FlyingTypers asked a number of leading executives whether improving consumer confidence in key western markets would boost air freight volumes as the need for expedited shipments rose; or whether they thought the lengthy dip suffered by the air cargo industry in both volume and pricing was indicative of a more fundamental, long-term modal shift. Jeff McCorstin is President of Global Freight Forwarding District, UPS Asia Pacific.
     True to his analytical mindset, when asked to what extent modal shift has been a factor in bearish air freight markets in recent years, McCorstin was keen to throw some numbers into the fray.
     Quoting World Trade Organization figures, he contended that world trade volume growth had been positive since 2010, while figures from Drewry and IATA revealed that world container traffic annual growth rates had been greater than air freight by a factor of 3-7 times.
     He concluded: “Ocean volume has been outgrowing air freight since 2011, indicating that shippers are changing their mix of modes they use.”
     What happens next is more difficult to pin down, however.
     “As the global economy picks up there may indeed be a certain amount of mode shift back to air to the extent that cost cutting alone is driving trade down from air to ocean,” he told FlyingTypers.
     “We do not see this shift to be significant based on the factors we see driving mode shift. What we’re seeing, however, is that larger mode shift quantities are being driven by product life cycle changes in both the high tech and healthcare segments.”
     In high tech, McCorstin said product innovation was now declining in some major categories, for example, laptops, so that obsolescence was now a declining risk, allowing for extended model life cycles and therefore greater transit time allotments.
     “Not only is the obsolescence risk declining but the retail product values are dropping such that total retail revenues now no longer support the air freight expense,” he said.
     “In healthcare, the same factors are played out as high-priced brand pharmaceuticals are replaced by low-priced generic drugs.”
     UPS has undertaken several customer engagements in both the high-tech and healthcare segments with a view to exploring the benefits of shifting to lower cost transportation models.
     “Customers are coming to us seeking not only air and ocean services but also intermediate solutions along the speed/cost continuum.”
     McCorstin believes that multi-modal solutions that integrate existing UPS products and capabilities have the potential to empower customers to make decisions that optimize their inventory leverage.
     “Customers want technology capabilities to see their inventory upstream from the purchase order,” he said.
     “And they want experience and a global network to develop and execute operating plans that allow them to make solution choices that may vary from shipment to shipment based on inventory optimization.”
     He believes customers, rather than simply weighing up how much it costs versus how long it takes to send a single shipment by either air or ocean, will instead continue to seek out far more sophisticated solutions that allow them to make tailored decisions based on an array of factors and requirements unique to their business.
     “Information/logistics programs such as UPS Supplier Management deliver that type of customer empowerment with a cloud based information platform that can be accessed by the customer, their vendors, and logistics providers in a way that facilitates multi-party collaboration for maximum efficiency,” he said.
Sky King

For Part I Click Here
For Part II Click Here

Hi Geoffrey,

     IT’S THAT TIME OF YEAR AGAIN!
     The 16th Annual Atlanta International Forwarders and Brokers Association (AIFBA) picnic is set for Tuesday, May 13, 2014, 11:30 am-1:30 pm at HWC Logistics and everyone involved in the transportation and logistics industry is invited to attend.
     HWC is located close in to ATL at 5300 Kennedy Road, Forest Park, GA.
     Please tell everyone you know!
     This year we have 2 Southwest Airlines domestic tickets for Raffle!
     Admission: $10.00 per person, which includes one real home-cooked hamburger, one juicy hot dog, some chips, a soft drink, & ice cream for dessert.
     See you there!

Donna Mullins
President Mullins International Solutions

To contact AIFBA click here

RE: An Evening With Jacques Ancher

Hi Geoffrey,

     I enjoyed reading your news from Istanbul. Jacques Ancher hit the nail on the head as usual. Innovation is key to progress and much needed change.
     Sadly very little has changed since his retirement. As reported elsewhere, it can still take up to 3 days to get a response to a price quote request.
     Fax machines are alive and in daily use at numerous supply chain offices (think forwarders, GSAs, Airlines etc.)
     Looking at the websites of numerous combination carriers you will be hard pressed to find any information about air cargo. It is usually a well-kept secret that air cargo is part of their business. The industry media headlines remain the same year after year:
               •  Declining yields
               •  Rising fuel costs
               •  Integrators increasing market share
               •   Over capacity
               •   Silly prices from carriers who either do not care or do not have a clue what their true net costs really are.

     How can such an industry, which is stuck in the seventies, ever hope to attract fresh talent? By all means join us but please leave your smartphone at home. :-)

Best regards,
Peter
Peter Walter
Director
Walter & Jenkins Associates Ltd.

RE: ICAO Nixes Lithium Metal Pax 2015

Geoffrey -

     There are a number of issues Jens got wrong in this article that will only lead to more confusion about ICAO's latest decision on Li metal batteries.
     1) ICAO did not "do away with part II of Packing Instruction 968..." Your readers will now think every Li metal battery needs to be shipped as a fully-regulated Class 9 DG starting January 2015. That is wrong.
     2. This statement is wrong: "While it is expected that both the ANC and the Council will approve the DGP's decision, one should not take such approval for granted, especially in the light of considerable industry lobbying from organizations such as NEMA (National Electrical Manufacturers Association and PRBA (The Rechargeable Battery Association)." If Jen really understood the situation at hand, he would know we supported ICAO's proposal to prohibit Li metal batteries as cargo on PAX. Why would we then reverse our position and "lobby" the ANC and Council?
     3. Has Jen seen or tested PyroPhobics Systems? Probably not. While their materials are promising, it is not a turnkey solution for shipping Li metal batteries on passenger aircraft as implied by the article.
     4. Lastly, your subject line implies Li ion batteries are "nixed" from PAX. That is not the case at all. The ICAO decision only addresses Li metal batteries, not Li ion batteries.

George
George A. Kerchner, Executive Director
PRBA - The Rechargeable Battery Association
1776 K Street, NW
Washington, DC 20006
gkerchner@wileyrein.com

Dear Mr. Kerchner,

     While FT is grateful for the feedback we receive on any and all of our articles, some of the reader’s comments to our “ICAO nixes Lithium Metal Batteries” article, which appeared on Monday, April 21st might warrant some further clarification, also in order to offer some insight into misperceptions commonly encountered in connection with this subject.
     Part II of PI 968 will be retained, e.g. not deleted entirely, but the “exempt” type of Lithium Metal batteries will only be permitted on all cargo aircraft. Barring otherwise detailed interpretation by ICAO and IATA, the requirement is that the Lithium Battery handling label be applied and marked so that the package may only be transported on all cargo aircraft, like the procedure currently is in the U.S. The CAO-label may only be used in conjunction with hazard labels and would therefore not be permitted on the basis of the present ICAO TI and IATA DGR. That, however, is quite a complication in handling since it is reasonably questionable that all staff will apply the required diligence; likely, more carriers will file deviations, which will add to confusion.
     With regard to the very valid question as to why lobby organizations might try to influence the eventual approval of the ICAO DGP decision to ban Lithium metal batteries by the ICAO ANC or Council, the answer is up to the lobby organizations in question; FT has no predetermined opinion here. However, it was PRBA who called the FAA’s “Freighter Airplane Cargo Fire Risk Model” “seriously flawed and wrong,” a statement the FAA was obviously able to disprove in their latest demonstrations at the William J. Hughes Technical Centre.
     As for the question whether or not the author—Jens—had firsthand knowledge about the PyroPhobic product, the answer is yes. Having worked in the forefront of the air transport industry for almost 30 years, serving as a DG trainer and Consultant subject matter expertise journalist on air cargo related matters, his experiences bear a lot of resemblance – both activities are strictly based on facts. So indeed, while we haven’t called the PyroPhobic IntuPlas containers a “turnkey solution,” it certainly is a valid shipping solution to the best professional judgment of the author, and prior to writing this article the test report and video documentation, which were seen, were impressive. PyroPhobic may not have the only working solution on the market, but that is also something we did not claim. We cited the PyroPhobic product as one working solution, and shipping Lithium Metal Batteries as such on passenger carrying aircraft after January 1st, 2015, will require competent authority approval. In order to obtain such approval, the PyroPhobic product will likely be considered an acceptable means to ensure the required “equal level of safety” by CAA’s worldwide were such approvals to be granted.
     We acknowledge the misidentification in subject line (not in the story itself, the headline, or the body copy) that was unintentional and corrected immediately.

Editor

Geoffrey,

     It is always amazing to me why these groups focus on banning only on passenger aircraft.
     Aren’t the lives of the crew and the people on the ground that the aircraft would crash into important to them?
     If these things are that dangerous, then they should not be carried by air.
     To say only passenger aircraft is hypocritical.

Bill Boesch

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