Lufthansa Cargo
Posts Record Profits
Lifts Tokyo Mercy Flight

     Karl Ulrich Garnadt was extremely pleased:
     “In 2009 we presented the poorest result achieved in the history of Lufthansa Cargo.
     “Today we are proud to announce the best annual outcome ever achieved by Lufthansa Cargo,” stated the carrier’s CEO.
     “So far in 2011, revenues have remained stable,” the executive pointed out.
     Last year's numbers are indeed sparkling, showing an operative profit of €310 million, contrasting sobering losses in 2009 of €171 million..
     Revenues totalled €2.8 billion and the load factor reached 71 percent, thus climbing by 7.3 percent year-on-year. All in all, LH Cargo not only improved its market position remarkably, but left competitors like Air France-KLM-Martinair Cargo, Singapore Airlines Cargo & Cargolux further behind.
     The carrier’s financial turnaround was prompted by a stiff cost-cutting program, the sidelining of up to four MD-11 freighters (thus taking dispensable capacity out of the market), major network adjustments and the overall global recovery of the industry.

New Leader Cuts Great Figure…      Karl Ulrich Garnadt (53), new Lufthansa Cargo Chairman and CEO, reported record financials today In Frankfurt.      The German Cargo carrier showed a strong recovery 2010, posting an annual operating result of €310 million euros.      This is a record figure after a sobering year 2009 with reported losses of 171 million euros.      Stiff cost cutting, including capacity reduction with the grounding of four MD-11 freighters, and also taking major network adjustments, headlined the financial turnaround.      New Lufthansa Cargo sales and marketing initiatives coupled with global financial recovery is also credited with the 2010 turnaround.

     Said Garnadt:
     “We learned during the crisis to react faster to market changes.
     “That strength paid off as the economy gathered momentum.”
     In charts he presented at the annual press conference, he highlighted the contribution of special products to his airline’s profits.
     The express segment grew by 118 percent, dangerous goods, pharmaceutical and products of the bio-technology increased 71 percent, and valuable goods saw a plus of 25 percentage points.
     Another major contributor to Lufthansa Cargo’s positive results were generated from its home-base in Frankfurt, by far Europe’s biggest consolidation hub.
     At FRA, almost three times as many tons of air freight are bundled as they are in Paris, Amsterdam or Milan, and almost twice as many as in London.
     “Frankfurt is a big asset we strongly rely on,” said Peter Gerber, (left) board member Finance & Human Resources at LH Cargo.
     However, the airport operations are threatened by a proposed ban of night flights, which could be imposed by Germany’s Federal Administrative Court as a possible consequence of the increase in traffic and noise caused by the newly built northwest runway. The ban would potentially be operational next October.
      “In that case, Lufthansa Cargo’s operations will be hit hard since the carrier is dependent on a certain number of night flights on routes between East Asia and Europe.
     “We currently account for approximately ten movements each night depending on weekdays, but at an assumed yearly growth rate of five to six percent we’ll need additional slots for securing further growth at our main hub,” Garnadt claimed.
     Meanwhile, the court’s decision is expected during the first half of 2012 rather than in fall of this year, as previously presumed.
     As a possible reason for the delay, Lufthansa Cargo offered “The matter is highly complicated,”
     Night flights are also relevant for the development of jobs at the cargo airline’s hub.
     “For this year we expect to increase the number of positions by around 250,” said Peter Gerber.
     Garnadt said his company will invest in three major business segments for safeguarding future viability:
IT infrastructure, the rebuilding of Lufthansa Cargo’s ground infrastructure at Frankfurt airport, namely the warehouse in the northern part of Rhein/Main, and the further development of the fleet.
     Herr Garnadt emphasized that the announced order of five B777-200 freighters that will join the fleet between 2013 and 2015 is not a predisposition for future aircraft orders of this Boeing variant.
     “We would be very glad if competitor Airbus could offer a cargo plane as a possible alternative to the B777F,” he said when asked by Air Cargo News/FlyingTypers.
     This (next) order, however, will not be placed earlier than 2018.
Heiner Siegmund/Flossie

LH Opts For B777 Freighters

     Lufthansa recently announced the purchase of 35 new aircraft among them 25 Airbus A320 NEO, five A321 NEO, and five Boeing freighters B777F.
     The complete order comprises €4 billion. It is the first time the German carrier placed an order for the Boeing variant B777.      Lufthansa's management says, the freighters are needed, to seize growth opportunities fuelled by rising demand. Plane maker Boeing will make delivery beginning 2013.
     The long-haul freighter has a maximum capacity of 102 tons each flight, and needs no tank stop on roundtrips between Fareast and Europe or places in South America and Germany. Therefore as compared to the MD-11s, the B777Fs will not require a technical stop for refuelling at Krasnoyarsk in Siberia,
     Nils Haupt, LH Cargo's head of communication assured Flying Typers that all 18 MD-11 freighters the carrier operates currently will be maintained in the fleet.
     He emphasized however, that at this point the decision has not been made whether the B777Fs will be automatically integrated in Lufthansa Cargo's fleet. or whether they could be assigned to AeroLogic, the Lufthansa Cargo / DHL Express joint venture (50/50%) and fly under the umbrella of the Leipzig-based cargo airline.
     Haupt said, "Where we finally choose to place the B777Fs is ultimately a question of costs." Herr Haupt added that negotiations with the cockpit crews regarding deployment, utilization matters and how to optimally curtail expenses would commence soon.
Heiner Siegmund

ACD Club Germany Gets Riege

Left to right—Johannes Riege and ACD President Wolf-Dietrich von Helldorf.

    “Our industry is doing a great job every day by transporting masses of goods from A to Z, thus spurring the global economy. What our industry is not good at all at, however, is communicating efficiently according to modern means along the entire supply chain.”
     This statement was a kind of preamble to a presentation given by Johannes Riege of Düsseldorf-based Riege Software International GmbH at the influential German Air Cargo Club (ACD) last Tuesday.
     Take the heavily pushed subject of e-freight for instance, which has proven to be a top agenda subject at all major IATA meetings during the last ten years. But vision and reality are far apart since the electronic data exchange is so far only practiced by a meager 2.8 percent of the industrial players worldwide.
     “To my understanding, e-freight can’t really be called a success story,” Riege commented.
     “Paperless documentation works well for airlines, some customs authorities and a number of airports. But truckers and especially the huge number of branch handling agents that bundle and consolidate vast amounts of shipments at secondary airports, from which they are fed daily to major cargo gateways, are totally excluded from e-freight,” criticized Herr Riege. Why? “Because IATA understands itself primarily as an airline lobby, pushing forward the interests of the carriers,” he said.
     E-freight, as it is standard today, doesn’t even offer a rather simple technical tool like electronic billing.
     To fill this communication gap, his enterprise came up with an innovative solution called “Scope” for air and ocean freight alike. It’s a modular, component-based application that can combine and mix the operational processes, thus enabling shippers, truckers, handling agents, customs authorities and airports to exchange data either via messaging or web services. Due to the one-file concept, the participants can revert to the data whenever they need it.
     One of the Scope users is Hamburg-based ths aircargo services GmbH.
     “Since we implemented Scope last October, we receive the data on shipments from all our forwarders we do business with right after they’ve picked up the goods at the shipper’s warehouses. The visible result is that processes became highly transparent, the flow of goods sped up, and paperwork was reduced remarkably,” praised owner and managing director, Ruediger Suhrke, of ths.
     “This not only saves us money, but has also minimized errors that occurred in the past when we filled out all shipping docs by hand.”
     After consolidating the shipments and simultaneously with the trucks’ departures at Hamburg airport, the data is transmitted electronically by ths to the gateway handling agent in Frankfurt. Having this information on file roughly eight hours prior to the physical arrival of the packages allows the agent to pre-plan their handling activities.
     “The next step will be extending Scope’s range and integrating local customs participation at Frankfurt airport,” said Suhrke.
     While this is a future goal, Riege’s electronic tool already offers the truckers a major, cost reducing benefit today: they don’t have to queue up at the ramps in Frankfurt anymore, waiting sometimes several hours before being permitted a ramp position to get their pallets unloaded.
     “Thanks to our product the agents at Rhein-Main know exactly when a truck will arrive, what goods are on board and what airline they are destined for,” says Riege.
     Scope, he adds, is based on multilateral solutions, aimed at integrating all players of the supply chain according to their own individual needs.
     “We strongly object to centralized systems as those in application in Amsterdam, Dubai and other places, since they tend to monopolize the electronic flow of data.”
     Riege told the 60 members attending the Air Cargo Club meeting that his product offering is the more egalitarian platform for agents, truckers, handlers, and airlines alike.
Heiner Siegmund

Ram Talks Japan
And Middle East

     Ram Menen is the iconic DSVP of Emirates SkyCargo, famous all over the world.
     He is the recipient of every award and accolade in transportation known to human kind, and some more than once.
     But to those of us who have known him for what is now almost 26 years, he still has a youthful, excited enthusiasm for our industry that has not changed much since the first airplanes leased in from PIA formed the EK fleet and Ram, with his friend and colleague Prakash Nair (EK Cargo marketing guru, pictured here with Ram at Air Cargo Africa last month) and Pradeep Kumar (who is also still at SkyCargo as honcho of Revenue Opitimization), were situated in a shack off the runways at DXB.
     The other side of Ram, who continues to lead in organizations like TIACA and IATA Cargo, is the down-on-the-ground human side of the great man.
     Here he talks one on one about Japan and also recent unrest in the Middle East.
FT:   What is your view of the current situation in Japan?
RM:   Our heartfelt condolences and sympathies go out to all the victims of the earthquake and the tsunami. We are very thankful that our team and their families are all okay. The situation with the nuclear reactors is of a major concern and like everybody else, we are monitoring the situation very closely.
FT:   What is the short and long term impact on air cargo as you see it?
RM:   A lot of the affected places are manufacturing areas and the disruption to the supply chains is still being estimated. Part of the impact felt will be in components that are supplied to various other manufacturing areas in China and other Far Eastern countries. These assembly plants will have to look at procuring components from other locations and it is also a question of other factories outside of the affected areas and other countries being able to ramp up their production capabilities and take up the slack. Hence, the impact will not just be contained to Japan; other production areas are also likely to be impacted.
The automotive industry is also hit quite badly with a lot of inventory already destroyed, and manufacturing and assembly plants completely destroyed. The contamination of foodstuff is also going to create severe shortages within the country, which will depend on what can be imported in… of course, available capacity could be a challenge.
     In short, commerce in general is disrupted and it will take months, if not years, before they can get back on their feet.
FT:   What is SkyCargo doing that might be helpful there?
RM:   We are still operating a full schedule to both Narita and Osaka, and keeping our supply lines open.
FT:   What impact is felt of the current unrest in Middle East?
RM:   We are watching the situation very closely. It is not a happy situation, however, the reality is that it is happening and we have to ride through and manage the situation as best we can. We are seeing the markets in Egypt and Tunis coming back. This is good news.
FT:   Are these current unexpected actions changing your business outlook for 2011?
RM:   Where we were expecting a robust growth of 8-10 percent for this year, we are now revising it down to anywhere between 4-6 percent… it will still be a growth scenario.
FT:   Leadership comments welcome…
RM:   Like any other crisis (there have been so many in this century!!), we have to roll up our sleeves and continue managing the challenges thrown at us and ensure that the wheels of commerce never stop!
Geoffrey Arend/Flossie

Simon Says Keep It Simple

     “Damco has a defined strategic plan for growth over the next five years. I am very much looking forward to supporting this ambitious plan together with our specialists, and I believe that supply chain development is a real differentiator within the industry,” said Simon Joslin, newly named Damco Director of Strategic Development in the UK and Ireland, responsible for Strategic Sales channel, including newly launched Retail, Chemical and Reefer verticals, as well as Supply Chain Development.
     Simon has over 20 years of experience within the Logistics and Supply Chain industry.
     He joins Damco from APL Logistics, where he held the position of Global Account Director.
     Richard Morgan, UK and Ireland Chief Commercial Officer says: "We are delighted to welcome Simon to our Commercial Management Team.
     “He has an impressive track record of success in his career to date and he will play an important role in expanding our business in key industry verticals."

Dear Geoffrey:

     Thank you for flashing my picture on yesterday's Flying Typers.
     April 1st marks four years since I retired from JAL and Feb 24 marks the seventh anniversary of the passing my wife, Yoko.
     I am very sad about outcome of my former company, which until 2010 was one of the largest airlines in the world with over 60,000 employees.
     It now holds the record of the largest bankruptcy of any airline in the world to date.
     I was fortunate to have retired after 41 years with JAL in 2007, financially intact. Can you imagine in Japan, last year as part of the restructure of JAL, every JAL employee who had retired, had their pension plan reduced by 30% to help save the company?
     Pension-related obligations accounted for more than a quarter of the airline’s interest-bearing liabilities.
Of course this did not pertain to local employees here in the U.S. that had retired.
     JAL was a very bureaucratic run organization and that contributed to its downfall.
     This was also stated by the 78 year-old Kazuo Inamori who took the helm in January 2010 when the company entered bankruptcy .
     One of his comments was that an "extremely low" number of the JAL's executives have business sense.
He told them:
     "You guys wouldn't be able to run a green grocery with your ideas."
     Mr. Inamori stated :
     "I want to change the minds of our executives and other employees so that they become conscious about profits and losses.”
     Kazuo Inamori (born January 30, 1932 in Kagoshima, Japan) is a philanthropist, Japanese entrepreneur and the founder of Kyocera Corporation and KDDI Corporation.
     I remember in late 1990s, when your Air Cargo News did the story about the new “JAL Cargo Building at John F. Kennedy International Airport for the 21st Century”.

     JAL Cargo JFK as a multi-tenant facility was designed to handle 20% of the total throughput of all air cargo at JFK.
     We had designed a very aggressive business plan that would have made the facility a major player in the cargo industry at JFK.
     This plan never materialized because JAL executives who were assigned from Japan with no knowledge of the local business, had other plans.
     Today, JAL no longer has 747F's and only has one daily 777 passenger flight to JFK.
     In November 2015, JAL will return the facility (Bldg 151) to the PANY&NJ.
     It will be interesting to see what the PANY&NJ will do with the building considering that a number of cargo buildings at JFK are either in moth balls or scheduled for demolition as is the former TWA Hangar and cargo building (Hangar 12).
     The revival of Japan Airlines is deeply connected to the revival of the Japanese economy.
     There is no question that the triple hit that just occurred in Japan (earthquake, tsunami and nuclear plant explosions) will have a great impact on the airline industry, especially for JAL that is in the process of downsizing and rebuilding the route network.
     My congratulations on the continued success of FlyingTypers.
     I look forward to reading it every issue.
     You have come a long way from the days when my daughter was your web master.

Rudy Auslander
Executive Director
JFK International Airport Chamber of Commerce.

Rudy Auslander is as decent and right and wonderful an individual as we have ever known in our 40 years on the airport beat. He is a dreamer and a doer, and a true pioneer of the modern air cargo who lifted air cargo operation technology and management. Rudy’s service to helping others and lifting the aviation community is total and as this letter indicates, we are all lucky he still is thinking about us.

Blast from The Past . . .

Dear Geoff,

      Nice to know that the JFK Air Cargo Association still thrives.
      I joined in 1966 (New York Air Cargo Sales Club) as a rookie cargo sales rep with Braniff.
     The president was Bob Havenstein of National Airlines.
     Our monthly meetings were held at the Playboy Club on E. 59th St.
     The meetings tariff was $10.
     We had a private meeting room and two bunnies were assigned to our meeting. What did the $10 buy?
Two drinks, a steak dinner, coffee and desert, plus Playboy usually threw in a door prize or two.
     Of course, back then you could get two drinks and a steak at the Owl for under $5, but the waitresses didn't wear bunny tails… more like whale tails.

Eldon Brown
ELDONBR@aol.com

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