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   Vol. 16 No. 9
Wednesday January 25, 2017

Great Again Ahead Of CNY

It appears that the period from around Feb. 15 to Mar. 12 will be very interesting for air and ocean cargo, based on recent comments from people around the world who spoke on and off the record.
Transportation sources are expecting and hoping that trade will be brisk and rates will remain high.
For ocean, this will be the result of reduced capacity and higher demand. The air picture is a bit different, but there are plenty of signs—despite newly elected President Donald Trump’s anti-trade pronouncements—that 2017 could be quite positive.
Here, SkyKing lands some comments just as Chinese New Year (CNY) approaches this weekend.

      Air and ocean rates were buoyant on healthy demand ahead of the Chinese New Year (CNY) festivities, which officially start on January 28.
      Reports from China suggest that some factory production lines have already closed down, while analysts are now suggesting that rising demand for both ocean and air services ahead of CNY might continue at above average levels, when shipments hit full swing again in late February. Could the rate increases of late December at sea and in the skies continue through Q1? It depends who you ask.

Chinese Ports Build Up

      What is clear is that there has been a major build up of cargo at Chinese ports ahead of CNY, which could keep rates higher than usual in February as backlogs are cleared. And, while finding capacity is not an issue ex-China for air freight shippers, most forwarders contacted by FlyingTypers report healthy volumes and steady pricing in line with the gains made in Q4.

Rates Are Up

Lucas Kuehner Karsten Michaelis     Lucas Kuehner, Global Head of Air Freight at Panalpina, predicted air freight volumes would remain strong up to the start of Lunar New Year. “Carrier rates are still higher than usual and last year,” he added. “After Lunar New Year, we expect volumes and rates to drop, but expect a rather strong end to the quarter in March for Asia-outbound shipments.”
      Karsten Michaelis, Head of Ocean Freight at DHL Global Forwarding Asia Pacific, said shipping markets had picked up after Golden Week last October and DHL had seen strong volume developments in the weeks prior to the Chinese New Year across all shipping trades.
      “Like every year, the demand will drop after Chinese New Year as factories need several weeks to restart production as their staff are returning from the long holiday,” he said. “Shipping lines have adjusted capacity with blank sailings for every trade to manage this period. The crucial question is how fast it takes for the demand to pick-up again?”

Post CNY Build Up

Daryl Ridgway      Daryl Ridgway, Global Head of Ocean Freight at Panalpina, said ocean demand was currently “extremely strong.”
      He added: “We expect a significant number of shipments to be rolled into February, post-Chinese New Year, due to the current overbooking situation. Freight rates are high and whoever pays most secures space from the carriers right now. The carriers allocate space very strictly based on previous shipments. After Chinese New Year, demand will weaken and rates are expected to start to soften. Some carriers have already announced blank sailing programs for this period to keep pressure high. Further disruptions are likely in March because carriers will realign their vessels before new alliances commence operations.”

Other Voices

Paul Tsui      However, Paul Tsui’s take on CNY was very different to many of his peers. The managing director of forwarding and logistics operator Janel Group and the immediate past chairman of the Hong Kong Association of Freight Forwarding and Logistics and the Federation of Asia Pacific Aircargo Associations, he said many factories in China had already closed down production lines this week, resulting in “quiet” demand.
      He said air freight demand out of Asia had been “moderate” in recent weeks and space plentiful.
      “For ocean demand before CNY, space is very tight, but I expect some space will be released by some shippers next week due to overbooking of space,” he added. “We expect it to be very quiet until the second week of February, and demand will be limited until March,” Mr. Tsui said.
Sky King

Volga Dnepr Group Onwards Into 2017

     Asked to submit a report card on 2016, Volga-Dnepr Group’s Marketing & Sales Senior Vice President Robert van de Weg puts it on the line:
     “2016 was a challenging year. We lived through a long period over the summer where supply outstripped demand, but I am pleased to say the peak season was very strong for us, so the year ended on a high note.
     “In many respects, given the volatile nature of world trade, it is actually rewarding to see that we can manage our way successfully through stormy times by working closely with our customers and suppliers.
     “Fair weather sailing is easy, but 2016 has definitely not been like that,” Robert declared.

2016 In Review

     “Now with the year in the rearview, we want to thank all of our customers around the world that have once again stood by AirBridgeCargo and Volga-Dnepr Group! We continue to grow and modernize our Boeing 747 fleet and increased our network in places where our customers asked us to support them.
     “I hope we have demonstrated our commitment to being a high quality, long-term partner to our customers and this will remain our focus in 2017.
     “Thanks to their great support, 2016 is AirBridgeCargo’s 13th consecutive year of tonnage growth.”

Onward Into 2017

     “Key for us,” Robert insists, “is to keep the momentum we have.
     “We are a developing company and our customers can see and are attracted by that.
     “ABC needs to keep the ‘momentum’ rolling along.
     “Success breeds success as long as it does not lead to a company becoming complacent or arrogant, and that’s the last thing we want to become.
     “We know we have to earn the support of our customers by providing capacity when and where they need it, by being competitive, and delivering the best level of service.
     “Service recovery is also important. If there is ever an issue, our customers want to be confident we will fix it quickly so it doesn’t impact them. I hope we are building a reputation as an airline that is constantly willing to learn and improve, and that is always listening to its customers.
     “During 2016, we demonstrated our ability to put capacity into markets where our customers need more lift and we will do that again in 2017.
     “It all comes down to not only understanding what customers want, but also having the ability to do something about it.”

Products & Operations

     “We have worked very hard to earn the confidence and trust of our customers so they believe in our operating capabilities and know we will deliver the level of service they require.
     “I hope we are now seen as a professional outfit: operating on-time with a young fleet and growing network, supported by a knowledgeable and capable group of people with a good track record of running airlines.
     “When you have earned that reputation, customers are much more willing to support your products and services.
     “It is essential for us now to continue developing specific products for important segments of the air cargo market, such as pharmaceuticals and off-sized cargoes.
     “Furthermore, we aim to get even closer to customers in specific segments where we have already earned a lot of customer loyalty, such as aerospace and oil and gas.”

Salutes Forwarders

     “Freight forwarders used to be called ‘agents,’ but that’s almost derogatory nowadays because it doesn’t truly reflect the critical role they play.
     “Freight forwarders have earned their place in the supply chain and are the vital link between shippers and asset-based providers such as airlines and shipping lines.
     “ABC is doing all we can to work as closely as possible with our forwarder partners while, if required, keeping an open eye on the service requirements of the ultimate shippers that are in need of specific services.
     “Over the last 12 years, we have demonstrated we are a quality carrier. We are easy to access and flexible in meeting customer requirements.
     “Plus, we are a growing carrier both in terms of capacity and in terms of our service portfolio, which is absolutely based on the needs of our customers.
     “Through our unique ‘Cargo Supermarket’ concept we can and do offer our customers a range of services utilizing our various aircraft types (B747, AN-124, IL-76, B737) as well as engineering and prviding logistics solutions for their most complex shipments.
     “That makes us unique and means we can also offer the most efficient solution for their cargo delivery needs.
     “We aim to capitalize on this more and more—it’s a key objective of our commercial strategy to have customers benefit from this.
     “I think our customers understand this because their support has been phenomenal. In 2004, for example, AirBridgeCargo carried 17,000 tons in its first year of operations.
     “By the end of 2016, we had flown well over 500,000 tons across our global network in Europe, North America, and Asia, so our customers must feel we are a valued partner.”

Succeed The Need

     Taking an inward look, Robert declared:
     “We need to develop more services for specific segments of the market, plus we need to continue to widen our network coverage.
     In Asia we are strong, but, for example, on transatlantic routes we can do better.
     “Plus, we always need to be looking for ways to get even closer to our customers and understand them even more so we can work together to identify where it is we can help them in terms of services and pricing.”

How Can Air Cargo Be Improved?

     “Legally approved initiatives within TIACA and IATA are appreciated e.g. implementation of harmonized customs rules and digital procedures is important.
     “Plus, we really like CargoIQ as a quality measuring platform.
     “However, confronting air cargo, in my opinion what is most important is for competition to drive innovation, and individual companies must rely on their own capabilities to progress,” Robert van de Weg concluded.

Performance Not Promises

So Smart It's Stupid
SmartKargo executives, (l to r)—Jay Shelat, Milind Tavshikar and Vladimir Camacho.

   SmartKargo went live to support cargo business processes for Wingspan Group, which represents Air Asia India.
   “SmartKargo provides all necessary software to perform complex air cargo functions literally out-of-the-box,” said Wingspan Group Chairman & Managing Director Neeraj Rathi.
   Jay Shelat (ex-AA Cargo, Jet Airways), who today serves as EVP Sales & Marketing for SmartKargo, added:
   “SmartKargo is built upon the world’s leading global cloud infrastructure, Microsoft Azure.
   “Because the Azure platform is continually evolving with emerging technology, the SmartKargo solution also updates with the platform, which means the solution is always cutting edge.”


Chuckles for February 3, 2014

Barry MedwedRE: Dutch Treat


      As a former KLM Cargo employee, reading the articles in the latest issue, Meurer, Ancher and Krems was great !!

Barry Medwed
Director of Key Accounts
Consolidated Aviation Service

Brown WilderGeoffrey,

     The article on Jan (Meurer) was well done and brought back fond memories of business/social dealings with him when he was THE KLM Guru . . . Jan was always a treat to do business with . . . A true character with class . . . Please give him my regards . . .
     Still enjoy seeing your son each Sunday . . .

Brown Wilder
ACI Air Cargo Inc. (Retired)

Isaac Nijankin    Thank you Geoffrey for the article on Jan (Meurer), a true professional, a true friend.
     I'll always cherish the time I had the fortune to share time with him during the numerous occasions that our airline life gave us.
     Cheers . . .

Isaac Nijankin
Varig Air Cargo (Retired)

Editor's Note: Both Brown Wilder and Isaac Nijankin were early stalwarts at TIACA and worked diligently to help establish TIACA back when the future of that organization hung by a thread.

Jacques Ancher Hi Geoffrey,

     Thank you. I wish that 2017 will be a fantastic year for you and Sabiha.
     Amazing how much credit you give to people while you are the people that have done more for the industry than any one of us.
     But that’s life.
     Hope to see you soon.

Jacques Ancher

For more on Jacques, click here.

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