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MICA(P) 086/02/2011 PPS1220/07/2012(022795)

The Trade Magazine for the Asia-Pacific & Middle East Regions Vol. 28, No. 6, June 2012

Geodis Wilson taps Asia India working group report out Panalpina puts focus on intra-Asia

www.payloadasia.com

Economic outlook

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Vol. 28, No. 6, June 2012

Group Publisher Wai-Chun Chen Email: waichun.chen@tenalpsasia.com EDITORIAL Editor-in-Chief Bob Gill Email: bob.gill@tenalpsasia.com Editor Donald Urquhart Tel: +65 6521 9760 Email: donald.urquhart@tenalpsasia.com Editor-at-large Nol van Fenema Email: nvfenema@vfpr-media.com Contributors Wong Joon San in Hong Kong, Manfred Singh in India, Heiner Siegmund in Germany and Karen E. Thuermer in the US. Sales & AD ADMIN Sales Director Adeline Ann Tel: +65 6521 9762 Email: adeline.ann@tenalpsasia.com Account Manager Alyssa Tan Tel: +65 6521 9767 Email: alyssa.tan@tenalpsasia.com Marketing Executive Avery Li Email: avery.li@tenalpsasia.com Admin Executive Lim Yann Ming Email: yannming.lim@tenalpsasia.com Publishing Support Production Manager Pauline Goh Email: pauline.goh@tenalpsasia.com Design Manager Honess Ho Email: honess.ho@tenalpsasia.com Manager, Circulation & Database David Low Email: david.low@tenalpsasia.com Circulation Executives Levi Cheng Email: levi.cheng@tenalpsasia.com Wang Jiaoman Email: jiaoman.wang@tenalpsasia.com Web Operations Executives Tiffany Mok Email: tiffany.mok@tenalpsasia.com France Nelo M. Sevilleja Email: franco@tenalpsasia.com Manager, E-Business Sam Soh Email: sam.soh@tenalpsasia.com Senior Web Developer Drake Lim Email: drake.lim@tenalpsasia.com FINANCE Finance Manager Lim Ai Ling Email: ailing.lim@tenalpsasia.com Ten Alps Communications Asia Pte Ltd CEO Raymond Wong Email: raymond.wong@tenalpsasia.com

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The ‘real’ intra-Asia trade

I

t seems even the most optimistic in the air cargo industry have reset their viewpoints with a reality check. The oft expressed sentiment from a few months ago that the market has bottomed and will see some pickup sometime in the fourth quarter has quietly faded, replaced by the ‘hope’ of some recovery early next year. But the bigger fear of course is of the euro-sky falling.

Many point to the most recent economic contagion of 2008-2009 where Asia, with the exception of Japan came through the crisis in pretty decent shape, as a possible outcome of another crisis, this time euro-inspired. But for at least one economist – Stephen S. Roach, former chairman of Morgan Stanley Asia and the firm’s chief economist – the possible crisis sparked by a Greek withdrawal from the eurozone – would be very serious indeed for Asia, he argues.

Financial and trade linkages make Asia highly vulnerable to Europe’s problems, with European banks funding nearly nine per cent of total domestic credit in developing Asia – a full three times the share provided by US banks. And of course European banks play a massive role in the Asian banking hubs of Singapore and Hong Kong.

The trade front is also significant. Asia’s traditional source of external demand – the US has given some way to Europe and both of these have also gradually been replaced by a focus on China over the last decade. Combined shipments to the US and Europe fell to 24 per cent of developing Asia’s total exports in 2010 – down sharply from 34 per cent in 1998-1999. And at the same time, Asia’s dependence on intraregional exports – the much touted intra-Asia trade flows – expanded sharply, from 36 per cent of total exports in 1998 to 44 per cent in 2010.

And so what looks like a rosy picture of an increasingly autonomous Asia that can better withstand the blows from the West’s recurring crises, figures from the International Monetary Fund show that in reality 60-65 per cent of all trade flows in the region can be classified as “intermediate goods” – components made in various Asian countries, assembled in China and ultimately shipped out as finished goods to the West.

And with Europe and the US still the largest export markets for these goods, it becomes clear how tight the linkage is between Asia’s China-centric supply chain and the turbulence of the major developed economies. This of course is made worse by the fact that Europe has displaced the US as China’s main export market. By 2010, the EU accounted for 20 per cent of total Chinese exports, while the US share contracted to just 18 per cent. The China-centric Asian supply chain made a bet on Europe, and it’s increasingly looking like a questionable bet.

As a number of economists have pointed out (see p.31 ‘Asia to see growth, but rebalancing critical’) the only defense against external global downturns is internal demand. But within Asia this has not been the case with private consumption falling to a record low of 45 per cent of developing Asia’s GDP in 2010 – down ten percentage points from 2002.

China’s economy is already slowing as a result of the problems in Europe and although the central government’s recent 12th Five-Year Plan is pro-consumption, its unlikely to go far as export markets for Chinese goods contract. Until China and Asia in general develop a more meaningful regional economy – true intra-Asia trade – there can be little hope of escaping the scourge of external shocks.

Certainly the air cargo industry – which banks on heavily on China and developing Asia – watches with anxiety the developments in Europe, hoping, perhaps against hope that the euro crisis passes. Should it come to be, the consequences are unimaginable for an industry that is once again down, but not-yet – beaten.

C O V ER Payload Asia has been appointed by the 18 member Federation of Asia Pacific Aircargo Associations as official publication for FAPAA news.

MICA(P) 086/02/2011 PPS1220/07/2012(022795)

The Trade Magazine for the Asia-Pacific & Middle East Regions Vol. 28, No. 6, June 2012

Payload Asia is a controlled circulation publication available free-of-charge on request to qualified subscribers. Qualified subscribers are buyers and sellers of air cargo/courier/express products and services plus government and trade officials dealing with airfreight who are based in the Asia-Pacific and Middle East regions. Non-qualified readers can receive Payload Asia on payment of a US$225 annual fee.

Payload Asia is published monthly by Ten Alps Communications Asia Pte Ltd, 67 Ubi Avenue 1, #06-06 StarHub Green, North Wing, Singapore 408942. Material in Payload Asia is copyright and may not be reproduced in any form without the written permission of the editor.

www.payloadasia.com | June 2012

Geodis Wilson taps Asia India working group report out Panalpina puts focus on intra-Asia

www.payloadasia.com

Economic outlook

As traditional US and European market demand has caved in on the back of dampening world trade, global players in the retail, pharmaceutical, high-tech, healthcare and automotive sectors are increasing their expansion into the Asian emerging markets. Geodis Wilson, a leading global freight management company, is tapping this phenomenon and translating it into airfreight and logistics growth. For this and more, please turn to page 26.

1

GATEW AYS

While ST Aerospace will take the lead in the A330P2F engineering development work, it will also undertake any over-flow of conversion work from the EADS EFW facilities in Dresden, Germany.

SINGAPORE A330 P2F conversion agreement signed

ST Aerospace, Airbus and EADS EFW have finalised the agreement to launch the A330 Passenger-to-Freighter (P2F) conversion programme. This follows the MoU announced at the Singapore Airshow in February this year setting out the project’s foundation and granting ‘Authorisation To Offer’ for the A330P2F. ST Aerospace lead the A330P2F engineering development work in collaboration with Airbus and EADS EF W, while EADS EF W will lead the industrial phase and undertake marketing and sales activities, supported

by Airbus. Most of the conversions will take place at EADS EFW facilities in Dresden, Germany, with the remainder at a dedicated facility of ST Aerospace.

EADS EFW will also serve as ST Aerospace’s European maintenance, repair and overhaul (MRO) centre, which fills the gap in ST Aerospace’s global airframe MRO footprint.

Under the agreements, ST Aerospace will subscribe to new shares in EADS EFW, representing 35 per cent of the enlarged share capital of EADS EFW, for a total consideration of €110.5 million, comprising A330P2F engineering development work and cash injection.

2

This will be funded internally by ST Aerospace. EADS will hold a 65 per cent shareholding in EADS EFW. Subject to regulatory approvals and customary closing conditions for the investment, the A330P2F engineering development phase is anticipated to commence by the end of 2012, with entry-into-service of the first A330P2F scheduled for 2016.

The A330P2F programme includes two versions – the A330-200P2F and the larger A330-300P2F. Of the two models, the larger A330-300P2F will be particularly suitable for integrators and express carriers thanks to its high volumetric payload capability with lower-density cargo, according to ST Aerospace. Complementing this will be the A330-200P2F which will be optimised for higher-density freight and longer range performance.

As well as complementing the factorybuilt A330-200F in service today, the A330P2F freighter conversion programme will also enhance and sustain A330 Family residual values by extending the economic lives of A330 airframes, said Airbus.

“The strong demand from airlines for a programme to convert used A330s from passenger configuration into an attractive freighter is clear,” said Tom Williams, EVP of Programmes at Airbus. “Together with ST Aerospace

and our sister company EADS EFW we have the perfect partnership to bring efficiency, reliability and profitability to our operators.”

According to Airbus forecasts, approximately 2,700 freighters will be required over the next 20 years, and around half of these will be in the mid-sized freighter segment, including 900 conversions. “Addressing this requirement, both the A330-200P2F and the A330-300P2F facilitate the change to environmentally-friendly, new-technology converted freighters, while recognising the operators’ focus on capital cost,” Airbus said.

Singapore Airlines sees net profits nosedive 69%

High fuel prices and an uncertain global economy weighed heavily on the Singapore Airlines Group earnings in the 2011-12 financial year, pushing net profit down by S$756 million (US$589.6 million) or 69 per cent to S$336 million.

Group revenue grew by $333 million (up two per cent) to $14.9 billion on the back of a 3.6 per cent improvement in passenger carriage, but partially offset by weaker yields.

The carrier – the world’s No.2 carrier by market value – said jet fuel prices remained high throughout the year, resulting in a 32 per cent spike year-onPAYLOAD ASIA | June 2012

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GATEW AYS year in average jet fuel prices to US$133 per barrel. This translated to a 29 per cent (+S$1.3 billion) increase in fuel cost before hedging, which contributed to a 10 per cent rise in Group expenditure.

The Singapore-based Group reported its operating profit fell S$985 million (-77 per cent) to S$286 million. The operating results of the main companies in the Group for the financial year include: Parent Airline Company – Operating profit of $181 million ($851 million profit in 2010-11); SIA Engineering – Operating profit of $130 million ($136 million profit in 2010-11); SilkAir – Operating profit of $105 million ($121 million profit in 2010-11) and SIA Cargo – Operating loss of $119 million ($151 million profit in 2010-11).

SIA Cargo’s load factor of 63.8 per cent was marginally down by 0.2 percentage points while freight carriage (freight tonne-kilometres) was almost flat. Cargo capacity rose 0.7 per cent.

The cargo breakeven load factor however, rose sharply by 5.7 percentage points to 67.3 per cent, as unit cost increased 5.4 per cent from high fuel costs while yields fell 3.6 per cent.

As part of its strategy of dealing with the current environment, SIA will focus on better linking SIA’s long haul network to that of its regional carrier, SilkAir. A weak global economy has hit demand on long-haul routes and competition from other premium airlines is ever intensifying. Middle Eastern carriers such as Emirates, Qatar Airways and Etihad have also been grabbing a bigger share of premium passengers with high service standards, attractive deals and new aircraft. Analysts have noted that the carrier’s decades-long brand differentiation may finally be eroding as a result of intensified pressure by largely Middle Eastern carriers.

SIA is aiming to better tap the network of its regional arm, SilkAir. “SilkAir is very much part of SIA, and we have to leverage SIA’s long haul (network) to connect into SilkAir’s regional routes,” said SIA’s chief executive Goh Choon Phong.

SilkAir’s network of cities, which include Xiamen, Bangalore and Koh Samui, would strengthen connections for customers, encouraging them to choose the SIA group for their entire trip instead of hopping onto budget carriers, Goh told reporters and analysts at a briefing.

The airline’s new medium-to-long haul budget carrier, ‘Scoot’ will start flying in June to destinations such as Sydney, Bangkok and Tianjin, putting 4

it in direct competition with more established players Jetstar and Air Asia X. It would also compete with its affiliate, Tiger Airways Holdings Ltd in one sector.

HONG KONG April cargo plummets, Cathay ups India services

Cathay Pacific Airways combined Cathay Pacific and Dragonair traffic figures for April 2012 show another drop in cargo and mail tonnage against passenger numbers growing year-onyear.

Cathay Pacific and Dragonair carried 124,531 tonnes of cargo and mail in April, a drop of 11 per cent compared to April 2011. The cargo and mail load factor was down by five percentage points to 63.3 per cent.

Capacity, measured in available cargo/mail tonne kilometres, decreased by 6.8 per cent, while cargo and mail tonne kilometres flown dropped by 13.7 per cent. For the first four months, tonnage has declined by 10.7 per cent against a capacity drop of 3.3 per cent.

Cathay Pacific general manager cargo sales & marketing James Woodrow said: “After the temporary surge in business in March, driven by large shipments of hi-tech products from Mainland China, demand softened again out of our key markets in April. The general air cargo market remains soft, especially to Europe, though intra-Asia traffic is holding up better, helped by a recent expansion of the passenger network in the region.

“Looking forward, we will continue to manage capacity in line with demand, particularly on long-haul flights to Europe and Transpacific. Fuel prices continue to be a major concern

on these long-haul routes.”

The two airlines carried a total of 2.5 million passengers in April - an increase of 11.7 per cent on the same month in 2011 – while the passenger load factor rose by 2.8 percentage points to 83.1 per cent.

Meanwhile, Cathay is ramping up in India. Along with the service to Hyderabad – the first airline to offer an air cargo service linking the capital of Andhra Pradesh, with East and North Asia – the carrier will be adding a third weekly freighter flight to Bengaluru to meet the surging demand to and from India’s leading information technology hub. Both services started from 17 May. The Hyderabad service has been prompted by pharma exports with Cathay Pacific director cargo, Nick Rhodes noting that Hyderabad was one of the major hubs for the manufacturing of pharmaceuticals in India, accounting for around two-thirds of the country’s drug production. “So we expect a strong demand for our specialised Pharma LIFT products and services.

For Bengaluru, we have been seeing increasing demand since we launched our freighter service last August and we believe the time is right for an additional flight each week,” he said.

The Hyderabad service will operate on a Hong Kong-Delhi-BengaluruHy d e r ab a d - Ho n g Ko n g ro u t i n g Thursdays and a Hong Kong-ChennaiHyderabad-Hong Kong routing on Sundays. The third weekly flight to Bengaluru will operate via Mumbai on Saturdays, in addition to the current flights every Monday and Thursday.

The launch of the new flights, according to Tom Wright, Cathay Pacific’s general manager South Asia, Middle East & Africa will reinforce the carrier’s position as one of the biggest

Cathay Pacific Cargo is moving to tap growing demand from India’s high-tech and pharma capitals.

PAYLOAD ASIA | June 2012

GATEW AYS airfreight operators in India. The latest schedule enhancements mean that Cathay Pacific will operate 19 cargo flights a week to five major cities: Delhi, Mumbai, Chennai, Bengaluru and Hyderabad.

Cathay warns of hard times ahead

Cathay Pacific Airways has warned that its financial results for the first half of 2012 are “expected to be disappointing”.

In response to the changing market conditions and challenging business environment, the group is readjusting the capacity of both Cathay Pacific and Dragonair by reducing capacity on some long-haul routes while increasing capacity and introducing six new destinations in its regional network.

Since the airline announced its annual results in March, fuel prices have remained high, the cargo business, despite a temporary improvement in March, has shown no sign of a sustained recovery and pressure on Economy Class yields has continued. There has also been some softening in yield in the premium cabins.

Cathay Pacific chief executive John Slosar said: “We previously warned that 2012 is looking even more challenging than 2011 and we were therefore cautious about prospects for this year. In response to the challenging environment we face, we are reducing costs where possible, including through a reduction of capacity.

The airline’s financial position remains strong which will enable us, despite the current difficult trading conditions, to maintain the quality of our products and services and to continue with our longterm strategic investment in the business.”

Slosar added: “This is not just a Cathay Pacific problem; it is clearly an industrywide issue, and continued high fuel prices in particular are hitting airlines hard across the globe. We have no option but to take concerted action to adapt to this volatile operating environment. We need to do this to protect our business in the short-run and to protect the Cathay Pacific team.”

The carrier has announced a raft of measures to reduce costs that will include adjusting both passenger and cargo capacity, deploying more fuel-efficient aircraft on long-haul flights, speeding up the retirement of its older Boeing 747-400 aircraft, and putting a hiring freeze on new or replacement ground staff. At the same time it is offering voluntary unpaid leave for cabin crew from June and introducing cost-saving measures such as cancelling www.payloadasia.com | June 2012

non-essential business travel for staff and reducing its marketing and IT spend.

For cargo, Cathay Pacific will now target four per cent growth in total (freighters plus passenger aircraft bellies), down from the original target of seven per cent, while there will be zero growth in freighter capacity compared to the three per cent originally targeted for 2012. Ad hoc cancellations will continue to be made to match market demand, the carrier said.

In the cargo fleet, Cathay Pacific currently operates 25 wide-body freighters, including five new B747-8Fs. As it takes delivery of three more B7478Fs this year and two next year, the airline will take three B747-400BCFs out of service this year as a near-term capacitymanagement measure.

On the passenger side, the Cathay Pacific Group as a whole will see its capacity growth reduced to 3.2 per cent from the targeted seven per cent this year. The capacity growth for Cathay Pacific will be reduced to two per cent from the targeted seven per cent. The airline’s network will remain intact but frequencies on some long-haul routes to North America and Europe will be reduced in response to high fuel costs and depressed yields.

The Group will retain its focus on expanding capacity within the region, with Dragonair’s capacity set to grow by 9.2 per cent against a target of 7.3 per cent as a result of the launch of new destinations and increased frequencies on regional and Mainland routes.

CHINA China’s SF Airlines to expand cargo fleet

While most of China’s domestic cargo airlines are experiencing operating losses

due to sluggish market demand resulting from global economic uncertainty and China’s export slowdown Shun Feng (SF) Airlines, a Chinese privately run cargo operator, plans to expand its fleet.

According to its chairman Li Dongqi the carrier will expand its freighter fleet from seven to more than 25 aircraft to meet growing demand for domestic express delivery services.

Last year, Shun Feng’s cargo traffic volume was 450,000 tonnes, which Li predicts will climb to more than 600,000 tonnes this year and jump to 1.5 million tonnes by 2015. But Li also admitted that “being short of a comprehensive cargo route network and an airport tailored for air cargo would hinder further growth of the carrier’s cargo business.” Li said another challenge the carrier faces is “limited capacity,” despite its ambitious fleet expansion plan.

Shun Feng has cooperation agreements with other domestic cargo carriers, including Shenzhen Donghai Airlines and Yangtze River Express Airlines, for the lease of cargo aircraft for charter services. It is also negotiating with China’s big three airlines for similar agreements. Shun Feng Express Group is the controlling stakeholder with an 85 per cent stake.

Boeing Shanghai signs deal with UTair

Boeing Shanghai Aviation Services Co., Ltd has announced that it has signed two agreements with UTair Aviation for maintenance and engineering services.

Under one agreement, Boeing Shanghai will provide engineering solutions to support UTair’s incoming fleet of up to eight B767-200ERs, helping the airline develop a maintenance programme,

SF Airlines uplifted 450,000 tonnes of cargo in 2011 and is forecasting to jump to 1.5 million tonnes by 2015.

5

GATEW AYS

Boeing Shanghai celebrates the completion of the 10th base maintenance check for Aeroflot’s B767 fleet at Boeing Shanghai’s hangar at Shanghai Pudong Airport.

develop new interior configurations and prepare a modification programme to assure that the aircraft are in compliance with European and Russian aviation authorities’ requirements. In addition, Boeing Shanghai will provide other services to maximise safe and efficient operations as this new model type enters UTair’s fleet.

Boeing Shanghai also has been awarded a contract for heav y maintenance of the first B767 to be introduced to UTair’s fleet in July. Under a separate contract, Boeing Shanghai recently completed a C-check on a B737-500 aircraft for UTair.

Based in Khanty Mansiysk, Russia, UTair Aviation is an integrated air transport and aircraft services company with over 40 years of experience on the Russian air transport market. UTair operates one of the largest aircraft fleets in Russia and ranks among the top five largest Russian carriers by passenger volume. The airline provides scheduled domestic and international passenger services and helicopter services, as well as airport services and airline catering services.

Meanwhile, Boeing Shanghai and Aeroflot Russian Airlines celebrated the completion of the 10th base maintenance check for Aeroflot’s B767 fleet at Boeing Shanghai’s hangar at Shanghai Pudong Airport.

Under the five-year maintenance agreement signed in September 2010, Boeing Shanghai has completed C checks, pylon modifications and full painting for Aeroflot’s B767s. To date, Boeing Shanghai has completed 29 base maintenance procedures on B767s for nine domestic and international customers.

Boeing Shanghai was established in June 2006 as a joint venture of Boeing, Shanghai Airport Authorities and 6

China Eastern Airlines, offering a broad range of services from engineering, aircraft maintenance and modification to component repair and overhaul and material management.

China Southern delivers prized Quarter Horses

China Southern Cargo played host to some special guests at Tianjin International Airport in May, after a 13hour long journey in a China Southern B747-400 freighter. The unique ‘guests’ were 59 American Quarter Horses which were specifically purchased for National Barrel Racing Championship and the Barrel Racing Grand Prix of 2nd International Horse Culture Festival.

These 59 5-year-old Quarter Horses (including 15 stallions) are worth nearly US$1.5 billion in total and originate from various US states such as California, Ohio, and Kentucky. Transporting 59 horses has led China Southern Cargo into a brand new field of delivery—horse transportation. While China Southern has wide ranging experience transporting live animals including panda, breeding

pigs, minks and cattle etc, this was the first time it had transported horses.

In order to guarantee the success of the uplift, China Southern Cargo set up a professional support team who immediately organised coordination meetings to make clear the handling procedures, link each department involved and specify the respective responsibility, the carrier said.

Three equine specialists were assigned to serve as grooms along with the horses during the flight. They were responsible for monitoring the condition of horses, watching closely for any erratic behavior, food and water if needed, as well as regulating the temperature of the cabin etc.

The aircraft landed as scheduled on the date of arrival. Once the necessary Customs, quarantine and other formalities were completed upon arrival, the China Southern Cargo team worked closely with their ground handling colleagues of Tianjin Airport to ensure that the horses were unloaded safely. Within 40 minutes, the 24 containers were unloaded from the aircraft smoothly, with all the prized horses in perfect condition.

The 59 Quarter horses were then delivered by horse trucks to the isolation field in Beijing for quarantine examination. After the 45-day isolation period, they will be transported directly to the pasture in Erdos in order to take part in the equine events.

The American Quarter Horse is the most popular breed in the US today and is a breed of horse that excels at sprinting short distances. Its name comes from its ability to outdistance other breeds of horses in races of a quarter mile or less with some horses clocked at speeds up to 88.5 km/h, which is fit for barrel racing, reining, cutting, calf roping etc.

China Southern Cargo delivered 59 American Quarter Horses from the US to China without incident, marking the first time the carrier has carried horses as part of its live-animal transport service.

PAYLOAD ASIA | June 2012

GATEW AYS

THAILAND Thai Cargo returns to Schiphol

Thai Cargo has returned to Amsterdam Airport Schiphol after an 18 month absence following the delivery of its newly converted B747-400 freighter in early May. The new weekly maindeck service operates Bangkok-MadrasAmsterdam-Bangkok with ground and ramp handling services provided by Aviapartner. “Our fleet development program is proceeding entirely according to our schedule. Now we are able to offer the Dutch cargo community a combined transport capacity of around 200 tonnes per week,” said cargo regional manager Sales & Operations, Norbert Rockenmeyer.

MALAYSIA Continued weakness in cargo markets: AAPA

Preliminary traffic figures for the month of April released today by the Association of Asia Pacific Airlines

(AAPA) showed ongoing weakness in international air cargo markets while growth in international air passenger numbers continues, bolstered by regional travel.

Airlines based in the Asia Pacific region saw international air cargo traffic, measured in freight tonne kilometres (FTK), register a 7.6 per cent decline compared to the same month last year, reflecting continued weakness in demand. Even with a 4.8 per cent reduction in offered freight capacity, the average international air cargo load factor fell by two percentage points, to 66.3 per cent for the month.

“International air freight markets remain depressed, with Asian airlines recording an overall 4.8 per cent decline in cargo traffic for the first four months of the year, exerting further downward pressure on rates, despite reductions in offered freight capacity,” said Andrew Herdman, AAPA director general.

These same carriers saw a 12.2 per cent increase in the number of international passengers carried in April year-on-year, rising to 17.2 million. In revenue passenger kilometre (RPK) terms, international passenger

demand grew by 10.1 per cent, reflecting significantly stronger demand on regional routes. With traffic growth outpacing an 8.5 per cent increase in available seat capacity, the average international passenger load factor was 76.3 per cent, 1.1 percentage points higher than in the same month last year.

Herdman added: “We’re still seeing welcome growth in passenger demand, but airline profit margins have suffered as a result of the weak cargo market, and the impact of stubbornly high oil prices. Although key Asian economies are still performing relatively well, the operating environment remains challenging, clouded by uncertainties over prospects for the global economy.”

MASkargo adds Ho Chi Minh City to network

MASkargo has commenced its inaugural A330-200F flight tapping the intra-Asia trade with a new twice weekly service to Vietnam. The service into Ho Chi Minh City’s Tan Son Nhat International Airport (SGN) from Kuala Lumpur (KUL) and on to Bangkok (BKK) before returning to KUL.

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GATEW AYS MASkargo said the introduction of this service offers connectivity onwards from its KUL hub to other stations around the world including: Sydney, Shanghai, Taipei, Bangkok, Hong Kong, Manila, Jakarta, Surabaya, Tokyo, Osaka, Frankfurt, Amsterdam, and Sharjah.

“In order to expand our presence along the Intra-Asia network, the flight to Ho Chi Minh City is one of the strategies to tap the growth of the Asian market,” said Mohd Yunus Idris, acting CEO of MASkargo.

“The strategic addition of Ho Chi Minh City into MASkargo’s route network signifies the growing importance of the Vietnamese market and its trade relations with Asian countries,” he added.

Idris added that Ho Chi Minh City has registered a steady cargo growth and MASkargo plans to further support the Ho Chi Minh City trade and economy through capacity and route expansion in its intra-Asia network destinations.

With the launch of its service to Ho Chi Minh City, MASkargo said it will seek commercial partners to help provide an extensive network helping support capacity demand out of Vietnam which will enable network expansion further into the region. This could include joint ventures and formulating special pro-rate agreements with partner carriers.

Vector Aviation has been appointed as the General Sales Agent (GSA) by MASkargo in Ho Chi Minh City.

Malaysia Airlines joins A380 club

Malaysia Airlines (MAS) has taken delivery of its first of six A380s, becoming the eighth operator of the world’s largest passenger aircraft.

“The A380 showcases our latest

premium offering in products and services. This will be our flagship aircraft, offering new levels of comfort, luxury and convenience for long haul travel,” said Ahmad Jauhari Yahya, MAS Group CEO. “With the A380 in our fleet, MAS will reinforce its position as one of the world’s preferred premium carriers bringing great Malaysian hospitality to our customers.”

and work processes that underpin the industry’s commitment to safety.”

He added: “Maintaining an effective safety management system is not just about being in regulatory compliance, it is important to appreciate and understand the processes involved, and ensure that the management of safety is embedded in the operating culture of every organisation.”

Industry must remain vigilant on safety: AAPA

DACHSER opens Malaysia office

Safety performance across commercial aviation is at an all time high, with a major accident rate of just one in every three million flights, but the Association of Asia Pacific Airlines (AAPA) has warned of the need to remain ever vigilant in further improving standards, identify continuing risks and implementing new safety initiatives.

AAPA technical director Martin Eran-Tasker, at a recent safety conference in Singapore, highlighted some of the Asia Pacific region’s safety priorities in 2012. “This year the region will need to focus on a number of factors that can still pose a higher safety risk, including controlled flight into terrain (CFIT), runway safety and wildlife hazards.

“Particular attention also needs to be paid to turboprop and smaller aircraft operations, which often provide services in more challenging environments and experience relatively higher accident rates,” he added.

On the issue of recruitment of the next generation of aviation professionals, Eran-Tasker said: “Recognising that Asia is destined to be the world’s largest air transport market, we need to ensure that the industry continues to attract talented individuals to support future growth.

Training programmes must also evolve, to incorporate the new technologies

Malaysia Airlines has taken delivery of the first of six A380s it has on order.

8

Global logistics provider DACHSER is continuing its worldwide expansion plan with the recent establishment of a joint venture in Malaysia from earlyMay. DACHSER Malaysia Sdn. Bhd. offers a range of air and sea freight services, to customs clearance and other logistics services. DACHSER’s joint venture partner is Malaysian entrepreneur Ah Seng Tan (holdings in Multitrans, Megalift).

“In Malaysia we are now present in another Tiger State following Singapore and Thailand, enabling us to develop both international and inner-Asian freight services for the benefit of our customers,” noted Thomas Reuter, managing director DACHSER Air & Sea Logistics.

CEO of DACHSER Malaysia is Huned Gandhi, a former member of the DACHSER India management team. He reports to Detlev Janik, chief regional director South/South-East Asia, who is based in Singapore. DACHSER is present in Asia with branch offices in Bangladesh, China, Hong Kong, India, Singapore, South Korea, Taiwan and Thailand and recently announced its growth strategy for the DACHSER Air & Sea Logistics business field with the aim of extending its footprint to 220 locations in 49 countries by 2017.

Huned Gandhi

PAYLOAD ASIA | June 2012

GATEW AYS

AUSTRALIA Qantas confirms major restructure

Effective 1 July, the Qantas Group will have two distinct businesses – Qantas International and Qantas Domestic – instead of Qantas Airlines. In a major restructuring move, the Australian airline confirmed changes to its executive team in the next phase of the five-year transformation plan launched in August 2011.

After the restructuring process, Qantas International and Qantas Domestic will have their own chief executives and their own operational and commercial functions. Even the financial results will also be reported separately. Alan Joyce, chief executive Qantas Group, said the restructure would strengthen the Qantas Group’s portfolio and help deliver its strategic goals.

TAIWAN

EVA Air orders three B777-300ERs

Taipei-based EVA Air has finalised an order with Boeing for three B777-300ERs aircraft, with purchase rights for an additional four aircraft. “The 777-300ER is the flagship of our long-haul fleet and will play an important role in growing our global operations,” said Chang Kuo-wei, president of EVA Air. “The highly efficient, technologically advanced airplane will enhance the premium flying experience for passengers and will also allow us to open new destinations around the world.”

The Taiwan-based carrier – which was the launch customer for the B777-300ER in 2000 – is in the midst of growing its fleet to increase frequency to mainland China and new destinations in North Asia.

In addition to the Boeing order for three B777-300ERs, EVA Air will also lease four B777-300ERs from GE Capital Aviation Services (GECAS), adding a total of seven new 777-300ER airplanes to its long-haul twin-aisle fleet. EVA Air currently operates 15 B777-300ERs.

FIJI Air Pacific to relaunch in 2013 as Fiji Airways

Air Pacific, Fiji’s national airline, continues to prepare for a significant relaunch in 2013 which will see it rebrand to its original name, ‘Fiji Airways’, when 10

Air Pacific, Fiji’s national airline will rebrand to its original name, ‘Fiji Airways’ when it takes delivery of its first A330-200 in 2013.

the airline’s new Airbus A330-200 fleet takes to the skies in June 2013. The new aircraft will be delivered in March 2013, and will fly to Fiji from Sydney, Auckland, Hong Kong, and Los Angeles.

The carrier also announced in May, three key strategic partnerships it said will further enhance international travellers’ in-flight experience onboard the ‘new’, revitalised airline.

“Air Pacific is delighted to announce a number of new partnerships that will allow us to provide passengers travelling to South Pacific even more reasons to fly with us. We’re working with Panasonic Avionics Corporation, Weber/Zodiac and Singapore Airlines Engineering Company (SIAEC) as part of our commitment to providing a world-class flying experience for our customers onboard the new A330-200s in 2013 and we’re confident they will be impressed. These deals are consistent with our desire to work with the very best, as we continue to revitalise the airline and prepare to relaunch as ‘Fiji Airways’next year,” said Air Pacific’s MD and CEO David Pflieger.

In the last 12 months, the airline has ordered the three new A330-200 aircraft that will be powered by Rolls-Royce’s Trent 700 engines, it has increased flights between Fiji and Sydney from 7 to 13 times weekly and it has made investments in revitalising and modernising the airline’s product and services.

“Air Pacific has a vision to become a best-in-class airline and over the past 24 months we have made significant progress with our turnaround plan,” said Pflieger. “The relaunch of Air Pacific in 2013 as ‘Fiji Airways’ marks an exciting new chapter for us.”

Air Pacific and its subsidiary Pacific Sun together fly more than 300 flights per week operating B747, and B737 aircraft from Fiji to 15 cities in 10 countries.

Destinations include Hong Kong, US,

Australia, New Zealand, Samoa, Tonga, Tuvalu, Kiribati, Vanuatu, and Solomon Islands.

India Indian aviation facing most uncertain phase

The Centre for Asia Pacific Aviation (CAPA)’s annual outlook for fiscal 201213 states that Indian aviation was facing its most uncertain phase in more than a decade. After reporting estimated record losses of just over US$2 billion in the year ended 31 March 2012, the country’s carriers were facing “an equally challenging year ahead”.

“Weak balance sheets, increasing costs, regulatory uncertainty, a sluggish Indian economy and a difficult global environment will continue to pile the pressure on airlines, especially the poorer performing carriers,” CAPA said.

Though CAPA has estimated that there will be 7-8 per cent domestic capacity growth in the coming year, it has cautioned that the government of India might have to temporarily shut down Air India for two-three months due to human resources issues.

Commenting on the performance of the carriers, in the 12 months ending March 2013, Air India will once again be the worst performer in the industry and report a loss of INR70 billion (US$1.3 billion). Kingfisher Airlines is projected to lose INR12-14 billion (US$220-260 million). However, the remaining four private carriers combined could post a modest profit of approximately INR11 billion (US$200 million).

CAPA has also pointed out that Air India could face a temporary shutdown due to human resources issues. The main hurdle that Air India has to overcome emanate from the merger between PAYLOAD ASIA | June 2012

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GATEW AYS Air India and Indian Airlines. “The integration of human resources has been ineptly handled and almost willfully ignored, with nobody within the airline senior management or at the level of the government having taken responsibility,” comments CAPA, adding “this has been a constant source of tension within employee ranks and after years of neglect a committee was established in 2011 to look into staff grievances. The committee submitted its report to the Ministry of Civil Aviation in early 2012. In the absence of any strategy of its own to deal with the issues at hand, the Government is left with virtually no option but to implement the report’s recommendations.”

Naki Air Cargo to begin India-UAE service

Naki Air Cargo, an air-cargo charter company based in the US state of Florida is preparing to start all-cargo air service directly from Vishakapatnam, India, to Dubai, UAE according to Naki’s COO and director of flight operations, Roger Nair. The service will be of major economic benefit to exporters in Vishakapatnam, home to one of India’s leading pharmaceutical industrial sectors, as well as the burgeoning IT industry based in Andhra Pradesh as well as the huge expatriate population living in the UAE, who regularly need to ship cargo home.

Naki will be offering this service in conjunction with a UAE based air-cargo operator, and has the capacity to utilise either A300-600 or B727-200 freighter, depending on the cargo needs of its customers. Naki Air Cargo’s operation will be able to connect with major long-haul cargo carriers to provide seamless connections to Europe and North America, and to provide a global reach for its customers.

The service will be of major economic

Naki Air Cargo is aiming to tap the growing pharma and IT sectors based in Andhra Pradesh.

12

benefit to exporters in Vishakapatnam, home to one of India’s leading pharmaceutical industrial sectors, as well as the burgeoning IT industry based in Andhra Pradesh as well as the huge expatriate population living in the UAE, who regularly need to ship cargo home.

Middle East Saudi joins SkyTeam alliance

Saudia (SV), formerly Saudi Arabian Airlines, joined SkyTeam Tuesday, becoming the alliance’s first member airline from the Middle East. “Joining SkyTeam is an integral part of Saudia’s long-term transformation strategy, which includes rebranding our airline, restructuring core operations and enhancing onboard products and airport services,” Saudia director general Khalid Al-Molhem said.

From its hubs in Jeddah, Riyadh and Dammam, SV operates a network throughout the Arabian Peninsula, the Indian Subcontinent and Northern Africa. Saudia adds 51 new destinations to SkyTeam’s global network, including 23 within Saudi Arabia. SkyTeam is also the only alliance with an active cargo component.

Muscat air freight capacity to more than double

Freight capacity at Muscat International Airport – presently undergoing development – will more than double to 250,000 tonnes per year according to Vic Allen, acting CEO of the Oman Airports Management Company (OAMC).

Allen said the Muscat International Airport’s current annual capacity is 99,000 tonnes, but the first phase of development will deliver improved temperaturecontrolled storage and introduce an efficient semi-automated cargo handling system.

Three development areas have been earmarked around the new airport site to handle commercial and light industrial operations, with Allen adding that phase two of the freight terminal development will see capacity doubled to 500,000 tonnes per year.

“Muscat International Airport is currently putting through about half the air freight that other airports of our size would put through, so we know there is a lot of potential. Phase one construction of the new cargo terminal will give us

two and half times the capacity we have today and the ability to easily expand to five times.”

SkyCargo to launch Washington belly service

Emirates SkyCargo will launch a new service between Dubai and Washington Dulles International Airport, the seventh US airport the UAE-based cargo carrier will serve. The Washington service will kick off on 12 September utilising the bellyhold capacity of a B777-300 ER passenger aircraft. Earlier this year the cargo division of Emirates started operating to Dallas-Fort Worth and Seattle, in addition to its existing services to New York, Houston, Los Angeles and San Francisco.

Ram Menen, Emirates’ senior divisional vice president of cargo, said Emirates now offers the fastest trade link between Washington and the Middle East. “Our Dubai hub is strategically located within eight hours of two-thirds of the world’s population and can connect US businesses to both established trading points in the Far East, as well as emerging markets in the Indian subcontinent, Africa and the Middle East,” he said.

Trade between the US and the UAE increased 43 per cent last year to a record US$18.3 billion as the Middle East state became the US’ 19th-largest export destination, according to the US Census Bureau’s Foreign Trade Division. The UAE’s exports to the US soared to $2.4 billion last year, an increase of 113 per cent from 2010.

Oman to acquire freighter for India-China

Muscat-based Oman Air has plans to add a dedicated freighter to its fleet, even as the airline continues to make losses.

The freighter – probably a leased A300 or A310 and converted from passenger service – would be inducted by the end of this year and used for services from India and China to Muscat. CEO Wayne Pearce said that there was a lot of freight Oman Air could access from the east.

The carrier has seen its passenger numbers go up by 30 per cent this year prompting Pearce to say that Oman Air was planning to add a few A330s prior to the arrival of six B787s from 2015 to its present fleet of 26 comprising 15 B737800s, four A330-200s, three A330-300s, two Embraer SA E175 regional jets and two ATR 42. It also wants to add some PAYLOAD ASIA | June 2012

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GATEW AYS single-aisle B737s. “We are doing studies on whether we should add extra aircraft earlier,” Pearce said in Dubai recently.

Emirates expands Dubai docking facility

Emirates Airline has signed a contract with local UAE firm Excel, based in Ajman, supported by Germany’s Gunzburger Steigtechnik, to develop an additional multi-aircraft docking system at their Dubai engineering facility. The new operation will be in addition to the four docking systems already in place in four of Emirates eight hangars. The contract will amount to AED28 million (US$7.6 million).

Emirates new multi-aircraft docking facility is the latest component of Emirates’ commitment to industryleading engineering technology and facilities. At the start of 2012, Emirates will begin construction on a state-of-theart Engine Shop which complements the present Test Cell Facility in Dubai. The growth of the Emirates fleet and the subsequent number of operating engines have necessitated the need for an inhouse Engine Shop in Dubai to provide the most cost-effective, efficient engine maintenance.

Saudi boosts Chad service with second B747F

Saudi Airlines Cargo has increased freighter frequency from its Jeddah hub to N’Djamena in Chad with the addition of a second B747F flight each week. The carrier started the original service in June 2011, but Amer Abu Obeid, sales director for the Middle East, North Africa and Turkey, said cargo demand has been growing with Saudi Airline’s 19 freighter connections per week to Europe via Jeddah proving attractive to shippers.

“The cargo market into Chad is growing from different points in our network,” he said. “This second flight into N’Djamena is another step toward achieving Saudia Cargo’s ambitious plans to expand its global reach, with eyes on Africa, in particular.”

Qatar launches two Iraq services

Qatar Airways launched, from 23 May, its 2012 Middle East route expansion with Iraq being added to the airline’s growing network. The northern Iraqi city of Erbil and capital Baghdad will join the 14

airline’s international portfolio of routes over a period of two weeks. Also from 23 May, scheduled flights will begin to Erbil, followed on 7 June by operations to Baghdad. Both routes will be operated four-times-a-week non-stop from Qatar Airways’ Doha hub.

The addition of Iraq marks yet another move by the Doha-based airline to venture into high demand, underserved markets. With the launch of two routes in Iraq in the space of just two weeks, Qatar Airways will take its new start-ups in 2012 to six destinations, with a further seven routes planned by the end of the year. Qatar Airways Chief Executive Officer Akbar Al Baker said Iraq had long been under the microscope by the company’s planning team, essentially due to lack of international air services in a country that had limited capacity for many years due to political instability.

“Now we believe is the right time to enter Iraq due to demand and infrastructure changes in a country that warrants more business and greater air access,” he said.

Over the next few months, Qatar Airways launches flights to a diverse portfolio of new routes – Perth, Australia (July 3); Kilimanjaro, Tanzania (July 25); Mombasa, Kenya (August 15); and Yangon, Myanmar (October 3).

EUROPE & CIS ABC becomes latest IATA member

AirBridgeCargo Airlines, part of VolgaDnepr Group and Russia’s largest all-cargo carrier, has become an active member of the International Air Transport Association (IATA). “Membership of IATA has been an important goal of AirBridgeCargo since it became an independent airline under the umbrella of our parent, Volga-Dnepr Group,” Arslanova, said. “We made a strategic step towards IATA membership by successfully passing the IOSA audit and we are now extremely proud to be among 243 world airlines in this association.”

AirBridgeCargo is already actively participating in IATA programmes designed to improve safety, quality and efficiency in the air cargo supply chain.

It has recently completed the audit to be listed in the IATA Operational Safety Audit register, an internationally accepted evaluation system designed to assess the operational management and control systems of airlines. It is also an Associate member of Cargo 2000, the IATA interest

group working to improve the quality of air cargo, and is working to adopt the Association’s e-freight programme.

First Panalpina liveried B747-8F takes off

Atlas Air Worldwide Holdings, Inc. (Atlas Air) took delivery of its first newgeneration B747-8 Freighter which it will operate on a wet-lease basis on behalf of Panalpina, the Swiss-based freight operator. This marks the first time in Panalpina’s history that an aircraft has been painted in the company’s livery. The aircraft named the ‘Spirit of Panalpina’ was delivered to Panalpina in May and will immediately enter scheduled service in Hong Kong within Panalpina’s unique own controlled air freight network.

From Hong Kong, the B747-8F flew on to Luxembourg with the first cargo on board. The aircraft is being deployed on the Luxembourg / Huntsville route as well as other routes. Atlas Air has ordered nine 747-8 Freighters, two of which they will operate for Panalpina.

LUG wins China Southern contract

LUG air cargo handling, the oldest independent ground service company at Frankfurt/Main airport, has signed longterm contracts with two new clients since the beginning of the year: China Southern and Air Baltic. The handling contract with Guangzhou-based China Southern covers six full freighter flights per week and a potential annual cargo volume of some 45,000 tonnes. LUG noted it considerably strengthens LUG’s portfolio of Far East carriers which includes ANA, Korean Air Cargo, Thai Cargo, and SriLankan Aircargo. Latvia-based Air Baltic Corporation, on the other hand operates daily flights to Frankfurt/Main with limited cargo capacity. The potential annual handling volume in Frankfurt is 150 tonnes.

Air France Cargo to slash freighter capacity

Air France will reduce its freighter capacity by 20 per cent as part of a costcutting and efficiency program aimed at returning to profitability. Air France Cargo will cut its fleet of three B747-400 and two B777 freighters to four aircraft. It is likely to dispose of one of the B747s rather than the newer B777s. The cargo unit also “will step up efforts initiated three years ago to reduce costs and improve economic PAYLOAD ASIA | June 2012

GATEW AYS performance,” Air France said.

Air France Cargo will fully integrate with its Dutch partners KLM Cargo and Martinair. It said it will seek synergies in its domestic and overseas stations but did not give details.

Once Europe’s leading all-cargo operator, Air France Cargo has steadily reduced its exposure to freighters by transferring them to KLM’s subsidiary Martinair. KLM Cargo also has slimmed to two B747-400 freighters as it also switched aircraft to Martinair, which now operates six B747-400s and seven MD-11 freighters. Air France-KLM’s cargo loss widened to US$88.4 million in the first quarter from $11.7 million a year earlier.

Air France-KLM’s cargo revenue shrank 8.3 per cent in April from a year earlier on 3.3 per cent less capacity.

Only India, China carriers steady on ETS opposition

A total of 10 Chinese and Indian carriers have broken the European Union’s law requiring them to comply with the Emissions Trading Scheme (ETS), while all other international carriers flying to, or from Europe have complied, the EU’s climate chief said.

The controversial law requiring all airlines to participate in the EU’s Emissions Trading Scheme has prompted massive global outcry and threats of a trade war. But despite the cacophony of protest and threats of non-compliance and trade sanctions, only eight Chinese and two Indian carriers have delivered on those threats not to comply, while more than 1,200 airlines have met the EU’s requirements.

“We have given them (India and China) until mid-June to report back their data,” EU Climate Commissioner Connie Hedegaard told a news briefing without identifying who the airlines were that failed to meet the 31 March deadline.

Penalties for breaking the EU law start at 100 euros per tonne of carbon airlines fail to pay for.

New weekly Zurich, Tampa service

Swiss WorldCargo has introduced a new weekly non-stop flight between Zurich and Tampa International Airport, Florida in partnership with Edelweiss Air using A330 equipment. “The addition of the new non-stop Zurich-Tampa flight further strengthens Swiss WorldCargo’s position in the North American market, where SWISS’s airfreight division already offers services to New York (JFK and www.payloadasia.com | June 2012

Newark), Boston, Chicago, Miami, Los Angeles, San Francisco, Montreal and Toronto,” it said. This year’s summer schedules will also see the resumption of the seasonal Edelweiss Air flights from Zurich to Vancouver and Calgary (Canada).

Virgin adds Vancouver, new Japan GSA

Vancouver is the newest destination in Virgin Atlantic Cargo’s international network following the launch of four flights a week to London Heathrow in May, adding to its existing nine, long-haul destinations in the US. In May, Virgin Atlantic resumed weekly A340-600 flights between London Heathrow and Chicago having earlier also added a further three flights a week from San Francisco.

Dan Parker, VP commercial at Virgin Atlantic Cargo noted that Vancouver is one of Canada’s largest industrial centres and has thriving business sectors such as software development, biotechnology, aerospace and perishables.”

Meanwhile, in Japan one of Japan’s leading air cargo general sales agents, Western Associates Group, has established a new company, Gateway Partners Inc. (GPI), to provide dedicated representation for Virgin Atlantic Cargo. Gateway Partners will devote their time to working with the airline’s customers in Japan focusing on maximising freight, courier and express revenues for shipments carried on Virgin Atlantic’s daily flight from Narita to Heathrow.

“Japan is an extremely important market for Virgin Atlantic and after the devastating earthquake and tsunami that struck north-east Japan in 2011, we have seen some improvement in recent months,” said Parker. “Exports to the UK and Europe remain challenging but cargo bound for the US has increased significantly. The recovery of the Japanese automobile market and the carriage of specific electronics products such as solar energy equipment are encouraging signs and we are confident GPI will also give us fresh outlook and approach in the market.”

Cargolux begins tapping booming Chongqing

Cargolux Airlines International has begun twice weekly freighter service from Luxembourg to Chongqing. Cargolux Airlines International has started a twice-weekly freighter service linking Luxembourg to the booming Chinese interior city of Chongqing. Schedules also take in stops at Doha, Sharjah, Baku,

Singapore, Kuala Lumpur and Tbilisi.

Over the last year Lufthansa, Cathay Pacific and Qantas have all started new freighter services to the thriving city of 32 million people, which has rapidly developed into a global center for the electronic, automotive, chemical and pharmaceutical industries.

Cargolux reported a net loss of US$18.3 million in 2011, from a $59.8 million profit in 2010, with Asian volumes down by 15.4 per cent year-on-year. The carrier took delivery of the fourth of 13 B747-8 freighters on order in May, replacing a B747-400F as part of its fleet rollover program that will successively replace its existing B747-400F fleet.

Americas US agrees to mutual recognition with EU, Canada

The US Transportation Security Administration (TSA) has reached a mutual recognition agreements with Canada and the European Union on their respective air cargo security regimes starting from 1 June. This recognition eliminates duplication of security controls and the need to implement different regimes depending on the destination of air cargo and will substantially cut costs and speed up cargo flows.

“We are getting rid of duplication of security controls, while preserving high levels of security. This is a big step forward and it will have a major business impact.

Air freight is by definition naturally urgent. Cutting out the duplication of security procedures will mean huge savings for cargo operators in terms of time and money,” said Siim Kallas, vice president of the European Commission responsible for transport.

Air cargo traffic between the EU and the US amounts to over a million tonnes a year traveling each way across the Atlantic. In 2011 goods transported by air from the EU to the US alone were worth more than 107 billion euros, which is 27 per cent of the value of all goods exported by air by the EU. The EU and US are each other’s single most important destination for air cargo.

The EU also recognises the US cargo security regime as meeting the recently adopted EU requirements for cargo being flown into the EU from third countries.

Therefore, no additional measures are required from air carriers transporting cargo shipments from the US to the EU. 15

GATEW C ALENDAYS AR

China Air Cargo Supplement in July issue

Advertising offices: Worldwide Alyssa Tan Tel: +65 6521 9767 Fax: +65 6521 9788 Email: alyssa.tan@tenalpsasia.com

Russia Sergey Stanovkin Tel: +7 495 7750735 Fax:+7 495 7750736 Email: consulting@dars.ru

The July issue of Payload Asia will feature a supplement focusing on China’s France United Kingdom/Benelux/ dynamic air cargo Daniel Solnica Scandinavia market, including Tel: +33 1 4246 9571 Stuart Smith Fax: +33 1 4246 8508 Tel: +44 20 8464 5577 coverage from the Email: dsolnica@club-internet.fr Fax: +44 20 8464 5588 recent Air Cargo Email: stuart.smith@ssm.co.uk Japan China event in Shanghai. The air cargo market in China continues to Katsuya Watanabe United States, Canada evolve, impacted by a number of domestic and international factors.

Tel: +81 90 5321 6881 Matt Weidner Fax: +81 3 6823 8994 The lethargic economies of the US and Europe have severely dampened Tel: +1 610 486 6525 Email: kwatanab@crocus.ocn.ne.jp Fax: +1 610 486 6527 cargo movements out of China, resulting in over-capacity at a number of Email: mtw@weidcom.com hubs while others, like Chengdu thrive. Chengdu in particular continues to grow into a significant cargo hub thanks to Chinese central government moves to push industrial development westward in the country. China’s

air cargo market has also seen a ‘rebalancing’ of sorts, with imports – Sep 5 Payload Asia Awards 2012

Singapore largely from Germany – beginning to offset the traditional one way flow www.payloadasia.com

of cargo out of China. The July supplement will examine the changing

face of the Chinese air cargo market, as well as the changing lineup of Oct 2-4

TIACA Air Cargo Forum (ACF 2012) players involved in the sector. For editorial participation and contributions

Atlanta, USA www.tiaca.org/tiaca/ACF.asp please contact the Editor, Donald Urquhart at email: donald.urquhart@

tenalpsasia.com or call him at +65 6521 9760 (GMT +8). For advertising Oct 8-12 FIATA World Congress 2012 in July supplement, please contact Alyssa Tan at email: alyssa.tan@

Los Angeles, USA www.fiata.com tenalpsasia.com or call her at +65 6521 9767 (GMT +8).

2012 CALENDAR OF EVENTS

Tommy Pilarp

Michael Sudmann

Chris Notter

Sebastiaan Scholte

P. Balasubramanian

Des Vertannes

Henrik Ambak

Winfried Hartmann

Michael G. Vorwerk

José Manuel Santos

Arno Hoitink

Ross Marino

Lothar Moehle

Nils Knudsen

Léon Jankowski

Hjoerdis Stahl

Remo Eigenmann

Lothar Moehle

Steven Polmans

David Ambridge

Olivier Bijaoui

Jérôme Lorrain

Myles Nichols

SUCCEEDING IN TOUGH TIMES –

T H R O U G H E F F I C I E N C Y , Q U A L I T Y , S I M P L I C I T Y A N D P R O F I TA B I L I T Y

20th-22nd June 2012 Hyatt Regenc y Paris-Charles de Gaulle

As yields and volumes stagnate or decline, we must not be the eternal victims. The answer is to reduce complexity, remove unnecessary cost and make it easier to do business with us as a logistics team. So, how do we generate more efficiency, greater competence and improve consistency and customer service?

In line with the announcement made at the 2011 event we are adopting a charity - Save the Children. We will stage a fun based and topical auction, with all proceeds going towards a great cause. In support of this we are now seeking donations of prizes and would welcome your suggestions for auction lots.

Email parveen@evaint.com

Hosted by

Bottled water sponsor

Platinum sponsor

Gold sponsor

Silver sponsor

Media partners

Evening cocktail reception

Supported by

Lanyard sponsor

Interested in sponsorship or exhibiting?

Contact: conferences@evaint.com or call +44 (0)208 668 9118 Register now to attend: http://evaint.com/our-events/air-cargo-handling-conference-2012 16

PAYLOAD ASIA | June 2012

EXPR E S S & MA IL Kintetsu World Express posts record 2011

Major Japanese international freight forwarder Kintetsu World Express, Inc. (KWE) said that its group net profit rose 21.1 per cent in fiscal 2011, which ended on 31 March, from the previous fiscal year to US$119.31 million, the largest amount on record. Tokyo-based KWE’s group operating revenue edged down 1.2 per cent in fiscal 2011 from fiscal 2010 to $3.31 billion. Its group operating profit increased 16.2 per cent to $172.80 million.

KWE said that although its mainstay air cargo operations were sluggish, it vigorously pushed ahead with costcutting efforts, such as closing or merging some business offices, resulting in the record net profit. Looking back on the last fiscal year, KWE said in an earnings release: “The global economy was generally lackluster because of growing concerns about a recession amid the widening debt crisis in Europe and signs that growth in such emerging economies as China and India was also slowing.”

“Japan’s economic outlook grew increasingly uncertain for various reasons, including the effects of the Great East Japan Earthquake and heavy floods in Thailand, a slump in overseas demand and the prolonged appreciation of the yen. But the Japanese economy began to recover gradually in the second half of the last fiscal year,” KWE said.

KW E said that it s air c argo transportation volume fell in the last fiscal year as a result of the Great East Japan Earthquake and a decline in global demand for such products as flat-panel televisions and personal computers, although its sea cargo services grew moderately.

FedEx to build new hub at Kansai

FedEx Express, an operating company of FedEx Corp, announced its decision to establish a new FedEx North Pacific (NPAC) Regional Hub at Kansai International Airport (KIX) in Osaka, Japan. The NPAC regional hub will serve as a consolidation point for shipments from northern Asia to the US. The 24-hour NPAC regional hub also will continue to operate as an international gateway for our customers in western Japan The agreement with Kansai International Airport for the new 25,000 square-

www.payloadasia.com | June 2012

meter facility includes customs clearance operations, ramp operations, sort and transhipment operations. It is expected the facility will be in operation in spring, 2014.

The role of the FedEx Asia Pacific Hub in Guangzhou, China remains unchanged, FedEx said.

“Asia is said to be the powerhouse of the world economy, and its trade volume is expected to reach US$14 trillion by 2015,” said David L. Cunningham, Jr., president, Asia Pacific, FedEx Express. “With the establishment of the FedEx NPAC Regional Hub, we will be able to provide a superior level of service to our customers within and outside of the APAC region. I believe the new facility will play a major role in contributing to Asia’s growing economy.”

Chapman Freeborn tracks in real-time

Chapman Freeborn Airchartering has further strengthened its specialist On Board Courier (OBC) product with the introduction of a new online tool for tracking shipments globally.

In addition to receiving regular updates directly from the company’s Colognebased OBC team, clients can now log in and view real-time updates on the status of their cargo – wherever it is in the world.

UPS expands into Nicaragua, Honduras

Global logistics provider UPS expanded its UPS Express Freight service into Nicaragua and Honduras, two emerging economies that count the US as their No. 1 trading partner.

“Trade between these two countries and the US has grown at a remarkable rate in recent years,” said Scott Aubuchon, director of International Air Freight, UPS. “US imports from Nicaragua have been growing at a rate of 21 per cent per yearon-year the last two decades—10 times faster than the latest IMF GDP growth forecast of the US economy for 2012.

“The growth we began to see after the 2006 Dominican Republic-Central America-US Free Trade Agreement (CAFTA-DR) is now accelerating with the recent trends in near-sourcing,” Aubuchon added.

A rising presence in the automotive industry, Honduras is the third largest exporter of automobile wiring harnesses to the US. The country’s recent diversification of exports over the past decade from primarily agricultural goods

to industrial goods has made the US and Germany two of its largest export trading partners, with 65 per cent of those exports bound for the US. Approximately 51 per cent of Honduran imports are from the US, followed by Guatemala and Mexico.

Approximately 58 per cent of Nicaragua export commodities are shipped to the US, including seafood, apparel and precious metals such as gold. Among the Latin American countries involved in CAFTA-DR, Nicaragua has become the fastest growing exporter to the US, while Nicaragua’s largest import partners include the US, Venezuela, Costa Rica and China.

Indian courier company opens in Bahrain

First Flight Couriers, one of India’s domestic and international courier companies, has launched its Bahrain office. Bahrain has easy access to Saudi Arabia, Kuwait and Qatar and continues to make significant investments in its logistics infrastructure, the company said.

“With the shortest travel time between its seaport, airport and the logistics processing zones of anywhere in the Gulf, Bahrain offers the best location,” said First Flight Couriers (Middle East) managing director, Johnson Mooda Thomas. First Flight has offices in Canada, US, UK, Singapore, Malaysia, Nepal and 1,000 offices in India.

FedEx acquires Brazilian Rapidão Cometa

FedEx Corp. has announced that it has signed an agreement to acquire the Brazilian transportation and logistics company, Rapidão Cometa Logística e Transportes S.A., which has been one of FedEx’s authorised representatives in Brazil for the past 11 years, the latest step in FedEx’s strategy for profitable growth in Latin America. FedEx said the acquisition will further enhance FedEx Express international and Brazil business offerings and continues a longterm commitment to the growing Latin American region.

This acquisition will afford FedEx Express’s customers access to Rapidão C o m e t a’s n a t i o n w i d e d o m e s t i c transportation and logistics network.

FedEx expects that the transaction, which is subject to customary closing conditions, will close in the third quarter of 2012.

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LO GIS TI C S Panalpina GDP certified at Schiphol

Panalpina, a leading provider of supply chain solutions, continues to obtain GDP (Good Distribution Practice) certifications at strategic locations around the globe to meet the increasingly stringent global and country-specific requirements for storing and transporting temperature-sensitive products.

Panalpina is currently operating the only facility for cross-docking and interim storage with airside access at Amsterdam Schiphol Airport with an official GDP certification issued by the Dutch Ministry of Health. GDP ensures that medicinal products are distributed to retail pharmacists and other persons entitled to sell medicinal products to the general public without any alteration of their properties. Panalpina’s unique state-of-the-art facility at Amsterdam Schiphol Airport has temperaturecontrolled cells for 2 to 8 and 15 to 25 degrees Celsius. It also offers re-icing services, as well as packaging services for pharmaceutical customers. The facility is part of Panalpina’s network of Centres of Excellence, which cater to the needs of the healthcare industry and all adhere to GDP.

Move One overcomes Mongolian challenges

Logistics provider Move One recently completed a challenging shipment from the US to Mongolia for a global manufacturer of industrial tools and equipment. The company entrusted Move One with the delivery of oversized cylinders, containers, and batteries to serve Mongolia’s rapidly growing mining industry. The purchase order included three shipments – normal container loads, individually loaded break bulk shipments by sea, and a dangerous goods (DGR) shipment of lithium batteries by air.

As there are no direct flights from the US to the Mongolian city of Ulaanbaatar, Move One said it secured a flight to Beijing, China for the DGR shipment of lithium batteries. But as land transportation was the only option to forward the cargo to its final destination, Move One coordinated the arrival of the batteries with the other freight arriving via ocean and consolidated all shipments for a single convoy of land transportation.

With some of the world’s largest 18

untapped reserves of gold, coal and uranium, Mongolia is a growing market for specialist logistics companies.

New DHL logistics hub at Brussels Airport

DHL Global Forwarding is to build a new logistics centre at Brussels Airport.

With 23,000sq metres of warehouse space, the facility will unite DHL Global Forwarding Belgium’s air freight activities under one roof at Brucargo West. The new building also provides dedicated areas, including a 1,750sq metre temperature-controlled space for life science customers and customers with other particular requirements.

Jean-Claude Delen, CEO of DHL Global Forwarding Benelux & France, said: “Brussels Airport is our country’s second economic driver, providing 20,000 direct and 40,000 indirect jobs. Through this €27 million investment, DHL Global Forwarding is reinforcing its strategy to focus on the specific logistics needs of our various key industry sectors.”

Anti-trust penalty pushes Panalpina to Q1 Loss

The massive fines levied on numerous freight forwarding groups by the EU Anti Trust Commission in March have had a devastating effect on profits and one company at least is preparing to appeal the penalty imposed on them.

In releasing its financial results, Panalpina says the total €46+ million penalty imposed by the EU Antitrust Commission in March has resulted in the Swiss logistics company recording a €33.3 million loss in the first quarter of this year. The Group reported a gross profit decrease of three per cent (+1 per cent currency adjusted) compared to the first quarter of 2011. Gross profit margin increased to 23.6 per cent.

Volumes in Air Freight were affected by a negative market and the profitability restoration program, down eight per cent on the previous year while ocean freight reached a record high, outperforming the market, up seven per cent against 2011.

Commenting on the penalty imposed for their part in the cartel activity Panalpina CEO Monika Ribar said: “We believe the amount (of the fine) is not justified, which is why we are going to appeal the decision to the European General Court.”

Of the current financial statement she

continued: “While we did very well in ocean freight, gaining market share, we knew that the first quarter would be a difficult one for air freight, especially in comparison to last year’s exceptional first quarter. In anticipation of the difficult market environment and a challenging 2012 we already reacted last year and introduced cost containment measures.

This led to a flat development of the operating expenses quarter-on-quarter.”

K+N Japan receives medical device license

Japan’s Chiba Prefecture Government has granted Kuehne + Nagel Japan a medical device manufacturing license (packaging, labeling and storage) for its logistics facility in Ichikawa.

The new designation marks an important step in the company’s further development of industry specific solutions tailored to the needs of the pharmaceutical and healthcare industry in Japan, it said.

The newly obtained license allows Kuehne + Nagel to perform activities within the manufacturing processes of medical devices prior to their distribution to the market. Specifically, Kuehne + Nagel can provide three main areas of services, namely the packaging, labeling and storing of medical devices. As part of the licensing requirements, Kuehne + Nagel has also appointed a dedicated on-site technical specialist for medical device manufacturing at its logistics facility in Ichikawa.

New Malaysian facility for Agility

To meet what it says is the growing demand for integrated logistics services in Malaysia, Agility has relocated its Penang warehouse and office to a new state-of-the-art facility with approximately 5,574 sq m of warehouse space and 1,858 sq m of office space.

Morten Damgaard, CEO, South East Asia & Malaysia, said: “The commissioning of this facility underpins Agility’s emerging markets growth strategy and is a testament to the successful expansion of our contract logistics business in Malaysia and the Asia Pacific region.”

At this new location, Agility will offer a comprehensive portfolio of distribution, storage and value-added supply chain services. Featuring 4,100 standard PAYLOAD ASIA | June 2012

LO GIS TI C S pallet capacity, bonded and non-bonded storage areas, air conditioning, humidity control, CCTV and alarm surveillance, the facility enables Agility to provide its customers with fast and secure freight handling.

Hacis speed its road feeder services

Hacis (Hong Kong Air Cargo Industry Services Limited – the road feeder and added-value services arm of Hactl) is equipping all of its air cargo road feeder vehicle fleet with the new Intermodal Transshipment Facilitation Scheme (ITFS) system.

Following the mandatory implementation of the Road Cargo System (ROCARS) in November 2011, ITFS was launched by the Hong Kong Customs & Excise Department (C&ED) to facilitate the faster passage of air-land intermodal transhipment cargoes between Hong Kong and Mainland China.

Under ITFS, such cargo will only be subject to one inspection, at either a land boundary control point or the Hong Kong International Airport (HKIA), and Customs clearance is shortened from up to three hours, to under five minutes.

ITFS registration of vehicles involves the fitting of a C&ED-approved GPS transmitter and an “E-Lock”. When the container passes through C&ED’s control points, the vehicle does not need to stop, as E‐Lock readers read its smart identity card, “lock” it and allow it to pass through unless it is selected for Customs inspection. The sealed vehicle can then be tracked via its GPS all the way to destination. To further speed up border processes, dedicated ITFS channels have been established at the Lok Ma Chau and Shenzhen Bay control points.

Hacis will register its whole truck fleet for ITFS. These vehicles operate its SuperLink China Direct scheduled daily express road feeder services, to and from the company’s six inland cargo depots throughout China’s heavilyindustrialised Pearl River Delta (PRD) region and Fujian Province.

Kenneth Bell, Managing Director of Hacis, comments: “We look forward to the future implementation of the ‘Quick Pass Mode’ using the same E-Lock and GPS technology, which will allow Customs inspection to take place at www.payloadasia.com | June 2012

destination instead of at the borders. This will further streamline border crossings, to the benefit of all parties in the supply chain.”

Kerry wins contract from Exego Group

Kerry Logistics, a leading global logistics service provider has announced a new contract to provide international freight forwarding and logistics services to the Exego Group, the largest retailer and supplier of after sales automotive parts and accessories in Australia and New Zealand.

The contract will involve Kerry Logistics providing all global freight forwarding services as well as developing consolidation hubs in Hong Kong, Shenzhen Yantian, Shanghai, and Taiwan. The contract also includes provision of cross docking and logistics services in Australia and New Zealand.

Volatile market leads to tough decisions for Toll

The Toll Group has announced decisions to reduce the carrying value of its Footwork Express business and property assets along with a sell down of its Automotive finished vehicle distribution business in Australia.

Toll said that given the continuation of extremely difficult market conditions in Japan, including the lingering impact of the earthquake and tsunami and a lower likelihood of any near term recovery, the Toll Board has decided to writedown the carrying value of the Footwork Express business by between A$146 million (US$184.8 million) and $166 million, to leave capital employed of between $200 million and $220 million.

After conducting its regular property portfolio review Toll said that as a result of continuing deterioration in Australian commercial property values, the group’s Board has decided to reduce the carrying value of four sites.

The group also finalised the sale of part of its finished vehicle distribution service to PrixCar, a 50-50 joint venture company between Toll and K-Line Automotive. Commenting on the earnings outlook for the 2012 financial year, Toll MD, Brian Kruger said: “We have seen continued pressure from the soft retail sector in Australia affecting the financial performance of our domestic businesses with an exposure

to that sector, together with weakness in the global apparel sector impacting volumes and EBIT in Toll Global Forwarding.

“In add ition, we have seen a deterioration in the performance of Footwork Express, and continued poor financial and operational performance in Toll Marine Logistics (part of Toll Global Resources), particularly in Asia, and significant margin pressures in the interstate linehaul and warehousing operations of the Toll Refrigerated business (part of Toll Domestic Forwarding).

“We expect this to result in underlying EBIT, including associate earnings for the 2012 financial year of between $400 million and $420 million compared with EBIT of $436 million for the 2011 financial year. Despite the challenges of the external environment, the majority of our businesses have continued to perform well, providing a strong contribution to overall Group earnings,” Kruger said.

Own offices in Oman, Namibia for Schenker

DB Schenker Logistics has announced that its joint venture Schenker Khimji’s LLC, which it established with longtime partner Khimji Ramdas Group in the Sultanate of Oman, has started operations, delivering comprehensive solutions in the fields of air and ocean freight, land transport, contract logistics, supply chain management as well as event logistics. Martin Hackl, to date DB Schenker Logistics’ delegate in the country, becomes MD of the new company.

Peter Glatz, CEO of DB Schenker Region Near Middle East and Africa commented: “We see a big potential in Oman to become another hub in the Middle East. This market is growing steadily, with new ports and airports being established. This joint venture will enhance our strong position in the GCC region.”

In Africa, DB Schenker Logistics has opened its own business in Namibia. Over the past five years, the customers relied on the service of partner Desert Logistics. After a successful partnership, it was agreed that DB Schenker would acquire 100 per cent ownership of Desert Logistics to further improve service levels and extend the global reach.

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A IR PORTS New CAAS initiatives to boost competiveness

The Civil Aviation Authority of Singapore has announced initiatives expand the scope of the S$100 million (US$78.1 million) Aviation Development Fund set up to develop the Singapore aviation industry.

The CAAS said that for the aviation industry in Singapore to enhance its competitiveness, the industry needs to raise its productivity and increase its access to new markets and business opportunities. To this end, the CAAS has expanded the scope of the programmes under its Aviation Development Fund (ADF), with the enhancement of the Aviation Innovation Programme (AIP) and the addition of the Aviation Promotion Programme (AProP).

AProP is the fourth initiative under the ADF1, with a budget of $5 million from 1 April 2012 to 31 March 2015. Open to Singapore-registered companies, organisations and industry trade associations, AProP aims to strengthen the Singapore aviation brand and help Singapore companies to expand their reach in international markets and their access to business opportunities.

The AIP has been expanded to bolster the productivity of the Singapore aviation industry. Launched in 2010 with a budget of $25 million over five years, the AIP seeks to encourage organisations to embark on innovative projects, initially to develop new or enhanced capabilities. With its enhanced scope, the AIP will now also support companies embarking on projects geared towards achieving transformative productivity goals, i.e. significant and sustainable productivity gains of at least 20 per cent.

CAAS and NATS to cooperate on air traffic

The Civil Aviation Authority of Singapore (CAAS) and NATS, the UK’s leading air navigation service provider (ANSP), have signed a Memorandum of Cooperation (MoC) today. The MoC will allow both parties to collaborate, exchange ideas and experiences as well as develop and implement new initiatives to tackle air traffic management (ATM) challenges.

“Air traffic management is a critical enabler for the growth of an air hub.

CAAS needs to grow Singapore’s air traffic management capacity to keep pace with the rate of growth of traffic at Changi and the region. We have implemented 20

initiatives to enhance our capacity and performance with encouraging results, but more can be done. NATS has a wealth of experience operating in very demanding environment,” said Soh Poh Theen, assistant director-general, CAAS.

Leipzig-Halle airport to get new cargo facility

Dietz AG and Flughafen Leipzig-Halle have agreed to engage in long-term cooperation for the further development of general air cargo at Leipzig-Halle Airport. ACC AirCargo Center Leipzig, a subsidiary of Dietz Group, will develop an area of approximately 60,000 square meters of the declared available land with direct apron access in the south cargo area. It is expected that the first construction phase of a new AirCargo Centre, with an area of approximately 23,000 square metres, will be completed by the first quarter of 2014, according to the latest building and security standards.

A further 15,000 square metres of air cargo areas will be built in the second construction phase, to be completed by the end of 2018.

“This cooperation underlines the potential of Leipzig/Halle Airport to establish itself as the leading air cargo facility after Frankfurt am Main and to further consolidate and extend that position with a strong partner,” says Wolfgang Dietz, chairman of the Executive Board of Dietz AG.

Changi, Narita sign MOU on cooperation

Changi Airport Group (CAG) and Narita International Airport Corporation (NAA) have signed a memorandum of understanding (MOU) to intensify collaboration between the two major air transportation hubs. The MOU reaffirms the strategic relationship between the two airports to develop and expand the global air transport network, and provide high quality services to the users of both Changi and Narita Airport.

Chennai to get another air freight station

The Chennai Port Trust has plans to build an air freight station (AFS), that will take care of statutory clearances, Customs documentation and examination; cargo acceptance check; security checks and palletisation, about 2km from Chennai airport. The move is aimed at reducing congestion at the airport’s cargo facility.

Currently, there are two AFSs in the vicinity of the airport.

DWC sees rise in cargo volumes

Cargo volumes at Dubai World Central (DWC) have gone up in the first three months of 2012, according to the quarterly traffic report issued by Dubai Airports. The airport, in its second full year of operation, saw cargo volumes of 50,062 tonnes in the first quarter of the year, compared to 10,381 tonnes in the first three months of 2011.

Air traffic movements at the airport have also gone up from 850 in the first quarter of 2011 to 3,513 in the same period of 2012. The growth was driven by additional charter and scheduled services introduced over the past year as well as the securing of several large noncommercial contracts. One of the latest to start using DWC is Saudi Airlines Cargo which began a scheduled freight service to DWC with three weekly flights from Riyadh. Dubai Airports’ total cargo volumes are expected to top three million tonnes by 2015 and an increasing portion of that growth is expected to spill over to DWC, according to the airport.

“Despite the fact that the global cargo industry remains under pressure, DWC continues to ramp up as new operations are introduced. Increasingly airlines are recognising that the airport, which is still in its infancy, has a unique value proposition with airlines able to take advantage of the its bonded link to the Jebel Ali port,” said Paul Griffiths, CEO Dubai Airports.

“In 2012 the economic picture has improved marginally from last year.

World trade is gradually beginning to recover. While some major European economies have slipped into recession, US consumer confidence is on the upswing, China’s economic expansion remains robust and both Thailand and Japan have started to rebuild from last year’s natural disasters. This can only help augment volumes at Dubai’s airports which benefit from a growing network and a geocentric location that allow them to tap into these global trade flows,” said Griffiths.

Schiphol spearheads Lifescience Steering Group

Schiphol Cargo – the dedicated cargo arm of Amsterdam Airport Schiphol – is forming a Lifesciences Steering Group to develop a long-term strategy PAYLOAD ASIA | June 2012

A IR PORTS for the promotion of Lifesciencesrelated activity centred around the Dutch airport. The cargo division said the initiative follows a recent mission to India, in which Schiphol Cargo and representatives of the Amsterdam Life Sciences Platform met with local pharma industry executives in round table format, to discuss the development of a pharma trade lane between India and Europe, using Schiphol as its distribution hub.

In the new Lifesciences Steering Group, Schiphol Cargo will be joined

by AmsterdaminBusiness, Amsterdamse Innovatie Motor, Bioport Europe, Amsterdam Airport Area, Schiphol Area Development Company and the Holland International Distribution Council.

April cargo declines at Changi

Changi Airport handled 4.9 per cent less cargo movements in April, reflecting the current downturn faced by most export markets around the world. In total, 148,200 tonnes of cargo passed through Changi during the month

underlined by a 9 per cent decrease in exports. On a rolling 12-month basis, Changi moved 1.86 million tonnes of cargo, a growth of 1.3 per cent. Passenger movements, on the other hand rose 12.7 per cent in April 2012 while aircraft movements increased correspondingly by 8.8 per cent to 26,400 movements.

Overcrowded Suvarnabhumi to get expansion

The Airports of Thailand (AOT) has announced it plans to spend about US$1.9 billion over the next five years to expand capacity at Bangkok’s overcrowded Suvarnabhumi airport by a third.

AOT, which runs the country’s six main airports, aims to boost capacity at Suvarnabhumi by 15 million to serve up to 60 million passengers in 2017, the AOT said. The $4 billion airport, which opened in September 2006 is expected to serve about 51 million passengers in AOT’s fiscal year ending in September 2012, up from 48 million a year earlier and above annual capacity put at 45 million now.

Meanwhile Bangkok’s old Don Muang airport, which is currently used by private planes, budget airlines and freight carriers, will take some of the strain from July 2012 when some scheduled commercial operations will move back there from July, the AOT said.

Cebu backs moves to decongest NAIA

Philippine budget carrier Cebu Pacific (CEB) has said it supports moves by the Civil Aviation Authority of the Philippines (CAAP) to decongest Ninoy Aquino International Airport (NAIA).

Congestion at NAIA is caused by limited runway capacity and although the airport is designed to accommodate 36 take-offs and landings per hour, it reaches nearly 45 during peak hours.

“Air traffic congestion in NAIA can cause delays from 4 minutes to 81 minutes per flight. An aircraft assigned for a roster of flights experiencing delays due to ATC can end up with a domino effect of delays, to the disadvantage of the passenger,” said CEB vice president for Flight Operations Capt. Victor Custodio.

FAPAA

Auckland hosts 39th annual FAPAA meeting

T

he Customs Brokers and Freight Forwarders Federation of New Zealand (CBAFF) hosted the 39th Executive Council Meeting and AGM of the Federation of Asia Pacific Aircargo Association (FAPAA) in New Zealand for the first time in the 27-year history of FAPAA. The FAPAA meeting, held over two days at the Crowne Plaza Hotel, Auckland, was attended by delegates from 14 of the 19 member countries and regions of the Federation, who were able to join together with delegates attending the annual national conference of the local organisation - CBAFF at the functions arranged concurrently. The large combined gathering proved to be a great networking opportunity for the freight forwarding industry members of New Zealand and other Asia Pacific nations. FAPAA brings together the members from within the region once a year, to the annual meeting which provides the opportunity to learn from one another on latest developments and to share information on important practical and technical aspects of the air freight forwarding industry.

The FAPAA meetings were opened

www.payloadasia.com | June 2012

by chairman Paul Tsui on 11 May who praised the international associations for making the time and effort to travel from all parts of the Asia Pacific to this important meeting. “We are delighted to be hosted in Auckland by the CBAFF in the beautiful country of New Zealand for our latest FAPAA meeting” said Tsui.

Members of FAPAA received detailed information and updates from the International Air Transport Association (IATA), on the project to implement the electronic airwaybill (e-AWB) globally by 2014, this would result in a similar sized progressive step as did e-ticketing for passengers and the FAPAA chairman shared some important information on the experience of their local organisation – HAFFA in the early implementation of the e-AWB in Hong Kong through Cathay

Pacific Airways. Discussions around the more extensive e-freight project were also held and the members shared their experience and views but agreed that that e-AWB was more relevant and achievable in the short term, subject to carrier readiness to implement The necessary technology and systems.

Delegates were also provided with updates to various regional and global air cargo security programs and Stephane Parrenin – cargo manager, Australia for IATA – delivered a detailed presentation on their ‘Secure Freight’ Project. Security is always high on the agenda at the FAPAA meetings as it is an essential part of the Freight Forwarding business operations.

FAPAA was pleased to welcome a three-person high level delegation from CIFA, the China International Forwarders Association, who attended as observer with an expression of interest to join the Federation once they received the necessary Government approvals. FAPAA is always looking to encourage new memberships from the countries in the Asia Pacific Region and to facilitate greater communication amongst the Freight Forwarding Associations.

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FOC US

India’s air cargo working group submits report It was December 2010 that India’s Civil Aviation Economic Advisory Council (CAEAC) decided to bring about changes in the countries air cargo sector. The industry had just weathered global recession and almost every aviation stakeholder had come to the realisation that it was cargo that brought in the money – hence the sudden emphasis on enhancing infrastructure for the sector. Manfred Singh reports.

K

eeping in view the projected rapid growth in air freight, the CAEAC set up a Working Group on Air Cargo and Express Service Industry to recommend a slew of policy initiatives for the sector. In fact, the terms of reference for the working group were clear: The group would assess the growth potential of air cargo in the country while identifying areas that require further improvements to seize the emerging opportunities in international trade and in the context of faster pace of economic growth in India.

Headed by M Kannan, Economic Advisor, Ministry of Civil Aviation, the working group held seven meetings through 2011 with stakeholders comprising civil aviation and airline officials, cargo carriers, aircraft manufacturers and airports. The 120-page report, submitted recently has, according to Dr Nasim Zaidi, Secretary, Civil Aviation, “in-depth analyses of issues and comprehensive coverage of key aspects of the air cargo business” that would “lead to specific actionable points with timelines for implementation”. That the first of its kind report was a well-conceived exercise was pointed out by Tulsi N Mirchandaney, managing director, Blue Dart Aviation: “It has highlighted the issues and aspirations of our sector. We look forward to an equally aggressive implementation process.”

Key challenges The report lists out the key challenges – topping the list is, of course, infrastructure bottlenecks – and acknowledges that

22

airports in the country were developed primarily from a passenger standpoint; hence the requirement for development of cargo facilities was not taken seriously.

“Cargo is generally the last part to be thought of and is relegated to that part of the airport, considered not important otherwise. This leaves the entire logistics of cargo – infrastructure and facility in a woefully inadequate and poorly managed area of the airport,” the report says. It also points out that regulatory hurdles have not only stymied the growth of air cargo but impacted the industry spanning various departments and ministries.

In what could be termed as a definite thrust towards all-round development, the Working Group has listed out initiatives and set aggressive timelines with the most important being the laying down of an integrated framework for an Air Cargo Logistics Policy within three months. That will go some way in bringing efficiency in air cargo operations while meeting the growing needs of business and industry.

Another important deadline – once again to be worked out in the next three months – is giving industry/ infrastructure status to the air cargo sector. Once that is done – with the concurrence of the Ministry of Commerce and Industry, the Central Board of Direct Taxes and the Finance Minister – the industry will find it easy to source funds for creating infrastructure. The sector is presently being handled by multiple ministries like the Ministry of Civil Aviation, Ministry of Roads, Ministry of Commerce and Industry, etc.

The lack of industry status has posed problems for the under-capitalised freight forwarders, integrators, cargo terminals and air express operators among others who find it difficult to raise funds through organised banking or financial channels.

Experts point out that it is impossible for these stakeholders to invest in modern equipment and technology to increase efficiency and reduce transportation costs.

Providing industry status to the air cargo sector would assist in the development of the sector and bring down the current logistics costs. In addition, ‘industry’ status would facilitate easier access to finance through availability of organised financing and banking.

Asia ascendant Reflecting the views of industry experts that air cargo growth worldwide will be driven by Asia over the next two decades and that intra-Asia growth will be expected to dominate world air cargo growth, the working group has advocated the need to create strong air cargo infrastructure at the gateway airports of the country.

It has also recommended the creation of transhipment cargo facilities since Indian airports are ideally located to act as transfer hubs for various intercontinental routes like Australia and Europe and Southeast Asia. These routes, at present, are dominated by European, Middle Eastern and Southeast Asian carriers.

The working group felt that in spite of the geographical advantage of the country’s airports, India has not been able to successfully compete in the market to capture intercontinental traffic.

In this area the group has put forward one of its most ambitious deadlines – within a year – of creating at least one true cargo hub in the country while promoting key gateway airports as cargo transhipment hubs. In fact, in discussions with industry and trade representatives, the working group found out that at least four air cargo transhipment hubs in India could be developed by 2020. These cargo hubs can easily capture 20-30 per cent of the existing traffic along the intercontinental routes, the working group concluded.

The deadlines – given the present economic conditions – will be difficult to adhere to, but a first crucial step has been made and the air cargo sector can look forward to better times.

PAYLOAD ASIA | June 2012

I T & E QU I P MEN T India’s Customs authority goes live with CHAMP

CHAMP Cargosystems has announced that carriers and forwarders can now exchange mandatory messages with the customs authorities in India using the CHAMP automated Global Customs Gateway (GCG) service.

CHAMP’s service already facilitates message exchange between carriers and 31 other customs authorities around the globe including the authorities in Canada, Mexico, Liberia and EU. The advanced customs solution converts messages to the specific protocols and formats required by the different authorities, simplifying the process and reducing declaration errors, CHAMP said.

Global Customs Gateway is the only service available to carriers that also sends automatic responses and messages which alert users to the changing status of customs filing. This proactive messaging will enable carriers to remain fully up to date on all their filings with the Indian customs authorities at all times.

Jame s Fer nandez , V P Glob al Commercial Operations, CHAMP, said: “Most states place the responsibility for complying with advanced customs

www.payloadasia.com | June 2012

information legislation with the carrier.

In India, this obligation is placed on carriers and forwarders. The challenge for our customers – carriers, ground handlers and forwarders – is to meet the requirements efficiently. Using CHAMP’s GCG ensures a customer complies with the regulatory requirements of the various authorities. By facilitating compliance and providing proactive updates and alerts, it also avoids freight being held or delayed by customs and reduces the risk of being fined or embargoed.”

More than 60 carriers and ground handlers already use the CHAMP application for the European Union Import Control System (EU ICS) which was implemented two years ago for the European Union customs territory covering 27 EU member states plus Norway and Switzerland.

Jettainer launches smartphone ULD app

Jettainer, a leading international service partner for ULD management, has introduced the ‘JettAPP’ for mobile devices – based on both the Apple and Android systems. It allows customers

to determine the location of a container and even rebook it in just a few steps: the mobile device first scans the bar code on the container in question – rather like a smartphone or a tablet computer.

The ULD history then becomes visible and makes it possible to check where the cargo container is located. If the container is not at the right place, the app allows it to be rebooked to a different site.

The JettAPP picks up all kinds of barcodes including QR and RFID/NFC. Other uses for the app like stocktaking are being developed. The technology can particularly make it easier for station personnel employed by airlines, ground handling companies and repair shops to do their work.

“The benefits are obvious” says Alexander Pluemacher, managing director of Jettainer. “The JettAPP allows companies to request and log information about a container directly on the spot. Above all, this improves the data quality which not only means enormous savings in terms of time, but also an increase in efficiency. Other functions like damage reporting or flights movements are conceivable inthe next version.”

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P RO FI L E

Panalpina puts new focus on intra-Asia trade Panalpina is set to reopen a regional office in Singapore not so much to remedy a currently tough air freight market but to move the company towards a more local, more Asian approach as it seeks to better tap the intra-Asian trade. Michael Mackey reports.

“F

rom the mindset point of view it is a major change” acknowledges Marco Gadola who will oversee the operation. Gadola is himself a key part of the change. Currently CFO Gadola will become CEO for the Asia Pacific region as of 1 July. The new office is to have top level management a change from the previous role it had as a communications post for the European headquarters.

Ahead of taking up his new job Gadola is also clear about what his new job entails. “The first priority will be China.

Actually the focus will be to generate pre-paid business in China,” he said in a late May interview with Payload Asia.

The challenge the company has in Asia in general and China especially is to extend its customer base here. “Our Asian customer base is still relatively weak,” conceded Gadola.

Keen on intra-Asian Keen to tap into growing intra-Asian trade as other trade routes either remain stagnant at best or are declining it wants to sell and generate more business out of the region especially China, that’s the pre-paid bit. Today most of its China business is either sold or generated in either Europe or the US. What it wants to do is get away from that towards a more balanced position.

“What we are doing as we speak is hire highly qualified people,” said Gadola adding “it all starts with having a marketing and sales organisation in China.”

Where the change will come, and it is a big one, is it will be concerned not so much with the westbound routes out of China to Europe but the regional ones and the Easterly ones.

Panalpina is, it quietly admits keen to end its dependency on the traditional Far East–Westbound routes. “That’s actually the big challenge to end the Far East–Westbound (bias) and develop intra-Asia and the Far East–Eastbound or transpacific routes,” said Gadola.

There is a twist in this a geographical one, although a twist still compatible with the company’s strategy of localisation: 24

Air freight outlook

Marco Gadola

Gadola himself will be based in Singapore.

This is not a senior management whim, but a serious business decision as the largest cluster of decision-makers is based there and having proximity to them is a key concern. Gadola’s patch whilst it might have an immediate emphasis on China is everything East of and including, India and being close to a market like that is another important consideration in choosing Singapore.

Panalpina is very keen to help Asian companies and others outsource more of their supply chain. Among the things it will be bringing to the market are: Inbound to Manufacturing (I2M), Transformational Cross Docking (TXD), kitting, postponements, milk runs and distribution to points of sales.

There is, as Gadola highlights, to be an emphasis on value adding. “That’s the focus for Asia Pacific to value add and to extend the product portfolio.” And it could go even further.

Panalpina has tiered optimism about the air freight market with long term and regional confidence offset by a more cautious immediate outlook.

“We anticipate the Intra-Asia air freight market to grow roughly eight per cent over the years to come – Far East–Eastbound and Far East– Westbound considerably less,” the supply chain behemoth said.

Gadola described the current air cargo market as “blended” with growing Asian regional trades balanced by declining long haul ones. “IntraAsia is still at high capacity with some growth on the airfreight side,” he said.

Pushed for specifics he listed, “China into Japan, China into Indonesia, Indonesia into Japan. So obviously the Intra-Asian business is becoming more important.”

This is in stark contrast to both Westbound to Europe and Eastbound transpacific which have seen rates decline by as much as 25 per cent, he said.

Looking ahead, Panalpina believes the market will improve, but only modestly in the second half of the year although maybe not enough to be confident about rates rising just yet. Modest bets are being placed on a mild revival in the American economy, although not yet Europe.

One thing the company is looking into is joining the road freight market in Asia. This it sees as comparatively large, but is aware of the contradiction that a developing road market competitively priced and sold well, works against the shorthaul Asian air freight market, the very intra-Asian market it wants to tap.

Gadola who admits the the road freight market “is eating into the air freight products” does not really see it as a concern for Panalpina. “Its more a problem for those on the shorthaul.

These players will obviously suffer.” That said road freight is “something we are looking at providing.”

PAYLOAD ASIA | June 2012

Conference

2012

Be part of the Payload Asia Conference Date: 5th September 2012 Venue: Pan Pacific Singapore Time: 8:30 am to 4:00 pm

Conference Topics 1. Round-table Session 1

A changing cargo paradigm?

Has today’s intensely competitive and highly volatile market conditions necessitated a change in the way the air cargo industry operates in terms of not only its asset structure – ie. Combination carriers with either a belly focus or a mixed belly/freighter offering and maindeck-only players? Are current pricing mechanisms still relevant to ensure long term sustainability of the industry? What – after so many years of debate over the topic – is the impact today of ocean shipping on the air cargo industry?

2. Presentation Session

Emerging giants – Comparing and contrasting China and India Destined to be two of the biggest air cargo markets in the world, two very different countries present two extraordinarily different air cargo markets. What are the similarities and differences of these markets? What can one market learn from the other? When will we see the real blossoming of trade between these two countries and what will it mean for the intra-Asian trade lane?

3. Round-table Session 2

The emerging Asia-Africa air cargo market Africa has become a key area of interest for many air cargo companies seeking new markets and the current economic boom across the vast continent is providing a key source of additional business for many companies willing to tackle the challenges of operating in this diverse regional market. With substantial investment in a number of African countries by predominantly mainland China companies, a rapidly growing Asia-Africa cargo market is springing up, supplementing the long established Europe-Africa trade. What are the challenges, who are the key players and what is the potential?

Registration details*

http://conference.payloadasia.com/en/registration.asp *The conference is free to attend for qualified attendees. Qualified registration will be notified with an email for seat confirmation.

For more information on the conference topics, please contact

Donald Urquhart I Editor I Tel: (65) 6521 9760 I donald.urquhart@tenalpsasia.com

http://awards.payloadasia.com/en/conferenceoverview.asp

For Sponsorship opportunities, please contact your Payload Asia rep or

Adeline Ann I Sales Director I Tel: (65) 6521 9762 I adeline.ann@tenalpsasia.com Alyssa Tan I Account Manager I Tel: (65) 6521 9767 I alyssa.tan@tenalpsasia.com

CO VER STORY

Geodis rides Asian emerging market growth As traditional US and European market demand has caved in on the back of dampening world trade, global players in the retail, pharmaceutical, high-tech, healthcare and automotive sectors are increasing their expansion into the Asian emerging markets.

Geodis Wilson, a leading global freight management company, is tapping this phenomenon and translating it into airfreight and logistics growth. Wong Joon San reports.

L

ooking back 10 to 20 years ago, most of the global top quality branded goods were then produced in China and exported for sale in North America and Europe. Today, there have been big changes with business flows doing a 180 degree turn, with traditional markets manufactured products are flowing back to Asia. Sales of popular retail branded luxury products are booming in Asia, thriving and becoming a norm in the region, while sales of luxury products in traditional markets are in the doldrums.

But for logistics companies like Geodis Wilson, this is a welcome development indeed.

Leading Asian cities like Shanghai, Beijing, Guangzhou, Hong Kong and Singapore, which are teeming with booming middle-class, are fiercely competing to out-do each other to part the rich from their money. Top department stores and high-end luxury brand name stores, which promote brands like Prada or Louis Vuitton, are enjoying steady business at their outlets, translating into big business for freight management companies like Geodis Wilson.

As an indication of the huge market potential, Italian luxury design house Prada said its net profit soared 72.2 per cent in the year ending January 2012, driven by strong retail sales especially in Asia.

As a potential market for global expansion, Asia is fast becoming an attractive region for the global retail industry‘s expansion in the next decade.

Growing at a rate of nine per cent per year, the Asian retail industry, which is now worth US$1 trillion, will have more than doubled in value by the year 2020, according to a retail market study. In recent global recessionary years, Asia is one of very few regions that has continued to show an increase in retail profits and overall economic development.

Global retailers are increasingly moving into Asia to capitalise on its fertile retail markets. According to PricewaterhouseCoopers, Wal-Mart and Tesco have implemented aggressive expansion plans in Asia in the near future.

This is not surprising for these powerful

26

Thomas Blank

retail giants since profits in the Asian retail sector have been predicted to reach US$8.5 trillion by the year 2014.

Even though government incentives that fueled consumer spending during the global economic downturn of 2009 have expired, the growing upper class is extremely attractive to luxury retailers throughout the world. Large global chains are also eager to move into areas where small locally-owned shops and markets were the only shopping option with PricewaterhouseCoopers predicting that the Asian retail industry’s growth will be two to three percentage points higher than global retail growth in general.

Carrier strategy For Geodis Wilson to efficiently serve this booming retail and other sectors, it has a core carrier strategy that is based on using the capacities of 10 major airlines, complemented by capacity of regional carriers the company taps in the Asia Pacific.

Thomas Blank, Geodis Wilson’s regional director for Sales & Marketing in Asia Pacific, responsible for all sales, marketing and communication matters in the Asia Pacific region, says, he preferrs not to name the portfolio of carriers which was always being reviewed and adjusted to the market needs. But as an example, he says Singapore Airlines Cargo just recently

joined that group and had signed a global partner agreement with Geodis.

Regarding air cargo space arrangements during the peak seasons, Blank says: “We have a solid mix of block space agreements at various commitment levels and obviously we also buy space in the open market depending on our needs. If necessary, we will further acquire charter capacities in the market.

“We have some very good airfreight teams in our key locations that have always been able to match supply and demand.

This also has something to do with the very close relationship we forge with our clients to get better, more accurate and detailed forecasting.”

Asked about Geodis’ airfreight to seafreight ratio, Blank says, “Overall, we are using about 60 per cent airfreight and the rest by seafreight.”

However, he expects the ratio to become balanced in the near future as customers try to reduce their costs through using cheaper alternatives to airfreight. Fashion and lifestyle, which are under Geodis’ retail operations, make up about one-quarter of the company’s business.

Blank says many airfreight customers are considering Geodis’ cross-boundary trucking solution as it is much cheaper than airfreight.

Demand changes “We are seeing changes to the (global) distribution patterns and demand. Inbound flows now are getting to have a solid base.

(In Asia) we have a good segment of high end brand products, a middle class plus low end products segment,” Blank says.

“It is good to have a mix of the different segments, which is extremely important for our business because the low end gives us the necessary volume to run a sustainable business.

“We not only provide transportation but also all kinds of distribution like value added services for the retail industry like garments on hangers, plus sticking on labels and price tags.

“We also have specialised facilities in Shanghai, manned by staff with gloves and masks as we are handling very expensive and high end garments. We have made PAYLOAD ASIA | June 2012

COVER S TORY significant investments to enhance our services, which goes beyond the level of ordinary service.

“We have six warehouses in Shanghai, and a dozen other facilities in the country at Chengdu, Shenzhen, Hong Kong, including one up north of Beijing,” Blank says.

At Chengdu, where Geodis has recently opened a warehouse, the company is hiring new staff to manage an additional workforce of about 50 employees.

The company designs solutions for customer and implements new contracts while offering high level of quality and maintaining high standard of customer satisfaction. It continually evaluates and enhances standard procedure for safety, security of staff, equipment and warehouse operations, putting it in a pole position in this business.

Blank explains that Geodis‘ major hubs are Shanghai, Hong Kong, Bangkok and Singapore. Airfreight business in many other countries and areas is channeled through local and regional airports rather than hubs, for example, Chengdu and Chongqing in China.

Geodis offers a complete range of warehousing and distribution services, supported by Geodis Wilson Warehouse Management System (WMS) that is fully EDI capable to allow seamless communication between systems, as well as tailored to individual customer needs in Asia. Clients have full WMS internet access, enabling full stock control, online orders/communication, complete handling/processing visibility and on-line reporting.

Regional bottlenecks Asked about air cargo capacity bottlenecks in countries like Vietnam, Cambodia and Indonesia, Blank says that such challenges are here to stay, unless the authorities concerned invest in expanding their airport infrastructure.

When faced with such challenges, Geodis looks for alternative solutions like using a neighbouring country‘s airfreight with connections to its cross-boundary trucking services and so on.

“In Vietnam, I do not believe (the air cargo capacity shortage) will be resolved in such a short time. Vietnam is going to suffer from capacity shortage for the next five years (at least),” he adds.

Blanks says this is because Vietnam’s GDP growth rate was much faster than its infrastructure development, particularly its airport facilities growth. But he points out that the country may still be able to meet the air cargo capacity demand www.payloadasia.com | June 2012

Emerging from the giant Antonov AN-225 Geodis Wilson managed the transportation of two brand new wind turbine blades with a length of 42.1 metres for its customer LM Wind Power.

in the next one to two years, but would be badly constrained after that period if the administration does not remedy the situation.

Regarding Laos, a landlocked country, Blank says the country is in a worse situation than Vietnam and a lot of services there relied on its neighbours’ air services combined with Geodis’ trucking services.

For peak seasons, Geodis also has longterm with short-term plan adjustments to deal with the cargo loads.

Turning to Indonesia, he points out that this is one of the few Asian countries which does not offer full freighter services. But according recent statements from Garuda Indonesia – as reported in the June edition of Payload Asia – the carrier’s ambitions have advanced from a desire to augment passenger revenue with belly-hold freight to a plan for full freighter flights to take off before 2013. This includes one A330-200F to be in service by next January and two more joining the fleet in 2013.

Blank welcomed this news as the country was growing very rapidly, and a shortage of air cargo capacity in and out of the capital city, Jakarta, particularly during the peak season made it difficult for many companies to do business smoothly.

China’s infrastructure Regarding China’s infrastructure development, Blank was full of praise for the country’s new airports, seaports, roads and rail networks which he described as being “excellent” since their evolution over the last 10 years. “However, there were many steps and processes between these networks that badly need re-engineering

as they are not up to the standards expected of a giant economy,” he adds.

Blank likened the massive infrastructure in China to that of a modern building, which was still using outmoded and obsolete systems to manage it. The management of these processes and systems need to progress to the next level with better quality and expertise of such services if the country is to work more efficiently and productively, he says.

The challenge of working in China is having to work with different levels of standards, Blank says, pointing out that the company had to be innovative again and again in offering solutions to customers to overcome obstacles it faces in the supply chain.

Despite the challenges, Geodis is continuing to invest to improve its services by introducing its leading-edge GW Transportation Management System (TMS) on the mainland. “Our TMS will go live in China in the next few weeks,” he says. Geodis, which has been using its TMS in some European countries as well as in South American countries, hopes to roll out the system in all the countries it serves its customers.

The advantage of using TMS is that once a shipment file has been created on the system, the information can be seen by all stake holders in the supply chain at the same time, doing away with the need for any duplication of the data, Blank explains. By doing so, the company’s staff can optimise the services and increase transparency along the way.

As a non-asset based company, Geodis‘ absolute expertise is the flexible 27

CO VER STORY and demand driven management of transportation services. This concept is the ideal match of Geodis Wilson‘s global forwarding and 3PL capabilities.

Cross-boundary trucking One of Geodis’ success stories is its cross-boundary trucking service, which it says has operated for the last 17 years in Southeast Asia. Now, the service has expanded to include China, an extension of its existing routes through Singapore, Malaysia, Thailand and the Indochina region, in the first quarter of this year, Blank says.

The full cross-border route, which is between Singapore and China, covers a total distance of 5,950 kilometres. It has a lead-time of six to seven days.

“Since we extended the service from Vietnam to enter Laos and Cambodia over the last two years, China was a logical step,” he says. “This service has been running consistently and is very reliable,” he adds.

Geodis has scheduled trucking services and has several departures per week.

It uses several sub-contractors for the trucking services, and the operations are headed by Christopher Lee, director for cross-border services, Blank says.

“Geodis is expanding its cross-boundary trucking services in response to customers’ demands because the service is cheaper than airfreight,” he says. “In terms of cost, the trucking service between Singapore to Shanghai is between half to one-third of airfreight costs.”

He explains that although trucking costs are double than of ocean freight, the

service’s advantage is that it takes only half the transit time of ocean carriers, which take up to two weeks including all the loading, unloading and customs clearance processes.

Customers have the option of choosing between full container load (FCL) services, or less than container load (LCL) services.

FCL containers are sealed from door-todoor and opened only if required by border Customs. LCL containers are consolidated at Geodis Wilson facilities along the route, and fed into the main road network by regional trucks.

According to the company, a distinctive element of its cross border trucking business is the range of security measures which enables Geodis to monitor and the protect cargoes. Tracking systems also help to ensure that the goods are delivered on time. Geodis also has solid contingency measures in place, outlining exact lines of action to take in case of severe weather, complex customs clearing or for accident prevention.

Geodis Wilson started operating cross-border trucking services between Malaysia and Thailand in 1995, extending into Singapore in 1996. The company has been operating daily scheduled LCL services since 1999, providing full Customs clearance support to shipments.

Customers benefit from a single provider across multiple Customs checkpoints.

To support this, Geodis Wilson operates staffed Customs offices at key borders in Malaysia, Thailand, Vietnam and China.

In line with Geodis Wilson’s innovative approach to customer service, schedules

Currently Geodis Wilson utilises air freight for 60 per cent of its shipments with the remainder being ocean freight, but it is a ratio that is likely to become balanced in the near future as customers strive to lower costs by moving away from the more costly air freight mode.

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can be tailored to meet customers’ requirements, helping businesses to benefit from savings in inventory holding costs. The service also provides customers with more flexibility than air freight, as road shipments do not have the same capacity and dimension limitations.

Pharmaceuticals Geodis has 10 per cent of its pharmaceutical business in Asia, and its footprint in China and India is growing very fast, helped by its G Box, the company’s own specialised packaging solution for pharmaceuticals transport.

The product targets pharmaceutical products requiring shipment by air at temperatures of 2-25 degrees Centigrade.

The system basically involves a box being wrapped in silvered polyethene to protect against water and then sealed and overwrapped for additional protection against external temperature variations.

“Blank says the G box has been quite successful last year, and on average it had transported 100 boxes into the mainland monthly. We have also re-engineered the G Box (including making some design changes) to make it more environmentally friendly, so that we can re-use it several times, including shipping the empty boxes for repositioning, thus bringing down the costs,” Blank says, stressing that by using G Box, Geodis had a competitive edge over rivals.

“Between 70-80 per cent of pharmaceutical business goes by airfreight as priority services, esepcially from Europe to Shanghai, which is a big home base for us,” Blanks says.

Mergers and acquisitions Geodis, which has been expanding via mergers and acquisitions over the last few years, has plans for more in the pipeline.

The group has indicated its ambition to strengthening its presence in the US market several times, looking for a target to complement its footprint infrastructure and sales.

Also in Asia Pacific, Geodis Wilson is not ruling out external growth. “If the right opportunity arises, of course it is of interest to look at companies which can provide geographical expansion to countries where we do not have a reach, and also at companies which have in interesting business models in niche markets.

“We are always looking at strengthening our footprint in China as it is a big market and we would look at businesses that can complement our own business mix. The same goes for India, which is a fast growing market,” Blank says.

PAYLOAD ASIA | June 2012

THE WORLD OF AIR CARGO IS LANDING IN ATLANTA 26th International Air Cargo Forum & Exposition 2012 The Georgia World Congress Center - Atlanta, October 2-4, 2012

Over 5,000 delegates and visitors, more than 200 exhibitors and a world of networking and new business opportunities!

– RESERVE YOUR SPACE NOW! The world’s premier air cargo industry event The International Air Cargo Association

Organized by

Co-located with: “The Supply Chain’s Premier Event™”

Council of Supply Chain Management Professionals Annual Global Conference 2012 September 30 – October 3, 2012

Hosted by

www.tiaca.org

Ground Handling Supplement

Economic outlook Singapore, HK top trade enabling index again Singapore, Hong Kong, Denmark and Sweden have once again come out in the top four, respectively, in the latest update of the World Economic Forum’s Enabling Trade Index (ETI). The index, compiled by the Geneva-based WEF every two years, assesses market access, customs administration, transport and communications infrastructure, and business environment in 132 trading states.

T

he report’s authors note that the latest edition reflects a world in which trade has rebounded from its 2009 slump. While noting that the international trade agenda has seen many shifts over the last several years, most notably, “it is a world where trade is no longer dominated by developed economies but is now more concentrated in and among emerging economies,” the report says. At the same time, events such as the Japanese tsunami in 2011 highlighted the continued international fragmentation of supply chains, it added.

Increasingly, goods are produced across a number of countries within the same company or groups of companies, and countries specialise in tasks rather than products.

Many of this year’s contributions reflect a growing recognition that trade facilitation is most effective when it is designed to support global value chains, the report said. “Consequently, when countries enable trade, the benefits are not just local or bilateral but global,” it said adding the warning that “global disaggregation of value chains through trade has brought challenges as well as opportunities.”

As in previous years, the top 10 of the ETI 2012 continues to be dominated by relatively small, open economies for which trade is key to achieving efficiency because their domestic markets are small.

30

Singapore, the report notes, continues to lead the way by a large, and widening, margin over second-ranked Hong Kong SAR. Both economies deliver a strong performance across all the components of the Index with open trade policies, excellent infrastructure, well-functioning border administration, and a business environment that is conducive to trade and investment, the report said.

As in the previous edition, two Nordic economies — Denmark and Sweden — occupy the 3rd and 4th position, respectively, based on their strong business environments, efficient border administrations, and highly developed infrastructures.

Further down in the top 10 there is some movement as New Zealand continues its upward trend, gaining one position to reach 5th place, while Finland and the Netherlands improve to occupy the 6th and 7th position, respectively.

Switzerland, Canada, and Luxembourg round up the top 10 rankings in this year’s ETI. While noting that Asia and the Pacific is host to some of the fastest growing and largest economies worldwide, the report highlights that many of the countries in the region have greatly benefited from trade and made it a central part of their growth strategy. The ETI shows a wide gap between frontrunners Singapore, Hong Kong, and New Zealand and the

rest of the region. “Many agree that Asia has yet to fully leverage the opportunities offered by trade; this situation is reflected in the results of the ETI,” according to the report.

Except for those in the top 10 and Australia (17th), Asia Pacific countries stay outside the top 20, with China at 56th position and India at a low 100th. “The key challenge for both these countries is to liberalise restrictive trade policies.

Thailand (57th), Indonesia (58th), and the Philippines have benefitted from trade liberalisation within the Association of Southeast Asian Nations (ASEAN) and improved in the rankings this year, it added.

The ETI report noted that a number countries within the European Union (EU) rank within the top 20 of the ETI rankings, reflecting their welldeveloped infrastructures, widely available transport services, and efficient border administrations. Britain, at 11th place, rose from 17th two years ago and EU economic heavyweight Germany, the world’s second largest national trading power according to the World Trade Organisation, was 13th on the index, unchanged from 2010, while France remained at 20th. ”However, their trade performance is constrained by the overly restrictive common trade policy of the European Union.”

The United States ranks 23rd this year, continuing its downward trend—the result of a deteriorating infrastructure and a less conducive regulatory environment.

The Russian Federation, at 112th place, ranks below other large emerging markets such as Brazil, India, and China.

PAYLOAD ASIA | June 2012

Economic outlook “The country would benefit from a freer trade policy, more efficient border administration, and a less burdensome regulatory environment,” according to the ETI. The only Latin American country among the top 20 was Chile, up four places to 14th, while the United Arab Emirates was at 19th and Japan at 18th, up from 25th in 2010.

New trade paradigm As well as ranking nations’ trade openness, the report finds that traditional notions of trade are increasingly outdated as global value chains require new measurements, policies and cooperation.

The report also finds that security, quality and trade can be mutually reinforcing through supply chain integrity efforts, but a knowledge gap in identifying buyers remains an important barrier.

“The adoption of policies that enable trade will become increasingly important, not only for enhancing development in individual countries but also for generating prosperity in their trading partners,” said Robert Z. Lawrence, Albert L. Williams Professor of Trade and Investment at the John F. Kennedy School of Government at Harvard University.

Lawrence is the academic adviser and a co-editor of the report.

The biennial report measures the abilities of economies to enable trade and highlights areas where improvements are most needed. A widely used reference, it helps countries integrate global value chains and companies with their investment decisions, said the report’s authors.

“These 2012 results demonstrate that the ASEAN Trade in Goods Agreement has facilitated trade since its entry into

force in 2010,” said Margareta Drzeniek Hanouz, senior economist of the Global Competitiveness Network. “This year we also directly capture the most important obstacles to exporting and importing in each country, and note the strong links between import and export success.”

“Reports like the Enabling Trade Index should stimulate greater trade flows around the world,” said Scott Davis, Chairman and CEO of UPS. “The Index takes a comprehensive approach toward encouraging governments to make needed changes to their trade and customs measures. We need more countries focusing on ways to facilitate trade in the way that Singapore and other leading economies have. The business community also has a role to play in leveraging the new opportunities created.” – The report is available for free download at: www.weforum.org/getr.

Asia to see growth, but rebalancing critical Growth in Asia is expected to pick up this year, after slowing in the last quarter of 2011, but Asian leaders now face the difficult task of adjusting policies to support stable, non-inflationary growth, say IMF economists.

A

t the launch in Kuala Lumpur, Malaysia of the IMF’s regular outlook for the Asia Pacific region, the economists said that the region is expected to continue growing at around six per cent this year, before rebounding in 2013.

“Calibrating the right amount of insurance to support stable, noninflationary growth is the main near-term policy challenge,” said Anoop Singh, head of the IMF’s Asia and Pacific Department.

“Policymakers should be ready to shift gears and renew tightening if overheating pressures become evident,” he cautioned.

Robust domestic demand Asia has continued to enjoy robust domestic demand against the background of the fragile global recovery. This has been reflected in low unemployment and robust credit growth in the region.

Inflation expectations also picked up and so far, capital inflows into emerging Asia have rebounded in 2012.

The IMF forecasts regional growth will be six per cent this year, roughly the same level as in 2011, and about 6.5 per cent in 2013. And while emerging Asia will remain the fastest growing region www.payloadasia.com | June 2012

in the world there remains considerable regional variation. Led by China and India, expanding at 6.9 per cent this year, industrial Asia is projected to grow only at 2.2 per cent. A further stabilisation of global economic and financial conditions over the course of 2012 would provide a boost to the whole region, but it could also revive the threat of inflation, say the IMF economists.

The report suggests that inflation will decline modestly in 2012, averaging some 3.5 per cent, but this partly reflects a normalising of commodity prices and in several cases sustained demand pressures mean inflation is likely to remain above explicit or implicit target ranges, the report notes.

Threats to growth Despite brighter prospects for the region, the report warns that financial turmoil in Europe could yet escalate and spread to Asia. In particular, a sharp fall in exports to advanced economies and a reversal of foreign capital flows would severely impact activity in the region. The report also cites higher energy prices as a risk to activity, and a source of difficult trade-offs between inflationary pressures

and budgetary risks from energy and food subsidies.

So far, stronger economic and policy fundamentals have helped buffer Asian economies against adverse financial market spillovers from the euro crisis, but the IMF believes that the best way for Asia to protect itself against external shocks is by strengthening domestic sources of growth. “Economic rebalancing remains a policy priority for much of Asia,” said Singh.

Further rebalancing needed Asia’s overall current account surplus is expected to bottom out in 2012 at about 1.5 per cent of regional GDP, less than a third of its pre-crisis peak level. But in China, the IMF believes the adjustment has largely been the result of very high levels of investment, a worsening of the terms of trade and a real, effective appreciation of China’s RMB, rather than increased consumption as a share of GDP. “Sustainable rebalancing will depend on China’s successful transition from investment-led to consumption-led growth,” says the report, which welcomed the recent decision by the People’s Bank of China to increase the RMB trading band, saying it underscored “China’s commitment to rebalance the economy and allow market forces to play a greater role in determining the level of the exchange rate.”

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Be lly A c he

More bang for the buck! Now this next item, we have to give props to Nordisk (they are still called Nordisk right? You’ll have to excuse us, we’ve been having a hard time keeping track of who has bought who lately). Some clever boffin in Nordisk’s marketing department got more advertising mileage than they surely envisaged when they first conceived of the idea to put little cardboard ULD ‘piggie banks’ with a US$1 note sticking out the top in front of each seat at all the tables at the World Cargo Symposium in March.

They proved a fairly instant hit, with various degrees of shyness determining how fast people moved to pull the dollar bill and shove it in their pocket! But we reckon times are hard, so nothing wrong with defraying the cost of the trip to KL! But after a belated thought, and subsequent announcement, that the money could be donated to charity, most (we’re not telling) returned the dollars they had collected.

But even more interesting was the surprise occurrence which demonstrated that IATA does indeed have a sense of humour!

While up at the podium IATA’s Aleks Popovich wryly assured the audience that just in case there was any question about where the money came from, “it’s not the missing CASS money!”. WooHoo! We give Aleks a 9/10 for that one! Timing, delivery, substance…that joke had it all!

Business, business, business. Having just returned from the Air Cargo China event we thought would share with you some of the more lucrative ‘business’ undertakings that occurred in Shanghai during the event. We’re pretty sure we’ve not seen any of these young ladies at any other events which leads us to suspect that while they may indeed be from the ‘supply’ chain industry and could well be experts in the concepts of ‘capacity’, ‘utilisation’ and ‘yield’ – certainly the awareness of ‘uplift’ would be second-to-none and e-commerce is clearly a cornerstone of their business strategy – but still, we suspect they may not actually be from the air cargo industry. Sadly though, these budding young supply chain entrepreneurs probably were busier than those ‘officially’ attending the ACC event. Here at Belly Ache we’re inclined to think that perhaps it is the current downturn in the industry that was behind the lackluster event, but on the other hand, maybe people are just getting tired of these events? In the case of ACC, one thing is for sure…people were pretty d*&n tire d of hav ing things disappear –magazines, pens, brochures, hooks for hanging banners, plants, p l a n e m o d el s , spectacles, chairs, you name it! – every time they turned around for even a millisecond!

Well, all we can say is, Intratil we missed you dearly, but thank you Brussels Airport for ste pping up and filling the void that otherwise would have improved the state of our well-worn livers, but at the same time would have made the event far less bearable. Cheers!

Now we know times are hard…but really…a sponsor for water, are you kidding us? You mean it takes a global cargo alliance to cough up the big bucks required to sponsor bottled water!? Sheesh, we’re not even sure who is more stingy – IATA or SkyTeam Cargo! And for the record, it’s ‘Bottled Water Sponsor’, not ‘Water Bottle Sponsor’. Ackkkkkkk.

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