We recently had the pleasure of picking the brains of DHL’s three wise men of the Chinese air cargo scene. They talked freely about the changing nature of import and export demand, the pros and cons of different airports for international cargoes, and how China’s ‘Go West’ policy to develop its interior regions is impacting air cargo movements.

FT:   Four trends—industrialization of the West, the production of more sophisticated products for export, growing intra-Asia cargoes, and rising imports for domestic markets—are transforming the air cargo picture in China. How is DHL adjusting its strategy to manage these economic trends?
Dongming Wu, Managing Director DLH-Sinotrans:   We will look closely at the development of customer needs, which is the most significant factor for any of DHL’s business decision-making or deployment. Recently, we added direct flights from China’s business centers—such as Beijing, Shanghai and Guangzhou—to the US, and established an additional daily intercontinental route from Hong Kong to Cincinnati as a direct response to meet increasing demands for services from South China and Hong Kong to North America. We are also currently expanding our China operations to cover most second and third tier cities across China, especially in Central and West China. Branch offices have just been set up in Zhengzhou, Taiyuan in Central and West China; Xuzhou and Wenzhou in the east; and Huizhou in the south.
Wenjun Li, Head of Air Freight, China, DHL:   Global Forwarding: These trends have been reflected in the 12th 5-Year Plan published by the Chinese Government. According to the Plan, the next five years will see 56 new airports built, 16 airports relocated and 91 airports expanded. Most of these airports are in Central and West China to cater to rising cargo and passenger volumes. As a one-stop logistics service provider, we are developing our air freight capacity in the central and western cities in partnership with airlines and local airports.
FT:   How does DHL source its uplift requirements to and from China?
Wenjun Li: We work in partnership with major global carriers to manage bilateral capacity on trunk routes. We deploy our capacity to and from Shanghai to cater to our customers needs, supplemented by commercial uplift capacity to cover more destinations so that we are the provider of choice for our customers.
FT:   You already have a major presence in Hong Kong, which gives access to industrial centers in southern China. Are you also now seeing more demand from customers for uplift from leading airports in Southern China as services and rates available there improve?
Edward Hui, CEO, Hong Kong, Macau & South China:  Recent trends have seen cargo tonnage moving into Southern China airports, mainly as a result of increased international air link capabilities, lower handling costs, improved customs processes and, most important of all, customer demand. Customers have recognized these improvements made in Southern China and are now more open to direct uplift solutions. Hong Kong International Airport has a competitive advantage over the Greater Pearl River Delta airports, given its extensive international freight connections. Nevertheless, Hong Kong should continue to strengthen its position as a key logistics hub by enhancing its infrastructure, nurturing more logistics talents as well as striving to improve its cost competitiveness and efficiency. It should also seek closer collaborations with other cities in the Pearl River Delta.
FT:   In the Central coastal and Northern regions of China, which are your favored gateways, how do find the relative service levels available at these airports?
Dongming Wu:   For DHL, Sinotrans, Shanghai Pudong (PVG) airport and Beijing airport (PEK) are used the most. More than half of our express volumes are from East China, making it one of our largest markets. Service levels at PVG and PEK are about the same for international flights. DHL is upgrading its dedicated flights between PVG/PEK and Hong Kong to accommodate growing business here. The North Asia Hub at PVG will also help cater to the increase in volumes in the region.
Wenjun Li:   For DHL Global Forwarding, Beijing and Tianjin airports are most utilized in the northern regions of China, and Shanghai Airport for the central coastal regions. In terms of service levels, both Beijing and Shanghai airports have commissioned state-of-the-art cargo terminals in recent months that meet or surpass industry standards. Our largest operations are in Shanghai, with almost two-thirds of the country’s manufacturing located within close proximity.
FT:   Parts of Western China are very remote. Are you already establishing offices there and which cargo sectors and geographic regions do you think have the most potential?
Wenjun Li:   DHL Global Forwarding recently set up branch offices in Henan Province and Shanxi Province, which are located in the central and western areas of China respectively. Both offices are equipped to offer a complete portfolio of all our services in an effort to further enhance networks in the central and west areas, especially for the automotive and hi-tech sectors. More imports can potentially impact costs for exports as increased import airfreight will help service providers better manage capacity.
Dongming Wu:   DHL-Sinotrans has established around 15 branches/service centers in China’s west region. We have moved into developing areas in West China, such as Tibet and Xinjiang Uygur Autonomous Region, well ahead of the competition. With enhanced network coverage, we will be able to provide stronger support to the economic development of China, especially the Western regions. Areas such as Sichuan and Yunnan provinces offer immense opportunities; there is a wide-ranging base of cross-industry customers, mainly covering the fashion and apparel, FMCG and retail sectors, as well as many low-capital manufacturing industries.
SkyKing

     The regional government of Upper Bavaria has approved enlarging Munich Airport by adding a third runway to its two existing ones. This decision comes after a thorough analysis of the forecast passenger and cargo traffic development, foreseeable environmental implications, the estimated future growth of aircraft movements, and the competitive situation MUC’s Franz Josef Strauss is facing as a fast rising hub in the central European airport landscape.
     According to the approval decision construction work on the 4 km long runway capable of accommodating every type of aircraft can commence immediately. Operator Flughafen Muenchen GmbH however, has postponed this step until courts have rejected expected claims and protests by individuals as well as neighboring communities in their attempt to jeopardize the project despite the go-ahead given by the politicians.
     Given this, it seems doubtful that the timeframe set by MUC’s officials of 2015 as inauguration date will be achieved. Observers and experts of the German legal system expect the first landing or take-off at runway 3 to take place later.
     Nevertheless, the District Government’s basic decision in favor of the roughly one billion euro project is a huge success for MUC’s managing director, Michael Kerkloh. For quite some time he has emphasized that without expanding his facility’s capabilities there will be foreseeable traffic problems. These already exist, especially during peak hours each morning and early evening, due to the narrowing slot situation.
     Aviation experts emphasize that Kerkloh also deserves major credit for his countless discussions with opponents of the runway convincing them to either change their nay to yay or at least to refrain from protests by realizing the potential benefits this major infrastructural project offers. According to Bavaria’s Prime Minister Horst Seehofer, a large number of new jobs will be created and the airport will be able to continue to strengthen its role as international hub in keeping with increasing traffic demands. “This is of major interest for the entire Bavarian economy,” Seehofer stated.
     Since opening in 1992, traffic volume at MUC has increased steadily. Last year, 35 million passengers utilized MUC – about three times the total of 1992. Some 390,000 movements and 287,000 tons of air freight were recorded. Today the airport offers scheduled services to more than 220 destinations in 68 countries worldwide. This gives Bavaria rapid and direct access to the world's key markets and metropolises. Moreover, with a workforce totaling 30,000 staff, Munich Airport is one of southern Germany’s most important job provider.
     Despite the additional runway, will Kerkloh’s most desired goal have to wait for a while: outperforming competitor Frankfurt by number of passengers and flights. Kerkloh started his aviation career back in 1987 at Rhein-Main.
Heiner Siegmund

     Kuhlcontainer is what Emirates SkyCargo has branded it’s new Envirotainer “RAP e2” that carried pharmaceuticals products from Hamburg, Germany via Emirates’ hub in Dubai to Jeddah, Saudi Arabia.
     SkyCargo it should be mentioned is the first cargo carrier to utilize the new generation of containers which can heat and cool temperature-sensitive cargo.
     Ram Menen, Senior Vice President Cargo, said:
     “Being the first carrier to embrace the RAP e2 underlines Emirates’ role as the innovative airline offering transport solutions that are tailored specifically to our customers’ requirements.
     “Using the Envirotainers we are able to guarantee an even higher reliability while transporting temperature-sensitive freight.”

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Editor’s Note: Oliver Evans wrote in his excellent and must read blog last September about his ride aboard a replica S38 Sikorsky Flying Boat:
As it turns out, we flew aboard the same craft from Egelsbach (Frankfurt) thanks to Lufthansa Charter and we wrote about that experience as well.
Speaking of looking back (and ahead) Germany will go gala over air cargo with a week-long celebration that commences on August 17th and begins with the unveiling of a new book commissioned by Lufthansa entitled “100 Years of Air Cargo.” The landing page to keep up with the latest happenings and celebration of 100 Years of Air Cargo is http://www.100-years-air-cargo.com/

     High above the lake of Zurich, wrapped in the surprisingly low humming of two old-fashioned open engines and the intoxicating smell of fuel, climbing at a soothingly slow pace over some of the region’s most beautiful mountains, chatting away with the pilot, who is not protected by so much as a curtain from me and generally feeling, well: see above.
     I am indeed sitting in precisely the Sikorsky S-38 water plane used by Leonardo di Caprio while playing the role of Howard Hughes in the movie “The Aviator” (Charles Lindbergh was another user of this type of aircraft).
     It is really refreshing (well, at least windy) to experience flying as it was a long time ago: boarding with neither security check nor document control, smelling an exhilarating mix of metal and wood, oil and the aroma of the two wicker chairs (!) in the passenger compartment, as our beautiful flying machine takes off from the first airport of Switzerland, Dübendorf.
     Puttering along at alarmingly slow speed, taking in the glittering lakes and shiny mountains all around us, counting the (countless) boats on the lake awaiting our return, marveling at the mixture of state-of-the-art and art-deco instruments on the tiny dashboard and infinitely enjoying the ride.
     Best of all, my adventure served a higher purpose, aiming at raising awareness of a charity which is only recently established in this country, “Luftfahrt ohne Grenzen” (aka “Wings of help”).

     This lean and enthusiastic team delivers relief shipments of all shapes and sizes by airfreight to victims of natural or unnatural disasters by collaborating with airlines such as mine and logistics partners on the ground.
     So after touch-down (or, in our case, splash-down), while I am on my knees rummaging through the luggage locker looking for “that yellow rope” the captain asked me to fetch so that we could be towed back to the pier,      I think:
     We are already working in an industry that really makes a difference by bringing fast and reliable relief to those in desperate need of it, but still I have a feeling that there always is a little bit more we can do.
     Finding this darned rope for example.
     Or going to www.wingsofhelp.ch
Oliver Evans

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