore 169206
Pte. Ltd. 1100 Lower Delta Road #02-05-8, EPL Building
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CONTENT PAGE
18
COVER STORY Asia Pacific to lead e-commerce logistics
NEWS
INSIGHTS
20
INTERVIEW Halleux on Qatar Cargo’s weQare
FEATURE
04 Cargo lifts China Airlines to
14 Cainiao on tech-enabled green
22 PLG: Turning market gaps into
06 U-Freight poised for growing
16 FedEx on free trade
24 YCH: Pushing Asia’s supply
turn 2020 profit e-commerce
initiatives
agreements
08 J&T Express enters air cargo with first preighter
EVENT COVERAGE 12 World Aviation Festival
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INSIGHTS Tech-enabled green initiatives for logistics
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opportunities
chains to new frontiers
26 Women speak up on gender balance
NEWS - AIRPORTS
Hong Kong extends airport support until May In March, Airport Authority Hong Kong (AA) extended the relief package for the airport community for another two months to the end of May 2021, in view of the prolonged
impact brought by the COVID-19 pandemic. The aviation body said it will closely monitor the operating environment and provide necessary assistance to the airport community
at this critical time. Relief measures will be adjusted depending on the air traffic and business recovery situation at HKIA.
The Adani Group, who entered the airports sector in 2019, won a mandate to modernise and operate six Indian airports: Ahmedabad, Lucknow, Mangaluru, Jaipur, Guwahati and Thiruvananthapuram. The company is in the final stages
of acquiring a majority stake in the Mumbai International Airport Limited (MIAL) which makes it the largest operator in terms of the number of airports managed, with a combined capacity of around 75 million passengers per year.
ACI Asia-Pacific welcomes new board directors and airports
Airports Holdings Berhad; Quoc Phuong Nguyen, Airports Corporation of Vietnam; and Videh Kumar Jaipuriar of Delhi International Airport Ltd.
Adani Airports rolls out cargo handling software IT provider Kale Logistics Solutions announced in early March that Adani Airports is set to implement its cargo handling system GALAXY in various airports across India. The cargo handling software operates for import, export and transit and serves transshipment, ULD management, service-level management as per AHM801, tracking, terminal and airline invoicing, as well as mail and courier handling.
Airports Council International Asia-Pacific welcomed three airport members and five directors on its board at its regional assembly last 31 March.
(ACI) new new 16th
The new directors joining ACI’s regional board include Nicolas Claude, Airport International Group, Jordan; Jerry Dann, Taoyuan International Airport Corporation Ltd.; Dato’ Mohd Shukrie Mohd Salled, Malaysia
Joining ACI Asia-Pacific, along with the 12 existing members in Australia, is Albury Airport (ABX), located in New South Wales. Other airport operators welcomed to the association are New Zealand’s Papa Rererangi i Puketapu Limited, operator of New Plymouth Airport (NPL), and Dammam Airports Company, owned by the General Authority of Civil Aviation and operator of King Fahd International Airport (DMM) in Saudi Arabia, which handled more than 136,000 tonnes of cargo in 2019.
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NEWS - CARRIERS ECS Group to ‘sell well’ as CMA CGM’s agent Leading cargo sales agent, ECS Group, has been getting the nod from airlines as it secured partnerships to market air cargo capacity amidst a volatile business environment. In March, ECS was chosen by CMA CGM’s newly established air cargo division as exclusive GSA to market capacity between Europe and the US.
first scheduled flight, operated by Air Belgium, took off from Liège (LGG) to Chicago O’Hare (ORD) on 13 March, whilst two new scheduled routes connecting Liege (LGG) to New York (JFK) and Atlanta (ATL) started on 28 March.
Last December, ECS launched its GSA Mail Solutions, dedicated to postal and e-commerce flows in response ECS will sell capacity for the four to the growth in e-commerce and A330-200Fs in CMA CGM’s fleet. The online B2C and C2C platforms.
EVA Air to add more cargo capacity this year January saw EVA Air Cargo maintain momentum from 2020, with cargo revenue jumping 150 percent to US$171 million and yields up 86.2 percent compared to the same month last year. In an interview, the Taiwan-based carrier said it will add more cargo capacity this year,
with three B777Fs scheduled to be delivered in Q4 of 2021 and Q1 of 2022. Taiwan’s excellent geographic location positions it, the airline noted, as an ideal hub for air transport from Asia to America, where it saw high yields for major routes in its EVA Cargo network. Pfizer/BioNTech and Moderna are packaging their Covid-19 vaccines at necessary below-freezing temperatures for the carrier, as well as other airlines, to deliver them to designated locations worldwide.
Vietjet eyes cargo business expansion for 2021 Budget airline Vietjet Air is set to introduce several new cargo services this year as Vietnam’s largest budget airline solidifies its global position in cargo transportation. The cargo division’s standing VP Tran Quang Hoa said the carrier would closely follow the development of the logistics market to meet the demand.
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In late November of 2020, the carrier received a license from the Civil Aviation Authority of Vietnam to transport special goods on cargo flights, which is highly expected to draw in big cash for Vietjet in 2021. The airline has taken several orders of electronic components delivery from large tech groups, Hoa said.
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Last year it also inked an agreement with a top global shipping and logistics partner to set up a transcontinental transportation network to achieve growth in both cargo volume and revenue. In 2020, Vietjet moved more than 60,000 tonnes, up 75 percent in cargo revenue.
NEWS - CARRIERS Air Hong Kong adds fifth A330 freighter Air Hong Kong welcomed the fifth A330 freighter to its fleet, joining two production A330-200Fs and now three A330-300 passenger-tofreighter conversions, in addition to nine older wide-body A300-600s. The Cathay subsidiary is looking to add more capacity to move priority e-commerce shipments for customer DHL Express within Asia, and for Cathay Pacific Cargo during its downtime at Hong Kong International Airport.
Registered B-LDT, the aircraft was still flying passengers 18 months ago and was ferried to Dresden, Germany, in January 2020 for conversion. The converted freighter arrived in January via Malta, where it received its distinctive ‘peeled banana’ livery with Air Hong Kong and DHL Express branding, according to the carrier. A test flight was done on 4 February and it entered commercial service a few days later.
Cargo lifts China Airlines to turn 2020 profit A shift to cargo over passenger services enabled China Airlines to stay profitable despite the prolonged impact of the coronavirus pandemic on travel demand. In a year marked by border restrictions and strict quarantine measures which decimated much of the passenger business, the Taiwanesebased carrier turned to its cargo division for much needed revenue to eke out a profit. In 2020, cargo revenue was up 87 percent compared to 2019. Cargo demand jumped 18.7 percent year on year, whilst capacity climbed 10.3 percent. Cargo load factor was
up 5.1 percentage points at 72.1 On the cargo front, the airline sees percent, whilst cargo yield in 2020 continued demand as shippers look jumped 58.5 percent. an alternative to sea freight. Along with steady growth in the stay-atChina Airlines said it adapted to the home economy, e-commerce and imbalance in supply and demand related communications equipment, by using its 747F fleet and new China Airlines said it will continue to 777 freighters to maximize cargo optimise its freighter routes to the revenue, taking advantage of the central US and the US east coast. traditional peak season to hit a record single-quarter cargo revenue. The airlines is also looking to tap into India’s market potential and boost The Taiwanese-based carrier posted revenue with its stopovers in Delhi US$4 billion (TWD115 billion) in and Mumbai. The company is also revenue for 2020, down 32 percent planning to open new cargo routes versus 2019, whilst operating profit to Ningbo and Tianjin in China to take dropped 18 percent to US$76 million advantage of market developments. (TWD2.18 billion).
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NEWS - E-COMMERCE U-Freight poised for growing e-commerce market Hong Kong-based forwarder U-Freight Group is poised to tackle the surging demand for logistics services from ongoing e-commerce growth, including new demand patterns in merchandising, warehousing, and distribution. Simon Wong, chief executive of U-Freight, noted a trend in the development of distribution centres, as many traditional importers, exporters and traders now need fulfilment capability after shifting most of their business to an e-commerce model. One of its
logistics hubs in Hong Kong is being modified to convert part of it into a smart warehouse equipped with a fleet of automated guided vehicles (AGV) and an intelligent racking system so that it can perform as a socalled e-commerce fulfilment centre. The hardware is due to be installed early in April with system implementation by the end of the same month. U-Freight said it is now a ‘logistics partner of choice’ for the growing number of online channels and platforms where entrepreneurs sell their own designs and products, including the likes of Easyship. U-Freight is heavily involved in the Fulfilled by Amazon programme in several countries, and in 2019 launched a bespoke product to assist small businesses with their e-commerce logistics needs.
Millennials, digital to drive B2B e-commerce The way transactions are done amongst businesses are expected to shake up as more sales interactions are expected to take place through digital channels. A new study by DHL Express predicts that 80 percent of all B2B sales interactions between suppliers and professional buyers will take place in digital channels by 2025. With the millennial generation taking over as decision makers in most businesses, the study found that it now accounts for 73 percent of all professional B2B purchasing decisions. “As digital natives, their experiences in the B2C sector translate to high expectations when making B2B transactions, pushing companies to invest in digital solutions, such as selling platforms, while offering great growth potential,” the study read.
to remain ‘agile’ to be able to accommodate the surge in volume, particularly during peak months, to take advantage of the growth rates during holiday sales and mega shopping days. In Asia Pacific Ken Lee, CEO of DHL Express Asia excluding China, DHL witnessed a Pacific, reminds logistics providers 17.3% year-on-year rise in shipment
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volume during the peak months of November and December 2020 and a 21% higher spend per customer. In those two months alone, there were 65% more B2C shipments of which consumer technology products and fashion apparel contributed the most, Lee noted.
NEWS - E-COMMERCE Fresh capital to boost SmartKargo rollout for airlines SmartKargo is looking to accelerate the adoption of e-commerce shipping solutions for airlines with fresh capital from Boston-based investment firm M33 Growth. The company will use the capital to roll out its cloud-based solution for carriers as a growing number of airlines
Airline technology that opens the world of e-commerce shipping. Every online shopping site is looking for reliable solutions for fast delivery of their products. Airlines and their supply-chain partners own the assets to meet the growing demand for speed in delivery by e-commerce retailers worldwide. Connecting this demand with an airline’s supply of capacity can bring a nice revenue increase via air cargo. SmartKargo provides the technology and knowhow to help airlines and their partners connect from the desktop to the doorstep. Learn more Visit us at www.smartkargo.com to read a case study and learn more about the opportunity.
Enabling e-commerce. Delivered. www.smartkargo.com.
ponder on finding new revenue streams through e-commerce shipping and last-mile delivery. SmartKargo’s ‘operating system’ is already live with Air Canada and at some point will come to Asia Pacific according to Milind Tavshikar, chief executive at SmartKargo.
Cainiao, Hong Kong Air team up on e-commerce Cainiao Network teamed up with Hong Kong Air Cargo to launch cargo flights to Philippines, Malaysia and Thailand via its Hong Kong eHub. The Alibaba logistics arm continues to expand its network as it promises online consumers delivery within 3 days in Southeast Asia. Cainiao said the added cargo capacity will support growing e-commerce logistics demand in Southeast Asia, with the ability to transport around a quarter million parcels per week. ‘Phase 1’ of this new partnership will see seven weekly flights from Hong Kong to Manila, as well as three and six flights each week to Kuala Lumpur and Bangkok, respectively. The integration of the air cargo hub, along with the new logistics flow, is expected to cut delivery times for shipments to the Philippines, Malaysia and Thailand.
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NEWS - EXPRESS DHL Express drafts B777Fs in Asia Pacific DHL Express is adding more air freight capacity as it looks to serve the growing demand between Asia Pacific and the US and Europe for shipping fuelled by the rapid growth of e-commerce. The express operator will deploy two B777 freighters operated by Kalitta Air and Aerologic and offer close to 2,350 tonnes of capacity each week. The twin-engine freighter aircraft
has a payload capacity of 102 tonnes and a range of 9,600 km, making it ideal for long-haul routes. The B777F operated by Kalitta Air will fly five times a week from the US to the hub in Singapore via Sydney and will make stops in Hong Kong and Japan before making the return flight to North America. The airline will operate a new flight route that flies between SIN and SYD six times a week. Meanwhile, the B777F operated by AeroLogic will fly six times a week from Leipzig to Hong Kong and Singapore before making a stop in Bahrain and returning to Europe.
J&T Express enters air cargo with first preighter Courier company J&T Express is looking to add more capacity to ship packages throughout Indonesia with the launch of its first cargo aircraft. Celebrating its 6th anniversary this year, the delivery service company officially launched its first cargo aircraft at Budiarto Airport in Tangerang on the island of Java. The aircraft, a B737-300 registered PK-YSH, will be J&T’s first owned aircraft. The plane has an average life of 25.4 years and was recently reconfigured as a preighter. It will be
Kargo Xpress gets Vallair’s last B737400F
operated by previous owner Trigana Air Services and can load up to 15 tonnes each way, with at least two flights per day. With the new preighter, J&T Express is looking to increase the efficiency of package delivery, especially outside Java, with hopes to enhance servicelevel agreements with its customers. The company will operate the preighter on the Jakarta-Medan and Jakarta-Batam-Tanjun Pinang routes, which are seeing the highest traffic outside Java.
the A321, B737NG and ATR for its freighter conversions. The aircraft, registered MSN 26605, was modified in 2018 by PEMCO Conversions and will be the first Kargo Xpress is set to become the freighter in Kargo Xpress’ fleet. fifth air cargo operator in Malaysia with the purchase of Vallair’s last Vallair announced in December B737-400F. The company, owned 2020 it will start A321 conversions by charter operator M Jets, aims in China after seeing potential to fulfil Malaysia’s supply chain demand for the narrowbody demands, as well as those of freighter in the country’s active neighbouring countries, spurred e-commerce sector. It signed an by e-freight and e-commerce. MOU with US airline operator Vallair, handing over its legacy GlobalX for 10 conversions and has aircraft, said it will now focus on leased two to SmartLynx Malta.
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NEWS - LOGISTICS Rhenus opens free zone warehouse in Bangkok
and healthcare, offering better value with duty exemptions. Customers in electronics and medical devices with specific storage requirements can safely and securely tap on its 450-sqm temperature and dust-free controlled room, ambient storage facilities and the anti-static testing room.
Rhenus Logistics has opened a new free zone warehouse in Bangkok, Thailand, as it aims to serve a wider range of industries. The warehouse is strategically located within a 10-kilometre radius of three existing The warehouse supports pallet warehouses that house general storage for standard cargo and block cargo and dangerous goods. space for oversized cargo up to 3 tonnes and offers flexible in-transit Rhenus says the facility, located capacity for large shipments, with within Bangkok’s free trade zone, comprehensive 24-hour security will offer services to key industries measures within and around the like manufacturing, medical devices facility.
Geodis expands logistics footprint in South Korea Geodis is responding to the demand for supply chain services in South Korea with the opening of a new facility in Icheon. The new facility will provide additional warehousing and value-added contract logistics resources for e-commerce companies and manufacturers. The new multiuser warehouse is located 25 kilometres from central Seoul and can be reached within 90 minutes from both Incheon International Airport and the Port of Incheon. With the additional location, the company now has 65,000 square meters of space in the country. The warehouse is open to all new business and offers ‘all-in-one service, increased efficiency, full visibility and total control.
Air freight, contract logistics drive revenue for Agility Global logistics provider Agility reported net profit of US$138 million (KD 41.6 million) for 2020, down 52.1 percent from 2019. In its financial report, the company recognised the performance of its integrated logistics (GIL) unit, which took much of the slack as other business units saw dismal results. Full-year net revenue for GIL inched up 3.8 percent versus 2019 to US$940 million, primarily driven by air freight and contract logistics which
saw revenue grow 31.4 percent and 12.2 percent, respectively. The logistics provider said its GIL unit grew overall in 2020, despite challenges in other areas within the business, like ocean freight, fairs & events, and project logistics, as well as one-off charges resulting from cost-cutting initiatives given the impact of Covid-19. For 2020, Agility’s revenue reached US$5.3 billion, up 2.7 percent versus 2019, whilst EBITDA hit US$538 million, down 15.9 percent. Operating cash flow for 2020 was US$589 million (KD177.8 million), up 17.3 percent compared to the previous year.
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NEWS - LOGISTICS UPS ramps up cold storage capabilities in Singapore UPS aims to support Singapore’ ambition to become the centre of vaccine distribution in Southeast Asia with ultra-low temperature freezer farms at its dedicated healthcare logistics facility in the city state. These freezers can reach temperatures
of up to -80°C and are identical to those currently used by the parcel company in its global facilities for Covid-19 vaccine storage. Just slightly larger than an average household refrigerator, the freezers come with surprising storage capacity, and a single unit has the potential of housing enough doses to inoculate the entire population of Punggol, just below 200,000.. Experts estimate 340 million doses are required to inoculate Southeast Asia.
CEVA eyes air freight stations to up healthcare logistics On World Health Day, CEVA Logistics announced a new subbrand for its healthcare logistics services. Aptly named FORPATIENTS, the new entity will provide end-to-end logistics solutions to healthcare and pharmaceutical companies, and the forwarder plans to invest in temperature-controlled facilities around the world with the support from parent company CMA CGM. The company has committed to
operating a network of more than 40 airfreight stations by the end of this year, with some stations offering contract logistics support. CEVA Logistics plans to offer temperaturesensitive packaging solutions, both active and passive, as well as solutions for out-of-gauge goods through its global network. It will also provide monitoring solutions for realtime decisions through embedded location and temperature IoT devices.
Dimerco starts operations at Indo’s first e-commerce PLB Dimerco has started operations at the first and only e-commerce bonded logistics centre (PLB e-commerce) in Indonesia, operated by local partner PT Uniair Indotama Cargo (Uniair Cargo). Covering over 10,000 sqm, the bonded warehouse utilises Dimerco’s e-commerce platform for rapid clearance and manages
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domestic deliveries, typically with a lead time of 1-3 days, compared to direct B2C deliveries that take up to 14 days. In a bonded warehouse, B2B2C shipments achieve faster customs clearance and there is no requirement to pay duty and tax in advance. This allows the forwarder
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to move goods faster than standard B2C e-commerce operations with goods already in the BLC warehouse ready for local delivery. The facility relies on fully automated processes to ensure efficiency and keep costs low and can handle over 150,000 units per day.
NEWS - FREIGHT FORWARDERS New alliance eyes ‘reset’ for Europe-Australia air freight Recently formed Wholesale by Vels and established Australian wholesaler Consol Alliance have entered into a strategic partnership to disrupt the air cargo business on the EuropeAustralia route. As a start, the new alliance will operate weekly, tradeonly unitised airfreight consolidations from Amsterdam Schiphol to major Australian airports. Import services from Australia to Europe are also on the near-term agenda, with plans to collaborate in Auckland and Chicago.
and will feature late cut-offs, fast releases and flexibility when needed. Discounts will be offered for dense cargo under 6000cc/kg in volume, and forwarders will have the option of using the service’s master air waybill, or their own individual air waybills.
Facilities have been set up by Wholesale by Vels in Amsterdam, whilst Consol Alliance will use its own handling centres to break bulk in Sydney, Brisbane and Melbourne, for local release or transfer of cargo to its The service caters for general cargo, other regional stations in Adelaide and dangerous goods and e-commerce Fremantle.
Wholesale by Vels and Consol Alliance
Sun Logistics opens RACSF at HKIA Hong Kong-based forwarder SUN Logistics last week launched a new regulated air cargo security facility (RACSF), as it looks to adopt new technologies to meet customer needs. The move follows ICAO’s full implementation of its air cargo screening policy starting March where all cargo, except for validated known consignors, are subject to 100 percent security screening prior to being loaded onto commercial aircraft. SUN Logistics said the on-airport warehouse, built as an annex of the
Airport Freight Forwarding Centre at HKIA in Chek Lap Kok, will offer air freight logistics solutions, as well as stringent security and safety measures for all managed cargo. The new RACSF, covering 108,000 square metres, has four pallet-sized and two parcel-sized X-ray machines, whilst an off-airport facility in Kwai Chung has 2 skid-sized and 1 parcelsized X-ray machines, according to its website. Both offer air export logistics services, including ULD build up and cargo security screening.
CargoAi hands tools in view of sustainability CargoAi has launched new features that would allow freight forwarders to track and trace carbon emissions, as more companies take a sustainability approach to clean up their business activities. Forwarders can now choose routes and airlines based on their carbon impact. A Flight Search module shows forwarders the carbon emitted for each airline and route and allows them to choose transport solutions accordingly. Complementing this is a free ‘universal track and trace system’ to follow each shipment and calculate the CO2 emission in real time.
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EVENT - WORLD AVIATION FESTIVAL
Airlines discuss future on sustainable fuel When then-16-year-old Greta Thunberg sailed to North America to avoid flying and attended the UN Climate Action Summit, perhaps everyone at that summit knew it was time to take action on sustainability, with every move under the watchful eye of the younger generation. Under pressure the aviation industry faces an opportunity to be bolder with its carbon neutral ambitions, and out of the emerging technologies the one that emerged to fill the gap is sustainable aviation fuel. So what do we do now as the call to action is urging the industry to make things faster? The industry has been solving problems, as Anna Mascolo of Shell Aviation, pointed out at the sustainability panel during the World Aviation Festival last week. Recent commercial flights operated by KLM with Shell have shown the viability of SAF. Lufthansa and DB Schenker have started cargo flights running
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In the value chain, especially on B2B, we see there’s a lot of interest and readiness to pay the premium to the level of sustainable Not enough volume for a policy aviation fuel. on sustainable fuel. The expert panel wanted to ask what now are the challenges of building back better and scaling new technologies to meet industry targets?
Currently it is not possible to fuel an aircraft with pure SAF for technical and legal reasons, and the prices are much higher than conventional. Putting the industry in a tighter position is the fact there is not enough supply. “We need sustainable aviation fuel at pace and at scale and we are nowhere near that,” said Mascolo, adding that even with all the ongoing projects materialising the industry can only produce 1 percent of expected demand for 2030, or 4 million tonnes annually.
One of the recent projects saw Airbus and Rolls Royce testing 100 percent SAF use, but despite the industry’s full commitment Anna says the size of the challenge is really high for aviation to take on it alone.
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“We also need supportive mandates and policies in place and in general a strong regulatory environment, and in some cases fiscal incentives.” Meanwhile in the US, United Airlines’ view is leaning towards positive government policies and incentives. “We have a chicken and egg scenario where there’s just not enough volume to support mandates,” said Lauren Riley, managing director, global environmental affairs and sustainability at United. As part of a broader coalition, the airline is pushing for a blender’s tax credit, which is expected to scale up production and close the price gap between SAF and regular jet fuel.
EVENT - WORLD AVIATION FESTIVAL Recently it formed the EcoSkies Alliance with freight partners to collectively purchase 3.4m tonnes of SAF, as a step to go beyond offsets.
the last year, corporate and cargo customers have been proactive in asking for compensation and SAF given they also have set their own ‘enterprise responsibility’ in terms of “It is 2 to 4 times the cost of decarbonisation. conventional, so for an airline right now given the impact of “In the value chain, especially on the the pandemic on our financial B2B, we see there’s a lot of interest circumstances, that’s very difficult and readiness to pay the premium to for us to present that business case the level of SAF,” he noted. The end and pay for that premium associated game, he says, will be a ‘true price for with the lower carbon fuel.” So a flying.’ “That’s where it’s all evolving: blender’s tax credit would really be a the complete impact of flying is positive mechanism to enable a shift somewhere in the price of tickets.” and scale in production, she added.
Long vs short term solution
easjyJet’s director of flight operations David Morgan agreed that rule makers need to offer sufficient incentives to scale up new technologies up to the point that pricing becomes good if not better. The short-haul carrier is optimistic about hydrogen but given how such technologies are still relatively nascent, Morgan made the case for offsets as the only viable option at the moment given the lack of SAF supply. “As an industry perhaps we should be a little less snobbish of carbon offsets in the very short term,” he added. Coming from a major oil exporter, Mariam Al Qubaisi, head of sustainability at Etihad, said carbon offsets work for the airline in the current situation, particularly for passenger customers who wish to do more for the environment. “We don’t have SAF, we don’t produce SAF, transporting SAF is an issue and maybe flying less as part of our network is the solution.” “When we look at all the solutions out there, we need to take the quick wins and carbon offsets is one of them,” she added.
Will customers premium?
pay
on a pedestal where the industry is seen as the perpetrator of climate change.” But as part of the solution, she says it is important that the industry showcase that despite being competitors, when it comes to the planet, we’re all in this Better intent for alliances together. “There is no competition Whilst this may be welcome news for in sustainability. Either we all win or producers like Shell, the challenges nobody wins,” as Anna points out. are systemic and need a collaborative approach. Mascolo said the energy Global approach company comes in as an enabler for With industry developments the synergies needed to make the happening regionally, KLM’s Karel sustainable shift, actively engaging thinks there has to be a global with governments and stakeholders approach, warranting the need for to bring the conversation forward. associations like IATA and ICAO “These alliances are incredibly powerful and absolutely needed, but I do think that there may be too many alliances and there needs to be more convergence,” Mascolo noted. easyJet echoing the sentiment said these conversations have to be meaningful enough that the policy makers are also in the conversation. “The important alliances are those that have meaningful strategies and with milestones in them otherwise they become a bit of a talkshop,” Morgan added. Sharing her comments, Lauren from United said that despite a sort of a kitchen sink effect where everyone is forming alliances, at the end of the day, “she’ll take the enthusiasm over inaction.”
Public perception
the In
In that regard, KLM’s VP for sustainability, Karel Bockstael, expressed that even if there weren’t many passengers over
Asserting whatever target might not be good enough. There’s going to be continued pressure, engagement, dialogue around ‘can we go further sooner’
terms of public perception, Etihad’s Al Qubaisi mentioned that communications play an important part of bringing this wider discussion on sustainability and decarbonisation to drive change. “We have been put
to step in and be a voice for the industry. IATA, representing leading airlines, he says, can take a leading role in preparing the objectives in line with the UN’s Paris Agreement for next year’s assembly. easyJet’s Morgan urged getting more into the details of how industry targets will be achieved, stating the need to start ‘nailing down’ milestones to make those targets.
“I don’t think inaction by the global aviation industry is going to be accepted,” as United’s Riley reiterated. “I think asserting 2050 or 2060 or whatever the target might be, might not be even good enough. So I think there’s going to be continued pressure, engagement, dialogue around ‘can we go further sooner?’” This brings us back to one of the major themes in the discussion: are the right stakeholders really pushing on the right levers to accelerate some of the solutions? The answer could be very well a resounding ‘yes’ because, as Riley pointed out, we might really need to.
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INSIGHTS
Courier digging through scattered parcels on the street
Cainiao used biodegradable boxes during last year’s Double 11
Logistics robot somewhere in Hangzhou
Tech-enabled sustainable initiatives for ecommerce and logistics Words by Wang Haosu
The e-commerce industry has experienced rapid growth and advancement in recent years. From the point of selecting the goods to purchasing and receiving the parcel, the entire online shopping process can be completed within half an hour to an hour. In addition to relying on a comprehensive online shopping system, a strong and well-integrated logistics also plays an indispensable role in achieving this feat. Amid the pandemic, the implementation of measures such as lockdowns or stay-at-home orders has also accelerated consumers’ shift to online shopping, with more consumers choosing to purchase daily necessities using online platforms. The role that logistics plays within the eCommerce sector has only gotten more essential. At the same time, with the rapid development of online shopping and logistics, Cainiao, as a logistics network, also attaches great importance to the proper handling of packaging and reducing waste—issues which have a significant impact on environmental sustainability. Cainiao Network, Alibaba’s logistics arm, was founded in 2013 to establish an ecosystem to support the evolving needs of the global logistics industry. The ecosystem comprising logistics companies has since undergone a digital transformation to bring about greater efficiency and cost reduction along the value
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chain, while enhancing the resilience of the supply chain to ensure a smoother flow of goods. As a technology-enabled logistics company, Cainiao has partnered 3,000 domestic and foreign logistics players and 3 million couriers, including the top 15 logistics companies in China and the top 100 companies globally. The implementation of cutting-edge technologies has facilitated the gathering of real-time data from various companies and routes which support merchants to adopt the most economical and efficient delivery method to suit their business needs.
Smart routes to reduce carbon emissions
China’s eCommerce sector is experiencing phenomenal growth but the fragmented logistics network has become a major challenge to improving delivery efficiency. In various cities and counties in China, it is a common sight to witness courier personnel digging through a mountain of parcels on the street, and rushing to deliver them. So how does Cainiao revolutionize the logistics industry in a more environmentally friendly and sustainable way? The answer lies in digitization. Cainiao has developed an open platform that provides a full suite of technology-enabled logistics services for global companies, ranging from electronic shipping labels to digital customs clearance.
INSIGHTS There have also been numerous technology innovations made in the last mile logistics which are not only good for the environment, but also enhances customers’ experience. For example, using machine learning, Cainiao can predict and analyze consumer demand, thereby setting up a logistics network in the location closest to the consumers which reduces the transportation distance and time. In addition, leveraging the Internet of Things and big data, algorithms are used to provide couriers with the best delivery route to reduce carbon emissions and improve delivery efficiency. Recently, a 1.5-meter-long, 0.9-meter-wide logistics robot “Little G” has become one of Hangzhou’s attractions. After receiving the parcels from a Cainiao Post station, it automatically drives into a nearby community for delivery. Using a 360-degree sensing device to avoid crowds and obstacles, consumers only need to approach Little G and enter the pick-up code to collect their parcels. Here, Little G demonstrates how technology innovation has real-life applications to directly improve consumers’ daily lives.
The logistics company, together with more than 500 Chinese and overseas merchants, used about 4 million biodegradable boxes, which is estimated to save 79,000 kilograms of plastic. In addition, Cainiao used a smart packing algorithm to reduce packaging materials for more than 12 million packages. It also used the original box or ‘zipper boxes’ to reduce the amount of sealing tape used, saving more than 86 million metres, which is enough to circle the earth twice. The global logistics market is massive. With the rapid development of the eCommerce market, the demand for domestic and cross-border logistics is rising sharply. To ensure the continued and sustainable development of the industry, there needs to be a conscious focus on driving technology-enabled green logistics initiatives. This will ensure that we are making economic advancements and improving the ease of doing business while also caring for the overall wellbeing of the community and environment.
This doesn’t end here. The digitalization of the entire logistics industry is inevitable as the global economy and companies prepare for the Logistics 4.0 era. Growing internet and smart device penetration means that warehouses can become smarter with autonomous robots, smart sorting systems; vehicles can be more energy-efficient and equipped with GPS position for better data collection and route management; parcels can be affixed with electronic shipping labels for realtime tracking end-to-end. The possibilities are endless, and Cainiao plans to digitalize every aspect of logistics from end-to-end. This will have the potential to bring about impactful changes to support China’s US$2.09 trillion eCommerce market.
Leveraging partnerships to boost sustainability
Sustainability has become a key issue in logistics in recent years. In 2017, Cainiao launched a recycling program and partnered with industry players and charity organizations to carry out the recycling of packaging materials in China. According to the industry survey released by CBN Business Data Center, the collaboration between Cainiao, Alibaba merchants and consumers during Double 11 in 2020 resulted in remarkable results. At approximately 80,000 stations in China, more than 100 million parcel packaging were collected within 14 days for reuse or recycling. Cainiao’s electronic shipping labels also helped save more than 2.2 billion sheets of paper during the sale period—400 billion sheets over the past five years.
THE CONTRIBUTOR Wang Haosu is currently the Head of Green Initiatives at Cainiao. He is responsible for spearheading green logistics initiatives such as enhancing the sustainability and eco-friendliness of Cainiao’s entire logistics chain, and Cainiao Ocean, a corporate-led environmental project that aims to reduce the use of non-biodegradables packaging. Prior to joining Cainiao, Wang served as the Vice President of iQiyi where he oversaw game operation and distribution. Before that, he was with Tencent from 2011 where he served roles such as the Director of Tencent mobile game operation and the Producer for Tencent mobile game distribution. He holds a master’s degree in marketing from the School of Business Management at the Université de Poitiers in France.
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INSIGHTS
Why free trade agreements will boost SME growth in Asia Words by Kawal Preet
COVID-19 has been an enormous disruptor for us all since 2020, and Asia Pacific is no exception. It’s not just the economic impact that has rippled around the world; the pandemic has completely changed the fiber of how companies work, transact, manage supply chains and move goods around the world. Of course, Asia’s economics—and its challenges— are diverse. This region has long played a key role in global supply chains and has strong potential to close in on business recovery in the post-COVID world. For instance, ASEAN’s GDP is expected to stretch to $4.5 trillion by 2030, opening a huge opportunity to build greater resilience for the future. Recent events prove that when global commerce grinds to a halt, local, domestic and regional trade can continue to sustain the economy. After all, 60% of international trade is intra-regional. But to enable it, connectivity within and beyond borders is essential.
Not only is this the first multilateral free trade agreement that China has taken part in, but it is the first time that China, Japan and South Korea have entered into an FTA together.
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2020 saw intra-Asia trade dip to 13%. But it’s expected to rebound to the tune of 6.6% growth as global demand resumes throughout 2021. That’s why trade agreements—like the Regional Comprehensive Economic Partnership (RCEP)—are significant. The RCEP, signed in November 2020 and pending ratification, will enable a bigger marketplace between the 10 ASEAN members plus Australia, China, Japan, New Zealand and South Korea. This type of cooperation benefits and strengthens our region. Already intra-regional commerce accounts for more than half of Asian trade, with the intra-Asia trade lane expected to ultimately outgrow the trans-Pacific.recommendations, crossselling and CRM (customer relationship management). This all dials back to greater sales, customer loyalty and growth possibilities for small business and e-tail entrepreneurs. Consumers have come to rely on e-commerce during lockdowns, so retailers must keep selling quality products at appropriate prices without compromising the customer experience. And online shopping needs to expand to the smaller Indian markets, so that all sectors of society can access and use it—not just the middle class. To keep customers coming back, Indian e-commerce businesses are predicted to start shifting their focus to boost customer base through loyalty and subscription programmes this year. Not only is this the first multilateral free trade agreement that China has taken part in, but it is the first time that China, Japan and South Korea have entered into an FTA together. The big three East Asian nations—connected by a free trade agreement for the first time—stand to gain the most. China’s exports are projected to rise by $248 billion thanks to RCEP, with Japan seeing an
INSIGHTS This flurry of online shopping and digital transactions has SMEs evolving into international business natives, linking customers and suppliers all over the world. extra $128 billion and South Korea $63 billion. Trade among the big three in East Asia should account for a significant portion of the increase. Considering China is implementing the ‘dual circulation’ strategy, more effective connections will come into action among production, distribution, circulation and consumption in and out of China. Another beneficial FTA is the EU-Vietnam FTA— approved by the European Parliament and the Vietnam National Assembly and in effect since August 2020— which highlights the growing importance of Vietnam and Southeast Asia on the global stage. It is a vote of confidence for global commerce, and the small-andmedium-enterprises (SMEs) behind these economies, during this time of recovery. Because SMEs often interact directly with customers, they are the group most impacted by shifts in trade regulations. These trade deals signal widening opportunity and possibility for change.
that can enable cross-border commerce and help small businesses scale up. Take our new ground-breaking collaboration which powers the FedEx logistics network through Microsoft’s intelligent cloud. It gives greater visibility into supply chains with near-real-time analytics of shipment tracking, driving more precise logistics and inventory management. A reliable logistics partner can be the resilient backbone for SMEs operating at a time of crisis. For example, in addition to flexing its network when needed, FedEx offers interactive e-commerce delivery solutions that allow e-merchants to offer their residential customers the ability to customize delivery options, including timing and location of receiving deliveries—a contactless delivery solution at its best. COVID-19 has been the tipping point for small and medium businesses - and SMEs are repositioning for the future. Together, we must creatively plan and adapt for what’s next. By making it easy for SMEs to do business with their customers, recovery will flourish. We must be future-ready—now.
Many SMEs experimented with operational changes during the pandemic in ways that have created lasting transformation. For instance, one medical device manufacturer we work closely with has a supply chain spanning Singapore, Malaysia, China and the Philippines. They are now flexing manufacturing so that more than one country can assemble their medical devices. By reducing dependency on a single market, they’re creating vital options for their business in the future. Others are moving their business online given the access made possible to a new customer base. Consumers— amid lockdowns—turned to online shopping for nearly everything, which accelerated e-commerce growth and resulted in a surge of digital shops. Adoption of online grocery is getting a boost, with an expected annual growth of 30% and online penetration is doubling from 5% in 2020 to 10.6% in 2024. Online retail sales in Asia Pacific are expected to grow from $1.5 trillion in 2019 to $2.5 trillion in 2024, according to Forrester. China remains the largest market in Asia Pacific, expected to reach $2 trillion by 2024. This flurry of online shopping and digital transactions has SMEs evolving into international business natives, linking customers and suppliers all over the world. It’s one of the reasons why, as e-commerce develops, we are focused on innovation and automation technologies
THE CONTRIBUTOR Kawal Preet took up the president role for the Asia Pacific, Middle East, and Africa (AMEA) region at FedEx Express on 1 June 2020, where she is responsible for overall planning and implementation of corporate strategies and operations across the region. Preet, who started her career in 1997 as an associate engineer in Singapore, was most recently the senior vice president of operations for North and South Pacific (excluding mainland China and Mongolia), a position she assumed in June 2017. She became vice president, planning and engineering air network for Asia Pacific in 2016. She is currently chair of the National Center for APEC (NCAPEC) and is an active board member of the USASEAN Business Council.
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APRIL 2021
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COVER STORY
Asia Pacific was the largest market for e-commerce logistics in 2020, accounting for 41.6% of the global total.
Asia Pacific to take lead in ecommerce logistics The global e-commerce logistics market grew 27.3% in 2020, according to the latest data from Transport Intelligence, reflecting a surge in e-commerce demand, exacerbated by the coronavirus pandemic. With a market share of 41.6% globally, Asia Pacific represents the world’s largest market, with China leading the way.
market. Despite already being a relatively mature market, given internet penetration rates close to 100%, e-commerce has reaped the benefits of the pandemic. Online retailers have benefitted from urban density, tech-savvy consumers, and high-tech network infrastructure. Competition remains intense within the market with Amazon Japan, Yahoo Japan and Rakuten accounting 2020 growth The Asia Pacific e-commerce logistics for more than 50% of the country’s market grew 22% in 2020. Valued yearly e-commerce revenue... at around €153b, it is the largest regional market, accounting for South Korea represented the third 41.6% of the global total. In 2020, largest market for e-commerce China’s logistics market grew 20.1% logistics in the region. Despite in 2020 to around €112.8b. According experiencing 26.7% growth in 2020, to eMarketer, online retail sales the market is set to only expand by accounted for 44.8% of total retail 7.2% over the next 5 years (2020sales in 2020, with growth bolstered 2025). With already high levels of internet penetration and smartphone by the coronavirus pandemic. adoption, this means less headroom Japan experienced growth of 18.6% to improve in areas that typically in 2020, making it Asia Pacific’s promote e-commerce growth. second-largest e-commerce logistics
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Other markets that showed significant growth include India, expanding 36.1%, as consumer habits moved online brought about by the coronavirus and lockdown measures. Rising smartphone penetration, the launch of 4G networks and increasing consumer wealth have also boosted the market in 2020. Australia expanded by 35.3% in 2020 on the back of a shift in consumer behaviour towards online shopping. According to Australia Post, almost 9m households made an online purchase last year, up 10% from 2019. The pandemic also prompted a shift in the product categories purchased online. To support future growth, the company invested in its air network, including the addition of a dedicated Gold Coast freighter. Taiwan, meanwhile, was the slowest growing market in the region, experiencing 16.1% expansion in
COVER STORY 2020. Despite initiatives by the government to boost e-commerce growth through subsidies, language barriers and high shipping costs have stunted the country’s cross-border e-commerce potential, according to Ti.
Retail logistics
The impact of the Covid-19 pandemic on various retail product categories has been anything but universal with retail sectors experiencing varying demand. For instance, demand during the first wave of lockdowns was so great, many logistics providers and retailers struggled to cope. Ti suggests that changes in the retail sector imply parallel changes in the sector’s logistics industry. The traditional model of ‘trucks & sheds’ looks old fashioned, characteristic of traditional retailing. Right now Amazon’s logistics operations are setting the benchmark for e-retailing in the future, with its large, capitalised networks of fulfilment hubs and cross-docks with high levels of automation, and even higher levels of focus on data. Companies following this lead have reversed the trend towards outsourcing logistics and making logistics a core-competency. Ti notes that the traditional contract logistics industry looks to have a far more limited future in many parts of the retailing sector. Whilst consumer demand is unlikely to change its patterns, the ability of e-retailers to respond to demand as a result of superior information management at the tactical level implies more precise inventory management. Ti says order-todelivery cycles can be compressed and inventory positioned and priced more effectively. The implications for logistics sectors, such as airfreight and sea freight, are likely to be significant.
Consumer electronics
Booming demand for televisions, smartphones, and wearable devices
drove the consumer electronic market in 2020, reversing the slump seen in previous years. The sudden revival was primarily due to stay-at-home orders, which left many scrambling for office and home equipment to supplement new remote work or online school setups.
In parallel there is a so-called strong ‘Chinaflight’ pioneered by Japanese and South Korean electronics brands who, over the last five years, have adopted a policy of moving assembly operations out of China. For instance, Sony and Samsung have shifted production from their home markets of Japan and South Korea to new However, electronics supply chains locations like Thailand and Vietnam. were amongst the earliest to be impacted by the coronavirus as In terms of the global logistics market, factories shut down for a prolonged Ti suggests this could result in growth period over the Chinese New Year. At in Southeast Asian ports, shipping the same time as supply chain issues, lanes and airfreight operations; the logistics industry was critically growth in logistics property and disrupted. Bottlenecks, created infrastructure; and significant by cessation of passenger flights, diminution of the opportunities for blanking of sailings and disruption non-Chinese LSPs in China. of domestic transport within China, has forced many high-tech shippers Asia Pacific forecast to use air charters. For instance, Sony Ti expects moderate growth of 8.6% had to commission Delta’s 747s to for Asia Pacific’s e-commerce logistics ship PlayStation 5 consoles to the US market over the next five years. This to meet launch demand. rate could go as low as 4.9% or as high as 12%, depending on whether Airlines such as IAG, Lufthansa, Delta logistics costs as a percentage of and United Airlines, which relied on sales were to increase or decrease travel prior to the pandemic, had to over this time frame, Ti noted. use passenger aircraft for charter flights, whilst other airlines with China’s e-commerce logistics market freighter services increased their is expected to grow at 12% CAGR over frequency and range of destinations. the next 5 years, extending its position as the world’s largest e-commerce ‘Chinaflight’ logistics market, ahead of the US. It is Ti suggests that the electronics expected to grow above Asia Pacific sector’s supply chain geography is and global growth rate, accounting changing. For more than 20 years, for 76.1% of the Asia Pacific market the sector has been dependent on and 35.7% of the global market by China for the assembly of products. 2025. Most chip fabrication plants in China, however, are owned by Taiwanese, Other developing markets also Korean or Japanese, whilst state- remain full of promise and will owned plants produced more continue to fuel e-commerce growth commodified products. But, as Ti over the next five years with many notes, all this is changing with some boasting double figure growth rates. ‘not entirely successful’ attempts by Vietnam and Malaysia are set to China to make its own chip designs. grow at CAGRs of 19.9% and 14.4%, “SOEs have expanded into other respectively, or higher. However, component areas, supplying both e-commerce is still a ‘relatively new’ major global corporations, notably phenomenon in these markets, and Apple, and Chinese brands, resulting increased internet access, more in a more China focussed supply secure online payments, improved chain and consequently logistics customer interfaces and improved provision,” Ti added. logistics processes will be needed to make this happen.
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C-SUITE INTERVIEW
In February, Qatar Airways Cargo announced chapter 2 of its WeQare sustainability programme in which the cargo airline pledged to offer free transport for wildlife back to their natural habitat. Payload Asia got a chance to do an interview with Guillaume Halleux, chief officer for cargo at Qatar Airways, as he shared the latest developments on WeQare, the intricacies of live animal transport and the ‘ripple effect’ of this programme to its staff and the society.
QR Cargo hopes for ripple effect on sustainability What’s the inspiration behind WeQare’s chapter 2: rewild the planet? Can you share a memorable effort by QR Cargo in transport of wildlife? We are concerned about leaving a legacy for the future generation and I think each individual on this planet should really ask themselves what kind of world they want to leave for the next generation, for their children and their loved ones. Every action of ours affects the environment and since wild animals preserve the ecological balance which affects our planet’s wellness, we thought it was time to introduce Rewild the Planet. Qatar Airways is already engaged in the fight against illegal trafficking of wild animals and we have performed a number of repatriation operations. As an inaugural signatory to the Buckingham Palace Declaration in March 2016 and a founding member of the United for Wildlife Transport Taskforce, Qatar Airways has a zero tolerance policy towards the illegal trade of endangered wildlife. This second chapter of
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WeQare, our sustainability programme, strengthens our commitment to wildlife and is consistent with the airline’s commitment to fight wildlife trafficking and illegal trade of wild animals. Our employees are the ones who enabled the transportation of 1 million kilos and they will be the force behind the transport of wild animals for Chapter 2. Do you think the industry needs to put more effort into sustainability? What are the other trends that are increasingly being adopted by airlines and partners with people, planet and profit in mind? Yes, we all need to put greater efforts into sustainability and awareness about this topic is definitely growing. Sustainability is not only limited to the aviation industry but has to be implemented at the most basic level. Several initiatives focusing on carbon impact and reducing environmental impact such as e-AWB, e-freight, aviation fuel etc. have been gaining momentum in recent
C-SUITE INTERVIEW years in the industry. There are areas for progress in sustainability and through WeQare, our sustainability programme, we are incorporating sustainability in our everyday actions and encourage others to do the same. The programme encompasses actions or chapters around the key pillars of sustainability: environment, society, economy and culture. It’s a never ending programme, few chapters have been written while others are being thought of. I am very glad with the progress so far, it gives our employees and everyone part of this project, a sense of purpose and fulfilment as in the end, such noble deeds benefit both, the giver and the receiver and it has a ripple effect, inspiring everyone in the society to do good. I read from an interview you’ve been receiving positive feedback from NGOs and groups on wildlife transport. I’d like to ask if there’s any particular project you’re looking forward to finalising in the near term? Can you walk us through the kind of coordination needed to make this happen? Yes, indeed. We have started to receive few inquiries since the announcement of Chapter 2, the first inquiries being to move lions and rhinos. There are many NGOs, who do their best to move wild animals back to their natural habitat and most of the animals are taken away from the wild for entertainment for the most part. I talked to a number of NGOs, who volunteer and spend their resources including, sometimes, bearing the cost of transport. The biggest hurdle for most of them, after they complete all legal and regulatory procedures, is the cost of transport. So we came up with the project where if anyone or an NGO wants to ship wild animals back to their natural habitat, then Qatar Airways will move it free of charge. I firmly believe that the cost of the repatriating wild animals to their natural habitat should not be a hindrance, especially when it benefits our entire planet. The formalities for this transport during the current pandemic is slow, but we are on track and will be announcing more details soon. How much do air freight rates usually go when you compare transporting wildlife with general cargo? Would you say the complexity of transporting wildlife is at par with that of the vaccines, or even more? The repatriation of animals is not a huge market, but it is growing each year. Our number of shipments for live animals has seen 78% growth in 2020 over the previous year. The transport of wildlife is very complex since we are transporting living animals with unique personalities. But air transport is the most humane way to transport them back due to the time and speed
The transport of wildlife is very complex since these are living animals with unique personalities. Air transport is the most humane way to transport them back.
element. When transporting animals, there are key factors such as aircraft environmental control system settings, airport and en-route environments, ground handling, animal physiology and this varies by species. Also given the combination of different species in transit, you can imagine the complexity of the transport. The air freight costs are naturally high. We have been transporting live animals for many years and have a dedicated product for transport of live animals throughout the world. The product is managed by specialists who also represent the airline in several global animals shipping organisations/boards such as IATA’s Live Animals and Perishables Board and Animal Transportation Association. We can also provide bespoke charter solutions based on our customers’ requirements. Our state-of-the-art 4200 sqm live animal centre at the hub is fully equipped with all the facilities for animals being imported, exported and transiting our hub. All our processes are compliant with IATA’s Live Animal Regulations, ensuring the safe transport of animals by air. What can we expect from the next chapter? The next chapter will no doubt be focused on sustainability, I cannot disclose any more but stay tuned for a very exciting third chapter of our sustainability programme. *A version of this article was published on the Payload Asia website in March.
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APRIL 2021
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FEATURE
PLG headquarters with a good view of the Tuas Mega Port
PLG: Turning market gaps into opportunities When the first wave of coronavirus cases prompted Singapore to implement a circuit breaker, Pacific Logistics Group was in charge of storing the country’s food supply. As one of the leading homegrown logistics companies in the city state, PLG is playing a crucial role in supply chains across Southeast Asia. Operating across 20 locations in 11 countries, the company handles air freight for perishables and livestock and provides warehousing solutions for frozen and chilled food. With limited capacity and inventory pileups brought about by global lockdowns, PLG predicts manufacturers to increase export volume within 1 or 2 years and with it the demand for freight. It also expects multimodal transportation to see increased demand as more shippers explore cheaper options.
managing director, as he walks us through the company’s operations, the digital shift in logistics, and how PLG is bridging market gaps and turning them into business opportunities.
Multimodal transportation is expected to see increased demand and growth as more shippers explore railway freight as Can you tell us more about PLG’s part of the options. operations? Which modes or business are driving revenue for the company? In which markets are you seeing much potential? Pacific Logistics Group is based in Singapore with global connections and regional networks spanning across 20 locations in 11 countries— including Singapore, Indonesia, Malaysia, Laos, Cambodia, Myanmar, Thailand, the Philippines, South Korea, China, and Germany. PLG provides customised and cost-effective integrated logistics solutions for clients, many of whom are MNCs.
trends. Last year’s pandemic resulted in more stockpiling activities and this created a strong demand for warehousing services. Warehousing rose twice the amount of prepandemic levels. Freight demand is expected to increase in the coming few years as economies recover. Due to limited freight frequency and inventory pileups during the global lockdowns, we foresee manufacturers increasing their export volume within the coming 1-2 years, driving the demand for freight.
In an interview, Payload Asia talks Our revenue drivers vary season to to Kelvin Lim, founder and group season, depending on the industry’s Multimodal transportation too is
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FEATURE expected to see increased demand and growth as more explore railway freight as part of the options. By leveraging a mix of sea-rail or airrail options, this meets short transit times and balances out the supply and demand of freight equipment. With capacity congestion in both sea and air, how are you managing the sharp increase in rates? What would you say is the main headache for shippers aside from surging costs? This surge in pricing was caused by the domino effect of low air freight frequency, which in turn pushed a higher demand for sea freight. We think that the price will reach its corrective equilibrium point once the frequency of aircraft and sea vessels reach pre-pandemic volume levels. Likewise, the backlog of inventories resulting from limited shipments posed another challenge to sellers and shippers aside from surging costs, as it incurred additional warehousing costs. Shippers and sellers had to factor in these additional costs, and consumers had to absorb these fluctuations.
back-end teams, and the customers. With access to data via real-time tracking and orders, this reduces manpower inefficiencies and common information can be shared quicker, particularly with telecommuting now part of the new normal. PLG was in charge of Singapore’s stockpile during the circuit breaker. Can you tell us more about your capacity to store perishables? What about pharmaceuticals? Are you putting your hands into distributing the vaccines? We presently handle air freight for perishables and livestock, as well as warehousing solutions for frozen and chilled food. At present, we can store up to 4,500 pallets for our frozen storage facility.
For other ambient food storage, we have a total of 200,000 square feet of space. We are also exploring the storage of perishable goods. Alongside, we introduced a brand new vertical—food logistics, to solve logistical challenges for the F&B industry. With our recent storage facilities Halal-certified, PLG serves the diverse needs across the entire With these rising costs, shippers industry. and sellers were forced to explore an alternative mode of freight—rail At this stage, we are working closely freight—to export their goods. With with customers to build a stronger our strong background in freight, we footprint and expand our capabilities foresee higher conversion rates from to handle the sensitive requirements sea freight to rail freight amongst for pharmaceuticals. our current customers. Your headquarters near Tuas 2020 was quite a disruption but Megaport has a great view of in some way, it did fast track everything that’s going on around digitalisation especially for the at the maritime terminal. For logistics industry. What are your those looking for a career in thoughts on this? logistics and stepping into a great Apart from incorporating digital office with a view, how would you advances in daily operations such describe PLG as a workplace? as very narrow aisle (VNA) and It is amazing to witness the progress automated handling, one crucial of Tuas Mega Port, all from the area digitalisation needs to tackle is doorsteps of our headquarters automating the flow of information. from the initial land reclamation This helps to bridge communications works down to the installation of gaps between operations teams, automated rail-mounted gantry
cranes, and the opening of Phase 1’s operations. In relation, shipping and ports are important elements in logistics and PLG being 1 kilometre away from Tuas Mega Port is advantageous. We are within reach of the port’s main gate in 15 minutes. We gain efficiency in turnarounds because more trucking can be accomplished within the same time-period as compared to other logistics companies that are situated much further a distance from the Mega Port. The logistics industry has evolved significantly in recent years and we believe it will continue to change even in the next few years. With a strong shift towards digitalisation, the need to remain relevant has become more pertinent than ever. As a dynamic and agile organisation, PLG is quick to capitalise on bridging market gaps and turning them into business opportunities. This agility is made possible because of our strong collaborative culture, where cross-functional teams work closely to achieve business objectives. Which trends do you predict will shape up logistics in the years ahead? What do companies need to do to recover and thrive post-crisis? And where do the opportunities lie? We foresee more mergers and acquisitions over the year and increased strategic partnerships to consolidate resources and increase market leadership. To thrive in these dynamic times, companies need to adapt and shift quickly to industry trends. For PLG, this means aligning with the broader national development in infrastructure to facilitate new economic growth. As digitalisation becomes a turning point for the industry, key opportunities will arise in this race to come up with the next industrychanging innovation.
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APRIL 2021
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FEATURE: YCH GROUP
YCH: Pushing Asia’s supply chains to new frontiers Technologies like AI, data analytics, IoT and blockchain are pushing the boundaries of what supply chain and logistics companies can do to significantly improve their operations. As supply chain management continues to increase in complexity, more industry players will depend on new technologies to better understand where their business stands.
at Supply Chain City, dubbed Asia’s supply chain nerve centre, the homegrown company works with suppliers, manufacturers, brands, resellers and consumers to manage each stage of the supply chain—a ‘7PL’ approach so to speak—through inventive use of technology and the fast evolvement of work processes.
Singapore-based YCH Group knows its business and is putting innovation at the heart of its development and growth. Located
The Fusionaris system serves as a key infrastructure for YCH’s operations. This facility combines five stories of warehouse space and an automated storage and retrieval system that allows 66,000 pallets and round-theclock supply chain activity with 18 cranes in operation. A series of mezzanines with pallet conveyors for inbound and outbound cargo connects to four floors, where case and piece picking with other value-added services are undertaken.
Leveraging physical infrastructures with digital capabilities can yield powerful results, allowing logistics players to move cargo at lower costs and maximum efficiency.
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Combining digital infrastructure
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“Leveraging physical infrastructures with digital capabilities can yield powerful results, allowing logistics players to move their cargoes quickly, safely, and efficiently at lower costs and maximum efficiency,” said Ryan Yap, head of growth, innovation and partnerships at YCH Group. “New tech such as supply chain
and analytics help businesses by offering insights on people, processes, assets and the entire value chain to facilitate quicker decisions for global supply chain management. Solutions such as order and inventory optimisation also help them to position the right stocks for the right orders across different countries by optimising the inventory,” he added.
‘SuperPort’ concept
This infrastructure and technological acumen has certainly not gone unnoticed. In March, the company was selected to design, develop,
FEATURE: YCH GROUP and operate a logistics complex in Phnom Penh (PPLC), predicted on its ‘superport’ concept. The facility will feature the use of logistics technology to improve resilience, visibility and process flow, as well as a training academy to develop Cambodia’s local human capital in the logistics sector. Yap added that the concept will show the advantages of multimodal transportation through road, rail, air and sea linkages, acting as a supply hub for manufacturing operations, particularly in fast-developing countries in the region like Cambodia and Vietnam. “The idea of SuperPort is to create a smart logistics infrastructure so that each country can grow and move up the value chain, in turn creating a formidable economic bloc in ASEAN as a region,” noted Yap.
Innovating to adapt
When the pandemic hit supply chains and businesses in the region, this spurred an even bigger need to ensure business continuity. YCH said it spent significant resources to provide medical supplies and assistance for its employees when the situation took a turn for the worse. With stricter controls on the movement of people and goods, Yap said supply chain traceability and control had significantly increased, creating a learning curve and necessitating an efficiency tradeoff. “Fortunately, our experience in supply chain management allowed us to take measures to ensure that the disruption to our operations remains minimal, though it was admittedly difficult to minimise any increase in costs,” he noted. “Nevertheless, such measures will surely impact the global economy moving forward and we have chosen to see them as a new avenue where we must continuously innovate
The idea of SuperPort is to create a smart logistics infrastructure so that each country can grow and move up the value chain, in turn creating a formidable economic bloc.
promise.
With the growth continuing in these three markets, YCH said it is constantly reinventing its solutions to drive ‘unparalleled omni-channel fulfilment,’ which has bode well for the company in tapping new markets, opportunities, and supply and augment our supply chain chain methodologies. capabilities with new solutions that would aid in restoring and preserving “Such an approach encapsulates pre-pandemic efficiency levels,” he the idea of having multiple sites of operation that are flexible, scalable, added. and most importantly, connected to For BCP purposes, the Singapore each other to ensure a robust supply team had to segregate and map out chain. This will be the key to supply individual functions, assign dedicated chain continuity which will surely be manpower to cover those functions, on the forefront of everyone’s minds plan shift patterns to allow different moving forward,” said Yap. shifts to function as potential backups in case of an outbreak, and re- Industry ecosystem plan overlapping functions to ensure Whilst technology is an enabling social distancing whilst preserving tool for innovation, YCH says that smooth hand-overs. having an ecosystem inspires critical innovation, and this is more ‘While it has certainly not been easy prevalent at Singapore’s ‘supply chain to maintain high productivity with nerve centre’. With its knowledgethese measures, we are proud to say based LEARN ecosystem, Supply that our operations team have stood Chain City is designed to stimulate united and open minded to being innovation through collaboration. Its re-trained to ensure everyone stays hub approach gives smaller players safe,” Yap said. a chance to be part of an integrated ecosystem, providing access to opportunities across the value Regional integration Despite the crisis, growing calls for chain and bringing inclusive and regionalisation are taking place, YCH sustainable growth for supply chain noted, with Asia in the middle of two partners. mega-regional trade agreements. Its homebase Singapore, for instance, “This forms the objective of our is actively participating in both smart logistics infrastructure project. the CPTPP and RCEP as it looks to We are not here just to build a smart mitigate the negative impact of infrastructure, stay for a couple of Covid-19 and maintain open supply years, and then cash out. Our goal is a long term one with the idea of chains. creating a symbiotic partnership There has also been an increase in with the local country to ensure the trade corridors with major hubs continued success of the SuperPort like China, which has been the project and facilitate regional and ASEAN’s largest trading partner for subregional trade integration. It is 12 consecutive years. Meanwhile, also important for us to grow as a growing confidence in India’s pack, to share our best practices growing manufacturing capacity and to innovate together so that we and the region’s rising services can capture the great opportunities exports, including travel, transport generated from the burgeoning and business services, offers much ASEAN economy,” Yap ended.
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SPECIAL FEATURE
Women speak up: Promoting gender balance for the next generation The aviation and logistics industry has long been riddled with gender equity issues, much like maledominated businesses, but times are definitely changing. Following the International Women’s month this year, advocacy groups are making a stance to promote more balanced representation in boardrooms and industry events.
Logistics Group called out event organisers to invite more female subject-matter experts to speak at their events, starting this year. One of the proponents of the movement, Emma Murray, founder of PR agency Meantime Communications, says they had to step up because previous attempts were lacklustre. “A few years ago, we had a false start when organisers started to invite women In April, the Women in Aviation and to join a panel of women to talk
Clera Lam, Cathay Pacific
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Marie-Louise Philippe, Airbus
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about being women—that needs to never happen again.
Yesteryears
For Joana Li, executive director for Asia Pacific at AIrBridgeCargo, she first noticed a serious issue with gender imbalance when she first joined the industry. “I still remember I was the only Asian woman in a cargo event in Dubai around 15 years back and there was obviously
Joanna Li, AirBridgeCargo Airlines
SPECIAL FEATURE nothing about gender balance at its full potential, especially when that time,” Joanna shared. you consider that less than 10% of pilots are women and only very few Emma, who she fell into the industry women make it to the C-Suite and by accident in 1994 and has never senior leadership positions,” Marieleft since, says the times have Louise noted. changed since she attended her first air cargo show in 1996. “There As far as gender gaps go, there is no are more women and more women official data, which is critically one of visible, but it is not enough, and it is the issues. too slow.” “We have a perception that there are gaps, but we need more information Joana noted it is imperative to have on the whys and wheres to help an interest group to remind the still change the situation. One place male-dominated industry of the where it is glaringly apparent is on importance of maintaining gender the stage at industry events, and balance, as men and women do view even in the audience at those same things from different angles and events,” Emma noted. perspectives which may help the industry to move forward faster and Looking back at the last two years, stronger. her group estimates that only around 18 percent of speakers on event “It is great to see that the diversity panels are women at the moment. issue has been at the frontline with “We need to build up the facts and the leading industry organizations, figures so that we can start to set like TIACA and IATA, aimed at realistic benchmarks and targets changes in this field, and we see and measure success. That’s why more industry media concerned when we issued a challenge to event about women’s position in this organisers to recruit more women sector,” Joanna added. speakers, we also asked for them to provide data on how many they have now, what they hope to achieve and More data Whilst the movement is taking the whether they achieved it and so on,” necessary steps to move forward she adds. with the agenda, the data seems to prove otherwise. According to Mentorship: walking the talk Marie-Louise Philippe, senior sales For any organisation, having a director at Airbus commercial, there platform or group dedicated to is still room to unleash the maximum understanding and addressing potential of women across all levels gender issues is critical, and FedEx’s in the industry. president for AMEA, Kaweel Preet, believes in leading by example. To “The aviation industry is still one raise awareness on gender diversity where gender diversity is not at in the workplace, her company
organises events and training on a regular basis. To nurture diverse top talents, FedEx also has a mentoring program where aspirants are paired with senior leaders to advance their leadership skills. “Mentors are important. I want to share what my first direct female boss told me—she said, ‘Walk tall.’ This means mastering your own presence and I know many people, regardless of gender, are not comfortable with that,” Kaweel adds. Emma comments,“most people took me under their wing and couldn’t wait to share their knowledge and enthusiasm. Those that treated me differently were few and far between and I would expect some raised eyebrows if I shared more recent experiences I have had, which were far more blatant than attitudes in the 90s and 00s”. Indeed raising awareness and mentoring are some of the concrete ways to prepare the next generation of female leaders to join the industry. In Singapore, Mary-Louise together with other professionals started their own Women in Aviation International (WAI) chapter to empower women in all aviation career fields and interests. The nonprofit’s membership includes astronauts, airline pilots, technicians, engineers, air traffic controllers and even high school and university students. This September, the group is organising its first outreach programme called “Girls In Aviation Day” for primary and secondary
We have a perception that there are gaps, but we need more information on the whys and wheres to help change the situation.
Kawal Preet, FedEx Express
Emma Murray, Meantime Communications
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SPECIAL FEATURE schoolgirls to learn more about the disciplines of aviation and STEM. The group is currently reaching out to various stakeholders to make this happen.
Empowering the next gen
Inclusive environments and wellbalanced teams for the most part offer richness of views, larger access to talent and clear economic benefits as proven in research from McKinsey and HBR, according to Mary Louise. “It’s not just a case of ticking boxes or hitting a metric, it is actually an integral part of a successful business,” Emma adds. For Cathay Pacific’c head of cargo digital, Clera Lam, views of different angles stoke creativity and, in turn, ups the chances of recruiting or retaining the best fit talent, regardless of gender. “I have been in this industry for over a decade now and I don’t see any disadvantage in my career development so far being a woman. I would advise young female talent to be brave to shine and seize opportunities for
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development and advancement,” There are already quite a number of she adds. female leaders in the industry and so the path is open to all, as long as you Over at FedEX, Kaweel says women are ready to take the challenge.” in leadership is the norm, not the exception. “In the AMEA region, When Emma and colleague Celine women make up almost a third of Hourcade started WiAL, one of the our management positions. In Asia questions they asked was ‘how can Pacific alone, more than 70% of we change perceptions and attract the roles in finance, legal, human the next generation to join the resources and customer experience industry if they can’t see themselves are women,” she noted. “Women represented’? Perhaps with a strong play strong, impactful roles across and equally vocal support group, the board at FedEx.” inclusive mentoring and a bit of luck, there lies the answer. As Kaweel puts Whilst communicating with it: “Only when every team member superiors may be pretty daunting feels connected, respected, and particularly for new talent, ABC’s empowered can we achieve the best Joanna offers a piece of advice: results in the business.” “No need to pretend you can be as strong as a man physically to fit in, but also do not try to apply your feminine sides to get advantages. I am a believer that talent and hard work speak louder than anything in a work environment and the time will come people will respect you because of what you do rather than taking note of your gender.
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By 2025, 75% of the global workforce will be made up of millennials who have a unique perspective on diversity. Do you think they would want to work with companies that put diversity and inclusion at the back seat of company culture? Clearly, that is for them, but also the industry, to decide.
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