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Geoffrey Arend Air CArgo News Thought Leader
Vol. 13 No. 53                                                                                                                              Tuesday June 17, 2014

 

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Measuring Cargo Shows 2014

Around this time of year, air cargo settles into a lull; it’s a whole season, really, when the furious schedule of trade show events that began in early February hits the pause button, and summer rules.
     When we add up the number of three-day stints spent in a strange hotel attending a show, so far in 2014 it amounted to two 3-day-stints at IATA—WCS & CNS, an AGM in Istanbul for TIACA, the Airforwarders Annual Conference in Orlando, plus some other airport based gatherings—most notably the JFK Air Cargo Day and a lovely couple of days in SJU with EMO Trans.
     The major takeaway from all of these trips centers on what we heard from the always astute and varied group of remarkable executives, who either attended only some of the aforementioned or, like us, were present for them all.
     In 2014 there are two schools of thought about air cargo events:
     One thought is that there are simply too many air cargo trade shows; the other is that too much is never enough.
     We fall somewhere in between those two sentiments.
     For us at least, there is always an interview or speech that changes everything and makes us glad we heard it.
     Also, despite the nature of instant communication in the cyber-age, it is becoming abundantly clear that as we move forward, the face-to-face human interaction can be revealing and quite helpful as we attempt to tackle and master swift changing markets and shifting business patterns.

Ian Ahern, EMO Trans


     Along the discovery trail, down in Puerto Rico we spoke to Ian Ahern, (above) managing director for EMO Trans Australia.
     “There are still plenty of opportunities to build new business even as the Asian market currently fluctuates a bit, and at EMO we happen to live next door to one of these developing markets.
     “For example, Papua, New Guinea has become a market that is in rapid need of almost everything, driven by vast gas fields under development.
     “Infrastructure is minimal and although costs are quite high (in addition to other normal business challenges), this is an exciting market. The government has embarked on many new development projects and along with Air Niugini is broadening the culture for expansion of air cargo across the country.
     “At the same time, EMO Trans Australia is involved—almost alone—in developing transportation connections via Port Moresby to facilitate bringing all manner of consumer goods and oil equipment into the country.
     “The task of developing a market in this case is both exciting and daunting, because basically there is nothing there and everything has to be brought in.
     “But we know in a broader sense in every case there are markets out there if you are willing to search for them and then roll up your sleeves and make things work,” Ian Ahern insists.
Geoffrey


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AA Cargo arrives in Hong Kong

(AA Hong Kong Exclusive)—In case you missed it, last week was a big week—American Airlines Cargo launched a pair of flights from Dallas/Forth Worth to China, adding substantial cargo services.
   American Airlines CEO Doug Parker told reporters the carrier’s new routes to Asia “aren’t gambles — they are investments in our future.”
   “It’s an extremely important part of the globe,” Parker said.
   “We’re a global carrier.
   “It’s an area that’s strategically important to us. So we view them as investments for the long term.”
   AA Cargo is in the air flying to Hong Kong and Shanghai via B777s (B777-300ER is pictured here at the gate on Friday after arrival in HKG) as two top gateways receive service.
   President of American Airlines Cargo Jim Butler describes the new services as a “major milestone for us.”
   “Building our presence in Asia is a key component of our long-term network strategy.
   “Including these two new routes, we’re now able to connect Asia to 68 different cities across Latin America, creating hundreds of routes where shipments can start and end their journeys.”
   Hactl handles American Cargo at HKG with representation by GSA Antares International.
   At PVG, American Cargo is handled by (PACTL) and represented by GSA Pan Asia Express.


Qatar Miami Launch

    Qatar Airways opens Miami, and Miami-Dade Mayor Carlos A. Gimenez, left, CEO of Qatar Airways H.E. Mr. Akbar Al Baker, center, and Director of the Miami-Dade Aviation Department, Emilio T. González like what they see.
    The press conference is all smiles as the new Miami-Doha service began on Wednesday, June 11, 2014, as its 6th U.S. Destination.
    QR is the only non-stop service from the Middle East to Florida, USA.

 

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Brandon Fried and Tony Tyler At CNS

     At the CNS Partnership Conference in San Antonio, Texas, on May 2-4, President of the Airforwarders Association Brandon Fried and Secretary General of IATA Tony Tyler held what we imagined might be a throw-down morning session between forwarder and airline.
     After all, cutting to the chase in that relationship is why CNS Partnership went into business 27 years ago.
     But what the duo actually delivered was among the dreariest presentations of any trade show in recent memory.
     There was nothing in the session we can recall, let alone report as newsworthy.
     Too much time spent with no payoff at trade show prices.
     Maybe the session was held because, by comparison, it gave tremendous dignity to the people who sat quietly in their seats and had to listen to it.
     But, I don’t know.
Geoffrey


Chuckles For June 17, 2014

 

Chasing The Modal Shift 4

After hearing from industry leaders at Drewry, UPS, and BDP talk about the severity of air-to-ocean modal shift, its causes, and whether the trend could reverse, FlyingTypers threw some more modal choice questions at executives at DHL in Asia and Seko Logistics in the U.S. The insights were illuminating.
Joe Bento    Joe Bento, Chief Sales Officer at U.S.-headquartered Seko, offered the small-to-medium sized forwarder perspective, albeit one with turnover of more than $600 million per annum.
    He said that smaller forwarders were “virtually under the radar” in terms of huge scale supply chain management for new product launches by companies like Apple, for example, which were almost commoditized in terms of end-to-end management of product delivery. However, he said that as the U.S. and the global economy improved, everyone in the transport chain would benefit by the general increase in demand, with new product launches then offering periodic demand boosts.
    “Take, for example, an Xbox being manufactured by Microsoft in Asia for Europe or the U.S.,” he said. “If they are running into deadlines with Walmart or another major retailer, then the demand for the goods can quickly start to outweigh the cost of transport. When this happens, you quickly move up the modal chain, right up to even maybe chartering a B747 freighter.
    “This is from where the pressure on senior supply chain directors comes. They need to get product to market at low cost, but they balance this against demand and the need to get to market. They all want to reduce costs. That won’t go away. But they have to balance these competing demands, especially for bigger companies.
    “When Apple does a product launch they don’t care about whether the supply chain guys are getting it on a container out of Asia. They want it there and that’s all that matters. If it costs a few dollars more they don’t care. And this has a big impact right across the market, especially when economies are on an upward curve, because that’s when a new product can cause a market spike.”
Nicklas Schlingensiepen    Nicklas Schlingensiepen, Head of Air Freight Operations & Compliance in the Asia Pacific at DHL Global Forwarding, also takes the view—for obvious cost reasons—that most supply chain planners prioritize the use of ocean carriage wherever possible. He argued that recent improvements in the global economy had not prompted a “shift back” to air per se, because sea freight was always the most cost effective solution available and anyone who had successfully managed a shift to sea would not use air unless absolutely necessary.
    “That said, there are some indications that the rate of modal shift from air to sea might slow down, since shipping lines are also implementing measures such as super slow steaming, which could impact the acceptable lead times to end customers and efforts to improve the capacity/demand ratios,” he said.
    “In turn, that means there could be an even greater demand for in-between alternative solutions such as sea-air, rail-air, rail, and trucking to best fit a customer’s requirements.”
    He said the shift from air to sea (and/or to modes in-between) over recent years was something that forwarders helped manage for clients as part of supply chain optimization and cost reduction strategies, but also was related to the value of goods and the nature of each shipper’s requirements.     “The key is working together in close partnership to find the right model and also the right contingency plans, since a shift from air to sea also comes with a variety of different risks and challenges,” he said.
    “In general, recently you can see shifts to ocean for certain types of High Tech goods and Life Sciences & Health Care. But this is also linked with the fact that these sectors have also historically been very heavy air users.
    “In the opposite direction—sea to air—there will always be a need to use air for all sectors due to many reasons, so it is important to have good contingency planning in place through close partnerships.”
SkyKIng

For Part I Click Here
For Part II Click Here
For Part III Click Here



Alitalia

   Here comes more of the same . . . Alitalia is closing yet another bailout deal; this time it is selling a 49 percent stake to Etihad Airways for 400 million Euros.
   Writing in Forbes Magazine, Marcel Michelson wonders who might need a flag airline, while also predicting the deal will only delay Alitalia’s demise.
   “It may be time for Italy to swallow national pride and let go of Alitalia.
   “The music stopped for the dolce vita, but it did not notice.”

Richard Malkin
Click Here To Read Intro
Click Here To Read Part I
Click Here To Read Part II
Click Here To Read Part III


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