Vol. 12 No. 94                       THE GLOBAL AIR CARGO PUBLICATION OF RECORD                  Monday November 4, 2013
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THE AIR CARGO NEWS THOUGHT LEADER  



Over the past few weeks we have read quite a bit about the turmoil within TIACA and the different accounts of what transpired. At the end of the day, everyone will have their own perspectives on this one but we must now focus our efforts on how to make TIACA a stronger organization capable of tackling the challenges that lie ahead, while at the same time addressing the concerns that have been raised by the recent organizational changes.
     I need to preface my comments by saying that I have the utmost respect for all the key players in the story including Michael Steen, Oliver Evans, Daniel Fernandez, Doug Brittin, and Issa Baluch. They have all individually contributed so much to the industry that we call home, and they must be thanked and recognized for the contributions they have made and the work they continue to do on behalf of all of us – most of which is on a voluntary basis.

     I am not going to dwell on Daniel’s departure from the Secretary General position at TIACA because that has already been reported on in great detail. Daniel did a great job during his tenure as Secretary General and was a vital contributor as TIACA took on a broader role in the industry. Doug is also a very capable leader who has navigated his share of minefields while at the TSA. I am certain he will be a very effective steward of TIACA in the years ahead as they navigate the global regulatory framework.
     What I do want to opine on, are the concerns raised by Issa resulting in his resignation from the TIACA Board, and try and put a little perspective on the situation. Issa has very strong convictions and that is why he has earned so much respect within our industry. His belief that TIACA has been taken over by special interests and lacks transparency has some merit and must be addressed, or the very backbone of what TIACA stands for could be compromised. But as a former Board member, I also understand that all board proceedings/decisions cannot be made public, debated within the group of Trustees, or reached via consensus as much as we would all like for this to be the case. It simply isn’t realistic!
     At the end of the day, TIACA has established a very ambitious agenda to insure that the industry has viability for years to come.
     Unfortunately, as is the case with most things, it takes money and influence to have a loud enough voice. TIACA needed to raise money and also attract some very high profile companies to the Board. They are caught between a rock and a hard place. They needed not only the money but also the influence of the intergalactic airlines and forwarders.
     I believe that through this process, the more independent board members as well as smaller corporate members of TIACA weren’t getting their voices heard. To address these concerns, I believe that the dues and governance structure need to be dramatically altered to address the funding issue while at the same time allowing for a diversified Board. Some ideas include:
           Restructured dues schedule which is based on company turnover and Trustee status is earned if contribution threshold is met for company size rather than flat $10,000.00, which is a highly regressive structure (ex. United pays $25,000 and JetBlue pays $5,000 but both earn Trustee status);
           Reserve 3 spots on the Board for companies with less than $50 million in turnover, who have paid their Trustee dues, so the interests of the small to medium sized businesses is not lost;
           Have TIACA officially assume the role of GACAG and make the Boards of both FIATA and the GSC as well as the Cargo Committee of IATA as official advisors to the TIACA Board.
     I am sure there are a hundred more ideas that should be considered. Oliver has the opportunity to get everyone back in the boat and rowing in the same direction and I am hoping he pursues it vigorously.


he anticipated spike in air cargo demand does, finally, appear to have become a reality, or at least a partial one. Certainly there is growing evidence of an increase in volumes and rates on the eastbound Trans-pacific lane. Asia-Europe is a more blurred canvas, but there are hints of wakefulness amid the shadows.
Some industry folk are also now reporting a marginally tighter global supply of freight capacity, although how long this may last and what impact it will have is the subject of much debate.
     What is clear is that a number of factors are currently conspiring to improve the general outlook. This year’s late Thanksgiving cut the number of shopping days between Thanksgiving and Christmas, forcing many shippers to cover inventory shortfalls by air rather than sea. Consumer confidence in both Europe and the U.S. is also hinting at improvement, and there has been a spate of new product launches aimed at the holiday season and requiring rapid delivery, which has boosted charter markets. Cuts in freighter capacity by many carriers also appear to have tightened the supply side of the equation, both in scheduled and charter markets.
     The upshot has seen forwarders reporting shipment delays out of a number of Asian airports for freight heading into the U.S. Key lanes have also seen a spike in rates of up to a quarter in recent weeks.
     “A number of project shipments such as those by Apple, Samsung, and Microsoft are underway,” said Paul Tsui, chairman, The Hong Kong Association of Freight Forwarding & Logistics, although he added the rider that the volumes being flown were actually less than manufacturers had initially predicted. He also said the cancellation of freighter services had been a factor in tightening the space available out of Asia.
     Final freight data for October was not available as FlyingTypers went to press, but the September figures had already suggested a bounce-back was imminent. Drewry’s East-West Air Freight Price Index rose for the second consecutive month in September, driven by trade from Asia to North America. Indeed, in September rates rose strongly on all eastbound routes, with the exception of Shanghai-Chicago, where all-in pricing dipped 2.4 percent thanks to lower fuel surcharges.
     Rates from Asia to Europe also showed signs of recovering, evinced most clearly by a 10.3 percent pricing jump on the Shanghai to Frankfurt lane in September.
     “We have been anticipating a tightening of capacity and a growth in demand, fuelled by new product launches and the peak season, particularly from Asia into North America,” Martin Dixon, Drewry Business Development Manager, told FlyingTypers earlier last week.
     He expects airfreight rates to rise further through November as new products are shipped, demand for Asian manufactured goods rises, and the end of the tourist season tightens capacity.
     John Cheetham, (left) Regional Commercial Manager Asia Pacific & India at IAG Cargo, said demand was “strong” from Asia to Europe, particularly out of Hong Kong. “We knew that the product launches would help to boost the peak season and this certainly seems to have come to fruition,” he added.
     Sebastiaan Scholte, (right) CEO of Jan de Rijk Logistics, said the European market had been improving since the end of August, although he said recent gains had been marginal rather than game changing.
     “It is busier, but not the traditional end of year rally as before,” he said. “Since airlines have been taking out capacity, the extra volumes might result in a shortage of capacity, but we experience only a slight increase in total volumes.”
     A spokesman for Lufthansa Cargo said most markets had been improving but it was too early to call this a major spike. “We do see some signs of recovery in various markets, however I would not call it a peak yet,” he said.
Looking at individual markets, he described the North Atlantic as “difficult,” the South Atlantic as “better,” and Asia as a region where some markets were recovering.
     “It will be important to see how sustainable and intense the recovery will be but it is still too early to say,” he added.
     However, where the market goes from here is up in the air. “I do not have a magic crystal ball, but I do expect the market to continue to grow at a very modest pace in the next year,” said Scholte. “It seems that consumer confidence is getting a little bit better, which hopefully will result in more consumption, production, and trade.
     “If we all become a little more optimistic about the market growth next year, it may become a self-fulfilling prophecy.”
     Tsui said he did not think the bounce-back would last long “and we shall return to the level previously in a matter of 2 or 3 weeks maximum.”
     The Lufthansa spokesman said, “we do expect a real recovery in the course of the next few months,” but hedged his bets by adding “we consider flexibility of utmost importance and will steer our capacity according to the demand.”
Sky King


e are looking at this picture of Ram Menen (left), Bill Boesch, and Prakash Nair (right) taken a decade ago at the high point of Air Cargo Americas (ACA) in 2003, as the event feted Mr. Boesch with the prestigious ACA Award for “Outstanding Contributions To Air Cargo.”
Each time we look at these three guys, (although they are not at ACA much anymore) we know that the reason we will be at ACA in Miami on Wednesday November 6th is because of the great people who are always part of an event that, for Latin American air cargo, is the biggest of its kind.
     Air Cargo Americas is the Grand Wazoo of American industry gatherings; a wide, open, lusty, and frenetic couple of days of warmth and Latin spirit, it can also be a bit wild and even rough around the edges, especially when the party gets going before noon.
     If you ever wondered what the people at the airport who are having a beer for breakfast_think and talk about, at ACA it is all about business, life, smiles, and friends.
     But the old and young who network here are always larger than life, representing the heart and soul of this American air cargo industry.
     We have always thought that the ACA venue (just off the main runways of MIA offered great access), although the place is kind of worn out.
     It certainly is not as slick as some trade shows, but dig a little deeper and embrace all of ACA, from its pipe rail booths to the bigger, slicker display stands.
     A tip of the hat goes to Charlotte Gallogly, President of the World Trade Center Miami, who has been at the helm of this event since it began twenty-four years ago.
     Miami International Airport gets a nod as well.
     No other airport in the world has a biennial cargo event of this size and dimension that has lasted as long, nor greeted more members of the air cargo industry.
     What makes ACA worthwhile can be found out there on the hoof, at the coffee breaks, inside the display stands, and taking a microphone.
     Thinking about all the things we do while employed in air cargo, making friends from all over the world is better than anything else.
     A curious thing occurs when we gather at air cargo events—sooner or later, our humanity takes over.
     The "mission" gets pushed back and we become much more than the voices and faces and thinking of what passes as air cargo today.
     This is our life, this career in air cargo. These are our friends who are there for us, like touchstones, whether in Atlanta, Dubai, Basel, or Rangoon.
     What a great example of international relationships these air cargo trade shows can be!
     People from all over the world, connected by the desire to advance the speed of international commerce, meeting in Miami, Florida, for a couple of days in November, under the warmth of the sun.
     Just when the cold slap of the arctic express is ruling out any hope of one more languorous day up north, we join the birds down south.
     Don’t miss it.
Geoffrey Arend


lthough that flurry of announcements from American and US Air that would have moved AA Cargo President Kenji Hashimoto to a new elevated position at the planned merged carrier is yet to be finalized, for his part the erstwhile Kenji-san has not broken stride as he goes about his business of building the cargo division’s role in the greater American Airlines.
As always, Mr. Hashimoto makes what he does look easy, which is also the mark of a true professional. In fact, to hear him speak, there is no doubt Kenji is on the ride of a lifetime.
     “It has been both a satisfying and gratifying few months for us, as September marked the fifth straight month that we’ve seen a year-over-year increase in traffic.
     “Also, in the third quarter, we reported revenue of $163 million, up nearly 5 percent versus the same period last year.
     “It’s a challenging market right now, and we’re pleased with those results.”


     “Earlier this year, we rolled out the new aacargo.com, which was designed with customer input, and it has been received with a lot of positive customer feedback.
     “In September, we signed the IATA Multilateral e-AWB Agreement, moving us one step closer to a paperless operation.
     “And, we can’t forget our network growth.
     “In the spring, we rolled out new service between Chicago O’Hare and Dusseldorf along with Dallas/Fort Worth and Seoul, and then this month we’ll begin service between Dallas/Fort Worth and Bogota along with Miami and Milan, as well as Los Angeles to Sao Paulo in December.
     “We also just announced that we will begin offering cargo service between Dallas/Fort Worth and Hong Kong and Dallas/Fort Worth and Shanghai, both in June 2014.”


     “Based on our third quarter results and with IATA’s most recent figures showing some slow but steady improvement for the industry, we’re cautiously optimistic for next year.
     “Right now, we’re in the planning process for next year and identifying ways we can differentiate ourselves from the competition and continue to position American Airlines Cargo as the partner our customers prefer.
     “For example, with the increase in transportation of biologicals and pharmaceuticals in recent years, we’ve been investing in our infrastructure, specifically for our ExpediteTC program.
     “Earlier this year, we expanded our controlled room temperature (CRT) facilities in New York-JFK and will begin construction on a new CRT in London Heathrow.
     “We’ve also been listening to our customers, and based on their feedback and the overall market, we’ve been expanding our cargo service in key domestic and international cities including San Diego, Atlanta, New York-LaGuardia, Indianapolis, Orlando, Hartford, and Liberia, Costa Rica. Later this year, we’ll expand cargo service in New Orleans and Minneapolis/St. Paul.”


     “Right now, performance has been directionally specific. Atlantic westbound traffic has been decent, while eastbound traffic has been challenging.
     “In Latin America, southbound traffic is doing well, while northbound traffic is tough.
     “Overall though, our business has grown as a result of additional flying to Asia, Latin America, and Europe, better international mail traffic, and an emphasis on our premium product.
     “After May, we expanded our presence in several key markets like Frankfurt, and we added our new 777-300ER into Los Angeles and London-Heathrow, New York-JFK and London, and Dallas/Fort Worth and Sao Paulo.
     “As far as commodities, right now we’re getting into the start of berry season, with shipments coming from Chile to the US, and we’re also in the height of lobster season, with the seafood traveling from Miami to Shanghai via Los Angeles.”


     “Our rates remain competitive, and similar to other industries, our rates are a reflection of regional demand and the state of the global economy.
     “It’s hard to say to what that will look like in the future, but I can say we will continue to deliver our customers the quality product and superior customer service they know and expect from us.”


     “Interestingly enough, mail was the very first customer for what is today American Airlines Cargo, and mail continues to be an important part of our portfolio.
     “Today, we transport mail for USPS, several international postal operators, and military and state department sites worldwide.
     “The composition of the postal business has been changing from being primarily correspondence to now consisting largely of business-to-consumer merchandise.
     “We’ve invested in supporting this transition by updating processes as well as through industry leadership and are actively involved with piece-level mail scanning and tracking, which provides data to various postal operators and their customers and gives near real-time intelligence and visibility to postal items as they move through our system.
     “Currently, Mark Gilbert on my team serves as chairman of the IATA Air Mail Panel and actively participates in industry groups that are focused on improving postal services.”


     “Freight forwarders are our customers, and our customers are our priority.
     “We see ourselves as partners to forwarders, and we are focused on finding ways to provide them with creative solutions to meet their shipping needs.
     “Whether it’s personal visits, phone calls, or meeting at industry trade events, we stay in frequent contact with our customers to make sure we’re well attuned to their needs and work with them to be successful together.”


     “I think collaboration is key. It’s crucial that we have continued communication and collaboration among all entities in this industry.
     “The coordination efforts between associates are a great start, and continuing those talks will only help in implementing initiatives that make sense for everyone.”


     “I’m happy to still be working in cargo, and I see this as an opportunity to continue pushing forward on all of the great customer-focused initiatives we have underway.
     “And, more so, I enjoy working alongside a talented team that I’m genuinely going to miss.
     “Currently, Jim Butler and I meet and catch up whenever possible, and as I’ve mentioned before, I’m still fascinated by the fact that we have such similar career paths.
     “This has been a good opportunity for both of us to transition a bit longer to make the handover even more seamless than we originally envisioned.
     “But, for now, American and US Airways continue to operate as independent companies and competitors, and all of the leadership announcements for the new merger remain on hold until such time as the merger receives final clearance and is legally consummated.”
Geoffrey

Saudia Cargo is first and foremost the specialist for cargo to and from Saudia Arabia. Furthermore we offer an attractive network in Europe, MENAT, Indian Sub-Continent, Africa, Europe, and the U.S.A. with a good mix of scheduled freighter and belly capacity as well as cost effective solutions for ad hoc charters,” declares Peter Scholten, VP Commercial at Saudia Cargo.
     “We feature a different network than the other carriers in the Middle East.
     “Our dedication to our customers is first rate and we want your business and work for it.
     “Right now, as November 2013 begins, business is stable in a challenging market environment.
     “Volumes and revenue that we move over our freighter and belly network is 7 percent higher than in 2012.
     “Saudia increased freighter frequency from Dhaka to five B747 freighters, upgraded our services from Nairobi from five MD11 flights to six B747 flights, and commenced freighter services in Manston, UK.
     “We also started new B747 freighter services in Kano, Nigeria, and recently increased the frequency to twice weekly.
     “Our outlook ahead is to a similar market situation next year, as we have seen in 2013.
     “Belly capacity will continue to grow whilst cargo volumes will stagnate.”


     “Saudia Cargo will launch a new product for pharmaceuticals in cool-containers this month (November), focusing on pharmaceuticals to Saudi Arabia in phase 1 of the product rollout.
     “In July we debuted OK-2-KSA, an online tool that assists importers in obtaining the approvals for importing goods from authorities in KSA.
     “So far we have handled some 500 requests, which is very encouraging.
     “Feedback has been quite positive, and we are seeing the volumes in the tool grow every week.
     “Our new cargo hubs in Nairobi and Lagos this year offer in total 32 additional destinations.
     “Both hubs are connected with large freighter capacity, daily B747 flights to Lagos, and six weekly B747 freighters to Nairobi.
     “Combined with the thirteen destinations that we operate direct from Saudi Arabia, we are covering 45 destinations in this emerging continent.”


     “We continue to see a strong growth of cargo to KSA and GCC countries from various regions in the world, however, the capacity to these markets are sufficient, thus leading to strong competition.
     “The same applies to the Asia to West Africa market.
     “In our business we see strong performance from Indian Sub Continent and on the lanes to and from Europe.
     “But we also are moving to shore up all markets, particularly from Far East, which need special attention due to major overcapacity in most cities where we operate.
     “At the same time a major agenda item is our effort in dealing with various (political, security, etc.) challenges in some of our markets in MENAT.
     “Overall—never a dull moment!”
     From Martinair to Saudia, Peter Scholten combines long-term cargo experience with the ability to be on his mark 24/7.


     Not only does Peter Scholten stand up in terms of devotion to air cargo, but also at six foot five he usually is the tallest guy in the room.
     If the attention and sense of excitement he has brought to the Middle East cargo scene is any indication, he tempers all praise with inclusion of the value of leadership and team spirit at Saudia Cargo.
     “My take looking ahead is that we need to liberalize the traffic rights for air cargo.
     “We are still facing many markets where we can't operate or are not allowed to carry cargo.
     “Traffic rights are still managed today via bilateral agreement between countries and have many limitations for carriers.
     “I am most proud of the fact that Saudia Cargo is now back on the map as a professional cargo carrier and operates successfully in the global air cargo arena.
     “Saudia Cargo is also a first-rate team with dedicated leadership and attention to detail to do business with all the top global and local forwarders in our service markets.
     “Client surveys underscore that our clients recognize our service improvements.
     “Saudia Cargo has climbed significantly on the global cargo airline rankings and received various awards.”


     “Both our cargo terminals in Jeddah and Riyadh will be replaced by new terminals, and will grow in capacity.
     “In Jeddah, capacity will grow in four steps from 35.000 M2 to 75.000 M2 by end 2015. The capacity of the cargo terminal in Riyadh will grow from 44.000 M2 to 120.000 M2 capacity by 2015.”
Geoffrey

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