nalysts are currently offering widely divergent views on where container shipping freight rates on major East-West lanes will head in the coming months and years. But all agree the ability of lines to manage capacity will be the key factor.
Freight rates from Asia to North Europe as measured on the Shanghai Containerized Freight Index have slumped this year from a high of $1,350 per TEU in February to less than $750 per TEU in late May. A similar decline has also been apparent on the Transpacific, with lines finding little grip on either trade regardless of a series of general rate increases.
     Despite slow steaming strategies by lines and increased scrapping, vessel capacity continues to outweigh demand. Macquarie Research estimates that demand growth on the Transpacific of three percent this year will be offset by an equal decline in demand from Asia to Europe.
     Nomura Equity Research, meanwhile, expects global container demand growth of 4.2 percent this year but supply growth of 7.6 percent.
     On condition of anonymity, the Asia CEO of one integrator with a major forwarding arm said lines would continue to struggle to maintain rates for the rest of this year, despite a recent pick-up in volumes on major East-West trades.
     On the transpacific, there is disagreement between analysts on exactly how lines performed in recent annual contract negotiations. A spread of $50-100 year-on-year gains by shipping lines was generally reported but the forwarder executive said settlements had largely been “flat” with little change in rates compared to a year ago. But some analysts claim the picture is still murky because a number of boxship managers walked away from loss-making deals. If correct, this will leave them highly reliant on a successful peak season and a hoped-for surge in spot rates.
     However, Drewry said lines were “again at war with each other over market share” during the second quarter on the Asia-Europe and transpacific lanes. Whether lines are willing or able to more successfully manage capacity in the coming months will be crucial to profitability and rates.
     The forwarder executive said volumes out of Asia had rebounded since Chinese New Year on both Asia-Europe and the Trans-pacific trades. But he predicted volatility would remain in the market even if there was a sustained further volume increase through the traditional peak season.
     “The volume outlook is pretty good and if it continues to build we’ll have a decent second half,” he said. “I don’t see the European market as so terrible despite all the problems there. There is still demand growth and we’re optimistic.
     “I think the market challenge is about capacity. Volumes will pick up month over month in the peak season, but there is still so much capacity that lines will have an issue with rates and I see more GRIs coming in or lines will have big losses again.
     “The contracting season wasn’t so successful for lines so they’ll be acting out of desperation because rates, although sustainable at the start of the year, have been falling for a number of weeks. Lines will need increases regardless of supply and demand.”
     Nomura doesn’t forecast a major rebound in freight rates until next year, but expects carriers to get back into the black on the major lanes next quarter if managers stop chasing market share and concentrate instead on capacity management.
     Macquarie forecasts sustained freight rates gains for lines in 2014 and 2015 but predicts only a marginal uptick in the next two quarters.
SkyKing

f Qatar Airways Chief Officer Cargo Ulrich Ogiermann is not having the time of his life these days, it will have to do until the real thing comes along.
Uli is on track to position QR as a leading freighter provider in the Middle East and internationally as well.
“As we attend Air Cargo Europe this week in Munich,” Uli told FlyingTypers, “we want to share our story, sense of adventure, and excitement with every delegate attending this great event.”
     The fact is that Qatar Airways Cargo has been part of Air Cargo Europe many times previously, “but this year, coming on the heels of our expansion and building of the Qatar Airways cargo product and brand, we are especially eager to welcome all to Hall 4, Stand 418,” Uli declared.


     “2013 has already been highly successful for Qatar Airways Cargo, with the hosting of IATA's World Cargo Symposium in March, the arrival of our new Airbus A330s and B777Fs, and a growing route network," Mr. Ogiermann said.
     “The success of the IATA event is still evident in the form of various appreciation and thank you notes received.
     “Many conferees were amazed by the massive development Qatar is currently undergoing.
     “The extensive cargo facilities at the new Hamad International Airport are one of the prestige projects of Qatar.”
     This month Qatar Airways Cargo will get its fifth Boeing 777 freighter.
     Beginning in June, the Qatar Airways Cargo fleet will include three Airbus A330F and five Boeing 777 Freighters.


     “The new cargo center will enable us to compete with the top cargo airlines in the industry,” Uli said.
     “The soon to open USD$1 billion Qatar Airways Cargo Complex at Hamad International Airport—the State of Qatar’s new iconic airport—covers an area of more than 290,000 square metres and will handle 1.4 million tons of cargo annually; more than triple the capacity of the existing facility.
     “The complex is made up of seven facilities, including one of the largest Cargo Terminal buildings in the world, with an Air Cargo Handling System capable of accommodating 1,005 Unit Load Devices (ULD) and 5,286 consignment cages.
     “A state-of-the-art Cargo Warehouse Information System (CWIS) will ensure the location of all cargo in the terminal—whether stored in the ULD System, consignment cages, or in the various special cargo handling areas— and will track and process quickly and efficiently.
     “A new Cargo Agents facility will provide leasable space for more than 12 businesses, and a Landside Security Station will feature a special document processing area.
     “The Live Animal Centre contains dedicated holding, veterinary, and processing areas for live animals shipped by air. A team of specialist animal care personnel will be based at the facility to tend to animals departing, arriving, or transiting through Doha.”

     “The State of Qatar lies at the heart of the Gulf, and is playing an increasingly influential role on both the regional and world stage.
     “Our Doha hub is at the crossroads of East and West.
     “This central geographical global positioning enables us to see growth potential in all markets we serve.”


     “Qatar Airways Cargo serves over 40 freighter destinations worldwide through its hub in Doha.
     “We have made a substantial investment in the Doha Hub, with staff and facilities to ensure all cargo deliveries are processed efficiently and seamlessly over a wide variety of product categories.
     “We have world class cargo facilities and offer an unrivalled service.
     “As Qatar Airways Cargo, we are always looking to tap unreached markets and new freighter destinations,” Uli Oggiermann said.
Geoffrey/Flossie

ay Curtis, Delta Cargo Vice President-Sales, has a story to tell at Air Cargo Europe in Munich this week; it includes a menu of services and enhancements that are continually being added to the carrier’s offering.
Admittedly, 2013 is challenging, but Delta Cargo is sending the signal that it is out for all the business, and is an enterprise that is constantly put to the test by a growing customer base; regardless, it is, as Ray says cautiously, “winning.”
     “Given the uncertainty and weakness in the global economy,” Curtis said, “we are holding our own with regard to our revenue performance.
     “Economic stresses in Europe and the ongoing uncertainty in the U.S. are affecting the overall market worldwide for passenger and cargo traffic.
     “These global conditions have caused contraction in the cargo industry in particular.
     “The only thing that is certain with the economy is ‘uncertainty,’ and we don’t see this improving in the near term.
     “But a tough business climate doesn’t mean that you sit on your hands.
     “Delta Cargo continues to invest and innovate.
     “Here in Germany, for example, our auto industry premium product line branded ‘Variation Wheels,’ is rolling right along, and Frankfurt leads the way!
     “During the past year, we have seen 65 percent revenue growth in Variation Wheels, and we expect that growth to continue.
     “Frankfurt is Delta’s top originating market for Variation Wheels.
     “Primary destinations include Detroit, Los Angeles, and New York-JFK.”


     “At Air Cargo Europe this week we are talking to our customers about Variation Wheels and our entire offering, and that’s what it’s all about.
     “Europe itself is an important market for Delta Cargo and we have an extensive network here that connects everywhere in the U.S. and also to shipments into Central and South America and Mexico.
     “We look forward to visiting with our customers in Munich Hall A4 Stand where we will be exhibiting with SkyTeam Cargo.
     “Our SkyTeam Cargo group is active and growing and we are the only multi-carrier cargo alliance in the industry.
     “Today SkyTeam include 10 airlines and will be welcoming China Cargo Airlines as our newest member.”


     “Growing e-freight adoption and building on the momentum from the recent CNS conference is something that we will be discussing with customers this week, not only as a critical industry initiative, but as something that we are very focused on.
     “Delta is working together with our global partners to accelerate the adoption of e-freight.
     “For example, Delta joined the IATA multilateral eAWB agreement in April.
     “We were the first airline to join along with Swissair, which clearly demonstrates our commitment to leading the industry in this area.”


     “In terms of new services, Delta has recently added new transcontinental service with wide-body, pallet-capable aircraft between JFK and Los Angeles and JFK and SEA, timed to connect with our international bank business; we also connect our gateways out of Atlanta including LAX, SFO, SEA, SLC, JFK, and DTW with wide-body pallet-capabilities.
     “This capability is very exciting because it allows us to serve our customers with single connections from Europe to key markets across the USA.
     “Our Customer Service Center is another area of focus.
     “Last year we introduced a Customer Resolution Team that is staffed 24/7 to assist our customers with tracking shipments.”


     “Another aspect of technology that we have and will continue to invest in is the enhancement of our website, www.deltacargo.com.
     “Late last year we re-launched the site with improved design and navigation.
     “In the coming weeks, the site will include language translations (German, Spanish, and Japanese) to serve our cargo customers around the globe, and later this year, we will launch enhanced booking functionality, online eAWB submission, and customized performance reporting for key accounts.”


     “We know that operational reliability is a key criteria used by our customers when making a decision about which airline they choose for their shipping needs.
     “Building a consistent and reliable operation is a major focus for Delta Cargo and for our company as well.
     “Scott Barkley joined the team in August of last year as managing director of global operations.
     “Scott is a people-focused leader who has made a difference from day one in building our team and putting processes and metrics in place to measure and make continuous improvements to our performance.
      “Another investment we have made, which has launched in Atlanta, is our Cargo Logistics Manager. CLM, which is an industry first among passenger airlines, connecting our scanning technology to our existing Webvision cargo platform.
     “Today at Delta our cargo ops team gains real-time visibility in one centralized location to all the freight, including U.S. Mail, coming into or leaving Atlanta.
     “After the system is piloted in Atlanta, we expect to roll it out to other stations later this year,” Ray Curtis said.
Geoffrey/Flossie Arend

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f you wanted to say that the air cargo business has gone from the frying pan into the fire, you would get no argument from Jan Krems as Air Cargo Europe takes off in Munich.
As the point man for AF/KL/MP in the Americas, serving as Vice-President Cargo, Mr. Krems takes the long-term view.
“Business is extremely challenging.
      “We are focusing on retaining and also growing our market share within the Americas.
      “Our added value products are playing an increasingly important role in providing a professional and high quality service, as the market is accustomed to receiving from Air France – KLM Cargo and Martinair Cargo.
      “We face continuous rate pressure and are concerned that the airline industry will not be able to sustain these dropping rates without consequences.
      “Therefore our approach is to do what it takes to be the indispensible resource.
      “Often that means going the extra mile for the customer, which in 2013 and moving ahead is business as usual for us.”


“So at Munich, Air France – KLM Cargo and Martinair Cargo view this worldwide event as an outstanding opportunity to meet clients, suppliers, and other players in the chain to hear what they have to say and to also reinforce our commitment to excellence.
“We will be present along with our SkyTeam partners, including Delta and other key representatives from various offices.”


      “For example, we are emphasizing a strong network connecting Europe to all major cargo markets via our attractive gateways, CDG and SPL.
      “Our offering is also for reliable, high-frequency connections via our passenger networks, complemented with flexible freighter capacity on selective markets, plus global network coverage strengthened through our partnerships (Delta, Alitalia, Kenya Airways).
      “Additionally, high-quality transfer at the hubs and competitive European truck connections is coupled with local commercial presence at all major cargo markets.
      “In other words, today’s KL/AF/MP offering delivers transport capability for the full range of airfreight commodities, as opposed to just being able to do a few things right.”


      “We have reviewed our sales policy and have redirected to a new business model with the customer segmentation being the cornerstone.
      “Our range of products is being simplified for greater efficiency, and active promotion of e-services (e-booking, e-freight, e-claims) will improve service quality.
      “Yearly Customer Satisfaction Surveys will continue to ensure that we are in touch with our customer’s feedback, which tells us how we are doing.
      “It is crucial that we move forward in improving services that our customers require.”


“Our network continues to grow with new destinations ex-Europe, including Tripoli, Benghazi, Libya, and Yekaterinburg.
“Looking ahead, we are ramping up more direct services into Russia to serve our flower clients in Ecuador and Colombia.
“We are the market leader to Europe and strongly recognized by the market for our quality and reliability.
“Our view as always towards pursuing closer cooperation with our SkyTeam partners and utilizing our unique network and products,” Jan Krems said.
Geoffrey/Sabiha

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