CARGO SALES REPRESENTATION FOR SRI LANKA
Proposal submitted by
United Ventures Private Limited Colombo, May 2015
CONTENTS
Executive Summary Company Profile An analysis of the market for cargo The overall market and its main market segments Total Export cargo Performance by Airline Total, Uplift, Discharge & Transshipment Export Commodities to Canada, US and South America Sri Lanka Export Statistics in weight & Value List of Leading Agents and Shippers The Air Canada Cargo Sales Projection
EXECUTIVE SUMMARY There has been a significant increase in Air Cargo from Sri Lanka to Canada and the US since 2012 year on year, very evident by the statistics gathered from the Sri Lanka Export Development Board and Sri Lankan Airlines. i.e.502, 803 kgs in 2012, 759,009 in 2013 and 865,938 in 2014 demonstrates clear growth year on year. We believe it is opportune for AIR CANADA CARGO to penetrate the Sri Lanka market based on the growth potential For Canada, USA, and South/Central America. This is statistically demonstrated in this proposal. The volumes are moderate but the incremental revenue to be earned from this segment is a good value proposition. The Air Cargo related areas covered in the proposal supported with statistical data are as follows. 1. An analysis of the market for cargo, a brief outline of the commodities air freighted (more detailed information is provided further on), the facilities available at the International airport where the cargo terminal is based and the structure of the cargo industry. 2. The overall market & its main market segments highlights the areas of export, Europe being the largest followed by the Indian Sub-continent and Asia, Australasia and the Far East. 3. Total Export Cargo for the period 2012, 2013 &2014 indicates the performance and growth pattern of this sector with 2014 being the highest. Current economic indicators establish that this industry is poised to grow in the next two years. 4. Performance by Airline– Exports from Jan to Dec 2014. This table provides a monthly breakdown weight wise highlighting the trend and seasonality of the shipments. 5. Total Uplift, Discharge &Transshipment identifies the category and monthly performance in each area. 6. Export commodities to Canada, the U.S. and South America - a description of the main commodities and the potential in terms of market share for Air Canada in comparison to the overall market and potential for growth where applicable. The countries in South America include Brazil, Chile, Colombia, Argentina, Mexico and Cuba (AC destinations selected on the basis of its frequency). 7. Sri Lanka export statistics in weight and value to Canada, the U.S. and South America. 8. List of top Cargo Agents and Shippers 9. The Air Canada Cargo Sales Projection is based on leveraging the relationships built over the years with the online carriers for space on the outbound sector & negotiating competitive rates with them, Air Canada’s network and good connectivity to North and South America and the regular provision of space on AC aircrafts, especially ex Europe is the key to success.
01
CARGO SALES REPRESENTATION FOR SRI LANKA
THE COMPANY PROFILE United Ventures Private Limited The company first opened its doors in 1995 as United Holidays - a single business entity with two Divisions i.e. Inbound Tours and the Airline Division, with a goal to be one of the leading travel and tourism specialists in the industry. Today, United Ventures has evolved as the Holding Company for 3 independent operations: United Ventures: General Sales Agent for United Airlines and Air Canada and the Representative for STA Travel and the International Student Identity Card - ISIC. Go Holidays: Outbound IATA accredited travel specialist. Holidays By Design: Destination management and inbound tour operator. The respective companies provide a wide scope of travel and tourism solutions. Our experienced teams are geared to meet the ever growing demands of the market, whilst maintaining their individual brand identities. Innovation and commitment to excellence are the key factors for United Ventures’ transformation into the company it is today. Backed by a thorough and comprehensive understanding of the industry, business and customer, we at United Ventures are dedicated to providing a high level of value and care to each client, business partner and stakeholder alike, by becoming partners in achieving their individual and business goals.
OUR CORPORATE VISION We believe every customer is special! We deliver value for money in a trusting and friendly environment Service is our goal through knowledge & commitment “WE ARE PASSIONATE ABOUT OUR COMPANY AND WHAT WE DO”
MISSION STATEMENT Get the basics right, go beyond expected standards & practices. Innovate - Products, Service & Delivery Generate - bottom line and Inspire - Team & Partners
02
CARGO SALES REPRESENTATION FOR SRI LANKA
GENERAL COMPANY INFORMATION The legal name and trading name of the company:
United Ventures Private Limited. Registered head office address, and principle telephone number No 54, Walukarama Road, Colombo 3, Sri Lanka. Telephone: +94 115474747
Type of entity Corporation/Limited Liability Company and operates under the jurisdiction of: Sri Lanka
The date the company was incorporated 11 October 2004
Present Portfolio of the Company 1. General Sales Agents for United Airlines & Air Canada - United Ventures Pvt Ltd. 2. Destination Management - Holidays By Design Pvt Ltd. 3. Outbound Travel and Holiday Packages - Go Holidays Pvt Ltd.
The Board of Directors Chairman Managing Director Executive Director Directors
: Afghar Mohideen : Parveen Dassenaike : Ravi Widyalankara : Rohan Siriwardene, Deepthi Siriwardene
The Board members collectively boast of a 100 year span of experience successfully managing Commercial Aviation and Travel related activity, including direct Airline and GSA Management in Sri Lanka and Overseas. This covers Air Cargo Sales/Operational activity utilizing regular passenger aircraft belly space and scheduled wide-body freighters.
Our Bankers Commercial Bank of Ceylon PLC. WTC Branch, 3rd Floor, West Tower, World Trade Center, Echelon Square, Colombo 01, Sri Lanka. Tel: +94 112 441291 Ms. Dilrukshi Abeysinghe - Manager Email: Dilrukshi_abeysinghe@combank.net DFCC, Vardhana Bank PLC. Head Office - No 73, W.A.D. Ramanayake Mawatha, Colombo 2, Sri Lanka. Tel: +94 112 680000 Mr. Hemanath Samaranayaka - Head of Business Development & Private Banking Email: hemanath.samaranayaka@dfccvardhanabank.com
03
CARGO SALES REPRESENTATION FOR SRI LANKA
SRI LANKA AIR CARGO MARKET ANALYSIS SRI LANKA AIR CARGO MARKET ANALYSIS Sri Lanka’s airline cargo industry has made significant strides towards developing the industry, increasing efficiency and achieving its full potential as a strategic hub in South Asia, consequent to the political turmoil, effects of the three decade old war, fluctuating fuel prices and the global economic crisis. The main commodities exported by air to Canada & the US are textiles &apparel, diamonds, gems & jewellery, manufactured goods including newspapers, periodicals and magazines - leather products, fish &fisheries products such as tuna & fresh fish, perishables such as fruit and vegetable and other export crops like coconut based products, tea &petroleum products.
Air Cargo Terminal at Colombo Airport The Bandaranaike International Airport provides cargo handling services with a capacity of 250,000 MT per year along with a dedicated and well trained team to facilitate international trade. Its Cargo Center is located on the premises of the airport with an impressive storage space of over 20,000 square meters. – for all Exports , Imports and Transshipment, Including SEA/AIR transfers. The total area of the Cargo Terminal’s ground space is 7,500 sq meters and the first floor 2,000 sq meters. The area of the freezer and cold room is a 133 cu meters. Sri Lankan Airlines occupy Terminals 4/5.
The Cargo Terminal is zoned as shown below; i. Cargo Village Terminal 1 – with a floor area of 2,787 sq. m houses the Freight Forwarders Warehouses (1,500 sqft x 20), Airline Offices, Courier Service, Gem & Diamond Exchange & Customs. ii. Cargo Village Terminal 11 – floor area of 1,858 sq. meters - Fitz Aviation & members of the Sri Lanka Association of Freight Forwarders. iii. Cargo Village Terminal 111 - floor area of 2,320 sq. meters - DHL cargo & The Board Of Investment. Iv. Cargo Village Terminal iv - floor area of 7,500 sq. meters used for all imports including temperature controlled freezer units, dangerous goods (both imports & exports) and the animal holding facility. V. Cargo Village Terminal v - floor area 9,000 sq. meters for all Exports The Bandaranaike International Airport has been undergoing numerous expansion projects in the last few years. The highway to Colombo and the rail link has been completed. This development provides more convenient connections to the Colombo City, the entire country and the future city airport on the suburbs of Colombo. Other improvements include the implementation by Sri Lankan Airlines of the E-AWB.
04
CARGO SALES REPRESENTATION FOR SRI LANKA
Future Expansionary Plans at the Colombo Airport 짜 A second runway to support the Airbus A380 (CMB is currently able to handle the A380 for emergency landings). 짜 Expansion of the Colombo Airport Highway Project to connect to the Southern highway. 짜 Expansion of International Aircraft Parking capacity to 32 aircraft. 짜 Expansion of cargo movement capacity to 1,000,000 tons per annum.
Current Operators at the Colombo Airport Scheduled Online - UL / EK / QR / SQ / CX / TG / MH / EY / KU / 9W / AI / KE / TK / WY SV / SG / MJ / G 9 / D7 / CA / MU / FZ (mix of Wide-body and Narrow-body Aircrafts ) Freighters - CX / Expo Aviation Active Offline Cargo Operators - AA/ UA/ BA/ DL/ KL/ SR/ LH Sri Lankan Airlines Cargo enjoys the sole monopoly of handling all Cargo related ground handling and Terminal activity at the International Airport. Direct services are available ex CMB to Europe, South Asia, the Far East, The Middle East and the Indian subcontinent. The two main Associations representing the cargo industry are SLACA (Sri Lanka Airline Cargo Association) with 12 online airlines and 16 offline members and SLAFA (Sri Lanka Freight Forwarders Association) with 188 members, SLAFA being the more active of the two Associations. Currently only CX operate a B747-400 freighter and Expo Aviation an ad hoc weekly freighter using an MD82 aircraft to South India.
05
CARGO SALES REPRESENTATION FOR SRI LANKA
MAIN MARKET SEGMENTS FOR AIR CARGO - EX COLOMBO (2014) According to the statistics of the Export Development Board the total annual air cargo uplifts 2014:272,050,166 kilograms. This covers all air freight to every destination.
Source: The above statistics are based on 2014 figures published by the Department of Civil Aviation
TOTAL AIR CARGO EXPORTS EX COLOMBO IN KILOGRAMS
Source – Sri Lankan Airlines
06
CARGO SALES REPRESENTATION FOR SRI LANKA
TOTAL CARGO UPLIFT BY AIR IN 2014 EX SRI LANKA (IN KGS’S) CODE UL
CONDOR
EK
EMIRATES
BA
BRITISH AIRWAYS
153763
140410
175076
118938
206381
184738
162343
147929
161148
156899
150330
136039
1893994 BA
FZ
FLY DUBAI
117377
115243
147754
125726
53249
85807
121356
123464
136766
163962
146668
141654
1479026 FZ
AI
AIR INDIA
29254
18225
33638
32020
44634
30166
29896
27090
24686
38756
50182
27889
386436 AI
KU
KUWAIT AIRWAYS
153699
146360
204219
159184
161822
202477
193074
147198
127603
160193
151418
139825
1947072 KU
WY
OMAN AIR
114208
139912
229938
219446
285041
193901
183954
204872
202324
204562
123639
163473
2265270 WY
783949
853833
678710
730756
755230
669179
843025
799893
762315
780476
920216
886505
9464087 QR
25854
27118
34142
19620
202694
183444
291835
184954
209945
215758
286458
181817
151934
182182
192398
215757
2499176 SV
367840
351758
444809
364901
382022
312919
348343
349310
306441
336897
303688
312311
4181239 SQ
33596
27377
39362
41692
41378
52821
49968
35970
37114
88952
163357
167117
778704 TG
24189
29208
33521
26330
28832
24721
36372
34151
32554
29211
31642
6603
SV SQ TG MU 9W
JET AIR
MS
EGYPT AIR
SG
SPICE JET
KR
SKIVA/ARM ENIA
717804
519192
555658
486025
416675
448210
407792
529960
508897
1882146 1622654 2167068 2048635 1482519 1463675 1650364 2027935 1740384 1748309
1614156
TTL
CATHAY
RJ
473605
DEC
4978004 57394117 UL
DE
QATAR AIRWAYS ROYAL JORDANIA N SAUDI ARABIAN AIRLINES SINGAPOR E AIRLINES THAI AIRWAYS INTL CHINA EAST
550003
NOV 4990283
CX
QR
658796
6272617 CX 0 DE
1741610 21189455 EK
106734 RJ
337334 MU
44220
33479
56808
50944
66098
55102
61170
32330
29306
42536
47079
58048
577120 9W
111006
116286
0
13487
39394
32898
46520
44670
43668
53920
69773
39087
610709 D7
812
3794
4679
5002
5596
5551
6114
4310
5184
5216
6196
3707
56161 SG
2570
13193
13232
4500
4958
7318
2563
12908
61242 RG
EY
ETIHAD
57451
122466
215659
117932
133849
120468
103788
92320
97499
119503
144610
123204
1448749 EY
TK
TURKISH AIRLINES
281710
363976
457057
273795
353887
374345
336751
279099
305353
297208
402974
441667
4167822 TK
G9
AIR ARABIA
141776
158420
148447
134965
153620
133926
115344
96490
142719
125371
136499
146504
1634081 G9
MJ
MIHIN AIR
174337
167364
192024
147027
177416
231185
241244
160047
179170
197525
202582
227801
2297722 MJ
63325
65446
75276
79588
90699
75920
72576
71019
83812
78347
88543
66819
228406
271594
331439
327157
294052
316010
424398
355556
325196
330033
314011
332910
MH KE
07
NAME JAN FEB MAR APR MAY JUN JUL AUG SEP OCT SRILANKAN 3967153 3689315 4548212 4304808 4844013 5278970 5600382 5088903 4993085 5110989 AIRLINES
MALAYSIA N AIRLINES KOREAN AIR
CARGO SALES REPRESENTATION FOR SRI LANKA
911370 MH 3850762 KE
TOTAL UPLIFT, DISCHARGE & TRANSHIPMENT JAN TO DEC 2014
MONTH
UPLIFT (kg)
DISCHARGE (kg) Excluding Transshipment
Jan-14
9619147
3043232
2176727
14839106
Feb-14
9144792
2399856
1907143
13451791
Mar-14
11315276
3707140
2213633
17236049
Apr-14
10046275
2814071
2318105
15178451
May-14
10539368
3353111
2669249
16561728
Jun-14
10559755
3233050
3124727
16917532
Jul-14
11351455
3243006
3299732
17894193
Aug-14
10757083
3203974
2954663
16915720
Sep-14
10301011
3634513
2908163
16843687
Oct-14
10788325
4004779
3036464
17829568
Nov-14
10789410
4091841
3248571
18129822
Dec-14
11059331
3867861
2931916
17859108
TOTAL
199,656 ,755
TRANSSHIPMENT (kg)
TTL (kg)
MAIN EXPORT COMMODITIES TO CANADA, THE US & SOUTH AMERICA The study was undertaken based on the Air Canada cargo distribution ability and all figures indicated are based on Air Cargo movements only.
Textiles & Apparel Knitted & woven is the primary airfreight export commodity. Although the largest, only 15%-20% is shipped by air. Despite manufacturers looking at reducing inventory cost and just in time production, there has been an increase in air freight of this commodity overall with 114.3 million kgs carried in 2012, 168.6 million in 2013 and 183 million kgs in 2014. The volumes to Canada and the USA however have shown a decrease over 2013. It is expected that GSP + will be reinstated to the US in 2016.
Diamonds, Gems & Jewellery Despite the overall decline in this commodity in the past three years, the GSP tax concession extended by the US currently on all sapphire gemstones exported from Sri Lanka has increased the demand to the US and potential for growth in the future is on an upward trend. Pearls and precious stones to Canada have seen a marginal increase from 30,556 Cs in 2013 to 44,565 Cs in 2014 even though Canada offers no tax concessions on this commodity. Due to the high taxes levied in Canada, the potential for growth in this commodity is relatively low.
08
CARGO SALES REPRESENTATION FOR SRI LANKA
MAIN EXPORT COMMODITIES TO CANADA, THE US & AND SOUTH AMERICA Manufactured products The market has remained somewhat static with 484,317 kgs in 2012 to Canada, the US & South America 471,723 kgs in 2013 and a marginal increase to 493,235 kgs in 2014.Machinery & mechanical appliances, industrial products (food &beverage, leather products, appliances, footwear, ceramic & Porcelain, Rubber, Coir and Wooden products are some of the items that fall within this category.
Fish & fisheries products including Tuna & Seafood The demand for this commodity has been increasing year on year from 12.5 million kgs in 2012 to 14.7 million kgs in 2013 and 16.5 million kgs in 2014. The majority of Sri Lanka’s tuna is air freighted fresh to the EU, a trade flow that has taken years to set up and hone, however the EU ban in Oct 2014 has adversely affected this industry. Despite the huge demand for this commodity in the US, the factories in Sri Lanka don’t have the frozen capability to leverage the full potential for this product that has grown from 1.6 million kgs in 2012 to 2.7 million kgs in 2013 to 3.3 million kgs in 2014. Currently an average of two containers a week of tuna is shipped to Canada alone. Fresh edible fish such as mullet and garupa is another commodity that is growing in demand.
Coconut & Coconut based products A year on year increase has been recorded in the total export of this commodity from 172,382 kgs in 2012 to 346,952 kgs in 2013 and 408384 kgs in 2014. However the market to Canada and the US was 6,231 in 2012, 116,314 in 2013 and 88,534 kgs in 2014. Coconut cream & milk, desiccated coconut, coconut flour and virgin coconut oil are a few of the products growing in demand in this sector.
Other Exports including Tea, Spices & Cashew Kernels This commodity is high density cargo that brings in good yields. The cargo is shipped to various locations as bulk tea and finished products (tea bags, packets).The rest include natural rubber andother export crops ( fresh vegetable, fruit, spices, cashew, essential oils, fisheries products (aquarium fish ). There was a decline to Canada & the US from 193,139 kgs in 2012 to 127,937 in 2013 and a slight increase to 131,277 in 2014 with the same trend apparent in the overall market of this commodity.
09
CARGO SALES REPRESENTATION FOR SRI LANKA
SRI LANKA EXPORT STATISTICS TO CANADA, THE US & S.AMERICA AIR FREIGHT Value in US$
10
CARGO SALES REPRESENTATION FOR SRI LANKA
SRI LANKA EXPORT STATISTICS TO CANADA, THE US & S.AMERICA AIR FREIGHT Value in US$
AIR CANADA CARGO SALES PROJECTION 2016 POINT OF SALE: SRI LANKA. UPLIFT IN KGS
- Average net rate to AC = USD1:25 - Total AC revenue: USD 468,000.00 - All rates are structured for shipments Q45 and more Routing: CMB YY LHR/ CDG/ FRA/ FCO/ IST/ AC - CANADA/ US/ S.AMERICA CMB YY DXB AC - CANADA/US /S.AMERICA The following leading Forwarders with potential to produce bulk on the above; 1. DHL Global Forwarding (Pvt) Ltd 2. Expo Logistix (Pvt) Ltd 3. Freight Links International (Pvt) Ltd 4. MIT Cargo(Pvt) Ltd 5. Speedmark Transportation Lanka (Pvt) Ltd 6. Ace Cargo (Pvt) Ltd 7. Expo Lanka Freight Ltd 8. MAC Supply Chain Solutions (Pvt) Ltd 9. Hellman Worldwide Logistics (Pvt) Ltd 10. Toll Logistics Lanka (Pvt) Ltd
11
CARGO SALES REPRESENTATION FOR SRI LANKA
SERVICE STANDARD The interests of Air Canada will be looked after by a Manager, guided by the MD and Board members of the company who have the required exposure to Cargo marketing and Operations in the past.. Experienced staff will take responsibility for all key functions of Sales/Marketing and Operations.
Dediicated Team: 01 Senior Sales / 01 Executive
Supported by: GSA Manager, Cashier, Accounts Assistant
Role of Senior Sales / Executive: Conduct regular sales visits to all potential agents and interline partners. Identify other agents with potential to generate business on AC. Weekly reporting and feedback to ED. Supervising and tracking all cargo movements whilst maintaining regular communication with agents. Providing updates etc
GSA Manager: Responsible for the overall operation of the Airline. Primary objective is to meet the Principal’s targets. Role includes expanding the Distribution, Agents product updates and quarterly agents review meetings & building relationships with the agents and interline partners.
OBJECTIVES ¥ Secure all possible business opportunities for Air Canada cargo from Sri Lanka to Canada, US & S. America. ¥ Ideally position Air Canada cargo as a reliable express delivery option in the market. ¥ Optimise sales potential including Small/ Sample parcels and Courier traffic. ¥ Leverage the already established strong relationships with interline carriers to secure regular capacity. ¥ Awareness of the AC product and image building as a credible option among the local shipping community through regular visits by a dedicated sale staff to cargo agents and direct shippers. ¥ Strive to ensure that both Stakeholders, i.e Airline and GSA, meet or surpass revenue objectives.
12
CARGO SALES REPRESENTATION FOR SRI LANKA
CONCLUSION Our companies have established a reputation for being specialists in the Airline, Travel and Tourism sector. We are proud of the Brands we represent, all of which we have pursued with a specific objective. The management and staff of United Ventures Private Limited will be totally independent and will place great emphasis and focus on positioning Air Canada Cargo in Sri Lanka. The close business relationships developed over the years between Air Canada and United Ventures will be further strengthened through the possible representation of Air Canada cargo in Sri Lanka. We look forward to developing a win win working relationship with AIRCANADA CARGO in the very near future. Thank You. The Management of United Ventures May 2015, Colombo.
13
CARGO SALES REPRESENTATION FOR SRI LANKA
14
CARGO SALES REPRESENTATION FOR SRI LANKA