FlyingTypers caught up with the estimable Steven J. K. Lee, Chairman of Singapore Aircargo Agents Association and also a senior executive at DHL Global Forwarding. He believes that there is plenty to be positive about on Asia lanes despite fears of hard landing in China and ongoing doubts about European demand. He also warned that the European emissions trading scheme will make it even harder for airlines to cope with rising fuel prices.

     “Overall the result for last year was not so drastic; some forwarders did better than previous years and some forwarders did worse.
     “Last year the first six months were good. In the last six months though we saw a slowdown due to the Euro-zone situation, Intra-Asia was pretty stable.
     “I would describe the first months of 2012 as months of non-confidence. Consumers still appear to be confident in emerging economies such as China, Vietnam, and India, but in the developed economies there has been a sharp fall in confidence.
     “I think if the general market situation persists and continues it’s of great concern. Singapore is no different to other markets and the situation will continue to be unpredictable,” said Mr. Lee.
     But despite the low points and worries of 2012’s opening, there are still some things to which one can look forward.
     “The bright spots are Indonesia, Vietnam, New Zealand, India, Japan, which is recovering from the tsunami, and Thailand, which is already getting back after the floods.
     “These lanes will continue to flourish in 2012 and airlines are looking at increasing capacities and capabilities, especially in serving Vietnam and India.
     “Integrators are making gains in all markets.
     “The importance of China is unquestionable, but forwarders in Singapore and the region are not totally reliant on China.
     “The Singapore government provides special incentive schemes to Small Medium Enterprises to diversify their investments especially to the Asian countries. China still plays a major role, but markets like Myanmar, Vietnam, Russia, Latin America, Middle East, Africa, India, and Indonesia are now a major focus.
     “I see forwarders are already flocking to Myanmar to look for new opportunities.
     “If China rebounds, hopefully for the last six months of the year it will bring back the traditional peak period and vibrancy to the industry.
     “Europe is the main concern, but hopefully there will be a rebound from the U.S., which is very unpredictable due to the forthcoming Presidential election,” said Mr. Lee. He went on to note that everyone is hopeful for more demand going to Europe, and that “Everybody dreams for a rebound.”
     “Europe may take a while longer; it’s hard to know. If China comes to the rescue in the debt crisis the rebound can be immediate. It is all down to the political situation.”
     While most major air cargo gateways wound up losing volumes in 2011, Changi remained static due in part to geography.
     “Singapore is still very fortunate to be in the most strategic location. It serves as a very important hub for South East Asia, and all the airlines operating in and out of Singapore are very stable.
     “Changi Airport is always on a progressive path with continuous upgrading. Recently, the Singapore government announced that the budget terminal would be demolished and rebuilt as a bigger Terminal 4 to cater for demand.
     “More wide-bodied aircraft have complemented the stability of the industry. Changi Airport Authority of Singapore with various authorities and agencies are always watchful and never leave opportunities unturned.
     “Coolport is only in its second year of operation and the impact may not be too visible yet, but it is a national interest upgrade of the airport facility and in the long term it will be a very viable facility.
     “It will become a total logistics hub for pharmaceutical and temperature control products.
     “Changi Airport Group, together with Singapore Airport Terminal Services, will continue to promote this capability to ensure the facility will be fully utilized,” said Mr. Lee.
     A key criterion for forwarders in Singapore is managing the region’s higher costs, which is handled in numerous ways as outlined by Mr. Lee.
     “The companies with strong presence here use different methodology in managing their operational costs.      Most of the companies do not make staff redundant, but compromise by reducing their salary on a temporary basis, since staff cost is the main component of total expenditure.
          “Other cost reduction includes travel, utilities and also maximizing airline pallet utilization.”
With SIA Cargo’s capacity reduced by 20 percent this, we wonder how Singapore’s air cargo community will be affected.
     “Although the freighter fleet of SIA has been reduced by 20 percent in response to the weak economic environment, cargo capacity has increased owing to the delivering of twin aisle aircraft in response to passenger demand.
     “The overall decline in load factors is undermining cargo profitability. No particular routes are affected and SIA did provide a head ups to SAAA in regards to the situation, but the prerogative is still with the carrier.”
     Capacity reduction is not the only concern to the industry—high fuel costs and a new EU emission scheme are also on the list.
     “Over the last several months, weakness in the Euro and gains in the U.S. Dollar meant that Euro-based airlines could not take advantage of any falls in oil prices which are U.S. based.
     “The higher cost is definitely a major concern to air cargo. The EU emissions scheme in my opinion is going to make it worse,” said Mr. Lee
SkyKing/Flossie