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

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    Issa Baluch may know as much about logistics as anybody you will ever meet.
He possesses the chops and know-how gained over a career that spans 37-plus years.
    Best known as the founder of Dubai-based Swift Freight, which was a medium sized multi-national that he eventually sold to Barloworld, one of Issa’s lasting contributions is that he is the guy that launched sea-air in Dubai.
    These days Issa is at Harvard in the USA, where he is undoubtedly continuing to think big thoughts about logistics.
    Here with Harvard in the rear view mirror for a few months, Issa shares some ideas with us about what air cargo should view as top priority in 2012 and beyond.

     “The industry should seek stronger ties with regulators to ensure it continues to participate in the passage of air cargo regulations with a voice. This concern might be taking a back seat to what is viewed as more pressing issues, such as security and the downturn in the global economy, but it should not be neglected nor given a low priority.
     “I tell people in the air cargo business to cling to their customers, now more than ever. The future of their business depends heavily on these customers. To neglect them, whether intentionally or not, will lead to the downfall of their business. My advice to the air cargo industry is to listen well to what their customers are saying.”
     While Mr. Baluch has high expectations for cargo moving forward, he is also grounded in the reality that “the economy is sick and the cure will be slow and painful.
     “The old belief still prevails in me. I believe the United States is the engine of the global economy. If it suffocates, everyone else suffers. So focus on what happens in the USA, but keep an eye out for emerging markets. It's also important to keep track of troubled regions of the world, as well as those still recovering from natural disasters.
     As for a ‘recipe for success’, the rules can be quite simple when broken down logically. “Clearly those who invested wisely in new and modern aircraft, warehouses, trucks and other equipment, and those who are well entrenched in their niche markets—these are the winners of the day. Air cargo can be an asset-intensive industry and renewing such assets is important for survival.”
     But there is still much left to be done on an industry-wide scale, such as creating “A global standard for the industry,” said Mr. Baluch.
     “We are still far away from standardization. Air cargo security, for example, remains elusive in some countries or regions. What needs to happen is for nations that have achieved some form of standardization to band together and guide those who are lagging behind.
     “When I was a practitioner in the industry, I used to act. Now at Harvard, I plan a lot. My problem is I am unable to do both at the same time.
     “One out of 10 young people know nothing about the industry. This is both alarming and amazing. It boggles the mind to discover that we have done very little to enhance the image of this industry in the minds of the new generation. My presence at Harvard and MIT in the last 18 months has revealed this tragic scenario. Clearly, a lot needs to be done,” said Mr. Baluch.
     Issa believes that the role of freight forwarders has only become more important over the years. “In some countries, freight forwarding has become one of the most important industries fueling economies and driving destiny. This does not mean, however, that its importance differs from others.”
     He also believes there have been many misconceptions that have grown out of the effects of terrorism on the industry, something which we all must be aware of when trying to move forward.
     “There are a lot of misconceptions about air cargo. The most relevant, however, is that packages will not be opened by anyone but the sender and the recipient. This is relevant because terrorism has changed the way everyone does business and not just the freight forwarding industry. We again go back to the question of cargo security and what we can do about it,” said Mr. Baluch.
Geoffrey/Flossie

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