When Apple unveiled its new iPhone X among a bevy of launches in September, it was easy to see air freight’s Indian summer through the prism of the electronic behemoth’s pre-launch shipments. Yet that was not the only factor boosting demand on key lanes.

Will Bridget Fidget?

     Take fidget spinners, for example.
     The kids craze has taken the world by storm this year. By May, all 20 of the top-selling toys on Amazon were fidget spinners or fidget cubes. One estimate suggests that during the first six months of the year, 50m units of the product were sold – mostly to consumers in Europe and the U.S.

Focus Lucas Keuhner

     Lucas Kuehner, Panalpina’s global head of air freight, told FlyingTypers that new products had contributed to keeping air freight markets buoyant in 2017. But he insisted demand was strong across most verticals.
     “We are not engaged with Apple, but what we see is strong demand for electronics, industrial consumables, auto and manufacturing, telecoms and, especially on the Transpac, a lot of consumer goods,” he said. “There is growth across the board. There’s no single market that’s not growing.

Spins A Tale

     “Earlier in the summer, we had the opportunity to fly these spinners, for example. This is dense cargo when shipped in bulk. When it’s on the shelf and it’s hot it has to go by air. This is an example of what leads to sudden capacity crunches - two charters flown with this stuff eats into the market.”

No Slow Down In Sight

     Kuehner said demand had remained strong on major lanes outbound-Asia through Q3, especially on the Transpacific trade. “Demand from Asia has never really subsided since Q4 2016,” he added. “The Far East to Europe lane dropped a little in Q3 compared to Q1 this year and Q4 2016, but not to the levels of previous years – in fact it wasn’t really even a dip, it just wasn’t as strong as the Transpacific. And recently we have seen a bit of an uptick.”

Boosting Markets Into Octember

     “Export lanes out of Asia are not the only ones enjoying heavy traffic,” Kuehner said “there was currently significant volumes flowing from Europe in “all directions”, while the Transatlantic and Latin American markets were also performing strongly.”
     At the end of September there was an expected boost to markets. “It’s the end of the quarter so that drives some additional volume and, with the Golden Week holidays and factories closed at the start of October,” he explained. “expected shipments right up to the start of the holidays further amplified demand.”
     Indeed, Kuehner sees no sign of demand slowing over the rest of the year. “As soon as business resumed post Golden Week we headed into the peak season,” he said. “I don’t expect another dip in demand out of Asia this year. We’re looking at a long and deep peak season this year, similar to 2016.
     “Carriers are also managing capacity so we are expecting a crunch. Rates will likely spike in parallel to this high Q4 demand leading into Q1 next year.”
     However, he cautioned that year-on-year volumes would probably not be as starkly higher in Q4 as during much of 2017 simply because Q4 2016 was so spritely.
     “Relative growth rate might not be as huge in Q4, because it’s against a much higher base, so it will be down from the 10% year-on-year growth we’ve seen for much of this year,” he added.

Grab Capacity Not Just Blowing Smoke

     Panalpina is warning customers they should secure capacity now to avoid higher rates later in the year, albeit Keuhner added the proviso that, this being the air cargo market, there were always downside risks.
     “What I explain to customers is this is a prediction, but all the indicators I have including many, many conversations with customers and carriers, is that with more product launches to come, which also boosts component traffic, plus e-commerce performing strongly, it all points to a strong peak,” he said.
     “But it’s also unpredictable. We are working intensively with customers so they can put aside capacity with carriers so they have pre-procured capacity on different lanes.”

Busting Out Charters Everywhere

     Panalpina has already contracted more than 100 ad hoc full charter aircraft outbound from Asia ahead of Q4. “We are prepared, but we will also buy capacity on the open spot market,” he added. “We’re doing it early as rates might go to crazy levels like we saw last year.”

Can It Get Worse?

     He also said there were already shortages of capacity on key lanes such as HKIA to LA. “That’s one where I expect it to get worse,” he said. “As soon as we see the crunch starting, we will implement our peak season plan arranged with customers and carriers.
     “Carriers are trying to drive the rates up and the market is trying to establish new price points, which is fair because fuel is higher than last year.
     “The consequence for the client is that they need to take this into consideration and shift their focus in terms of how they procure capacity and the key to this is early engagement. They need to secure capacity first and foremost so they can get products on shelves on time.”
SkyKing

TIACA’s appointment of Ramesh Mamidala, Chief Executive Officer of Celebi Delhi Cargo Terminal Management to the TIACA Board of Directors along with Sanjeev Gadhia, founder and CEO of Kenya-based Astral Aviation is being viewed as another recognition of India’s growing importance in the world.


Ramesh To The Rescue

     TIACA Secretary General Vladimir Zubkov declares Ramesh Mamidala and Sanjeev Gadhia will help to expand global links to the air cargo supply chain, especially via developing regions of India.
FlyingTypers met Mamidala recently to find out his course of action as a director in TIACA.

The India Footprint

     “There is a lot of great work that TIACA has been doing since its inception,” said Mamidala, “and that is what has benefitted many countries.
     “I hope to bring all the good work that would benefit our nation, to several trade bodies and organizations across the nation.
     “My immediate focus will be to look for these opportunities and bring them to the country as soon as possible.
     “We are at work right now improving the TIACA footprint in India.”

The Professional

     An air cargo veteran, Mamidala has had stints in the Gulf and Dubai, when he was senior manager with Qatar Aviation Services (QAS) Cargo for Qatar Airways.
     He has also served as Manager Cargo Hub and Product Development at Emirates SkyCargo.
     Mr. Mamidala is a close associate of Delhi Airport Head of Cargo Business Sanjiv Edward, the current Chairman of TIACA.
     “Sanjiv (Edward),” said Mamidala, “has been doing a great job at TIACA in his current role.
     “He has represented our challenges and opportunities globally and I intend to continue doing the same.
     “Both India and Africa require serious efforts to improve trade processes and practices that need involvement of various government and trade bodies.”

The Quality Standard

     These moves aside, Mr. Mamidala said he believed there were some serious opportunities to implement and improve technology applications and global quality standards.
     “Fortunately, TIACA has been doing some good work on most of these improvement areas,” he said.
     As for integrating the Indian air freight industry with the global market through TIACA, the CEO said that there were some “fantastic and dynamic home-grown organizations such as ACAAI (Air Cargo Agents Association of India), ACFI (Air Cargo Forum India), FFFAI (Federation of Freight Forwarders' Associations in India), etc. that have been doing a great job in representing and resolving trade issues over the last several years, and some for decades.
     “These organizations have become icons over the years.
     “I believe both TIACA and our organizations will mutually benefit if we improve our association and partnership.”
     On the question of co-operation between the various air cargo bodies in India and the world, Mr. Mamidala mentioned that TIACA has an “excellent workgroups-based structure that works across several layers of the air freight supply chain with the intention to integrate them for better efficiency and transparency.”

Innovation Meets Challenge

     “India can benefit from the innovations and enhancements that have been successfully implemented in other countries while continuing to participate in the current and active workgroups for continuous improvement,” he said.
     “The India air cargo industry has been facing challenges largely due to the lack of infrastructure and the fact that the economy has slowed down considerably due to, among other drivers, the implementation of the Goods and Services Tax.”

Optimists As Winners

     “I remain an optimist,” he emphasized
     “In my experience, optimism always wins.
     “That is something I began believing very strongly while working for Celebi.
     “We all understand that India’s airfreight infrastructure, both international and domestic, needs tremendous improvement.
     “Many of us see this as an opportunity and have committed investments across several airports in the country,” he said.
     “The way I see it, growth will happen where there are efficiencies.
     “Some airports that have developed cargo infrastructure have demonstrated this well in the last decade.
     “The current and expected growth in domestic and international exports across several commodities (both pharma and non-pharma) are the opportunities that airports should plan for when developing infrastructure,” the new ‘TIACA Builder of India’ declared.
Tirthankar Ghosh