Bill Boesch, who served as top management at American Airlines Cargo from 1988-1998 and during an amazing four decade-plus career on the front lines of air cargo went on to build logistics services and save troops’ lives in Iraq and Afghanistan, stepped center-stage with a view of our industry and some forward thinking, as keynote speaker at the AirCargo 2014 held this week in Orlando, Florida.

 Looking at yesterday, today, and tomorrow, including a five year stint in the Iraq and Afghanistan war zone where Boesch used his logistics training to move goods and save lives, ACA delegates heard some good old-fashioned, off-the-shoulder, straight-from-the-heart speechifying, and most in the packed house (including yours truly), loved every minute of it.

Where Will The Growth Be?

     Pulling no punches, Bill took on the top question in transportation today:
     ‘Where Will The Growth Be?’ he asked AFA conferees:
     “For an industry or company to grow profitable, it must continually develop new products and services; without change the results will be slower growth, poor ROI, and, finally, major bankruptcy or consolidation.
     “Just this month FedEx chairman and CEO Fred Smith and IATA chief economist Brian Pearce said the recession of 2007 to 2009 ended air cargo’s growth due to increased trade protectionism; miniaturization of electronics; low interest rates leading to lower inventory ‘carrying costs’ that reduce the need for speed in the transport of goods; high fuel costs; and more reliable ocean freight services,” said Bill Boesch.
     “Pearce also warned that air cargo yields might continue to decline because of overall belly hold capacity provided by wide body passenger.
     “Pearce said: ‘The trend has led to the parking of many freighter aircraft.’
     “My response to those comments is that for certain right now in 2014, air cargo’s major growth has plateaued, and rates might continue to fall as more passenger belly capacity enters the market,” Bill Boesch told AFA conferees.
     “But we can stop this slide by carefully developing new products and markets and using future developments in technology to lower costs and grow profits in a highly competitive future marketplace.
     “If applied, this activity could bring upon a new age for air cargo and one of the most significant paradigm shifts our industry has ever seen.”

Tips Hat To Forwarders

     Mr. Boesch saluted the freight forwarders activity yesterday and today, calling out some outstanding individuals:
     “In USA forwarders, the marketing element of the air cargo business has demanded higher-quality service from the air cargo carriers, as well as improved and faster information, and unfortunately,” Bill smiled, “lower prices!”
     “We must recall and salute pioneers like Peter George at Emery, Larry Rodberg at Burlington and AEI, Joe Frigger at EMO Trans USA and others who realized that cooperation must be advanced; they were among the voices leading change, an activity I might point out continues, led by many of you present here in the audience today.”

Government Business Dips In 2015

     “Something I have also been involved with personally is activity of the US Civil Reserve Air Fleet or CRAF.
     “In the past up until now some well known U.S. flag carriers, and cargo airlines in particular, have been somewhat insulated from the negative effects in the world market because of the need for wartime lift by the U.S. military.
     “In 2015, this business, which has represented billions of dollars per year to the U.S. commercial carriers, will be significantly reduced.
     “For those of you who do not know what the Civil Reserve Air Fleet, or CRAF, is let me offer you a quick overview.
     “CRAF was formed in the 50s to give the U.S. military access to the U.S. commercial airlines’ fleets in times of national need.
     “In return for pledging aircraft to the CRAF program, the airlines gain access to the U.S. government’s business.”

Looking Ahead

     “Looking at the present and the future, my view is that there will be plenty of demand ahead, but we have a lot of work to do if we as an industry are going to get our fair share.
     “In addition to driving new markets, there are reportedly more than a billion people in China and India and elsewhere around the planet emerging into a new middle class during the next decade.
     “As Joe Czyzyk, CEO of Mercury Air Cargo said recently:
     “‘A billion people in the expanding global middle class during the next decade will not only subsist, but also will want stuff such as electronics, pharama and other commodities natural to air cargo.’
     “But none of us,” Mr. Boesch pointed out, “can be successful in that or any future, unless we recognize our customers’ needs while preparing for the future.
     “Companies that invest wisely, based on what they believe will happen in the future, will not only survive but prosper as we move deeper into the 21st century.”

Moving From Here To There

     “I think we will see serious advancements in low-cost alternatives to the present jet freighters in the next decade.
     “Ask yourself how much cargo really needs jet speed or does most of it just need to move twice as fast as ocean transportation?
     “Will that be based on technology advances, the new product of the 2020 decade?
     “Fusion as an energy source will happen within the next decade.
     “Undoubtedly we will see unmanned cargo aircraft in operation as right now the FAA is considering approval criteria that could reach finalization by 2017.
     “The impact of this new transportation technology will lower the cost of air cargo tremendously and create a market worldwide beyond imagination by many today.
     “In fact, some package delivery companies are seriously considering the first phase of unmanned delivery.
     “There is one company operating today, Aeroscraft, that is making major investments in new technologies and has serious government interest and private investment.
     “But we must speed up the processes on the ground through technology in security and reduce lengthy clearance times.”

Advancements & Open Skies

     “I believe open skies and globalization will gain momentum and as a result we will see cross investment in national carriers and the present alliances turning into joint ownership.
     “There will continue to be development in computers, mechanization, and robotics within the next decade that will greatly affect the air cargo industry and lower costs while improving reliability.
     “But Cyber security, one of the leading world concerns, must be solved.
     “We will need to address in exact detail drivers that affect our industry and the aircraft we fly.
     “Open trade is a subject governments must come to grips with once and for all.
     “World markets must open their borders and promote global trade.
     “The benefit of expanding global manufacturing can only accelerate the need for air cargo,” Bill Boesch said.

Some Final Thoughts
     
     Unlike some of the talks at the IATA Symposium earlier this month, Bill gave suggestions on how to reverse the negative slide and insure that air cargo will even have a bright future in the years ahead.
     As Bill imagined, air cargo might turn into “Air and Space Air” and the industry could go “where no man has ever gone to before.”
     We took Bill aside and asked him if he had any further thoughts; of course, he did.
     “You know that I have been arguing with Fred Smith forever that air cargo will be dominated by the belly carriers who can fly freight at a low cost incrementally.
     “At the IATA meeting earlier this month Fred came close to admitting that.
     “I see express carried on jet freighters, and air cargo carried in the ever expanding bellies of passenger flights.
     “Oversize special-needs cargo will continue to be moved aboard charter carriers.
     But sooner than many think a new cargo lifter will come onto the scene. Twice as fast as ocean shipping (no need to fly at 600mph versus 30mph on the water to compete and win), it will be able to lift enormous payloads—new, low-cost, high technology airships will change air cargo forever.
     "There are two versions planned: the ML 866, traveling at 100 knots/115 mph, with the ability to carry 66 tons up to 3,000 miles and the ML 868, traveling at 100 knots/115 mph, with the ability to carry/weighing 250 tons up to 6,000 miles.
     "This is between 30 to 40 hours JFK/LHR, depending on the winds, so at most 2 days between New York and London.
     “Time will tell if I am right, but it surely looks that way from where I sit,” Bill Boesch said.
Geoffrey

     Richard Malkin, the man who invented modern air cargo journalism, has breakfast with me in a diner near his home in Queens every two weeks.
     Nearing 101 years old, Malkin is writing again; here is a link to the most recent story that we published.
     Recently at breakfast I told him we were coming to AirCargo 2014 in Orlando to honor Bill Boesch, and he said that was good, but then asked me:
     “What about Larry Rodberg?”
     I asked him right back, so what about (the late) Larry Rodberg?
     Then Dick told me a story of how Larry built a company called Burlington Northern Air Freight into a big success and wanted to give back, and Malkin told Larry to use his smarts and money to get involved with the nearly defunct Airforwarders Asssociation.
     “Pick them up, and help the entire air cargo business, I told Larry,” Malkin said.
     “At the time AfA was on the rocks; its founders—who had been in place since the end of WWII—had just grown old and moved on as interest in the organization waned,” Malkin said.
     So that is exactly what Larry did, revealing himself as a giving person who was not only satisfied with his company’s success.
     Larry believed that air cargo could grow and flourish with the critical help of an organization that would present the unique advantages of air cargo—speed, reliability, on-time delivery, and minimal headaches.
     “In unity, there is strength,” was Larry’s motto.
     Larry and a few like-minded forwarder executives set out to change the AfA, from talking in a whisper to a voice that could be heard loud and clear to shippers, airlines, and in the halls of Congress.
     Spending a great deal of time and effort, and serving as President of AfA four times, Larry achieved his goal.
     The AfA voice grew more assertive over the years until today, led by Brandon Fried, Executive Director, (left) it competes successfully among transportation organizations representing older, larger—and much richer—industries such as railroad, trucking, and ocean shipping.
     While striving to fashion a renewed, active, and vigorous AfA, Larry never forgot his roots as a working forwarder.

Built Burlington Northern Air Freight Inc.

     BNAFI was founded soon after the CAB, which ruled the civil aviation industry in the 1970s, allowed railroads to own air freight forwarders.
     One railroad executive saw almost immediately the possibilities of air freight forwarding ownership.
He was Norman Laurentzen, president of Burlington Northern Railroad.
     Laurentzen thought an air cargo division would add another service to the railroad and hopefully earn a profit.
     But who effectively could start and operate this new Burlington division?
     Laurentzen was told about Larry Rodberg, a dynamic sales exec then working for Airborne Freight.
He invited Larry to a meeting at the railroad’s St. Paul, MN, headquarters.
     Together with an associate, George Ryan, Larry flew to St. Paul from Airborne’s Seattle office.
     Larry was not the typically elaborate business plan guy, with power point presentations and pointer in hand.
     The night before the meeting, in their hotel rooms, Larry and George scribbled notes on little yellow post-it notes.
     The next morning, they marched into Laurentzen’s office with a commitment for a new forwarding company. It was to be called Burlington Northern Air Freight.
     They marched out with a $2 million commitment to fund the new division—chump change for the railroad.
     Larry was on his way and never looked back.
     He and George took offices in Newport Beach and began looking for personnel. Larry hired the best he could find.
     He opened company-owned and operated offices in key cities of the U.S. No franchises for him.

Zero To Hero

     From a zero start, BNAFI quickly became one of the largest and most successful forwarders in our business.
     Its substantial return on investment and yields of 20 to 25 percent brought joy to St. Paul.
     These figures are unimaginable today. Within 18 months, the $2 million loan was repaid in full.

Marketing & Sales Extraordinaire!

     Larry was not just a born salesman. He also was no slouch at marketing.
     Larry wanted a slogan that would sum up, in a few words, the core of air freight.
     He asked his marketing people to come up with a phrase that would encapsulate the qualities of air freight.
     One of his advertising people created the slogan that still is in use today.
     “People, not planes deliver.”

Fleets To Futility

     A little rain must fall in every success story, however.
     The rain fell heavily on Larry.
     Turning once more to the air freight business, shortly before its demise the CAB decreed that forwarders could fly their own airplanes.
     The largest forwarders like Emery and Airborne rushed to buy or lease older aircraft.
     New management at now BAX Air Express also wanted to get on the air force bandwagon.
     Larry fought the new owners bitterly.
     He was no Luddite, but believed a forwarder could prosper only as a classic, non-asset middleman between shipper and airline.
     A forwarder’s value to his customer was the ability to go anywhere any time—to the next city or the furthest overseas destination.
     Larry lost the battle, but won the war.
     Today, no forwarder owns an air fleet.
     As John Emery, Jr., once told this reporter, “running an airline at Emery was the greatest mistake I ever made.
     “Let the airlines bleed red ink,” Emery said.

Remembering Larry

     Today, Larry, who died in 1990 of leukemia in Newport Beach, California, at the young age of 68, should be honored and remembered not only for creating a very successful company, but, perhaps more importantly, for instilling in the forwarding industry a sense of confidence about who they are, and for making the public aware of it through the Airforwarders Association.
     Some stories and people should live forever.
Geoffrey

Kudos To Saudia Cargo

   Say Hello To My Little Friends . . . Saudia Cargo flew on the wild side from Johannesburg (South Africa) to Riyadh (Saudi Arabia) moving 141 animals including giraffe, kudu, hartebeest, gemsbok, impala, springbok, blesbok and duiker to the Riyadh Zoological Garden.
   The deal was no walk in the park either. Close cooperation got everyone on the same page as weeks of meticulous planning and coordination were needed due to the special nature of the shipment.
   “The success of this operation is a credit to the hard work and dedication of all those involved and serves to demonstrate our ability to handle a wide range and nature of cargo on an international level,” said Amer Abu Obeid, Regional Director (MENAT) at Saudia Cargo.

United Adds
Long Haul Frequencies

   New “left side” USA connections via SFO, as United added a Taipei daily (B777) and a daily (B747) flight SFO/ FRA. UA goes twice daily (B777) frequency SFO/LHR .
On March 30, UA went twice daily (B777) IAH/ TYO.
   On April 24, UA goes twice daily to a brand new market connection (B767) IAH/MUC.

Michael Webber
Webber Air Cargo
Airport Consulting

     India’s interest to connect with Africa has seen a rise. It is not that it was not there earlier, but it has, of late, grown. The reason: trade with Africa is one-way with hardly any exports coming into India. Air cargo stakeholders pointed out to ACNFT that the freight prices on the India-Africa route will continue to be on the high side simply because carriers found the routes uneconomical.
     In 2012-13, India-Africa trade was $70.25 billion.
     “The target for India-Africa bilateral trade has been set as $90 billion by the year 2015,” E. M. Sudarsana Natchiappan, the Minister of State in the Ministry of Commerce and Industry, informed Parliament recently.
     “Certain areas/sectors have been identified in some African countries where India’s exports are presently quite low and the share of India’s exports in those countries’ global imports in these sectors is also low and thus India has the potential to export these identified commodities to these countries,” he said. Transport equipment, pharmaceutical products, machinery, plastic, and linoleum products and textiles have huge potential for growth in exports from India to Africa.
     Air cargo exports from India to East Africa include pharmaceuticals, textiles and leather and all three have seen significant growth. There has been a demand for more investment by Indian corporate entities in Africa. In fact, a recent report from McKinsey—‘Joining hands to unlock Africa’s potential: A new Indian industry-led approach to Africa’—has pointed out that Indian corporate houses would be able to quadruple revenues from Africa to $160 billion by 2025 by focusing on IT services, agriculture, infrastructure, pharmaceuticals, and consumer goods.
     The report comes at a crucial time: India is in the throes of a general election scheduled to take place in May. The present government—whatever its compulsions—has not been able to push the economy: indeed it has slowed down to around 4.9 percent today from the more than 8 percent in 2011.
     Words of hope have come from global analytical major CRISIL. In a report it said that there were signs of industrial growth lifting from its 2013-14 low (in 2012-13, it grew one percent against the 2.9 in 2011-12).
     “On the back of a marginal improvement in the global economic environment, export growth has already entered into positive territory,” CRISIL said.
     According to the Federation of Indian Export Organizations’ (FIEO) President Rafeeq Ahmed, 2013 was not a good year for exports.
     “We expect that 2014 should be okay because markets like the U.S. and Europe are stabilizing,” he told a wire service recently. Air cargo growth, for example, from April 2013 to November 2013, was a mere 1.9 percent (from 1478.31 thousand tonnes to 1506.21 thousand tonnes) in comparison to the same period in 2012. It is expected that air freight tonnage growth in 2013-14 will be around 3 percent and will continue to rise to 5.5 percent in 2018-19.
     It is in such a situation that the spotlight is on Africa. With a projected average growth of about 5 percent during 2013-25, it is second only to emerging Asia and the Middle East, and the Africa committee at the Confederation of Indian Industry (CII) feels it would be worthwhile for India to partner in its growth and development.
As for air cargo, while the trade may be one-sided—Indian imports from Africa, like minerals, do not use air – -there is reason enough to believe that volumes would rise with more corporate initiatives. Sanjeev Gadhia, Astral Aviation CEO, mentioned at a recent meet that there was need for “more initiatives from the private sector and more joint ventures between Indian and African companies.” He also said that exports to India could rise if new economic zones were established in the interiors of Africa.
     Gadhia has been watching the Africa scene for quite a few years and he emphasized that the Chinese were investing in a big way not only in infrastructure but in other spheres as well. It is time India played an active role in Africa.
Tirthankar

Get On Board Air Cargo News FlyingTypers
For A Free Subscription
Click Here To Subscribe

If You Missed Any Of The Previous 3 Issues Of FlyingTypers
Click On Image Below To Access

FT031714

Send comments and news to geoffrey@aircargonews.com
Opinions and comments expressed herein do not necessarily reflect the views of the publisher but remain solely those of the author(s).
Air Cargo News FlyingTypers reserves the right to edit all submissions for length and content. All photos and written material submitted to this publication become the property of All Cargo Media.
All Cargo Media, Publishers of Air Cargo News Digital and FlyingTypers. Copyright ©2014 ACM, Inc. All Rights Reserved.
More@ www.aircargonews.com

100% Green