Vol. 8 No. 26WE COVER THE WORLD Tuesday March 3, 2009
Official On-Site Publication World Cargo Symposium Bangkok 2009 Day 2


Dateline Bangkok


Cargo Security Tracks

Big Time At BKK

     For an event that has been - by any measure - successful in its first two years, it is heartening that organizers have welcomed feedback and actually responded to it.
     Of course, it is also encouraging when the main criticism has been that the event offered too much substance.
     The number of concurrent tracks offered at this year’s WCS was reduced in response to past complaints that IATA’s packed agenda compelled registrants to choose between multiple sessions of interest.
     Tracks cut this year may return in alternating years – potentially good news for attendees at the previous airports track.
     Speaking of airports, in an era of competition between events and rivalries between trade associations, Airports Council International – North America actually moved their own cargo event in Memphis back one week to March 10-12, specifically to avoid overlapping IATA WCS.
     Such cooperation is welcome if all too uncommon at times.
     The 2009 IATA World Cargo Symposium theme of “Focus on the customer – delivering in turbulent times” applies to virtually every aspect of the industry but particularly to cargo security – one of eight concurrent ‘tracks’ to run on March 4th.
     Given that the competitive advantage of air transport is speed and reliability for which shippers must pay a premium, anything that diminishes those two qualities goes to the core of the business. It is impossible to have an informed dialogue about cargo security that ignores the need to preserve the purposes for which industry has traditionally relied upon air.
     Neither IATA nor its constituents benefit from merely dodging responsibilities or avoiding security costs for its own sake.      Rather, IATA seeks to ensure that requirements effectively deliver what is intended and that expenditures are proportionate and integral to the objectives. In such an economic environment, little tolerance (financial and otherwise) exists for expensive window-dressing creating the illusion of a tighter security environment.
     Nor is there much enthusiasm – beyond a few consultants and technology providers – for a ‘jobs bill’ disguised as a security program.
     According to John Edwards, Head of Cargo Security for IATA, the industry needs:
            Required measures to be proportionate, i.e. threat-based and risk-managed
            A multi-layered coherent, simplified regulatory environment
            Solid relationships with regulators and other key stakeholders
            Relevant innovation and technology developments to be recognized
            All requirements to be efficient, cost-effective and sustainable
     Recognizing its own limits to influence national interests, IATA nonetheless seeks to at least inform them - promoting acceptance of global standards whenever practicable and effective.
     Such standardization might well yield cost-savings, but also bridges gaps created by variances in global supply chain security programs.
     As much as possible, IATA seeks to avoid needlessly ‘reinventing the wheel’, preferring to champion programs already demonstrably effective and to raise the profile of such resources to the broader audience IATA garners.
     Such lofty objectives require not only the right mix of presenters but an audience bringing their own experiences and given the opportunity to participate in the dialogue.
     An informed dialogue is precisely what IATA strives for in its event – not a series of monologues.
     While assuring its presenters are prepared and encouraging the sharing of research, WCS organizers limit speeches in favor of content attendees will not have received in other venues.
     Uniquely, each WCS track winds up with establishment of take-away action items reported in the larger forum. Providing a work-plan, these objectives provide continuity between scheduled events – consistent with IATA’s role as an action-oriented organization rather than schedule-planner.
     Anchoring the security track will be IATA’s Head of Cargo Security John Edwards and moderating the panel discussions will be U.S. cargo consultant, Michael Webber of Kansas City-based Webber Air Cargo.
     Among presenters is Marcus Hallside, President of Innovative Compliance Europe Ltd. Years before 9/11, Hallside was active in the development of cargo security solutions.
     Resulting from a 1999 proposal to the U.S. FAA for an aviation regulatory research program to address risk in air cargo shipments, Hallside directed research resulting in a prototype Known Shipper database.
     Such tools are critical to development of layered programs more based in scientific method than ‘feel good public policy’.
     A host of regulators from North America, Europe and Asia will also serve on panels, including several who have participated in earlier WCS events. While regulators may explore programs under their own jurisdictions, the collective can also count on being asked to provide examples of responsibilities the industrialized nations have for assisting the developing regions in meeting global standards.
Geoffrey


WCS Up Close & Personal

Bangkok Exclusive—People from all over the world are either in Bangkok or focused on IATA World Cargo Symposium (WCS) this week.
Here is what is being said as WCS 2009 continues.




One driving motive for me to take part at IATA’s Bangkok symposium is the networking aspect, hence meeting other players of our industry and exchange views and thoughts.
     We need to discuss flexible solutions and elaborate different scenarios for the next three or even more months. Looking beyond our own business we are witnessing the shutting down of factories, people losing their jobs.                Considering this situation I believe the markets are going to get even worse in the
next two or three months to come. And that’s why we should sincerely talk about different scenarios here at WCS that our industry should be prepared for.

To my understanding northern China is not hit as hard by the economic downturn than the southern part of the country around Guangdong Province. There, about 90 percent of the total production is exported to foreign markets whereas in the North we have a split situation with production for the domestic Chinese consumers and exports as well.
A second reason why China’s northern industries are hit less by the global downturn is because there is a broader mix of commodities, like the production of machinery parts, pharmaceuticals, consumer goods or components for the aviation sector.
Take Tianjin, located about 1,5h drive east of Beijing.
This place is developing into a formidable logistics and cargo hub, with as many as 4,000 Chinese and about 10,000 foreign enterprises being located already in the new industrial Bin Hai area that today already is four times as big as Shanghai’s Pudong production zone.
Now, Beijing’s government decided to support the logistics and transport sector at Tianjin even further by offering enterprises a package of up to 5 billion U.S. dollars for settling and doing business there.
This shows how determined the Chinese politicians are to develop Tianjin into a logistics hub.
Hence, the site offers ample business opportunities for shippers, cargo airlines, and agents.
That’s a major aspect that I like to point out in discussions and meetings here at the WCS.”



     There are a great number of highly interesting tracks the WCS meeting has placed on Bangkok’s agenda like E-Freight, Security or Dangerous Goods. Personally, I very much look forward to the ‘cash management / revenue optimization’ subject because of its growing importance in times where cash flows are slowing to a drip.
     Profit enhancements are extremely difficult to achieve under the given circumstances.
Consequently, I very much appreciate IATA taking the initiative in a number of fields by bringing the industry’s players together in working groups to hopefully find feasible solutions for enhancing our biz and securing our future.

     As one of the speakers at WCS I’ll try to provoke the participants a bit by demanding a more mandatory regime IATA should impose in air cargo. Take dangerous goods as an example, there everything is determined, compulsory and well documented so at the end of the day everybody complies with the given regulations. Now, I’m asking IATA why this does not happen in other fields in air freight. Cargo 2000 for example is a great step forward for the entire industry. The question is however, why hasn’t Cargo 2000 gone any further? The answer is that the Cargo 2000 regime is not compulsory.
     Therefore, I opt for a different view IATA should take by not leaving it up to the different participants to perform as they like, but rather insist on compliance of certain quality standards
along the supply chain.
     I believe this could be a major step to get our industry ahead.

 

ULD Days At WCS


     They are named LD 7, LD 3, AAN, AAY, AMF or AKH – transport boxes for different aircraft, purposes and fits.
     Not much attention was paid to these and alike unit load devices for quite some years.
     Many considered them a necessary evil that had to be there when needed by ground handlers or carriers at their warehouses for packing and flying out goods.
     That was it.
     Meanwhile, times have changed dramatically.
     The days of “a ULD, is a ULD, is a ULD” are gone.
     Main credit for bringing ULDs under closer scrutiny deserves the perishables biz as front-runner in the demand for specialized containers enabling temperature sensitive transports of flowers, vegetables, meat and similar produce.
     With their role constantly growing IATA’s last World Cargo Symposium 2008 at Rome honored this topic by putting aluminum boxes and pallet equipment on the agenda.
     By taking the ULDs out of the shadow and placing them right in the spotlight a process was initiated that raised basic questions like inventory costs, appropriate ULD management systems, adequate handling and storage equipment, higher asset utilization and last but not least the pros and cons of outsourcing the pallet and container business since managing ULDs does not belong to the core activities of airlines.
     Now, a year after the Rome debates, this topic is even more pressing due to the global economic downturn that continues to impact air cargo.
     Consequently, the ULD topic is increasingly seen by controllers and airline managers as a means to reduce unnecessary costs.
Given this, the pros and cons of outsourcing will be a major issue that WCS placed on the agenda.
     A second important aspect is the operational environment of ULDs outside of the aircraft.
     They probably spend more time in warehouses respectively on aprons than they actually do in flying aircraft, criticizes IATA.
     Which technical improvements are possible to reduce the weight of the ULDs and how can the ground handling of the equipment be improved for the benefit of the air freight industry are further questions standing on Bangkok’s IATA Cargo agenda. Followed by what can be done to reduce the damaging of containers and pallets and thus minimize costs.
     A new generation of light but durable containers that are presently tested will be illustrated during the event together with case studies on how the ULDs blend into the logistics chain.
     Finally, a panel including airline managers, ULD manufacturers and operators is given room to wrap up the many presentations and contributions and present the floor their own thoughts on how the equipment for transporting goods in belly-hold compartments of passenger aircraft or main decks of freighters should be designed, professionally managed and efficiently utilized.
Heiner Siegmund


Smart Thinking & Good Advice

     “I really hope this world economic disaster causes the carriers to understand the importance of IATA and to stop looking at it merely as a means to spend a few weeks in some city, socializing and away from the pressures at home.
     “IATA has the means to take a leadership role and come up with ideas from its members on how to assist them during these almost unimaginable difficult times.
     “It is apparent to all at this stage that recovery can take years and in the meantime the airlines need to maintain some semblance of profit.
     “On the passenger side, business can be stimulated by price even as far as “buy one, get one free.”
     “But in air cargo, history shows us price merely shifts the available market between carriers unless you go down to the price of sea freight.
     “In most cases experience has proven to me that the size and changes in the air cargo market are in direct correlation to the changes in economic growth.
     “The air cargo industry is composed of a lot of very smart people.
     “I would hope in Bangkok, IATA gets these people to focus on helping the industry recover and doesn’t concentrate on individual airlines.”
Bill Boesch

(Editors Note: Bill Boesch, a 40-year veteran and true pioneer of modern air cargo, is among other top posts, the former President of American Airlines Cargo.
Bill, for the past few years has been stationed in the Middle East bringing a lifetime of pioneering logistics know-how to support the U.S. Armed Forces stationed in Iraq and Afghanistan.
In 2008, a grateful nation gave Bill the highest USA civilian award—The Ellis Island Medal of Honor for his effort).

 

Bellwinkel Dials Up Collaborative Planning

     No, the message he delivers at WCS Bangkok meeting might not be filed as an extraordinary revolutionary or visionary approach in the annals of IATA’s WCS.
     Nevertheless, it’s the important daily biz that Nokia’s Juergen Bellwinkel intends to improve by directing the spotlight on a number of very practical and forward driving issues the cargo industry has so far circumvented.
     One of the key items on his agenda is the ULD usage.
     “We could optimize the packing processes if we’d know exactly the kind of aircraft the carrier intends to fly our shipments with,” says Nokia’s Global Director Outbound Logistics and Transports.
     If this data were being provided early enough to the cell phone manufacturer, “our warehousing people would know precisely which sorts of pallets fit best for a certain aircraft variant.”
     Due to the lack of ULD information, there still is a lot of air being transported instead of cell phones or their components presently, Bellwinkel argues.
     Everybody would benefit if aircraft utilization could be optimized - shippers, forwarders, and carriers.
     “It would be a small leap but a major improvement by adding value for all participants,” he says.
     Unfortunately, the cargo industry is still too fragmented with each player within the supply chain stuck to his own traditional duties more or less.
     The different actor’s thinking often ends at their fence and hardly reaches much beyond.
     “What is necessary are new collaborative efforts that combine the expertise of airlines, agents and shippers rather than conserving the outdated lone player attitude many still prefer by just concentrating on their own daily routine. “Carriers could send us their loadmasters to tell our warehouse people what the specific packaging and ULD requirements of a cargo airline are,” Bellwinkel says.
     Thus, by looking beyond their own fence and by combing forces a rather complex process would become more transparent right at the place where shipments originate.
     This will result in delivering better quality at fewer costs for everybody involved.
     To add, that the planet would benefit from supply chain improvements, too, by reduced greenhouse gas emissions and more sustainability.
     “This specific environmental aspect, that is becoming increasingly important for our industry, is a cornerstone in Nokia’s corporate culture,” the manager emphasizes.
     IATA’s Bangkok Symposium, Bellwinkel recommends, is the place where the idea of more collaborative planning processes and thus animate the supply chain actors to better combine their particular strengths can take wing. “If IATA doesn’t take the initiative who will then?” he asks.
     The manager’s proposed interdependent approach could also lead to more cost transparency, a very much neglected topic so far.
     “Take the fuel surcharges last year.
     They went up and up but the index for price increases remained quite a hidden secret,” Bellwinkel recaps.
     According to him at minimum structure transparency is necessary to illustrate to shippers why surcharges have been changed.
     “Our problem is twofold.
     “The airlines never give us basic data about their surcharge regime and secondly as vendors we were completely unable to pass these additional costs on to our clientele.”
     Bangkok WCS he hopes, should elaborate on practical solutions for higher transparency in pricing and shipping matters and more cost efficiency, too.
Heiner Siegmund

IATA Gives Voice
To Air Cargo

   "The IATA-held air cargo gatherings are always a powerful and forward driving event giving the industry the opportunity to see the broader picture and what lies ahead," said Ram Menen, Emirates SkyCargo's iconic divisional vice president cargo in Bangkok today.
   “Speaking from an airline standpoint I want to emphasize that we are only one part of the supply chain - nothing more or less.
   “Of course we are the main asset holders within this chain, offering shippers and agents transport capacity on board our freighters and passenger aircraft.
   “This makes us vulnerable because of the capital intensive equipment we bring to the table.
   “Since 911 the aviation world has changed considerably with highly prioritized topics like security taking center stage with heightened rule and regulations being added all the time.
   “Government imposed regulations don’t only affect airlines but airports, shippers and forwarding agents as well.
   “But now it is IATA’s role to optimize the different elements within the supply chain.
   “Main thing we’ve got to change is the mindset of people involved in the cargo industry.
   “Here IATA WCS 2009 is a welcome offer for a common umbrella including all the players involved."
Heiner Siegmund

Fasten Seat Belts
Bumpy Ride Ahead

   Bette Davis may have uttered the words in the headline here, but WCS IATA numbers guru Brian Pearce will likely deliver some more unsettling figures that look suspiciously like déjà vu all over again Day Two at 1400 hours in his presentation:
   Economic Trends In Turbulent Times.
   The suspicion from the title is that the numbers might even be down a bit from the report as the world airline business buffeted by deteriorating economic conditions continues to sag.
   But stay tuned.
   Maybe there is some light at the end of the tunnel?
   Trust IATA’s Chief Economist with more than 20 years of international experience in several industries to deliver both the numbers and more.
   In a world that is if anything overly anxious to find out what does all of the financial news mean and what is likely to happen next, Mr. Pearce is the straight from the shoulder clear picture in what will be a true bottom line moment at the Bangkok Symposium.
   Mr. Pearce analyses the economic and policy landscape facing the airline industry but goes beyond the traditional narrow role of just traffic forecasts to forecasting all the factors affecting what is happening and is likely to affect future profitability in the airline business.



BFS Class Act At BKK

     In Thailand Bangkok Flight Services (BFS) is the go-to air cargo operation at Suvarnabhumi Airport.
     Stewart Sinclair, Managing Director Bangkok Flight Services and VP Asia for WFS told Air Cargo News/Flying Typers that “the effects of the global financial meltdown have impacted here,” (just like everywhere else) “with cargo volumes down over 11% over each of the last 3 months and passenger numbers dipping close to 10% - unheralded since the aftermath of 9/11”.
     “The knock-on effect of the super-high fuel prices in the mid part of last year are still with us as many airlines hedged their fuel at prices over 100 USD per barrel and are unable to take full advantage of the drop in fuel prices seen since.
     “All of this was compounded in Bangkok by the closure of the city’s airports for 10 days in late November and early December, delivering a sharp blow to the beginning of the high season for tourist arrivals.
     “Truly a “perfect storm” of blows to our industry, which has left us all facing its severe impact on our businesses.
     “It is at times like this that the strongest survive and this is when superior service becomes critical.
     “But the challenge is always how to reduce costs but at the same time maintain quality that differentiates you from your competitor.
     “This is equally true for BFS – our position is to strive to continue to provide the highest levels of service to our customers but also to reduce costs allowing us to prevail.
     “BFS has had to react quickly to cut non-essentials, even canceling our annual customer golf event, very sad to all of us that miss that day of networking and fun.
     “But these are tough times so we have identified a number of similar cost savings as part of a much leaner year for BFS.
     “However we will not compromise safety or training and have not cut resources from these areas or from maintenance of our equipment.
     “We are also attempting to share the pain of less compensation all around as an alternative to not making some people redundant.”
     We like Stewart Sinclair, in fact have liked him since he opened the station in 2006 and would not allow some tough press coverage about systems glitches phase him a bit, even when some local Thai stories got his name wrong identifying him as Sinclair Stewart.
     “Call me anything, but not late for dinner,” the youthful executive laughs.
     A fan of spicy Thai chicken salad and unwinding at the beach, Sinclair takes the heat these days, having arrived at WFS in 1992 from a school that eschews the limelight in favor of behind the scene competence.
     “In addition to other responsibilities including opportunities for new business in markets, getting our service delivery right will continue in good times or otherwise as top priority,” he says.
     “So it’s all hands against that objective.”
Geoffrey



Food For Thought
As Ureta Sets The Table

     The track is called Revenue Optimization and the characters are familiar industry professionals like Decartes’ Vince Ryan and IATA’s Nick Blake in an open from the floor Q&A at BKK WCS the morning of March 4.
     But attention is also drawn to Cristián Ureta Larraín, the youthful and dynamic CEO of LAN Cargo who in the spirit of bettering air cargo for everyone is offering himself up deep dish with a presentation titled “Turning Revenue into Profits - Keys to Success.”
     Not only will Mr. Ureta be making an all too rare public address, but the session
will also provide an opportunity for the audience to hear from a much admired cargo operator’s experience of dealing with the issue of turning revenue into profits.
     Interestingly Senõr Uretas’ address will precede a networking luncheon that in any case will certainly have plenty of food for thought even before the first celery stalks the banquet hall.
Geoffrey



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Thanks to Emirates Airline for providing us transportation to IATA World Cargo Symposium 2009



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