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   Vol. 13 No. 72   Monday August 25, 2014

 

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Air Cargo News For August 25, 2014
Air Cargo News For August 25, 2014

 

The Ground Handling Landscape

     Trends and fads in the industry come and go: at one time, airlines strived to become conglomerates, adding the “Group” title to their names and accumulating holdings from hotels to catering and aircraft maintenance to IT and logistics, epitomized by the likes of Jan Carlzon at SAS, Philippe Bruggisser at Swissair/SAir Group, and Robert Crandall at AMR Corporation and American, to name a few.
      The flight in the opposite direction followed a couple of years later, with a nearly myopic focus on “core competencies” that evolved in the 1990s, resulting in many airlines eventually shedding services considered non-core. These developments were by no means linear or uniform; however, they spawned a slew of new organizations, which, while starting nationally or regionally, have since expanded to become global in scope, as is the case with some of the ground handling companies.
     HACTL (Hong Kong) started operations in 1976; Swissport was founded in 1996 and acquired Servisair in 2013; Fraport was incorporated in its current form in 2001; Aviance emerged in 1999; AMR eventually became WFS; DNATA went global and operates as Toll/DNATA in Australia while ASIG grew incrementally and expanded worldwide, and there are too many others to name individually.
Swissport Tanzzania     These ground handling companies have been around for two decades or longer and perhaps nowadays only graybeards still recall a time when airlines used to self-handle cargo. Frankfurt Airport is not unique in actually having handling companies dedicated to building up and breaking down cargo, and another unrelated handling company servicing the airside, i.e. ramp operations and loading/offloading aircraft.
     It is perhaps timely to take a look at what this has done to the airline cargo business when cyclically, yet again, the focus is on chronically bemoaned excessive dwell time. There doesn’t seem to be a single, one-size-fits-all, answer, opinion, or practice among airlines when it comes to this subject. One the one hand, having a vendor/customer relationship between airline and ground handler can bring benefits based on a structured SLA (service level agreement) and also financial predictability. On the other hand, ground handling companies service multiple airlines and are expected to indiscriminately provide the same quality and attention to each. That at least is the theory, but the results vary. The counterbalance is as always in the detail—it isn’t unusual, for example, to see ground handling staff dedicated exclusively to each customer airline’s IT system because the airline insists its system needs to be used to process its cargo. This is at a time when there are a number of highly successful handling systems in place, which interact electronically with airline cargo systems—yet the customer is king!
     If one where to examine some of the typical problem areas in the airline/handler relationship, primarily as it relates to either added effort, or more importantly, what may impact dwell time, what comes up is the interdependence and timeliness of data entry, message exchanges for shipment status, and ULD control. Waiting times for customers’ trucks delivering and/or picking up freight are also entirely controlled by the handling company.
     Is the complexity and lack of direct control therefore, to an extent, a self-created problem by the airlines? Is it too late to change? One can examine what various carriers are doing in this respect; Delta Air Lines, which carries cargo solely in the lower decks and bellies of passenger aircraft, maintains a mixed environment, with handling agents in most network locations except its largest operation, the Atlanta hub, which has been self-handling its cargo and that of its SkyTeam partners since soon after Neel Shah and Ray Curtis were brought in from United to take over in 2008. Delta also has its office staff at several airports processing cargo documentation in conjunction with a handling company performing the physical cargo processing in the warehouse and airside.
     In a 2006 FlyingTypers article titled “Dolan Gets Upped-Talks About Change” Scott Dolan, President-United Cargo said:
     “In June 2003, United Cargo began outsourcing of our largest domestic warehouses—including those at our hubs. This was an initiative that not only saved about 80 million dollars annually, but also enabled us to significantly improve service to our customers by implementing more robust metrics and tough service-level agreements with our vendors.”
     Dolan went on to say: “I have to admit; we had a rough start in the first year because we did not do the work necessary to be successful. You need to have documented processes, metrics, SLAs and a reward & penalty system in place. However, we had a traditional arms-length vendor-client relationship, where feedback on service was based heavily on crisis management and anecdotal failures with our most vocal customers and sales people.”
     That turned out to be an understatement, with Swissport initially winning, then losing United, and customer issues persisting to the present day; however, matters going forward are now in the very capable hands of Jan Krems.
henrik ambak     According to Henrik Ambak, vice president Ground Services at Cargolux (an all-cargo airline), “In principle we believe outsourced handling remains beneficial, even for hubs, as internal units will typically not feel the competitive forces required to keep them as fit as possible, be it in terms of customer service or cost effectiveness. Over the past twenty years competition has in many places brought a substantially lower unit cost, in particular seen against the increase in labor costs experienced in the same period. The challenges we have with outsourced handling can largely be resolved if the airlines want to [fix it]. A key issue is structural, as many airlines have an un-helpful segregation between procurement functions and Operations/Safety/Service delivery. You typically get what you pay for, even in relative terms.” Asked about the amount of overall management attention required, Henrik said, “I personally spend around a third of my time on issues directly related to handling agents.”
     Especially at an all-cargo airline, the decision is straightforward, as no one else needs to be consulted.      For combination carriers, sometimes the passenger side—good, bad, or, indifferent—can dictate the choice of a handling company, with relatively little clout to address problems as long as the passenger side is happy.
     Another major carrier that operates both freighters and also uses space on passenger aircraft recently commented that while contracting at present with handling companies, they have been mulling over the idea of insourcing handling at some strategic locations.
     IATA plays a role in ground handling through the IATA Ground Handling Council, and the IATA Safety Audit For Ground Operations (ISAGO). According to IATA: “IGOM [IATA Ground Operations Manual] has been developed in response to industry demands for enhanced ground operational safety and damage reduction. IGOM is the core manual for all ground operations and provides standard procedures for the frontline personnel.”
     Henrik Ambak told us “The AHM [airport handling manual] will likely remain helpful, but of course the objective is to get the IGOM to productivity so we can slim down our own carrier-unique manuals and get ISAGO really going to finally bring the promised benefit.”
     What do you think?
Ted Braun


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Ningbo Port

     Labor unrest in China—somewhat commonplace in 2014—flared white-hot as the Chinese port of Ningbo was hit by strikes with thousands of truck drivers demonstrating. It all spun a bit out of control last Thursday.
     As usual, the dispute centered upon attempts by truckers to raise salary and haulage rates. Right now operations are now disrupted at the world's sixth busiest ocean port.
Map of Ningbo     Robin B. Finke, Corporate Ocean Freight manager, EMO Trans, told FlyingTypers on Friday:
     “It is difficult to know when the strike will officially be over, but we are seeing delays that are affecting our customers.
     “We’re taking this disruption one step at a time as EMO dedicates itself to keeping our customers and service partners aware of any service delays and changes in scheduled arrival dates.”
     Bonnie Xu, station leader for Ningbo at logistics firm BDP International, told Reuters on Friday the strike was preventing the company from delivering export containers into the port, and import containers from being sent out to customers.
     For the record, Ningbo handled 16.77 million twenty-foot equivalent units (TEUs) in 2013, an increase of 7 percent from the previous year.
Geoffrey/Flossie

 


CAL Plane

Offer Gilboa   “Winning by a nose” is a term used to describe a narrowly-won horse race, or as Israel-based CAL Group defines it, it’s what happens when you add a B747-400ERF all-cargo aircraft to the fleet.
   Offer Gilboa, owner and chairman of CAL Group puts it this way:
   “We expect our latest nose-loading, big side-door freighter to be ready for service in November, affording CAL a competitive ability to move any sized cargo anywhere in the world.
   “CAL has a clearly-defined corporate strategy designed to strengthen our company and enable growth, and this new aircraft is central to achieving our goals.”
More: www.cal-cargo.com.

 

 

 


SmartKargo Group
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Chuckles For August 25, 2014

 

Quotabe First Six Part 3

Part 3 of this series continues with some story clippings that share unique thoughts from the more than 150 exclusive and original feature-length articles created exclusively for FlyingTypers’ readers during the first half of 2014.


 Where Security Is Not A Rigmarole    Quote 1April 2, 2014
Frankfurt Germany’s Commerzbank Arena is all about business, as cargo security took center stage April 1 in a confrontation that suffered no fools.
     The local Bundesliga soccer team that populates the venue might have spent the day thinking about their future, but for the hard working, business-challenged air cargo industry, tomorrow hung on today, as "Recognize Risks – Build Alliances" brought Sabine Wiedemann, head of group security at Daimler AG Stuttgart, to emphasize the theme—the need for partnerships throughout the supply chain.

Hooray For Harald

Harald Zielinski     Harald Zielinski, head of security and environmental management, Lufthansa Cargo, presented "2020 in View"—security strategy for air freight in times when change is the only constant.      Shipper certification turned out to be less problematic than anticipated and all parties cooperated exceedingly well, staving off the shipment avalanche many feared would result. Lufthansa Cargo is building the most modern and efficient logistic center in the world at Frankfurt Airport, to the tune of more than €700 million Euro investment, due to open in 2020.
     Key components of LCAG's security strategy include staying close to its customers, maintaining quality, deploying eCSD, ACAS (in the U.S.), EU PRECISE in conjunction with ACC3 (certifying 9-10 Lufthansa Group stations by end 2014), and segregation of shipments from "green line" countries with security completed at the origin, thus eliminating the need for repeated security checks down the line.
     Regulatory bodies are challenged to streamline their respective processes. No single technology by itself satisfies security requirement; therefore, looking ahead to 2020, the operative word is to be proactive rather than reactive.
     Harald encouraged all participants in the air cargo chain to rise to evolving challenges and work together because 100 percent security remains elusive.
     A panel discussion followed with Wolfgang Ischinger; Ingo Rahn, executive VP global airfreight DHL Global Forwarding; Jörg Mendel, president LBA (Federal Aviation Authority); Gerold Reichle, director/head of department BMVI; Peter Andres, head of corporate security, Deutsche Lufthansa AG; and Franz-Josef Hammerl, director/head of department BMI (Federal Ministry of the Interior).
     The issue of the reciprocity principle as it relates to security was addressed; panelists were in agreement that cooperation is key at the EU level rather than bilateral agreement (as practiced vis-à-vis the U.S.) to reflect both internal and external security aspects. A strong and united European community offers a better platform for an integrated security regime. Delays for transit freight are a critical issue; complexity costs money, therefore, harmonizing security is paramount for all participants. The inward look reveals that the various EU member countries still have different regulations and interpret them differently; hence the starting point is clearly the challenge in Europe.
     Franz-Josef Hammerl disagreed with other panelists regarding transfer freight, for which he believes transit security controls are essential. Winfried Hartmann, FRAPORT/Air Cargo Club Germany, asked Herr Hammerl why credit card companies use trend analysis routinely to proactively identify suspect transactions while the security checks lag far behind, necessitating repeated transit security checks. Hammerl acknowledged that developments are moving in that direction; however, implementation will only be completed by 2020.
     Additional risks stem from high dependence on cyber security given the widespread use of IT and the related issue of data integrity. EU employs 100 inspectors to audit security measures; Peter Andres said he'd welcome the EU investing in at least 10 employees to work on innovation and security concepts because otherwise the industry would not be able to keep up with change and future challenges. Ingo Rahn commented that the industry is well integrated in the security discussions with the TSA in the USA and on the way in Europe, which is more fragmented. He lamented the insufficient global standards for security, recognizing the varying level of development across the globe, a constant challenge.

Ted

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Quotable 2An Evening With Jacques Ancher, April 28, 2014

He may have “departed the building” 15 years ago, but last Friday well-wishers gathered in a compact room as one of the truly great executives of air cargo—a dreamer and doer unrivaled in our industry—Jacques Ancher was finally inducted into the prestigious TIACA Hall Of Fame in Istanbul, Turkey. During the last decade of the 20th century, Jacques made history at KLM Cargo.
     While ocean trade slipped past the picturesque hotel windows, plying their way up from the Bosphorus to inland ports and back out to sea, and air trade winged toward jam-packed Ataturk International and (in a lyrical inspiration for FlyingTypers) in and out of the only airport in the world named for a woman called Sabiha, Jacques Ancher, a man who always loved air cargo, took the floor and hit “refresh” on the air cargo thought process in a simple, reasonable, and direct manner.

Geoffrey, Sabiha Jacques and Jan

From left: Geoffrey & Sabiha Arend with Jacques Ancher and “Wild Thing” Jan Meurer, together for the first time in Istanbul last Friday as Jacques joined the air cargo immortals in the TIACA Hall of Fame.


     Jacques spoke for just a few minutes and did so without notes—straight from the shoulder and right from the heart.
     “I am still fascinated by this business.
     “If you stand back and take the full view of air cargo, what is in clear focus is that this is a multi-billon dollar business driven by a large, dedicated group that includes the best, most prestigious companies in the world.
     “Air cargo is really and truly golden.
     “Although I have gotten along in years since we last spoke when I retired from KLM, I cannot understand why this beautiful cargo industry is still treated in some cases as a stepchild.
     “We must be doing something wrong,” Jacques Ancher declared, as the room sat up and paid attention.
     “I came here expecting to receive an award, not to say much more, having never attended any industry events or award dinners since I left 15 years ago.
     “But once again talking to my former colleagues and listening to your business scenarios and speeches here tonight, especially the laudatory comments about me, I must admit I am quite moved.
     “I wish that they were all true,”Ancher declared.
     “But looking out on many of the people here tonight, and how important this group is today in leading the industry, I still feel air cargo is heading in the right direction.
     “I also want to acknowledge the time many of us had together and how we tried to change the air cargo business.
     “But I’d like to also say that in retrospect there are two things I wish I had done differently.
     “I wish I had gone to both aircraft manufacturers Boeing and Airbus and asked them to deliver airplanes without cargo bellies.
     “The reasoning is that new airplanes without cargo capacity would make all of our lives much simpler.
     “Under that scenario, when an airline bought an airplane the decision to carry cargo would also represent a true commitment to the air cargo business.
     “The second thing I would have done differently is the way we attempted to change air cargo by organizational structure within our company, KLM.
     “If I did it again today, I would inspire change through innovation.
     “I believe the key to change is people.
     “Only through people can you change what you are doing.
     “If you can build innovation into your structure you have a chance to win.
     “In a broader sense, cargo needs innovation.
     “To build innovation you must allow your people to experiment with new ideas, to see whether they can work or not work.
     “If you do that you will change not only people’s outlook, you will also change air cargo.
     “I only have to look at my grandchildren, with their thumbs and fingers zipping across a tiny mobile keyboard on a cell-phone or PDA to know that innovation is accelerating change in the world.
     “Air cargo could benefit greatly by simply looking around and building its future by innovation.”
Jacques brought his own atmosphere into the room. You could feel the air change as he moved about the place softly, in subdued elegance, his words measured, thoughtful and full of promise.
     You felt the barometric pressure rising as he spoke.
     I am absolutely certain if he were displeased about something we might have felt the ballroom misting over last Friday.
     Too bad you were not there.
     Too bad we will not see his kind again soon, if ever again, in air cargo.
     Thanks Jacques.
Geoffrey /Sabiha


 

New England Cargo Club
Members of The Air Cargo Club New England August 14 at Suffolk Downs.

     It is one thing to gather with colleagues and schmooze about the business, our kids, and other life issues, whether at a trade show or just on a sales call.
     The human condition dictates that every once in a while, any of us can be overwhelmed by events.
     That is exactly what happened to Paul Carrabes, who has served the air cargo business for nearly 38 years and today is the Import Manager for Geodis Wilson in Boston, Massachusetts.
     Paul left work recently and discovered upon reaching home that the place he and his wife Patty had inhabited for almost 50 years was severely damaged.
     A freak tornado (the first in 60 years) smacked into his seaside community on July 28, tearing off roofs like tissue paper, and otherwise damaging more than 100 homes.
     But as the Carrabes’ family quickly discovered, The Air Cargo Club of New England would not allow them to stand alone. Doing what airport cargo clubs have always done best, they extended a helping hand via a fund raiser.
Michelle DeFronzo     So on Thursday, August 14, 2014, at Suffolk Downs, which donated use of the Topsider Room at the beautiful, old, 1935 race track located in East Boston, an auction was held to help raise money for Paul and Patty. It consisted of donated items from businesses, including hotel stays, Boston Red Sox tickets, river cruises, and cash donations.
     Michelle DeFronzo, Air Cargo Club of New England president, described the effort in simple, heartfelt terms:
     “The cargo community here was all in to help Paul and Patty and it was really great to see what we can achieve so quickly when we come together,” Michelle said.
     “Air Cargo Club of New England will also make a contribution to the Revere Tornado Relief Fund, to show our love and appreciation in some way for everyone impacted by this terrible storm,” Michelle added.
     Additional donations can be sent to Air Cargo Club New England, PO Box 395, East Boston, MA, 02128 .
     For more information and to attend a meeting of this great club: www.aircargoclubne.com
Geoffrey

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