China Loses Capacity

An elderly Chinese man attaches a blessing tablet with his wishes for the New Year on the first day of the 'Year of the Dragon' at the Dongyue Temple in Beijing on Monday. China is welcoming the year of the dragon, a symbol considered particularly auspicious, as it is the only mythical creature among the dozen animals that represent each year in the Chinese cosmic cycle.

     Chinese New Year was celebrated around the world this week, but air cargo executives were not among those enjoying the festivities.
     Although operators reported rising imports to China throughout 2011, volumes on critical front-haul export lanes ex-southern China and Hong Kong were weak. Moreover, a hoped-for peak in the run up to the Lunar New Year failed to materialize, following a similarly poor lead-in to the Christmas festivities which heaped pressure on carriers.
     Jade Cargo International, one of the top five players on international routes to and from China, has already suspended its operations due to weak demand and has so far been unable to meet target deadlines for their resumption, while Cargoitalia grounded its freighter operations from Hong Kong in late December. Other carriers are already following suit, as yields remains poor.
     A spokesman for Air France-KLM said the airline had already taken some capacity out of Asian markets.      “Rates are lower than a year ago and I do not expect big improvements in the coming months as economies are not yet picking up,” he said.
     “Demand remains down and there is still overcapacity in the market.
     “It might get a little better in the course of 2012, but sea freight is at ultra-low prices and still capacity—new ships—will be added this year.”
     Although ocean freight rates on key trades did indeed sink last year, this was mainly due to excess capacity rather than poor volume growth. For air cargo operators in Asia, the market was very different. While there were capacity issues, year-over-year volumes fell consistently throughout 2011 and the outlook for 2012 remains uncertain with the EU debt crisis and struggling U.S. economy.
     Lufthansa Cargo, a stakeholder in Jade, has hinted it may reduce its own-brand capacity ex-China, while most leading carriers have reported major contractions in cargo volumes on routes to and from Asia.
     A spokesman for one European carrier with a strong presence in China said that while there had been stable volumes in the run up to Christmas, there was not sufficient demand to drive the yield increases that were needed to sustain profitable freighter operations.
      “Yields have been under pressure due to depressed demand from the Western economies,” he added. “The run up to CNY was simply an extension of the run up to Christmas; volumes were reasonable, but not strong enough to warrant yield increases.
     “Rates during this peak were significantly lower than the same period last year. I would not be at all surprised to see further market capacity reductions after CNY.”
     He said the outlook for 2012 was “not strong” and predicted the first half of the year would be “very tough due to poor demand from the Western economies.”
     “It is possible that we see a capacity correction after CNY, which may provide some relief, but the underlying demand situation is not expected to improve until the second half of the year and only if Europe and the U.S. are able to muster some meaningful economic growth,” he added.
     Ram Menen, Divisional Senior Vice President Cargo at Emirates, was more positive. He said the China market had seen no signs of life in the first weeks of January, although he was hopeful that the U.S. economy was improving and could generate some stimulus later in the year.
     “A lot will be dependent on what the oil prices do,” he said. “We are expecting the first two quarters of 2012 to be stagnant. Although some capacity has gone off the market, there is a lot of newly built Boeing 747-8F and Boeing 777F capacity entering the market, so the balance between supply and demand is likely to tip in favor of supply.
     “With that in mind, if the oil prices remain high, there will be a lot more of the older built capacity coming out of the market, so there really will be a concerted effort to right-size the capacity in the market.
     “Rates are under pressure, and are likely to remain like this for the first half.”
Sky King

New Lufthansa Freighter Service To Detroit

     “Our new freighter connection supplements the daily flights operated by Lufthansa passenger aircraft, and offers our customers more capacity and greater flexibility,” said Achim Martinka, Lufthansa Cargo Vice President The Americas, as Lufthansa Cargo added a weekly freighter flight from Frankfurt to Detroit, Michigan on Monday, January 23.
     Return is via JFK.
     “The automotive and pharma industries, especially, are growing demand for fast and reliable transport to and from Detroit.” Detroit is also known as “The Motor City,” shortened in the 1960s to “Motown.”
     “So in March we will go all-cargo to Detroit twice weekly,” Mr. Martinka said.
     We asked Achim Martinka for his read on the year ahead, with respects to the year we just put behind us.
     “We had a good year 2011; therefore the challenge is to maintain that good performance in 2012.
     “Looking around, all major markets are having their difficulties, which bring uncertainty into our industry. We do therefore expect growth only for the second half of the year 2012.”
     There can, however, be no accounting for rapid changes, which seem to plague the cargo industry. In order to weather the ups and downs, it’s important to understand how to predict the tides and ride the waves accordingly. Thankfully, Mr. Martinka couldn’t agree more.
     “We are very much used to the fact that our industry changes quickly from good years to difficult years, so it’s nothing really unusual for us when it gets tougher again and we have to take special measures to overcome such a period.
     “We have a very strong team, which is involved pretty early in every decision. That's important to secure dedication and commitment.
     Mr. Martinka is quick to tell us that the American market, while not under the same pressure as Europe and Asia, is still not operating at full bloom.
     “America isn't really booming, although we do not have the same problems like our colleagues in China.      Actually we are still profiting from the fact that we are the national carrier of Germany, as Germany is still strong in exports,” said Mr. Martinka.
     As for customers, they, of course, place great faith in the Lufthansa organization.
     “They all see a difficult start into the year and the hope that it will get stronger in the second half. But especially for Asia, we might need a bit more patience.”
     We imagine the freighter from Frankfurt to The Motor City is a step in the right direction.
     As the song “Patience” from the Motown musical Dreamgirls says, we all must have “Patience, patience, ‘til a brighter day.”
Ted Braun/Flossie

AF/KL Highlights New CPS Feature

     A new feature developed on CPS in conjunction with Unisys provides a structured step-by-step process for a forwarder making an e-booking for shipments such as live animals, perishables, valuables, or any cargo which requires a special handling code.
     This validation is aimed at facilitating more e-bookings while adding process certainty to both the forwarder making the booking and the airline agents accepting them. By displaying a default list of commodities from which to search, data entry errors are reduced and eliminated, and the corresponding standard special codes can be selected from a drop-down.
     The result will be a more efficient booking transaction for all the participants and a higher confirmation rate of bookings for cargo requiring special handling from the get go. Customer satisfaction is also likely to increase.
     FlyingTypers spoke with Jan Krems, Vice President the Americas Air France/KLM, in order to elaborate on the drivers for this development. Mr. Krems was able to provide perspective on how this new initiative was funded and why it was necessary.
     “The AF KL statement mentions this new feature was developed by CPS (in conjunction with Unisys). It was totally funded by CPS.
     “It was made necessary to adjust to the demand of the market, as added value cargo is part of Air France-KLM Cargo strategy. Thanks to this innovation, all our forwarders will get a confirmation to their e-bookings in a swifter and more accurate way since our system will recognize their input,” said Mr. Krems.
     The product selector certainly has benefits and advantages, and it seems a wide swath of the industry would be interested in operating more efficiently down the line. Mr. Krems assures us that “forwarders of all sizes are currently using e-booking devices to deal with Air France-KLM Cargo on a daily basis.
     “The product selector will significantly reduce the number of manual actions performed by our Customer Service people in cases of e-bookings pending due to missing information. The customer will then see status ‘confirmed’ in CPS.”
     It’s helpful to note that “The percentage of e-bookings in Americas is now over 40 percent and we expect to grow it further thanks to this product selector,” said Mr. Krems.
     CPS is an Internet portal operated by Unisys and contracting carriers AA, AC, AF/KL, DL, SK, and UA/CO. Its use is free for their forwarder customers. There is a wide range of service offerings including automatic status updates by e-mail, viewing branch specific SPOT rates, requesting a SPOT rate on-line, Customs status, Special Handling Code descriptions, and much more.
Ted Braun/Flossie

Emirates SkyCargo Adds To Africa

     “While many regions are experiencing challenging economic conditions, Africa—with a population in excess of one billion and rich in natural resources—is one of the few areas to record growth, and the long-term outlook is very positive,” said Ram Menen, Emirates’ Divisional Senior Vice President Cargo, as Emirates Sky Cargo sets service to Lusaka, Zambia and Harare, Zimbabwe on February 1, less than three months after the launch of a dedicated weekly freighter to Accra and Lome.
     “We expect demand to be strong for a variety of commodities going in and out of Lusaka and Harare, and have no doubt the two destinations will be a strong addition to our African network,” Mr. Menen added.
     The Dubai-Lusaka-Harare service will operate five times a week by an A330-200, providing a total weekly cargo capacity of up to 160 tons.
     South Africa is Emirates SkyCargo’s key trading point on the continent, with a weekly capacity of more than 1,500 tonnes spread across the belly-hold of 84 passenger flights serving Johannesburg, Cape Town and Durban, as well as two dedicated Johannesburg freighters.
     Dedicated freighters also operate to Eldoret and Lilongwe, while the other points on Emirates SkyCargo’s African network—Abidjan, Addis Ababa, Accra, Cairo, Casablanca, Dakar, Dar el Salaam, Entebbe, Khartoum, Lagos, Luanda, Nairobi, Tripoli, and Tunisia—are served using either the belly-hold of wide-body passenger aircraft, or a combination of the belly-hold and freighters.
     “We have slowly built up our presence on the continent since we launched flights to Cairo in 1986 and in recent years, as Africa started to realize its huge potential, we began operating to Cape Town, Durban, Luanda and Dakar,” added Menen.
     “With such a comprehensive service now in place, we are in a good position to help sustain Africa’s continued economic development by facilitating international trade with its business partners and opening it up to new markets on our ever-expanding network.”
     Zambia has been enjoying an economic boom, driven by record copper prices and continued foreign investment in its mining industry and infrastructure, while Zimbabwe's economy is growing at a brisk pace despite continuing political uncertainty.
     Emirates SkyCargo expects to transport parts to support the mining and infrastructure sectors—as well as of commodities such as garments, computer parts, and pharmaceuticals—from the likes of the Far East, Australasia, the Indian Subcontinent, Middle East, Europe and North America. Fresh flowers, fruit, and vegetables will be among the main commodities shipped in the other direction, while trade generated by neighboring countries is also expected.
     EK 713 will depart Dubai every Monday, Tuesday, Wednesday, Friday, and Sunday at 0925hrs, arriving in Lusaka at 1450hrs. The service will depart Lusaka at 1620hrs, arriving in Harare at 1720. The return flight leaves Harare at 1920, arriving Lusaka at 2020. It departs Lusaka at 2150 and lands in Dubai at 0710hrs the next day.
Flossie

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RE: Swish At Swiss World Cargo

My dear Geoffrey,

     My word, you are a master of words! But I wish to start with very traditional but truly heartfelt best wishes for 2012, and I may add for the Year of the Blackwater Dragon: aren't our Chinese friends so much more poetic, not to say mythical, than us! Bless them! After all, they will have a big say in how this earth of ours will be run from now on.
     Thank you for the spotlight on our ladies: they certainly deserve it!
     Look forward to our next meeting, wherever it will take place (KUL?)

Best
Oliver
Oliver Evans
Chief Cargo Officer
Swiss World Cargo

Dear Sabiha, dear Geoffrey,

     That’s a very nice article – thanks a lot!

Ciao ciao
Maria Campanella
Senior Cargo Marketing Communication Executive
Swiss World Cargo

Dear Maria & Oliver,

      Actually, you all made everyone in air cargo logistics look good.
     But the writer, like the cook, enjoys an occasional paté.

Good wishes,
Geoffrey

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