Set 'Em Up Jo
          I got a little story you oughta know.

     While the big trade organizations, governing bodies and air cargo airlines are conducting their gatherings as the Spring/Summer 2010 season unfolds, Air Cargo News FlyingTypers is spending a few days with EMO Trans at their Global Annual Meeting in Washington, D.C.
     The first thing you notice about the meeting is that planning is thorough and exact, and includes plenty of time for EMO people from Korea, Australia, Germany, Chile, Canada, USA – you name it, meetings are ongoing from right after breakfast until sundown in almost every available space at the modern downtown Washington, D.C. Hotel.
     From 0900 to 1730, these meetings are continuous and involve just about everybody.
     The agenda set up here rivals some bigger trade show organizations, although since this is a company meeting, the tradition of sugar coating the opening plenary is traded in for straight from the shoulder “where are we now” opening addresses from Jo Frigger, CEO EMO Trans USA and Stefan Ritter, Managing Director, EMO Trans Germany.
     From out of the gate, first morning topics include a look at sales during 2010 and beyond, plus an airline view delivered by Oliver Evans, MD of Swiss Cargo and Jack Lampinski, CSM Swiss USA.
     The morning opening is followed by a roundtable event for everyone dealing with the hot button issue of compliance and security, involving several participants and EMO executives.
     All of this is covered before high noon on the first day of the EMO Global Network Meeting.
     The rest of the event, which culminates Thursday, is a non-stop set of meetings upon meetings punctuated with large social networking events, including the opening gala held here at the Kennedy Center on Sunday evening.
     EMO Trans began providing professional air freight services in Germany in 1965.
     During the past 45 years EMO Trans has grown and now has solutions for air cargo, ocean freight, distribution and warehousing via 250+ offices located in over 120 countries.
     Bells and whistles services include offering door-to-door control for every shipment and global visibility through local representation and knowledge of the unique characteristics of each market.
     “We build our market presence with careful planning and total customer service,” says Joachim Frigger.
     The company also keeps its team on the same page by doing a little out of the box side step, in addition to the annual meeting and empowering office visits, by offering the EMO Trans Cookbook.
     Through the Cookbook, EMO Trans shows true originality in recognizing and acknowledging the varied cultures of the EMO employees and the world the company serves.
     Filled with page upon page of local favorite recipes from people in its far-flung network of offices, the EMO Trans Cookbook offers a unified vision of the company and shows what makes for a true recipe for success: the ability to stay close to the ground, stock your ranks with good people, and always keep close to the customer.
     We know all this because we cover EMO Trans here in ACNFT often.
     What we weren’t fully aware of is that there were so many delectable dishes at work in the same place at the same time.
     Talk about victorious victuals!
     "What we did,” said EMO Trans boss Jo Frigger, “was to ask people from all of our global offices to submit recipes that were personal or family favorites in order to capture the flavor of our worldwide group and share some favorite meals with friends and business colleagues.”
     So what’s on the menu for Washington, D.C.?
     Stay tuned.
Geoffrey/Flossie Arend

Hard Numbers Tough Leadership

     “Today, we still offer you sparkling wine.
     “Tomorrow, however, after you’ve heard our 2009 financial results, it’s only going to be water,” said Nils Haupt, Lufthansa Cargo’s head of communication. It was with this toasted sentiment that he welcomed aviation journalists at a restaurant in Frankfurt on the eve of the carrier’s annual press conference.
     The figures presented the next morning at Lufthansa caterer LSG Skychefs’ headquarters were indeed gripping, to put it mildly. The carrier’s CEO, Carsten Spohr, and Board Member in charge of Finances, Peter Gerber presented the numbers.
     It is an eye opener to hear and see the details of the oft over-used buzz words “tough times” when they are described in full detail.
     Lufthansa Cargo posted operating losses of 171 million Euros in fiscal 2009 after a profit of 164 million Euros the year before: “The worst result we have ever been hit by in our history,” stated Spohr. Other figures delivered by him and Gerber were seemingly gloomy.
     Revenues fell from 2,907 billion Euros in 2008 to 1,951 billion Euros in 2009 – a loss of 32.9%. The average load factor sank from 65.8% to 63.6% (-2.2%) and the amount of freight and mail carried diminished from 1.7 million tons (2008) to 1.5 million.
     Like most other air freight flyers worldwide, Lufthansa Cargo was caught between sharply reduced volumes and ailing margins. While tonnage went down 10%, yields fell between 30% and 40%, namely during the summer months last year. It was only in autumn when LH Cargo came up with a general rate increase and volumes picked up again that the margins began to crawl slowly upwards.
     The figures may have been even worse if LH Cargo had not taken early countermeasures, such as the implementation of a stiff cost-cutting program, the sidelining of as many as four MD-11 freighters, the introduction of short time working for most of the staff and the ability to show great network flexibility by abandoning loss-generating routes in favor of opening up new routes.
     The worst seems to be over. “The crisis has bottomed out and demand is rising steeply,” stated Herr Spohr. January figures underline his statement, with volumes growing 24.3 percent in average.
     “February showed even better results,” Spohr added.
     Consequently, short time working will end in April and May, and two of the four MD-11 freighters currently parked at a California desert will undergo technical checks to prepare for reintegration into the fleet in the event that market demand increases in the coming weeks and months.
     “Being cautiously optimistic, we expect double digit growth in 2010,” said Spohr. With these additions, LH Cargo aims to attain positive operating results as quickly as possible, but at the latest by 2011.
     Once again he emphasized the airline’s self defined role as a quality carrier.
     “Delivering a first class product to the market is our only chance to survive,” he emphasized. Since the carrier’s home base in Frankfurt is a high cost airport, there is no alternative to being a quality airline, and therefore a bit more expensive than competitors.
     Both Spohr and Gerber reminded the roughly 40 aviation journalists attending the annual conference that night flights at their hub are vital to the airline. If the German high court should impose a general curfew or sharply reduce the number of night operations it would “destroy our entire business model,” Spohr pointed out.
     As a global network carrier that transports half of the tonnage on freighter main decks and the other half within the belly-hold compartments of the Lufthansa passenger fleet, the airline is extremely dependent on fast and smooth transfers of goods from aircraft to aircraft at Rhein-Main – a ban on traffic between midnight and 5:00 am would severely affect business.
Heiner Siegmund.

     OK Air, China’s first private carrier, celebrated its fifth birthday on March 11, just a few days after it introduced its new controlling shareholder – Tianjin Datian W. Group (DTW), one of China’s top private logistics companies.
     To some extent, this birthday signifies a rebirth of a new OK Air or, in the words of the statement released by the carrier: “OK Air is now standing on a new starting line.”
     In the last four years there have been some uneasy days for OK Air, including a suspension of operation lasting one month towards the end of 2008.
     “The difficulties of OK Air should be attributed to divaricating among former shareholders,” said Mr. Wang Shusheng, founder of DTW and the newly elected board chairman of OK Air as well.
     OK Air has been featured for its strategy of positioning air cargo on the same priority as passenger transportation. This strategy was part of what created conflict among former shareholders of the carrier, but this gets full endorsement from its new controlling shareholder.
     DTW pays RMB500 million to acquire all shares from former shareholders of OK Air, a deal described as “bottom fishing” by Mr. Wang.
     “Now is the best time to make this investment. Using RMB500 million to buy such a competitive airline is something we never expected before,” said Mr. Wang.
     OK Air now has 66 pilots and 60 student pilots. Its fleet includes three Boeing 737-800 passenger jets, three B737 all-cargo freighters, two Yun8 general aircraft and one Modern Ark 60 regional jet. Three passenger aircraft are currently in operation while its all-cargo freighters are grounded since the end of 2008.
     “The flying of three B737 freighters and MA60 will be resumed by the end of April 2010,” Mr. Wang said during an internal meeting of OK Air.
     “By the end of 2010, OK Air will introduce three to four B737-800 passenger jets, primarily establishing its B737-800 fleet to serve long-range routes.
     “Two more MA60 made by the Aviation Industry Corporation of China will also be delivered in 2010. Within three years, OK Air will set up its MA60 fleet covering regional flights in China.”
     During the past 16 years, Mr. Wang led DTW from a small freight forwarding company to a full-service logistics provider.
     DTW is known to the public for its deal with FedEx. It founded a joint venture with FedEx in 1999, to which it sold a 50% percent stake in the JV, plus its domestic express business in 2006, at a price as high as USD$430 million.
David

Malev Rationalized 2010

     Hungarian Malev Airlines will be state-owned again after having been privatized only three years ago. Recently the Budapest-held general meeting of shareholders paved the way for the new proprietorship of the 1946 established airline.
     According to their votes, the Hungarian state will take over 95% of the Malev shares, with 5% remaining at Russian Vneshekonombank (VEB). Thus far, VEB had possessed 49% of the Malev stakes, with 51% held by Magdolna Koeltoe, a 54-year old Hungarian businesswoman. Aviation experts have always considered her to be a front for Hungarian interests in the airline, which would have been at stake if any non-EU majority owner (like Russian VEB) had taken over more than 50% of the shares.
      Sources in Budapest claim that when acquiring 49% of Malev shares a number of financial promises were made and broken by the Moscow-based bank, including loans and new cash injections. This caused a heavy dispute between Hungary’s government and the Russian finance institute, which left Malev’s future in uncertainty for months. To avoid having the country’s flag airline go bust, Budapest’s rulers had no alternative but to invest numerous funds in the past two years.
     In the spring of 2009 German aviation manager Martin Gauss was nominated CEO and management began to completely restructure Malev’s business. The airline pulled out of loss-producing intercontinental routes, cut costly unionist privileges among the workforce and long-time employees, got rid of all B767 long-haul passenger aircraft and streamlined the regional network.
     Now all non-core activities are for sale, and prominently the air freight division. “But only in the case that we get a fair price and the investor guarantees to take over all employees,” Herr Gauss stipulates as the two major preconditions.
      Right now 95 cargo staff are listed on Malev’s payroll. With most of the business happening abroad, general sales agents like ECS Globe Air Cargo in Germany manage the carrier’s Hungarian home market. Air freight contributes a mere two percent of Malev’s annual turnover.
      “As an airline we are presently posting red figures, but if we strictly act according to our business plan, Malev will be profitable by 2012,” predicts CEO Martin Gauss.
Heiner Siegmund

DHL Village For India

     While many other air cargo stalwarts may have pooh-poohed the idea, Christoph Redmund is firm in his belief that “India is set to emerge as a cargo hub due to its geographic location between South East Asia and the EU nations.”
     Christoph Redmund is CEO of DHL Lemuir Logistics Pvt Ltd, which is an integral part of the global DHL Logistics network.
     Redmund goes on to point out that an analysis from Frost & Sullivan found that the total air cargo in India (domestic and international) was about 1.77 million tons in 2007-08 and was expected to grow at a compounded annual rate of about 8.3 percent by 2013.
     According to a recent Ernst & Young report, in India only one percent of the cargo is moved through air as compared to the global average of two percent. “There definitely exists a huge potential,” says Redmund.
     In the country the air cargo market has grown at a healthy rate in the last decade and is expected to maintain a high growth rate until 2025, before stabilizing.
     However, before the air cargo hub does happen, Redmund hopes that India’s economic development will ensure the establishment of dedicated cargo cities with multi-modal interchanges, state-of-the-art cargo terminals, cold storage facilities and electronic data interchange systems.
     He also mentions, that “regulatory restrictions, inadequate infrastructure and security hazards are some of the constraints hampering the growth of the (air cargo) industry.”
     However, for the moment, the underdeveloped trade and logistics infrastructure of the country has resulted in the high logistics cost of the Indian economy. It is more than 13 percent of GDP and quite unlike the less than 10 percent of GDP in Western Europe and North America.
     In the present scenario, says Redmund, India’s airports are finding it tough to cope with rising volumes of air cargo.
     Among the other factors hindering growth are shortage of skilled manpower, complex tax laws and inefficient use of IT.
     Advocating the need to set up dedicated air cargo villages in the country, Redmund says that these villages would have to be “designed as a one-stop solution, providing forward and backward linkages so as to give a thrust to the cargo industry.”
     The villages, he advises, should “comprise airline terminals, forward bonded terminals and dedicated centers for the movement of special cargo such as perishables, valuable cargo, pharmaceuticals and restricted articles.”
     Once the infrastructure issues are addressed and the new cargo airports are made operational, the market will witness growth within the next five years.
Tirthankar Ghosh

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