Vol. 10 No. 67                       THE GLOBAL AIR CARGO PUBLICATION OF RECORD SINCE 2001                Thursday July 14, 2011


     Today, minesweeping near Kabul, tomorrow, cargo controls at Cologne, Frankfurt, Hamburg or other airports between the North Sea and the Alps.
     This scenario is about to become a reality: German military staff will be posted away from Afghanistan’s battlefields and elsewhere to take on new duties at the state’s Federal Aviation Office Luftfahrt-Bundesamt (LBA).
     Last Wednesday, members of the German parliament gave their blessings to finance 247 additional jobs the LBA badly needs in order to tighten air freight controls and improve security procedures.
     Most of the new LBA personnel will not be logistics experts, but come from the German army where they are currently busy doing their military or administrative service.
     From the standpoint of Berlin’s ruling coalition of Conservatives and Liberals, this job rotation is appealing because it’s partially cost neutral.
     Despite a number of pending questions, it’s therefore no real surprise that it finally got the green light by the house of parliament.
     ACNFT asked some influential members of the cargo industry what they think about these plans.
     Here are their reactions:
     “I basically support all steps for improving air freight security, but would like to know how qualified the potential candidates are for this job and what exactly will their duties be and what operational areas after being transferred to the LBA,” asks Ruediger Suhrke, (left) Managing Director of Hamburg-based forwarder ths aircargo services GmbH.
     Being a security expert who constantly coaches ground handling personnel, he questions whether the candidates are sufficiently skilled for undertaking this challenging task.
     “There is quite a difference between professionally driving a German Leopard tank through hostile territory and detecting an explosive device hidden in a cargo shipment,” he reasons. Maybe it would have been a better idea, Suhrke suggests, to hire retired logistics experts on a part-time basis and send them up front because, unlike military soldiers, they know the supply chain from A to Z.
      Frankfurt-Hahn airport’s head of sales, Udo Preissner (right), is skeptical as well.
     “The entire endeavor will only be successful if the people get thorough training to start their new assignments well prepared.”
     Cargo security came under heightened scrutiny last fall after two Yemen-dispatched bombs were intercepted on their way to the U.S.
     One of the explosive devices was transferred at Cologne airport without being detected by security personnel.
     The bombs were hidden in printer cartridges and were powerful enough to blow up the aircraft carrying them.
     Right after the incident, the German government announced the implementation of a rigid security concept that would close obvious loopholes through the employment of 450 additional staff at the LBA.
     Until last week, however, not much had been done, since German Chancellor Merkel’s team failed to present a detailed security concept.
     Consequently, the members of the parliament “Bundestag” rejected financing any increase of security personnel.
     Finally, however, the government resolved internal conflicts between the ministries of Transport, Interior and Finance concerning security responsibilities by agreeing on a new master plan.
     Having made this decision, the parliament reacted promptly by allowing the financing of up to 247 jobs at the LBA. An additional 203 jobs still remain on the waiting list until Chancellor Merkel and her teammates present further details of their plans to better secure air freight flows.
Heiner Siegmund/Flossie


K & N China Goes West

     The Kuehne + Nagel group may have cut its competitive teeth in Europe, but the Asia Pacific zone now generates much of its revenue and volume growth, not least for its air division. That was the key point made by Thomas Lehmann, (right) Senior Vice President, Airfreight for the Asia Pacific Region, when he spoke to us from his office in Singapore, which is now the company’s regional base following its relocation from Hong Kong last year.
     2010 air cargo volumes managed by the Switzerland-based logistics and forwarding major increased on all routes, rising 25 percent overall to almost one million metric tons, aided by K+N’s strong presence in the pharmaceuticals, high-tech and perishable sectors. But the standout performer was traffic to and from the Asia-Pacific region.
     K+N’s Asia Pacific organization handled 504,000 tons of air cargo in 2010, representing a 47 percent hike compared to a year earlier and contributing 53 percent of the group’s total air volumes.
     The trend has continued this year. “Overall, the airfreight business in Asia Pacific is up compared to the same period last year,” offered Lehmann, who said K+N was continuing its heavy investment in sales and industry-specific product offerings in the region.
     “The revival of the world economy was accompanied by a distinct rise in transport and logistics volume, primarily in the Asia Pacific region.
     “Demand for Hi-Tech, Electronics, Automotive and raw materials are the main drivers of growth.”
     K+N’s Asia-Pacific organisation was established in Hong Kong in 1961 and now covers 152 locations in 21 countries employing some 6,800 people. Managers are able to draw on managed warehouse space totalling 450,000 square metres located across the region, as well as 75 contract logistics facilities.
     Lehmann said that, depending on the requirements of customers and lanes, K+N’s capacity sourcing was a mixture of wide body and narrow body aircraft supported by limited use of low cost carrier capacity on intra-Asia trades. By leveraging its multi-carrier programme and optimising its trade lane management, Lehmann expected K+N to achieve above market average growth in its air business again this year.
     “The company assigns great importance to the expansion of activities in the Asia Pacific region as well as to the development of new products and services for niche segments.
     “We have expanded into the niche sector of perishables logistics, as well as industry-specific solutions for the pharmaceutical and healthcare sector.
     “We are continuously observing market demands, enabling us to offer tailor-made services requested by our customers.”
     A recent report by Boeing predicted intra-Asia annual air cargo growth of 7.9 percent per year through 2029 and Lehmann forecast this would be a key trade lane for K+N in both the short- and long-term.
     “Increased importance is being attached to the Intra-Asia and transpacific trades, with the key objective of offering customers best possible services and access to key markets.”
     China, not surprisingly, will be critical to sustaining K+Ns impressive growth rates. Andy Weber, (left) president of K+N Asia Pacific, told ACNFT that the company was now represented in 40 locations in China, all with Class ‘A’ Forwarder Licenses.
     The 35-year logistics veteran claimed K+N was among the top five airfreight logistics providers in China, where it employs over 3,000 people, and he confirmed that import growth this year was stronger than exports, a trend that prompted K+N to establish specific industry competence centers.
     Further network expansion is now on the cards in China. Weber identified key growth markets away from established centers on the coast; Chongqing, where authorities are determined to establish the city as the largest notebook manufacturing location in the world, Chengdu for automotive and software, Zhengzhou for hi-tech manufacturing, Wuhan, Jinan, Changsha for automotive OEMs and suppliers, and Lianyungang for chemicals, pharmaceuticals and healthcare.
     “Kuehne + Nagel has been expanding its footprint throughout China, not only in the eastern region, but also in the central and western provinces of China,” he said.
     “The company focuses primarily on organic growth, with aggressive investments in local logistics experts in core business fields such as seafreight, airfreight and contract logistics as well as building up a virtual road logistics network.
     “We will set up more offices, in line with our growth strategies and China’s ‘Go West’ initiatives.”
Sky King

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Ditch Belly Lift Says DJ

     Finding someone who knows the air cargo business may be easy, but there are only a handful of people who want to disseminate the knowledge.
     D. J. Ghosh, founder and president of the New York-based American Friendship World Air Cargo Corporation, has taken it upon himself to set up a website on what he lovingly refers to as “the complete encyclopedia for the Air Cargo Professional.”
     An entrepreneur since 1993, Ghosh has been creating new air cargo market opportunities and his website is “intended to create, develop and refine the business intelligence that will be needed to support the science of independent air cargo operations.”
     A strong believer that the air cargo business has come of age and is no longer “a grown up child that has lived for too long under the same roof as his parents,” Ghosh says that it is important to understand that air cargo operators cannot stay for too long “under the umbrellas of their passenger counterparts.”
     What are the necessary ingredients that make up a cargo airline?
     Talking to ACNFT, Ghosh pointed out:
     “If you look at the ideal cargo airline, the only ones which really fit the definition are the integrators.
     “They have an end-to-end product where they define the expectations and the parameters of the cargo offering.
     “Everybody else has a diffused offering, and the reason they have a diffused offering is because they do not control the supply chain.”
     He says that most cargo airline operators have to “rely on partners who are extremely unreliable and who also have their own definitions of service.”
     The Ghosh prescription, therefore, is that “until we have an integrated service offering, the air cargo proposition will not stand by itself.”
     If that is the case, are the high belly cargo figures really ‘air cargo’ as he understands it?
     “I don’t even think belly cargo should have existed,” says Ghosh.
     “It just happened by default.”
     He explains that most of the freight that is carried in bellies is done so because there is empty space in the belly of aircraft.
     Of course, it has developed into a bigger product.
     “But I think to get our game in order, you really have to provide a main deck offering,” he says.
     He went on to detail that trade is growing exponentially along with the expanding economies.
     “The volume of business is going up and I guess that’s where the size of the pie is growing.
     “But the offering of air cargo itself is still a long way to go and the reason it has a long way to go is that it is still a very diluted offering.
     It is confused between the passenger offering and the freight offering.
     Until this becomes a separate discipline on its own, I think it won’t stand by itself,” Ghosh justifies.
     The “thinking” entrepreneur said that air cargo operators started cargo, but with a disparate offering.
     “What they haven’t done is define the product offering. Every cargo requires some degree of sensitivity and some dedication in the business model itself,” says Ghosh. He gives the example of pharmaceuticals that “we have to move in a certain temperature controlled environment. As for perishables, there is a whole variety. Moving garments on hangers or transporting computer chips: all these are products that,” according to Ghosh, “require a scientific definition and a scientific approach to moving them logistically. So until we provide the definition, everything is going to move in the generic space and there’s going to be no dedicated offering for these products.” He then points out emphatically that the passenger business alone cannot provide the kind of dedicated service that is needed.
     The man is preparing a plan and hoping to start the “intelligent” cargo airline in the United States. Perhaps as operations develop and become scalable, “we will be able to get people to buy into the model.”      Says Ghosh, “If you look at any global brand—whether it is a hotel chain or a restaurant chain—it develops a concept. Then they take that concept and test it in different markets. If there’s integrity in the concept then it can be scaled globally and provide a definite service offering. You won’t have a different service offering in a different country.”
     The process to transform the air cargo industry has begun: “That’s why we’ve created a model; we’ve put up a website. We want to create the definitions of each and every aspect of the air cargo airline business. As of now, I think IATA has done it to a certain extent. But they really haven’t gone and taken this game to a new level. This business is still a very scattered one. We intend to provide a definition and a scientific base which will take air cargo to a level where everybody who gets into this business is pre-qualified and competent to get into this business,” says Ghosh.
     A frequent attendee at most aviation and air cargo events, Ghosh says international organizations do not have it on their agendas to provide scientific bases for the industry. Instead, “what they have on their agenda is bringing people together. They provide a network where you bring like-minded people together, but to get into the nitty-gritty of the business you really need research and people who are extremely competent in their subject matter,” he says. And that is what Ghosh and American Friendship want to do. “We intend to develop what you call domain expertise even in the movement of a particular product, in the way a container is built, an aircraft is financed, an airport is selected, in the way pilots are trained – all of these will be well documented on our site. In short, it will be like an A-Z manual dealing with every aspect of the cargo business.”
     For the moment, however, Ghosh sees immense opportunities – downturn or no downturn. “I think the biggest opportunity exists in economies like China’s and India’s. They are what I call ‘nascent economies’ in terms of the air cargo game.” India, for example, has no freighter airline per se. So the learning curve in India is still a very long one. He comments that the Indian cargo industry is willing to learn on how to conduct the business. Listing out the tremendous opportunities for cargo carriers in the expanding world market, he says, “There is opportunity in Asia, and intra-Asia—that is actually the bigger segment of the market—as well as between Asia and the other continents like Europe and North America. Within this framework there is tremendous opportunity if we can define the types of products and services which should be used in the Asian markets,” he says. And this is where his startup airline, American Friendship World Air Cargo Corporation, comes in. He wants to address these opportunities by supporting traditional airlines with additional freighter capacity on long-term leases. “For one thing, we originally conceived of American Friendship as a concept airline and what we’ve tried to do over the years is to refine the definition of a cargo airline and how it should operate in a dedicated space.”
Tirthankar Ghosh


Hi Geoffrey,

     Today I unsubscribed from FlyingTypers, as I have retired from ACI World due to their move to Montreal this year.
     I want to express my enjoyment reading your excellent information and commentary on the cargo sector, and the focus on the people who are making it all happen.
     It has been a great read over the years!

Best regards,
Nancy Gautier
ex-Director Communication
ACI World

Dear Nancy,

     Thanks for writing.
     We love what we do and appreciate your kind words.
     Of course we would be happy to extend your subscription.

With best wishes always,




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