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   Vol. 18 No. 54
Monday August 26, 2019

  All Together Now—Uncanny occurrence last Friday August 23, almost 30 years to the day when people in the Baltic States formed a human chain and sang against Soviet Russia accelerating the communist downfall. In Hong Kong, protesters, also singing, formed a human chain across Kowloon.
  Mass demonstrations, which began in June 2019 over a now-suspended extradition bill to China, continued one more weekend in Hong Kong.

  Rarely has Cathay Pacific been taken to task, but that is exactly what happened when cabin crew got involved in protests, and employees were arrested a week ago.
  Mainland Communist China holding 30% of Cathay shares, unleashed its full ire against Cathay and took down the carrier long-regarded as the royalty of Hong Kong business, humiliating and forcing its two top executives to resign.

Not High On The Hogg. News that sent shock waves around the world—Cathay Pacific CEO Rupert Hogg was forced out, resigning Friday, August 16, 2019, following pressure by Beijing on the Hong Kong carrier over participation by some of its employees in anti-government protests.

  That move shouts loud and clear, sending an unmistakable signal that corporate Hong Kong better knuckle under to the will of Mainland China.
  “There is an old saying,” Mark Simon of Next Media Hong Kong told British Television’s Channel 4 News, “you kill the chickens to scare the monkeys.
  “In this case they killed the monkey to scare all the chickens.
  “The idea that Cathay can get keelhauled across the China media scape lets everyone else know to run to the hills.”
  While firms continue under pressure to toe the government line, the protests are still going on, as you read this story.
  Mark Simon described as ‘the loud American’ adds:
  “With all the talk we hear about China, we tend to forget that they are a Marxist-Leninist regime.
  “Marxist, the economic part; Leninist, is the political,” Mark Simon said.
  So far no comment, other than seemingly falling into line, from many of the ‘Hongs’ in Hong Kong, including Swire, the parent of Cathay Pacific, Jardines, Hutchinsons, HSBC and others.
  “There is an unseasonal chill in the air, a climate of fear,” Jonathan Miller of Channel Four said, adding:
  “The laws that set Hong Kong apart and give companies their corporate advantage are threatened now that big business in Hong Kong know they have to kiss the ring of Xi Jinping.”
  Meantime down on the ground as business closed last week, Hong Kong protesters formed a human chain the length of the island through Kowloon and into the northern territories up to the border with Mainland China after authorities banned airport protests.
  As YouTube, Twitter, Facebook and other social media suffered large blocks of content shutdown, the people of Hong Kong continued their massive peaceful protests.

Chuckles For August 25, 2014

     In a year of uncertainty marred by huge unrest in everybody’s favorite gateway, Hong Kong, we asked Mike White, President of USA-based Cargo Network Services (CNS) to share some thoughts that might also act as a beacon for many of us in transportation trussed up in tariffs and an otherwise tough (to the point of being even a nasty awakening) business year.
     So, pour a coffee if you are at work, or an adult beverage if it is after hours, pull up a chair, take this in, and then maybe call up a colleague and have the story read (if they have not seen it) so you can both help widen the school of thought, as 2019 slogs along.
     We like that the world has an organization like CNS that has named someone who has his finger on the transportation pulse, and his heart and soul into lifting air cargo and helping everybody.
     Dare we say it again:
     We like Mike.
     Since we know Mike as one of the smartest guys, who not only knows something, but he also is always listening, we share his thoughts with you right now.

FT:  What impact has Hong Kong unrest having on cargo to and from China & Intra Asia Pacific?
MW: The unrest in HKG has caused of course some very limited issues for the short term. What hasn’t been discussed as much is the growth of other carriers from the region which are expanding service from the manufacturing areas within China.
     For instance SF Airlines from Hangzhou (HGH) and New York (JFK) and Uni-Top Airlines from Wuhan (WUH) to Chicago (ORD) with freighters are new routes not seen. We are also seeing new additional service from China with recent articles talking about how United will enter the San Francisco (SFO) to Guangzhou (CAN) sector, as well as new additional service to HKG. There is a lot of capacity growth in the China market.

FT:  Also, what do you think will be the impact for the traditional Christmas rush?
MW: The recent backing off by President Trump on tariffs from China until the end of the year will cause most likely a short-term demand for electronics and smaller priced goods for the Christmas rush. The concern is, will there be a drop-off after Christmas, if the tariffs do kick in? This may cause a stocking of goods early, to beat the tariffs.

FT:  What other impacts?
MW: The discussion by U.S. government officials is the impact of raising the de minimis value of goods for U.S. customs clearance to $800. This has somewhat opened issues on how cargo is shipped into the U.S. A lot of these types of cargo that are under the $800 value. This means a lot more shipments being sent in smaller or single quantities. CBP has reported a 30% increase in the number of house waybill shipments. Many of these shipments are being sent via the postal systems, especially those being shipped from China Post to USPS. CBP has also increased crackdown on electronic data for the shipments and a higher increase of screening to reduce illicit and counterfeit shipments.
     The other issue is the global impact is Europe. With the recent political issues in Italy and the upcoming EU budget deadline may have further impact on the balance of Europe. There of course is the concern over what issues BREXIT may bring on.
     Overall, sanctions and tariffs are causing things to become somewhat more difficult for shippers and brokers to be in compliance.

FT:  Near and long term? What should shippers do?
MW: Shippers must become more and more knowledgeable of staying regulatory compliant. It is not a time to back off from automation. Paperless export in the CBP Automated Commercial Environment (ACE) is in pilot stage with all transport carriers. It is expected that ACE Export will be coming sooner than we think, and forwarders, shippers and carriers must not slow down on moving to a paperless environment.

FT:  Any other thoughts about this year, tariffs? Do you expect an easing of tariffs? Our take is that Trump has loosened up a bit as markets took a big hit last week.
MW: As we all know, the Trump administration can change in a minute. The President has backed down some and it something to watch as to how the Administration deals with, not just China, but other areas as well.
     High-value goods that travel by air were to be the last of the tariff-covered imports, but it now appears that they are to be part of the mix. If the White House reduces the de minimis values, this could have more impact on air cargo than the tariffs themselves.

FT:  Stocks are at times flat in summer but 800 points in one day recently was an eye opener about possible recession.
MW: In the CNS Summer 2018 Air Cargo Focus I wrote about the factors of an upcoming “Perfect Storm”. It is a concern that the storm is coming and here is what I said. There are several factors that must be watched that could cause this perfect storm. These include airport facility constraints, price of oil, truck driver shortages, trade sanctions and geopolitical issues. We have seen most of these issues already taking place. Question will be, how does air cargo take these into consideration when planning their network and fleets?
     For CNS we are focusing on airport constraints and have begun initial steps on looking at JFK. We are seeing some ideas already being developed and have had good discussions with the Port Authority on their development of new air cargo facilities.
     We have also begun discussions with airlines, forwarders and ground handlers to get their views of those in the know. Can we find some best practices, improved communication or other areas that we can identify to improve upon?      We plan on learning more, and sharing that with members of our CNS Advisory Board and discussing what we as an industry can do to improve our industry.

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Summer Fun

Speed Gibson

  Air cargo readies the biggest cargo show of the year in the U.S., as Air Cargo Americas meets just off the main runways of Miami International Airport at the World Trade Center October 29-31. Miami International Airport said that it served 688,000 more passengers for the first six months of 2019 than last year, up in fact three percent to 23.4 million travelers.
  During the first half of 2019, American Airlines launched new service Miami-Cordoba, Argentina service on June 7.
  Four international passenger airlines commenced MIA service with new routes including Norwegian MIA/Gatwick; Royal Air Maroc Miami-Casablanca; LOT Polish Airlines Miami/Warsaw; and Corsair to Paris Orly.
  “We have had an outstanding year so far in terms of expanding and diversifying our route network,” said Lester Sola, MIA Director and CEO.
  “We look forward to the remainder of 2019 bringing additional growth and more exciting route development announcements.”

Fall CalendarULD CARE
September 16-18, Montreal
Breakthrough To Excellence

October 1-4 Cape Town
Where Technology & Logistics Meet

Air & Sea Cargo Americas
October 29-31, Miami

Logitrans Turkey
November 13-15, Istanbul

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Publisher-Geoffrey Arend • Managing Editor-Flossie Arend • Editor Emeritus-Richard Malkin
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