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   Vol. 16 No. 63
Tuesday August 8, 2017

India Taking Air Cargo Personal

      In October 2016, when India’s Airports Authority of India created a wholly-owned but functionally and administratively-independent cargo subsidiary, the AAI Cargo Logistics and Allied Services Company Limited (AAICLAS), air cargo stakeholders felt it was the right step.
      With its 125 airports—18 international airports, 7 Customs airports, 78 domestic, and 26 civil enclaves at military airfields—the AAI had too much on its hands to handle.
      So, the separation of the cargo department was logical.
      A more important reason for the establishment of AAICLAS is the growth of the country’s economy.
      Today, with the Goods and Service Tax (GST) regime in operation, the importance of air cargo and its impact on the overall economy of the country cannot be overlooked.
      The AAI management realized that cargo handling was a specialized activity and one that was becoming increasingly personal due to the requirements of air cargo customers.

The Benefits of Change

      Personalized handling of cargo will be a norm now that AAICLAS has a CEO in Keku Bomi Gazder. A cargo professional with more than three decades of experience, earlier Gazder was with Saudia Cargo and was responsible for boosting cargo from India. FlyingTypers met up with him to find out his plans.
      Gazder looks at his new post—a big move from the private sector to the public sector—as an opportunity. He has been in his position for slightly more than a month and “can say that the government sector has its own merits and positives.”
      He said that government and the various divisions in the Aviation Ministry had the technical, financial, operational, and intelligence resources along with the vision to be an agent of change.
      At all the meetings with various ministries he had attended, Gazder pointed out:
       “I can say with complete confidence that there is an air of expectation, enthusiasm, and change that will be driving results in businesses.”

The Vision Thing

      “At the end of the day,” he emphasized, “it really does not matter where one comes from as long as one can deliver the desired numbers.
      “AAICLAS is a 100 percent subsidiary of AAI.
      ‘The vision of the company is clear: It will focus on cargo handling, security and documentation handling, supply chain, be a transshipment facility provider, an airport free zones developer, and taken on project logistics.”
      To that Gazder added: “We will also work as a multi-modal interface linking air, surface, and water transport as well as connecting to hinterland points in India, thus becoming the largest networked and fastest growing logistics solution provider in India.”
      As the CEO pointed out, the mandate of AAICLAS is to focus on cargo and increase the cargo handled by the AAI-held airports using best practices and world-class technologies.
      “We are mandated to perform all functions and explore opportunities that contribute to the growth of our airport-related business,” he said.       

Defining Various Sectors

      “AAICLAS will find out the sectors it has to focus on in order to grow in the next five years,” Mr. Gazder assures. “AAICLAS has been working on a five-year vision document.”

Tables Are Turned

      “We are at 2017 and now we need to plan where we want to reach by 2022—with details on the verticals.
      “It will be a blueprint on how and where the company will go forward, along with timelines.
      “There were two key factors that defined AAICLAS: speed in decision-making and the ability to build business.”
      Having been “on the other side of the table” for quite a few years, Gazder said it was comparatively easy “for me to understand what the requirements of the airlines and the forwarders are at the airports and address them in the best collective interest of the industry and economy.”

Not Easy Peasy

      It will not be an easy task, but the top priority for AAICLAS would be to “benchmark ourselves on best practices worldwide and on the Ease of Doing Business index.”
      What has given Gazder the confidence is the positive development in the cargo movement in the AAI-held airports. He expects the business to grow by 10-15 percent in the current financial year and over 20 percent in the next fiscal.
Tirthankar Ghosh

Jon Kent

     Why USACIA Summit Washington September 6? Read what Jon Kent, Legislative Representative, National Customs Brokers and Forwarders Association of America (NCBFAA) has to say.

     “Again this year, the National Customs Brokers and Forwarders Association of America (NCBFAA) are collaborating with Cargo Network Services Corp (CNS) as part of The U.S. Air Cargo Industry Affairs Summit (USACIA in Washington D.C. September 6.
     “NCBFAA is comprised of customs brokers, ocean transportation intermediaries and indirect air carriers, the latter creating a perfect fit for joint activities with CNS.
     “Several years ago, a group of air cargo representatives recognized the need to create much greater visibility in Washington for air cargo services.
     “To coin a phrase, we had been traveling far too low under the radar in a town where a positive reputation is essential to good treatment at the hands of government.
     “Our group looked for ways that we could showcase the value of these services, showing the diversity of our collective interests and plowing into the issues that are important to our prosperity.
     “NCBFAA recognized immediately the value of a partnership with CNS.
     “We had been working together for some time on CNS’ automation initiative and recognized the forward-leaning approach that characterizes their government affairs strategy.
     “Last year, when we inaugurated the U.S. Air Cargo Industry Affairs Summit, NCBFAA witnessed outstanding discussions on topics that concern the industry.
     “We worked closely together—all of the air cargo sponsors – to create an exciting debut. NCBFAA is even more enthusiastic about this year’s agenda."

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Dimerco Upward The Beat Goes On
     Dimerco Express Group is already one of Asia’s largest forwarders and 3PLs, but the Taiwan-based company has global ambitions and air freight is central to its strategic blueprint.
      Last year Dimerco handled 219,000 tons of air cargo, up 8.4 percent year-over-year. Volumes were buoyed by expansion of the company’s North America and European operations, which saw year-on-year growth of 28.5 percent and 29.2 percent, respectively.
      Joey Chou, Corporate Vice President, Business Development, told FlyingTypers that further growth has followed this year. “For 2017 Q1, the year-to-date sales revenue of Dimerco Express Group is around USD $125 million, a 6.9 percent un-audited increase compared to the same period last year,” he said. “By region, we saw 17.9 percent year-on-year growth in our China and Hong Kong operations and 32.5 percent for Europe.”
      Dimerco’s global network now takes in over 140 business locations in 17 countries in Asia, Australia, North America, and Europe, along with more than 190 strategic partner agents covering the rest of the world.

Looking South As Business Adds Up

      Chou said he was optimistic on air forwarding markets for the rest of 2017, not least because Vietnam, the Philippines, Indonesia, and India were becoming key markets for electronics and mobile phone production and/or demand. “Traffic growth has been fastest on international routes within Asia, as well as between Asia and Europe,” he added. “And the reason could be that GDP growth in the ASEAN region is forecast to be 6.4 percent in 2017.”

Protectionism Not Needed

      As for the U.S., he said a possible shift toward protectionism represented a substantial risk, but a risk that had not yet become reality. “Asia is particularly vulnerable to a decline in global trade because the region has a high trade openness ratio, with significant participation in global supply chains,” he explained. “However, since the Asia Pacific region remains the engine of global growth and the economic conditions of major countries are stable, the future of United States’ trade policies and agreements with its critical trading partners, such as China and India, would be the key.”

Strong Market Base

      Dimerco’s home market of Taiwan, with its raft of multinational electronics companies, has also provided strong base cargo flows. “For 2017 Q1, the year-to-date growth rate of overall sales revenue of Dimerco Express Group in Taiwan is around a 7.6 percent increase compared to the same period last year, with the tonnage up around 22 percent,” he said.
      “Semiconductor and consumer electronics are the main industries, which account for more than 50 percent of airfreight services that Dimerco provides to worldwide customers.”

An Ocean Of Opportunities

      Dimerco, like many other global forwarders, has also benefitted from the shortcomings of ocean freight this year. It has prompted modal shift, which saw strong uplift demand out of Hong Kong, Shanghai, Beijing, Guangzhou, London, Milan, Frankfurt, and Chicago. But Chou said shippers were also now looking beyond ocean and air, not least via the company’s Cross-Border Train Freight service, which connects China with Europe, Central Asia, and Russia via train. Dimerco has offered the CBTF for almost seven years now and Chou said clients could benefit from 16-day transit times—around 20 days faster than ocean freight—but with only 30 percent of the cost of airfreight.
      “With the booming of block trains, more and more customers have switched to this service,” he added.

Immature Digital Forwarders

      Chou was also strident when asked how online forwarding companies might disrupt the businesses of incumbents. He said most digital forwarders were “immature at this stage” and would have a limited impact on established players until they learned to fully meet the service requirements of shippers. He also claimed that at present new entrants could “only provide services for general cargo” and could not meet “the complicated requirements” of real world forwarding.

Disrupting The Disruptors

      By contrast, he insisted providers such as Dimerco provided tailor-made solutions and countered the threat from disruptors by investing in new technologies that improved services.
      Supporting his point, Chou said Dimerco had recently launched its own web-based supply chain tracking product called Dimerco Value Plus System.
      “This system includes up-to-date, end-to-end air and ocean freight shipment status tracking, and inventory and warehouse transaction status and reporting,” he said. “To accommodate the specific requirements of industry, we can customize and incorporate any additional information required to optimize visibility of shipments.”

eCall Unifies Data

      To further improve service levels, Dimerco has also developed an “eCall Freight System,” a platform that unifies data streams and information flows with local logistics partners. “Furthermore, Dimerco will create a big data base to improve the safety of cargo freight and maximize the operation efficiency and the service quality,” added Chou.

Future Innovation

      Looking beyond 2017, he said innovation would be critical to the sustainable development of Dimerco’s air freight business.
      “Dimerco keeps pace with consumer demand,” he said. “For example, by employing our innovative IT integration capability and forming solid relationships with reliable last-mile carriers, at the end of 2016 Dimerco started working with Revolve Clothing, a well-known, Los Angeles-based luxury clothing and accessories brand, enabling online consumers in China and Hong Kong to enjoy a comprehensive shopping experience with faster, trackable delivery of their goods.
      “Dimerco also leads the way in establishing a new B2B2C business model, which offers remarkable savings in freight costs and relies on the close co-operation between online fashion retailer, freight forwarder (Dimerco), and local couriers.”


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Vladimir Zubkov—Quote Of The Week
   “You haven’t heard much about GACAG recently, however the group is not disbanded, and it has some potential, being a platform for discussion, coordination and even joint decisions by TIACA, IATA, GSF and FIATA.
   “The latter is the coordinator for 2017 – 2018.
   “We set up a meeting on 29 August in Zurich.
   “I undertook to write a paper on the issues faced by the GACAG members.
   “There will be also an opportunity to meet FIATA's new Director General, Hans-Guenther Kersten, and to discuss priorities of all the four participating Associations.”

If You Missed Any Of The Previous 3 Issues Of FlyingTypers
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