While air cargo is making headlines in Shanghai this week, the most dramatic picture in China this month was of a military band conductor during the opening session of the National People's Congress at the Great Hall of the People in Beijing last week.
IATA World Cargo Symposium public sessions continue through Thursday.

     If the stated theme at IATA World Cargo Symposium in Shanghai is “improving the customers experience,” then so far, the mood of the majority of the assembled air cargo executives here has not improved.
     People showed up here in part to get a glimpse of where the industry is heading.
     Instead, the scene that unfolded could have been written by Jack Womack, whose novel Let’s Put The Future Behind Us about a Russian entrepreneur of the special kind and the obstacles he had to overcome made him famous.

A Matter of Translation

     The majority of people attending the WCS opening plenary gathering in the China ballroom of the Pudong East Shangri-La were surprised to learn that they would need translation devices, which were handed out by IATA staff.
     Since the “Deputy Mayor of Shanghai’ (who kept his greetings brief and vanished immediately afterwards, which made noting his name unnecessary) as well as Liu Shaoyong, (left) board chairman of China Eastern Airlines, and Jing Yiming, President, Shanghai Airport Authority addressed the audience in Mandarin, the translation devices fed the majority of the attendees a rough grist of what had been said.
     Slowly as the event kicked off, the assembled cargo executives removed their headphones and turned their attention to their I-Phones, BlackBerries, and other mobile devices—not a good sign.

Lost In Translation?

     While Mr. Shaoyong acknowledged the challenges air cargo was facing, particularly in China, and bemoaned the bygone “long golden age of air cargo,” he focused on what he called “bottlenecks for the industry” and called for a “modernization of outdated business processes through IT.”
     Mr. Shaoyong certainly had his facts right, but he may have failed to explain the complexity of issues at hand—or else these subtleties were lost in translation:
     For example, his explanation that “air cargo industry is not isolated, but is part of the supply chain and in for a win-win future” puts words together without really saying anything.
     Maybe such phraseology is still acceptable at a Chinese board meeting, but the audience of the world’s cargo executive clearly expected more.
     Mr. Yiming (right) in turn promoted Shanghai as a cargo hub of excellence, highlighting the advantages of a free trade zone and PVG’s recent successful wooing of UPS establishing a regional hub there.
     In essence, the message brought forward by the Chinese speakers was: Give us your business, but on our terms.
     One subject that was not touched by the early speakers was the growing shift back from outsourced production in China to other parts of Asia, Eastern Europe, and Mexico—and the reasons behind it.

Mikuriya Talked Experience

     Those immersed in conversations via their mobile gadgets were shaken when Secretary General of the World Customs Organization Mr. Kuriko Mikuriya took the stage, because Mr. Mikuriya had both something to say and said it well.
     Outlining lessons learned from the 2010 Yemen incident and highlighting the need to share trade- and transport-related information for security purposes, Mr. Mikuriya emphasized the importance of e-commerce and the need for customs regulations adapting to the need for speedy clearance and release of goods empowering the consumer, which was a statement directly targeting the topic in question, “Improving the Customer Experience.”

Tyler On Message

     IATA Director General Tony Tyler’s address to the WCS audience was less predictable than one might have anticipated.
     While Mr. Tyler acknowledged China’s role as a main driver of growth in air transport, he insisted that air cargo must keep itself at the forefront of business transformation.
     Elaborating on current issues in the air transport chain, Mr. Tyler highlighted the issues pertinent to the transport of Lithium batteries by air and emphasized that the “safe handling of Dangerous Goods would continue to be a number one priority of IATA to ensure both a safe and secure air transport environment,” while admitting that such a safe and secure regimen does pose a considerable global challenge when considering the impact of Lithium batteries because of “the worrying issues with willful non-compliance” on the side of some stakeholders, in particular shippers.

IATA Economic Outlook

     The economic outlook delivered by IATA’s Senior Economist Julie Perovic was actually even more predictable than could be reasonably expected.
     Anyone reading air transport briefs would have been able to recite the headlines she gave by heart:
     “Cyclical gains but challenges and risks remain,” “a $50-per-barrel drop in crude oil prices compared to 2014,” and “a strong economic upturn would really help”—hardly news at this point.
     The forward-looking comments were also less than news: “economic cycle is positive but weak albeit the air cargo industry benefiting from a cyclic upturn;” Ms. Perovic reiterated that “performance by region is uneven” but that “asset utilization had improved, although considerable new capacity (predominantly on the passenger side) still continues to arrive.”
     “Yields continue to decline,” said Ms. Perovic, adding, “air cargo is likely to get cheaper” followed by the fact that air cargo had lost 5.4 percent in volume to the maritime sector compared to the previous year.
     While one would have expected some form of IATA Action list to combat the worrisome trends of declining yields and increased capacity, none followed—instead, Ms. Perovic moved to what she called the “threat of growing trade protectionism.”
     While she hinted that the “economic backdrop was improving”—with ASPAC (except Japan), MEA, and Africa leading growth and Europe and Japan lagging behind, she explained that the “heads of cargo [of IATA member airlines] were positive about demand.”
     How that fit in with declining yields and new capacity was not further explained—likely, because IATA may have learned from past experiences not to make predictions about the future since these tend to be off track.

How Are We Doing?

     Part of the opening plenary was Glyn Hughes’ update on IATA’s achievements on past promises.
     It is fair to say that IATA worked off their agenda items and delivered to a large degree, although Mr. Hughes’ statements clearly lacked “the vision thing.”
     With a focus on Dangerous Goods and Pharma regulations, we learned IATA has undertaken a much needed modernization of its outdated Cargo Agency Program.
     A new MoU with The Universal Postal Union (UPU), enhanced ULD Guidelines (delayed because of IATA’s 2009 firing of its former manager, ULD Standards), CO2 reporting tools together with Security-CSD and e-CSD with a “transformation of the air cargo industry’s facility capabilities matrix,” and the ACI European Union ACC3 Secure freight updated was included in Hughes’ ticking off of the IATA “mission accomplished” list.
Don Vito

Exclusively In FlyingTypers—In case you missed this.

     As you read this a considerable number of time zones away, most attendees of the WCS have slept off their jet lag and attended sessions of the IATA World Cargo Symposium in Shanghai—most delegates going for the open-plenary ‘getting started’ sessions of this three-day event; some for the closed ‘invitation only’ sessions, and some just taking the opportunity to do some extensive networking while the opportunity presents itself.
     Maybe it is because it is still early in the year, but there is something to be said for many functionaries from all aspects of the air cargo business together at one location, and in many cases measurable results must be brought home to justify the considerable time and expense of travel and lodging oneself halfway across the globe.
     Were he here making a movie, film director Sergio Leone would probably call the sessions a mix of the good, the bad, and the mediocre:
     At the top of the afternoon session was Tom Windmuller, IATA SVP APCS, with panelists Robert Mellin, head of Distribution and Logistics, Ericsson; Alex Xu, Supply Chain director of Lilly Pharma, Suzhou; and Chris Welsh, secretary general of the Global Shipper’s forum.
     While most attendees of this session were still sorting business cards collected during lunchtime and beforehand, as well as digesting the “networking and lunch,” the backdrop to anticipation and in some cases apathy was a rather mediocre discussion.
     While Robert Mellin raised some valid points about the “customer experience” seen from the shipper’s end of the supply chain, these points were hardly new and had been dragged out in public before:
     Getting operators, forwarders, and shippers to innovate together and significantly increasing the degree of collaboration between all parties concerned, as well as Mr. Mellin’s challenge that forwarders should grant shippers more access to operators and the succinct need for jointly optimized processes all across the supply chain involving all stakeholders, thus creating the potential for gains for everyone—it all drew little to no reaction from the audience.
     Maybe it was the time zone or lunch, but this session just seemed flat.

Marco Seabury Scores

     Heads snapped to attention when Marco Bloemen, SVP of Seabury Group, delivered insights about the impact of recent key trends to the air transport industry.
     While probably based on the same data and facts most everyone claims to have, to a large degree based on the IATA WATS, the manner in which Mr. Bloemen crossed the t’s and dotted the i’s seemingly convinced his audience that this guy had a message, so listen up.
     Mr. Bloemen had identified three main factors in the business today: The recent drop in fuel prices, parked freighter aircraft being put back into service, and the air cargo industry being slated for growth again.
     While IATA is forecasting a drop of fuel prices by 14 percent, the International Energy Agency IEA forecasted a 45 percent drop, which is probably also a good indicator about the accuracy of IATA’s economic forecasts.
     Mr. Bloemen predicted that the drop in fuel prices would most likely offset the yield losses and developed a number of alternating scenarios.
     Likewise, lower fuel prices will stimulate freighter contribution since the impact of dropping fuel prices is more positive for the freighter business than it is in the bellyhold-only sector.
     In addition, Mr. Bloemen outlined air cargo will most probably see freighters currently in storage put back into service, explaining that the capacity recently introduced to the market is made up of two-thirds bellyhold-only capacity and the rest attributable to new freighters and new conversions.
     As there are currently 110 widebody all-cargo aircraft in storage, to bring them back into service may have “a limited impact”—the equivalent of sixteen 747 freighters would roughly translate to a 1% capacity increase, and the return-to-service of obsolete aircraft like Boeing’s 747-100 and -200 types is unlikely while the -400’s are still the backbone of the cargo industry.
     Since capacity in storage fluctuates with the market growth this is more or less an organic mechanism.
     As for the air cargo sector being slated for growth again, Mr. Bloemen noted that four out of seven additional cargo tons in 2014 came from China, and that players such as Zhengzhou’s Foxconn factory were continuing to be a major driver of the Chinese mobile exports.
     However, Mr. Bloemen questioned whether this growth in China is a sustainable one or more a temporary bubble—the unsaid byline being that a shift in production to alternate locations would likely take time, but is taking place.
     So while we have accounted for the mediocre as well as the good of this WCS evening session, there still was, we dare say, a less than spectacular session.

Déjà Vu All Over Again

     

A panel discussion about “Matching supply and demand and meeting customer expectations,” chaired by Enno Osinga SVP Cargo and vice chairman at TIACA, with hopeful panelists like Oliver Evans, Swiss World Cargo chief cargo officer; James Woodrow, director Cargo for Cathay Pacific; and Michael Steen, CCO and EVP of Atlas Air seemed to many in the audience like it was on life support.
     Probably the most charitable thing to be said about this session is that although the panel sounded recorded, it was indeed live, although it bore an eerie resemblance to statements put forward by pretty much the same players during the October 2014 TIACA Air Cargo Forum.
     While the air cargo business needs prominent figureheads and clear thinking, too much thought process and wordage is expressed over and over again, sending identical messages to the industry.
     The net result is that this ongoing discussion effectively obliterates the need for multiple major trade events and waters down the distinctive identity of these conferences.
Don Vito

If You Missed Any Of The Previous 3 Issues Of FlyingTypers
Access complete issue by clicking on issue icon or
Access specific articles by clicking on article title

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 ©2015 ACM, Inc. All Rights Reserved.
More@ www.aircargonews.com

100% Green