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   Vol. 18 No. 47
Wednesday July 10, 2019

Things To Come In 2019
  Ram Menen is one of the original founding team of Emirates Airline, that headed SkyCargo from inception in October 1985.
  Ram, it can be said, built SkyCargo from the ground up to its place near or at the top of the world, as top executive and guiding spirit for 27 years.
  In fact when he retired in 2013, he departed Emirates with SkyCargo as the largest international cargo airline in the world.
  Ram is a FCILT (Fellow of the Chartered Institute of Logistics & Transportation), as well as a FRAeS (Fellow of the Royal Aeronautical Society).
  He is one of the founding members of The International Air Cargo Association (TIACA), serving as Vice President in 1993 and 1994, and as President, CEO and Chairman of the Board in 1995 and 1996.
  Ram Menen has won every major award given by industry publications.
  Today, with his wife Malou, he splits his time between homes in Luxembourg and Kuala Lumpur.
  Their son Ram Menen Jr. continues in the family transportation tradition. Ram Jr. is currently employed by Amazon Logistics.

What Happens Next?

     “When we used to say that we were living in an interesting time at the turn of the century,” Ram Menen said, “we hadn’t even imagined what interesting times would really look like!
     “I don’t think what we have seen during the last couple of years is a normal economic cycle.
     “Normal cycle would have put the world into a recessionary period toward the 3rd/4th Quarter of last year.

What Has Changed?

     “The socio-political environment has completely been disrupted, not sure for the better, because of the protectionist policies creeping back and the resultant looming trade wars between major economies.
     “It has become extremely difficult to make any kind of forecast with confidence.
     “Call it the Trump Effect!
     “On top of that, the Brexit chaos has not helped.
     “Basically we have seen the can being kicked down the road, and now it is almost certain that it is going to be a 'no-deal Brexit'.
     “The highs that we saw during the last year have been a result of the inventory build up to avoid paying tariff in the U.S. and China, as well as hunkering down for a ‘no-deal Brexit’ scenario.

Looking At Timelines

     “In the case of the U.S., the efforts in firing up the domestic production and manufacturing activities is likely to take time, which means that the U.S. will still have to rely on imports.
     “Ramp up in non-tariff affected countries like Vietnam can also take time.
     “It is good that the second wave of tariff regulations on Chinese goods has been postponed.

Nothing Written In Stone

     “The lows that we are experiencing could be temporary and as the stockpiled inventories get depleted, looking forward, we should see the demand for cargo coming back and can expect a better second half of the year.

Cargo Will Come BACK

     “We should also see a spike in demand into UK during September and October . . . just before the no-deal Brexit.
     “There probably will be a lull in traffic to UK during the last quarter of this year.
     “The demand for rest of Europe is likely to be steady.
     “LATAM and Africa market demand is likely to be moderate. Intra-Asia Pacific demand is likely to remain strong and on a growth footing in the movement of components traffic as manufacturing activities try to find ways of tariff avoidance in the U.S.

Watch On The Gulf

     “The Gulf region is likely to see demand for air capacity as the shipping lanes are affected by the current spat between the U.S. and Iran. It is a hotspot and something that needs to be watched closely.
     “It is potentially a dangerous and volatile situation and a war could change the market dynamic, not only in the region but in other parts of the world.

Capacity Rationalization Is Key

     “Key to managing the next 12 months will be capacity rationalization. I see the ocean folks have already embarked on this by blanking out sailings over the next couple of months.
     “The pressure on yields will be acute because of the pressure from procurement folks to reduce costs to absorb the increase in costs because of increase in tariff in the U.S. and China.

E-Commerce No Limits

     “E-commerce will continue to power the air cargo industry. Giants like Alibaba and Amazon will continue to change the dynamics of the air cargo industry. So will the likes of Flexport, making digital logistics a reality.

Keep A Weather Eye Out

     “As mentioned earlier, the current trend is an anomaly and markets can go either way because of the uncertainties. However, my gut feeling is that the second half is likely to be better than the first.
     “Only time will tell,” Ram Menen said.

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