Excess capacity is forcing Korean Air to focus on niche markets, and seafood exports from North America are to the fore.
      After uplifting 1.5m tons last year, IATA’s latest 2015 air transport statistics, published July 5, ranked KE as the fifth largest carrier in the world after FedEx (7.1m), UPS (4.5m), Emirates (2.5m) and Cathay (1.6m).
      KE bolstered its freighter network last summer with three new services, including a Chicago-Halifax offering in August. The latter in particular is proving highly attractive, not least because of the Canada-Korea Free Trade Agreement (CKFTA), Canada’s first free trade agreement in the Asia-Pacific region, which entered into force on January 1, 2015.
      “The Halifax route from Canada has been expanded in order to meet the increased demand of lobsters in Asian nations such as China, Japan, and South Korea,” a spokesperson told FlyingTypers.
      “Especially in 2015, the volume of lobster from Canada to Korea rose over 50 percent compared to 2014 due to the implementation of the FTA with Canada.”
      Looking more globally, the spokesperson said excess capacity had impacted yields and rates for all airlines. “Korean Air focuses on developing high yield cargo such as perishable, mail, and pharmaceutical goods,” he added. “At the same time, we are maintaining close ties with regular customers to secure a base demand.”
      A key contributor to KE’s cargo revenue remains the USA/North America region. “Due to stable freight demands on both sides, the USA/North America region is a major market for Korean Air,” said the spokesperson. “Even without considering the U.S. West Coast port strike effect, it still remains the biggest market, accounting for over 40 percent of Korean Air’s Q1 cargo revenue.”
      But the upbeat assessment of the USA/North America region is countered by the poor outlook on European lanes. The spokesperson said there remained clouds over the European economy, concerns that have been enhanced since the UK decided to leave the European Union in its June ‘Brexit’ referendum.
      “In 2016, there is an increasing anxiety concerning the uncertainty over the European economy,” said the spokesperson. “The EU Commission forecasted Europe region growth of 1.6 percent, 0.1 percent lower than the previous year, which also impacted the air cargo market. According to IATA’s report, Q1 traffic volume on the Europe lane has increased approximately 2 percent compared to last year, and it will be difficult to see any drastic market recovery for the time being.”
      The spokesperson also predicted a gradual slowdown in the growth of air cargo volumes in the Asia region. “There are continuous demands for airfreight in the Southeast Asia region with global companies building additional factories in Vietnam,” he said. “However, global trade slowdown seems to be much worse than expected and unfortunately, a positive outlook seems unlikely.
      “The decline in Chinese air cargo volume bound for the Americas and Europe region is also especially worrisome.”
      As for new services and investments for 2016, KE plans to introduce more cost efficient B777 and B747-8 freighters, replacing older B747s and resulting in a much younger and more cost efficient freighter fleet. “We will utilize these new freighters to our long haul routes first to make the most of cost efficiency,” he said.
      KE is also continuing to expand its network to new markets such as Vietnam, Mexico, and Peru to find new growth engines. “And this year, we are looking at Columbia, Ecuador, and Iran as our next target market to further expand our network,” added the spokesperson.
Sky King

Cambodia may not be the fastest developing Asian state, but it sure is the fastest changing one.
     Frequent visitors to the Kingdom of Wonders will note—even when returning after a few weeks of absence—new high rises, new brand stores, and an abundance of change at least in those parts of the country frequently visited by “barang,” as western foreigners are dubbed in Khmer.
     Do not confuse the Khmer “barang” with the Thai word “farang,” which essentially means the same thing; however, in Khmer the term “barang” also has a slightly negative connotation (in the sense of “rich and ignorant”) and Khmer people do not take kindly to being confused or even compared with Thais.
     Cambodian development is still hampered by the oozing wounds afflicted by the Khmer Rouge regime in power from 1975 to 1979.
     In fact, after the Khmer Rouge Cambodia could be compared to postwar Germany, just that there was no Marshall plan to help the Cambodian people back on their feet. All the more impressive is what the Cambodian people and the Cambodian state—political judgments left aside here—have achieved. Much of it has been trial and error, and the average Cambodian still has to make do with incomes of U.S.$80 or less a month with social security or medical care largely uncovered. Nevertheless, or probably even because of those adversary factors, Cambodia has opened up with garment production, spices (such as the world famous Kampot pepper), and the tourism industry accounting for as much as 43 percent of the national income.
     While the boom in Cambodia’s air transport sector is well known—as recently reported by FT—the changes taking place at Cambodia’s Royal Railways have been largely overlooked by most people not living in Cambodia.
     Cambodia’s present 380 miles (612 km) of 3 ft., 3 3⁄8 in. (1 meter)-gauge rail network goes back to the colonial times, when it was a part of French Indochina and consisted of two lines.
     Lack of maintenance, funds, and damage during the Vietnam War and the Khmer Rouge regime forced a total suspension of all services in 2009.
     That has changed, as Cambodia’s booming development necessitated reliable transport capabilities both in the passenger and freight sector.

     As for passenger services, air transport is too expensive for the average Cambodian, especially considering the time required to travel to the departure airport and from the arrival airport to your destination takes longer than taking a bus or express van.
     Traveling from Phnom Penh to the seaside resort of Sihanoukville by flight will cost about U.S. $10-15 for a tuk-tuk or taxi to the airport, about U.S. $140 in airfare, and another U.S. $20-25 to get from the airport to Sihanoukville. Despite the flight time being only about 55 minutes, the total time required will be no less than 5 hours. An air-conditioned express van will make the trip in about 4 hours for about U.S. $12, an air conditioned bus in about 5.5 hours for U.S. $8, and a regular bus for about U.S. $4 in 7 hours.
     The problem, however, is traffic. The last 30 km into Phnom Penh will take about 2 hours, and from 7-10am and 5-9pm any road vehicle is reduced to a crawl.
     Also, floods during the monsoon season and torrential rain can seriously hamper road transport.
     Cambodia’s Ministry for Public Works and Transport (MPWT) under the leadership of H.E. Samdech Sun Chanthol (left) has revived the rail transport sector with assistance provided by the Asian Development Bank, AusAID, and the Australian company Toll Holdings, which from 2009 until 2014 held a 55 percent stake in Cambodia’s Royal Railways.
     A new 73 mi. (115 km) missing link between Phnom Penh and Touk Meas was completed in October 2010 and the southern line (unusable since late 2008 after the worsening condition of the tracks caused frequent derailments) reopened for freight traffic—mainly coal and fuel trains as well as container traffic from Cambodia’s only deep-water port, Sihanoukville, to Phnom Penh in January 2013 and for passenger traffic just in time for the Khmer New Year on April 9th, 2016, after a 14-year downtime.
     Also, the Western line connecting to the Thai railway network is under reconstruction with a 4 mi. (6.5 km) gap between the border point in Poipet and Sisophon to be closed by the end of July 2016, and there are plans for a rail connection between Phnom Penh and Saigon (Ho Chi Minh City) that would provide a seamless rail link between Singapore and Kunming in China.
     Additionally the Cambodian MPWT has partnered with China Railway Group to build a third line of 252 mi. (405 km) in the north-southern direction across Cambodia to support transport of steel, sea containers, coal, and fuel and ease road congestion and damage.
     The newly revived passenger services between Phnom Penh and Sihanoukville, with stops at Takeo and Kampot, were very well received according to a press statement Royal Railways CEO John Guiry made to the Phnom Penh Post.
     Passenger capacity is between 130-165 per trip and the average speed about 25 mph (40 km/h) with the cost of a one-way ticket U.S. $7.
     Royal Railways plans to rent out carriages for events and conferences because of plentifold tourist demand.
     During recent Thai-Cambodian consultations that took place at the end of 2015, it was agreed to open two new international checkpoints in the Cambodian border province of Banteay Meanchey as well as developing jointly operated Special Economic Zones along the Banteay Meanchey-Sa Keo (KH) and Koh Kong-Trat (TH) borders. These SEC’s will provide further jobs, tax revenue, and investment by international companies in both Thailand and Cambodia.
     Probably the only downside of this development is that sooner rather than later the so-called “bamboo trains” or “Norries” in Battambang province will perish with the revival of the track system.      “Norries” are platforms made from bamboo fitted on leftover rail wheels and powered by small gas engines, chugging along the old tracks with whatever merchandise or passenger is to be transported for stretches up to 25 mi. (40 km) on an on-demand basis.
     In addition to the more reliable, economic, faster, and scheduled cargo links the newly revived Cambodian rail system is going to provide, the ease on the road system should account for considerable savings as overloaded trucks, fatigued drivers, and hardly roadworthy trucks account for considerable damages including collapse of bridges, a gruesome death toll in road accidents, and considerable pilferage.
Peter Harcourt

Here we begin a series of thoughts generated by indiviuals that have appeared in our pages since 1975, when we began publishing our monthly Air Cargo News trade publication in New York City.
   Richard Malkin has covered the air cargo business since 1942, and today at 103 years of age he has edited these comments, which will continue through the remainder of 2016.
   We hope you find this series useful and invite your comments. Vital Views is offered during a time of change in air cargo. It attempts to reach back into our past and recall outlooks that might help inform us when dealing with the challenges of today.
   Our belief, to quote Abraham Lincoln, is that “The best way to predict your future is to create it.”

Get On The Same Page said Robert L. Jones, Jr. in 1999 on the subject of dealing with the customer.      The late founder chairman and chief executive officer of Alliance Airlines ( that went into business in 1987- and is now called Focus Logistics) put it this way:      “You want to avoid problems with the customer, so you make sure that you settle all issues before the contract is signed.      “After that, all else is easy.”

Refine Your Business Technique said Dennis W. Patrick, President, Lynden Air Freight in 2002. He led that company for a quarter of a century before retiring in 2008.
     In a forceful comment on techniques for “everyday work,” Mr. Patrick reasoned: “You can remember one minute manager and management of objective. “You can remember how Japan and ‘quality management’ led the industrial world in their modern management and demand for ‘zero tolerance’ for errors and ‘quality management.’
     “Still, there are some principles that prevail, and I think quality as a noun, incorporated in a culture is one of those.
     “I am thinking of continuous improvement, meeting mechanics, measurement, and process improvement.”

The Constant Is Change said Angelo Pusateri, co-founder and president of Virgin Atlantic Cargo USA in 1989.
     Commenting on the role of opportunity, Angelo (pictured second from left-with Alan Chambers, Richard Branson and John Ryan, all of whom pioneered Virgin Cargo declared:
     “If there is anything I have learned about the air cargo business, it is that nothing ever remains the same, and as a marketing-oriented individual, I would find it dull if it remained unchanged.      Where would opportunities then come from?”

Off The Books said Wiliam D. “Bill” Clarke, former director of cargo planning at Trans World Airlines, (TWA) in 1988 calling attention to the following:
     “When deregulation occurred in 1978, the pricing environment began to change.
     “At first, the changes were not pronounced as forwarders and carriers felt their way through the new-found freedom from regulation, in the past few years, however, the pace has picked up considerably so that the formalized tariff rates are used by fewer and fewer customers.
     “For some carriers off-the-books traffic accounts for as much as 75 percent of the total volumes transported,”the erstwhile Bill Clarke said.

Road Dog Marks Political Matters … Guenter Rohrmann who had served as CEO and president of Air Express International and in 2004 was DHL’s COO, in a rare confidential moment, admitted that when he first entered the air cargo industry he never dreamed that his concerns would include such matters as the political situation in Brazil.
     On a wholly different note, in reaction to a comment on his arduous business schedule (70 percent of his time spent on the road) replied: “I love it and I live it.”

Vol. 15 No. 62
Express Delivery XLA Sets ACIA
Cooling Their Brakes
Chuckles For August 15, 2016
Is Freightos The Next Big Thing?
InstaClassic Chicago
Not Lion—This Really Happened