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   Vol. 17 No. 74
Friday November 2, 2018

UPU Blues

The rapidly growing trade in e-commerce shipments into the U.S. could be severely disrupted by the Trump administration’s order earlier this month instructing the U.S. Postal Service (USPS) to withdraw from a treaty setting shipping rates with nearly 200 countries. In Part Two of his analysis, FlyingTypers SkyKing looks at who might be the winners and losers as the repercussions of the decision unfold.

All That Glitters

     As noted in Part 1, the Trump Administration has a number of strategies it can pursue following its decision to pull USPS out of the Universal Postal Union (UPU) treaty. But whichever path negotiations and preparations take, the ensuing disruption will have a strong bearing on air freight volumes and rates in the short-term, and the packages and e-commerce market in the long-term.

Charles ClowdisSuffering Catfish

     According to Charles ‘Chuck’ Clowdis, Jr., Managing Director of Trans-Logistics Group, Inc., a transportation consulting and litigation support specialist, if the United States is unable to reach an agreement to restructure international postal rates, particularly the “terminal rates” provisions under the UPU, volumes of shipments up to 2 kg destined for the U. S. from China and other major e-commerce origins currently flown could potentially suffer.
     “Parity to domestic rates when considering distance is being sought by U.S. negotiators through the Universal Postal Union and while signals of intent to possibly withdraw have been raised, numerous rounds of discussions and negotiations will occur before any withdrawal occurs,” he told FlyingTypers.

Will Nervous Make A Difference?

     “Nonetheless, nervous shippers and receivers are bracing for any impact, and air cargo service providers rightfully are keeping a close eye on the talks.
     “My personal view from these early stages is that a mutually beneficial resolution will be found - ecommerce growth is vital to the global economy, adding pressure to find an equitable resolution.”

The Fair Game

     The world’s leading integrators and e-tailers will certainly be keeping a close eye on the negotiations. Companies such as Amazon and FedEx have long taken issue with the treaty, claiming that it offered unfairly discounted shipping rates to foreign shippers.
     However, according to Nomura, the Trump administration is also seeking higher postal rates (by 9-12%) on services USPS renders to the likes of Amazon, UPS and other major shippers.

Cathy RobersonMy Analyst Told Me

     “The biggest thing is higher prices for shipments from China to the U.S.,” said Cathy Roberson, founder and head analyst at U.S.-based consulting firm Logistics Trends & Insights.
     “This will hurt e-commerce providers such as Amazon and eBay, eBay especially because they have a partnership agreement with the USPS for its ePacket solution.
     “However, it could benefit the express providers - UPS, FedEx and DHL - because it would force shippers to pay the ‘Big Three’ prices for shipping instead. UPS has been a proponent of the U.S. leaving the UPU or renegotiating for a more level playing field for some time now.
     “I don't think we'll see less air cargo because of this. I believe cross-border e-commerce is here to stay regardless, particularly as more B2B transactions are conducted online.”

Spreading Impact of UPU Exit

     Roberson also noted that withdrawing from the UPU would not only affect China, but also other countries deemed ‘developing’ or ‘emerging’.
     “They all receive lower shipping pricing, but if the U.S. does leave, they will lose that privilege to and from the U.S. as well,” she said. “Keep in mind though, it is a one-year process for the U.S. to leave the UPU and there will be negotiations - perhaps a reclassification of China? Who knows.”

Higher Postal Costs In The Wings?

     Nomura, meanwhile, said that the broader implication of Trump’s move succeeding in its demand for a fairer terminal dues compensation system for USPS would be higher postal costs for postal operators across the board, particularly, those in the lower-tiered classification country rankings.
     “This consequently would translate to pricier e-commerce goods,” the analyst noted. “For example, those shipped from China, when factoring in the higher revised shipping costs, which could have a negative chain reaction on the last-mile players in ASEAN if it results in lower demand.”
     However, the likely key beneficiary to this potential change in terminal dues structure by the UPU in the event Trump succeeds in negotiating a fairer deal with UPU, are postal operators in the higher-tiered countries “as their undercharged amount naturalizes to zero”.
     Nomura added: “Within our ASEAN logistics coverage, we see Singapore Post as the primary beneficiary - Singapore ranks one tier below U.S. - in way of receiving higher compensation for terminal dues collected from the lower-tiered postal operators. On the flipside, however, with e-commerce shipments being at risk of seeing demand waning due to higher shipping cost across the board, this could consequently result in slower transshipment volume growth handled by SPOST.
     “At this juncture, the development is pretty fluid and, considering the amount undercharged by the U.S., the Trump administration may prefer to negotiate postal rates on a bilateral basis while, for other postal operators, it would likely remain a status quo.”

Nicola HughesThe Disruption Factor

     As the negotiations proceed, Nicola Hughes, Air Cargo Business Development at Freight Investor Services (FIS), said air freight markets would be disrupted as shippers evaluated the potential outcomes.
     “As the U.S. begins the process of the leaving the Universal Postal Union in a bid to stop subsidized international parcel delivery rates, we expect to see a rush of shipments for small parcels going from China to the West ahead of the rates rise,” she told FlyingTypers.
     “Depending on capacity availability, this could have an impact on air cargo rates in the short term, and long term we may see e-commerce providers looking for other solutions to avoid the increased delivery rates.”

For Part 1 click here.


john Gemmell, Simon Caviezel, Claudine Bonthoux, Olivier Bijaoui and John Keery

Dick Judy     The late Richard (Dick) Judy (pictured in his office) served as top executive at Miami International Airport for many years and is generally credited with putting that gateway on a firm path to greatness.
     Once I asked Dick, who was the go-to ground handler in Miami air cargo, and he said without hesitation “Claude Bijaoui”.
     “Claude Bijaoui arrived in Miami from France with investment and innovation and with not a small amount of heart, and he pioneered cargo ground handling here that almost single-handedly put Miami air cargo on the map,” Dick Judy told me in 1988.

Olivier and Claude Bijaoui Walking Legend

     Imagine my surprise at TIACA ACF, whilst strolling down one of those wide aisles, bumping into the man himself, Claude Bijaoui.
     Claude at 84, is still sharp as they come with a quick wit, and positive outlook that is by any measure refreshingly bright, welcome and needed in air cargo today.
     Our brief encounter led to longer conversation for these pages upcoming.
     But one thing he said gets some air here.
     While taking nothing for granted, Claude recalled his friend Dick Judy saying:
     “He was a businessman top to bottom.
     “Tough and driven, Dick Judy created an environment that allowed everyone to be successful,” Claude said.

Enter Transborder Aviation

     Meeting Claude was even more poignant, as the top news at TIACA ACF 2018 was that Claude’s son Olivier, having served as Chairman of WFS for over 30 years, has launched a new handling company in USA called Transborder Aviation.
     Olivier, an apple that did not fall very far from the Bijaoui family tree, rocketed WFS to the top of the heap in world air cargo handling,
     Simon Caviezel, founder of Cargo Airport Services (CAS) is partner in the new venture that also includes an “A-List” of legendary ground handling dreamers and doers including John Gemmell, John Keery, Claudine Bonthoux and some others.
     Transborder, based in Sunrise, Florida (Ft. Lauderdale) has an ambitious plan to become a household word in air cargo by this time next year.

It’s the Joust

     Wondered why these men who set records and are now sitting good whilst up in years, would want to come back to cargo, but then looked at Claude who is not part of this venture, but I imagine is nodding approval from the sidelines, and later myself in the mirror this morning and thought:
     “Are you kidding? It’s the joust!”

Ground Handling Equipment Boom

     In the case of Messer’s Bijaoui and Caviezel, a recent report that the global airport logistics systems market is expected to grow at a clip of 10.3% from 2018 to reach USD 14.1 billion by 2025 might have played into the comeback plan.
     But face to face with determination and the right stuff to be sure, both men and their start up team are embracing a new beginning that will specialize amongst other things, in developing techniques and capabilities to keep abreast and even ahead in the expected continued avalanche of e-cargo.
     “The mid-size market is asking for quality with network service at a time when new challenges and opportunities are emerging,” Olivier Bijaoui said.
     Today in air cargo handling what’s old is news.
     No doubt in USA and elsewhere air cargo is in for a great ride.

  “Introduction of new routes in our Winter Schedule and beyond, offers great new opportunities for us,” said Ashwin Bhat, Head of Cargo with Swiss International Air Lines.
  “In addition to our increased cargo capacity with the arrival of new Boeing 777-300ERs, new destinations allow us to showcase our best-in-class quality and service on a variety of global routes.”
  New flights include destinations in Asia, South America and Africa.

Ho Ho Ho Chi Minh

  Flights to Ho Chi Minh City/SGN from Zurich begin November 15, 2018, operated twice weekly.
  Colombo, Sri Lanka becomes a Swiss address twice weekly November 3, 2018.
  Buenos Aires, Argentina is added on November 7, also twice weekly.

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Edna St. Vincent Millay
Edna St. Vincent Millay
The Little Ghost

I knew her for a little ghost
That in my garden walked;
The wall is high—higher than most—
And the green gate was locked.

And yet I did not think of that
Till after she was gone—
I knew her by the broad white hat,
All ruffled, she had on.

By the dear ruffles round her feet,
By her small hands that hung
In their lace mitts, austere and sweet,
Her gown’s white folds among.

I watched to see if she would stay,
What she would do—and oh!
She looked as if she liked the way
I let my garden grow!

She bent above my favorite mint
With conscious garden grace,
She smiled and smiled—there was no hint
Of sadness in her face.

She held her gown on either side
To let her slippers show,
And up the walk she went with pride,
The way great ladies go.

And where the wall is built in new
And is of ivy bare
She paused—then opened and passed through
A gate that once was there.

If You Missed Any Of The Previous 3 Issues Of FlyingTypers
Access complete issue by clicking on issue icon or
Access specific articles by clicking on article title
Vol. 17 No. 71
Last Picture Show At TIACA
Voice For Cargo At Qatar Airways
Chuckles for October 22, 2018
Vol. 17 No. 72
ATC Toronto Road Show
Chuckles for October 26, 2018
A New Paige For Atlanta
A Greatest Race At Biggest Airport

Vol 17. No. 73
Hurry Up & Wait Exhausts JFK
Chuckles for October 29, 2018
U.S. Puts Stamp On UPU Withdraw
Mail Delivered The Airlines
UTIKAD On The Move

Publisher-Geoffrey Arend • Managing Editor-Flossie Arend • Editor Emeritus-Richard Malkin
Film Editor-Ralph Arend • Special Assignments-Sabiha Arend, Emily Arend

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