While everyone waxed rapturous over delivery of the first of the new B767-300 jet freighters in Amazon colors two weeks ago, a reported Walmart $3.3 billion dollar bid for Jet.com went largely unnoticed.
     On Monday Walmart announced that the acquisition is moving forward. The bid set the retailer as a major competitor for Amazon.
     While Jet is still somewhat unproven and is losing millions of dollars a month, this acquisition could still prove to be the next big thing.
     One thing is for sure: In the latest fiscal year reporting, Walmart e-commerce efforts have been a puny $13.7 billion annual revenue versus $79.3 billion in product sales for Amazon.
     Currently Amazon accounts for about half of the annual e-commerce growth and is growing at more than 30 percent annually according to reports.
     Walmart catching Amazon in the near term is quite impossible, but “once bitten twice shy” seems to be in play here as Walmart sees the mountain and is not shy about starting the climb.
     What Walmart likes about Jet, is Marc Lore, an executive who thinks e-commerce; a new, untapped customer base; and Jet.com's pricing focus and technologies, allowing for a lower, retail-driven philosophy offering additional discounts based on product availability at various shipping locations.
Geoffrey

Surcharge Summer . . . As the airlines raise not only rates but also certain surcharges, blowback has been predictable.
   FT spoke to a shipper in Germany last week whose DG consignment had been rejected at 175 Euro per CAO-DGR plus 5 Euros per package.
   By comparison, the so-called “DLH Standard in Germany,” which has been the benchmark most shippers follow, is 120 Euro for CAO and 3 Euro per package.
   CV has introduced a security fee of 0.08 Euro across its network.
   This appears to be a smart move versus CX, which will introduce a new fuel surcharge adjustment effective September. CX has a tough-sell pegging surcharge to fuel during a time when it is common knowledge that kero costs are at rock-bottom levels.
   Due to many diverse drivers—not the least of which is burgeoning available capacity—current rates see shippers and forwarders making money but airlines left holding the bag, searching for hefty enough profits to deliver a market-appropriate ROI on their expensive cargo operations.
   IATA raises this issue, and has it right.
Viktor

Air New Zealand is pictured at Shanghai Pudong International Airport as the carrier assesses a number of Chinese cities as potential destinations that could be added to the carriers' PVG and HKG services. Interestingly, adding Chengdu would be a route of 10,505km—slightly longer than Auckland to Los Angeles.

     Despite global declines in cargo yields, Air New Zealand is remaining startlingly competitive. In FY 2016, the carrier saw net profit reach NZ$338m (USD$242m converted at current conversions rates), an increase of 154 percent year-on-year. Its distance from global markets saw lower fuel prices contribute considerably to the gains, but operating revenue also surged. And, more significantly, cargo volumes were up 9 percent, yield by 1.6 percent and revenues by 21 percent with growth particularly strong on Pacific long-haul services and into Singapore. Given that many carriers are reporting yield, revenue and, in some cases, also volume decreases, the results were outstanding.
      Rick Nelson, Air New Zealand’s General Manager Cargo, said the airline’s freight business had, like most carriers, been impacted recently by global declines in cargo yields. But he insisted that upgrading products rather than cutting prices and services had helped retain competitiveness.
      “Air New Zealand has remained competitive in the markets,” he said. “Our diversification of cargo product globally, with a focus on high quality products and services, through understanding customers’ needs and developing appropriate solutions, has helped reduce the potential impact on yields.
      “Understanding customer needs and creating appropriate solutions which add value will continue to be fundamental to our cargo success moving forward.”
      Of course, the airline has also benefitted from the economic performance of its home market, which provides a steady supply of cargoes for uplift. “New Zealand is a primary producer of perishable products and innovative manufacturing,” said Nelson. “New Zealand has a strong reputation for high quality products and, as a result, we have seen increased volumes of cargo.
      “Equally, as New Zealand establishes or enhances trade agreements globally, we see an evolving and growing level of cargo.
      “While the economics of air cargo continue to be put under pressure, the potential for trade to increase to the benefit of many countries should have a positive impact on cargo volumes in the short and long term.”
      Air New Zealand has a fleet of 106 passenger aircraft at present with a committed investment of around $2.2 billion in new aircraft over 2017 to 2020. Nelson said the introduction of new Boeing 787-9s has enabled capacity increases into key markets, such as China, further supporting trade to and from New Zealand.
      “A new ULD handling system, which will shortly go live, is a significant investment in cargo efficiency and will further differentiate our Cargo Operations business from competitors and ensure a seamless import and tranship process for Air New Zealand customers,” he added.
      “Air New Zealand has also significantly invested in digital technologies, enhancing online national cargo booking portals and online support for agents.
      “As a result of our expanding network our global Cargo sales team has increased in size. We continue to invest in our people and in strong leadership development.”
      The carrier has also benefitted in the past year from expanding its network to include Buenos Aires, Ho Chi Minh City, and Houston. New services have also been announced to Manila and, in November, flights will resume to Osaka.
      “This expansion of our network has opened up additional direct gateways to our cargo customers and potential new markets for importers and exporters in the Pacific Rim,” he said.
      “Air New Zealand is continually looking at new potential routes or enhancements to existing routes, and consideration is always given to the impact these routes would have on cargo. South East Asia continues to be an area of growth.”
      Besides the addition of new routes, Air New Zealand has also been working hard to extend its ‘virtual network’ through strengthened relationships with alliance partners, giving access to more than 150 different destinations to customers. This virtual network has also benefitted from “significantly increased volumes” in the past 12 months, said Nelson.
      “With a good start and a strong growth documented in 2016, Air New Zealand is determined to see this through and has made further investments in digital technologies, enhancing national online cargo booking portals and online support for agents.”
Sky King

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     India is ready for the world: that is the message Mumbai International Airport’s cargo section sent out when it recently opened the doors of a domestic, common user cargo terminal.
      Constrained for lack of space, the new terminal on the Western Express Highway is a welcome addition. A short distance away from the airport, it boasts an area of 60,000 sq ft and has the capacity to handle 300,000 metric tons cargo annually.
      Domestic India cargo has been witnessing robust growth.
      According to Manoj Singh, Vice President of Cargo at CSIA, domestic volumes have seen 15 percent growth year-on-year in FY 2014–15.
      “In the current financial year (April 1–March 31), the volumes continue to go up,” the manager notes.
      “Despite the competition from road and rail transport, air freight tonnages have been going up largely due to e-commerce which, incidentally, comprises around 80 percent of the domestic cargo business of the airport.
      “CSIA and Singh are hoping that the new terminal will help boost domestic cargo business by around 8 percent,” he said.

Strength To Strength

      “Our objective is to strengthen our airport in all aspects.
      “In this endeavor we aim to be first in the country for any new initiative or innovation.
      “Also, space has been a major challenge for Mumbai airport, but we have surmounted this disadvantage through process efficiency and strategic planning,” Mr. Singh said.
      Detailing the domestic terminal, Manoj Singh notes that GVK Mumbai International Airport (MIAL), through its concessionaire Concor Air Limited, has set up the state-of-the-art terminal including truck docks with dock levelers, a dedicated cargo management system, and special handling facilities for perishable, dangerous, and vulnerable goods.
      The facility includes a comprehensive security infrastructure that included round the clock surveillance.

Squatters Flexes Innovation

      The paucity of land at the airport (anyone landing or taking off from Mumbai can see the widespread encroachment by squatters) forced the designers to go for an elevated cargo terminal building: domestic cargo flying to the airport is handled from the basement while outbound cargo is managed from the upper level.
      While most metro airports have lately focused on domestic cargo and have enhanced infrastructure and operations, Mumbai’s move comes on the heels of e-commerce giants in India announcing plans for India.

The Plan

      A study by ASSOCHAM (Associated Chambers of Commerce of India) put the size of the e-commerce industry in the country at more than $38 billion by 2016: a whopping 67 percent jump over 2015.
      The domestic e-commerce market is perceived to be the fastest growing in the world.
      Morgan Stanley estimates the market will bulge to $119 billion by 2020.

Amazon, Of Course

      The first off the mark was Amazon. Speaking at the U.S.–India Business Council Leadership Summit in Washington DC, where Indian Prime Minister Narendra Modi met U.S. business leaders, Amazon chief Jeff Bezos said that his company had decided to put $3 billion more into its Indian e-commerce site.
      A press release from the U.S.–India Business Council quoted Bezos, saying that Amazon “has already created some 45,000 jobs in India and continues to see huge potential in the Indian economy.”
      Homegrown e-commerce site Flipkart, for example, has received $3.15 billion from investors while Snapdeal has seen $1.54 billion coming in from Alibaba, SoftBank, and eBay.
      In fact, a couple of months ago Morgan Stanley reported Amazon was No. 3 with only 12 percent of the gross merchandise volume (GMV), behind Flipkart (45 percent) and Snapdeal (26 percent).
      While the three players have been investing huge sums to boost their respective logistics infrastructure, all of them use domestic passenger carriers to move consignments.

Planning Reality Check

      There are only two dedicated cargo carriers: Blue Dart and Quikjet.
      The new domestic terminal is just a part of Mumbai airport’s master plan for cargo. Mr. Singh notes that as 2016 progresses, the work schedule will be “in line with our planning.”
      “The master plan encompasses completed projects, including the Export Perishable Terminal, the Import Cold Zone, the Export Unitization Terminal, upcoming projects like the Export Heavy and Bonded Cargo Terminal as well as future projects like the expansion of the Export Perishable Terminal,” Mr. Singh concluded.
Tirthankar Ghosh

Vol. 15 No. 60
LIGHTBOX for August 8, 2016
Business Up Rates Challenged
Chuckles For August 8, 2016
Pride of the Nation
Letter to Lufthansa
Elevate Women Says Dhankar
Sweet Summer Farewell