Vol. 8 No. 20                                            WE COVER THE WORLD                                               Monday February 16, 2009

Dateline—Hamburg Exclusive: Former Lufthansa Cargo executive Michael Vorwerk has been appointed President of Cargo Network Services (CNS) as of March 1. By taking the lead at the Miami-based IATA subsidiary the Berlin-born manager will follow Jens Tubbesing who quit CNS in July 2008. Michael gave Air Cargo News FlyingTypers an insight of his plans, motives, and visions in this exclusive interview:

Q:   Michael, what especially enticed you to head CNS?
A:   To start with let me emphasize that I consider it a great privilege being appointed new CNS President and as an integral part becoming Executive Director for Cargo 2000, the global quality management system under the patronage of IATA. Especially in sluggish economic times with just about every player in the aviation and logistics industry struggling because of strong and gusty head winds this responsibility will not be an easy task. My previous field of activities in forwarding and airline industry is complementing my new duty at CNS. Before joining CNS I was Managing Director and COO of LifeConEx, a joint venture of DHL Global Forwarding and Lufthansa Cargo based in Plantation, Florida. Now, by soon heading CNS I appreciate the chance to broaden my spectrum by promoting comprehensive programs and solutions within CNS and IATA for the entire industry, and not only on behalf of a single company as before. This perspective indeed thrills me quite a bit.
Q:  When commencing your job next March what topic ranks on top of your to-do schedule?
A:   It is not one single issue that CNS prioritizes but a number of topics that we intend to push forward for further improving the supply chain. Take the aforementioned Cargo 2000 that shippers, forwarders and airlines can benefit from by both saving money and enhancing the quality of shipment flows. The result will be a better product that our industry delivers to the customer. One of the major tasks on our agenda is therefore, to convince more industry partners to embrace Cargo 2000. This we intend to achieve by demonstrating case studies that visualize typical shortcomings along the supply chain and how implementing Cargo 2000 as a tool can avoid them. Irregularities are an unfortunate part of the daily working routine; we need to make them transparent by systematic measuring in order to address them with continuous improvements.
Further we have to put focus on customer requirements, which is, by the way, the central message for the upcoming IATA World Cargo Symposium. Up to now, many supply chain participants are doing a good job in optimizing their own processes, which, however, does not mean, that the sum of these many efforts lead to a perfect transportation chain. Therefore, we have to work on a new collaborative thinking by knitting together the different industrial partners to develop joint solutions. IATA’s WCS in Bangkok will be an appropriate forum for discussing this issue and presenting some encouraging quality partnership projects.
Q:   Supposedly e-freight ranks high on your agenda as well.
A:    It certainly does. In the passenger business IATA was successfully able to drive the implementation of electronic ticketing within a couple of years. Now, in airfreight the implementation of E-Freight will not be easy because of the complexity of the processes and the many players involved. But despite all the challenges we are determined to push this issue ahead because it simplifies the processes, saves money and leads to better results. Generally speaking we have to enhance the automation of the cargo processes. There, I see a wide field for leverage especially in economic downturns like today that inevitably will trigger off new concepts in our industry.
Q:   Looking ahead at March 1, your starting day as CNS President. What will be your first task?
A:    To participate in IATA’s third World Cargo Symposium which begins in Bangkok March 2nd. There, I will be officially introduced, which will give me a good start with the opportunity to meet many important stakeholders from a large group of industry representatives and to learn first hand about more details of the most prevailing industry agenda topics.
A good preparation for me as well for the upcoming CNS Partnership Conference 2009 from May 3-5 in California.
Heiner Siegmund


Quote Of The Month

 New TSA regulations, a product of know nothings at the TSA, reacting to even bigger know nothings in Washington on Capitol Hill.
Just what the air industry does not need now, when it is struggling big time.”

Jack Zembeck
VP Cargo America West (Retired)
Now teaching in Nevada.


TSA Scans As Cargo Innovates

     As week three of that TSA 50% screening mandate for all USA belly cargo grabs hold of air cargo, word up from most quarters that despite some valiant effort all around, not to mention hopes and dreams mixed in for accent, there are still are more questions than answers.
     But guess what?
     The spirit of innovation and adaptability that once saw air cargo born into the world with leftover aircraft, (and some might say people) and dusty partial hangers for operations in the late 1940’s, is once again in play as government in USA turned the rules of engagement upside down during this long winter of 2009.
     More on that later, but first here is the latest news.
     Shippers we spoke to are still perplexed while trying to understand the need and process for screening authorizations.
     Albert Saphir, a well-placed and respected consultant to many shippers and freight forwarders told Air Cargo News FlyingTypers:
     “I have communicated directly with TSA, and I am hopeful that they (TSA) will listen to us, the unregulated shipper and publish non SSI information on their website soon.
     “Quite honestly, I still do not understand why any authorizations are necessary to begin with, as TSA has U.S. Congressional authority in this situation and thus can inspect any person or shipment they want to at any time.”
     While in the USA, air cargo industry trade associations have been rather silent on the matter, other than to join the general chorus of unrest and compliance, elsewhere Air Cargo News FlyingTypers learned that others are picking up the banner as organizations such as the U.S. Census Foreign Trade Division told ACNFT that it is looking into the authorizations issue,” in order to help exporters with clarification and guidance”.
     “Also getting involved as TSA mandates deepen is the NITL (National Industrial Transportation League), the oldest and largest U.S. shippers trade association saying that it is,” studying the issues and working toward getting answers for our members”.
     But now that the 50% rule is sinking in deeper, Albert Saphir notes:
     “Many people are disappointed that TSA did not get more direct shipper input, before putting forward new screening authorization form requirements. “Organizations such as NITL have great expertise and resources to assist TSA and other government agencies with practical and solid advice.”
     But getting back to authorization consent forms Air Cargo News FlyingTypers learned that many shippers are getting their legal department involved believing that at minimum they will need indemnity agreements from the IACs if they sign the screening consent forms.
     What that means is that a new layer has been added to the shipping process as attorneys get a seat at the table and feast on defining liability issues, and possible lawsuits that could eventually be brought when shipments get damaged or are delivered short to the customer.
     Speaking about other U.S. Government regulations involved in play here, Mr. Saphir indicates the plot may be thickening.
     “I think there are also SOX (Sarbanes Oxley) implications at work in this case, meaning that if title and risk transfer takes place upon pick-up from the U.S. exporter (most U.S. exporters prefer that language in their sales contracts as it is easy to manage for accounting and revenue recognition purposes) and then the U.S. exporter in order to satisfy the TSA Mandate "interferes" in the shipment process afterward by signing the screening consent form without obtaining written authorization from their foreign customer, then unintended consequences could result.
     “If the shipment gets damaged or arrives short at destination, the consignee (or their cargo insurance underwriters) will of course file a claim with the IAC.
     “But most likely the IAC will decline such claims due the fact that they have the screening authorization from the U.S. exporter.
     “Needless to say, that the consignee will go after the exporter for the claim and not pay the invoiced amount for the missing or damaged product.
     “In my view (remember, I am not an attorney!) this situation could become an issue for SOX due to the fact that the incorrect revenue (overstated) was recognized on the date of pick-up.
     “For now, the best, (non legal) advice I can give exporters, is to selectively sign such authorizations for IACs with whom you have a good working relationship.
     “Just make sure that you notify all of your foreign customers that you have done so, due to a "TSA mandate", and that title and risk still transfer to them upon date and time of pick-up and they will be responsible for any additional risks resulting from possible screening errors etc.”
     But we wonder what should exporters do that have "routed exports" over which they do not have any control? “That is a very difficult question to answer,” Mr. Saphir said.
     “All I can say is, be very careful and ensure that you have something in writing with your customer to protect you if anything goes wrong.
     “Also I am advising everyone to be sure and get your legal department involved, and possibly change shipments away from a "routed export" and use one of your trusted IACs instead.”
     But surveying the landscape Mr. Saphir says that most people in air cargo are great pragmatists.
     So part of the recipe to get things right and keep humping freight is to be creative.
     “Anyone out there who needs help with a few creative new ideas, certainly shouldn’t hesitate to contact me,” Albert says.
     "For example, on Thursday the 12th of February, one of the truck drivers that was picking up an international skid said that he now understands why we are putting a box over our pallets for shipment.
     “The driver noted that 50% of companies that are moving freight the way we used to prior to TSA are really having a lot of problems and their shipments are a real mess.
     “What I designed for this exporter is actually quite simple:
     “They used to ship all their boxed products shrink-wrapped and banded on a skid.
     “Because of the physical screening requirements now, we changed the process and are now placing the boxes into large cardboard shipping containers (others may refer to this as an over-pack or power pack) custom made to be the right size - both for the product box configuration and also the lower deck passenger airline container size limitations.
     “The cardboard containers are stapled (inside bottom) and strapped (outside) to the skid.
     “Yes, those cardboard containers cost money.
     “But the shipper no longer needs to shrink-wrap their skids (he is actually getting rid of their shrink-wrap machine).
     “Plus they save a bundle on screening fees and thus actually are saving money on the bottom line.
     “In addition, they have virtually eliminated product damage and shortages as already confirmed by their overseas customers.
     “A win-win for all.”
albert@abs-consulting.net. www.abs-consulting.net

A Postcript….Somewhere in the pantheon of air cargo legend, or if our sources are correct, at large on some Caribbean Island is our old pal Jerry Schorr, who in addition to being the last head of air cargo Eastern Airlines ever had while it was still a big airline, was an absolute original of air cargo.
     Jerry sat upstairs in the old Eastern Airlines tower landmark building on NW 36St. and LeJeune Rd., during the time when Col. Frank Borman the astronaut ran the airline. Ole Jer smoking his pipe whilst thinking up big ideas like a rate for night cargo called The Moonlight Special for a carrier without freighters that operated from an airport gateway (MIA) that didn’t handle much freight.
     When the cost of fuel ran up unexpectedly in the late 1970’s Jerry looked at all those aluminum cargo cans
that Eastern carried below deck filled with a multitude of individual distinct shipments that needed lots of costly attention coming and going and rolled the dice showing a different kind of mettle.
     Jerry put air cargo in a cardboard box called the Costcutter that a consignee could fill up as much as possible and Eastern Cargo flew that Costcutter for a flat rate to anywhere in its system.
     All of a sudden an airline that didn’t move much cargo was opening new markets by innovating and making the most of what it could be by offering the public all it had.
     For a while it didn’t matter if the bottom fell out of the occasional cardboard air cargo container that sat too long in the rain at SJU or PAP, or the snow at LGA, Costcutter had kicked a stodgy air cargo carrier a good one in the backside and while some laughed, others got a lift and millions of dollars poured into the airline.
     We were thinking about Jerry today as Albert spoke here about a security fix that had boxes filling boxcars in the sky.
     Air cargo people have always been a hearty bunch of innovators and we mark our existence in this world by realizing that we are lucky to still be telling these stories that surprise and even at times amaze us.
     We can’t wait for tomorrow because air cargo looks better every day.


Apple A Day At
Fruit Logistica Berlin

     Fruit Logistica February 4-6, 2009 in Berlin by all measure was a resounding success both inside and outside the exhibition hall.
     But our favorite were the more than 30,000 Rubens brand apples that were distributed at Berlin’s Central Station. and in S-Station Friedrichstraße.
     During an unusually gray snowy cold winter punctuated by a generally drooping economy there were these people handing out apples to commuters all day long and people picked up the fruit as a welcome break from everything else going on in early 2009.
     Fruit Logistica 2009 for the record despite these tough times delivered 2,288 exhibitors from 80 countries.
     Dr. Christian Göke (FL) said:
     "Fruit Logistica continues to gain importance in the international produce trade.
     “Despite difficult financial times, the industry's leading trade fair confirmed its status as the leading marketing platform for all players in the global value chain.      “The event provided an important impetus to the fresh produce business."
     The share of international trade visitors increased to 80 percent from 75 percent last year with 25 percent of visitors travelling as far as the Americas, Asia, Africa and Oceania.
     The event was officially opened by Ilse Aigner, Germany's Federal Minister of Food, Agriculture and Consumer Protection and also attended by Marigén Hornkohl, Minister of Agriculture from this year’s partner country, Chile.
     "Many consumers in Germany know the price of fruit and vegetables, but unfortunately are not aware of the value," Ilse Aigner said.
     Meantime the Freshconex trade fair, which runs concurrently with Fruit Logistica at the Messe Berlin hosted more than 70 exhibitors from 13 countries.
     Next Fruit Logistica Berlin, 3-5 February 2010.
More @ www.fruitlogistica.com


Gopi In His Own Write

     Whoever said aviators have little to do with the written word must not have heard about Captain Gorur Ramaswami Gopinath, India's pioneer of low-cost air travel. His is a story of perseverance amidst odds. The helicopter pilot who ventured into full-time silkworm rearing in 1985 – and won a Rolex Enterprise award in 1996 for "expanding ecological silk-farming to improve living standards" – and then founded Air Deccan in 2003, must have a bagful of experiences.
     The India unit of HarperCollins Publishers wants Capt. Gopi to recount his experiences and has approached him to write a book about his foray into civil aviation. With a working title, “You Can Simplifly,” readers know what to expect in the book that is scheduled to appear this October. Apparently, Gopi had to bow to the wishes of his friends and admirers who want him to retell the story of the rise and fall of Air Deccan.
     Busy for the moment with the launch of his cargo airline, Gopinath finds time to address students of business and management. So, will the book contain his advice to would-be entrepreneurs? There will, perhaps, be a few nuggets on the Gopi style of management but other than that it will be autobiographical in nature with stories from his own life. And, there will, of course, be a whole chapter on how he lost his dream to Vijay Mallya when Deccan was sold.