Vol. 9  No. 104                                                     WE COVER THE WORLD                           Tuesday September 14, 2010

 

     Markus Witte, Lufthansa Cargo Head of Technology Development breezes into the room in between appointments and puts it this way:
     “I can talk about some things- but other upcoming offerings for air cargo are off the table-for now!”
     Now we are thinking—just great—this guy tells us a secret or lets out some news not ready for prime time and if we don’t keep our mouth shut we could be toast!
     But a quick smile and immediate launch into news of a pet project lightens the air at once.
     Markus knows all about his subject and he brings an infectious enthusiasm to the table similar to what we hear as Steve Jobs talks Apple or what we recall of Edison screwing in his light bulb.
     Nobody beats the Wiz is what we are thinking.
     He studied engineering and then earned his MBA in business administration.
     Prior to his current assignment, Markus served in the Strategy Department at Lufthansa Cargo where he was involved in integrating the SWISS and Jade additions.
     “Recent advances in air freight container weight are just the beginning,” Markus Witte confides.
     “We are already working with our partners on the next generation of light weight container.
     Although he is short on specifics, we learn that experts are now focused on the container floor where most legacy weight of the box lives.
     ”Further reduction in weight is possible,” Witte confides.
     “The difference at Lufthansa is, good times or bad, our research never stops so although we all were in a tough economic situation, we kept our eye on the future and continued our work.
     "Now that business is coming back and things are improving we have a menu of technologies ready to bring forward.
     “A most effective manner to move ahead in the development of advanced systems whether in RFID, light weight containers or e-freight is to work with professional logistics managers from every commodity that we ship.
     “We then form a little bench-marking group that cooperates in advancing the form and since they are in another part of the business, say manufacturing or retail, we can be open and easy in helping each other and freely share our results as we don’t directly compete.
     “The results are amazing, way ahead of the research institutes because all of us are involved in real world examples, and practical applications of what we are advancing.
    "The “e-freight“ project as everyone now agrees signifies a major step toward process simplification.
     “The e-freight discipline furnishes cargo carriers with better data quality, improved supply chain efficiency, lower cost and quicker movements.
     “Those are key prerequisites for remaining competitive in the logistics business.
     “Future technologies are to be delivered and then promoted to air cargo not by PowerPoint although some of that is necessary.

     “I have a vision of how the air cargo industry can conform itself and invent itself at a new level by sharing our knowledge with our business partners— the freight forwarders and others."

     “We realize that everything takes time but if we can get the shippers and forwarders and airlines together about how technologies will greatly advantage each player for himself and also improve the entire chain, we can imagine great advantages and even bigger break throughs in improving air cargo systems in the years ahead.
     “Air cargo in five to 10 years will be identified on a by-piece level with each piece having a unique identity.
     “There will be a commonality for all players in the supply chain.
     “Information up and down the line will be available to everyone so that air cargo will be speeded up between all the stakeholders in the business.
     “Here at Lufthansa Cargo we enjoy an ongoing R&D association with the Fraunhofer Institute that is not only theoretical but also practical in application.
     “In Lufthansa Frankfurt Building 420, as example we are conducting pilot programs including new technology called Mojix designed by NASA that reports every aspect of a shipment from start to finish.
Right now air freight is an open circle. We believe Mojix will close the ring.
     “We imagine great things for the future of air cargo impacting not only our business but also every aspect of the entire supply chain.
     “What I really like about my job is feeling like a pioneer.”
Geoffrey/Flossie

 

     “China’s consumers are better understood when looked at as two distinct classes: urban consumers and rural consumers,” says a new study titled “Understanding China’s Consumers” from Deutsche Bank Research.
     “The urban households are much richer than their rural counterparts and consume three times more.
     “The richest 20 percent of China’s urban households is comparable to the economic size of South Korea or Taiwan.
     “China’s rural sector is a sizeable consumer market on its own.
     “The per-capita income of rural households has grown more slowly than that of urban households, especially after China’s WTO accession in 2001.
     “Urbanization is leading to a reduction in the size of the rural sector.
     “Still, at current income growth rates, by 2020, China’s rural sector will reach a size equivalent to India, as well as income levels and consumer patterns similar to those in lower to middle income Asian countries.
     “China could overtake Japan as the world’s second largest consumer market over the next decade.
     “China’s private consumption today is only around 16 percent of U.S. consumption and 56 percent of Japan’s.
     “But China’s strong GDP growth outlook bodes well for Chinese consumers, since it goes together with a rise in per-capita income and the attainment of consumption thresholds (for instance, the purchase of a car).
     “In China today there is an array of active policies oriented towards increasing disposable income and rebalancing China’s growth model towards domestic demand.
     “Putting aside the potential impact of structural policies to increase urban and rural household income, the continuation of current growth trends is likely to create two powerful groups of consumers in China in the next decade.
     “The urban consumers will expand both in size and spending power and their spending behavior will increasingly resemble consumers in the high-income Asian economies, like Japan, Singapore, Hong Kong, South Korea and Taiwan.
     “This bodes well for many industries, including travel, automobile, real estate, luxury goods, and information/communication equipment.
     “As for rural China, as income rises, its spending behavior will be similar to lower middle income countries in Asia, which should give a boost to the market for consumer staple goods and generate a second pole of private consumption on which China’s economy can rely,” DBR said.

 

India Growing
Middle Class Market

     India’s middle class will rule the country’s economy in the coming years. According to data from the India Brand Equity Foundation (IBEF), more than 300 million people will move up from the rural poor category to rural lower middle class between now and 2025. As a result, the rural consumer market will reach $425 billion by 2010-11.
     In such a situation, it is the Express industry—domestic as well as international—that will reap the benefits of the growth. Incidentally, the size of the Indian courier and express industry is small in comparison to world figures: according to Anand Sharma, Minister for Commerce and Industry, while the size of the global express market is around $175 billion, the industry in India is less than $2 billion. Nevertheless, it is among the fastest growing sectors in India—growing at around 10-15 percent and nearly the same size as the Indian shipping industry—and has major players like TNT, DHL, FedEx India and DTDC among many others.
     Witness the moves. Recently, for example, international major FedEx launched a new flight from Bengaluru with direct connections to Europe, the Middle East, and the United States. This was FedEx’s third gateway, in addition to Delhi and Mumbai. According to Baerbel Bussenius, Manager External Communications, FedEx Express Europe, Middle East, Indian Subcontinent & Africa, the expansion was aimed at increasing the region’s competitiveness and its ability to trade at global platforms. Along with the new flight, FedEx announced that it was expanding its premium domestic express delivery service from 14 to 58 Indian cities.
     Netherlands-based logistics major TNT’s Indian arm, on the other hand, expects its business to grow between 20-25 percent over the next few years. TNT’s domestic business, comprised of air-express, road-express and service logistics, contributes between 40-45 percent of TNT India's revenues.
     Last October, Capt. G. R. Gopinath launched his Deccan 360, an express and logistics venture with the claim of revolutionizing the concept behind next-day deliveries. He also began air cargo operations from India to the Middle East and Southeast Asia and has plans to integrate domestic and international operations in the coming months.
     It is in such a situation that the government has planned to introduce a new postal regulation that seeks to bring the express and courier industry under a regulator. The postal regulation today is governed by an outdated act: the Indian Post Office Act of 1898. The new regulation or Bill that will be tabled in Parliament before it becomes law—to be known as the Post Office and Courier Services Bill, 2010—would entail mandatory registration for courier firms with the regulator, the Postal Regulatory Authority of India (PRAI). The courier firms would have to contribute to a Universal Service Obligation Fund (USOF) to enable delivery of postal services to those areas that would not be financially viable at affordable rates.
      The question that most express and couriers services, according to ICRIER (Indian Council for Research on International Economic Relations), an organization that has been doing research on express logistics in India, have been asking is: does the industry really need a regulator? The sector is fragmented with more than 2,500 companies in the business. The survey found that there was no common view across different segments of the courier and express industry and their clients on regulatory issues. While the large companies felt that they should be outside the scope of a regulator, others had different views.
     In most countries, companies offering Express Delivery Services (EDS) have remained outside the purview of a postal regulator. To top it all, the regulator has to be an independent body and have nothing to do with India Post simply because the government postal department has express services, too: Speed Post.
     Whatever the outcome of the Bill in Parliament, courier/express majors should take heart that the private courier companies can take packets weighing below 500 gm. Earlier, carriage of such packets had been given to the India Post, the government-owned postal department.
Tirthankar Ghosh/Flossie

 


Tulsi Mirchandaney


Lise Marie Turpin

Lisa Schoppa


Karen Avestruz


Gabriela Ahrens

 

Contact! Talk To Geoffrey

RE:  IATA Rope A Dopes CNS Global


Dear Geoffrey,

     Please allow me to join the fray with regard to CNS and its possible relevance to a broader arena (Europe, the world?) or role as a "game-changer,” to use your own phrase. My friend and colleague, Dr. Otto, has appropriately opened or re-opened a debate at CNS, and we will all benefit from an exchange of views.
     I consider it futile and confusing to jump into the discussion without clarifying first what good things we associate with CNS. As a European-based business leader, what I associate and appreciate with CNS are the following:
     1. An annual event that is considered a highlight of the calendar, it brings together top executives from a wide spectrum of our top U.S. customers, airlines and other suppliers. The format allows everyone to catch up to discuss or solve bilateral business issues during the event. This is by far better than trying to manage a hectic, expensive and time-consuming schedule of flitting from city to city in the oft times vain hope of catching the right people at the right time. In short, it is a first-class networking event for forwarders, airlines and others. And because it brings together the main stakeholders in the supply of air logistics, the quality of public debate has often been superior to what you expect from most industry events.
     2. Although I have not personally been involved in CNS Board or Committee meetings, it is the opinion of my U.S.-based colleagues that industry representatives at CNS have done their due diligence in preparing the conference and driving the discussion of issues in a professional manner and with high enthusiasm.
     Now when we ask ourselves whether the CNS concept can be expanded or exported, we have to first ask ourselves what is missing in the other main trading areas (mainly Europe or Asia). What is certainly missing is an event that brings together such a large number of our top customers. However, we should understand and respect that besides the obvious lack of a tradition and the reputation that grows out of it, there is an obvious diversity of practice, culture and language in these other continents, which makes a "CNS Europe” or a "CNS Asia” unlikely. While a "CNS" in a quasi-continent like China or India would work, that already exists with e.g. ACAAI, which is well attended by both forwarders and airlines.
     For sure, IATA cannot fill the gap as it is an airline body, any more than FIATA could, as it is a forwarder body. But do we not have TIACA, which is an industry body and includes all main stakeholders in the air industry? So instead of focusing the debate on the vehicle (CNS, TIACA, etc.), let us focus on the desired content (issues and results) in our exchanges, be they via blogs, e-magazines or industry events, and then allow practical considerations of language and territory determine whether we use local, continental or global platforms.
     If globalization and the spread of the internet have taught us anything, it is that the game is no longer about one platform versus another, but about smart networking of any and all platforms: the existing links between TIACA and IATA, or between IATA and C2K, are good baby steps, but we have a long, long way to go in opening up our boundaries and developing a worldwide air cargo web.
     My very best wishes to you and all your readers.

Oliver

Oliver Evans
Chief Cargo Officer
----------------------------------------
Swiss International Air Lines Ltd.
PO Box
CH-8058 Zürich Airport
Tel +41 (44) 564 5001
Fax +41 (44) 564 5003
Email oliver.evans@swiss.com


Dear Geoffrey,

     First, let me say that I enjoy reading FlyingTypers.
     FT keeps me up to date on what is going on, and lets me know if something is wrong.
     The recent comments by Dr. Andreas Otto, and my old pal Buz Whalen, bring back memories of when I was the Top Cargo Virgin.
     It seems CNS has become a business, offering and sometimes capitalizing on the needs of the forwarders and carriers.
     The services provided by CNS are necessary, but there needs to be some flexibility in industry discussions and how they are conducted when trying to solve industry problems.
     When CNS was first established, we heard from the airlines, and later added forwarders to our board.
     We had good talks and spoke frankly about what we both needed to make profits.
     After all, that is what all good business is about – making profit.
     We were on the way to making this happen.
     Virgin was against the use of the word partnership, as it did not really fit.
     We believed that the word “cooperative” better described what we were doing at CNS.
     There were only a few who agreed, and so we ended up with the CNS Partnership.
     A Partnership implies working closely together to achieve our profit goals, but today that does not seem to be the case.
     IATA, a worldwide organization, has imposed its will on CNS, making it a department of IATA as opposed to a stand alone organization that would represent industry needs.
     Until IATA allows for freedom of speech, CNS will go nowhere.
     If CNS wants to grow worldwide or in any other measure perhaps it should be privatized with cargo people to run the show.
     That is my two cents on the subject.

Sincerely,
Angelo Pustateri

(Editor’s Note: Angelo put Virgin Atlantic Cargo into business in America and then moved up to retirement and teaching at Hofstra University. Today, Angelo, who was so much a part of everyone’s air cargo story for more than 20 years, says life is about his “eight grandchildren,” although we are happy to report that events in our business occasionally tag his interest.)
      


For More Comments:
Dr. Andreas Otto
Buz Whalen

 

 

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Polar, Asiana, BA, Korean, Qantas, Japan Air, Martinair, Cathay, SAS, AF, KLM. ELAL, LAN, Aerolineas, Cargolux, Nippon have pleaded DOJ price fix guilty as of 9/8

Boeing dumps B747-8 manager as jet is a year late and over budget. Pat Shanahan replaces Mohammad Yahyavi. First B747-8 delivery may lag to January.

"China will build more high speed rail in 2010 than the rest of the world combined,” REG Davies Senior Curator National Air & Space Museum.

companiesandmarkets.com says Brazil airports improvement is underway & air cargo rises by 4.3% in 2010 after a 7.9% drop in 209.

DP World is now the world's third-biggest ports operator, moving above APM Terminals in Hague according Drewry Shipping Consultants.

IATA reduces 6th Annual Cargo Claims Conf. to GVA office party Nov. 10 barely a week after everyone has shot their load November 2-4 at TIACA AMS.
Your move . . .

A350 XWB is abuilding now. Airframe made of 53 percent lightweight carbon fibre composites. Confirmed 528 sold with first delivery 2013.

Less is More. Air France adds Tokyo from CDG via A380 (Sept.1) it's 3rd A380 route (Joburg-New York) cutting frequencies, whilst adding seats.

Lufthansa’s third Airbus A380 named Peking opened once weekly scheduled service to Beijing September 1, just one week after being delivered to the airline.

Latest Boeing forecast says world will need 7,200 new airplanes worth $700 bil next 20 years but has not sold a B787 in more than a year.

 

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