Payload Asia | January 2020

MCI (P) 002/07/2016 ISSN 2010-4227

The Trade Magazine for the Asia-Pacific & Middle East Regions Vol. 36, No. 01 January 2020

Boeing likely to take off soon After challenging year, improvement expected for 2020 Airport retail trends for 2020

F R O M T HE ED IT OR The Air Cargo Magazine for the Asia-Pacific Region

Vol. 36, No. 01, January 2020 Publisher K.Dass Editor-In-Chief/Publisher Email: editorial@harvest-info.com Tel: +65 6828 9333 EDITORIAL Yi An Ang Editorial Assistant Email: angyian1998@gmail.com Tel: +65 6828 9333 Alison Yeo Editorial Assistant Email: design@harvest-info.com Tel: +65 6828 9333 DESIGN Samantha Tham Graphic Designer Email: samanthatkq@gmail.com Tel: +65 6828 9333 SALES REPRESENTATIVES Asia/Japan Katsuya Watanabe Tel: +81 90 5321 6881 Fax: +81 3 6823 8994 E-mail: kwatanab@crocus.ne.jp South Korea Kwangsok Hong Tel: +070 8880 1745 Mobile: +010 9886 0729 Email: kshong2000@nate.com North America Matt Weidner Tel: +1 610 486 6525 Fax: +1 610 486 6527 Email: mtw@weidcom.com

DFS Group exit Singapore Changi Airport

Asia-Pacific airlines saw November traffic increase 3.9% compared to the 2018 period, a slight decline compared to the 4.2% annual growth recorded in October. Capacity rose 2.8% and load factor rose 0.8 percentage point to 79.9%. While seasonally-adjusted volumes are increasing, the trend has moderated. Disruptions in Hong Kong, slowing demand in India and China and less supportive business confidence in several key economies are among the contributing factors according to IATA.

At the Singapore Changi Airport, DFS Group will exit the liquor and tobacco business here after 40 years. However, the company will open its seventh store in Macau and fourth store in Hong K. Dass, Editor-In-Chief Kong by the end of the year, while its Hong Kong flagship store will be renovated by next year. DFS will also open its second European store in Paris in April.

DFS decided not to bid to continue selling alcohol and cigarettes at Asia's third-busiest airport for international passengers. It said that changing regulations on the sale of these products against a background of geopolitical uncertainty meant staying at Changi was not a "financially viable option".

Its competitor, South Korean travel retailer Lotte Duty Free has snagged the liquor and tobacco concession tender at Changi Airport. Lotte will start operations this June at the 18 stores spanning over 8,000 square metres of retail space across the four terminals. Its tenancy will last six years from June 9, 2020 to June 8, 2026.

This will be the first time a new operator helms the airport’s duty-free liquor and tobacco stores according to Changi Airport Group (CAG). In August 2019, DFS announced it will exit the business after a four-decade tenure. It declined to bid in CAG’s tender exercise for the new concession, due to tighter regulations, geopolitical uncertainty, and “steep losses” incurred at the operations.

This was CAG’s most significant leasing exercise since the last round of tenders were conducted in 2013 for the liquor and tobacco concession as well as the perfumes and cosmetics concession.

CAG said Lotte’s proposal stood out with its “strong omnichannel and marketing ideas”. Lotte, the world’s second-largest travel retailer in terms of sales turnover, has extensive experience in the industry including in the liquor and tobacco segment. It has concession experience in markets such as Australia, Japan, New Zealand, South Korea and Vietnam, operating at a scale similar to that at Changi Airport, CAG said.

Harvest Information Pte LTD 120 Lower Delta Road #09-07 Cendex Center, Singapore 169208 Tel: +65 6828 9333 Printer: Pixerise Design & Print Pte Ltd

With Lotte’s arrival, all 18 stores at the airport will be given makeovers to appeal to new consumer segments, in particular the millennials. The iconic duplex store at Terminal 3 will also see a complete revamp of its store facade. Renovation works will be conducted in phases.

In addition, some stores will feature product personalisation, such as customised whiskeyblending. They will also sport new liquor boutique concepts and curated zones with the latest products.

Lim Peck Hoon, CAG Executive Vice-President for commercial, said that Lotte’s proposal was aligned with CAG’s vision to offer passengers new “retail-tainment” initiatives using smart technologies.

Payload Asia has been appointed by the 20 member Federation of Asia Pacific Aircargo Associations as official publication for FAPAA news.

Payload Asia is published eleven times a year by Harvest Information Pte Ltd, located at 120 Lower Delta Road, #0907 Cendex Center, Singapore 169208. All rights reserved.

Please address all subscription mail to Payload Asia at the above address, or Call (65) 6828 9333. For annual air-speeded subscriptions for non-qualified subscribers, please contact us at editorial@harvest-info.com.

Payload Asia is published monthly by Harvest Information Pte Ltd, 120 Lower Delta Road, #09-07 Cendex Center, Singapore 169208. Material in Payload Asia is copyright and may not be reproduced in any form without the written permission of the editor.

www.payloadasia.com | January 2020

“Lotte also demonstrated a keen understanding of the market environment with a sound business plan supported by a competitive financial bid and backed up by solid business fundamentals,” Ms Lim added.

BREAKING NEWS HARVEST INFORMATION has officially acquired Payload Asia.

All correspondence should be made to design@harvest-info.com or editorial@harvest-info.com from 30 May 2019. You could also reach us at +65 68289333.

1

Content Page

2

GATEWAYS

04-09

COVER STORY Boeing likely to takes off soon

10-11

IATA

12-14

FOCUS Saudia launched SAL for ground handling and logistics services at Saudi airports

15

FOCUS IATA to improve efficiency of cargo handling audits

16

AIRCARGO REPORT Carbon emissions per passenger decrease more than 50% since 1990

17

FEATURE - AIRLINE Six airport initiatives launched for disabled passengers

18

FEATURE - AIRPORT Airport retail trends for 2020

19

FEATURE - LOISTICS GrabFood unveils merchant solutions & first GrabKitchen in Singapore

20-21

FEATURE - LOGISTICS FedEx Express strengthens clinical trial logistics services for global pharmaceutical customers

22

FEATURE - LOGISTICS Supply Chain Intelligence – Challenges and The Road Ahead

23-24

FEATURE - LOGISTICS IGD: Two leading retailers drive online grocery growth in Asia

25

EVENT - ALMC 9th ALMC Closes on High Note

26-27

EXPRESS & MAIL

28-29

IT & EQUIPMENT

30-31

LOGISTICS

32-33

TRENDS

34-36

10 17 22 26 26 PAYLOAD ASIA | January 2020

18-19 March 2020 Shanghai World Expo Exhibition & Convention Center (SWEECC) Shanghai, China

global reach market know-how

new business

get it HERE breakbulk aSIA DISCOVER NEW PROJECT OPPORTUNITIES IN CHINA + ONE BELT ONE ROAD PARTNER COUNTRIES, INDONESIA, JAPAN, MALAYSIA, SOUTH KOREA, THAILAND, THE PHILIPPINES, VIETNAM & MORE.

DESIGNED FOR ALL PROFESSIONALS INVOLVED IN PROJECT CARGO: SHIPPERS, PORTS, TERMINALS, SPECIALIZED TRANSPORT & EQUIPMENT PROVIDERS, FREIGHT FORWARDERS AND RELATED SERVICE PROVIDERS.

Visit asia.breakbulk.com

GATEW AYS

ASIA

Australian Government needs to challenge Productivity Commission’s final report

Aviation is an important economic contributor to Australia, supporting over 700,000 Australian jobs, and contributing $69 billion or 5.5% of the country’s GDP.

The International Air Transport Association (IATA) is calling on the Australian G overnment to challenge the recommendations of the Productivity Commission’s (PC) final report that the existing regulatory regime is effective, and changes are not needed.

Aviation is an important economic contributor to Au strali a , supp or ting over 700,000 Australian jobs, and contributing $69 billion or 5.5% of the country’s GDP. “This faces imminent risk if the aviation sector is not supported by the right policies that facilitates the sustainable development of the industry,” said Zanarini.

I ATA h a s i d e nt i f i e d s i x principle areas that need to be strongly addressed by regulators in Australia: 1. The current Economic Regulatory Regime does not address or exercise remedial action where monop olistic behavior by Australian Airports is identified 2. The current Monitoring Regime is not Fit-For-Purpose 4

3. The assertion that airlines have countervailing power at Brisbane, Melbourne, Perth and Sydney airports is incorrect 4. The existing monitoring reg ime ha s fallen shor t of delivering the key strategic outcomes envisioned by the Au s t r a l i a n G o v e r n m e nt i n moving to light-handed economic regulation in 2002.

5. L a c k o f e f f e c t i v e competition in jet fuel supply 6. I m p l e m e n t a t i o n o f measures that will result in the efficient management of scarce airport capacity, particularly at Sydney Kingsford Smith Airport.

“The conclusion of PC’s final report is wrong. The existing regulatory regime is ineffective.

Change is urgently needed. And the Australian Government needs to challenge the PC’s report and re-invigorate the c o n s u l t at i o n p r o c e s s w i t h airlines and airport users,” said Zanarini.

AirAsia Group and Universal Music Group launch RedRecords

New label focused on elevating A-Pop music to a global audience, first signing is Jannine Weigel – Thai singer, songwriter, influencer, model and actor.

AirAsia Group, a leading travel and lifestyle company within Asia Pacific and Universal Music Group (UMG), the world leader in music-based entertainment, announce d the l aunch of RedRecords, an innovative new label partnership focused on signing, developing and breaking new Asian artists and elevating ‘A-pop’ globally to new audiences throughout the region and around the world.

The two companies announced the groundbreaking partnership at a press conference, held in Kuala Lumpur. RedRecords will focus on discovering and developing talent from Southeast Asia and throughout the wider continent and form a clear and unique sound that reflects the diverse and rich musical culture of the continent.

RedRecords will be based in Kuala Lumpur and Los Angeles and w ill combine UMG’s industry leading track record in artist development with AirAsia’s regional and global marketing strength to expand A-Pop’s reach beyond national borders and languages to reach audiences around the world. In addition to artist development and A&R, the label will provide distribution and marketing, as well as management and agency services. The label will be led by Hassan Choudhury, Head of Music for AirAsia Group, who will take on the role of CEO of RedRecords.

At the press conference, the label announced the signing of Thai pop-artist and influencer Jannine Weigel, as its marquee first artist. Weigel, a singer, songwriter, influencer, gamer and actor has released several singles and EPs and amassed a huge following on social media, with more than 600 million PAYLOAD ASIA | January 2020

GATEW AYS views and 3.3 million followers on YouTube, in addition to 3.2 million followers on Facebook, 1.5 million on Instagram and more than 500,000 on TikTok. E a rl i e r l a s t y e a r, U M G announced a strategic expansion of operations within the region with the launch of a new regional headquarters in Singapore. UMG is committed to growing the entire music ecosystem throughout Southeast Asia, extending its focus and commitment to local language and domestic repertoire in order to provide music fans with the best music experience throughout the region.

Hactl handles 104 freighters in a single day

88 of the 104 freighter flights were fully handled by Hactl, both on the ramp and in its SuperTerminal 1 facility.

Hong Kong Air Cargo Terminals Limited (Hactl) – H o n g K o n g ’s l a r g e s t independent cargo handler – has broken its all-time record for the number of freighters handled in a 24-hour period.

On 3rd November, Hactl handle d no less than 104 freighter aircraft – beating its previous record of 102, set on 5th November 2017.

The peak of activity took place between 0200 and 0300, when Hactl simultaneously handled 13 freighters. Recent upgrades to Hactl’s IT system – notably a new airside management app – mean the company has increased its ramp efficiency and productivity.

Hactl is the only c argo handler in Hong Kong which www.payloadasia.com | January 2020

can provide both terminal- and ramp handling of freighters as a single service package.

Says Hactl Chief Executive Wilson Kwong: “We are very proud that we have once again beaten our record for freighter handling in a single day. To have successfully processed 104 widebody freighters in just 24 hours is a clear illustration of the immense scale of our operations and resources.

“Recent new business wins, together with growth in demand ahead of Thanksgiving and Christmas, have come together to achieve this impressive result. But it’s once again the remarkable team I am so proud to lead, which pulled out all the stops around the clock, to ensure that every aircraft successfully maintained its tight turnaround schedule.”

AAPA steadfast in supporting carriers facing tough market conditions

88 of the 104 freighter flights were fully handled by Hactl, both on the ramp and in its SuperTerminal 1 facility.

Asia Pacific carriers have de velop e d an out standing reputation for effectively and flexibly responding to challenges over many decades and as a result, remain at the forefront of the global air transport industry. The industry is now entering a challenging phase, with strategic development and profitability being threatened by a slowing global economy, political uncertainties and a multiplicity of operational

constraints.

Set against this demanding backdrop, leaders of AAPA member carriers gathered at the 63rd AAPA Assembly of Presidents meeting in Kuala Lumpur on 22 Novemb er 2019 focused on a number o f i mp o r t a nt i s s u e s s e e n as obstacles to industr y development in the Asia Pacific region and around the world. In particular, the Assembly passed resolutions on Environment, Cybersecurity, Infrastructure, Slots, Passenger Facilitation and Taxation.

Aviation Infrastructure With air travel demand projected to more than double over the next two decades, and the Asia Pacific region expanding at an even faster rate, there is a clear n e e d fo r a i r p o r t a n d a i r traffic management (ATM) infrastructure development to keep pace with such demand.

Airspace modernization is a global challenge, and improving the capacity and efficiency of international ATM infrastructure and ser vices requires a long term strategy supp or te d by appropr i ate commitment, funding, planning and resources. The failure to fully address this issue will result in increasing congestion and flight delays with adverse consequences for the travelling public and the wider economy.

A APA calls up on A sian governments and all industry stakeholders to work more closely together to deliver effective ATM services to meet present and future operational requirements; and to collaborate beyond national borders and commit to the development and implementation of enhanced Asia Pacific air traffic flow management systems.

5

GATEW AYS Environment With anxieties about the impact of climate change gaining increasing momentum around the world this year, AAPA is calling on governments and industry stakeholders to collaborate more closely in collective efforts to address aviation’s climate impact and promote sustainable aviation.

The Association sees it as being critical to ensure the integrity of the ICAO CORSIA scheme and avoid the duplication of requirements being placed upon international aviation CO2 emissions. The ICAO CORSIA scheme agreed in 2016 is now being implemented worldwide, with full emissions reporting by all international c a r r i e r s h av i n g b e g u n i n January this year.

AAPA calls on governments and operators to work together towards the effective implementation of CORSIA in a way that is fair and equitable, avoids competitive market distortion, and recognizes the interests of developed and developing nations. AAPA also calls on governments to refrain f rom apply ing duplicative requirements on international aviation CO2 emissions.

Cybersecurity The civil aviation sector i s inc re a sing ly reli ant on complex infor mation and communications technology systems, as well as on m a i nt a i n i n g th e i nte g r i t y and confidentiality of data . Today, c ybersecurity threats to civil aviation are continuously evolving, whether targeting operational safety, business disruption or the theft of information for other m o t i v at i o n s . M a i nt a i n i n g safe, se cure, and resilient operations is always a top 6

priority for the air transport i n d u s t r y. A A PA s t r o n g l y belie ves thatstrengthening cybersecurity requires governments, industr y and other stakeholders to work collaboratively together.

A s s u c h , A A PA u r g e s governments, industr y and other stakeholders to establish a global and regional approach to cybersecurity built on the basis of trust and transparency, and to work together to enhance cyber threat awareness , promote c ybersecurity culture, and strengthen cyber resilience.

Air Travel Accessibility Air travel is now an essential means of transport with over four billion passengers travelling worldwide by air annu ally. Airline s are continuously improving their service offerings for all passengers and committed to delivering a seamless travel experience that is safe, reliable and dignified. Nevertheless, the proliferation of different policies or requirements for the facilitation of air passengers with disabilities introduced by many governments, border control agencies and airports has resulted in overlapping and conflicting entitlements resulting in operational complexity and confusion for air passengers.

AAPA calls on governments to work closely with other aviation stakeholders towards a shared long term vision of harmonised international practices on the facilitation of passengers with disabilities, with the aim of achieving a more inclusive air transport system. Additionally, AAPA calls on governments to support ICAO efforts to develop a work programme on improving accessibility for passengers with disabilities,

in a safe, secure and dignified manner, using evidence-based approaches that are practical and cost-effective.

Slots An increasing number of capacity constrained airports around the world require a process for allocating airport slots. Although overall slot co o rd i n at i o n i s g e n e r a l l y managed in accordance with well-established global principles, deviations from these standards can adversely a f fe c t th e e f f i c i e n c y a n d predictability of air transport operations to the detriment of the travelling public.

AAPA calls on governments and slot coordinators to manage the allocation of slots in an independent, transparent, fair and non-discriminatory manner in line with ICAO guidance and established international standards and procedures such as the Worldwide Airport Slots Guidelines, recognising the benefits of a single, globally harmonised approach to slot management involv ing all stakeholders to optimise the efficiency and predictability of air transp or t s er v ice s .

I n a d d i t i o n , A A PA c a l l s on governments to ensure timely investment s in the d e v el o p m e nt o f av i at i o n related infrastructure, including airport runways and terminal capacity, as well as modernising air traffic management systems, to meet the projected growth in demand for air transport, to the benefit of the wider economy.

Taxation Airlines and the travelling public continue to bear the burden of numerous taxes and charges impose d by governments , as well as monopolistic service providers PAYLOAD ASIA | January 2020

GATEW AYS and other agencies. Recently introduced or increased taxes on air travel include Malaysia’s D e p ar ture L e v y, the Ne w Zealand International Visitor Conser vation and Tourism Levy and the imposition of various levies by different governments such as France, Germany, the Netherlands and Switzerland, often under the guise of environmental initiatives. Further, a number of airports are imposing or increasing passenger service charges as pre-funding mechanisms to finance future infrastructure facilities.

At a time when the industry is already having to cope with an increasingly challenging business environment, and recognising the adverse impact on the wider travel and tourism sector, AAPA renews its call on governments to refrain from increasing the burden of aviation levies in any form on international air travellers.

AMERICA

American Airlines Cargo undergoes u p g r a d e Network has global reach

The technology transition impacts more than 8,000 team members in cargo and airport operations, and more than 30,000 customers.

American Airlines Cargo recently launched the first phase of its single largest investment to-date with the roll out of a new cargo end-to-end management system on October 1. www.payloadasia.com | January 2020

The overhaul replaces the majority of the organization’s legacy technology, narrowing 90 systems down to less than 10. Not only do the new tools bring an upgraded customer experience, the evolution of the investment is part of a broader initiative to modernize the entire business.

A team of more than 700 people across 300 locations globally and more than 150 business, technology, and vendor partners at the airline’s new headquarters in Ft. Worth, TX supported the implementation process.

Jessica Tyler, Vice President Strategy and Development for American Airlines Cargo, has led the technology initiative since its genesis nearly three years ago. From the start, her team has been united in the belief that a people-first philosophy is necessary for this kind of transformation to succeed and move the business into the future.

The new system is powered by the iCargo platform and implemented in partnership with IBS Software.

The platform has a host of modern technology components, driving transformation in Sales, Operations, Customer Experience, and Accounting, allowing for more efficient online channels, better tracking, greater efficiency in warehouses, and a robust back-end system that will further strengthen both the customer and team member experience.

IBS Software has a proven trackrecord and breadth of experience running complex transformations for similar carriers. The transition to iCargo provides the foundation for a host of innovations and initiatives expected to be rolled out in in the next 12 months and beyond.

In addition to leading Cargo’s modernization efforts, Tyler also heads the product innovation and alliances teams. Her organization focuses on the future outlook – specifically how Cargo plans and invests in the right technologies, products, partnerships and ways of doing business to best serve customers.

She will be speaking at Air Cargo Americas in Miami, FL on October 31 as part of the Innovations and Technology Advancements in Air Cargo panel.

Pratt & Whitney GTF Engine revenue flight hours triple in 2019

The GTF engine continues to attract new orders, with more than 10,000 orders and commitments to date from more than 80 customers.

Pratt & Whitney GTF engine revenue flight hours tripled in 2019 across the combined GTF-powered fleet of Airbus A320neo family, Airbus A220, and Embraer E190-E2 and E195-E2 aircraft. Over the past year, the GTF-powered aircraft fleet nearly doubled in size and Pratt & Whitney welcomed 13 new airlines to the inservice GTF family including Delta Air Lines, Wizz Air, Cebu Pacific and Azul. Pratt & Whitney is a division of United Technologies Corp.

There are now more than 600 GTFpowered aircraft in operation with 44 airlines around the world, with more than 4.5 million total engine flight hours. Pratt & Whitney estimates that its GTF engine customers collectively have saved more than 240 million gallons of fuel valued at over $440 million USD, while avoiding more than 2.3 million metric tonnes of carbon emissions since the engine entered service in 2016.

7

GATEW AYS is a first success, reached thanks to the commitment of the Ministry of Agriculture and the National Phytosanitary Service, and it is vital to have openings of other markets in the future”.

EUROPE & CIS The GTF engine continues to attract new orders, with more than 10,000 orders and commitments to date from more than 80 customers. Several of these airlines have also signed multiyear contracts for Pratt & Whitney’s EngineWise Comprehensive service agreements, dedicated to sharing the company’s engine expertise and fleet intelligence with customers so they can optimize engine performance.

Since entering into service in early 2016, the GTF engine family has delivered on its promised ability to reduce fuel burn by 16 to 20 percent, and to dramatically reduce regulated emissions and noise footprint.

Origine Group deliver s f ir st container of kiwi to Mexico

Besides Asia and Europe, Origine Group, that brought together important fruit companies from Italy and Chile, is penetrating the markets of the American continent.

Origine Group’s first container of kiwi with destination Mexico is leaving today from Genoa port.

8

“It is our first load of top-quality kiwi for this new overseas market, which this season opened to the Italian product – says the Managing Director of Origine Group, Alessandro Zampagna-. This is a further progress in our mission of developing overseas markets, where we want to sell our best fruits.”

“The season of the Italian kiwis has started in a positive way – Zampagna adds – in spite of the low production of this year. Last season we exported more than 2,000 tons of Italian kiwis, a volume we hope to increase significantly this year”.

Besides Asia and Europe, Origine Group, that brought together important fruit companies from Italy and Chile, is penetrating the markets of the American continent.

“After this first year, where the main objective is to create the commercial relationships with the Mexican clients, in the future we hope to grow in a market that can absorb important volumes” Zampagna states.

“In a difficult moment for the Italian fruit & vegetable sector – adds Marco Salvi, President of the National Association Fruitimprese and of UNACOA, one of the companies associated with Origine Group – the possibility to sell our kiwis to Mexico

Opportunity for Aviation in Europe’s Green Deal

The global air cargo brand Turkish Cargo participated this year in Logitrans, Turkey’s most extensive international transportation and logistics fair, for the 11th time.

The International Air Transport Association (IATA) asked the European Union to support aviation’s energy transition to sustainable aviation fuels (SAF) as part of the bloc’s Green Deal, being launched tomorrow.

Since SAF were first certified as ready for use in commercial operations in 2009, over 215,000 flights have taken off using some blend of this low carbon fuel. The industry believes that achieving 2% of global jet fuel from non-fossil sources by 2025 could create a tipping point for production and cost of SAF. The 14 production facilities currently operating, under construction or in the final stages of financing and planning take the industry a long way towards the 2% goal. But more progress is needed.

The role of governments in energy transition has been mapped in the successful development of solar and wind solutions for power generation.

Aviation should be the priority for sustainable liquid fuels.

SAF are a critical component of aviation’s long-term efforts to cut its emissions to half 2005 levels by 2050.

The industry’s strategy to achieve this also includes significant investment in new technology aircraft, research into electric and hybrid propulsion, programs to improve operational efficiency, and the world’s first global sectoral climate mechanism, CORSIA.

PAYLOAD ASIA | January 2020

GATEW AYS

Turkish Cargo participated in Logitrans – 2019 fair

The global air cargo brand Turkish Cargo participated this year in Logitrans, Turkey’s most extensive international transportation and logistics fair, for the 11th time.

Having a 155 m2 wide stand area in the fair organized in CNREXPO Istanbul Fair Center on November 13-15, Turkish Cargo met business partners and event participants.

The Logitrans fair has hosted approximately 150 firms composed of the representatives of cargo agencies, automotive producers, air cargo firms, airport and harbor authorities, IT service providers, customs authorities, logistical associations, logistical schools, the representatives of international logistical publications, and over 15 thousand visitors.

Turkish Cargo, within the scope of Atlas Logistics Awards organized for the 10th time this year; He was awarded the first prize in the “International Air Carrier” category and the Jury Special Award for ‘Dual Air Cargo Hub Solution’ and ‘Mission Resque’ projects.

Participating the international fairs regularly, Turkish Cargo gives air cargo

service in over 300 destinations in 126 countries and keeps growing steadily.

According to the international air cargo information provider WACD’s September data, the successful brand grew significantly by achieving a tonnage increase of 8.8 percent in a sector wherein the global air cargo market shrank by -5.4 percent.

Turkish Cargo’s target is to be one of the top five air cargo brands of the world in 2023.

Steady growth f o r Tu r k i s h Cargo

According to WACD’s September data, in September when only Turkish Cargo, one of the top 10 airlines, achieved a positive result, the

Logitrans – 2019

www.payloadasia.com | January 2020

cumulative contraction in the global air cargo market was -5.0 percent.

According to the international air cargo information provider WACD’s September data, the global air cargo brand Turkish Cargo, which serves 126 countries of the world, grew significantly by achieving a tonnage increase of 8.8 percent in a sector wherein the global air cargo market shrank by -5.4 percent.

On the basis of the tonnage sold, the flag-carrier air cargo brand has grown by 11.1 percent in America, 9.7 percent in the Far East Region, 8.7 percent in Europe, 7.9 percent in the Middle East, and 5.3 percent in Africa, thus achieving positive results in all regions wherein it provides air cargo service, and kept growing steadily in these regions.

In addition to the flag-carrier Turkish Airlines’ cargo carrying capacity, Turkish Cargo that performs direct cargo flights to 88 destinations with its cargo aircraft fleet and has achieved a sustainable growth through its current infrastructure and newly made investments has been continuing to increase its capacity through successful operations in over 300 destinations constituting its current flight network.

The successful air cargo brand that serves 126 countries keeps raising its success bar by combining its broad range of services and operational capabilities with Turkey’s unique geographical advantages.

9

C OVER S TORY

Boeing likely to takes off soon

“The Board is confident Dave Calhoun is the right leader to strengthen Boeing’s safety culture, improve transparency and rebuild trust,” a Boeing spokesperson said… …

James Calhoun, Boeing CEO

The Boeing 737 Max will likely return to service sometime in 2020, but that won’t close the books on one of the aerospace giant’s worst crises in its 103year history.

Boeing stock actually finished 2019 with a 1% gain, but management will have to address key questions in the coming year, such as how quickly production can ramp back up and how much compensation airlines will get for the grounding. Boeing and Turkish Airlines on Tuesday reportedly agreed to a $225 million compensation deal.

Lawsuits from families of crash victims and investigations are also pending. The Securities and Exchange Commission is reportedly probing Boeing’s financial disclosures related to the grounding.

Congress, the Justice Department, FBI and the Transportation Department inspector general’s office also have been looking to see if the company provided misleading information about the Boeing 737 Max to regulators and customers.

And the FAA is investigating 737 Max production practices.

For now, top Boeing 737 Max customers expect the plane to fly again in early to late spring. Southwest Airlines (LUV) and American Airlines (AAL) removed the jet from their schedules until April, while United Airlines (UAL) has removed it until June.

But those are just the U.S. carriers with the Boeing 737 Max in their fleets.

Depending on when regulators around 10

the world OK the plane, the return to service elsewhere may take longer. Its new CEO Dave Calhoun suggested in an interview with CNBC in November that the return of the Boeing 737 Max may take until 2021 to complete “in its entirety.”

Then there is the flying public. Airlines will have to deal with passengers who find out if their flight is on a Boeing 737 Max and want to change to a different plane. Some airlines will let skittish passengers switch, but European budget carrier Ryanair (RYAAY) reportedly won’t and won’t offer refunds either.

Anyway, Boeing’s new CEO, Dave Calhoun, has a daunting to-do list when he takes the reins at the company’s

Chicago headquarters on Monday: improving the plane-maker’s strained relationships with regulators and airline customers, winning back public trust and getting the 737 Max — grounded for almost a year after two deadly crashes — flying again.

A more than decade long Boeing board member, Calhoun has already signalled he will be more conservative than his predecessor Dennis Muilenburg. The board ousted Muilenburg just before Christmas after his botched response to the crashes and overoptimistic forecast that regulators would allow the planes to fly again before the end of 2019. The latter drew public ire from the Federal Aviation Administration, setting up a rare confrontation between the regulator and the biggest company it oversees.

Calhoun called on employees to learn from the painful lessons since the first of two 737 Max crashes, in October 2018.

“Many of our stakeholders are rightly disappointed in us, and it’s our job to repair these vital relationships,” Calhoun said in a note to Boeing’s more than 150,000 employees. “We’ll do so through a recommitment to transparenc y and by meeting and exceeding their expectations. We will listen, seek feedback, and respond – appropriately, urgently and respectfully.”

Calhoun, 62 and a veteran of General Electric and Blackstone Group, has been playing peacemaker with the

PAYLOAD ASIA | January 2020

C OVER STORY

FAA. He also favoured the company recommending airline pilots undergo simulator training before the 737 Max can fly again, reversing the company’s position when Muilenburg was at the helm. The change promises to add millions in costs for Boeing but is one that aims to restore confidence in the planes’ safety.

“He’s certainly the right person to stabilise the situation,” said Teal Group aviation analyst Richard Aboulafia.

Perhaps Calhoun’s most challenging task will be fixing Boeing’s internal culture that has drawn criticism from lawmakers for prioritizing costs over safety, which has been blamed for killing the 346 people on the crashed flights in Indonesia and Ethiopia.

Calhoun urged the company to release hundreds of internal messages about the 737 Max’s development, a person familiar with his thinking said, adding that Calhoun will spend time at the company’s Seattle plant to talk with employees.

Boeing 737 Max Production Outlook To stop the flow of grounded jets spilling out into employee parking lots at the Seattle-area factory, Boeing will halt production of the narrow-body jet starting in January and told its suppliers to stop deliveries starting in mid-January.

Boeing previously slowed 737 Max www.payloadasia.com | January 2020

production to 41 a month in April as the global grounding took hold, but planned to ramp up to 46 by the end of 2019, then to 52 by February 2020, and to 57 by the end of 2020.

The failure of the Boeing 737 Max to obtain clearance this month to fly again has thrown that timeline out the window. But a whistleblower warning also threatens the ability to ramp up, even when the plane is recertified.

Former Boeing employee Edward Pierson told Congress earlier in December that he witnessed a factory in chaos and reported serious concerns about production quality to senior Boeing leadership months before the Lion Air

crash in 2018.

FAA chief Stephen Dickson revealed at a Capitol Hill hearing that the regulator has opened a probe into Boeing 737 Max production processes after the whistleblower warning surfaced. He also suggested more enforcement action may be on the way.

Spillover From Boeing 737 Max Crisis Before the crashes, the FAA often delegated key tasks to Boeing, and global regulators had often followed the FAA’s lead. Not anymore. And that new relationship will have long-term effects on the 737 Max as well as other planes.

The FAA will have to approve every Boeing 737 Max before delivery to airlines, the regulator said in late November. Boeing previously had authorization to perform routine pre-delivery safety checks by itself.

In addition, European, Brazilian and Chinese aviation regulators have their own requirements, separate from the FAA’s, to be fulfilled before the jet can return to service.

Other Boeing planes will likely face extra scrutiny too. The European Union Aviation Safety Agency has said it will conduct its own “concurrent validation” of the FAA’s certification of the nextgeneration Boeing 777.

The UAE’s aviation regulator will review the certification process of the 777X as well, sources told the Wall Street Journal.

The UAE’s move is key as it affects the Emirates airline, which is a major 777X customer.

And that’s for an update to an existing aircraft. How will regulators treat a totally new plane? Boeing has said it’s still considering a midmarket aircraft with a clean-sheet design.

11

After Challenging Year, Improvement Expected for 2020 Highlights of expected 2020 performance include: • The return on invested capital is forecast to be 6.0% (improved from 5.7% expected in 2019).

• The net profit margin is forecast at 3.4% (up from 3.1% for 2019).

• Overall industry revenues are forecast to reach $872 billion (+4.0% on $838 billion in 2019).

• Industry operating expenses are projected to climb 3.5% to $823 billion from $796 billion in 2019.

• Passenger numbers are expected to reach 4.72 billion (up 4.0% from 4.54 billion in 2019).

• Freight tonnes carried are expected to recover to 62.4 million, a 2.0% increase over 61.2 million tonnes carried in 2019, which was the lowest figure in three years.

• Stronger economic growth should support passenger traffic (RPKs) growth of 4.1% similar to 2019 (4.2%) but below historical trends.

• Average net profit per departing passenger of $6.20 ($5.70 in 2019)

The International Air Transport Association (IATA) forecast that the global airline industry will produce a net profit of $29.3 billion in 2020, improved over a net profit of $25.9 billion expected in 2019 (revised downward from a $28 billion forecast in June). If achieved, 2020 will mark the industry’s 11th consecutive year in the black.

2019 Performance Economic performance in 2019 was weaker than had been anticipated at the time of the June forecast.

This aligns with weaker global GDP growth of 2.5% (versus 2.7% forecast in June) and world trade growth of just 0.9% (down from 2.5% forecast in June). These negative developments contributed to softer passenger and cargo demand and corresponding weaker revenue growth, as passenger yields fell 3.0% and cargo yields dropped 5.0% compared to 2018.

Operating expenses did not rise as much as anticipated (3.8% vs. 7.4% June forecast) largely owing to lowerthan-expected fuel costs; but this was not enough to offset the softness in 12

revenue.

“Slowing economic growth, trade wars, geopolitical tensions and social unrest, plus continuing uncertainty over Brexit all came together to create a tougher than anticipated business environment for airlines. Yet the industry managed to achieve a decade in the black, as restructuring and costcutting continued to pay dividends. It appears that 2019 will be the bottom of the current economic cycle and the forecast for 2020 is somewhat brighter. The big question for 2020 is how capacity will develop, particularly when, as expected, the grounded 737 MAX aircraft return to service and delayed deliveries arrive,” said Alexandre de Juniac, IATA’s Director General and CEO. “

Performance Drivers for 2020 Economic Growth: GDP is forecast to expand by 2.7% in 2020 (marginally above the 2.5% growth in 2019). World trade growth is expected to rebound to 3.3% from 0.9% in 2019, as election year pressures in the USA contribute to reduced trade tensions. Growth is supported by actions from central banks as well as easing fiscal policy.

Fuel Costs: Slower-than-expected global economic grow th in 2019 contributed to lower energy demand, with crude oil prices averaging around $65 per barrel (Brent), compared to $71.60 in 2018. Oil supply is also plentiful, boosting inventories. As a result, oil prices are expected to dip further in 2020 to $63 (Brent). Jet kerosene prices are also expected to dip, averaging $75.60 per barrel versus $77 per barrel in 2019. The expected industry fuel bill of $182 billion will represent 22.1% of expenses, down from $188 billion or 23.7% of expenses in 2019.

Labor: Total employment by airlines is expected to reach 2.95 million in 2020, up 1.6% on 2019. Productivity (ATKs/employee) is expected to rise PAYLOAD ASIA | January 2020

2.9% over 2019 as capacity growth picks up. Unit labor cost ($/ATK) is expected to be virtually flat at $0.12, as better productivity offsets increasing wages.

Passenger: Passenger dema nd (RPKs) is expected to grow 4.1% in 2020, in line with 4.2% growth in 2019.

In fact, this masks a GDP-growthdriven pick-up since the underlying growth rate fell to less than 4.0% in 2019. However, whereas passenger capacity (ASKs) rose 3.5% in 2019, it is forecast to grow 4.7% in 2020 – as aircraft deliveries rise significantly, causing load factors to slide to 82% from 82.4% in 2019. This will maintain pressure on yields, which are expected to slide 1.5% after falling 3.0% in 2019. Passenger revenues, excluding ancillaries, are expected to reach $581 billion (up 2.5% from $567 billion in 2019).

Cargo: Cargo traffic turned negative last year for the first time since 2012.

The 3.3% annual decline in demand was the steepest drop since 2009 during the Global Financial Crisis.

Freight carriage, meanwhile, slipped to 61.2 million tonnes from 63.3 million tonnes in 2018. Cargo traffic is expected to rebound moderately with 2.0% growth in 2020, with tonnes forecast to reach 62.4 million, which is still below the 2018 result. Yields will continue to slide with a 3.0% decline forecast for 2020, an improvement from a 5.0% decline in 2019. Cargo revenues will slip for a third year in 2020 with revenues expected to total $101.2 billion, down 1.1% from 2019.

Regional Outlook The regiona l prof it picture is mixed in both 2019 and 2020. Africa, M idd le Ea st a nd Lat i n A merica are all expected to lose money in 2019, with carriers in Latin America returning to profit in 2020 as regional economies strengthen. Airlines in North America continue to lead on financial performance, accounting for 65% of industry profits in 2019 and around 56% of aggregate earnings in 2020. Financial performance is www.payloadasia.com | January 2020

expected to improve or remain the same compared to 2019 in all regions except for North America, where expected capacity growth owing to new aircraft deliveries could put pressure on earnings.

Nor th American carriers a re expected to post a net profit of $16.5 billion (down from $16.9 billion in 2019). That represents a 6.0% net margin and a net profit of $16.00 per passenger. The region managed to improve profitabilit y in 2019, as the sti l l strong economy and st r uc t u ra l i mprovement s i n t he industry allowed unit revenues to hold up much more than in other regions. But in 2020, unit revenue and profitability are expected to reduce.

This will be the result of a slowing economy and a significant increase in aircraft deliveries particularly with the expected return to service of the 737 MAX fleet.

European carriers are forecast to report a $7.9 billion net profit in 2020 (up from $6.2 billion forecast for 2019) as airlines in the region benefit from the opposite pattern of the developments expected in North America. Economic growth is forecast to pick up and, as a result of substantial cuts in expansion plans, capacity growth is expected to be moderate, helping to improve the supply-demand balance. The net

profit per passenger is expected to be $6.40 (3.6% net margin). This relatively good aggregate performance for the region hides a long list of airlines just breaking even or making losses, which is why there were a series of European airline failures in 2019.

Asia-Pacific carriers will be helped by the modest recovery in world trade and air cargo, showing a $6.0 billion net profit in 2020 (up from $4.9 billion in 2019) for a 2.2% net margin. Asia remains the manufacturing center of the world and revenues from transporting many of those goods are a significant proportion of sales for many of the region’s airlines. But the trade war is assumed just to be on hold; trade tariffs are not reversed.

Consequently, the rise in trade and cargo volumes is moderate. The net profit per passenger is anticipated to be $3.34.

M idd le E a ster n c a r r iers a re continuing a restructuring process and announced schedules point to a substantial slowdown in capacity growth for 2020. After very weak economic grow th in 2019, which limited local traffic, some rebound is expected in 2020. Restructuring a nd st ronger g row t h w i l l boost performance. But this will take time and a loss is expected for a third consecutive year, estimated at $1 billion, trimmed from $1.5 billion in 13

2019.

L at i n A mer ic a n c a r r ier s a re expected to benefit from improvements to the underlying economies and restructurings and return to the black next year with a small profit of $100 million. Apart from currency weakness in 2019, the region’s economy slowed sharply to just 0.2% due to problems in Mexico, recession in Argentina and a decline by around one-third in the size of the Venezuelan economy. In 2020 airlines will be helped by the rebound to 1.8% growth forecast by the IMF, led by stronger growth in Brazil and Mexico and less severe contractions in Argentina and Venezuela. This represents a $500 million positive swing compared with an expected loss of $400 million in 2019.

African carriers continue to suffer structural problems of high costs— in large part owing to government taxes and fees--and low load factors.

Economic growth in the region has been relatively good and is expected to rise in 2020, but markets are extremely fragmented and inefficiently served in the absence, so far, of a Single African Air Transport Market. As a result, they are projected to show a loss of $200 million, similar to 2019.

14

Demand (RPKs) Global North America Europe Asia Pacific Middle East Latin America Africa

2019E 4.2 3.8

Capacity (ASKs) 2020F 2019E 2020F 4.1 3.5 4.7 3.8 2.3 5.1

4.5 4.7 2.6 4.2

3.8 4.8 2.5 4.3

3.9 4.4 1.9 3.0

3.7 5.5 3.2 4.6

3.7

3.8

4.2

4.9

Air Transport’s Economic Contribution Some key indicators of the benefits from increasing global connectivity include: • The 2020 average return airfare (before surcharges and tax) is expected to be $293 (2018 dollars), which is 64% below 1998 levels after adjusting for inflation.

• Average air freight rates in 2020 are expected to be $1.66/kg (2018 dollars) which is a 66% fall on 1998 levels.

• The number of unique city pairs served by airlines is forecast to grow to 23,162 in 2020 (up 4.2% from 22,228 in 2019), and up 126% on 1998 levels.

• The global spend by consumers and businesses on air transport is expected to reach $908 billion in 2020 up 4.0% on 2019 and equivalent to 1.0% of global GDP. • The value of trade carried will reach $7.1 trillion dollars, up 5.1% over 2019.

• The value of the tourism spend associated with air travel will be $968 billion, up 7.3% over 2019.

• Airlines are expected to contribute $136 billion to government coffers in tax revenues in 2020 (a 5.2% increase over 2019).

PAYLOAD ASIA | January 2020

F ocus - A ir lin e

Saudia launched SAL for ground handling and logistics services at Saudi airports

The new independent entity within the Saudia Group which will act as the main cargo gate and ground handling and logistics services hub across the Saudi airports.

Under the patronage and presence of His Excellency the Minister of Transport, Saleh Bin Nasser Al-Jasser. On Monday 16 December 2019, Saudi Arabian Airlines (Saudia) launched the Saudi Arabian Logistics (SAL) Co., the new independent entity within the Saudia Group which will act as the main cargo gate and ground handling and logistics services hub across the Saudi airports.

The launch was announced in a grand ceremony held in Riyadh and attended by the Governor of Customs Authority Ahmad Al-Haqbani, Abdulhadi AlMansouri, President of the General Authority of Civil Aviation (GACA), Anef Abanomi, President of Saudi Post, Sami Sindi, the Saudi Arabian Airlines (SAUDIA) Director General, the directors of government agencies working at Saudi airports, CEOs of the companies and the strategic units of the Saudia, cargo and aviation transport experts.

A speech was delivered by Fawaz Al-Fawaz, Chairman of SAL Board, underscoring SAL logistics goal and its pivotal role in achieving the Vision 2030 objectives. Al-Fawaz thanked everyone who had a contributory role in founding the company, which will usher in a new logistics era keeping up with the growth and development across the precious

www.payloadasia.com | January 2020

Kingdom. Following the speech, Eng. Al-Jasser announced the official launch of the SAL brand into the world of logistics services.

SAL CEO Omar Talal Hariri delivered a speech and played a short video explaining the SAL goals and brand identity.

“SAL aims to provide integrated logistics operations and ground handling services. It acts as a link between land and sea shipping and the Saudi airports in line with the National Industrial Development and Logistics Program, which is one of the pivotal themes of the Vision 2030, especially in the light of the gigantic economic transformation the Kingdom has been seeing. SAL will improve the quality of logistics operations and support the Kingdom’s vision towards transforming the country into a global logistics hub handling all types of cargo and shipping operations pointed out Hariri.

GACA President handed over GACAR 151 license to SAL CEO, which qualifies SAL to officially provide ground-handling services at King Khalid International Airport’s cargo station.

Al-Jasser noted that one of the SAL strategic goals is to invest in the Kingdom’s strategic location as the heart

and the crossroads of key international trade routes between three continents: Asia, Europe and Africa and a distinctive logistical getaway between the East and the West and all over the world.

Describing the logistics service sector as vital and strategic, Al-Jasser commended the milestone developments achieved so far and hoped to see more public and private sector partnerships that help support and bolster the comprehensive development across the nation in this prosperous era as well as contribute to achieving the logistic goals of Vision 2030. He hopes SAL will have a noticeable effect on the overall logistics industry.

“The unprecedented comprehensive development projects being implemented require all government agencies and the private sector to join forces in order to execute similar projects that help develop logistical services and efficiency. The government views the transportation sector as pivotal and works to develop it in order to provide the best transportation and integrated logistics services that keep up with the comprehensive development programs. SAL is one of the ambitious initiatives,” Al-Jasser said.

Saudia Director General Sami Sindi said SAL will improve the efficiency of logistics operations and ground handling services through integrating land and sea transportation operations and linking them with the Saudi airports in order to enhance logistical services across all stages.

“SAL will contribute directly to enhancing and developing the logistics infrastructure including all types of cargo platforms, warehouses and equipment as well as e-commerce cargo and shipping facilities,” Sindi explained.

He said SAL will start its business activities in January 2020 and offer highquality logistics and ground handling services in line with the national and development goals. It will also create more economic and development opportunities through forging strategic partnerships with different local and global logistics service providers.

15

Focu s - A ir lin e

IATA to improve efficiency of cargo handling audits

The International Air Transport Association (IATA) has launched a new program to raise global standards in cargo handling operations.

The Smart Facility Operational Capacity (SFOC) program aims to reduce audit complexity and duplication for cargo handling facilities.

This new IATA initiative has two components: • Standardized Global Audit Program: IATA has introduced the Smart Facility Operational Capacity Audit Certification (SFOC Audit Certification) to provide airlines with the assurance that SFOC Certified facilities are adhering to IATA’s Resolutions and Recommended Practices in cargo handling and with IATA’s Cargo Handling Manual (ICHM).

It is estimated 360,000 days per year are wasted annually on redundant cargo handling audits. The SFOC Audit Certification program aims to reduce redundant efforts across the industry by 50% through removing the need to validate generic cargo operation procedures.

• Committed Audit Reduction: The Audit Reduction Commitment (ARC) is an industry pledge to reduce audits. Airlines participating in the SFOC program will undertake a gap analysis to determine which audit standards will not need to be assessed for SFOC certified facilities. The revised audit scope is then defined through the ARC. Individual airlines will provide clear visibility on the potential audit reduction for SFOC certified facilities, ensuring there is a solid mechanism to eliminate redundant audits.

“Auditing is critical to ensure the global standards that underpin the safe and efficient operations in the aviation industry. IATA’s strong capabilities in auditing have been proven in the successful IATA Operational Safety Audit (IOSA) and CEIV programs. The SFOC program will bring this expertise to general cargo handling operations,” said Mr. Glyn Hughes, IATA’s Global Head of Cargo.

16

SFOC Program Launch Partners Singapore will be the initial focal point for this important new initiative. SATS Ltd and Singapore Airlines are the first organizations to join the Smart Facility Operational Capacity (SFOC) program.

SATS is the first Cargo Handling Facility to receive the new SFOC Audit Certification and Singapore Airlines is the first airline to join the program by signing the ARC. “The SFOC certification, which we have worked closely with IATA to refine, allows us to sharpen the focus of our own audits of our handling agents. This zooms in on SIA--specific procedures, and enabling even greater emphasis on safety and security. The combination of both the SFOC audits

and our own audits serves to provide a comprehensive picture of our service partners’ capabilities and operational quality, while improving audit efficiency for us and our service partners,” said Mr. Chin Yau Seng, Senior Vice President Cargo, Singapore Airlines.

“SATS is delighted to be the world’s first cargo ground handler worldwide to achieve the IATA SFOC Certification. We are delighted to have Singapore Airlines as our partner and the first carrier to commit to ARC. The certification affirms SATS’ consistent standards and the quality of our service. We hope other airlines will follow this example to realize the SFOC program’s full audit efficiencies for the entire industry” said Mr. Yacoob Piperdi, CEO, SATS Gateway Services.

PAYLOAD ASIA | January 2020

Aircargo Repo r t

Carbon emissions per passenger decrease more than 50% since 1990

The International Air Transport A s s o c i a t i o n ( I ATA ) p u b l i s h e d information confirming that carbon emissions per passenger have declined by more than 50% since 1990. Much of the improvement has occurred because the industry has achieved an annual fuel efficiency improvement of 2.3% over the period since 2009, some 0.8 percentage points ahead of target.

This progress is a combination of investments in more efficient aircraft and operational efficiencies.

“Cutting per passenger emissions in half is an amazing achievement of the technical expertise and innovation in the aviation industry. But we have even bigger ambitions. From 2020 we will cap net emissions. And by 2050 we will cut emissions to half 2005 levels.

Accomplishing these targets means continued investment in new technology, sustainable fuels, and operational improvements,” said Alexandre de Juniac, IATA’s Director General and CEO. Airlines have invested some $1 trillion in new aircraft since 2009, and in addition have signed forward purchase agreements for sustainable aviation fuel (SAF) amounting to approximately $6 billion.

In addition, the introduction of the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) will ensure carbon-neutral growth on

www.payloadasia.com | January 2020

international flights from 2020 and raise around $40 billion in climate finance.

Alternative measures are inefficient and fail to cut carbon Analysis from IATA shows that efforts to deliberately suppress air travel through punitive passenger taxes are inefficient and largely ineffective at reducing carbon.

The CORSIA scheme’s effectiveness lies in its global scope. It is estimated it will reduce emissions by around 2.5 billion tonnes over the lifetime of the scheme. But global goodwill towards implementing CORSIA is being compromised by governments

introducing a patchwork of carbon taxes. A series of decisions or proposals have been made in recent months to levy air passenger taxes, including in France, Germany, the Netherlands and Switzerland.

“Taxation aimed at stopping people from exercising their freedom to fly will make travel more expensive but do very little to reduce emissions. It is a politician’s feel-good solution, without taking responsibility for the negative impact it has on the economy or the mobility restrictions it imposes on people with lower incomes,” said de Juniac.

Long-term, aviation is aiming to reduce emissions with cleaner technology.

This will require a financially sound airline sector capable of funding the significant investments that will be needed to make flying sustainable.

“Governments must focus their efforts correctly. Flying drives prosperity. It is not the enemy. Cutting carbon must at the forefront. And government leadership is needed to incentivize the commercialization of sustainable aviation fuels, drive efficiencies in air traffic management and support research into next generation low-carbon energy sources,” said de Juniac.

17

Feat u re - A ir line

Six airport initiatives launched for disabled passengers

Airports are becoming increasingly accommodating towards passengers with disabilities, often with the help of technology.

GlobalData’s airport technology writer Varsha Saraogi lists six initiatives that airports implemented in 2019 to help make air travel an easier experience for disabled passengers.

Self-driving wheelchairs at Abu Dhabi International Airport In a partnership with Etihad, personal electric vehicle supplier WHILL and information technology c o m p a n y S I TA , A b u D h a b i International Airpor t launched autonomous wheelchairs that allow travellers with reduced mobility to move around the airport without the assistance of a staff member.

These vehicles are equipped with sensors to identify obstructions and offers an automatic stop function.

In addition, the airport is working towards developing other features to be rolled out in the future, which include real-time gate and boarding time updates for guests.

Those who are not comfortable with the autonomous wheelchair can choose the traditional assistance method and have airport personnel help them.

Boise Airport capitalises on virtual reality Travelling can be challenging for children and adults with autism as the entire process before boarding an aircraft makes them feel quite anxious, according to autism charity Autism Speaks.

To help passengers with autism navigate the airport environment before going in person, the city of Boise in Idaho, US collaborated with Boise State University to create a virtual reality experience. Apart from being available at the airport itself, the VR experience can also be used at the Boise Library before passengers visit the airport.

United Airlines hires special Olympics athletes as ambassadors In October 2019, United Airlines hired special employees to help disabled travellers navigate O’Hare International Airport. The airline 18

also aims to motivate them to be more independent in mainstream society.

In a statement, United Airlines said that it is promoting the idea that employing people with disabilities has a positive influence on a company’s success. This move would then motivate people with disabilities to become more comfortable when travelling via air, the airline said.

Cork Airport introduces sunflower lanyard scheme In March this year, Cork Airport initiated a lanyard scheme where people with hidden disabilities – autism spectrum disorder, epilepsy and acquired brain injuries – are able to easily ask for extra support when travelling through Cork Airport with the help of a lanyard.

The ‘Sunflower Lanyard’ initiative, already in use in airports including Heathrow and Gatwick, allows passengers to discreetly identify themselves to staff. The project is part of an initiative by OCS, the global passenger assistance services provider.

Sea-Tac International improves signage and introduces induction loops Seattle-Tacoma International

Airport in the US announced new services in October 2019 to make travel more accessible and less stressful for those with hidden disabilities.

It implemented initiatives such as sunflower lanyards and installed hearing loops and improved its design with new curb cuts to make the structure more conducive to PRM. G a t w i c k ’s n e w t r a i n i n g programmes for staff Gatwick Airport has come a long way since it was named as one of the worst airports in providing access for disabled travellers by the CAA in 2018.

In October 2019, Gatwick announced an independent panel – comprising experts in the travel needs of disabled passengers – to help shape Gatwick’s accessibility strategy and improve services for disabled passengers.

Gatwick Airport claimed that it became the first UK airport to open a sensory room after a consultation with the National Autistic Society. It said it upgraded its infrastructure to accommodate blind and visually impaired passengers with the assistance of a tool provided by the Royal National Institute of Blind.

PAYLOAD ASIA | January 2020

Feat u re - A ir po r t

Airport retail trends for 2020

The world of airport retail is booming. Alongside increasing brick and mortar stores, airports are improving services through personalisation and technology. From Heathrow’s personal shopper service to JFK leveraging VR and AR to help passengers find the retail shops at the airport, airport hubs are ensuring that passengers make the most of their limited time before boarding.

GlobalData asks four retail experts to pinpoint the coming trends for 2020.

Chief value adviser for retail at SAP UK, Shane Finlay: “Airport retail will become the way customers shop in the future.

One of the reasons is that it’s tax free. A number of airport retailers are increasingly looking to customer experience surveys to get a better understanding of travellers’ spending habits.

“While consumers are moving through travel hubs, time is of the essence and there is a fuller range of emotions . D elivering good experiences will depend on connecting customer experience data with operational data.”

Chief executive officer and founder of AOE, Kian Gould: “There will be four major retail trends in airports in the near future.

“The first regards the approach to technology as well as the business model, where we can observe an ongoing transition to omnichannel.

Passengers expect to have access to e-commerce platforms and websites anytime, anywhere – regardless of

www.payloadasia.com | January 2020

the device they use.

“Secondly, there is a definite trend toward luxury items in travel retail. The reason is that passenger buying behaviour has changed dramatically. Passengers research, check availability and compare prices online – and then purchase the products at the airport.

“The third trend regards the entire travel retail e cosystem.

Airports provide the physical space and infrastructure; brands and retailers the retail environment and airlines provide the necessary customer data to communicate with and sell to passengers in a targeted manner. We call this ecosystem ‘The New Quaternity of Travel Retail’.

“Finally, passengers’ e-commerce buying behaviour is trending more toward third-party platforms such as WeChat, Jessica’s Secret and A l i b ab a’s p re - t r av el d u t y - f re e platform, Fliggy Buy. Integrating such third-party vendors into travel retail ecosystems is relatively new and will change the industry in the

long term.”

Director at Pioneer Group, Mark Childerhouse: “The biggest trends in airports for 2020 are personalisation and making high-end shopping an attainable luxury for the modern traveller.

“Retail shops ne e d to fo cus on delivering experiences which offer one of two things: ultimate convenience, or a luxury experience.

Business travellers are searching for both of these items simultaneously, and with the time-poor traveller spending more hours in airports than with free time at the destination, offering ser vice, quality and a memorable moment is all important.”

“Retail owners need to work out how to leverage their brand equity and play to their consumer’s requirements, while also reducing any barriers to purchase. There is nothing more stressful than waiting in queues to pay while your flight is on its final call.”

Executive chairman of Hellenic Duty Free Shops S.A , George Velentzas: “ I t ’s i m p o r t a n t t o f u l l y a c c o m m o d a t e t o d a y ’s a n d tomorrow’s travellers’ needs. Even though, traditionally, duty free business attracted customers with lower budgets, this is no longer what today’s customers are after.

“To create better value proposition and offer a unique experience, the duty-free sector must add a strong local flavour. Local foods holds 37% of the total sales in Greece.

We e ducate our p ersonnel on Mediterranean diet and local liquor.

In 2018 we launched a new concept ‘All Greek to Me’ that offers unique souvenirs, Hellenic gourmet, Greek designers’ fashion masterpieces.”

19

Feat u re - L o gi s t i c s

GrabFood unveils merchant solutions & first GrabKitchen in Singapore

• Commits to merchants’ growth through a merchant platform that spans procurement, marketing, finance and business management • Launches GrabKitchen in Hillview with over 10 F&B brands, including 3 virtual restaurants and the latest GrabFood Hub Grab, Southeast Asia’s leading super app, announced a merchant platform that will provide tools for F&B merchant-partners of all sizes to expand their businesses. Beyond food delivery, Grab is catering to end-to-end business needs that spans procurement, marketing, finance and business management. GrabFood

also opened its first cloud kitchen in Singapore to better serve the needs of users.

“Grab’s announcement comes at the back of a stellar 2019 where our food delivery business across the region saw a 5.2 times growth in gross merchandise value (GMV) and 173% increase in active users. 2019

was about expansion, and becoming consumers’ most preferred service. In 2020, we’ll combine our capabilities across food delivery, financial, and advertising services and provide merchants with the tools of the trade that will take their businesses to new heights. In addition, we aim to provide our users with more choices and greater convenience,” said Lim Kell Jay, Regional Head of GrabFood.

Empowering merchants of all sizes to reach new heights GrabFood will introduce a platform suite providing end-to-end business support to merchant-partners beyond traditional food delivery services.

The following will roll out in phases in select countries over the course of 2020: • Unified merchant app and dashboard with self-serve access to GrabFood, Grab Financial Group and GrabAds services: Grab will simplify the merchant experience by integrating relevant Grab Financial Group and GrabAds services into a single merchant platform. The new unified platform will enable merchant-partners of all sizes to not only track business performance and manage daily operations but also maximise their growth through analytics, advertising and financial services.

• Purchasing services to drive costs down for MSMEs: Micro, small and medium enterprises (MSMEs) tend to get the short end of the stick when it comes to cost negotiation due to lack of scale. Through partnerships with procurement platforms and by tapping into the GrabKios agentnetwork , merchant-partners can procure discounted kitchen supplies and ingredients at very competitive rates, and have them conveniently delivered to their stores.

• Ta i l o r e d s o l u t i o n s t o

20

PAYLOAD ASIA | January 2020

Feat u re - L o gi s t i c s minimise disruption to merchants’ existing processes: Grab tailors its offerings to make it easy for merchants to access Grab’s platform, with minimal disruption to their original operational model. For example, merchants who already have their own delivery fleet and wish to tap into Grab’s customer base have the option to do so with point-of-sale integration. GrabFood orders are directly sent and synced w i t h m e r c h a nt s ’ p o i nt- o f - s a l e system, creating greater operational efficiency.

To improve the online-to-offline experience for customers, Grab will also introduce a new self pick-up feature where they can order their meals in-app even before they arrive at the outlet.

• GrabKitchen expansion: With 50 cloud kitchens across five Southeast Asian countries, GrabFood will continue expanding its network of cloud kitchens in 2020. This would offer more merchant-partners the opportunity to expand with GrabKitchen at low cost and risk and with immediate access to Grab’s user base.

The first cloud kitchen in Singapore opens today, with more to come in the first half of 2020.

G r ab K i tch e n o f fe r s m e rch a ntpartners an experimental platform to introduce new food concepts and brands with significantly reduced risks. Besides offering a space to operate, GrabFood takes care of overall utilities management within the facility, as well as marketing support within the app to reduce the onset business challenges merchants face when they look to set up new outlets or even their first business.

Your favourite foods in a single cloud kitchen Grab’s first cloud kitchen in Hillview, Singapore, brings over 10 F&B brands to northwest Singapore, including three new virtual restaurants.

Commenting on the launch of Grab’s first cloud kitchen in Singapore, Dilip Roussenaly, Head of GrabFood Singapore said, “We’re honoured to open our first GrabKitchen in Singapore in partnership with many reputable merchant-partners who www.payloadasia.com | January 2020

have chosen to expand together with us. Together with our merchantpartners, we hope to bridge cuisine demand and supply gaps, complement and expand the variety of food options at different price points in the area, and offer them conveniently to consumers through on-demand delivery, self-pick up, or dine in.”

Based on consumer surveys and insights derived from the Grab app, consumers in Northwest Singapore wanted greater variety of healthy foods, burgers and local foods.

Specifically in Bukit Batok, bubble tea, mala, and soup were not only the most frequently searched for items on GrabFood, but also saw significantly higher consumer demand than merchant supply. When it comes to cuisine types, Japanese, Indian and Thai were the most sought after in the area.

To address this gap, GrabFood brought an eclectic mix of over 10 F&B brands into its first GrabKitchen in Singapore, offering a wide selection of food options. GrabKitchen features: • 10 restaurants including three new virtual restaurants namely Lady Boss Mala by the founder of Thai Dynasty; Waboru by JR Group as well as Tiffin Walla by Co-Kitchens.

• The 6th GrabFo o d Hub which brings popular hawker food, coveted FMCG and packaged food brands such as Asia Pacific Breweries’ Heineken and Tiger b e ers and dangerously addictive salted egg snacks by Irvins, which has taken

Singapore and the larger Southeast Asia by storm.

• Beverages by Playmade, one of Singapore’s bubble tea darlings who has made its first foray into the West with GrabKitchen.

Consumers in surrounding Hill view districts such as Cashew, Bukit Batok, Bukit Gombak and Toh Tuck can have food and drink options delivered on-demand to their door via the Grab app, while those who do not mind taking a short walk to GrabKitchen can opt to dine-in at the location or choose the self pickup option in-app to save on delivery fees. For variety, consumers can order from multiple GrabKitchen merchants in a single order so every one gets to have whatever tickles their fancy.

GrabFood began its regional expansion in May 2018. Today, it is the only regional food delivery platform operating in 271 cities across seven Southeast Asian countries.

GrabFood is the #1 most often used food delivery platform in Southeast Asian[1] countries according to a market survey by Kantar. In 2019, GrabFood partnered with over 300 international and national chains and introduced 24/7 delivery and grocery delivery service in select markets.

These new additions to GrabFood broadens consumer choices, which in turn drives higher engagement and usage of the app, and incrementally improves earning prospects for both merchants and delivery-partners.

21

Feat u re - L o gi s t i c s

FedEx Express strengthens clinical trial logistics services for global pharmaceutical customers Life Science Center in Tokyo, Japan renovated with key upgrades

Following the completed renovation of the TNT Life Science Center in Tokyo, Japan in May 2019, FedEx Express is bolstering its healthcare solutions to support and better meet the complex logistics needs of its pharmaceutical customers in Asia Pacific. The Life Science Center – with 40 dedicated employees serving clinical sites throughout Japan – has expanded capacity, boasting the latest modern equipment and a strong team of clinical trial logistics service specialists. The upgraded facility will better meet and support the clinical trial logistics requirements of healthcare customers both within the Japan domestic market and those shipping to Japan from around the world.

The improvements at the Life Science Center are all specifically designed for clinical trial logistics, such as: · At 3,500 square meters, the enhanced Life Science Center has an 80% increase in clinical drug storage capacity. · Expansion of Chiller Rooms and Ambient Rooms with two separate temperature zones (between 2 degrees to 8 degrees Celsius and 20 degrees Celsius). · Establishment of Allocation Room where investigational medication product and placebos can be assigned inside the facility. · Introduction of humidity control in Chiller Rooms, Ambient Rooms and Allocation room. · Establishment of a 22

frozen storage unit, enabling storage of between minus 20 degrees and minus 30 degrees Celsius. · A centralized monitoring system to ensure temperature and humidity integrity and controlling of all temperature-controlled facilities. · Enhanced security systems – including earthquake resistance standards compliance – and renovation of the private back-up power generation system.

Overseas pharmaceutical customers can now ship investigational medication product in bulk to the Life Science Center in Tokyo, which will store them in temperature-controlled facilities, instead of shipping individually when needed. The drugs can then be delivered to hospitals all over Japan when needed in special temperaturecontrolled packaging systems. After the trial ends, the unused drugs can be retrieved from the hospitals and stored in the Life Science Center for return to the origin or destruction.

The upgraded Life Science Center – an important hub for storage and transportation of investigational medication product in Japan – will continue to meet the diverse needs of global pharmaceutical companies and contract research organizations (C ROs). It will help customers simplify the clinical trial logistics and optimize cost and time efficiencies, so they can focus on more important business priorities.

The pharmaceutical industry is moving to combat rare diseases with more advances in research.

Japan is the second fastest growing mature pharmaceutical market in the world, close behind the U.S. and expecting dramatic rise in generics and biosimilars in 2020. This will drive demand for stable supply of investigational medication product to support development, and better clinical trial logistics solutions.

“A si a Pac if ic i s f a st g aining preference from pharma companies the world over as a key destination

for conducting clinical trials given the large patient pool and cost efficiencies. FedEx Express plays a key role as a strategic differentiator for success in clinical trial logistics, e sp e c i ally for p otenti ally lifechanging complex shipments,” said Karen Reddington, president, Asia Pacific, FedEx Express. “With FedEx healthcare solutions, our customers have the benefit of deep healthcare logistics expertise, supplemented by global networks so they can stay compliant with global import and export regulations along with the assurance that their shipments will be transported under best-in-class facilities.”

TNT and FedEx continue to further integrate, collaborate closely and harness both shipping solutions to deliver clinical trial logistics services to their customers, aided by a robust shipping process and an extensive operational network overseas for pharmaceutical companies in Japan and across Asia Pacific.

FedEx Express remains committed to serving customers with specialized logistics needs in the pharmaceutical sector. This year, FedEx Express launched the MedPak VI°C solution, a high performance reusable thermal packaging that provides 96 hours of temperature stability in case of unforeseen contingencies. Other solutions, such as SenseAware®, m a i nt a i n c l o s e m o n i t o r i n g o f package’s temperature, humidity, pressure and location along delivery, providing customers with more visibility along the entire supply chain at any time.

PAYLOAD ASIA | January 2020

Feat u re - L o gi s t i c s

Supply Chain Intelligence – Challenges and The Road Ahead

By Karen Reddington, President, Asia Pacific, FedEx Express

Supply chains in Asia are fast e volving into smarter, technology-driven systems for a dynamic healthcare industry.

In today’s digital marketplace, supply chains are becoming highly interconne cte d and competitive. Now more than e ver, investment in supply chains is taking on a strategic priority in Asia. Supply Chain Intelligence is a key area of fo cus emp owering pharma business operators to better track the entire supply chain, get re al- time p erformance insights and get full visibility along the entire process so they are in a better position to tackle today ’s global complexities surrounding supply chains.

Supply chain investment is a priority in order to enhance intelligence in the system itself so that supply chains continue to modernize.

Role of Supply Chain Intelligence in healthcare logistics www.payloadasia.com | January 2020

Generally, the supply chain refers to the resources needed to deliver goods or services to a customer. Managing the supply chain in healthcare is typically a very complex and fragmented process . Due to increasing co mp e t i t i o n , r i s i n g co s t s , government regulations, and demand for a higher quality of service, healthcare providers are under enormous pressure.

Logistics is the gateway for phar mace utic al comp anie s to bring their products to a global marketplace at minimal risks. Given the diversified locations, mergers, multiple information systems, changing organizational structures across the globe, supply chain l e a d e r s i n h e a l th c a re a n d p h a r m a n e e d to o p t i m i z e supply usage throughout the enterprise. The real value-add lies in innovation. A strong te c h n o l o g y - b a c k e d s u p p l y chain can provide deeper, better insights into transportation including temperature control

and cost optimization.

Complete Visibility and Realtime Tracking will be game changers Products, such as vaccines, biopharmaceuticals and cell therapie s , ne e d to b e transported under stringent e nv i r o n m e n t a l c o n d i t i o n s where temperature, humidity, light exposure and other variables are tightly controlled.

Tracking and monitoring the i n g re d i e nt s f ro m s u p p l i e r t o f a c t o r y, m e a s u r i n g temperature, time and the location to deliver reliable data and a clear line of sight at every stage is critical. This level of visibility and tracking are the top areas which can really help supply chain leaders – and therefore, healthcare and pharma providers – to identify e f f i c i e n c i e s a n d g ap s a n d then tie that to their business profitability.

Historical data can allow supply chain prov iders to 23

Feat u re - L o gi s t i c s d e p l o y o p t i m a l p a ck a g i n g designs and utilize cold storage facilities during transportation, while real-time data analysis can flag specific shipments where intervention is required immediately to save a product.

For instance, FedEx regulatory compliance is supported by end-to-end tracking technologies which generate extensive data and continuous visibility on biopharmaceutical shipments. One example is the SenseAware system – a FedEx innovation – that monitors temperature, humidity, light exposure, shock events, and other environmental factors that can impact supply chain integrity. The combined multisensor device can gather, send and monitor data, enabling a comprehensive array of realtime tracking. Customers have a clear line of sight at every stage and identify and solve potential risks along a complex supply chain.

FedEx supports clinical trial projects by providing greater transparency throughout the supply chain. It will not only make the customers’ life easier but also elevate their business and help them connect to a larger network in APAC and worldwide. To add, automation will continue to improve, and automated tracking systems will help to reduce the need for

24

manual inventory management as well as considerably reduce drug wastage due to expiration and spoilage, since facility personnel can be proactively alerted to the status of products in storage. With inventory data digitized, healthcare facilities c an work f a ster, and w ith added accuracy, to better meet accreditation and government regulation requirements.

Big Data will be central to predicting and mitigating risk Data and AI will play a key role in Supply Chain Management and will empower business operators to conduct realtime data analysis. Modernday Supply Chain Intelligence (SCI) is digitally driven and can better help companies slash costs and increase customer s at i s f a c t i o n b y co m b i n i n g data and analytics to draw out patterns and look into the future. Broadly speaking, Supply Chain Management (SCM) te ch n o l o g i e s w i l l e n h a n ce operational and transactional efficiencies in manufacturing, sourcing , and distribution.

SCI technologies can integrate business intelligence with data from SCM systems, providing strategic information to decision-makers. By harnessing d at a a n d i n n o v at i n g w i t h technology, manufacturers and

their logistics providers can further customize solutions and effectively close the shortage gaps.

P re d i c t i v e a n a l y t i c s c a n enable scientists to identify patterns and gaps, and suggest efficiencies, revenue opportunities, potential problems or competitive advantages. Real-time data can be processed by manufacturers and their supply chain vendors through descriptive analytics to reveal operations patterns.

Companies can forecast how their supply chain may evolve, and develop risk-mitigation strategies to fi x identifie d weaknesses.

Logistics can drive the development of Healthcare Industry Supply Chain The future of the healthcare industr y will be global and borderless . The biopharmaceutical boom in Asia is calling for the adoption of new technologies and higher quality cold chain services.

With innovative solutions such as “Smart” medical inventory c abinet s and sensor-ba se d technologies, FedEx, a logistics industry leader for healthcare and other specialty shipments, continues to identify innovative ways to provide the visibility required by customers up and down the supply chain.

Accurate forecasting, faster re s p o n s e t i m e s , ab i l i t y to recognize shipping patterns to plan for risk, saving on costs, in addition to running a low-tozero waste operation will be key parameters for the industry to measure business efficiencies, supplemente d by ef fe c tive s u p p l y c h a i n i ntel l i g e n ce .

L o g i s t i c s co mp a n i e s mu s t continue to enhance their solutions and remain focused on innovation to aid compliance and cost optimization for their customers in the healthcare industry.

PAYLOAD ASIA | January 2020

Feat u re - L o gi s t i c s

IGD: Two leading retailers drive online grocery growth in Asia As online shopping continues to be the fastest-growing channel in Asia’s grocery market, international researcher IGD reveals the two biggest players, JD.com and Alibaba, are driving the most growth in online grocery shopping, with their combined grocery sales growth in value terms outstripping that of the overall market.

With a current value of US$99bn, IGD expects Asia’s online grocery market to grow to US$295bn by 2023, at a compound annual growth rate

(CAGR) of 24.4%. IGD’s forecasts show that JD.com’s grocery sales will grow 28.8% by 2023 to reach $9.8bn and Alibaba’s grocery sales will grow to $9.5bn, with a CAGR of 25.6%.

Alongside pure ecommerce retailers, Asia’s online grocery market consists of bricks and mortar retailers that are developing their online capability, as well as forming alliances and partnerships to accelerate growth.

The top 10 online grocery retailers in Asia are:

Rank

Retailer

2018 sales US$m

2023 sales US$m

CAGR

2

Alibaba Group

3,041

9,517

25.6%

3

Rakuten

2,646

5,359

15.2%

4

Shinsegae

1,143

2,688

18.6%

5

Auchan Group

1,017

2,362

18.4%

6

AEON

1,284

1,970

8.9%

7

Seven & i

1,000

1,800

12.5%

8

Lotte Shopping

570

1,451

20.5%

9

Amazon

276

1,117

32.3%

10 Yonghui Source: IGD research Nick Miles, Head of Asia Pacific Research at IGD, says: “The growth of online grocery in Asia will continue to be led by online marketplaces, especially JD.com and Alibaba, with food and grocery products helping to drive up the number of times shoppers use these retailers’ platforms. Other pureplay retailers including Rakuten, Amazon and Coupang are also strengthening their online grocery operations and will increasingly play a more prominent role in the channel.

Nick continues: “Bricks and mortar retailers are scaling up their online operations and building partnerships with online players, delivery partners, technology companies and payment solution providers. These partnerships are vital for retailers to compete successfully with online marketplaces and online specialists.

“There are several ways suppliers can capitalise on growth in online retailing, including developing longterm partnerships with retailers in

199

1,037

39.2%

1

JD.com

www.payloadasia.com | January 2020

2,747

9,754

areas such as marketing campaigns and tailored promotions. Collaborating across the full chain is also important and suppliers should integrate their systems with retailers’ systems, to access real time data on stock levels and ensure

28.8%

product availability for shoppers. Finally, suppliers can really engage in the mobile space by making sure they stay up-todate with new apps and social media platforms and other programs that are enhancing experiences for shoppers.”

25

E vent - AL MC

9th ALMC Closes on High Note

In 2020, ALMC will be renamed to “Asian Logistics, Maritime and Aviation Conference (ALMAC)” and be held on 17-18 Nov 2020.

The discussions were immense at the recent Asian Logistics & Maritime Conference (ALMC) in Hong Kong. With the backdrop of global trade tension and civil unrest in Hong Kong, ALMC took off on the right footing, with 70 industry experts as speakers and moderators sharing with 1,900 participants from 32 countries. The event was also inspired with 110 exhibitors from 9 countries and saw more than 150 possible businesses matching within the two days.

Ongoing trade disputes and uncertainties around the globe, along with ever changing trade and consumption patterns, present both challenges and opportunities to the logistics sector. These and related subjects were examined by logistics, maritime and aviation industry players from around the world at the ninth Asian Logistics and Maritime Conference, organised by the Hong Kong Trade Development Council (HKTDC).

The regional logistics sector is inevitably seeing a growth trend. Small, medium size and fully equipped logistics support providers are actively extending their expertise to many unreachable sectors.

Global e-commerce boom in recent years have redefined the role of logistics at large and motivated the industry to embrace digitisation. Many adopted this trend to survive and remain relevant in the industry.

But challenges remain just as opportunities are appearing in several ways.

The opening day also featured eight forums offering a holistic view of industry opportunities, covering important issues related to maritime, supply chain management and logistics and air freight industries. The Maritime Forum focused on three areas: geopolitics – “Between

26

a Rock and a Hard Place – Navigating a Perfect Geopolitical Storm”; smart shipping – “Smart Shipping: How Disruptive is New Age Tech?”; and transforming the structure of the shipping industry – “Today’s Shipping Dilemma – Is the Future in Owning or Managing?”. Shipowners, maritime analysts and technology experts explored the future development of the shipping industry from multiple perspectives, including Nigel Anton, Managing Director, Structured Finance, Standard Chartered Bank; Martin Stopford, President, Clarkson Research Services Limited; Andy Tung, CoChief Executive Officer, Orient Overseas Container Line Limited; Tim Huxley, Chairman, Mandarin Shipping Limited; William Fairclough, Managing Director, Wah Kwong Maritime Transport Holdings Limited.

Some memorable discussions from 9th ALMC: “Trade tensions are rising around the world, resulting in a dramatic spike in import-restrictive measures.” said Coleman

Nee, Senior Economist, Economic Research and Statistics Division, World Trade Organization (WTO). He pointed out that the WTO’s most recent report on trade restrictions, published in June, showed that the trade coverage of new import-restrictive measures imposed from October 2018 to May 2019 was more than 3.5 times the average since May 2012. World merchandise trade volume grew just 0.6% in the first half of 2019, and the dip in both imports and exports in Asia was similar to that in the 2015/16 slowdown.

“Trade diversion is a significant trend, resulting in some emerging markets, like Brazil and Vietnam, seeing large increases in exports, while mature markets, such as Korea and Europe, experience declining exports.” said Mr Nee. He concluded by appealing for a multilateral trading system and emphasised that bilateral agreements are no substitute for rules that all countries subscribe to. Hong Kong is one of the world’s best examples for countries to follow, said Mr Nee. Meanwhile, Robbert van Trooijen, Senior Vice President and Head of Asia Pacific Region at Maersk, discussed changing supply chain dynamics. “Maersk’s goal is to help connect and simplify global supply chain, to support long-term growth in Asia,” he said.

Omni-channel trends require distribution support, which is both a problem and an opportunity for logistics services providers, according to Mr van Trooijen. Keeping supply chain costs as low as possible put logistics providers under pressure as they need to be agile and fast. “Producers are making money on their sales, but losing PAYLOAD ASIA | January 2020

Even t - AL MC buying more expensive brands, from food to footwear. This transforms retailing. In the mainland, just 40% of retailers are large retail chains, compared with 80% in Japan. But as income rises, many of the 60% “mom and pop” stores will be replaced by large chains, changing the warehousing industry.

money on their supply chain inefficiencies.

As margins erode in e-commerce, it is especially important that costs are kept under control in the supply chain,” he said.

Mr van Trooijen also briefly discussed the challenges and opportunities related to the shift in sourcing from Mainland China to Southeast Asia. The mainland has replaced the United States as the world’s largest e-commerce market, while the growing force of e-commerce has to be served economically and promptly by logistics providers through B2C (businessto-consumer) logistics, driving sustainability throughout the supply chain, he noted.

The plenary also featured Katsuhiko Umetsu, Senior Executive Officer of Japan-based logistics and distribution firm Yamato Holdings Co, Ltd. “The food supply chain will be enhanced by innovative logistics, making temperature control, manufacturing, distribution and logistics transparent,” he said. “Yamato’s goal is to develop an end-to-end cold chain platform to allow perishable food to be delivered safely around the world.”

Yamato operates on the hypothesis that food is a global asset and examines how Yamato and other logistics companies can deliver perishable food safely. Its goal is to develop a shared cocreation value platform to allow logistics providers to do this, and Mr Umetsu invited all companies at the forum to work with the company to achieve the goal of building a food safety cold chain that can trace products and temperature using a physical internet-driven network.

Yamato is the largest logistics firm in Japan, and 11% of the parcels it delivers are in the cold chain, so the company is ready to create a global platform.

Mr Umetsu outlined the future for www.payloadasia.com | January 2020

logistics, information and financial technology. For governments, this involves food safety standards, digitalisation of customs and quarantine regulations, and development of cryptocurrency. For business, this involves developing and implementing new cold chain technology.

He concluded with a plea for the audience to join as stakeholders to create a global cold chain platform together.

Lau Teck Sien, Partner and CEO of HOPU Investments discussed HOPU’s experience with, and massive investment in, warehouses, and its experience with the mainland’s massive consumption growth.

HOPU has 17 million square metres of warehouse space globally, he said. What is interesting from HOPU’s perspective is that the mainland’s per-capita GDP, which is about US$9,000 overall, but US$30,000 in some tier 1-cities. When per capita income reaches $10,000, consumption behaviour changes, said Mr Lau, with consumers

New landscape in the logistics industry and future trends Ka-mun Chang, Managing Director of Li & Fung Development (China) Limited and Managing Director of Fung Business Intelligence, forecast five future trends in the logistics industry. One trend involves the challenge to the WTO because of the prevalence of bilateral and regional trade agreements, which make customs procedures, for example, very complicated.

The second trend is consumer empowerment through mobile phones; this has created new demands for supply chains, which have to meet consumer needs globally. And a third trend is the trade tension between the mainland and the United States. “Even if they do agree on a simple trade deal,” he said, “there will still be many challenges, such as IP, technology transfer and ‘Made in China 2025’.”

Another trend is the Belt and Road Initiative, which represents a new phase of globalisation. The mainland government has started moving low-cost sourcing bases for high-volume products, which may benefit logistics companies in Hong Kong and the rest of the Guangdong-Hong Kong Macao Greater Bay Area.

The final trend Mr Chang discussed was tech innovations, such as artificial intelligence and 3D printing. These technologies shorten lead times, allowing customers to obtain products instantly.

27

E XPR E S S & MA IL

Fe d E x C o r p . reports second quarter results

FedEx Corp. reported the following consolidated results for the second quarter ended November 30 (adjusted measures exclude the items listed below for the applicable fiscal year):

increased yields at FedEx Freight.

Net income includes a tax benefit of $133 million ($0.51 per diluted share) from the recognition of certain foreign tax loss carry forwards.

Fe d E x E x p r e s s r e c o r d e d asset impairment charges of $66 million ($50 million, net of tax, or $0.19 per diluted share) related to the permanent

Fiscal 2020

Fiscal 2019

As Reported (GAAP)

Adjusted (nonGAAP)

As Reported (GAAP)

Adjusted (nonGAAP)

Revenue

$17.3 billion

$17.3 billion

$17.8 billion

$17.8 billion

Operating income

$554 million

$684 million

$1.17 billion

$1.33 billion

Operating margin

3.2%

3.9%

6.6%

7.5%

Net income

$560 million

$660 million

$935 million

$1.08 billion

Diluted EPS

$2.13

$2.51

$3.51

$4.03

This year’s and last year’s quarterly consolidated results have been adjusted for: Impact per diluted share Fiscal 2020

Fiscal 2019

TNT Express integration expenses

$0.19

$0.34

Aircraft impairment charges

0.19

—

FedEx Ground legal matter

—

0.17

Net U.S. deferred tax liability remeasurement

—

0.02

Operating results declined due to weak global economic conditions , increased FedEx Ground costs from expanded service offerings, the loss of business from a large customer, a continuing mix shift to loweryielding services and a more competitive pricing environment.

In addition, the later timing of the Thanksgiving holiday resulted in the shifting of Cyber Week into December, which negatively impacted the quarter’s results.

These factors were partially offset by lower variable incentive comp ensation exp enses and 28

retirement of 10 Airbus A310-300 aircraft and 12 related engines.

During the remainder of fiscal 2020, FedEx Express will make further network capacity changes by reducing flight hours. The company continues to evaluate if additional aircraft retirements are warranted.

Outlook FedEx is unable to forecast the fiscal 2020 year-end markto-market (MTM) retirement plan accounting adjustment. As a result, the company is unable to provide a fiscal 2020 earnings per share or effective tax rate (ETR) outlook on a GAAP basis.

FedEx now forecasts fiscal 2020 earnings of $9.10 to $10.35 per diluted share before the year-end MTM retirement plan accounting adjustment , and earnings of $10.25 to $11.50 per diluted share before the year-end MTM retirement plan accounting adjustment and excluding TNT Express integration expenses and

aircraft impairment charges. The company’s ETR is now expected to be 23% to 26% before the year-end MTM retirement plan accounting adjustment . The capital spending forecast remains $5.9 billion.

These forecasts assume moderate U.S. economic growth, the comp any ’s c ur rent f uel price expectations, no further w e a ke n i n g i n i nte r n at i o n a l economic conditions from the company’s current forecast and no additional adverse developments in international trade policies and relations. FedEx’s ETR and earnings per share outlooks are based on the company’s current interpretations of the Tax Cuts and Jobs Act (TCJA) and related regulations and guidance, and are subject to change based on future guidance, as well as FedEx’s ability to defend its interpretations.

Digitalization and automation will help e-commerce supply chains overcome the profitability challenge, says new DHL white paper It looks at six principal areas where e-commerce is challenging the supply chains of merchants and logistics companies.

“Change at the Speed of the

PAYLOAD ASIA | January 2020

EXPR E SS & MA IL Consumer: How E-Commerce is Accelerating Logistics Innov ations” w a s authore d

by Professor Lisa Harrington, President and CEO of lharrington group llc. It looks at six principal areas where e-commerce is challenging the supply chains of merchants and logistics companies: customer expectations for a perfect buying experience; consumers’ desire to buy and receive goods ‘anywhere, anytime’; exploding demand for urban delivery; competition for labor and wage inflation; the emergence of new online sales models and unexpected surges in demand; and environmental concerns.

The impact of these challenges is most keenly felt in the areas of fulfilment and last mile delivery.

Labor in the U.S., for example, which is the world’s second largest e-commerce market accounts for 40-60% of w arehousing operating costs. With real estate company CBRE predicting in 2018 that an additional 450,000 w arehous e workers w ill b e needed in the U.S. by the end of 2019 and unemployment at a consistently low rate, his presents a risk in terms of both cost and recruitment, particularly during peak periods. Increased urbanization, combined with heightened pressure - from both socially conscious consumers a n d mu n i c i p a l au th o r i t i e s , in particular - to reduce the environmental impact of transport operations is forcing retailers to seek out creative ways of balancing delivery convenience with reduced mileage for dieselpowered vehicles over the last mile. www.payloadasia.com | January 2020

Across each of the profitability challenges, technologies already exist that allow companie s to reduce unit costs, better forecast needed inventory or increase productivity to absorb additional growth. Robotics and automated sorting systems, for example, allow companies to process higher order volumes without the need to engage large numbers of temporar y workers. Advanced Warehouse Execution Systems, combining Internet of Things capabilities, machine le ar ning , business intelligence and data mining agents can increase performance and responsiveness to meet rising customer expectations.

While autonomous vehicles for last-mile delivery still await regulatory approval in many marke t s , dig it ali z ation c an already support better demand forecasting to allow inventory to be placed closer to the end customer and to optimize transport routings, reducing time on the road. As many of these technologies evolve further and new innovations come to the market, companies that are able to deploy them effectively within

their supply chain will be best positioned to address the costly inefficiencies, volatile order trends and demanding customer expectations that characterize the fiercely competitive e-commerce market.

Acknowledging that innovation can itself be a profitability challenge, particularly if approached at the wrong pace or with excessive outlays of capital, the research also detailed a three-step approach to i n n o v at i n g s u cce s s f u l l y : focusing on innovations that provide differentiation; adopting a long-term, strategic view of innovation; and bridging the silos of people, software and machines.

DHL opened its newest Innovation Center - its third globally - in September 2019 in Chicago, U.S. The center acts as a hub for innovation, where DHL conducts research into the major trends shaping the logistics industry, explores customers’ needs and readiness for more innovative solutions, and tests and pilots technologies with the highest potential for deployment.

The white paper provides new insights on how specific challenges within the e-commerce supply chain can be overcome with the support of new technologies.

29

IT & E qu ipm ent

DSL Group e x p a n d s Indonesia and Thailand ma rket s w it h the new Hyster UT Series lift trucks DSL Group has ordered an initial

consignment of Hyster UT lift trucks for its diverse markets spread across Indonesia with 260 million people.

L e ad i n g I ndone si a n a nd T h a i materia ls ha nd l ing compa ny DSL Group is introducing Hyster’s new UT Series range of lift trucks to open up new markets and expand existing opportunities in the nations’ high growth economies.

DSL Indonesia and Dilok and Sons Co Ltd Thailand – which pride themselves on being one-stop shops for all forklift needs – were amongst the first dealers to order the new range of Hyster UT Series lift trucks in six different capacities from 1.5-3.5 tonnes, aimed at industries seeking Hyster quality, toughness and service at a cost-effective entry level price to reliably tackle simple everyday materials handling applications.

DSL Group has ordered an initial consignment of Hyster UT lift trucks for its diverse markets spread across Indonesia with 260 million people, and also for the strong materials handling needs present throughout Thailand’s growing industries.

The value proposition – “Meets the Need. Makes the Move.” – relates to

New Hyster H2.0-3.5UT 2,000-3,500kg forklift for use outdoors and indoors

30

Hyster service is a major advantage of DSL Group, the one-stop shop for forklift needs

customers who don’t need particular advanced functionality features, but prefer proven materia l s ha nd l i ng solutions backed by a supplier they can trust – and with the support of a reputable service network extending across Asia-Pacific. The UT Series’ uncomplicated approach to materials handling – backed by 24/7 service – is particularly attractive to customers whose materials handling equipment is required to work intermittently over a working week, on an as-required basis, typically up to 1,000 hours a year.

Demand for the new UT Series will be especially strong among businesses such as food and beverage organisations, bu i ld i ng materia l i ndust ries, a nd logistics centres involved in warehousing, storage, transportation and distribution, says the Managing Director at PT DSL Indonesia, Mr Puntin Kulmongkon.

The new Hyster UT range embodies all the quality features that have been at the heart of the Hyster brand for nearly 90 years, including intelligent design, product testing, qualit y of manufacturing and quality of suppliers.

Rat her t ha n pigeon-hole ba sic utility needs – or offer one-size-fits-all solutions – the UT Series philosophy opens a discussion with customers on “What are your specific needs and how long do you need to use it for on a daily basis?”

Hyster already has a strong and longestablished professional distribution network extending across Asia-Pacific, strength that is in turn backed by Hyster-Yale globally, which has been building relationships and partnering with customers, suppliers, dealers, and employees over many decades.

Gold Coast Airport extends partnership with SITA G o l d C o a s t A i r p o r t u s e s S I TA

AirportConnect Open, the commonuse platform, together with self-service bag drop and check-in kiosks.

Gold Coast Airport has extended its partnership with global IT provider SITA for passenger and baggage technolog y unti l 2024. The new agreement continues the airport’s close relationship with SITA, which has been in place for more than 10 years.

Gold Coast Airport uses SITA AirportConnect Open, the commonuse platform, together with self-service bag drop and check-in kiosks. All this technology combines to deliver an efficient and cost-effective solution to the airlines, while ensuring an enhanced passenger experience at the airport.

This announcement follows the release of SITA’s 2019 Air Transport IT Insights, which revea led that investment in automating the passenger journey is providing a faster, more pleasant airport experience. According to the report, airport CIOs are seeing strong returns on their technology investments with 68% recording a year-on-year improvement of up to 20% in passenger satisfaction levels, while 44% saw an increase in average passenger processing times.

Gold Coast A irpor t welcomed almost 6.5 million passengers in FY2019, making it the fifth busiest international airport in Australia and sixth busiest overall. The airport’s passenger numbers have steadily risen in recent years and are expected to more than double by 2037. The

The full range of new Hyster UT series lift trucks operate in tight spaces, handling pallets and picking/storing inventory

PAYLOAD ASIA | January 2020

IT & E qu ipm e n t ex tended pa r tnership w ith SITA comes as $500 million is invested in redeveloping the airport precinct and represents a commitment to suppor ting f uture grow th, whi le continua l ly improv ing passenger experiences.

T h e Wo r l d ’s first ISO approved drone safety standards announced

It is the first in a series of emerging standards for air drones, with others due to address General Specifications, Product Manufacture and Maintenance, Unmanned Traffic Management (UTM) and Testing Procedures.

The world ’s first ISO approved drone standards have been announced by the International Organisation for Standardisation (ISO) following a 12-month period of consultation with drone professionals, academics, businesses and the general public.

The f ina l publication of these new international safety and quality Standards for Unmanned Aircraft Systems (UAS) are set to have a massive impact on the future growth of the drone industry throughout the world, and, are the product of several years of cooperation and rigorous interrogation from all sectors of society.

This important first step is part of a wider deliverable by ISO which is expected to trigger rapid acceleration in the use of air drones by organisations keen to reap the rewards of this transformative technology, against a background of reassurance on safety and security within a new framework of approved regulatory compliance.

The announcement by ISO represents enormous progress in the standardisation of the global drone industry and is of particular sign i f ica nce in add ressing t he operational requirements of the more recognised and prevalent air drones, www.payloadasia.com | January 2020

also known as UAS. The new Standards include protocols on Quality, Safety, Security and overall ‘etiquette’ for the operation of commercial air drones, which will help shape future regulation and legislation.

It i s t he f i r s t i n a s er ie s of emerging standards for air drones, with others due to address General Specifications, Product Manufacture and Maintenance, Unmanned Traffic Management (UTM) and Testing Procedures. The Product Manufacture standards for UAS, which are due to be published next year, will combine w it h t he op er at ion a l s t a nd a rd s already published to establish a fullairworthiness suite of standards for UAS. Air safety A key attribute of the ISO Standards announced today is their focus on air safety, which is at the forefront of public attention in connection with airports and other sensitive locations. The new Standards promotes an ‘etiquet te’ for drone use that reinforces compliance towards nofly zones, local regulation, flight log protocols, maintenance, training and flight planning documentation. Social responsibility is also at the heart of the Standards, which strengthens the responsible use of a technology that aims to improve and not disrupt everyday life. The effectiveness of the Standards in improving air safety will be further strengthened by the continuing rapid development of geofencing and counter-drone technology, providing frontline protection against ‘rogue’ drone operators.

Privacy and data protection The Standards also seek to address public concerns surrounding privacy and data protection, demanding that operators must have appropriate systems to handle data alongside communications and control planning when f lying.

The hardware and sof t ware of a ll related operating equipment must also be kept up to date.

Significantly, the fail-safe ofhuman intervention is required for all drone flights, including autonomous

operat ion s, en su r i ng t hat d rone operators are held accountable.

The exciting future for drones Air drones are already beginning to provide solutions to some of the most pressing economic, transport, security, env i ron ment a l a nd pro duc t iv it y challenges faced by governments and industry throughout the world, reducing road traffic, easing congestion, saving lives through a reduction in accidents and reducing pollution in our cities.

As well as speeding up the delivery of large-scale infrastructure projects, drones are expected to reduce the need for some expensive new major transport infrastructure altogether.

New excit i ng appl icat ion s for a i r d rone s a re b ei ng de velop e d daily. Revolutionary approaches are emerging for freight and passenger transportation, with drones providing a cost-effective and environmentally responsible alternative to traditional methods, relieving the burden on our already stretched urban road networks. Further applications in the agricultural, maritime, construction and energy sectors among others, are already transforming businesses, w ith v ir t ua l ly a l l industries a nd business sectors set to benefit from the Standard-led adoption of rapidly evolving drone technology.

Impact on the economy A number of recent reports have attempted to forecast the economic impact of air drones globally. For i n s t a nc e , i n it s r e p o r t D r o ne s Reporting for Work, Goldman Sachs has estimated that the size of the global drone industry will reach $100 billion by 2020. Most recently, analysts at Barclays estimate that the global commercial drone market will grow tenfold from $4bn in 2018 to $40bn in five years. They believe the use of drones will result in cost savings of some $100bn. These predictions relate solely to air drones, demonstrating that the economic benefits offered by drone technology are vast, with growth set to accelerate across surface, underwater, air & space, as well as emerging hybrid drone applications.

31

Logis tic s

C E V A Logistics launches new service in India

In a further expansion of its global healthcare capabilities, C E VA Logistics announced the launch in India of a specialist installation s e r v i ce fo r l a rg e - s c a l e medical equipment using its own dedicated team of engineers and technicians.

C E VA’s e x p e r t t e a m will be responsible for unpacking , installing and s e tting up equipment such as MRI (Magnetic Resonance Imaging) Scanners, Cath Labs, Digital R a d i o g r ap hy m a ch i n e s and C T (Computerised Tomog raphy) S c anners on behalf of a number of global manufacturers.

In order to enable the smoothest possible installation, the dedicated team of technicians and engineers are fully conversant with each piece of equipment and conduct site readiness sur ve ys b efore unpacking and

32

setting up the machinery at the designated location.

Known as factory installations , these can involve a wide range of weights and pieces.

For instance, an MRI scanner comprises a total o f 2 6 b o xe s w e i g h i n g between 18-20 tonnes with a single magnet weighing eight tonnes.

Initially based in Mumbai, India, the team will work on installations there as well as in Pune, Nagpur, Ahmedabad and Belgaum, b efore b eing g radu ally expanded across CEVA Logistics’ network.

e vent , which w ill t ake place in June 2020.

The Big Logistics Diversity Challenge will bring together logistics professionals to look at how the sector can tackle diversity collaboratively and colle ctively in an informal setting.

The event will also offer the perfect platform for indu str y to share b e st practice, network , team build and help shape what the profession should do next to encourage a more inclusive sector.

Support also comes from across the industry from o rg a n i s at i o n s s u c h a s : Aston University, Cold Chain Federation, SHD L o g i s t i c s , Wa r e h o u s e & Logistics News and ForkliftAction.

F r e i g h t association lends support to diversity in Delta Cargo logistics to be LUG’s As a Supporting Organisation, BIFA will be new client in encouraging its members to enter a team for the Frankfurt e vent , which w ill t ake place in June 2020.

The British International Freight Association (BIFA) is adding its support to The Big Logistics Diversity Challenge 2020, which is being organised by Nimble Media Ltd, in association with Talent in Logistics.

As a Supporting Organisation, BIFA will be encouraging its members to enter a team for the

LUG aircargo handling has added Delta Air Lines (DL) to its customer portfolio at Frankfurt International Airport.

PAYLOAD ASIA | January 2020

Logis tic s

Ef fe c tive Janu ar y 15, 2020, LU G air cargo handling GmbH will serve the American airline Delta at the international freight hub Frankfurt (Germany).

The carrier has been an LUG customer in Munich (Germany) for over five years.

LUG aircargo handling has added Delta Air Lines (DL) to its customer p o r t f o l i o a t Fr a n k f u r t International Airport. The airline has been a customer in Munich for more than five years and LUG has now been able to extent the partnership to the station in Frankfurt. The service q u a l i t y, i n f r a s t r u c tu re , and high level of process automation match DL’s wide range of premium products, including pharma and valuables.

D elt a Air L ine s w ith headquarters in Atlanta GA (USA) flies three times daily from Frankfurt to D e t ro i t , Atl a nt a , a n d New York with a mix of A330 and B767 aircraft.

This gives LUG again a westward connection.

DL Cargo offers direct customer deliveries for time critical shipments in the US in 50 plus cities.

The USA continue to www.payloadasia.com | January 2020

be an important export market for German industry, especially in the automotive, machiner y, and pharmaceuticals sector, despite the current political turbulences and boycott threats. In addition, G ermany remains the second biggest market for US goods in Europe - after the UK. Thus, LUG expects a considerable increase in throughput at its terminal in the CargoCity South in 2020.

GEODIS sets new shipping volume record b e t w e e n Thanksgiving and Cyber Monday

GEODI S is among the industry leaders in fulfilment and distribution in the e-commerce sector.

Next to countless teams of jolly elves, GEODIS is the latest addition to the legendary list of Santa’s helpers. The Third-Party Logistics (3PL) provider shipped 23 million units in the U.S., to set a new shipping volume record between Thanksgiving and Cyber Monday.

Th e r e c o r d - b r e a k i n g increase is driven largely by the continue d and growing trend of online

holiday shopping. GEODIS i s among the indu str y leaders in fulfilment and distribution in the e-commerce sector.

“The holiday season is th e m o s t c r i t i c a l t i m e for our customers whose businesses hinge on GEODIS getting their products to consumers on-time for every single order,” says Randy Tucker, Pre sident and C E O, GEODIS Americas . “As volume increases , we a re co n s t a ntl y s e ek i n g ways to strengthen our productivity. We do this through innovation in our warehouses , while also prov iding our t alente d workforce with the most robust environment and technologies so that we can be as successful as possible.”

Along with technology and automation, the GEODIS workforce will grow by more than 7,000 during the 2019 holiday season to accommodate the increased volume.

“The holiday season is when GEODIS teammates really shine,” says Mike Honious, Chief Operating Officer, GEODIS Americas.

“Our teammates take great pride in doing their part to help Santa spread joy across the world. We are grateful for our teammates, and we’re thrilled to help our clients close out 2019 on such a strong performance.”

33

T REND S

Maritime trade growth slumps as protectionist policies bite

GlobalData’s ship technology w r iter Adele B er ti say s : “Shifting geopolitical balances were standing in the way of good business for the best part of 2019, as the industry held its breath when tensions near the Strait of Hormuz and off the coast of Venezuela reached their peak.”

The resurgence of populism in several countries is spelling trouble for open global trade, a warning sign that is being seen by the shipping industry as a growing threat to business.

“The International M a r i t i m e O rg a n i z at i o n’s (IMO) sulphur cap deadline is fast approaching, pressures from the public are pushing for more gender equality within the sector’s workforce, and many stakeholders have been voicing concerns over the implementation of protectionist policies in some of the leading economies of the world, including US and China, the UK and Brazil.

“In May 2019, the ICS joined other organisations to express concern over this incre a s e in prote c tionist p o l i c i e s . Th e d el e g at i o n took to the World Trade O rg a n i z at i o n ( W TO ) t o present two position papers that outlined their support for free trade and a rulesbased multilateral trading system.

“The studies revealed a seven-fold increase in import-

34

restrictive trade measures in 2017 alone, which accounted for some $588.3bn in extra costs to global trade.

“In October 2019 the United Nations Conference on Trade and Development’s (UNCTAD) annual Review o f M a r i t i m e Tr a n s p o r t revealed a substantial in dip in maritime trade growth from 4.1% in 2017 to 2.7% in 2018.

“A major victim of this framework was containerised trade growth, which fell from 6% in 2017 to 2.6% in 2018.

Growth in port container traffic also saw a slump, as rates increased by 4.7% in 2018, down from 6.7% the previous year.”

Commenting on the figures, UNCTAD secretary general Mukhisa Kituyi, said: “The dip in maritime trade growth is a result of several trends including a weakening multilateral trading system and growing protectionism.

It is a warning that national policies can have a negative impact on the maritime trade and development aspirations of all.”

Baltic and International Maritime Council (Bimco) chief shipping analyst Peter Sand tells GlobalData: “Once supply chains have b e en disrupted, and trust eroded to the extent that it has been during this trade war, the effect on containerised and dry bulk shipping between the two countries [US and China] could last long beyond any resolution to the trade war (should one of these manifest itself ), although Bimco is sceptical that meaningful progress will happen any time soon.”

A Sustainable Industr y for a l l E u r o p e ’s Citizens

The International Air Transport Association (IATA) called on governments in Europe to seize the opportunity to create a sustainable aviation industry that protects the environment a n d i n c re a s e s co n n e c t i v i t y o p p o r t u n i t i e s f o r Eu r o p e ’s citizens.

The call came at the opening of Wings of Change Europe—a gathering of aviation stakeholders being hosted in Berlin, Germany.

Amid continuing celebrations of the 30th anniversary of the fall of the Berlin Wall, the role of aviation in the continent’s integration was top of mind.

Focus on environmental action The growing concerns over cl i m ate ch a n g e h a s r i g htl y focused attention on the work aviation is doing to re duce emissions. Airlines have cut average emissions per passenger journey in half compared to 1990.

More importantly, the industry is committed to reducing its env ironmental impact e ven further.

Airlines continue to invest tens of billions of euros into more efficient aircraft, more efficient operations, and the development of sustainable aviation fuels The growth in CO2 emissions from 2020 will be offset using the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) Aviation has committed to reduce total emissions to half the 2005 level by 2050, in line with the goals of the Paris climate agreement.

Taxation does not solve the PAYLOAD ASIA | January 2020

T REND S climate problem The climate challenge can only be overcome by industry and governments working together.

Governments have the power to accelerate carbon reductions by encourag ing inve stment in sustainable fuels , new technologies, and improvements to air traffic control.

Un f o r t u n a t e l y, Eu r o p e a n governments are focusing on collecting taxes rather than reducing emissions. The latest proposals in Germany would approximately double the taxation on passengers, making it harder for people on lower incomes to fly.

A Sustainable industry for all De Juniac highlighted that the airline industry faces considerable challenges in Europe, due to an infrastructure crisis, high costs, and unhelpful regulations. He highlighted: The challenges of the capacity crisis, with airports unable to expand Increasing costs, particularly charges by monopolistic airports Inefficient airspace management, leading to increased delays and emissions Regulations such as EU261 on passenger rights, proposals to eliminate seasonable time changes and pressure to diverge from the Worldwide Slots Guidelines, all of which move the industry in the wrong competitiveness direction

In-Flight Services boost passenger satisfaction on International flights, J.D. Power Finds

Turkish Airlines Ranks Highest in Overall Satisfaction among Airlines Flying to Europe; Japan Airlines Ranks Highest among Airlines Flying to Asia.

Great food—the spicier the b etter— plus go o d customer ser vice and a positive track record are the primary drivers of passenger satisfaction on international airline f light s .

In a stark departure from the price-driven culture of domestic airline customer behavior, the J.D. Power 2019 Airline International Destination Satisfaction Study,SM released, finds that cost and fees are notably less important than in-flight services when it comes to delighting pa ssengers on international flights.

The Airline Inter national Destination Satisfaction Study is a new syndicated study that measures passenger satisfaction

A more equal workforce for longterm industry sustainability The Wings of Change event also saw more than 30 airlines commit to ‘25by2025’, designed to increase female employment at senior and under-represented levels within the industry. Airlines pledging to 25by2025 undertake to increase female representation in these areas to a minimum of 25% or by 25% from current levels, by 2025. www.payloadasia.com | January 2020

35

T REND S with airline carriers flying from North America to Europe and from North America to Asia.

It is based on performance in nine factors (in order of average importance across both models): in-flight services; cost and fees; aircraft; flight crew; check-in; boarding; immigration; baggage; and reservation.

Following are some of the key findings of the 2019 study: In-flight services—especially food and beverage—are key to passenger satisfaction: In-flight services, such as food and beverage and in-flight entertainment, are the primary drivers of passenger satisfaction among international travelers. On flights to Europe and Asia, more than half of the overall in-flight passenger experience is dictated by food and beverage. Inflight services are more important to passengers bound for Asia or Europe; whereas passenger satisfaction with long-haul flights within North America is more of a value proposition primarily driven by cost and fees.

But the food could be better: While the food and beverage factor is key to passenger satisfaction, there is room for improvement.

Overall passenger satisfaction with food and beverage offerings is currently lower than that of satisfaction with in-f light entertainment options. On flights to Europe, overall satisfaction with in-flight entertainment is 53 points higher (on a 1,000-point scale) than for food and beverage.

On flights to Asia, that gap is 22 points.

Track record matters when it comes to airline selection: The primary drivers of airline selection among international passengers are past experience with the airline (40%); good customer service (36%); convenient scheduling (35%); reputation (33%); and lower ticket price (31%). Other variables, which weigh heavily on airline selection among domestic travelers—such as availability of a 36

direct flight, no luggage fees and Wi-Fi access—play a much less significant role in airline selection among international travelers.

Study Rankings Among carriers flying from N o r t h A m e r i c a t o Eu r o p e , Turkish Airlines ranks highest in passenger satisfaction with a score of 833. Virgin Atlantic (829) ranks second, while British Airways and Delta Air Lines(815) rank third in a tie.

Among carriers flying from North America to Asia, Japan Airlines ranks highest in passenger satisfaction with a score of 869.

Delta Air Lines (861) rank s second and Korean Air (854)

ranks third.

The J.D. Power 2019 Airline International Destination Satisfaction Study measures p a s s e n g e r s at i s f a c t i o n w i th airline carriers flying from North America to Europe and Asia. The study is based on responses from 6,287 passengers and was fielded in September-October 2019.

J.D. Power is a global leader in consumer insights, advisory services and data and analytics.

These capabilities enable J.D. Power to help its clients drive customer satisfaction, growth and profitability. Established in 1968, J.D. Power has offices serving North America, South America, Asia Pacific and Europe.

PAYLOAD ASIA | January 2020

Daily website update • Weekly e-newsletter • Searchable archive

THE RESPECTED VOICE OF THE AIR CARGO INDUSTRY Subscribe for FREE now! www.payloadasia.com/subscribe/ Global coverage with focus on Asia-Pacific, Indian Subcontinent & Middle East A 33 years publication 14,200 global subscribers Published 11 times a year

www.payloadasia.com For advertising opportunities, please contact your Television Asia rep or K. Dass at Tel: (65) 68289333 | email: editorial@harvest-information.com