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   Vol. 17 No. 52
Tuesday August 21, 2018

China Southern Cargo currently faces challenges on multiple fronts, but most obviously from the escalating Sino-U.S. trade war which threatens its Transpacific business.

It’s All Cricket

     When FlyingTypers recently caught up with Zhao Fengsheng, Senior Vice President of the carrier’s Cargo Division, he was optimistic about the year ahead although on tariffs, to use an old English cricketing idiom, he played a decidedly straight bat.

The Tariffs

     Asked how China Southern had coped with the imposition of tariffs by both the U.S. and China and the threat of more to come, Zhao admitted the Transpacific trade was crucial to CZ’s freight business plan, but was hesitant to discuss the topic in detail.
     “We have been paying close attention to the change of customer demand, using flexible sales methods and adjusting capacity and actively exploring new markets,” was all FlyingTypers could draw from him.

Stable Market Two Percent Growth

     Mr. Zhao was more forthcoming when discussing the health of freight markets this year.
     “So far in 2018, the air cargo market has been stable overall,” he said.
     “But the market demand growth is not as good as the same period in 2017.
     According to preliminary statistics, in the first five months of this year, the freight and mail transportation volume and revenue of China Southern Cargo Airlines have achieved a moderate growth, with cargo volume increasing by 2% year-on-year.”

Demand By Region

     Mr. Zhao said China-Europe demand had been “stable” this year, while intra-Asia cargo demand had been dynamic, prompting service roll-outs.
     “China Southern Airlines began to operate Guangzhou-Vietnam-Guangzhou route by B747 freighter on September 24, 2015, two flights per week,” he said.
     “Up to the end of May 2018, CZ has operated more than 500 flights. Over 19,000 tons of goods has been shipped from Vietnam to China, Europe and the United States through this route, and more than 5,000 tons of them has been transported to Europe Via China.”

Exceptional 2017 Sets Bar High

     Like most carriers, 2017 was exceptional for CZ, all the more so because after years of relatively slow growth the rebound was unexpected. CZ certainly took advantage - revenue from freight and mail transportation increased by 26.3% year-on-year while profit from freight operations reached CNY651 million (USD$97m), the carrier’s best ever financial performance.
     “We did have expectations of recovery of the air cargo market in 2017, but the bounce was better than what we expected,” explained Mr. Zhao.
     “On the one hand, the cyclical upturn in 2017 was predictable.
     "Based on the IATA data, the air cargo market demand was weak in the first three quarters of 2016 and the cargo capacity growth of the Asia-Pacific airlines slowed sharply, which was only half the growth rate of the same period of 2015. In the fourth quarter of 2016, the market demand started to rebound significantly, but the slow capacity growth situation held out until the third quarter of 2017, resulting in great improvements in revenue in 2017.

Recovery Was A Surprise

     “On the other hand, the strength of the recovery had largely topped market participants’ forecasts in 2017.
     “European and U.S. economies had gone through a strong recovery, with manufacturing industry rapidly transforming from smooth running to accelerating expansion and the unemployment rate gradually declining to a record low.
     “Against this background, global business inventories were short, and U.S. enterprises suffered a continued decline of the Inventories to Sales Ratio during 2016 – 2017.
     “In order to restock inventories, enterprises had to take advantage of the time-sensitive air freight offering, so this was a driver during the economic recovery,” Mr. Zhao said.

All smiles—Mr. Zhao Fengsheng, SVP China Southern Cargo and Mr. Marcel de Nooijer, EVP, Air France KLM Martinair Cargo after signing the October 2017 Memorandum of Understanding.

The Air France Connection

     CZ continues to benefit from its ongoing and long-standing cooperation with Air France KLM Martinair Cargo. The carriers first signed a freighter cooperation agreement in 2003, but this was stepped up in 2015 when a Memorandum Of Understanding was signed endorsing a mutual cooperation plan.
     “In October 2017, the MOU was further updated with an aim to further enhance mutual benefit and collaboration to the maximum advantage,” explained Zhao.
     “Our cargo cooperation is mainly in cargo and mail interlining, which covers mutual access to the airlines’ respective networks and provides our customers with an extensive global reach.
     “During these years, cargo destinations we jointly serve increased to 24, mail destinations up to 55, the scope of interlining expanded from general cargo to mail and perishables such as flowers, fruits, etc.
     “In addition, we added ‘Block Space’ cooperation to the existing interlining since November 2017, and plan to extend this.
     “Based on the solid foundation we have jointly built, I believe we can work out better results in 2018 and beyond, in terms of added value to customers, reaching new markets, generating revenue and sharing best practices.”

Will Tariffs See You In September?
Tariff Dustup Could Be Cargo Windfall
Wings & Wheels & Trump Tariff
Tariff Watch As Deadline Looms

     A ULD being loaded onto the main deck or slipped into the belly of a wide body passenger aircraft is the money shot in any air cargo message of late.
     But what about the ULDs, aka “silent partners,” of our air cargo enterprise?
     Watching the daily ballet of ULDs being loaded and unloaded from aircraft at the airport, it is easy to step back a bit and wonder about the stories they might tell.
     I recall just a couple years ago out at JFK Airport casting a long steady gaze at a somewhat dented can sitting alongside the old Lufthansa Building 260, the airport facility where the German carrier pioneered all-cargo main deck B747F service from Frankfurt to New York in 1972.
     But this can had the words “Seaboard World” printed on it and that brought back even more memories to a time when SWA and LAAC operated competing B747Fs across the Atlantic from adjacent cargo facilities at JFK.

Not Alone In My Thoughts

Summer Reruns     When it comes to ULDs in 2018 and beyond, the “Go-To Guys” are Bob Rogers and Urs Wiesendanger.
     Both have served over the years as lightening rods for a Canadian organization devoted to ULDs called ULD CARE.
     ULD CARE is a not-for-profit corporation.
     Having started life in the 70s as an IATA special interest group (then named the Interline ULD User Group-IULDUG) and subsequently split off to become an independent not-for-profit entity, ULD CARE retains a close link to IATA through an MOU.
     ULD CARE also maintains a close contact with the Cargo Focus Group at the FAA.
     Its membership is open to organizations whose scope encompasses any aircraft unit load device (ULD) activity.

The Two & Only

     How great to encounter the two most activist ULD spokesmen in the world, Urs Wiesendanger, President, ULD CARE, Air Canada (retired), and Bob Rogers, Vice President ULD CARE, Senior Advisor Nordisk, at the recent IATA World Cargo Symposium in Dallas, Texas.
     The dynamic duo Urs & Bob make their case, pulling no punches, keeping it simple, laying it on the line.
     “ULD CARE is at the forefront in advancing compliant, safe, and efficient ULD operations,” Bob Rogers told FlyingTypers.
     “Over the past 40 years, we have evolved from an interlining tracking system to a provider of comprehensive solutions that advance ULD handling for the air cargo industry.”

ULDs Taken For Granted

     “The global air cargo industry,” Bob Rogers said, “faces many challenges and demands, and with a few exceptions ULD operations are taken for granted, expected to be available and useable when needed, but often put to use in conditions characterised by inadequate infrastructure and under trained personnel, totally unsuitable for what are essentially aircraft equipment that perform an essential flight safety function and are not just a piece of material handling equipment (MHE).”

A Fatal Flaw

     Major (fatal) crashes in 1997 (Fine Air 101) and 2013 (National Air Cargo), both attributable to non-complaint cargo restraint leading to cargo shift and loss of control of the aircraft, require a “sea change” in the approach to safety around cargo loading. All too often, the basics of weight and balance compliance and load restraint are overshadowed by DG and security.
     “There is today a significant gap between what at least some national aviation authorities (NAAs) including the FAA expect from the airlines under their jurisdiction in terms of ULD operations, while on the other hand the unregulated ground handling, cargo terminal, and freight forwarding sectors places very limited attention on ensuring that only airworthy ULD loaded correctly are delivered to the aircraft and that handling infrastructure and activities minimize the damage to ULD, which are lightweight aircraft equipment, and not some piece of MHE to be hammered around the warehouse or ramp,” Bob Rogers said.

ULD CARE Punches Above Its Weight

     “In its ongoing evolution, ULD CARE’s primary focus is to first create solutions that will support the correct use of ULDs and then promote these solutions using the limited resources of ULD CARE,” said Urs.
     “As a not-for-profit trade association, we rely very much on the efforts of volunteers to give their time and expertise, however we believe that with the portfolio we now bring to the industry, ULD CARE punches well above its weight.”

Time For Code Of Conduct

     “2018 sees the launch of the ULD Code of Conduct, a first for this industry,” Mr. Rogers declares.
“CofCs are widespread in many industries but are not common in aviation due to the highly regulated nature of aviation.
     “However, ground handling, cargo terminal, and freight forwarder activities fall outside the aviation regulatory footprint, and with the airlines having outsourced these activities there exists a considerable vacuum when it comes to adequate ULD operations.
     “Individual airlines may well have their own campaigns to promote quality in ULD operations, but against an overwhelming lack of awareness (interest?) across the various sectors of the industry, one airline will struggle to achieve anything significant,” Bob Rogers added.

ULD Care Challenges Ahead

     “Air Cargo is a multibillion 24/7 global operation and making changes is very challenging, all too often it takes major accident to trigger sufficient attention,” Bob Rogers said.
     “ULD CARE knows what has to be done to ensure safe cargo loading, and has the solutions to assist the industry perform this function correctly. The challenge is to engage and enroll the far-flung corners of the air cargo industry to pick up their game.”

Why ULD Code Of Conduct Matters

     “You cannot go a week without reading about some new facility for Pharma,” Bob Rogers insists.
     “Pharma is a very, very large part of air cargo and attracts a great deal of interest.
     “Yet the treatment of the costly and complex Temperature Controlled Containers that are a foundation of this activity falls far short of what is needed, increasing both operating costs and operational failures.
     “Similarly, Fire Containment Covers and Fire Resistant Containers can provide a vital layer of protection against Lithium Battery fires, a major risk on some trade lanes.
     “But these items are both costly and require proper handling, so often are not present in day to day operations.”
     “ULD CARE’s primary vehicle for change,” Urs Wiesendanger declares, “is the ULD Code of Conduct.”
     “The ULD CARE Code of Conduct,” Bob Rogers insists, “introduces an appropriate element of quality into ULD operations, distilling down into a simple, easy to comprehend statement of intent the core principles applicable to flight safe ULD operations and handling.
     “Based on and complimenting the IATA ULD Regulations, which can be considered to be the ‘bible’ for all ULD operations, it is the intention that the code become the basis for ULD operational standards in organisations regardless of size and scale,” he said.

Rally Around The Banner

     “ULD CARE,” Bob and Urs point up, “remains the only body dedicated specifically to the promulgation of ULD practices.
     “With around 65 airline members and about 25 related members such as ULD manufacturers, ULD CARE is in a unique position to drive ULD specific initiatives.
     “In terms of cooperations, we look to similar trade associations such as ASA, industry publications, freight forwarder associations, and anyone with a vested interest in improving ULD operating standards to assist in driving our message outward.”
     When Is The Mission Accomplished?
     “Easy answer,” is the word in chorus.
     “ULD CARE strives for 100 percent safe ULDs on aircraft, supported by ground operations that use adequate facilities and infrastructure and staffed with adequately trained personnel who know the difference between right and wrong when it comes to ULD!
     “Perhaps such an ambition wont happen overnight, and no doubt adoption will take time.
     “But every bit is a step in the right direction.
     “Ideally if a number of the larger entities take the Code of Conduct on board, we will gain momentum.”

ULDs Get No Respect
     A common saying goes, “you can’t see the forest for the trees.”
     This also seems to be true for the ULD (or Unit Load Device).
     Most everyone in the air cargo business can identify the common types of ULDs and has seen them in all-day use for the purpose of carrying cargo, mail, and baggage.
     Few people, however, are familiar with the latest developments around ULDs, the requirements applicable to their use, and the regulatory background edicts for their usage.
Rodney Dangerfield     Thinking about ULDs and their common perception in our business, we are reminded of the great American comedian Rodney Dangerfield who used to tell his audience about his woes and travails:
     “You see, I get no respect,” Rodney would say, and that phrase usually brought down the house.
     Legally speaking, ULDs are part of the aircraft’s equipment and thus subject to stringent airworthiness requirements.
     In other words:  A surplus of missing rivets, damaged doors or locks, bent edges, broken base plates as well as improper repairs, the wrong tiedown equipment, and overload or unevenly distributed load will cause the ULD to be used out of its specifications and thus not be in compliance with applicable FAA, EASA, and IATA rules.
     Aircraft manufacturers including Airbus and Boeing as well as ULD manufacturers have developed stringent guidelines which, apart from airline-internal guidance such as the COM (Cargo Operations Manual) or the ASM (Airport Services Manual) can most easily be viewed in the IATA AHM (Airport Handling Manual) in its current 38th Edition and the IATA ULD Regulations in its current 6th edition (the IATA ULD regulations have replaced the IATA UTM, the ULD Technical Manual, about three years ago, when the manual was revamped and substantially updated).
ULD history


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     A Ju-52 passenger aircraft of the Swiss airline Ju-Air lands last Friday.
     It is the airline's first flight after the crash on August 4, 2018 of one of its classic aircraft in the Swiss Alps resulting in 20 fatalities.
     “JU-AIR immediately and voluntarily suspended its flight operations as a sign of respect for the dead and their families and friends, and to give the team at JU-AIR time to begin the process of overcoming the accident,” JU-AIR said.
     “The Swiss Federal Office of Civil Aviation has declared that there is no reason why the Ju-52s of JU-AIR should not be allowed to fly,” the company said, adding:
     “Swiss Transportation Safety Investigation Board STSB gives no cause to doubt the operational safety of our airplanes.”
     “Should the investigations bring forth any findings that put in question the safety of our flight operations, we would immediately suspend them once again.”
     The JU-AIR fleet currently operates three vintage Ju-52s that were built in 1939 and in service with the Swiss Air Force before being retired in 1981.

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