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   Vol. 14  No. 39
Wednesday May 6, 2015

 

China Exports and Capacity Flatten Rates

     Deteriorating exports from China allied to an influx of capacity on ultra-large container ships are combining to put even more downward pressure on ocean liner spot rates on key East-West trades.
     Although most major Chinese box ports saw marginal growth in throughput in the first quarter (according to figures from the Shanghai Shipping Exchange), at the port of Hong Kong volumes have declined year-on-year every month since June 2014. March throughput was 13.5 percent lower than a year earlier.
     Most analysts had expected exports from China to show healthy growth in March, but instead they crashed 14.6 percent year-on-year. Exports from China have dropped for the last three months as economic growth rates have slowed. China’s imports were also down 12.3 percent year-on-year in March.
     Forward indicators are also poor. The HSBC China Manufacturing Purchasing Managers Index fell to a 12-month low of 49.2 this month, down from 49.6 in March, with new orders falling from 49.8 in March to 49.2 in April. A figure above 50 represents expansion and below 50 indicates contraction.
     The world’s second biggest economy now looks increasingly likely to fall short of the government’s 7 percent GDP growth target for 2015.
     All of which has been a major factor in rapidly declining ocean spot rates. The Shanghai Containerized Freight index fell almost 20 percent in just a week to $702.46 on April 24. Spot rates from Shanghai to Northern European ports sunk to a new low of $399 per teu on the same date and the index is now almost 70 percent lower than a year earlier and less than half the rate at which Drewry believes lines can break even on Asia-Europe services, even with lower bunker prices.
     Drewry believes that lines will struggle to push through General Rate Increases on Asia-Europe trades in such a depressed market. With more container ships due to enter the market, the analyst predicts that only a major upsurge in demand and/or the removal of capacity will see rates rebound on this key route.
     Chief Shipping Analyst at BIMCO Peter Sand said striking the right level of supply to match actual demand for transportation on Asia-Europe trades had proven impossible recently.
     “The re-activation of almost the entire idle fleet during the autumn, in combination with the continued inflow of new Ultra-large container ships on the Far East to Europe trades, has yet again developed a situation where overcapacity sours the freight market,” he added.
     Asia to the West Coast North America trades have also seen freight rate erosion. As April was drawing to a close, spot rates from Hong Kong and Shanghai to the U.S. West Coast were all negative versus a year ago and their declines were accelerating by the week, although improved flows via West Coast ports as an agreement between unions and employers looks likely have helped unblock this supply chain. Efforts by lines to increase rates in early April failed to find any market purchase. Annual contract negotiations with shippers are set to be a hard sell for carriers operating into the West Coast.
     The situation from Asia into the U.S. East Coast via the Panama and Suez Canals looks altogether more stable, with rates largely higher than a year ago despite some recent weekly losses. Not least this is due to the decisions of many shippers to avoid West Coast ports where possible—a case of once bitten, twice shy!
     However, despite the gloom, Sand is optimistic that rising exports from China and healthy demand from U.S. consumers can boost markets as the year progresses.
     “The Chinese manufacturing sector has been facing serious headwinds in 2015, with new orders declining three months in a row for the first time ever, according to Markit,” he said.
     “New export work fell too in March. Still, it is likely that absolute export levels are lifted again in the second quarter as purchasers gear up to the peak container season in the third quarter. If the supply side, by then, matches the demand side better, earnings should improve for owners and operators.”
SkyKing


Ioanna Chromopoulou and Alexios Sioris

   The head of Customs at Athens International Airport teams up with Athens International Cargo marketing manager as Greece continues its long but steady climb back from economic ruin.
   She has lengthened the Greek Customs Clearance hours, (until 10:00 pm) and Greek Airport Customs is “Always [open] on Sunday.”
Athens Stand 525   Here, both Ioanna Chronopoulou and Alexios Sioris are animated and excited as they describe projects they want to share with Air Cargo Europe attendees in Munich this week, including ongoing upgrades in the sea-air effort to build traffic for the Athens aerial gateway.
   “GDP inched up 1 percent last year in Greece,” Alexis said.
   “It is a modest gain, but a move indeed in the right direction.
   “We have a natural gateway ready and willing to do business,” he added.
Geoffrey/Flossie



Lena Boueri

     Sometimes the cargo business is about making a lot of money, other times it is about following others into the business.
     Every once in a while, you come across somebody who tells you that they want to build something and succeed in this business, and right away you can tell that it is a matter of the heart.
     Partner and Managing Director of Boueri Freight Services of Beirut, Lena Boueri had spent some years away from her native Lebanon, optimizing her great training and love of financials as a top-notch investment banker for JP Morgan, based in New York City’s financial district.
     For Lena, however, the fast track to the top of one industry resulted in a fork in the road, which led off in a new direction when her father passed away and left his Beirut-based company, Boueri Freight Services, in limbo with no one to succeed him at the top.
     Lena said that her brother and sister had no interest in Boueri Freight Services, but something inside of her, like that line in the Beatles’ song, said:
     “Get back to where you once belonged.”
     And so she did, returning to lead a company that her Dad began in 1972, just before the terrible Civil War took out the Beirut that many still longingly refer to as “The Paris of the Middle East.”
     “My Dad began this company when Beirut was on top, and all through the destruction and revival of the past years he stayed in business with great determination, market savvy, and a fine list of business partners in both ocean and air.
     “I just could not let the legacy of my father and the resource that is his very fine forwarding company go away,” Lena said.
     “Boueri is and has always been in my mind and in my heart.
     “That is just the way it is,” she said softly.
     Lena was at CNS Partnership a couple weeks ago, looking for a few good partners.
     Her financial background and sense for world markets have taught her that seeking the right connections will help accelerate Boueri forward.
     “We are a privately-held company.
     “Boueri is headquartered in downtown Beirut (the Boueri Building has two other branches in Lebanon and representation in New York).
     “We enjoy long-term relationships with global partners and agents worldwide.
     “We think our advantage is with the Boueri company’s recognition & brand awareness.
     “Driven by expertise and a highly knowledgeable workforce, our executive management (which includes myself and others here) is actively involved in every process, every day.
     “Boueri brings faster and more personalized services than the competition, including the same contact person for each shipment.”
     “We are all about service reliability and ethics,” said Lena.
     “We have a company-owned packing and consolidation facility.
     “Everything we do is driven by our a fully automated PO management and tracking system, which provides real time data, tracking, and reports,” Lena said, adding:
     “Maybe most importantly of all, we want your business!”
     Works for us.
Geoffrey
lena@bouerifreightservices.com


Great Traders—Lebanon Forever! Pictured at a New York city meeting in 1984 (center) the legendary Salim Salaam, chairman and chief executive officer, Middle East Airlines and far left Ansel E. Talbert, our executive editor with Geoffrey Arend, publisher.

Chuckles for May 6, 2015

“As great as 2014 was for network expansion, 2015 should be even more exciting as we add non-stop service between Dallas and Beijing, and between Miami and Frankfurt.”
     Call it poetry in motion or a sky full of dreams, but the biggest airline in the world is out to deliver the promise and seems to love every minute of it.
     “We will also introduce the 787 Dreamliner into our fleet in May, linking Buenos Aires, Beijing, and Shanghai via our Dallas hub.”

Joe Reedy
     As you might gather, Joe Reedy, vice president, Cargo Sales and Marketing and American Airlines managing director is upbeat as 2015 evolves and Air Cargo Europe takes off this week in Munich.
     “The strength of the dollar and the improving economic conditions in the U.S. are certainly helping to drive imports, particularly from Asia and Latin America.
     “On the flip side, we’re monitoring for signs of a weakened export market as we move forward.”


New American Airlines

     “Not to diminish what either carrier (US Airways and AA) had in the past, but being American Airlines Cargo today means access to the largest airline network in the world.
     “That’s a very powerful proposition and we are very excited about the solutions that the network can offer our customers.”


Best Surprise Was No Surprise

     “I wouldn’t say there was anything you would call a surprise leading up to our integration.
     “We worked extremely hard at preparing for the unexpected. Combining the two cargo carriers required incredible attention to detail and an intense focus on doing the right thing for our customers throughout the process.
     “If anything, it was a pleasant surprise to stand on the other side and see that we emerged from the process a stronger team, one that brings an incredible amount of experience to the table from both legacy airlines.
     “We’re determined to take that same level of focus and determination and apply it to improving many facets of our business.”


Trade Show Week In Europe

Air Cargo Europe AA Booth      “Air Cargo Europe provides an unparalleled opportunity to meet with senior decision makers at many of our most important customers.
     “ACE is also an excellent forum to discuss the most important issues our industry is facing today or will face in the future.
     “We want the world to know that American Cargo in 2015 is a dedicated global team enterprise which is completely focused on meeting the evolving needs of our customers; a world class network, which continues to grow; our fleet renewal program is bringing more cargo-friendly aircraft into service and helping us to grow our capacity to key markets.
AA Stand No 510      “Having just completed our annual visit and participation in Cargo Network Services, ‘The CNS Partnership Conference,’ held in Orlando late last month, we continue to believe that these industry gatherings benefit working together to improve the global supply chain.”


Building For Tomorrow

     “Last month, we opened our state-of-the-art pharmaceutical and healthcare cargo facility next to Philadelphia International Airport. “The facility brings over 25,000 square feet, designed to handle a wide range of temperature controlled shipments for our ExpediteTC° product offering.
     “This doesn’t garner a lot of attention, but one of the more positive aspects of the company’s recent success is that we have the opportunity to replace aging GSE.
     “Over the next several months and into next year, we’ll be able to provide new equipment at our busiest and most important cargo hubs, which will add up to increased productivity and reliability.”


Quarter Century of Service

Joe Reedy and John Vittas     Joe Reedy joined American Airlines in 1989.
     As he continues his twenty-sixth year at American, Joe recalls his good fortune to have “a chance to work with many great employees of American Airlines in cargo and also in the handling business.
     “From these experiences I knew I wanted to join American Airlines Cargo.
     “I feel very lucky to work in this industry and with such a great group of colleagues at American Airlines.”


Tomorrow Is Today

     “We are creating a team of highly skilled and motivated employees who are all energized by what lies ahead for our company.
     “American Airlines today is a new organization, lots of new airplanes, an invigorated customer focus, and great opportunities.”


Watch On Air Cargo

     “As an industry there is always more that air cargo can do to ensure its continued growth and importance as a transportation enterprise in the years ahead,” Joe Reedy insists.
     “Air cargo needs to engage and recruit from outside our industry to bring in new talent. One necessary step will be to move our industry towards digital solutions for the next generation—we can’t continue to rely on paper and phone calls.
     “From my vantage point the future of air cargo is clearly in our hands to win or lose.
     “At American Cargo we not only greet the future, we embrace it,” Joe Reedy smiled.
Geoffrey/Flossie

 

Suresh NairOman Air Takes Off

     Look up in the sky—it’s a bird, it’s a plane, it’s Oman Air!
     You might think Suresh Nair is a new kid on the block—the youthful head of cargo sales and marketing at Oman Air projects the image of an eager, dedicated young airline executive, driven by his unique role in the emergence of a major niche player on the air cargo scene.
     “In five years we want to be where Etihad is today,” Mr. Nair says with determination.
     “We are a medium-sized carrier that is putting great emphasis on air cargo, as we go about acquiring a wide-body fleet of cargo friendly, belly-loaded aircraft.”
     Asked if he would prefer to load passengers in the hold and put cargo on the main deck, as Oman Air currently serves 48 destinations via 30 aircraft from hub Muscat, Nair thinks for a second, gets the joke, and laughs.
     “By 2017 we will have 50 aircraft and by 2020 we will see 70 airplanes in the fleet consisting of B787, B777, and A330-300s going to an expanded menu of destinations.”
     It turns out Nair has worked at three airlines—SWISS, Etihad and now Oman Air.
Oman Air Booth No. 201     “I began in operations at SWISS, [then] moved into revenue management and really had my learning ground there.
     “Later I was part of the very exciting operations start up for Etihad Airways in India, spent some time in Abu Dhabi headquarters for six years in total at EY, and now am part of the great build up and emergence of Oman Air.”
     “My background in operations and revenue management offers a keen awareness of the key drivers in air cargo,” Mr. Nair said.
     “We are very aware of what needs to be done and as a small, service-driven carrier everybody pitches in to get the job done every step of the way,” he concluded.
Geoffrey

 

Jacques Heereman, Geoff, Sabiha, Jan Meurer     Why are these people smiling?
     Because they love each other, that’s why!
     If there is one good reason to trudge around a trade show, it is to see old friends.
     Which probably means we need to circuit these events more often because you never will know who will show up.
     Here, Geoffrey & Sabiha say “Hi and Happy Dutch Independence Day”(Yesterday) to good friends and Netherlanders Jacques Heereman, Inter Aviation Services and “Wild Thing” Jan Meurer at Air Cargo Europe.
     After a few hugs, recollections, and a bit of a tweet tweet, it was off in different directions for all four, with the thought, always: “We will be together again soon.” 

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