There is a high, stark white wall Ashwin Bhat faces from his desk as Head of Cargo for SWISS International Airlines in Zurich, Switzerland.
     Just over his shoulder, a floor-to-ceiling window reveals the outside neighborhood and the ensuing seasons.
     But the white wall offered Ashwin a unique opportunity to forge a personal window on the world, so he took it.
     He placed a giant and colorful map of the world on his white wall, which may not be so unique, as business offices go.
     Lots of people with the kind of global responsibility that Ashwin shoulders include a map of the world in their office scheme.
     “I always like to loosen up the conversation by saying something like:
     ‘Let’s take a picture in front of your territory,’ and it usually works,” he says.
     Ashwin also collects artifacts from his travels for Swiss WorldCargo; right now the collection is rather amazing and tells its own story of the growth, development, and keen understanding of an air cargo executive who climbed the ranks and appears to have no fear about succeeding a widely popular Oliver Evans.
     Ashwin Bhat has a plan, his eyes are on the prize, and every time he is in his office we imagine he is thinking about new worlds to conquer.

Up Against The Wall at headquarters Ashwin Bhat is flanked by members of his executive team. To his right is Alain Guerin, Head of Cargo Marketing and to his left is Urs Stulz, Head of Central Services Cargo.

The Year That Was

    “Our corporate results were excellent for 2015—record breaking, really. As an airline we had the third best report in history and for that we have to thank all our customers both passengers and cargo.
     “On the cargo side, the numbers were not so good with some reasons.
     “Firstly, our business was impacted by two external factors in 2015.
     “The decision of the Swiss national bank to peg the Swiss Franc to the Euro meant that when the Euro collapsed from 120 to 101 we were stuck flying with our usual high load factors; we could not compensate selling one Euro and getting one Swiss franc in return where previously we were selling one Euro and getting 120 Swiss Francs in return.
     “In other words, in 2015 the money conversion alone—where close to 80 percent of Swiss WorldCargo revenue is in foreign currency—accounted for about 50 percent of our decline during the year.
     “The other factor that impacted 2015 was the artificial first quarter uptick everyone experienced due to that U.S. West Coast dock strike, which drove unnaturally high numbers our way.
     “Unfortunately, for the remainder of 2015 business trended downward, with everything from yield to surcharges under tremendous pressure.
     “So our results for 2015 did pale as compared to 2014, a year that was one of our best cargo performances ever.”

Looking Ahead

    “Now we are advancing our plan and look ahead to our offering for 2016.
     “I can say if somebody out there can forecast this year, lots of luck; what I can see this year will also be a challenge.
     “My take is that there is a new normal taking hold that we all have to deal with, and we have some exciting additions to our offering as well as upgrades.”
     As he speaks, Ashwin takes a long, deep draft from his cup. On it are some words to be remembered when speaking to Ashwin: “Attitude Is Everything.”
     Ashwin Bhat smiles and says, “We work at every point to stay close to our customers and let them now that we never forget how important they are.
     “The world is changing.
     “Right now in technology we are on the second half of the chessboard, where the growth is exponential and where what we knew was happening during the last five years is changing rapidly to something completely different ahead.
     “So in such a grey rather than black and white world business situation, especially in air cargo, we need to have a positive attitude with the drive and will to succeed.
     “Swiss WorldCargo is confident of who and what we are and that is exactly what made our cargo business successful in the first place.
     “The second factor for us is that we are fielding an excellent team worldwide.
     “The name of the game is collaboration—not confrontation.
     “Our customers know that they can expect Swiss WorldCargo to lead the way in product offering and value for money.
     “All of the above and more come out in the exciting plans we have for the future,” Ashwin Bhat said.

Back To The Future

    “Put simply, we are evolving as should be and working to be even more focused than ever before on developing and deepening our resolve to work into our strengths.
     “It’s all about value, plain and simple.”
     “For example, Swiss has an image in the marketplace of being a high-priced resource.
     “While it is true that we are very high quality and we take immense pride in our product offering, and our services are priced accordingly, at the same time we are not unmindful of market conditions.
     “We sell air cargo and are in a world market that is operating under certain limitations, which Swiss WorldCargo both understands and competes with.
     “Our offerings, products, and services are not only superior, they are also competitive.
     “In other words, people that do not approach Swiss, thinking that we might say ‘no,’ will be surprised to discover that we want their business and are willing to talk about it.”
     As Head of Cargo, Ashwin Bhat is a member of the Board of SWISS International Airlines.
     “When it comes to running the airline, cargo has a seat at the decision-making table for the entire enterprise,” Ashwin Bhat said.
     Little wonder that today air cargo accounts for about 16 percent of the total throughput of the airline.

Excitement As B777s Add Services

     “Swiss adds new B777-300ER services into Los Angeles in May 2016, offering 25 tons of uplift.
     “We have always flown with a high load factor (80 percent); even in a down market there is demand for our services,”Ashwin Bhat said.
     Swiss deployed its first Boeing 777 on regular long haul flights from Zurich to New York JFK from February 21 four times weekly, then switched to daily Montréal services on March 27.
     In mid-April, the B777s will add Hong Kong services, a route well suited for the aircraft, followed by Los Angeles (June), Bangkok (July), and then San Francisco and Sao Paulo.

The Experience So Far

     As the conversation wound down, Ashwin Bhat made the point that while remaining vigilant and ready for every opportunity, the work has also been a bit of an internal consolidation exercise.
     “Much of my work has been with the team, working alongside my people, developing ideas and strategies.
     “I like to be outside my office working alongside and amongst the people here in Zurich.
     “You learn about things in the day-to-day closeness of working together.
     “Collaboration is fine, but we need to virtually integrate our systems to create a seamless experience for our customers.
     “I think there is much to be considered from the start-ups of today and especially from the culture of bringing change faster.
     “A good idea in 2016 that takes until 2018 to implement is no longer acceptable in a world where changes are often put into force overnight,” Ashwin insists.

Up Against The Wall

    “Sitting in my office at my desk one day looking at the blank white wall that lines one side of this room, I thought a bit about the canvas I have been given, leading the cargo fortunes of a great and storied international airline.
     “Of course, as we all know, air cargo is about people, so I thought this wall should represent the world we serve to bring a sense of the global village into our headquarters.
     “For example, the blue bowl on the wall with the image of fishes inside is from Hong Kong, and it says that everything you want in life should be yours in abundance and should overflow the bowl.
     “The horses pictured here were sent from our station in Singapore: ‘Let your hopes and dreams have the speed and strength of galloping horses.’
     “The Spear from Kenya symbolizes determination and resistance that the native tribes employed to end the colonial era there.”
     “A small U.S. Presidential Seal on the wall sent from (where else?) Washington, D.C., proclaims that this is the enclave of ‘the commander in chief,’” Ashwin laughs.
Geoffrey

    Taiwan-headquartered China Airlines is hoping free trade agreements under negotiation or already in place and high demand for niche cargoes and sports equipment will boost cargo demand as 2016 unfolds.
    CAL will introduce two B777s and four A350s this year; the B777 will fly the SFO, LAX, and JFK routes while the A350 will fly European and Australia/New Zealand routes. The capacity additions will mean overall cargo capacity is expected to grow by 2-3 percent during the year, but according to Jeremy Chang, Vice President of Cargo Sales & Marketing Department, there is room for some optimism this year, despite the barrage of bearish economic forecasts and indicators released recently.

    “The 12 member nations of the Trans-Pacific Partnership (TPP) reached an agreement on October 5, 2015, to remove more than 10,000 import/export tariffs and other non-tariff obstacles,” he said. “This is expected to help increase Japanese exports of automobiles and automotive parts as well as boost the imports of textiles and exports of clothing from Vietnam.”
    Chang told FlyingTypers that the looming Rio Olympics would also boost exports of specialty clothing and sporting footwear from Southeast Asia and he was optimistic about demand for uplift of semiconductors, not least into Taiwan. “Semiconductor Equipment and Materials International (SEMI) forecasts indicated that capital expenditure by the global semiconductor industry would continue to grow in 2016,” he said. “As Taiwan has the world’s highest capital expenditure, CAL is therefore bullish on demand for shipping of imported machinery and equipment from the U.S, Japan, and Europe to Taiwan.”
    However, Chang said the parlous state of the global economy as well as the slowdown of Asia’s manufacturing sector meant that export growth from Taiwan was expected to flatten out during 2016. “International institutions—the World Bank, OECD and IMF—have all lowered their forecasted global economic growth rates for next year,” he explained. “OECD also indicated that global trade growth has now dropped to global economic recession levels. Fortunately, the increasing global popularity of sports and recreation, as well as growing demand for electric vehicles, mean that Taiwan’s functional textiles and electric vehicle components will become key drivers of air cargo exports.”
    CAL also expects to benefit from its sea-air agreement with leading container line Yang Ming Marine. CAL signed an MOU with Yang Ming Marine in mid-November to form a “Sea-Air Grand Alliance.” The two companies then further expanded the strategic partnership to include Chunghwa Post last December in an effort to profit from the growing web commerce market by offering a new door-to-door delivery service.
    “With the addition of Chunghwa Post, we aim to expand into the segment where bulk container shipments of goods ordered on major online shopping platforms are stored and processed for door-to-door parcel delivery,” said Chang. “Moreover, we plan to establish a joint online shopping platform that is scheduled to be introduced in April next year.”
    The Yang Ming collaboration consists of three services: “Cargo-to-Post,” “Joint Sea-Air Freight” and “Joint Air-Sea Freight.” Customers using “Cargo-to-Post” are able to ship ocean cargo from China to Taiwan where postal mail tags are attached before the cargo is exported via air cargo to the U.S. The “Joint Sea-Air Freight” product sees cargo from SE Asia and China transported by sea to Taiwan and Dubai before being sent by air to the U.S. and Europe. The “Joint Air-Sea Freight” service will see European/American cargo shipped by air to Taiwan and then transshipped to SE Asia by sea.
    “The conversion of Chinese cargo to postal service does not incur additional tariffs because the cargo to be transshipped by sea will enter the dedicated transshipment warehouse at Taoyuan International Airport,” explained Chang. “The mailbag tags will be added under the supervision of Customs or dedicated personnel. The converted mailbags are then exported directly by air. The joint sea-air/air-sea cargo is transported by bonded trucks to the bonded zone for transshipment so there are no additional tariffs either.
    “The joint freight services not only offer customers additional shipping options—for example, the cost of shipping is lower than air cargo and shipping time is shorter than sea cargo—but are also a response to the growth in the export of Chinese cargo arriving for transshipment by air before being exported as mail bags. This will help with the delivery of foreign cargo around the world through the postal system after they arrive in Taiwan for transshipment.”
    Chang said the overall growth in demand for air cargo had been limited in the second half of 2015 due to continued weakness in the Asian manufacturing sector and lower-than-expected throughput from air cargo-related industries.
    Although full year volumes handled by CAL had not been released when FlyingTypers interviewed Chang, he said expectations were that volumes growth had been positive. “Growth in international Freight Revenue Ton-Kilometer (FTRK) is expected to reach 2-3 percent due to CAL’s continued optimization of our capacity allocation and development of potential market sources (e.g. changing the European transshipment hub to Dubai [DWC], the addition of Shenzhen [SZX] as a freighter destination, and additional freighter flights to Tokyo, Hanoi, and Ho Chi Minh City).   
    “We have also strengthened our collaboration with international couriers, SkyTeam Cargo, and sea freight operators to develop new courier sources and joint sea-air freight business opportunities,” he said.
    Chang said one of the bright spots last year was the performance of the Transpac lane, which was “outstanding,” not least because of the cargo backlog at U.S. West Coast ports between late 2014 and 2015 Q1 driving up demand for charter flights between Asia and the U.S. and also pushing up U.S. shipping prices.
    “Due to cargo owners shifting from sea to air cargo, CAL dispatched three charter flights carrying 3C cargo from Taipei to Seattle and one charter flight carrying French fries from Los Angeles to Tokyo. In 2015 Q1, CAL also dispatched 17 charter flights from Taiwan/Japan/Vietnam to the U.S.”
    The resolution of the West Coast port backlog saw the cargo market return to normal levels after Q2, though CAL’s Transpac cargo revenue grew moderately between September and November. “While the Thanksgiving holidays in the U.S. meant a reduction in Transpac cargo volume in the last week of November and the onset of the cargo off-peak season in December, CAL strengthened our collaboration with international integrators on courier sources to improve unit revenue and loading,” he said. “This helped to alleviate the impact from slackening market demand.”
    On European lanes, overall cargo demand remained flat last year due to the slow recovery of the economy and manufacturing sector. “Measures such as the switching of transshipment hub to DWC, reducing of freighter capacity as necessary, and operating 777s with large holds for FRA, however, should see the European lane outperform last year’s results,” he added.
Sky King

    Although it has often found itself—alongside its Middle East peers— caught up in rows with regulators and competitors (mainly in Europe) about how it has funded and managed its expansion, there is no doubt that Etihad Airways is a major star in the world of air freight even when markets are stubbornly slow.
    In 2014 Etihad Cargo recorded a 19.2 percent year-on-year surge in cargo revenue, which totaled $1.11bn, aided by a 16.8 percent increase in freight and mail volumes to 569,000 tons.
    Its cargo division produced a “standout performance,” said the Abu Dhabi-based airline, while industry veteran James Hogan, the carrier’s Australian president and chief executive, saluted Etihad Cargo, adding that it “has consistently outperformed the global market” and its “impressive 17 percent growth in freight ton kilometers in 2014 is four times the industry average.” High praise, indeed.
    Growth was a bit slower in 2015, but it has still been eye-catching given the disappointing growth in world trade and the bearish nature of cargo markets for much of the year.
    David Kerr, VP of Etihad Cargo, attributes the growth to the continued expansion of the airline’s global passenger and cargo network, and the addition of new passenger aircraft to the fleet, which have provided extra bellyhold capacity.
    “We have also rolled out new cargo products designed to meet the specific needs of customers, and the strong export and import demands between financial centers and key emerging markets,” he told FlyingTypers.
    “During the first half of the year the airline launched new passenger services to Kolkata, Madrid, Entebbe, Edinburgh, and Hong Kong to complement our existing global network, enabling Etihad Cargo to extend its reach and offer bellyhold capacity to new routes in India, Africa, Europe, and Asia.
    “Last year we also launched Tempcheck, a new cargo solution created to ensure the integrity of all temperature-sensitive pharmaceutical and healthcare products as they are transported around the world.
    “As part of the Tempcheck introduction, we upgraded our temperature controlled storage facilities in Abu Dhabi and installed purpose-built facilities to support the new venture. We are continuing to providing a range of active solutions from all major industry providers, including recognized providers such as Envirotainer, C-Safe, and Va-Q-tec.”
    Etihad currently operates a fleet freighter aircraft to 38 destinations on its passenger network, while its freighter-only routes serve key cities around the world including Bogotá, Chittagong, Dar es Salaam, Djibouti, Dubai World Central, Eldoret, Guangzhou, Hanoi, Hong Kong, Houston, Kabul, Miami, Sharjah, and Tbilisi.
    “We’re witnessing new trade patterns from emerging markets such as China, Vietnam, Bangladesh, and India to Africa via our hub in Abu Dhabi,” said Kerr. “We are perfectly positioned to take advantage of those trends through our strategic location and with new long range aircraft being added to the fleet.”
    An additional two B777Fs are due to join the fleet this year, joining its current freighter roster of three Boeing 777Fs, three Boeing 747Fs, and four Airbus A330Fs.
    Cargo operations will also be aided when Abu Dhabi airport is upgraded. “The Midfield Terminal project is due to complete in 2017,” said Kerr. “We are building for the future here and that is why we are currently investing in a new cargo terminal in Abu Dhabi to help create an even larger global freight hub.”
Sky King