candl

IATA , W ORL D A C D AIR C ARGO FIG U RES C A U SE C ONF U SION Volume III n No 4

June 2014 I `60

c a r g o

l o g i s t i c s

p 3 Gives a wake-up call

The mega alliance of three of the world’s largest ocean carriers has created more than ripples even before operations have begun Cathay goes for changes

Cathay Pacific is adjusting to pressures from belly cargo and high fuel prices

Plight of Pareeshan Ram

Truck owners will have to contend with rising diesel prices and other expenses

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managing EDITOR’s NOTE

Hope thrives amidst the confusion

O

ne says the air freight markets are in modest slowdown and another points out a “solid first quarter”. Yes, we are talking about the two sets of air cargo figures. While the April 2014 figures from the International Air Transport Association (IATA) for global air freight markets show that demand has not grown in recent months and there is a “modest slowdown”, those from WorldACD tell a different tale and even goes on to point out that “the (air cargo) industry will be pleased to see this trend (of a solid first quarter) continue” in the future months.

Confusing no doubt! Whether there is optimism or pessimism in the air, what is certain is that air cargo needs to pick up. The news from around the globe – especially from the developed nations – speak of growth in exports and, therefore, a significant spike in air cargo volumes. But where are the volumes?

This, despite the fact that load factors have been hovering around 45-46 per cent. Is it that overcapacity still exists? Well, air cargo bosses think so (see interview with Cathay Pacific’s James Woodrow) and are unanimous in their opinion that aircraft bellies are taking away most of the cargo destined for freighters. That is not a good sign because the prime position that air cargo holds as a contributor of revenue is slowly being eroded.

The figures – whether from IATA or WorldACD – should be a guide of sorts and not mere ‘markers’ to help stakeholders create new markets and enhance business. It is time these stakeholders started thinking differently. Let new ideas flow from younger minds – only then will the industry become more profitable.

On the high seas, however, something dramatic is taking place. The P3 alliance seeks to bring huge benefits to shippers. Will it change international shipping? It will certainly – hopefully, it will start operations after getting the nod from all the anti-trust agencies sometime later this year – but it will not

only usher in a non-competitive regime but also end the run of small containerships. Whether that will be good for shipping or not – only the future will tell.

Amidst all this, where does India come in? Now that the government of Narendra Modi is well-settled, the cargo and logistics sector hopes that infrastructure – or rather the lack of it – will get a well-deserved push. Only then would our air cargo sector get off the ground. Over the last 65-odd years, we have not had any dedicated air cargo carrier. A few have tried but failed due to a variety of reasons.

Once infrastructure in the Tier-2 and 3 cities are readied, domestic air cargo – that by all accounts has been growing by leaps and bounds – will take off. On the other hand, as the GST regime kicks in, transportation by road will become easier. The much-hyped ‘farm to fork’ concept will gain credence and the country could look forward to a healthy and happy population.

Much has been written about our Prime Minister’s cordial relations with his Japanese counterpart.

With the Comprehensive Economic and Cooperation Agreement (CEPA), Japan could hasten the Delhi Mumbai Industrial Corridor (DMIC) project. In addition, Japan wants to help out in setting up a Chennai-Bengaluru Industrial Corridor and a Dedicated Freight project in the south, connecting the cities of Bengaluru and Chennai. If these go through – and they will given the eagerness and intent of the Prime Minister – we could look forward to more muscle for the cargo and logistics sector.

We have our finger on the pulse of the sector and any movement – big or small – will reach our readers. But, as always, communication cannot be like the one-handed clap. Let’s keep the channels of conversation open.

Till then, happy reading!

tghosh@newsline.in

June 2014

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Cargo & Logistics articles news views edits interviews clippings profiles news digest STATISTICS COLUMNS

contents

C&L

Volume III n No 4

Editor-in-Chief

K SRINIVASAN Managing Editor TIRTHANKAR GHOSH Consulting Editor ramesh kumar Senior Sub-Editor-cum-Reporter punit mishra Sr. Proof Reader Rajesh Vaid

Cover Story

p14

Maersk Line, Mediterranean Shipping Company and CMA CGM agreed in principle to establish a long-term operational alliance on East-West trade routes, called the P3 Network. A look at the new alignment, the obstacles it faces and what effects it would have on India.

Controversy

p18

The air cargo community around the globe has been delivered two sets of figures, one by IATA and another by WorldACD, for the first quarter of current year creating a controversy.

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SPECIAL REPORT

Correspondents anjana tanwar, naveed anjum, charchit singh Chief Visualiser ajay negi Designers Mohit kansal, nagender dubey Picture Editor Pradeep chandra Photo Editor HC Tiwari Staff Photographer Hemant rawat Director (Admin & Corporate Affairs) Rajiv Singh Vice President (Business Development) Vinod kaul

The trucking sector is highly sensitive to fuel price increases. The recent diesel price increase holds the attention of transporters resulting in the hike of freight rates.

SPOTLIGHT

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James Woodrow, Director Cargo, Cathay Pacific talks about declining air cargo volumes, the new cargo terminal in Hong Kong and much more.

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NEWS IN BRIEF

Lufthansa Cargo is in preliminary talks with All Nippon Airways over a possible cooperation agreement of joint cargo transports.

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June 2014

Cargo & Logistics just in time

rapiscansystems.com

US postpones 100% container scanning

T

he US authorities have postponed implementation of the new rules that required all cargo containers entering the US to be security scanned prior to departure from overseas for a further two years, amid questions over whether this was the best way to protect US ports. The 100 per cent scanning of US bound containers at their last foreign ports was scheduled to take effect on July 1, 2014. The requirement was introduced with the SAFE Port Act (Security and Accountability For Every Port Act of 2006). Homeland Security Secretary Janet Napolitano in May, 2012 notified the US Congress that she would use her authority under the 2007 law to delay

implementation by two years because the systems available to scan containers would result in a negative impact on trade capacity and the flow of cargo. Commenting on this latest climbdown, Peter Quantrill, Director General of the British International Freight Association (BIFA) said: “As BIFA has said repeatedly, the Department of Homeland Security (DHS) has consistently underestimated the enormity of the task in hand relative to the costs both to the US government and foreign governments, as well as, importantly, the limited ability of contemporary screening technology to penetrate dense cargo, or large quantities of cargo in shipping containers.”

Air cargo grows P

reliminary traffic figures for the month of April released recently by the Association of Asia Pacific Airlines (AAPA) showed encouraging growth in both international air cargo and passenger markets.

For the region’s carriers, international air cargo demand in freight tonne kilometres (FTK) increased by 4.7 per cent in April, on the back of sustained demand for Asian exports. However, freight load factors remained under pressure due to capacity expansion. With offered freight capacity expanding by 5.3 per cent, the international freight load factor averaged 64.3 per cent in April, 0.4 percentage points lower than the same month last year. Commenting on the results, Andrew Herdman, AAPA Director General said, “International passenger traffic demand continued to grow, with the region’s carriers registering a 5.2 per cent increase in international passenger numbers during the first four months of the year. During the same period, air cargo demand for the region’s carriers grew by 4.2 per cent, thanks to an improvement in global trade conditions.” Looking ahead, Herdman added.

Shantanu Bhadkamkar heads IFCBA S

hantanu Bhadkamkar, Immediate Past Chairman of Federation of Freight Forwarders Associations In India (FFFAI), was unanimously elected as Chairman of International Federation of Customs Brokers Association (IFCBA) at the Board of Directors Meeting of IFCBA held in Seoul, Korea on May 13, 2013. IFCBA (International Federation of Customs Brokers Associations) is entering its 25th anniversary year as the only global organization representing customs brokers.As Chairman, Bhadkamkar leads a newly elected executive committee team in IFCBA. which include Managing Directors, Pedro Bequengue (Angola), Can-

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June 2014

Newly-elected IFCBA office bearers

dace Sider (Canada), Vito Totorizzo (Italy), Han Hwi-Sun (Korea), Victor Gamas (Mexico) and Darrell Sekin (United States). George Zografos (Greece) is the Immediate Past Chairman while Carol West (Canada) con-

tinues as Secretary of IFCBA In his address as Chairman of IFCBA, Bhadkamkar said that “Customs brokers have integrated into global supply chains as experts in logistics and border management, and have made unparalleled contributions towards making supply chains tax efficient, legally compliant, environmentally friendly, safe and secure”. He informed, “As the newly elected Chairman of the IFCBA, I am committed to work with our member associations to strengthen our professionalism, implement IFCBA best practices and continue to add value to the many small and medium sized businesses who rely on our expertise.”

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Cargo & Logistics just in time

DHL study points to future trends for logistics industry In the second edition of the Logistics Trend Radar, DHL has reported on future trends for the logistics industry. The current report builds on the first issue, portraying the recent development of trends already identified in 2013 and introduces new trends to complete the picture. The report sketches a future landscape for logistics professionals and challenges they will face, but also outlines solutions that are in development, e.g. for multi-channel retailing or predictive purchasing.

“The logistics industry is undergoing rapid and profound changes,” according to Matthias Heutger, Senior Vice President Strategy, Marketing and Development, DHL Customer Solutions & Innovation.

“As a truly global company we are in a unique position to draw on our experience in every geographical region on this plan-

et as well as with clients from every single industry. With the Logistics Trend Radar, we created a dynamic tool, inspiring us and others to derive innovative solutions in the world of logistics,” he added.

Among the new trends the report highlights are: • Omni-Channel Logistics: The integra-

tion of different offline and online shopping channels making use of interactive eTags with personalised content and integrating social media and mobile devices • Anticipatory logistics: The big data analysis of customer product searches, shopping histories, wish-lists and even cursor movements in order to send a shipment even before the customer places an order • Crypto Payment: Universal payment systems that allow global cross-currency payments to clear in seconds, support any unit of value (frequent flyer miles, mobile minutes etc.) and make room for new pricing models e.g. via micropayments The report’s findings form the basis of the hands-on experience in Deutsche Post DHL’s Innovation Center in Troisdorf, Germany and find their way into prototype and pilot innovations.

e-AWB gains momentum T

he electronic Air Waybill (e-AWB) penetration jumped in April 2014 to 14.3 per cent, 0.9 per cent more than March, surpassing 205,000 shipments, according to IATA. It was the highest single month growth since the start of the industry initiative. The implementation of new technologies and the Customs acceptance of e-AWB are key elements to achieve a fully paperless supply chain. The top three airlines by e-AWB volumes were: Cathay Pacific with 45.7 per cent, followed by Emirates with 28.5 per cent and Korean Air with 21.4 per cent.

The April e-AWB numbers increased with the help of Hong Kong Dragon Airlines (KA) that has increased by over 18 per cent between March and April 2014, and Egyptair (MS) with a significant increase of over 16 per cent. Tradewinds Group has

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June 2014

TOP E-AWB PERFORMERS COUNTRY

RANKING BY PERCENTAGE PENETRATION UNITED ARAB EMIRATES 72.1% HONG KONG, CHINA 45.4% USA 9.4% AIRLINES FLYDUBAI 93.7% EGYPTAIR 50.1% CATHAY PACIFIC GROUP 45.6% FREIGHT FORWARDER: PANALPINA 21.2% SCHENKER 20.9% DHL GLOBAL FORWARDING 19.3%

had an impressive start with 69.9 per cent e-AWB penetration in their first month of implementation. Etihad went live with e-AWB on seven lanes out of LHR with DHL Aviation. Now, Etihad is also connected to the Worldwide Information Network (WIN) platform which has enabled their first e-AWB shipment.

It may be mentioned that the Pakistan Customs are paving the way for e-AWB acceptance through the roll-out of an electronic system by July 1, 2014. Additionally, Qatar Airways (QR) has implemented single process in SIN in partnership with DNATA Singapore and QR also went live with e-AWB at seven Indian airports (BLR, BOM, CCU, COK, DEL, HYD and MAA).

Indian Customs are provided with a self-attested A4 print out of the e-AWBs by the agent/shipper.

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Cargo & Logistics Numbers

4th

container terminal at JN Port

by PSA

P

SA International won a concession to build and manage the fourth container terminal at the Jawaharlal Nehru Port (JN Port) in India’s commercial capital Mumbai, entailing an investment of `8,000 crore. Called Bharat Mumbai Container Terminals (BMCT), the new terminal will help cater to the increasing demand for container handling capacity and facilitate maritime trade in India.

The project involves developing a capacity to handle 4.8 million twenty-foot-equivalent-unit (TEU) containers a year in two phases. PSA has to submit a bank guarantee of `375 crore for the project

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out of which `75 crore is submitted and the remaining `300 crore will have to be submitted in 80 days.

The design, building, operation, finance and transfer agreement for BMCT is for a period of 30 years. PSA International, formerly the Port of Singapore Authority, is one of the world’s largest port operators.

$182mn 50

port contract awarded by Peru

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eru awarded a USD 182.4 million contract for the construction and operation of a maritime port to a consortium of Brazilian and Spanish companies. Consorcio Paracas beat out 2 other bidders on the project, including a local unit of APM Terminals, owned by the Maersk Group.

The winning consortium was formed by Spain’s Servinoga and Brazilian companies Pattac Empreendimentos e Participacoes, Tucuman Engenharia e Empreendimentos and Fortesolo Servicios Integrados. The terminal port near Peru’s southern coastal city of Pisco, which the consortium will manage through a 30 year concession, is expected to speed up mineral shipments from the Andean country’s southern mines.

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June 2014

26th

consecutive year of profits for Emirates

E

mirates Group recorded its 26th consecutive year of profits in 2013. The company posted a US$1.1bn profit – 32 per cent up on the previous year. Its revenue climbed to $23.9bn, 13 per cent higher, despite competitive pressures and the slow global economic recovery. Cargo’s contribution was impressive, with Emirates SkyCargo for the first time reporting a revenue increase as high as nine per cent, to $3.1bn – but with an accompanying one per cent yield decline. “Contributing 15 per cent of the airline’s total transport revenue,

per cent freight subsidy through ports outside Odisha

xporters are likely to enjoy a subsidy of up to 50 per cent on total freight charges paid on shipment of merchandise through ports outside Odisha provided ports within the state do not have facilities for handling such cargo. Exporters would also get incentives for publicity and exposure of up to 50 per cent of the total cost subject to a ceiling of `50,000. But such incentives will be allowed only in case of select reputed trade fairs. Besides, firms availing travel support from government of India under similar scheme will not be eligible for state incentive. The draft policy is aimed at identifying sectors which are already contributing or

have the potential to contribute to exports. It also seeks to identify the bottlenecks which need to be overcome to enable the sectors to realise their full potential. Infrastructure constraints have to be overcome to boost exports. Odisha’s overall exports stood at `2382.83 crore on 2001-02 and have been consistently growing since then. But exports from Odisha in 2011-12 saw a drop of 5.61 per cent at `16,139.20 crore in 2011-12 compared to `17,098.88 crore in the previous fiscal. The steepest fall was noticed in case of exports of engineering, chemicals and allied products which nosedived 75.23 per cent from `612.62 crore to ` 151.69 crore.

numbers

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ports saw rise in cargo volumes

C

SkyCargo continues to play an integral role in the company’s expanding operations,” said a statement. Volumes climbed by eight per cent to 2.3 million tonnes in an otherwise flat and challenging airfreight market, highlighting the UAE carrier’s ability to grow revenues against the industry trend, the statement adds.

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per cent fall in net of Great Eastern Shipping

argo volume at 12 major ports in the India recorded a boost of 8.90 per cent at 47.37 million tonnes (MT) during April as against a year-ago period. The cargo handled by 12 major ports stood at 43.50 MT in 2012-13.

Kandla port handled the highest 6.94 MT traffic during February, followed by 6.41 MT cargo by Paradip Port and 5.42 MT by Jawaharlal Nehru (JN) port, as per the data

by Indian Ports Association (IPA). Mumbai port recorded 5.05 MT traffic while Visakhapatnam Port received 5.01 MT cargo and Chennai Port 4.39 MT traffic.

These ports had handled 555.50 MT cargo in 2013-14 recording a marginal increase of 1.78 per cent over the previous year.

The cargo handled by these ports stood at

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reat Eastern Shipping reported a 20 per cent fall in net profit at `66.84 crore for the quarter ended March 31, mainly due to hike in fuel prices. The company had posted a net profit of `83.73 crore in the corresponding period of last financial year (2012-13). The company’s total income from operations stood at `798.77 crore for the review period as against `775.28 crore in the same period last fiscal. The expense on fuel, oil and water during the quarter was `105.19 crore as against `82.60 crore in the previous fiscal (2012-13). Great Eastern Shipping’s net profit for fiscal 2013-14 stood at `537.76 crore, against `573.95 crore in FY’13. The company has two main businesses - shipping and offshore.

545.79 MT in 2012-13. The present capacity of major ports is only about 700 MT, while the Maritime Agenda of the Ministry has fixed an aim of 3,130 MT capacity addition by 2020. India has 12 major ports - Kandla, Mumbai, JNPT, Marmugao, New Managlore, Cochin, Chennai, Ennore, V O Chidambarnar, Visakhapatnam, Paradip and Kolkata (including Haldia) which handle approximately 61 per cent of country’s total cargo traffic. During the last fiscal, the government awarded 30 projects to augment major ports capacity to 220 million tonne per annum (mtpa). A parliamentary panel has recently termed the targets as unrealistic saying it had no connection with the past performance.

B747-8Fs placed by Atlas

tlas Air Worldwide has placed two B747-8 freighters into Aircraft, Crew, Maintenance and Insurance (ACMI) service for DHL Express. The pair will be operated by Atlas Air in Polar Air Cargo Worldwide’s transpacific express network under an ACMI arrangement for DHL Express and Polar’s other customers. The aircraft replace two B747-400 freighters currently in ACMI service for the express

parcels giant. “We are delighted to deepen our long-standing relationship with DHL and to support the strong growth of its transpacific network operations,” said William Flynn, president and chief executive of Atlas Air Worldwide. Atlas will operate a total of four 747-8Fs and five 747-400Fs in ACMI service on behalf of DHL. Atlas will also continue to operate seven Boeing 767 Freighters in CMI service for DHL.

June 2014

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Cargo & Logistics

DWC’s jewel

Emirates SkyCargo Emirates SkyCargo’s move to set up base at DWC’s Al Maktoum International Airport will save time and ensure safety

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mirates SkyCargo’s investment in highly-qualified staff, the very latest information technology, the most efficient aircraft and the finest ground handling facilities, has made it a significant force in the global air cargo industry. The freight division of one of the largest airlines in the world, officially started operating its freighter fleet from its new cargo terminal at Dubai World Central’s Al Maktoum International Airport.

After months of construction, planning and testing, Emirates SkyCargo’s freighter fleet officially started operating from its new cargo terminal at Dubai World Central’s Al Maktoum International Airport. The first service was a Boeing 777F from London Heathrow with more than 100 tons of cargo. Phase 1 construction of DWC is complete with 250 staff and the ability to handle 700,000 tons of cargo annually.

Phase 2 will see 500 staff employed and is set for completion in September this year. It is expected in the future to handle a million tons of freight.

“The start of operations at DWC today is a major milestone for Emirates SkyCargo. Our various teams, along with many of our partners and stakeholders, have been working very hard over the past few months to complete phase one of the

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June 2014

Emirates Sky Cargo Facility at Al Maktoum International Airport (DWC) Facts and Figures

project. We have also held numerous trials to test the readiness of every aspect of the facility and the movement of cargo between the DWC and Dubai International to ensure a smooth transition and enable us to meet our customers’ expectations,” said Nabil Sultan, Emirates Divisional Senior Vice President, Cargo.

Emirates SkyCargo currently has a fleet of 12 freighters, 10 Boeing 777 Fs and two Boeing 747-400 ERFs, which operate to more than 50 destinations around the world. Cargo arriving on freighters will be transported by dedicated trucking services between DWC and Dubai International Airport along the Emirates Road (E-611) which will be the main corridor for connecting cargo between freighters and the passenger fleet. The terminal infrastructure also includes 45 truck docks and 80 truck parking spaces, in addition to 12 aircraft stands directly in front of the terminal. The newly opened terminal is equipped with state-of-the-art technology. It features a fully automated material handling system which is one of the world’s first to have an automated Quick Dolly Transfer System that enables quick transfer of 6 Unit Load Devices (ULDs) simultaneously. The perishable area has been designed to handle about 140 000 tonnes of cargo per annum, featuring three large areas each with different temperature ranges.

The start of operations at DWC today is a major milestone for Emirates SkyCargo. Our various teams, along with many of our partners and stakeholders, have been working very hard over the past few months to complete phase one of the project.

Nabil Sultan, Emirates Divisional Senior Vice President, Cargo June 2014

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Cargo & Logistics Cover story

At sea, courtesy When three of the world’s largest ocean carriers announced that they were joining hands to set up what is now commonly known as the P3 alliance, it created more than ripples. A look at the new alignment, the obstacles it faces and what effects it would have on India.

B

ig is beautiful in the ocean shipping business. Yes, we are talking about the new alliance that is ready to create ripples around the world: it is an alliance by the world’s largest ocean carriers, Denmark’s AP Moeller-Maersk’s Maersk Line, France’s CMA-CGM and the Swiss-based Mediterranean Shipping Co. The three have, in principle, agreed to establish a long-term operational alliance on East-West trades, called the P3 Network. With the aim to improve and optimise operations and service offerings, the P3 Network will operate a capacity of 2.6 million TEU (initially 255 vessels on 29 loops) on three trade lanes: Asia-Europe, Trans-Pacific and TransAtlantic. While the P3 Network vessels will be operated independently by a joint vessel operating centre, the three lines will continue to have fully independent sales, marketing and customer service functions.

The P3 Network will provide customers with more stable, frequent and flexible services. Each of the lines will offer more weekly sailings in their combined network than they do individually. As an example, the P3 Network plans to offer eight weekly sailings between Asia and Northern Europe. In addition the P3 Network

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will offer more direct ports of call. The improved network is expected to reduce the disruptions for customers caused by cancelled sailings. In order to provide customers with a consistent service offering across the network, the lines will establish an independent joint vessel operating centre.

Declining volume growth and overcapacity in recent years have underlined the need to improve operations and efficiency in the industry. This has prompted the creation of other operational alliances such as G6 and CKYH. Using the P3 Network the lines expect to be able to improve their efficiency through better utilisation of vessel capacity.

The lines intend to start operations in the second quarter of 2014, but the starting date will be subject to obtaining the approval of relevant competition and other regulatory authorities. In addition, the establishment of the P3 Network is subject to the lines agreeing on definitive contracts.

Finalisation and signing of the contracts is planned for the fourth quarter of this year.

Elaborating about the alliance, Maersk global head Soren Skou told business magazine Business Today that the “key point about the P3 alliance is that if it is approved by the regulatory authorities, it will provide first of all significantly better physical products than what we offer today in the east-west trades that are covered,

As we go to press, C&L has learnt that China’s Ministry of Commerce (MOFCOM) has blocked the launch

of the P3 Network by MSC, CMA CGM and Maersk Line citing “monopoly concerns”. Vincent Clerc, Chief Trade and Marketing Officer for Maersk Line said the decision was a surprise since the three shipping majors had “worked hard” to address China’s concerns.

-- Managing Editor

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June 2014

P3

cover story

The P3 Network will provide customers with more stable, frequent and flexible services.

Each of the lines will offer more weekly sailings in their combined network than they do individually. As an example, the P3 Network plans to offer eight weekly sailings between Asia and Northern Europe.

June 2014

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Cargo & Logistics Cover Story

flickr

According to SeaIntel, a leading market intelligence provider in the container shipping industry, the P3 alliance will have distinct advantages as far as vessel size and number of ports touched. Alan Murphy, COO and Partner in SeaIntel, was quoted saying that “P3’s average vessel size will, in Q2 2014, be 12,900 TEUs.

P3 Highlights Share of container each member of the P3 Alliance will contribute Mediterranean Shipping Co. 34% A.P. Moller-Maersk’s 42% CMA CGM 24%

The P3 Network will be based on existing capacities of each member, initially operate a capacity of 2.6 million TEU (255 vessels). Ü Maersk Line will contribute with approximately 42 per cent of the capacity (including the new Triple-E ships), of about 1.1 million TEU. Maersk Line will continue to offer the Daily Maersk product to those customers requesting it. Ü MSC will contribute with approximately 34 per cent of the capacity, of about 0.9 million TEU of capacity. Ü CMA CGM will contribute with approximately 24 per cent of the capacity equalling 0.6 million TEU. Ü Vessels contributed to the P3 Network will continue to be owned and/or chartered by the lines. Ü

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June 2014

better products in terms of frequency, better products in terms of geographic coverage and reliability. Secondly, we will be much more efficient” Industry pundits have calculated how much each of the shipping lines will contribute to P3. While the Copenhagen-based Maersk Line will contribute around 42 per cent of the P3 capacity, or about 1.1 million TEUs (that will comprise the new Triple-E ships — the largest ships in operation today, each one is 18,000 TEUs), the Geneva-headquartered MSC will add 34 per cent of the capacity, or 0.9 million TEUs and the Marseilles-based CMA CGM will throw in around 24 per cent of the capacity, or 0.6 million TEUs. If estimates are to be believed, P3 under the leadership of Maersk Line’s Lars Mikel Jensen as its Chief Executive Officer could control about 42 per cent of the market on the Asia to Europe route, 24 per cent on the Trans-Pacific routes, and around 42 per cent on the Trans-Atlantic route. Although it is still not certain where the P3 will be headquartered but there are indications that it could be from London and Singapore with a staff of approximately 200 persons.

According to SeaIntel, a leading market intelligence provider in the container shipping industry, the P3 alliance will have distinct advantages as far as vessel size and number of ports touched. Alan Murphy, COO and Partner in SeaIntel, was quoted saying that “P3’s average vessel size will, in Q2 2014, be 12,900 TEUs. The P3 carriers will have a significant economy of scale advantage, allowing them to operate with

a much lower unit cost”. In addition, the number of port-to-port loops that the P3 carriers will serve will be much more than other carriers. In the Asia-North Europe routes, the P3 carriers will service 143-plus port-to-port combinations; simply put, the carriers will directly serve 80 combinations more while on the Asia-Mediterranean routes, the P3 alliance ships will offer 172 direct port-to-port combinations.

Murphy went on to point out that if the P3 alliance gets the green signal from all the anti-trust authorities including China, the other carriers would react or lose market share. When that happens, there could be “a renewed programme of ordering mega vessels, despite the detrimental effect this would have on the long-term market outlook”.

What does the alliance hold for India?

Little, because none of the country’s ports are in the routes of the P3 alliance. However, what is important is that all the carriers have a presence in India with Maersk leading the show. In the recent conversation with Business Today, Soren Skou mentioned that Maersk had a number of Indian clients “who are not only shipping from India but actually doing business all over the world.

Skou said that since the “large Indian business groups are not just doing business in India”, he was sure that some of Maersk’s India based customers would benefit from the P3 alliance.

Maersk has been in India since 1932. In fact, it has the largest number of employees in the country. As Skou pointed out, Maersk

cover story

was providing “one of the things that India needs for its future growth – logistics, transportation, port infrastructure as a group”. India has been playing a major role for Maersk Line “not as a market in itself but also as a provider of business process services”.

On its part, Maersk was responsible for creating another alliance: this one in the Asian region. On January 14, 2014, Maersk Line, APL and OOCL announced a new cooperation on three existing Far East to Indian subcontinent services, starting February 2014.

In a slot-sharing agreement that also includes partners CMA CGM, Emirates Shipping Line, Hamburg Süd and Regional Container Lines, 18 vessels with a total capacity of about 17,500 twenty-foot equivalent (TEU) will be deployed on the three Far East-Indian subcontinent services.

The multi-carrier cooperation will provide more frequent sailings between Asia’s major trading hubs and, at the same time, eliminate unnecessary service duplications between the carriers. Known as the Far East alliance, it is similar to P3 product and, according to Skou, allows Maersk to sell better products and more frequencies. “It’s good for our customers because it allows us to ship more at reduced costs, inventory costs and at the same time we can benefit from becoming more cost effective and invest in business freight costs are lower”.

Even so, concerns have been voiced over the P3 alliance in many quarters. Heading the list is the Asian Shippers Council

www.cmacgm-marcopolo.com

Even so, concerns have been voiced over the P3 alliance in many quarters. Heading the list is the Asian Shippers Council (ASC). Incidentally, India is a member of the council. The ASC has emphasized that the P3 was “something similar to a monopoly”. Other than the ASC, shippers in India have expressed concern about the vessel sharing agreements (VSAs).

(ASC). Incidentally, India is a member of the council. The ASC has emphasized that the P3 was “something similar to a monopoly”.

Other than the ASC, shippers in India have expressed concern about the vessel sharing agreements (VSAs). Since the shippers are unorganized, unlike those in the US and the EU, they fear that they would have to counter volatile freight rates.

Industry experts say that while almost all shipments in the US and the EU are governed by annual rate contracts with container carriers, only a few Indian shippers are covered by annual rate contracts. When the P3 alliance starts operations, there will be less competition since the alliance members will be holding much of the capacity. Result: freight rates will be dictated. In fact, Indian shippers feel that there should be no VSAs. It may be mentioned here that the government has exempted VSAs among container carriers from the provisions of the Competition Act. A notice in the Gazette of India dated December 11, 2013 stated: “In exercise of powers conferred by clause (a) of Section 54 of the Competition Act, 2002 (12 of 2003), the central government, in public interest, hereby exempts the vessel sharing agreements of liner shipping industry from the provisions of Section 3 of the Competition Act, for a period of one year from the date of publication of this notification in the official gazette, in respect of carriers of all nationalities operating ships of any nationality from any Indian port.”

During this year-long exemption period, the country’s director general of shipping will be

responsible for monitoring agreements like the P3. Strangely, the exemption has come at a time when alliances like the P3 and the G6 alliance between APL Ltd, Hapag-Lloyd AG, Hyundai Merchant Marine Co. Ltd, Mitsui O.S.K. Lines Ltd, NYK Line Ltd and Orient Overseas Container Line Ltd, are under the lens in the US, EU and China.

In fact, Chinese shipowners have made it quite clear through their China Shipowners’ Association (CSA) to their government that the P3 alliance would create unfair competition in the container shipping markets. Among CSA’s members are the top Chinese government-owned Cosco Container Lines and China Shipping Container Lines. The CSA has declared that it would keep a strict watch on the shares of the P3 companies once the operations start.

The Chinese are not alone. Sometime ago, the US Federal Maritime Commission Chairman, Mario Cordero, asked the Chinese and the European Union to join in a Global Regulatory Summit on the P3 alliance that he was planning. The US Federal Maritime Commission is responsible for a fair, efficient, and reliable international ocean transportation system even as it protects the consumer from unfair practices. Apart from the question of unfair competition, owners of small ships are worried. The P3’s large vessels – all above the 14,000 plus TEU ships – would edge out the 8,000-TEU and 10,000-TEU containerships. Drewry’s Maritime Research has pointed out that there will be sailing cancellations by the smaller shipowners and not service withdrawals.

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Cargo & Logistics controversy

Figures, numbers, stats

Much to the consternation of the air cargo community around the world, there are two sets of figures doing the rounds.

While the International Air Transport Association figures for April suggest a reversal in growth, WorldACD holds a totally different view pointing out that the first quarter of the year was “solid” and that “the industry will be pleased to see this trend continue” in the future months. A report

T

he International Air Transport Association (IATA) released data for global air freight markets in April showing demand (measured in Freight Tonne Kilometers or FTKs) was 3.2 per cent above the previous year levels.

Demand has not, however, grown in recent months. Traffic levels in April were slightly below those of January and 1.1 per cent lower than what was recorded in March.

Latest data show that prior improvements in the demand environment are experiencing some reversal. Largely as a result of further slowdown in the emerging markets, mostly China, indicators of business confidence slipped further in April. Levels still point toward growth, but at the weakest pace for the past five months.

World trade growth has also slowed over recent months. However, momentum in advanced economies remains intact, and export orders still point to expansion. This suggests that current sluggishness in the demand drivers is likely temporary.

“Trading conditions for air freight are difficult. Overall, business activity and trade have shifted down a gear after a strong end to 2013. And this is taking its toll on growth in the air cargo sector. Developed economies are still maintaining postrecession momentum and the expectation is

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for a stronger finish to the year,” said Tony Tyler, IATA’s Director General and CEO. The air cargo sector is committed to improving its attractiveness to shippers through efficiency. The goal is to reduce shipping times by 48 hours before 2020.

A centerpiece of this effort is the e-freight initiative which seeks to modernise the air cargo sector with paperless business processes. “Air cargo’s sales proposition is speed, and cumbersome processes are holding us back. In March we reached a significant milestone. For the first time, the e-Air Waybill (e-AWB) was used for over 200,000 shipments. That’s good news but we still have a long way to go,” said Tyler.

Though conditions were difficult, AsiaPacific carriers saw cargo demand grow by 5.2 per cent year-on-year. The strength of this performance was exaggerated by a comparison to a particularly weak April 2013. Ongoing weakness in Chinese manufacturing activity was likely to impact on air freight demand in coming months, and export volumes in emerging Asian markets had been in continuous decline throughout 2014. Capacity rose 7.8 per cent. On the other hand, European airlines saw demand for air cargo fall by 0.7 per cent compared to April 2013, as trade activity levelled off. GDP growth in the

Eurozone was just 0.2 per cent in the first quarter. However, indicators look positive for a stronger second quarter. Capacity was up just 0.2 per cent.

North American carriers posted yearon-year growth in demand of 2.6 per cent.

The latest data showed a rebound in trade volumes to and from the US and underlying growth trends in business activity were positive. This could boost air freight growth

etcinternational.com

controversy

in future months. Capacity was down 0.8 per cent. Middle Eastern carriers, however, reported that air cargo demand expanded 8.7 per cent compared to the previous April.

This was slightly slower growth compared to previous months, but still easily the strongest growth of any region. Carriers are benefitting from the upswing in developed economies, and increased volumes from emerging markets in Asia and Africa.

Capacity was up 8.1 per cent.

Latin American airlines suffered a fall in cargo demand of 6.5 per cent compared to April 2013. Trade volumes in the region have slowed in recent months, reflecting a wider ongoing emerging market malaise.

Capacity also fell, but by only 0.5 per cent.

African airlines saw air cargo demand grow by 2.9 per cent. Further growth was held back by weakness in key economies in

the region, such as South Africa. Capacity rose by only 1.1 per cent.

Close on the heels of the April data, IATA brought out its mid-year report, “Economic Performance of the Airline Industry�. The report predicted airline profitability in 2014. Overall net profit for the world’s airlines would be around US$18 billion with more than half of the total profit being made by the North American carriers

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Cargo & Logistics controversy despite the fact that these carriers will have the smallest increase in profitability of all regions.

However, it is cargo which will continue to disappoint though cargo traffic will be expected to go up 3.1 per cent.

IATA has forecast that $6.8 trillion worth of goods will be moved by carriers in 2014. But these goods will be transported at freight rates that will be four per cent lower than that of 2013, after inflation.

Incidentally, the cargo growth rate of 3.1 per cent will be a little more than the the expected rate of passenger traffic growth.

It is no wonder that IATA has pointed out in the report that “the divergence in growth trends between cargo (slow) and passenger (robust) is creating challenges for airlines in matching capacity to demand.” Simply put, cheaper belly capacity is killing yields (see interview with Cathay Pacific’s James Woodrow elsewhere in this issue).

Other than the pressures from belly capacity, there are a few issues that will continue to hinder the growth of air cargo.

The first is rising labour costs in China and other manufacturing countries that has led to “on-shoring” by manufacturers which in turn has reduced air freight. In addition, the move by surface transporters to reduce costs has sent freight tonnages down.

Today, the average time for an air freight shipment is around 6.5 days though IATA has asked its members to bring it down to two days by 2020.

The question that many in the trade have been asking is whether IATA projections are right. WorldACD that

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June 2014

“Trading conditions for air freight are difficult. Overall, business activity and trade have shifted down a gear after a strong end to 2013.

And this is taking its toll on growth in the air cargo sector. Developed economies are still maintaining post-recession momentum and the expectation is for a stronger finish to the year” Tony Tyler

provides comprehensive data on air cargo markets holds a different view: In March it mentioned that worldwide, air cargo had seen a “solid first quarter” and continued that “the industry will be pleased to see this trend continue”. April 2014 showed a volume growth of 6.3 per cent year-overyear (YoY), a little below the growth for Q1 (+6.8 per cent). Yield in USD was only 0.2 per cent lower than in March, and 1.5 per cent lower YoY. Revenues in April stood firm: whereas they had grown YoY by 4 per cent (in USD) in Q1, in April they grew by almost 5 per cent.

WorldACD mentioned that there was optimism in the air and wondered where the “business will increase most”. The report said: “Some say that the newer air cargo

markets are in decline after spectacular growth earlier on. Do the actual figures corroborate such views? Since the recent past performance may well be an indicator for future developments, WorldACD arbitrarily drew a circle of 500 km around a number of top origin cities, and compared 2013 with 2012 for each of these catchment areas (“CA”), taking outgoing and incoming air cargo together.

In Europe, the catchment areas (“CA”) around Amsterdam, Brussels, Paris and Frankfurt overlap to a fairly large extent.

Not surprisingly, they show a similar growth of around 3 per cent. The CA-Milano shows +5 per cent and the CA-Istanbul +10 per cent (and even +20 per cent compared to 2010). The CA’s around the top European cities are the world’s largest CA’s in volume.

In the United States, the CA’s Chicago and New York contracted for the past three years. The CA’s Miami, Los Angeles and Atlanta hovered around 1 per cent to 2 per cent growth. The picture was starkly different in the Middle East and South Asia, where the top CA’s around Dubai, Delhi and Dhaka grew by 6 per cent, 6 per cent and 17 per cent, respectively YoY. In the largest air cargo market, Asia Pacific, Seoul and the Pearl River Delta grew by 9 per cent and 2 per cent respectively (the city Guangzhou grew by 19 per cent). Other big Asian air cargo centres stayed below the worldwide growth of 1.9 per cent. Looking at the largest CA for each of the six regions worldwide, business to and from these CA’s together accounts for 67 per cent of worldwide volumes in 2013. This is lower than in 2011 (68 per cent), indicating growth of the newer air cargo markets.

The report concluded that the big centres in Europe and MESA did better than average in 2013. Most of them look set for doing the same in 2014. The main centres in the USA do much better in 2014. The same goes for the Pearl River Delta, whilst Tokyo/Osaka is rebounding from the slump ex Japan. Nairobi also moves again. Lastly, a number of the newer cargo centres show a rise in volumes Oslo, Manila, Ho Chi Minh City, Quito and Karachi.

spotlight

Cathay’s

all set to fly ahead The cargo division of Cathay Pacific – like most other airlines – has been having a difficult time. Adjusting to the pressures from belly cargo and high fuel prices, the carrier has not only started looking for newer markets but also brought about structural changes by reducing the freighter fleet and increasing its efficiency.

H

ong Kong-based Cathay Pacific had quite a healthy passenger growth in 2013: 29.9 million in comparison to 29.0 million in the previous year.

Though it missed analysts’ estimates of a HK$2.77 billion net profit – according to a Bloomberg survey – it saw a net profit of HK$2.62 billion in 2013 from HK$862 million in 2012.

In March this year, the then Cathay Pacific Chairman Christopher Pratt had said: “The cargo business continues to be problematic. There is still no sign of any sustained improvement in the market and some changes in the business appear now to be structural rather than cyclical. We thus have reduced the size of our freighter fleet and at the same time increased its efficiency.” Simply put, the cargo division has not had such a good run. As James Woodrow, Cathay’s Director, Cargo, put it to this correspondent, the beginning of the year was “pretty slow” and though “volumes bounced back in March … the yield was still very much in depression” (see interview). One of the major reasons was the competition from belly operators and belly capacity in the market including his own Cathay Pacific. The pressures led to a decline in cargo revenue: HK$23.7 billion

from HK$24.6 billion in 2013. Its cargo yield slumped by 4.1 per cent to HK$2.32 from HK$2.42 in the prior year on 1.5 per cent fewer tonnes of cargo being carried at 1.54 million tonnes against 1.56 million tonnes in the previous year.

The way out for the airline to revive its cargo fortunes was to tweak the market and bring about the structural changes that Chairman Pratt had mentioned. In a move that promises to bring in volumes, Cathay Pacific Cargo has expanded its operations, including starting its services to Columbus, Ohio, Mexico City and Guadalajara. In addition, it is planning to move into Africa, that, as Woodrow agreed, the Middle East carriers had got the first-mover advantage. Even so, he said that there was “definitely a market between China and Africa for freighters but we also need a market from Africa back into Asia”. Africa apart, Cathay is keen to create markets and get to leadership positions. In India, it has created a niche for itself – despite the infrastructural problems – and is a formidable carrier.

As for the structural changes, Cathay has asked Boeing to buy back six production 747-400F freighters from Cathay – one each in 2014 and 2015 as well as four in 2016; while it has ordered 21 777-9Xs,

three more 777-300ERs and a 747-8F. Added to that is the new Cathay Pacific cargo terminal at Hong Kong International Airport that became operational in October 2013. The HK$5.9 billion cargo terminal has already started delivering results – as Woodrow pointed out – and efforts are on to reduce the transit hours to less than five hours. Even so, Woodrow and his team will have to contend with the pressures from belly cargo that is certain to increase in the coming months when the 777300ERs join the fleet. The 777-300ERs, according to industry pundits, can carry anywhere from 100 to 120 tonnes of belly cargo on each of its Hong Kong-London Heathrow flights and around 80 tonnes on the Hong Kong-Los Angeles routes. Incidentally, belly cargo is perceived to have high profit margins ranging around 60-70 per cent although it is in conjunction with passenger operations. But, for the moment, with pure air cargo not doing too well, Cathay’s cargo team would have to live with belly cargo. And, if James Woodrow’s wish is granted and fuel prices come down a notch or two, Cathay cargo would be able to keep its head high.

Then again, that is a wish that everyone in the industry has been praying for but never granted!

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Cargo & Logistics spotlight

“We hope to open up Ahmedabad later this year” James Woodrow, Director Cargo, Cathay Pacific talks about declining air cargo volumes, the new cargo terminal in Hong Kong and much more in a conversation with Tirthankar Ghosh C&L: How do you see 2014 playing out? Cathay Pacific’s profits in 2013 climbed by nearly 204 per cent to US$335m last year -- however its cargo business remained weak. In fact, cargo revenue declined by 3.6 per cent in comparison with 2013. What are the reasons for Cathay Pacific cargo business doing badly?

James Woodrow: As you have seen from our results, January and February were pretty slow this year…targeting the Chinese New Year but it was quite a quiet period particularly in February. Volumes bounced back in March which was encouraging although even with the volumes coming back, the yield was still very much in depression. I think going forward we are expecting to see a similar situation with a

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June 2014

slight improvement in volumes of last year.

Why we got that is because the structure in the market continues to be over supplied and so there’s a lot of competition.

There’s competition from belly operators as well as belly capacity coming into the market including from Cathay Pacific and we have introduced quite a number of new 777-300 ERs and also A330-300s which are all very good belly cargo carrying aircraft. So that really has an effect on the market.

We had parked five of our freighters. We parked one 747-400 BCF and we parked four out of six of our production freighters. So that leaves us with a fleet at the moment of 21 freighters. So, we’ve got 13 747-8s; we’ve got six 747-400 ERF (Extended Range Freighters), and we are op-

erating two 747-400 production freighters.

C&L: Cathay, as you have pointed out, has parked quite a few freighters.

Would you then say that the time for freighter operators is over…

JW: Wait, I wouldn’t say that because I got 26…I think that there’s still a place for freighters. I think at the moment there are still too many freighters and that we order the best fuel-efficient freighters.

If you look at our most recent transaction with Boeing, we sold six production freighters to Boeing – so one will go this year, one next year and four the following year. So, by the end of 2016, we will have 14 Dash 8s and six ERFs. So that will give us a modern fleet of 20 freighters.

I think if you are based in the heart of

spotlight

Asia, and Hong Kong is still very much the heart of Asia, we are in a very good position to connect the whole of intra-Asia. We can connect China with India. We have our freighters going not just to Shanghai but also at Xiamen, at Zhengzhou, at Chengdu, at Chongqing. We have those freighters coming in to Hong Kong.

We also have an extensive passenger belly network through Cathay and Dragon Air operating to Qingdao or Kunming or Hangzhou or Nanjing.

We have a very extensive China network and then we have an extensive network into India. We have our freighters into Delhi and Mumbai, at Hyderabad and Bengaluru, at Chennai. Then we have our passenger flights into all those places and also into Kolkata.

So, I think Hong Kong is very much at the heart of Asia. As you also point out, we now have a very, very efficient hub.

C&L: It has only been a few months since your new cargo terminal at Hong Kong International Airport became operational. Have you started feeling the effects?

JW: Yes, we have the Cathay Pacific cargo terminal. We have invested US $750 million in that …HKK$ 5.5 billion in our

James Woodrow Director Cargo, Cathay Pacific If you are based in the heart of Asia, and Hong Kong is still very much the heart of Asia, we are in a very good position to connect the whole of intra-Asia.

terminal. We have a state-of-the-art 3.6 million tonnes facility which is designed for fast transshipment of cargo. So, we have the hardware as far as the freighters and passenger bellies. We have the hub which is the heart which is the Cathay Pacific cargo terminal and then we have the people who have the ‘Cathay Pacific can-do spirit’ which is the brains of the operation.

C&L: Have you been able to cut down on time...?

JW: If you are going from tail-to-tail, we can do that in 60 minutes. If it is just go-

ing directly from one aircraft to another, we can do that in 60 minutes. It doesn’t then have to go in through the terminal. Hong Kong is a very efficient airport. However, if it has to come into the terminal, broken down and built up, then in our old terminal it was eight hours and we are now operating at five hours and we are to looking to continue to further reduce that and our aim is to be able to do that where necessary, in three hours.

Now, that kind of reduction gives us a lot more connectivity between all our flights. So, that’s the value of having our own terminal. We can drive faster transshipment. We can also tailor-make solutions for customers. Specific customers need their cargo quicker than others — whether it be perishables or need any special handling. If it is pharmaceuticals or any heavy cargo, then we can do it because it is our terminal.

C&L: Is the terminal fully operational?

JW: We opened the terminal slowly, in stages. We started back in February last year and it only was fully operational for all our cargo in October last year. We operated smoothly both through the peak season last year through October, November, December and also through March this year when

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Cargo & Logistics spotlight

we had more than 5,500 metric tonnes per day of cargo going smoothly through our terminals. It’s now operating well and we are now also looking to attract new customers. This is not just a dedicated facility for Cathay Pacific but we are also looking to attract new customers. Anyone can also take advantage of the state-of-the-art facility that we have built.

C&L: Earlier, products were sent from the production lines in the Pearl River Delta. Today, you have to fly to new production centres in Chongqing and Zhengzhou. Is it a big burden?

JW: If you go back ten years, it was much easier for us because all the cargo came from the Pearl River Delta. Then some of the production shifted to the Yangtze River Delta. We have a lot of capacity between Shanghai and Hong Kong. So, Shanghai is our second biggest origin after Hong Kong.

If you move west or move inland then some of the production as you know has shifted to Chengdu, to Chongqing…

So, now our freighters call at these ports. We have six freighters a week to Zhengzhou; we have five freighters a week to Chongqing; we have three freighters a week to Chengdu; we also have three freighters a week to Xiamen.

But the production didn’t just move to inland China. Some of it moved to, for example, Vietnam. Samsung has a huge

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June 2014

factory in Hanoi. So, we have six freighters per week between Hong Kong and Hanoi so that we can service the likes of Samsung.

Canon has a big factory in Hanoi, so does Nokia. Some of the garment manufacturing moved to Bangladesh, some of it to India.

So, we have to have these connecting into our Hong Kong hub.

C&L: The cargo division decided some time ago to carry more valuable goods. The interest is more on flying diamonds and medicines than T-shirts.

How far have you been successful?

JW: Obviously we are trying to provide a value-added service. So, that is particularly applicable and appealing to, as you said, high-tech, pharmaceuticals, oil and gas.

We have five freighters per week flying to Texas which are picking up all the gas-related cargo. We carry a lot of the aircraft engines, we carry a lot of oversized and out-of-gauge cargo. And we also carry a lot of perishables which obviously need cold chain handling.

Yes, we also carry a lot of express cargo, so time-definite cargo. We are trying to carry more valuable cargo because obviously the freight rate over yield is higher of this type of cargo. But we still carry a lot of garments and textiles, whether they be from India, Bangladesh, Sri Lanka, Ho Chi Minh or Indonesia.

As you know we also have a mix of car-

go. We have 32 freighters per week from Hong Kong to Trans-Pacific whether it be for L.A. or Miami or going down to Latin America. We fly directly into Mexico where we have three freighters a week. So, we need to fill those, but we also need to fill all our passenger bellies.

So, to Singapore we have ten flights a day between Hong Kong and Singapore.

We have more than 20 flights per day to Taipei. We have 17 flights per day to Shanghai.

We have nine passenger flights per day to Beijing. We have a lot of intra-Asia capacity. We are also carrying raw materials into these areas — into Dhaka, into Colombo, into India. So, these are accessories or raw materials that we are carrying in for the garment industry. We are carrying 1.6-1.7 million tonnes of cargo per year…so, we have to have a little bit of everything.

C&L: Are all your freighters full?

JW: We always look to match supply with demand. So, if the demand this week is for 30 freighters, then yes, then we will put out 30 freighters. If the demand is for 34 freighters, then we will put out 34 freighters. The beauty of freighters is that we can be very flexible to increase or decrease the capacity to match the demand. So, are we filling our freighters mainly from Hong Kong to the U.S.? The answer is yes. Maybe this week I have 32 freighters and maybe next week the demand is a bit stronger, then I’ll have 34 freighters and these are always Dash 8 freighters, so we are taking 120 or 130 metric tonnes.

C&L: How is your partnership with Qatar helping the air cargo business?

JW: We have a joint venture on the passenger side with Qatar. We don’t have any particular alliance with Qatar on the cargo side but we do work with them as an interline partner. Yes, there is some opportunity for us to load cargo from Hong Kong to Doha and then use those services into Africa. But at the moment we already have one tiny flight into Africa into Johannesburg, passenger flight. So, it’s interesting for us to see how we can try to develop the market.

C&L: Are you concentrating on the

spotlight East or the West? You seem to have few flights or none into Africa, unlike the Middle Eastern carriers?

JW: I would say, if you look at our network, we have a very, very strong intra-Asia network because that has obviously been helped by Hong Kong’s geographical location at the heart of Asia. That is very strong for us and as I said we have a very strong freighter network trans-Pacific and we have been growing this in the recent months.

As you said we just started twice a week into Columbus, Ohio which as you know is the distribution area particularly for the garment industry for companies like Abercrombie and Fitch.

We also started, as I said, three freighters per week to Mexico City and Guadalajara.

In addition to that Trans-Pacific, we have an extensive passenger belly network. So, we have four flights a day to L.A. We have four flights a day to JFK and one to Newark. So, we have capacity to Chicago, to Toronto, to Vancouver. We have a very strong trans-Pacific product. And in Europe more of our capacity is based on passenger belly… As you know from London we have five passenger flights a day with 777-300 ERs. So, that’s mainly 100 tonnes per day into and out of London.Then we have freighters into London, Paris, Frankfurt, Amsterdam to supplement the passenger bellies.

You are correct, the Middle East carriers have capacity into Africa. There definitely is a market between China and Africa for freighters but we also need a market from Africa back into Asia.

C&L: How do you see the Indian market faring? Any new destinations on your radar?

JW: The Indian market has been quite challenging over the last 12 months, so, that for us is the problem. But as I said earlier, long term we are quite bullish that we can provide a very good link between the west of Asia and India. So, that’s very much our focus. We also do service, we have freighters from Delhi into Europe, we have freighters from Mumbai to Europe. We also service trans-Pacific going from India in our passenger bellies and our freighters, connecting in Hong Kong.

We see India as a very important market for Cathay Pacific. We want to provide the leadership in India. That’s why we’ve opened up markets like Hyderabad, Bengaluru, Chennai, Mumbai and Delhi for a number of years. We are still looking to open up new markets. We hope to open up Ahmedabad hopefully later this year. So we are still looking to develop the Indian market.

C&L: The pharma business is growing fast in India. Lufthansa, for example, has invested in Hyderabad airport for pharma. As a carrier, do you have plans to enhance pharma exports from India?

JW: Pharma is one part of the business. It is certainly important in markets like Bengaluru and Hyderabad. But there’s not enough pharma to fill up our planes. We need to particularly focus on the Hong Kong and China markets into India. We carry garments, leather goods, pharmaceuticals, perishables. Certainly, if you are looking going forward, yes pharma will be important but so will perishables in and out of India.

We certainly have a great deal of expertise in perishables. We built our terminal specifically to be able to handle large volumes of perishables. So, we carry perishables from all over the world. This is very much a global business and we want to connect India to and fro with all these markets.

C&L: What are the problems that you face in the Indian market?

JW: I think there are some infrastructure challenges. If you look at an airport like Chennai, that is certainly a challenging working environment. If you look at the newer airports like Bengaluru and Hyderabad, then that is a much better environment. We hope to see continued investment in Indian airports and infrastructure, so that we can keep improving efficiency of our business and moving the cargo more quickly to the customers.

C&L: How do you see 2014 shaping up for the air cargo business?

JW: I think we want to see the global economy continue to pan out. That is definitely the good news for air freight. I think we would like also to see the older freighters of our competitors continue to be parked…

We want demands to be going up. That would give a much better environment for our business.

If we had a further wishlist we would like to fuel prices going down…as much as 60 per cent of our cost is just in fuel and even though we have invested in fuel-efficient 747-8s, we would really like to see fuel cut down to a more manageable level… a level we can live with. That would be good for us and good for the global economy…

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25

Cargo & Logistics neighbour

‘SriLankan Cargo performed remarkably’ Amidst challenges posed by major air cargo operators, SriLankan had a bumper 2013 handling the highest tonnage in its history. Tirthankar Ghosh was in Colombo to find out about the carrier’s cargo unit’s plans and spoke to Chamara Ranasinghe, Head of Cargo, SriLankan Airlines

W

hen SriLankan Airlines was inducted as an oneworld member some time ago at Sri Lanka’s second international airport – the $200 million China Exim Bank-funded Mattala Rajapaksa International Airport (MRIA) – there was one person who had more than a smile on his face. He was Chamara Ranasinghe, Head of Cargo at SriLankan Airlines. The Mattala airport, named after the Sri Lanka President Mahinda Rajapaksa, not only has SriLankan Cargo but also Air Arabia and flyDubai but now with the oneworld membership hopes to attract at least some of the other 14 members. While oneworld member British Airways would most likely start services to MRIA, others like Emirates Airlines, Korean Airways, Sichuan Airlines and Etihad Airways have shown interest.

Contributing around 13 per cent of the airline’s total network revenue through passenger belly capacity, transshipment is a major source of earnings for SriLankan Cargo. Hence the large smile on Ranasinghe’s face. He pointed out that almost 90 per cent of the transshipments through Colombo hub is handled and moved by SriLankan. In fact, the average handled volume of transshipments per annum is 50,000 metric tonnes, which is approximately 25 per cent of the total handled (200,000 mts/annum).

The MRIA would be an added gateway for SriLankan Cargo. The cargo arm of SriLankan Airlines is responsible for the 5,000-sq m cargo facility at Mattala with its 60,000 metric tonnes handling capacity.

It also has storage facilities for dangerous goods, temperature regulated goods and valuable cargo.

At Bandaranaike International Airport, Colombo, SriLankan Cargo uses its unique

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June 2014

neighbour position in the Indian Ocean by bridging the commercial centres of the East and West.

In 2013, it saw a hike in both tonnage and revenue. Exports out of Colombo saw an increase of 33 per cent in tonnage compared to 2012. That was an achievement indeed since the competition came from the likes of carriers that operated freighters like Qatar Airways, Etihad and Cathay Pacific.

Ranasinghe also pointed out that Sri Lanka, one of the five fastest growing international freight markets over the 2011-2016 period, according to a forecast released by IATA, would see an average growth rate of 8.7 per cent. The key markets that SriLankan Cargo would serve would be the USA, UK, Germany, France and the Middle East.

It is to these markets that SriLankan Airlines offers connectivity with direct flights giving it a strategic advantage.

However, one of the major challenges that SriLankan faces comes from the payload restrictions on the Europe-bound routes. In fact, Ranasinghe mentioned that the payload problems had been going on for quite a few years but SriLankan had tied up a number of BSAs (block space agreements) with carriers to Europe and beyond via the Middle East.

To overcome the capacity problem, the carrier had put in place a dynamic pricing strategy and now with the membership of the oneworld alliance, it would provide ample opportunities for the airline globally. Also, SriLankan had embarked on a re-fleeting programme by adding A330300s and A350-900 aircraft to replace the old A340-300s and A330-200s. Excerpts from a conversation with Chamara Ranasinghe: How was 2013 for SriLankan Cargo?

SriLankan Cargo recorded a revenue of USD 96 mn, which is inclusive of PO Mail for the financial year 2013-14. The airline carried 94,410 metric tonnes of cargo for the said year. Indeed it is a remarkable achievement taking into consideration an overall 82 per cent passenger cabin factor and severe market conditions.

The main contributory factors for this achievement: customer satisfaction by offering a personalised service and high

moved by SriLankan.

Chamara Ranasinghe Head of Cargo, SriLankan Airlines India is a key market and revenue contributor for SriLankan Cargo. In the last financial year India was able to produce a tonnage of 15,000 metric tonnes with planned increase of 20 per ecnt for the current financial year.

reliability coupled with aggressive marketing in the niche markets.

What kind of tonnages have you done?

At one point, you created a record of maximum tonnages. Is the maximum tonnages coming from garments?

Of the carried 94,410 metric tonnes, garments accounts for almost 50 per cent of the total tonnage ex-CMB with the rest of tonnage being accounted for by perishables, courier cargo, etc.

Not so long ago, everyone spoke about Sri Lanka being developed into a fullscale cargo hub. Now with the Mattala airport, do you feel that Sri Lanka is well on the way to becoming a hub?

Sri Lanka is already the hub for SriLankan Airlines Cargo. We are yet to see customer airlines making use of this facility in order to make Katunayake (Colombo) a full scale hub in the region. SriLankan Cargo being the sole ground handler is continuously making preparations to offer more handling facilities with updated equipment and IT systems.

Mattala Airport will be mainly focused for cargo freighter operations, in addition to currently belly capacity on the line flights. The Colombo airport will continue to be the main hub with almost 90 per cent of the transshipment being

Specifically, tell us about business from India. What kind of tonnages are you doing?

Next to China, India is a key market and revenue contributor for SriLankan Cargo.

In the last financial year India was able to produce a tonnage of 15,000 metric tonnes with planned increase of 20 per ecnt for the current financial year.

Are there plans for inducting dedicated freighters? You will be phasing out some old aircraft this year and the next. Will these be converted?

While we currently do not plan for inducting dedicated freighters, we have however tied up with FitsAir for an exclusive MD82 freighter to be dedicated to SriLankan Cargo. With this MD82 freighter operation, we will be expanding current operations to Bangladesh and most parts of India, a noted key sector for SriLankan Cargo.

What kind of technological upgrading have you undertaken for growth?

Steps have been taken to upgrade the current Skychain system with additional features in order to optimize the cargo revenue and allow for seamless cargo operations.

We have also tied up with Techwings to utilize their Revenue Plus Budget tool in order to generate an incremental revenue.

Currently, SriLankan Cargo has undertaken to launch E-AWBs in Sri Lanka.

Already six per cent of the shipments on SriLankan Airlines are being electronically handled and we have targeted this to be 25 per cent by the end of this year. This will be a huge advantage for all the stake holders in the air freight business in Sri Lanka.

How do you see 2014 playing out?

Though air cargo is on a slow rise, IATA chief Tony Tyler says that Asia will lag behind.

2014 is going to be a much more challenging year for SriLankan with an 8 per cent increase on the revenue budget despite minimal favourable market variances over the previous financial year.

June 2014

27

Cargo & Logistics profile

Lawyer in the driver’s seat Meet the man who trained to be a lawyer but acquired success as a transporter. That’s the hands-on Y P Jain…

Y P Jain

W

hen you bump into 67-year old Yogendra Pal Jain, Managing Director of South Eastern Carriers Private Limited, ask him: “How come a man whose father was a reputed senior judge and he a qualified and once-upon-atime a practicing advocate in Delhi High Court plunged into transport business?”

I assure you that you would hear his hearty laugh to begin with. Then watch out for his off-the-cuff and from-the-heart confession: ‘I regret sometimes!’

No, don’t rush to conclude that he means it. Honestly, no. Believe me, he says this in full jest and humour.

Then, why this switch from prestigious legal profession to less-fancied trucking business?

“It’s all due to circumstances,” pat comes the reply.

Born in Sangrur, Punjab in the pre-Independent era and educated from Rohtak in the young Independent India, Yogendra began practicing soon after obtaining a law degree from Agra University. It is no secret that success and reputation - in that order comes after a few years of hard work in the court rooms.

“It was a big slog,” he confesses and does not mince his words that his legal lineage did not make his professional life easier.

The year was 1966 and that’s when he got married. As luck would have it, his father-in-law, the late Ram Kumar Gupta — a noteworthy transporter under the South Eastern Carriers banner — tempted young Yogendra with “an offer which I could not resist”. The offer was to Join his band wagon, learn and run the business. It’s

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June 2014

all yours, the father-in-law told his bright lawyer damaad.

“Why not, I thought. At least, it would be my business. New, it may be. So what?

That’s how I got into this business.” Yes his father-in-law was his mentor, he says with a heavy dose of candor. Marriage was a game-changer for Yogendra. In a business which was mostly run by people with lesser

“Many foreign companies that have come

into India in this sphere are simply unable to manage the way they had been handling their business outside India. Why? Because India is different.”

educational background, the legal background and fluency in Punjabi and Hindi gave a big leg up to Yogendra to embark on his new career. He did not let his fatherin-law down. Business expanded multifold from `3.5 crore in the late 1960s to about `300 crore-plus today with an asset-light formula (SEC does not own a huge fleet and most of it is outsourced). He joined him to conquer untapped areas.

Systematically, he made inroads into totally untapped Punjab and Haryana, thanks to the creeping industrialisation of Ludhiana, Jalandhar, Amritsar, Faridabad etc. those days. After Punjab and Haryana, he shifted focus to untapped Gujarat,

profile another emerging industrial state. Between “Never get into any business dealing without a good 1970 and 1977, he spent time in Mumbai margin. Have a tight cost control. Tap expanding his empire all over Maharashtra virgin areas constantly. Fourthly, ensure your by roping in top-notch corporate clients.

During this period, he purchased sub- workforce is comfortable and happy working for you.” stantial shares of the company and subsequently was also taken on as a Director on Professionals’ goals are diverse from the Board. He shifted back to Delhi due to promoter-owners, he points out. To enhance health issues and he continues to rule the their own career path, they keep at looking roost from his perch in Gurgaon since then. for better options. On the contrary, proElevated to the post of Managing moter-owners are single minded. It is their Director only in 2005 — much longer than business. Come what may, they have to he would have anticipated — Yogendra sustain. This necessitates a full time, handsis as cool as a cucumber. No fancy office. on approach, he clarifies. “When any desi Utilitarian in approach. Tech savvy. And, logistics company chairman tells you that he is “involved” in everything. Control he has a professional team running his busifreak? “You have to understand that owners ness and he has taken his feet off the accelcannot absolve their responsibilities in the erator, just don’t believe those statements. transport or logistics business. Total profesThey are not speaking the truth.” That’s sionalisation in the logistics business will Yogendra Pal Jain. not work in India. Many foreign companies It is not practical, according to him. that have come into India in this sphere are One may agree or disagree with Yogensimply unable to manage the way they had dra’s assessment. But he is frank and forthbeen handling their business outside India. right. The late P D Agarwal, has been his Why? Because India is different.”

role model. “The late P D Agarwal.” Yes, he is referring to the founder of the erstwhile Transport Corporation of India, now rechristened as TCI Limited, a publicly listed business enterprise on the bourses.

Four things which are so great about Late P D Agarwal are, “Never get into any business dealing without a good margin. Have a tight cost control. Tap virgin areas constantly. Fourthly, ensure your workforce is comfortable and happy working for you,” Yogendra Pal Jain elaborates. No doubt, these objectives may seem very simple, but hard to imbibe and implement successfully.

The transportation or logistics business is extremely competitive: a dog eat dog business.

Price undercutting and resorting to unethical means to survive are natural.

Resisting that temptation, raising the bar of services and conquering the minds and hearts of professionally managed big business houses are big challenges. The way the Indian economy is growing, new industrial hubs are fast emerging. Fifteen years ago, very few had heard of Baddi (Himachal Pradesh) or Rudrapur (Uttarakhand).

Today, they are “sizzling”.

Rising income levels – in urban and nondescript rural areas under various government schemes – is compelling businesses to push or rush their wares to hitherto unheard of locations. Hence, it is of paramount importance to tap those new spots.

Last, but not the least, is to keep drivers – the backbone of any transport/logistics company – always in a good mood. His stellar role as one of the founding fathers of All India Transport Welfare Association has to be viewed in this perspective.

What about the future? “Bright, definitely,” adds the former college level badminton player and the recipient of the prestigious IIM Singer Trophy for being the marketing man of the year in the service industry in the 1980s.

— Ramesh Kumar (The profile is part of C&L’s spotlight on personalities from the cargo and logistics sector who have contributed immensely to the Indian economy.)

June 2014

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Cargo & Logistics COLUMN

Plight of ‘Pareeshan’ Ram Fuel prices will continue to hold attention and remain the bane of transporters, as Ramesh Kumar points out

Ramesh Kumar

Fuel is very critical from whichever angle one may view.

No oil, no growth is a fact of life. For a transporter like Pareeshan Ram – yes, that’s not his real name, but an assumed one because he does not want to reveal his true identity to his own peer group for whatever reason – fuel spend is sizeable.

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June 2014

O

n the day the “achche din aane wala hain” Narendra Modi government announced the routine monthly 50 paise hike in diesel prices set in motion by the previous UPA government way back in January 2013 to wipe out the ballooning under recoveries to the Oil Marketing Companies (OMCs) and thus tackle the fiscal deficit, Pareeshan Ram wrote a bulk mail to his peer group of transporters giving vent to his anguish over a slew of issues that has been bugging him for a long time. Fuel hike certainly is one of his bugbear.

“Hamey to installment, High Speed Diesel (HSD) aur toll tax ne maar dala hai.

Pratidin increase ho jata hai. Kya kare samaj nahi aata. … Kiraya to increase hua par kya fayada! Expenses increase ho gaya. Hame koi to samjhai ki kya kare,” (EMI payment (towards financed vehicles), fuel and toll taxes collectively killing us. Don’t know what to do. Yes, freight rates have marginally gone up. But what is the point? Expenses have multiplied several fold) is what Pareeshan Ram bemoaned in that mail.

Fuel is very critical from whichever angle one may view. No oil, no growth is a fact of life. For a transporter like Pareeshan Ram – yes, that’s not his real name, but an assumed one because he does not want to reveal his true identity to his own peer group for whatever reason – fuel spend is sizeable.

Not just him, but for the entire transport fraternity. By the way, fuel impacts every walk of life. Like death, it does not differentiate between any two individuals. It’s equally scary.

Pareeshan Ram’s concerns are not his alone. It impacts the entire economy.

Remember the oil shock of 1970s when the Organisation of Petroleum Exporting Countries (OPEC) imposed hefty increase in the global oil price in the wake of Yom Kippur War? Most likely not. Does not matter. From

the logistics and supply chain perspective, the current 50 piece/month hike means a lot – irrespective whether India inc uses fuel directly or indirectly. Transportation is put to use for movement of raw materials to manufacturing site and then the finished products to the nooks and corners of India as part of their respective distribution strategy. Thus, none can escape from oil price hike until the under recoveries to OMCs is wiped out as part of oil deregulation initiative currently underway.

Two things actually may lessen the burden on Pareeshan Ram and the rest. Luckily the global oil price is hovering around US$107 a barrel and secondly, the Indian Rupee is gaining strength vis a vis the US Dollar. Experts predict that when Rupee-Dollar parity reaches around `56, OMCs under recoveries would have been the thing of past with regard to diesel alone. Simply put, a stronger Rupee helps less forex outgo since payment towards oil import has to be in American Dollar. After the latest hike, the under recoveries is pegged at `2.80/ litre keeping the US-Rupee exchange ratio at `58.86. Are we looking at the ideal scenario obtaining in less than a year’s time? Most likely. Assuming the Rupee does not weaken visa-vis the US Dollar and the global oil prices don’t go through the roof in the meantime!

Deregulating the price of diesel is an extremely politically challenging objective, since it is perceived to have cascading effects resulting in an increase in inflation through increase in cost of freight transport which eventually feed into the final prices of essential commodities. Within the broad theme of diesel pricing there are issues of taxation, under-recoveries and the fiscal burden on government, which have to be analyzed in tandem in order to arrive at precise conclusions about the current level of subsidies for diesel.

According to Mukesh Anand, Assistant Professor, National Institute of Public Finance and Policy, in his research report on “Diesel

COLUMN Pricing in India: Entangled in Policy Maze”, presented mid 2012, “Diesel constitutes 38 per cent of all petroleum products consumption in India. Given the profile of uses and users of diesel, currently its substitution possibilities appear to be severely circumscribed. It is used as an input in activities that together account for almost 40 per cent of gross domestic product (GDP). But, almost 65 per cent of diesel is used in transportation activities that contribute to 6.6 per cent of GDP. Road-transportation services constitute more than 70 per cent of GDP from transport services. Diesel sold from retail outlets located along national and state highways constitute more than three-fifths of all retail sales. Operation of trucks uses more than one-half of diesel consumption for transportation. Although, railways consume around onefourth as much diesel per net tonne-kilometre as trucks, the ratio of rail to road in passenger traffic stood at 15:85, and in freight traffic at 30:70.”

Sixty seven years after Independence, the Government of India has no concrete data on private fleet operations in India, a fact admitted by government unhesitatingly. “As of now there is no mechanism in place which would provide regular data on freight and haulage (Ton Kilometre-TKM) and; passengers and distance carried (Passenger Kilometre-PKM) by the private sector operators in road transport sector.

No comprehensive data on freight movement is available to indicate origin, destination, type and size of freight carried on roads by motorized transport,” says the National Transport Policy document.

On the issue of fuel cost in the total operational cost of fleet operation, researchers claim it is 80 per cent for 16 tonne vehicle, whereas World Bank in its 2005 study pegged this at 40 per cent. Notwithstanding this discrepancy in percentage, it is a fact of life that fleet owners are paid keeping the input cost in mind. Well, that is not the sole solution. Mahesh Anand offers another option. “Potential to improve efficiency in diesel-use in road-transportation is of the order of 25 per cent from improved administration of provincial institutions (for example, check-post management). Improvement in average speed of transit from improved road infrastructure would not only raise fuel-efficiency but also trigger cost-reduction on maintenance and staffing.”

Does it mean Pareeshan Ram’s plight will remain edgy forever? Yes and no: Yes, if he does not come out with some operational efficiencies at his own end. A holistic transportation or logistics policy at the national level that can attempt to leverage multimodal route perhaps can reduce the too much dependence on fossil fuel and thereby bring some solace to the motor maliks. This will equally assist the logistical or transport management spend wisely by India Inc. This is where the Rakesh Mohan’s National Transport Development Committee recommendations submitted to the government a few months ago can play a positive role. Significantly, the newly-anointed Minister for Road Transport & Highways and Shipping (yes, a combined ministry!) Nitin Gadkari is thinking aloud on multimodal and alternative fuel (ethanol-based) usage.

If all goes well, the Narendra Modi government’s poll promise of “Achche din aane wala hain” may very well become a reality. If so, Pareeshan Ram’s worries may evaporate on all counts. Just not on the fuel front alone.

(The author is Member, Committee on Supply Chain & Logistics, National Centre for Cold-Chain Development - A Govt of India Organisation Under Ministry of Agriculture. He is also author of 10,000 KM on Indian Highways, Naked Banana! And an Affair With Indian Highways.)

Given the profile of uses and users of diesel, currently its substitution possibilities appear to be severely circumscribed. It is used as an input in activities that together account for almost 40 % of gross domestic product (GDP). But, almost 65 % of diesel is used in transportation activities that contribute to 6.6 per cent of GDP. June 2014

31

Cargo & Logistics news in Brief

Air  LH Cargo and ANA in partnership talks

wikiMedia

Lufthansa Cargo (LH) is in preliminary talks with the Japan-based All Nippon Airways (ANA) over a possible cooperation agreement of joint cargo transports. The exact date for the announcement of the alliance between LH Cargo and the ANA is still pending. From LH Cargo’s point of view, ANA seems to be

a perfect choice.

Both Lufthansa and ANA belong to the Star Alliance, they closely cooperate on routes such as Frankfurt-Tokyo or Dusseldorf-Tokyo, and both are market leaders in their respective European and East Asian geographical environments. What makes ANA particularly attractive for LH Cargo is the fact that they operate their Boeing 767 freighter fleet predominately on domestic routes and to destinations in A-PAC. Simultaneously ANA offers vast lower deck capacity on their passenger aircraft on transcontinental routes between Japan and Europe. Close bilateral collaborations with a number of selected passenger airlines are a cornerstone of Lufthansa Cargo’s future programme.

Preliminary reports indicate that ANA Cargo has changed its warehouse cargo handling company at Frankfurt airport. With effect from May 21, 2014, Lufthansa Cargo AG replaced LUG Aircargo Handling GmbH. According to the Japanese media, the move seems to indicate that both airlines could be establishing a strategic freight business partnership.

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June 2014

Emirates receives validation for ACC3 security E mirates successfully completed the validation process for the European Union-initiated Air Cargo or Mail Carrier operating into the Union from a Third Country Airport (ACC3) security regulation, becoming the region’s first air carrier to do so. Through close collaboration between Emirates Group Security and SkyCargo, Emirates completed the ACC3 security validation at the Dubai hub before the deadline of July 1, 2014. Failure to complete the validation would have potentially prohibited Emirates from transporting cargo into the European Union – severely disrupting SkyCargo’s operations. Emirates’ air cargo business accounts for over 15 per

cent of the airline’s total transport revenue.

Commenting on this achievement, Dr Abdulla Al Hashimi, Emirates’ Divisional Senior Vice President-Group Security said, “We placed the highest priority on the inspection and validation of our cargo operations in Dubai being the hub for our operations. Emirates is seeking similar validation at other stations from where Emir-

CAPELLA now adheres to CODECO norms C

APELLA, Kale’s CFS/ ICD/Container Depot management system used by several global Container Freight Stations (CFSs) and Inland Container Depots (ICDs) has now been enhanced to support messaging formats as per CODECO norms. It now supports CODECO message formats which are used between shipping lines and container depots to communicate electronically about the container status, thus replacing the traditional manual methodology.

CODECO message reports Container gate in and gate out movement at a CFS/ ICD which is required by shipping lines to track their containers status electronically.

Once the message file is generated through CAPELLA in CODECO format, it is sent to a

secure FTP/SMTP folder at the recipient’s system.

Vineet Malhotra, Senior VP, Kale Logistics Solutions, said, “Keeping a global perspective, all our IT systems incorporate industry best practices and CAPELLA is no exception. It is a complete integrated and webbased application that can cater to end-to-end needs of a VFS/CFS/ICD/DEPOT/Terminal.

With the added functionality for reporting messages in CODECO format, the duplication of manual work involved is reduced for both CFS/ICD and Liner/Liner agency ensuring greater accuracy in information transmission. There are no more delays in reporting of container status at the CFS.”

news in Brief

ates regularly operates freighter flights direct to the European Union. Working with law enforcement stakeholders and business units, Emirates Group Security has spearheaded the validation task.

We take pride in the fact that we’re the first carrier in the region to complete this ACC3 requirement.”

Meanwhile, Emirates SkyCargo added Mexico City and Atlanta to its flight schedule, further expanding its freighter network to more than 50 destinations around the world. The oncea-week service to Mexico City starts in Dubai with a stop en route to Frankfurt, while on the way back the flight makes a scheduled stop in Houston and Copenhagen before heading back to Dubai. On both routes, Emirates SkyCargo uses its Boeing 777 Freighter aircraft, which is capable of carrying 103 tons of cargo, and with its main deck being the widest of any freighter aircraft, it’s able to uplift outsized cargo and carry larger consignments.

Major milestone by Air Dispatch

Air 

Centralised load control specialist Air Dispatch CLC recently celebrated the successful completion of its 1,000,000th load sheet. The milestone was reached on April 16, 2014 with the production of a load sheet for Finnair flight from Helsinki to Copenhagen. The Finnish national flag-carrier – one of Air Dispatch CLC’s longest standing clients – was presented with a commemorative award to mark the occasion at the recent IGHC Ground Handling Conference held in Kuala Lumpur. Nick Yeadon, CEO of Air Dispatch CLC, commented, “This landmark occasion highlights how Air Dispatch has expertly and efficiently established itself as a leader in the field of centralised load control services, seamlessly implementing solutions for airlines worldwide. This number is only set to multiply as our client base continues to expand.” Ari Kuutschin, Head of Ground Operations at Finnair added, “Air Dispatch CLC is an excellent partner for Finnair and its flexible approach has ensured safety and accuracy since day one.”

Jettainer to manage ULD fleet for Jet Airways

AMI imports boosts operations A

gional cargo centres, often MI, which pioneered trimming a day off transit the trade-only airfreight times. wholesale concept, has startSaid AMI Imports Maned weekend working, and ager Stuart Orkney, “We are added an additional spot rate attracting increasing numspecialist to its team, as the bers of airfreight agents latest measures to further with occasional ocean strengthen its UK imports ofimports. At the same time, fering.

Stuart Orkney ocean freight agents are AMI’s Imports Department beginning to realise that they can use AMI now operates on Sundays, preparing imfor airfreight imports and exports.” He also port Customs entries for submission first pointed out, “We have a new momentum thing on Mondays. This means inbound in our imports business. airfreight shipments are being cleared AMI has assembled its most robust more quickly, so the freight can be reand comprehensive offering to date for leased earlier to the importer’s agent at import customers. At the same time, we London Heathrow. Meanwhile, shipments remain a compact operation offering a bound for the north and Scotland are highly personal service.” also leaving London earlier for AMI’s re-

The German ULD logistics management company Jettainer signed a five year cargo services contract with Jet Airways. Jettainer, the world’s leading ULD service provider will help the second biggest Indian airline to augment their long haul flights with efficient under floor cargo solutions.

“The co-operation with Jet Airways is a great opportunity for both sides and a gateway to Asia for Jettainer. We are certain that other airlines will monitor the success of this project closely”, said Jettainer’s managing director Casten Hernig. “It is the first co-operation of Jettainer with an Asian airline. After a

roll-in phase which started on February 2nd all operations are running smoothly and efficiently with Jettainer operators assisting the airline in day-to-day operations,” he addded.

The deal is worth nearly two million Euros. The outsourcing arrangement includes the handling of nearly 1,300 ULDs, of which almost 600 are lightweight containers of the AKE LW design. Jet Airways is replacing “a fair share” of its old lower deck cargo containers as part of the deal, providing environmental benefits and lower fuel consumption. ULDs provided and managed by Jettainer will fly on Jet Airways routes to New Delhi, Mumbai, Brussels, London, Newark (USA), Singapore and Hong Kong. Jettainer currently takes care of a fleet of more than 70,000 ULDs for 14 airlines.

June 2014

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Cargo & Logistics news in Brief

shipping and ports  Adani Ports buys Dhamra Adani Ports has agreed to acquire a 100 per cent stake in Dhamra Port from Tata Steel and L&T Infrastructure Development Projects at an enterprise value of `5,500 crore. “The Dhamra port ac-

quisition now gives us an opportunity to replicate the development and phenomenal growth of the Mundra port on the eastern coast of India and, thereby, continue to execute our pan-India strategy,” Adani group chairman Gautam Adani said. A 50:50 joint venture between L&T Infrastructure and Tata Steel, Dhamra Port (DPCL) was commissioned in May 2011 and has two fully mechanised berths. Located in the Bhadrak district of Odisha, the port is strategically placed between Haldia and Paradip ports. In 2013-14, the port registered a 30 per cent growth in cargo-handling at 14.3 million tonnes (mt).

At present, the Adani group owns and operates five ports in Mundra, Dahej, Hazira, Goa and Vizag.

Essar Ports posts 16 per cent rise in net profit Essar Ports Ltd has registered 16 per cent rise in its net profit for the 2014 fiscal at `3.83 billion from `3.31 billion year-on-year. Its net profit for the January-March quarter in the last fiscal fall by 1 per cent at `908 million as compared to `921 million on-year.

The company witnessed 13 per cent surge in its revenue for the 201314 fiscal at `16.37 billion as against `14.48 billion recorded in the 201213 fiscal. Essar Ports revenue for the

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June 2014

India may allow owners ships overseas I

ndia’s maritime regulator, the Director General of Shipping, is pushing for a plan that allows local shipping companies to register their ships in tax-friendly overseas jurisdictions without opening subsidiaries, in a bid to increase the national shipping capacity. The proposal will allow local shipping companies to directly register their ships overseas sitting in India without opening subsidiaries abroad to create a new fleet category known as Indian-controlled, foreign-registered ships. The plan is also aimed at reversing a trend of local fleet owners opening subsidiaries abroad to register and operate their ships, thereby resulting in a flight of ships which would otherwise have been registered under the Indian flag. Local laws do not allow an

Cargo operations at DBGT inaugurated

P

acific International Line’s (PIL) MV Kota Nabil made a maiden call at Dakshin Bharat Gateway Terminal (DBGT) in Tuticorin after Chairman of VOC Port Trust A Chandrabose formally inaugurated the cargo operations at the DBGT. This maiden call of PIL’s vessel heralded the opening of the DBGT for operations for vessels using ship’s gear. Dakshin Bharat Gateway Terminal is a special purpose vehicle incorporated by ABG Container Handling Private Limited, Mumbai, and is the concessionaire implementing this Private-Public Partnership project at Berth Number 8 of VOC Port Trust in Tuticorin. The DBGT has appointed a subsidiary, Bollore Africa Logistics (BAL), as its Management Contractor, who will be responsible for project implementation, including operations, maintenance, commercial/ marketing and day-to-day running of this container terminal.

Indian shipping company to register ships outside the country. The proposal, which needs the government’s approval, involves giving a relaxation from this law to Indian ship owners so that the task of registering

Adani Ports total A dani Ports & SEZ Ltd, India’s largest port developer and part of Adani Group, announced the financial results for the fourth quarter and year ended March 31, 2014. Consolidated total income for the year FY14 increased by 43 per cent to `5,508 crore compared to `3,841 crore in the last year.

The consolidated Earnings before interest, taxes, depreciation, and amortization (EBIDTA) increased by 36 per cent to `3,604 crore compared to `2,640 crore in the last year.

The consolidated PAT without considering Abbot Point, which had been divested last year, for the current year increased by 13 per cent to `1,740 crore as compared to `1,538 crore in the last

news in Brief

to register

Shipping Corp earns profit

ships overseas becomes official and legal.

It will also help Indian shipping companies raise cheap funds overseas without any of the attendant problem associated with Indian-registered ships. The Indian flag is not considered a friendly flag by international lenders for various reasons.

S

hipping Corporation of India (SCI) reported a net profit of `13.24 crore for the quarter ended March 31 on the back of higher income from operations. The firm had clocked a net loss of `284.45 crore in the same quarter a year ago, the company said. Total income from operations of the company increased to `1,281.94 crore, from `973.57 crore in January-March quarter of FY’13, it said. Total expenditure of the SCI came down marginally to `1,244.26 crore from `1,247.91 crore in the same quarter a year-ago, it added.

income increased year.

The consolidated cargo handled by the company was 112.75 MMT in year FY14, an increase of 24 per cent, over last year. Adani ports Mundra handled 101.12 MMT cargo making it the largest commercial port in India. It registered a 23 per cent growth in the year FY14 compared to growth of 2 per cent for cargo at all major ports. In case of containers, it handled 2.39 million TEUs with 38 per cent growth as compared to de-growth by 3 per cent in container volume at all major ports. During the current quarter Adani Ports Mundra handled 26.39 MMT cargo with 15 per cent growth in Q4FY14 compared to growth of 1 per cent for at all major ports. In case of containers, it handled 0.71 million TEUs with 49 per cent growth as compared to a no growth at all major ports.

shipping and ports  fourth quarter in the 2014 fiscal was recorded at `4.15 billion, reflecting a 5 per cent rise as against `3.96 billion y-o-y. Its earnings before interest, taxes, depreciation, and amortization (EBITDA) saw 14 per cent y-o-y growth at `13.27 billion for the last fiscal as compared to `11.67 billion in the previous fiscal. The terminal services provider also recorded 7 per cent rise in EBITDA for the final quarter of the bygone fiscal at `3.29 billion from `3.07 billion in the 2013 fiscal.

India to use waterways to Ashuganj port Bangladesh has agreed to allow India to use its waterways to Ashuganj river port on Meghna, for carrying food grains from Kolkata to Tripura. The Bangladesh government agreed to a request by the Centre to use its waterways up to Ashuganj port from Kolkata to carry 10,000 million tonnes (mt) of foodgrains and more than 500 trucks would be engaged by that country’s government, Principal Secretary, Food and Civil Supply department B K Roy said. The distance between Kolkata and Agartala via hilly areas of Assam by surface transport is about 1700 km, which is reduced to 350 km if the movement is through the plains of Bangladesh. Currently, Indian and Bangladesh waterways connect West Bengal and Assam states and Inland Waterways Authority of India and Bangladesh Inland Water Transport Authority are operating vessels on these routes. Bangladesh allowed India to use Ashuganj river port for the first time to transship goods from Kolkata to Agartala under the 2010 Inland Water Transit Protocol in September 2011. It provided transshipment facility on a trial basis and tons of steel sheets from Khidirpore dock in Kolkata formed the first consignment to Ashuganj river port from where it was sent to Akhaura land port on the frontiers with Tripura.

June 2014

35

Cargo & Logistics news in Brief

land  FedEx integrates Indian logistics companies Global courier delivery services company FedEx Corp recently announced the successful integration of its acquired Indian logistics companies AFL Pvt Ltd and Unifreight India Pvt Ltd. FedEx had bought these two firms in November

2010 for an undisclosed sum. Following the integration, FedEx expanded its services coverage from 4,000 postal codes to over 19,000 in India. The US firm now has a fleet of over 1,000 trucks and has added warehousing space over 900,000 sq ft.

David Canavan, Vice-President, Operations, FedEx Express India said, “In a little over a decade, India is expected to have as many as 18 mega-demand cities with a GDP (gross domestic product) surpassing $20 billion. This is why we have expanded our network to over 90 per cent of India’s manufacturing GDP, thereby providing seamless access to Indian businesses with diverse logistics needs.”

Blue Dart earns profit South Asia’s premier express air and integrated transportation and distribution company Blue Dart Express posted `124.40 crores profit after tax for the year ended March 31, 2014. In-

come from operations for the year ended March 31, 2014 stood at `1,932.51 crores. “Inspite of the strong headwinds faced by the Indian economy and high

36

June 2014

FPS member Reliance opens in Doha

D

ubai-based Reliance Freight Systems – the FPS network agent for Dubai, Jebel Ali and Abu Dhabi – opened a new office in Doha, the capital of Qatar. Reliance Doha will provide the company’s full range of multi-modal forwarding services, including import and breakdown of LCL consolidations, and will also offer Customs clearances (DDU/DDP) and road freight services throughout Qatar and neighbouring countries.

“Qatar is emerging as one of the most dynamic economies in the Middle East, and has the highest per capita income in the world. The Qatar’s economy is rapidly expanding in almost every sector, driven by government investment and the participation of multi-national companies. National

Dyzle join hands with TTL Active

D

yzle BV, a company dealing in measuring and analysing business process data for the cold chain in real-time, has appointed India-based TTL Active as a partner to support the company’s growth in the Indian cold chain logistics and warehousing market. This comes at a time of significant growth potential in the cold chain sector and favourable environment for development in cold chain infrastructure as a result of India’s new leadership. According to TechSci Research, the cold chain industry in India is expected to grow at a Compound Annual Growth Rate (CAGR) of 28.7 per cent over the next few years and solutions like the one provided by Dyzle will provide much needed visibility to the supply chain.

Another recent industry report suggests the value of fruits, vegetables and grains wastage in India is around `440 billion (US$ 7.2 billion) annually, with fruits and vegetables accounting for the largest portion of that wastage at around `133 billion (US$2.2 billion).

carrier Qatar Airways is to treble its fleet by 2015, and has ambitions to develop a truly global cargo service. With so many positive factors at work, we at Reliance feel this is the best time to expand our regional coverage by establishing a presence here, and so seize the tremendous opportunities that lie ahead for the freight industry,” said Sanjay Berry, Managing Director, Reliance Freight.

Freight rates T he month of May brought back some cheer for the trucking sector as the truck freight rates went up by 4-5 per cent during the period. The increase in truck rentals was mainly driven by agri cargo, increase in rural spending, and election-related spending.

Truck rentals recovered during May after 4-5 per cent fall in April. While increase in diesel price by `1.21 per litre and 15-20 per cent growth in fruit and vegetable cargo, among others, aided the increase of rentals during May, factory output remained flat barring some improvements in cargo in Fast-moving consumer goods (FMCG), consumer durables, general merchandise and construction material segments in Tier 1 and 2 cities, said a statement of Indian Foundation of Transport Research and Training (IFTRT).

Truck freight rates on Delhi-Mumbai-Delhi round trip on a 9-tonne payload

news in Brief

Temp-controlled LCL to Dubai from FPS

T

he Rotterdam and Prague members of the FPS network of independent forwarders and consolidators have launched a trade-only, temperature-controlled ocean LCL service for perishables. The new service typically targets commodities such as typically foodstuffs, wine, medicines and chemicals used in food production that require transportation at a constant 15°C. Initially, the service will operate fortnightly from the company’s Rotterdam container freight station to Dubai and Japan. FPS plans to increase to weekly sailings in line with market demand, to add further destinations, and to increase the European catchment area. FPS uses reefer boxes belonging to its chosen lines, and only utilises direct sailings in order to minimise transit times.

FPS Rotterdam and Prague plan to work with all partners at destination that are experienced in handling temperature-controlled cargo. The company has a history of launching innovative niche services, such as its recent Rotterdam-Fiji direct consolidation service operated in partnership with its Fiji counterpart.

up by 4-5 per cent in May

truck increased by 4.1 per cent at `63,000 on June 1 when compared with `60,500 on May 2. Delhi-Chennai-Delhi round-trip saw a rise of 4.8 per cent at `98,500 from `94,000 and Delhi-Ranchi-Delhi rental

was up 5.1 per cent at `64,100. With the new government in place, there are expectations of improvements in industrial production and activity in infrastructure segment.

LAND  cost pressures, Blue Dart has performed reasonably well on all fronts and capitalized on its Quality, Consistency, Reliability, Passion and Commitment. We look back with great pride at the efforts our teams have put in to remain a Provider, Investment and Employer of Choice” said Anil Khanna, Managing Director, Blue Dart Express Ltd. During the year ended March 31, 2014, Blue Dart handled over 126.40 million domestic shipments, 0.91 million international shipments and over 513,474 tonnes of documents and parcels across the nation and 220 countries worldwide. The Board of Directors have recommended a final dividend of `15 per share for the year ended March 31, 2014. Together with the interim dividend of `35 per share declared on February 5, 2014, the total dividend for the year ended March 31, 2014 works out to `50 per share.

Mahindra Partners eyes new business Mahindra Partners, an arm of Mahindra group, has trebled the revenue of the new businesses in its fold over the past four years and is now looking to incubate or foster businesses in media, healthcare, and big data (or analytics). The combined revenue of entities under Mahindra Partners has grown from $300 million in 2009 to $900 million at the end of 2013. Two of its businesses, Mahindra Logistics Ltd and Mahindra Intertrade Ltd already rank among the 10 best performing companies in the $16.2 billion by revenue Mahindra group. The group has traditionally used Mahindra Partners as a vehicle to help it diversify into new areas, and it will continue to do the same, an executive said. Mahindra Partners currently manages 12 entities across sectors such as logistics, retail, leisure, consultancy and cleantech.

June 2014

37

Cargo & Logistics news in Brief

infrastructure  NHAI approves deferment of premium The Board of NHAI considered nine proposals for deferment of premium.

These nine proposals involved deferment of premium for a total value of `5959.93 crores. The period during which such deferment was considered was from 2014-15 till 2026-27, with the deferment granted during 2014-15 amounting to `651.30 crores.

This step would provide comfort to the lenders as debt obligations would now get priority over the premium payable to NHAI. NHAI would be able to recover the deferred premium with interest in the latter period of the concession. The deferment shall be limited to the actual revenue shortfall after meeting the debt obligation and operation expenditure. The concessionaire would not be allowed to declare any dividend until the shortfall in premium is made good.

L&T to diversify cargo handling capacity at Katupalli Port L&T Shipbuilding Limited is diversifying its cargo handling capacity at Katupalli Port to include automobiles and oil products in addition to its original plans for container handling. The private port has revised its cargo mix by scaling down container handling to provide space for the new items. Originally, the Katupalli port planned to handle a total of 25 million tonnes (MT) of cargo, of which 24 MT was containerised cargo and the rest steel and project cargo.

To accommodate handling of automobile and oil products, the container handling will now reduce to 21.60 MT, sources said.

At a recent meeting, the Tamil Nadu State Coastal Zone Management Authority decided to consider the company’s revised agenda. The source said that the company obtained environmental clearance in July 2009 for the development of ship yard-cum-port complex at Kattupalli.

38

June 2014

Essar Ports to invest `3,000 cr in projects

E

ssar Ports will be investing `3,000 crore into expansion over the next three years as it has received environmental clearance and legal go-ahead from the government in four port projects, which were stuck for several years, according to a top company official. “We have started receiving many pending approvals, which will ensure early commissioning of our four pending projects. These are the Vizag, Salaya, Hazira and Paradip terminals. For expansion of these projects, we will be investing `3,000 crore from this fiscal and are likely to be completed in the next three years,” company managing director, Rajiv Agarwal said. Agarwal said Essar Ports has already spent `8,000 crore on expansion. The company will spend about `1,200 crore in expansion this year alone.

The projects will increase cargo handling capacity by 77 million tonnes per annum

to 181 mt, he added. He also expressed the hope that these projects will diversify the revenue profile for Essar Ports by improving the customer mix. On funding for these projects, he said ` 555 crore will come from bank loans, and expects the funding to be in place in the next six weeks. The company said it has `5,500 crore debt on its books and its plans of dollarizing the same have been abandoned following RBI curbs on such debt raising.

Awards  • DTDC

DTDC Courier & Cargo Ltd, India’s Largest Express Delivery Network, won the National Award for Supply Chain and Logistics Excellence (SCALE) 2014 at the first-ever CII SCALE Awards 2014 held in Mumbai. The award recognized DTDC’s outstanding leadership and innovation for the development of the express courier’s network across the nation. The CII SCALE

awards were launched this year with an aim to recognise and award organisations that demonstrate excellence in different categories like Industrial/Retail Ware, Agri-Warehousing, Cold Chain, Chemical and Liquid Logistics, Container Logistics, Freight Forwarding, 3rd Party Logistics, Express/Courier, Project Cargo and Road Transportation.

• DB Schenker

• ColdEX

DB Schenker received the SCALE Award 2013 in the freight forwarding category. The recognition of SCALE Awards 2013 encompasses the excellence amongst logistics service providers and supply chain aspect of user industry. The award emphasizes DB Schenker’s leading position in India for providing international freight solutions and its ability to cater to any destination across the world.

ColdEX was awarded India’s Best Cold Chain Logistics Service Provider in Frost & Sullivan’s Indian Logistics Voice of Customer Awards 2014. The award was given to ColdEX for overall best performance among similar logistics service providers (LSPs) specialised or focused on cold chain logistics, nominated and rated by end users across target industries.

news in Brief

ACCD’s new Managing Committee takes over Air Cargo Club of Delhi (ACCD) held its 37th Annual General Meeting (AGM) recently. The event was attended by around 100 members of the club who elected the new Managing Committee for the year 2014-15.

While Yashpal Sharma was elected as the new President of ACCD, Ravinder Katyal was Vice President, Sajan Kallra as Honorary Secretary and Rajan Nijhawan as Honorary Treasurer.

Elected unopposed, Yashpal Sharma, the youngest-ever President of the club, addressed the members and promised to carry on the good work of the past committee. He said one of his top tasks would be to enhance the membership of the club during his tenure.

J P Singh, who completed his tenure

of two years as President, thanked the members for their participation in the club events and also his team for supporting him in his term.

ACCD is a nonprofit organisation dedicated to building a strong social network to bring all professional members of the air cargo fraternity close to each other and exchange healthy views about the industry.

It has an objective of promoting friendship and goodwill throughout the members of air freight industry both nationally and internationally.

Born in 1977 with a handful of members, Air Cargo Club of Delhi has grown over the years and now boasts of 235 active members and is still growing.

ACCD’s office bearers

Yashpal Sharma President

Ravinder Katyal Vice President

Sajan Kallra Hon. Secretary

Rajan Nijhawan Hon. Treasurer

Appointments  IATA names new cargo head The International Air Transport Association announced the appointment of Glyn Hughes as the association’s next global head of cargo. He is replacing industry veteran Des Vertannes. He has led a campaign to promote the value of air cargo, and is taking a principal role in the IATA team working to modernize the cargo agency programme.

Khan is DHL Express’ S Asia & SE Asia head DHL Express has united the management of two of its fastest growing regions with the appointment of Yasmin Aladad Khan as senior vice president for DHL Express Southeast Asia and South Asia. Khan will be in charge of South Asia, including Pakistan, Bangladesh, Sri Lanka and Nepal and retains responsibility for Southeast Asia excluding Singapore. The latest appointment

by DHL Express is in line with Deutsche Post DHL’s commitment to increasing the share of women in executive leadership.

S R Nair is JAS MD J.P. Singh Ex- officio

Prem Sawhney Exec. Member

Ashwini Sharma Exec. Member

Shakti Yadav Exec. Member

Halim Modassir Exec. Member

Rahat Sachdeva Exec. Member

Sumit Mathur Exec. Member

Padma Handa Exec. Member

Soman Rajiv Nair (FCICT) has taken over as the Managing Director of JAS Forwarding Worldwide from January 2014 for its Indian operations.

Before taking over as Managing Director of JAS’s Indian operations, Nair was with D B Schenker India as Director - Northern Region. He brings a rich experience of more than 20 years in Freight and Logistics Management.

June 2014

39

Cargo & Logistics CSR

Walk to better lives UTi Worldwide’s annual Global Walkathon raises funds for education, housing, and healthcare in many countries and staff from UTi’s offices around India’s participated in full force.

U

Ti Worldwide Inc., a non asset-based provider of global supply chain services and solutions performs its Corporate Social Responsibility through its Delivering Better lives (DBL). DBL focuses on providing facilities that support education, health services, housing, and other community needs in the 59 countries where UTi has its own operations. The foundation supports school projects in Zimbabwe, Bangladesh, and Cambodia; orphanages in China, Chile, and Colombia; and a cancer hospice in Peru, among many others.

UTi recently held its primary charitable event, the DBL Global Walkathon, to raise funds for the San Jorge Children’s Center in Buenos Aries,

40

June 2014

Argentina. Held over a two week period – from May 18 to May 31 – the Walkathon was staged at Gurgaon, Bengaluru, Chennai, Hyderabad, Kolkata, Pune, Mumbai, Oragadam (Chennai), Chakan (Pune), Bhiwandi (Mumbai) and Kuthambakkam (Chennai).

The Global Walkathon exemplifies the ‘unity’ in UTis diverse worldwide community. At the event, UTis workforce forms teams and either walk or hold other team events to raise money. Since its inception in 2007, the Walkathon has been instrumental in funding projects in various UTi regions.

DBL has funded the building of schools in Zimbabwe, South Africa, Bangladesh, and Cambodia. Funds raised by this year’s annual event will be applied to a project in Argentina. DBL will assist in the construction of a new shelter for young people in a dis-

advantaged area where there is limited social or financial support.

UTi’s workforce formed teams and walked during a two week period between May 18 and May 31, 2014. C & L and its readers applaud the efforts of the UTi team around the country.

stats

TRAFFIC AT MAJOR MAJOR PORTS PORTS TRAFFIC HANDLED HANDLED AT (DURING APRIL TO MAY, 2014* VIS-A-VIS APRIL TO MAY, 2013)

(*) TENTATIVE

(IN ' 000 TONNES) APRIL TO MAY

PORTS

% VARIATION AGAINST PREV.

TRAFFIC 2014* 2

1 KOLKATA Kolkata Dock System

YEAR TRAFFIC 4

2013 3

2063

1836

12.36

Haldia Dock Complex

4451

4523

TOTAL: KOLKATA

6514

6359

-1.59 2.44

PARADIP

11728

11551

1.53

VISAKHAPATNAM

10395

9986

4.10

KAMARAJAR (ENNORE)

4761

4180

13.90

CHENNAI

8815

8441

4.43

V.O. CHIDAMBARANAR

5032

4427

13.67

COCHIN

3716

3449

7.74

NEW MANGALORE

6413

6653

-3.61

MORMUGAO

2334

1875

24.48

MUMBAI

9986

8733

14.35

JNPT

10867

10458

3.91

KANDLA

15310

15371

-0.40

95871

91483

4.80

TOTAL:

Source:INDIAN PORTS ASSOCIATION

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Cargo & Logistics stats INDIAN PORTS ASSOCIATION TRAFFIC HANDLED AT MAJOR PORTS

(DURING APRIL TRAFFIC TO MARCH’2014* VIS-A-VIS APRIL TO MARCH’2013) HANDLED AT MAJOR PORTS (DURING APRIL TO MAY'2014* VIS-A-VIS APRIL TO MAY'2013)

(*)

TENTATIVE

PORT

(IN '000 TONNES) TRAFFIC PERIOD

P.O.L.

IRON ORE

FERTILIZER FIN. RAW

COAL CONTAINER THERMAL COKING TONNAGE TEUs

OTHER TOTAL % VAR.AGAINST CARGO 2013-14

KOLKATA TRF APRIL-MAY'2014

100

39

14

6

-

-

1187

77

717

2063

TRF APRIL-MAY'2013

86

49

4

-

-

41

1124

73

532

1836

TRF APRIL-MAY'2014

1093

350

19

71

219

712

263

16

1724

4451

TRF APRIL-MAY'2013

903

348

43

6

265

880

306

18

1772

4523

TRF APRIL-MAY'2014

1193

389

33

77

219

712

1450

93

2441

6514

TRF APRIL-MAY'2013

989

397

47

6

265

921

1430

91

2304

6359

TRF APRIL-MAY'2014

3034

537

51

719

4393

1229

14

1

1751 11728

TRF APRIL-MAY'2013

3442

765

-

606

4296

1027

9

1

1406 11551

TRF APRIL-MAY'2014

2549

2191

197

125

434

911

818

45

3170 10395

TRF APRIL-MAY'2013

2623

1965

193

133

435

1507

810

43

2320

9986

KAMARAJAR(ENNORE) TRF APRIL-MAY'2014

400

-

-

-

3974

68

-

-

319

4761

TRF APRIL-MAY'2013

300

-

-

-

3526

98

-

-

256

4180

TRF APRIL-MAY'2014

2456

33

-

24

-

-

4848

251

1454

8815

TRF APRIL-MAY'2013

2397

-

20

28

-

-

4709

244

1287

8441

TRF APRIL-MAY'2014

94

-

81

148

1452

-

1794

90

1463

5032

TRF APRIL-MAY'2013

63

-

40

115

1174

-

1518

79

1517

4427

TRF APRIL-MAY'2014

2345

-

22

60

48

-

891

60

350

3716

TRF APRIL-MAY'2013

2517

-

20

-

-

-

752

53

160

3449

TRF APRIL-MAY'2014

3606

432

147

28

556

657

155

9

832

6413

TRF APRIL-MAY'2013

4044

168

129

30

697

1166

119

8

300

6653

TRF APRIL-MAY'2014

87

125

32

-

120

1325

33

3

612

2334

TRF APRIL-MAY'2013

83

-

-

-

-

1425

34

3

333

1875

TRF APRIL-MAY'2014

5311

-

4

22

572

-

102

10

3975

9986

TRF APRIL-MAY'2013

5150

-

28

-

665

-

63

7

2827

8733

TRF APRIL-MAY'2014

792

-

-

-

-

-

9754

719

321 10867

TRF APRIL-MAY'2013

904

-

-

-

-

-

9129

694

425 10458

TRF APRIL-MAY'2014

9454

101

444

136

848

-

-

-

4327 15310

TRF APRIL-MAY'2013

9201

224

472

182

820

84

229

15

4159 15371

TRF APRIL-MAY'2014

31321

3808

1011

1339

12616

4902

19859

1281 21015 95871

TRF APRIL-MAY'2013

31713

3519

949

1100

11878

6228

18802

1238 17294 91483

-1.24

8.21

6.53

21.73

6.21

-21.29

5.62

Kolkata Dock System

Haldia Dock Complex TOTAL: KOLKATA

PARADIP

VISAKHAPATNAM

CHENNAI

V.O.CHIDAMBARANAR

COCHIN

NEW MANGALORE

MORMUGAO

MUMBAI

J.N.P.T.

KANDLA

ALL PORTS

% Variation from previous year

3.51

21.52

12.36

-1.59

2.44

1.53

4.10

13.90

4.43

13.67

7.74

-3.61

24.48

14.35

3.91

-0.40

4.80

4.80

Source:INDIAN PORTS ASSOCIATION

42

June 2014

stats

INTERNATIONAL air FREIGHT movement TRAFFIC STATISTICS - INTERNATIONAL FREIGHT AIRPORT

SL NO SL. NO.

MARCH 2014

ANNEXURE-IVA

FREIGHT (IN TONNES) For the period April to March % % 2013-14 2012-13 Change Change

For the month MARCH 2013

(A) 16 INTERNATIONAL AIRPORTS 1

CHENNAI

20433

20820

-1.9

220401

237105

-7.0

2

KOLKATA

4137

3454

19.8

45482

42436

7.2

3

AHMEDABAD

1301

1245

4.5

15705

12830

22.4

4

GOA

288

232

24.1

2016

2378

-15.2

5

-6.4

27283 27283

37963 37963

-28 28.1

TRIVANDRUM TRIVANDRUM

2146 2146

2292 2292

6

CALICUT

2217

2606

-14.9

22704

27256

-16.7

7

GUWAHATI

2

76

-97.4

36

94

-61.7

8

LU C KN OW

88

80

1 0. 0

1 15 5

11 5 6

-0.1

9

SRINAGAR

0

0

-

0

0

-

10

JAIPUR

26

30

-13.3

245

189

29.6

11

COIMBATORE

84

65

29.2

957

583

64.2

12

M MANGALORE ANGALORE

20 20

0

-

8 87 7

0

-

13

AMRITSAR

154

124

24.2

1486

1424

4.4

14

TR IC H Y

4 72

390

2 1. 0

4 75 1

28 9 9

6 3 .9

15

VARANASI

0

0

7

PORTBLAIR

0 31368

0 31414

-

0

16

0 342308

0 366320

-100.0 -

TOTAL

-0.1

-6.6

(B) 6 JV INTERNATIONAL AIRPORTS 17

DELHI (DIAL)

37177

34605

74 7.4

389853

358135

89 8.9

18

MUMBAI (MIAL)

44246

41245

7.3

467641

452741

3.3

19

BANGALORE (BIAL)

14355

14260

0.7

150733

144002

4.7

20

HYDERABAD (GHIAL)

4705

4707

0.0

49281

46495

6.0

21

COCHIN(CIAL)

4662

3798

22.7

42795

38033

12.5

22

NAGPUR (MIPL)

32

40

-20.0

416

406

2.5

105177

98655

6.6

1100719

1039812

5.9 -

TOTAL (C) 7 CUSTOM AIRPORTS 23

PUNE

0

0

-

10

0

24

VISAKHAPATNAM

0

0

-

0

0

-

25

PATNA

0

0

-

0

0

-

26

CHANDIGARH

0

0

-

0

0

-

27

BAGDOGRA

0

0

-

0

0

-

28

MADURAI

0

0

-

1

0

-

29

GAYA

0

0

-

0

0

-

TOTAL

0

0

-

11

0

-

(D) 17 DOMESTIC AIRPORTS

0

0

-

0

202

-100.0

(E) OTHER AIRPORTS GRAND TOTAL (A+B+C+D+E)

0

0

-

0

0

-

136545

130069

5.0

1443038

1406334

2.6

Source: AIRPORTS AUTHORITY OF INDIA

June 2014

43

Cargo & Logistics stats

DOMESTIC air FREIGHT movement TRAFFIC STATISTICS - DOMESTIC FREIGHT

SL NO SL. NO.

AIRPORT

(A) 16 INTERNATIONAL AIRPORTS 1 CHENNAI 2 KOLKATA 3 AHMEDABAD 4 GOA 5 TRIVANDRUM 6 C A LIC U T 7 GUWAHATI 8 LUCKNOW 9 SRINAGAR 10 JAIPUR 11 COIMBATORE 12 MANGALORE 13 AMRITSAR 14 TRICHY 15 VARANASI 16 PORTBLAIR TOTAL (B) 6 JV INTERNATIONAL AIRPORTS 17 DELHI (DIAL) 18 MUMBAI (MIAL) 19 BANGALORE (BIAL) 20 HYDERABAD (GHIAL) 21 COCHIN(CIAL) 22 NAGPUR (MIPL) TOTAL (C) 7 CUSTOM AIRPORTS 23 PUNE 24 VISAKHAPATNAM 25 PATNA 26 CHANDIGARH 27 BAGDOGRA 28 MADURAI 29 GAYA TOTAL (D) 17 DOMESTIC AIRPORTS 30 BHUBANESWAR 31 INDORE 32 JAMMU 33 RAIPUR 34 AGARTALA 35 VADODARA 36 I MPH AL 37 BHOPAL 38 RANCHI 39 AURANGABAD 40 UDAIPUR 41 LEH 42 TIRUPATI 43 RAJKOT 44 JODHPUR 45 DEHRADUN 46 DI BRUG A RH TOTAL (E) OTHER AIRPORTS GRAND TOTAL (A+B+C+D+E)

MARCH 2014

For the month MARCH 2013

ANNEXURE-IVB

FREIGHT(IN TONNES) For the period April to March % % 2013-14 2012-13 Change Change

6638 7588 3085 302 100 14 1064 268 292 123 500 23 12 0 29 226 20264

7161 6424 2966 199 131 38 435 217 197 233 481 24 5 0 17 221 18749

-7.3 18.1 4.0 51.8 -23.7 -63.2 144.6 23.5 48.2 -47.2 4.0 -4.2 140.0 70.6 23 2.3 8.1

71679 84300 35932 2752 1794 16 4 7871 3084 3722 6460 6115 280 129 0 404 2687 227373

78774 79796 35345 2586 1490 35 6 5919 2290 3027 6488 6097 292 88 0 303 2206 225057

-9.0 5.6 1.7 6.4 20.4 -53.9 33.0 34.7 23.0 -0.4 0.3 -4.1 46.6 33.3 21 8 21.8 1.0

20345 16130 7981 3395 871 417 49139

15561 15647 7140 2848 832 372 42400

30.7 3.1 11.8 19.2 4.7 12.1 15 9 15.9

215846 181101 91658 37389 9613 5108 540715

188176 182422 82546 33510 8873 4800 500327

14.7 -0.7 11.0 11.6 8.3 6.4 81 8.1

1944 233 488 276 55 96 0 3092

1627 185 302 213 132 90 0 2549

19.5 25.9 61.6 29.6 -58.3 6.7 21.3

21135 1823 4849 3315 1795 1204 0 34121

19861 1644 2251 2538 1238 1050 0 28582

6.4 10.9 115.4 30.6 45.0 14.7 19.4

459 508 86 313 668 157 3 73 78 245 75 0 107 0 11 1 0 0 3081 134 75710

333 393 128 209 565 163 291 75 174 45 0 52 0 12 0 0 22 2462 120 66280

37.8 29.3 -32.8 49.8 18.2 -3.7 28.2 4.0 40.8 66.7 105.8 -8.3 -100.0 25 1 25.1 11.7 14.2

4022 4801 1623 3355 6603 2052 4101 867 2491 843 0 1080 0 157 19 0 253 32267 1607 836083

3325 4734 1488 2346 5816 1970 3964 965 1530 724 0 1136 16 303 18 0 309 28644 1605 784215

21.0 1.4 9.1 43.0 13.5 4.2 3.5 -10.2 62.8 16.4 -4.9 -100.0 -48.2 5.6 -18.1 12 6 12.6 0.1 6.6

Source: AIRPORTS AUTHORITY OF INDIA

44

June 2014

stats

INTERNATIONAL & DOMESTIC air(INT'L+DOM.) FREIGHT movement TRAFFIC STATISTICS - FREIGHT ANNEXURE-IVC

SL NO SL. NO.

AIRPORT

(A) 16 INTERNATIONAL AIRPORTS 1 CHENNAI 2 KOLKATA 3 A H MED AB AD 4 GOA 5 TRIVANDRUM 6 CALICUT 7 GUWAHATI 8 LUCKNOW 9 SRINAGAR 10 JAIPUR 11 COIMBATORE 12 MANGALORE 13 AMRITSAR 14 TRICHY 15 VAR A N A SI 16 PORTBLAIR TOTAL (B) 6 JV INTERNATIONAL AIRPORTS 17 DELHI (DIAL) 18 MUMBAI (MIAL) 19 BANGALORE (BIAL) 20 HYDERABAD (GHIAL) 21 COCHIN(CIAL) 22 NAGPUR (MIPL) TOTAL (C) 7 CUSTOM AIRPORTS 23 PUNE 24 VISAKHAPATNAM 25 PATNA 26 CHANDIGARH 27 BAGDOGRA 28 MADURAI 29 GAYA TOTAL (D) 17 DOMESTIC AIRPORTS 30 BHUBANESWAR 31 INDORE 32 JAMMU 33 RAIPUR 34 AGARTALA 35 VADODARA 36 I MPH AL 37 BHOPAL 38 RANCHI 39 AURANGABAD 40 UDAIPUR 41 LEH 42 TIRUPATI 43 RAJKOT 44 JODHPUR 45 DEHRADUN 46 D IB RUG AR H TOTAL (E) OTHER AIRPORTS GRAND TOTAL (A+B+C+D+E)

NOTE:

MARCH 2014

For the month MARCH 2013

FREIGHT(IN TONNES) For the period April to March % % 2012-13 2013-14 Change Change

27071 11725 4 38 6 590 2246 2231 1066 356 292 149 584 43 166 472 29 226 51632

27981 9878 42 1 1 431 2423 2644 511 297 197 263 546 24 129 390 17 221 50163

-3.3 18.7 4.2 36.9 -7.3 -15.6 108.6 108 6 19.9 48.2 -43.3 7.0 79.2 28.7 21.0 70.6 23 2.3 2.9

292080 129782 51637 4768 29077 22868 7907 4239 3722 6705 7072 367 1615 4751 404 2687 569681

315879 122232 48175 4964 39453 27612 6013 3446 3027 6677 6680 292 1512 2899 310 2206 591377

-7.5 6.2 7.2 -3.9 -26.3 -17.2 31 31.5 5 23.0 23.0 0.4 5.9 25.7 6.8 63.9 30.3 21 8 21.8 -3.7

57522 60376 22336 8100 5533 449 154316

50166 56892 21400 7555 4630 412 141055

14.7 6.1 4.4 7.2 19.5 9.0 94 9.4

605699 648742 242391 86670 52408 5524 1641434

546311 635163 226548 80005 46906 5206 1540139

10.9 2.1 7.0 8.3 11.7 6.1 66 6.6

1944 233 488 276 55 96 0 3092

1627 185 302 213 132 90 0 2549

19.5 25.9 61.6 29.6 -58.3 6.7 #DIV/0!

21.3

21145 1823 4849 3315 1795 1205 0 34132

19861 1644 2251 2538 1238 1050 0 28582

6.5 10.9 115.4 30.6 45.0 14.8 #DIV/0!

19.4

459 508 86 313 668 157 3 73 78 245 75 0 107 0 11 1 0 0 3081 134 212255

333 393 128 209 565 163 291 75 174 45 0 52 0 12 0 0 22 2462 120 196349

37.8 29.3 -32.8 49.8 18.2 -3.7 28.2 4.0 40.8 66.7 #DIV/0!

105.8 #DIV/0!

-8.3 #DIV/0! #DIV/0!

-100.0 25 1 25.1 11.7 8.1

4022 4801 1623 3355 6603 2052 4101 867 2491 843 0 1080 0 157 19 0 253 32267 1607 2279121

3325 4734 1488 2346 5816 1970 3964 965 1732 724 0 1136 16 303 18 0 309 28846 1605 2190549

21.0 1.4 9.1 43.0 13.5 4.2 3.5 -10.2 43.8 16.4 #DIV/0!

-4.9 -100.0 -48.2 5.6 #DIV/0!

-18.1 11 9 11.9 0.1 4.0

Lucknow, Varanasi, Tiruchirapalli, Managalore and Coimbatore airports declared as International airports vide Notification No.AV.24032/10/2012-AAI dated 22nd October, 2012 by Ministry of Civil Aviation, Government of India.

Source: AIRPORTS AUTHORITY OF INDIA

June 2014

45

Cargo & Logistics last page

For Rajni Bhaskaran, who wanted to become a pilot, being in the thick of moving freight across the world is the only way she has come closer to her dream. She joined UT Worldwide India in 2000 and is Manager – Administration (India) Cargo is essentially a male-dominated industry. How did you find yourself in it?

When I joined I didn’t know that it was a male-dominated industry. For me it was quite a surprise as I had come from a retail background where there were more women v/s males. I have learnt never to approach any assignment as, ‘I’m a woman doing this job.’ It doesn’t factor into my thinking…I’m Rajni doing this job. I want to be valued for leading the team and the results we achieve and having the right relationships with stakeholders… across the board. That’s how I look at my role.

How many years have you been with the cargo industry and how has the journey been this far?

I have been in this industry and the organisation (UT Worldwide India) since 2000. It has been a wonderful learning curve intermingled with challenges and several growth opportunities. I have managed to stick on as I have always believed that, “Disruption is a friend, not an enemy”. If you don’t disrupt yourselves, the competition will.

How have your colleagues and those reporting to you reacted to you?

When I joined the organisation women were just a handful. I’ve always been focused on winning the hearts and minds

46

June 2014

of the employees. When you’re aligned you’ll have superior business results. Also, the management and the team have been wonderful, supportive and are not at all gender-insensitive.

Do you specialize in any section of the industry: e.g. handling of dangerous goods, etc.?

I have with experience specialised in the art of handling people. As the famous American author Maya Angelou had said, “I’ve learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel”.

What is so exciting about the cargo industry that keeps you attracted to it?

Since my childhood I always wanted to be a pilot. Unfortunately there were not many opportunities available at that juncture and since our industry is built on the foundation of services provided by airlines and ocean liners, I was naturally attracted to relive my dream through this job. As efficient freight distribution is vital to the economy of any country, the freight forwarding business has kept on changing from agents that organise shipments and transportation for individuals and other companies, to incorporating aspects of both freight forwarding and carriers into their services.

This dynamic environment has kept me hooked onto this job.

How confident are you about future growth on equal opportunity basis with male colleagues?

UTI’s management never discriminates between genders, appraisal is performancebased not gender-based. I believe there doesn’t exist a glass ceiling at all in my organisation, it is evident from the fact that I am currently the Head of the Administration - India.

What advice would you give youngsters – especially women – to join the industry?

If you are good in geography and numbers this job is tailormade for you. You would be interacting with customers from all over the world, moving a ton of cargo with a simple click of a button, planning shipments, developing equitable price plans, etc. and top on that the smile that you will bring on the face of the client; let it be a child in need of emergency vaccine in Africa, or a fashion designer showcasing his/her talent on a ramp in France. This industry will keep you on your toes; it is up to you whether you can keep pace with it and prove yourself.

Freight forwarding industry is a good industry to choose as a career, and in today’s scenario you will find more and more women are holding key positions in any organisation and adding value to the industry.

RNI No. DELENG/2011/387546

S

GROUP

Committed to Deliver

SA Consultants & Forwarders Pvt. Ltd. SA Cargo Services Pvt. Ltd. SA Aviation Pvt. Ltd. SA Travcare Pvt. Ltd.

Head Office:

L2, Kanchanjunga Building, 18, Barakhamba Road, New Delhi - 110001

Branches :

Tel: +91-11-2331 0752 / 53 / 54 / 55 Fax: +91-11-2331 0797, 6630 4004

Bengaluru

Chennai

Kochi

Email : Website :

Mumbai

info@sagroupindia.com www.sagroupindia.com

Srinagar