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   Vol. 17 No. 22
Friday April 13, 2018

     Airbus thinks it has a better idea for air cargo holds on combination cargo passenger flights, with the help of a vendor in France that also builds lavs for aircraft.
     In the future we may see coach passengers below decks alongside the suitcases and cargo.
     A deal between Airbus and Zodiac Aerospace to develop sleeper modules that can be swapped out with regular cargo containers on specific flights will be a fact of life in 2020 on some A330s and A350s.
     It’s good to remember that this below decks utilization scheme is being hatched by the plane maker that built the world’s biggest passenger jet with the smallest cargo lift (A380).
     Right now, Airbus claims there is interest amongst some airlines.
     Can we expect “turndown or room service” not to mention security on those long, dark flights in steerage class, with cabin attendants running up and downstairs handling creature comforts, including an occasional complaint?
     Did Airbus forget that, among other attributes, air cargo “the silent partner” never complains?

Buz Called It

     We can recall an interview we did with Eugene T. “Buz” Whalen, one of the great dreamers and doers, when he ran sales for JAL Cargo in the Americas.
     Buz was sitting at a customer event in the basement of the Holiday Inn on Rockaway Boulevard across the street from JFK International Airport in 1978.
     I asked him what his vision was of the air cargo business and he reached into his pocket and showed me the cartoon pictured here.
     I have never forgotten that night even though Buz and his wife, Bert, retired decades ago to Florida and the Holiday Inn At JFK became a cult hotel called The Saratoga Interfaith Inn.
     Buz, it should be mentioned, did great pioneering work for air cargo both at JAL Cargo and the industry at large, supporting the infancy of both CNS with the founder of that organization, Tony Calabrese, and later the rebirth of TIACA when it emerged from what was left of IACA, which had been operated for years by The Society of Automotive Engineers.
     So will the vision of air cargo filling empty seats above deck become a reality?
     Should air cargo speak up and ask Airbus to better support the business it already has below decks with better thought processes, including capabilities and innovation?
     Your move . . .

     Presently, the outlook for global air cargo markets is decidedly mixed after a fantastic 2017. The latest figures from Airports Council International revealed that total cargo including mail handled at all airports worldwide expanded by 7.9 percent last year, and international freight grew by 9.9 percent over the same period.
     But although volume growth has continued at healthy levels in the early months of 2018, reports from forwarders suggest that while the market has hardly turned bearish, neither is it firing on all cylinders.
     Even so, finding space is not always easy.
     “It depends on the freight lane and cargo—it’s horses for courses,” said one.

Paul TsuiSpace Not An Issue HKIA

     Paul Tsui, managing director of Hong Kong-based forwarding and logistics operator Janel Group, said there was currently no capacity issues out of HKIA, the world’s largest freight hub in 2017.
     “Demand is quite slow and we expect the situation will not improve until late June or even early July,” he told FlyingTypers.
     Another forwarder active in Hong Kong and China said there had been “some issues” with customs for e-commerce shipments by air in China, which had slowed volume growth, but he could not provide further information.

Rating Markets

     According to Freightos, Europe-U.S. Air Freight general rates have been increasing all year, starting at $1.15/kg at the beginning of 2018, rising to $1.43/kg by February, to $1.65/kg by March, and up to $1.80/kg earlier this month. Meanwhile, the digital freight marketplace said over the same period “China-U.S. and China-Europe rates went up in the lead up to Chinese New Year, and have eased since.”

According To IATA

     Certainly, the figures available from earlier in the year suggest global economic growth remains healthy, albeit with most analysts noting that it could face headwinds if a trade war between China and the U.S. breaks out. IATA said volumes over January and February had been healthy with demand growth in February 2018 showing a 6.8 percent year-on-year increase.
     “Adjusting for the potential Lunar New Year distortions by combining growth in January 2018 and February 2018, demand increased by 7.7 percent,” said IATA. “This was the strongest start to a year since 2015.”

Rogier SpoelSpoel Tightening

     Rogier Spoel, air transport policy manager at the European Shippers’ Council, told FlyingTypers that the air freight market in general had seen a tightening of space over the last year. And although shippers were finding it harder to secure suitable capacity, supply chain disruptions had been rare.
     “The expectation is that if the growth of 2017 continues in 2018, this surely will become a problem,” he said. “Shippers overall are more worried about congestion issues at the major airports rather than a lack of cargo space. Shippers do complain of higher supply chain costs, however that is the economic reality.
     “For shippers of consumer goods, there are options to use other modalities such as ocean or perhaps rail. For time and value sensitive shipments, air transport is often the only option and in the worst cases this may lead to such an increase in costs or orders being cancelled. But that is something that we will find out in the course of this year.”

That Certain Tightness

     So what happens next? According to analysis from Stifel, after the air freight market came roaring back last year driven by broad-based cyclical recovery and structural changes in the international flow of goods, primarily due to cross-border e-commerce, supply-demand fundamentals will see the market remain tight in 2018. “While capacity dynamics vary by lane, global demand growth broadly exceeds supply growth—especially main deck freighter supply,” said a note. “This situation is likely to persist into the near future, driving higher load factors, rising prices, network changes, and greater efficiency in the industry.”

The Cautionairies

     IATA was more or less bullish. In its latest report the Association said that although continued growth in air cargo demand was consistent with ongoing robust global trade flows, there were signs that peak air freight had now passed. “Demand drivers for air cargo are moving away from the highly supportive levels seen last year,” it said.
     “In recent months the Purchasing Managers Index (PMI) for manufacturing and export orders has softened in a number of key exporting nations including Germany, China, and the U.S.
     “And the seasonally adjusted demand for air cargo which rose at a double-digit annualized rate for much of 2017 is now trending at 3 percent.”
     Alexandre de Juniac, IATA’s Director General and CEO, also noted that negative headwinds could hurt the industry if protectionist policies gain traction in key markets.
     “Demand for air cargo continues to be strong with 6.8 percent growth in February,” he said.
     “The positive outlook for the rest of 2018, however, faces some potentially strong headwinds, including escalation of protectionist measures into a full-blown trade war.
     “Prosperity grows when borders are open to people and to trade, and we are all held back when they are not.”

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Prime Minister Narendra Modi with the ASEAN Heads of State and Governments and the ASEAN Secretary General on the occasion of the release of postal stamps to commemorate the silver jubilee of the India and ASEAN partnership at the ASEAN India Commemorative Summit in New Delhi.

     Better late than never . . . In what can best be described as a move that should have come a few years ago, India has reached out to the Association of Southeast Asian Nations (ASEAN).
     (Political commentators, however, point out that India’s overtures to the ASEAN was more due to the Chinese presence in the region or, as one commentator mentioned, “An anesthetic solution to China’s growing assertiveness in the region.”)
     Whatever the reason, Prime Minister Narendra Modi’s invitation to ten leaders from the ASEAN for India’s Republic Day to commemorate 25 years of dialogue partnership has kick-started the relationship. As the Indian Prime Minister pointed out in a signed editorial, which appeared in 27 newspapers and in 10 languages, the relationship had moved from dialogue partnership to strategic partnership.

Business Needs Connectivity

     Indian overtures aside, what emerged at the end of the ASEAN-India Commemorative Summit was a firm push towards bringing more connectivity between India and the ASEAN. A move, indeed, in the right direction since quite a few of these nations’ capitals do not have direct commercial flights connecting Delhi (Philippines, Vietnam, and Indonesia, for example).
     It may be mentioned that Narendra Modi also invited Singapore Airlines to expand its operation in India and start flight services to cities like Guwahati in Assam, according to secretary, East, in the external affairs ministry.
     The official also said that Vietnam would soon start direct flight services to India.
     In fact, full service airline Vistara—a joint venture between Tata Sons and Singapore Airlines—will start its international operations by the second half of the calendar year 2018, Chief Executive Leslie Thng announced recently. Vistara will initially start its short-haul international operations connecting South Asian destinations and other Asian destinations that are 2-4 hours away, followed by destinations 3-5 hours away, Thng said.
     The Delhi Declaration of the ASEAN-India Commemorative Summit highlights the connectivity issue. The Heads of State reaffirmed a commitment to “deepen cooperation in the area of aviation under the ASEAN-India Aviation Cooperation Framework adopted at the 14th ASEAN Transport Ministers’ Meeting in Manila, on November 6, 2008 [and] establish closer ASEAN-India air links to promote tourism, trade, and enhance greater connectivity between ASEAN and India.”
      The leaders also agreed to “strengthen cooperation in the area of aviation and maritime transport and look forward to the expeditious conclusion of the ASEAN-India Air Transport Agreement (AI-ATA) and the ASEAN-India Maritime Transport Agreement (AI-MTA).”

Long Standing Issues

     The air connectivity issue has been raised time and again, but there has been little action on the ground.
     Way back in 2003, then-Prime Minister Atal Bihari Vajpayee had advocated an Open Skies arrangement between the ASEAN and India.
     Five years later, in 2008, the ASEAN-India Aviation Cooperation Framework was adopted—and that was it. The result: Not only has tourism between the ASEAN and India not gone up, neither has trade.
     India has been recording the highest number of air travellers but Indians accounted for only 3 percent of all tourist arrivals in ASEAN. As for trade between ASEAN and India, it was at a low 2.6 percent.
     Connectivity—otherwise described as the “new Great Game” by India’s former Foreign Secretary Subrahmanyam Jaishankar—could indeed be the game changer.

Study Cited

     In a study done some time ago by the Associated Chambers of Commerce and Industry of India (ASSOCHAM), it was mentioned that, “though ASEAN-India economic engagements are moving forward in the desired direction, yet there are certain challenges that call for policy interventions. With the signing of the ASEAN India Agreement in Services and Investments, ASEAN and India are likely to benefit from an extended market, where the air connectivity aims to play a pivotal role. The issue of enhancing air connectivity is one of them. The major issues and challenges related to promoting air connectivity between ASEAN countries and India pertain to growing demand for air cargo services; facilitating business and leisure tourists by having more direct flights connecting Tier II and Tier III cities of India…”
Tirthankar Ghosh

     “Is it just a matter of time until transgender is an airline?
   “You just get on one sex, and you get off, you’re the other one.”

Jerry Seinfeld: “Comedians in Cars Getting Coffee,”
on YouTube.

If You Missed Any Of The Previous 3 Issues Of FlyingTypers
Access complete issue by clicking on issue icon or
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Vol. 17 No. 19
Tracking The Big Bounce Back
Chuckles for April 3
JFK Air Cargo Expo May 17
FIATA Reports IATA Dallas
Single Africa Transport Market
March Toward Oneness
Holy Week 2018

Vol. 17 No. 20
Building A Global AirBridge
Chuckles for April 5, 2018
India Pharma Rules Simplified
Towers Above All
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Vol 17. No. 21
Ali Baba & The 1,000 Tons
Chuckles for April 10, 2018
ULD CARE Delivers Code Of Conduct
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Formation Fliers Jump On Summer

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