Recently there has been much talk about the threat to our industry from integrators and other modes of transport.
     Sorry to say, but the subject is as old as the hills in terms of being an issue confronting air cargo.
     In fact, there most likely is a microfiche file at some local library that contains an issue of our old Air Cargo News from 1978, featuring people like Buz Whalen, the cargo boss at JAL Cargo USA, industry chieftains such as Luis de la Reguera at Iberia, Fernando Tavera at VIASA, Norm Jeppeson at BOAC, and a few others from TWA and Pan Am Clipper Cargo, sitting around a table at the old Wings Club in Manhattan’s Biltmore Hotel, under the watchful eye of Amelia Earhart, talking for hours about just these things.
     Patrick Murray, Head of Dubai-based Calogi, is one of the smartest guys we’ve met in air cargo.
     Patrick can be seen at upcoming trade show sessions in 2013, which become a lot less like a dog and pony exercise when guys and gals like him are on the panel.
     This time, the table talk is about the impending disappearance of air cargo as we know it, or knew it, before we blew it.

  Will air cargo slowly disappear under its own weight?
 Today industry leaders agree: we need to do something as other modes of transport threaten to take over bigger portions of the traditional air cargo business.
     Our industry is full of brilliant people, so it is surprising that some of our processes are based on practices dating back to the 1960s.
     Looking back over the last few decades, there have been thousands of innovations that have changed our lives forever. Smartphones and the Internet are two that come to mind immediately, but there are other advances that are worthy of mention.
  But there are plenty of other examples where innovation met inventiveness and determination, and actual need brought about change.
  Sure. In 1961 General Motors introduced the first industrial robot to assist workers with the production of cars.
     In 1971 The Society for Worldwide Interbank Financial Telecommunication (SWIFT) started the process of creating a shared, worldwide data processing and communications links and common language for international financial transactions.
  What about in 1976, when United Airlines offered its Apollo system to travel agents, leading to the development of SABRE, PARS, and DATAS, allowing travel agents to do online business with airlines, hotels, and other tourism institutions?
  Innovation can come at peculiar times and places as well. An example of that how is in 1979, when Gene Mosher’s Old Canal Café in Syracuse, New York, began using point-of-sale software to take customer orders; it sent information to the kitchen and monitor (in real-time), effecting labor and food costs.
     These innovations advanced each industry and helped usher in new eras of productivity.
  How would you compare air cargo to the aforementioned?
  Cargo has yet to adopt innovations like these and while it is not a like-for-like comparison, if we compare and contrast our industry to the above, we find the following:
     The majority of air cargo ULDS are loaded by manual means—forklift or by hand.
     Many air cargo supply chain stakeholders are not connected to networks, which allow them to exchange industry messages with business partners.
     Cargo is still lacking a widely adopted global distribution system.
     The telephone is still the main instrument for negotiating air cargo rates and bookings.
     There is no doubt we have the ideas and that many air cargo stakeholders do invest when it comes to their air cargo systems.
  But do we invest enough? Cargo contributes between 15-18 percent to the bottom line, so for every 100 million USD invested by an airline in their product lines, do we see 15-18 million coming to the cargo business?
We suspect not.
  There has been one resounding message: the traditional air-cargo supply chain needs to give customers what they want.
  How many air cargo industry solutions are designed to make it easy to do business with their customers rather than managing internal processes?
  Not many.
  And what about the integrators?
  With integrators, the customer is able to do everything online and knows the goods will be delivered to the consignee within a specified time frame.
  The customer neither knows nor cares how the deliveries get there, they pay up-front with the understanding that the service will be delivered.
  Yes, and that costs more, but peace of mind, if the integrators’ success is any measure, is a price-point worth paying for.
  Integrators have managed to turn the wholesale business of air cargo into a retail business. What can we learn from this approach?
  I’m not suggesting everyone develop a solution which competes with the integrators, but the combination air cargo business should move e-business forward and must no longer accept the status quo, which is holding our industry back.
  So even though some parts of the air cargo industry are in survival mode, what do you suggest to ensure business continuity in 2013?
  First reduce the use of mail, telephone, and fax. These are outdated and, in the case of telephone and fax, expensive methods of communication.
     Develop a plan to migrate to an online solution. There are plenty of inexpensive solutions available.
Also, airlines and forwarders must exploit existing e-Cargo capabilities:
     Implement programs to roll out electronic availability requests and responses, electronic booking requests and responses, electronic air waybills rating and electronic status updates.
     Make it easy to do business.
     Embrace the e-AWB: Designate a project manager to implement the e-AWB on all available routes where it is feasible.
     Look at reducing data entry tasks to an absolute minimum.
  So utilizing solutions such as Calogi (dare we suggest) can provide an avenue toward this solution?
  It should only be that simple—but yes, Calogi can help.
     The rest starts with, for example, companies incentivizing their trading partners to do electronic business.
     Air cargo needs to utilize information gathered effectively: look at how to develop real-time reports.      Identifying the trends and reacting early to changes can help better manage a business and to address risks before they become issues. We need to make better use of human capital. Implementing the previous steps will free up staff time. Use your team to develop campaigns and conduct face-to-face sales meetings with clients to promote your products and build relationships.
  What about that IATA campaign underscoring the importance of air cargo, and “Air Cargo Makes It Happen” focusing on the value of air cargo?
     Air cargo transports over US$6.4 trillion worth of goods, or approximately 35 percent of world trade by value.
  The IATA campaign is a good idea worthy of industry-wide attention. Air cargo is a trade facilitator that contributes to the global economic development. It is up to each of member of the industry to share that message. I believe we are at the beginning of air cargo’s version of the industrial revolution and we cannot falter. We have a duty to make this happen before it is too late.

December 8, 1980—Seated under a photograph of Amelia Earhart, at the Wings Club, in the old Biltmore Hotel in New York City—the first Air Cargo News Roundtable discussed industry issues. (Left to right) are Luis de la Reguera, Iberia; Fernando Tavera, Viasa; Eugene ‘Buz’ Whalen, Japan Airlines; Norman Jeppeson, British Airways; Richard Haberly, Flying Tigers; Geoffrey Arend, Air Cargo News; Dick Logan, Air Cargo News; William Clarke, TWA; and Peter Diefenbach, Pan Am.

A postscript: Nice going Patrick!
     He’s a smart guy in an industry that must figure out a way to stay in business so as not to end up on some has-been junk heap.
     Sometimes I think about that first air cargo industry roundtable and wonder about those great folks that were there 35 years ago in 1978.
     Buz Whalen is in Florida and I have seen Isaac and also Fernando recently, I think, or maybe it was in a dream.
     The picture of Amelia was created by artist James Mongomery Flagg, the man who created the immortal and iconic WWI recruiting poster for the U.S. Army: Uncle Sam pointing his finger and saying “I Want You.”
     Today the Wings Club shares a home with The Yale Club in New York City, where it holds monthly meetings with big name speakers.
     Maybe Flagg’s Amelia is on a wall somewhere at The Yale Club.
     Wherever she is, wherever those guys who once met in the Biltmore are today, we are quite sure that this conversation must bring a smile as time marches on.
Geoffrey

Awards? Sure we do! But as the story below underscores, FT spells out the reasons we find excellence all around in air cargo.
     Here Ralf & Geoffrey enjoy a garden party at InterCity Cargo City Süd at Frankfurt in 2006, when Ralf was inducted into our Hall of Fame.

     Old cargo pro Ralf Rainer Auslaender founded leisure cargo with LTU management on January 1, 2000, and he’s still operating pedal to the metal as Managing Director of an enterprise that serves as the arm of a large, impressive group of airlines that might not be in the air cargo business otherwise.
     leisure is the biggest and the best at what it does, and despite business challenges in Europe and airline fluctuations, it has built a solid reputation for its high quality, no excuses, hands-on service: delivering the total cargo solution.
     In the late 1990’s, Swissair acquired a handful of tourist-based carriers in France, Belgium, Italy, Switzerland, and Germany (LTU).
     Inside Swissair, the working title for this move into holiday travel was “leisure travel.”
     After things started going south for the beautiful airline, the cargo manager at the time, Ralf Rainer Auslaender, suggested that the power and strength of what was left of “leisure cargo” be consolidated. A new cargo business was formed.
     As the net widened beyond the original carriers, the principle was simple.
     leisure cargo would make the below deck profitable for a group of carriers who had not considered the gold to be mined, in space where suitcases and surf boards once ruled.
     Today leisure cargo is an important resource for an impressive and growing list of carriers whose business is tour-based.
     Keeping it simple has been job one since this long time cargo executive decided to focus exclusively on this market segment.
     “Maybe it will not be as simple as before,” Ralf muses as we sit in his office at Düsseldorf International Airport.
     “But that is how it is with a new idea.
     “Before long everybody attempts to copy it.
     “Our effort in 2013 will be centered on bettering our systems, including IT, to continue to deliver a service par excellence.”
     Outside, a big jet rumbles down the runway, passing a window wall that separates leisure cargo offices from the hardstand.
     Like many top cargo executives and unlike some others, Ralf Auslaender is at home at the airport every day.
     He is also unassuming, quiet spoken, and thoughtful, busy, but ordered.
     He never looks for his glasses, preferring to keep them around his neck on an eyeglass chain.
     But before our day ends, we are convinced that this man is right up there among the most original air cargo executives we have met.
     Ralf Auslaender rates top marks as the groundbreaking pioneer of an entirely new idea in air cargo transportation.
     Wee Willie Tyler was a U.S. baseball player who played for many decades on several teams. He was once asked why he was able to play for such a long time, and he replied:
     “I hit the ball where they ain’t.”
     In a nutshell that is exactly what Ralf Ranier Auslaender did and continues to do.
     RRA emerged from a lifelong career in transportation, coming first out of the ocean forwarding sector and then moving over to an airline assignment with a fresh look approach.
     He took LTU, a leisure tourist-based carrier, into the air cargo business; when that worked, he just multiplied a great idea and turned it into an air cargo phenomenon.
     leisure cargo GmbH provides all represented carriers with full logistical know-how on a worldwide or regional basis, from sales and handling contracts to road feeder services.
     “leisure Cargo has a better idea,” Ralf Auslaender says.
     “To the carriers we serve, leisure is the cargo division—a cargo management company that is 100 percent outsourced.”
     “Give us your schedule and available cargo lift and we will draw up solid revenue projection numbers.
     “Unlike others, we put our money where our mouth is.
     “Base revenues are backed up by payment guarantee.”
     Total remuneration of leisure cargo is generally a revenue share formula.
     In this scenario leisure cargo markets the entire capacity of a carrier under its own brand and manages the individual, internal processes: worldwide sales, operations, ULD Control, warehouse supervision, cargo revenue accounting, IT solutions, reservation system, claims processing and settlement, interline relationships, and executions of SPA’s and BSA’s.
     leisure cargo also assumes 100 percent responsibility for all and any cargo handling costs through usage and applications of its own cargo handling contracts.
     “A carrier under our umbrella can practically put its empty bellies to work from one day to another without tying up or investing any internal resources.”
     Through usage of only a single AWB for all airline clients under the wings of leisure cargo, legal issues such as claims processing and settlement can be dealt with directly through the leisure cargo legal department.
     Usage of one AWB strengthens the brand as well and avoids confusion among cargo agents.
     Currently nineteen different airlines have outsourced their cargo operations to leisure cargo on a worldwide basis.
     In an age where alliances draw attention for their potential, leisure cargo is a kind of reality check, getting down to business as individual carriers pool their respective and varied routes, forming a network that continues to grow as new partners are added.
     “leisure cargo offers belly capacity.
     “But with 50 percent of all air cargo traffic traveling in the bellies of passenger aircraft, we have a big enough playground to keep us busy.
     “Due to the geographical distribution of our mandated carrier (Air Berlin), LC will continue to concentrate on Europe in 2013.
     “But areas like the Middle East and Southeast Asia are holding a lot of potential for us.”
     Looking a bit wider, Mr. Aueslander let’s us know what air cargo can do to better itself.
     “Advancement on the IT side, allowing for a less complicated paper flow such as e-cargo, is certainly one thing,” he said.
     “But the air cargo business really all comes down to trust.
     “You must deliver and not make excuses, but when things are challenging or even if something slips up, transparancy is critical.
     “Our first job at leisure and what we bring to the equation is an intense quality principle, so that whether you are a carrier or an agent, leisure is a good fit because we are an organization that delivers personal service and people you can trust.
     “Beginning this month, leisure cargo will offer a priority product branded ‘wheels up’ that will include service guarantees with an uplift guarantee.”
     Ralf has great advice for young people thinking of a career in logistics.
     “This business is the best way to understand worldwide business, exports and imports, while working in an ever changing business environment,” Ralf Aueslander said.
Geoffrey

RE: Why Brazil Matters Now

Dear Geoffrey,

     I find it amazing how much promotion of Brazil is out there.
     None of the detractors are ever mentioned.
      Import duty rate is at least 100% of CIF value.
     Once a product is on the shelf the cost is up to 300% more than any other developed country.
     It is not unheard of to find a pair of designer tennis shoes for USD 1,000 in the Malls.
      Number #1 industry in that country is its Bureaucracy.
     Ninety of the activity at any given airport would not exist in any other first world country and owes its existence purely to Bureaucratic Legislation.
      Everything is expensive in Brazil accept one thing - human life, and that is worth nothing.
     High corruption.
     One ex-President just about owns the State of Maranhao by driving competition out.
     Customs officials accept bribes from airlines to adversely affect a targeted competitor to slow down Customs Clearance.
     Customs official sell copies of the Air Waybills to any agent with the desired funds (awbs are accurate and contain all information needed).
     Airlines ambushed by an Agent who is paid for information which is then used to blackmail the airlines.
     Shipper and Forwarders act in a coordinated way to control the airlines.
     Imports may be rosy and some of the highest rates in the world, but conversely Exports are the lowest bar none.
     High Employer Tax rates which is 150% of the employee salary.
     Hence each worker pays for one person not working in that country with the balance or 50% going to Social Services or the Governments.
     Municipal Government is responsible for the Social Welfare of all the citizens.
     The poor are coddled.
     The super-rich have high officials and friends in government that they can turn to,while the middle class is prey to individualized taxes designed to feedthe endless needs of the Bureaucracy.

David Popovich
SeniorAccounts Executive
Singapore Airlines Cargo, DFW

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