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   Vol. 22 No. 41
Tuesday November 14, 2023
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Jan Krems

     The first thing you'll notice if you walk with Jan Krems is that he is probably moving faster than you are.
     It seems that whether connecting to an appointment or just going out to lunch or even on his way to relax somewhere (an unlikely possibility), Jan is determined to get there soonest!
     Once we were both at a convention somewhere and it was 0500, and as we passed each other moving silently in opposite directions during an early morning constitutional, I felt the rush.
     For a long time now, been wondering what makes the man tick who made history during the pandemic, and yet today is rewriting the script as United Airlines Cargo President with imagination and brilliance, as he pivots and inspires?
     But is Jan racing with the clock?
     At my age you think about those things.
     I think not.
     His approach is total engagement whilst having the time of his life advancing air cargo.
     Lucky for tomorrow, Jan Krem's air cargo looks better every day.


FT:  
How would you characterize 2023 in the overall scheme of things? What do you know now that is guiding your moves for the rest of the year and shall serve to continue into 2024? (How is 2023 and what do you expect in 2024)
JK:  This is a year of resetting and adaptation. After the turbulent events of the past couple of years, our primary focus for this year has been to return to normalcy—or at least get as close to it as possible.
     Our approach in 2023 has been many-sided. We've taken a look at various markets, seeking opportunities for business growth, identifying areas where we can tap into additional capacity on our existing routes, and exploring new partnerships that can increase our operations. One trend we've observed is the return of some business from freighters to airlines, as some players the industry may have overcommitted to customers and struggled to maintain profitability.
     Throughout this year, our commitment to delivering added value has continued to pay off. We've managed to maintain a respectable level of yields, even in a challenging business landscape where price wars are a constant threat. Many airlines seem to be in a race to acquire business at any cost, even if it's not financially sustainable—I won’t name them—but they are not profitable. Our focus on value addition has been a key differentiator.
     The importance of relationships has been more evident than ever. We've witnessed both positive and negative examples of how partnerships can shape the industry. Navigating this tough year has been challenging, especially when compared to the heights we previously achieved. However, the support and understanding of our board members, who recognize the need for adaptation during this reset year, have been invaluable.
     Looking ahead to 2024, I am cautiously optimistic. We don't anticipate a significant shift in our budget compared to 2023. We believe that we've already witnessed the bottoming out of yields, with some regions, notably Asia, even showing signs of yield improvement. As China and other Asian countries gradually open up further, we anticipate a gradual return to this region.
     We look forward to 2024 with cautious optimism. We expect a focus on stability and an eventual return to growth in key markets.

Jan Krems

FT:  What would you say as top United Cargo executive to the fellow air cargo community as what everyone should be focusing upon to advance air cargo moving forward? (What should everyone be focusing upon to advance air cargo moving forward)
JK:  As an industry, we should collectively focus on:
       Recognize the Value: COVID-19 demonstrated the important role air cargo plays in global supply chains. We must continue to emphasize and communicate the value of air cargo to businesses and governments alike.
       Sustainability: Sustainability is not just a buzzword; it's a necessary requirement for the future. Invest in eco-friendly practices and technologies to reduce the industry's carbon footprint.
       Connectivity: Strengthening connectivity and collaboration across the air cargo ecosystem is key. The ability to seamlessly integrate and share data and resources will drive efficiency and reliability.
       Digital Transformation: Embrace digitalization to streamline processes, reduce paperwork, and expedite transactions. Being faster, more efficient, and less reliant on manual paperwork is the way forward.
       Cost Efficiency: In an increasingly competitive landscape, focus on cost efficiency. Seek ways to make deals that benefit both you and your customers, ultimately driving down costs and providing competitive pricing.
     By embracing these ideas, we can advance air cargo as an industry. United Cargo is playing an active role in driving these advancements, and we encourage all stakeholders to join us on this journey.

Jan Krems

FT:  What surprised you post COVID as pax capacity and pax travel came back? The impact on cargo . . . rates adjustments, etc.
JK:  The post-COVID era has brought about some surprising shifts in the aviation industry. One of the biggest has been the enthusiasm of passengers to resume traveling. Despite the uncertainties of the pandemic, people want to explore, connect with loved ones, and experience new destinations. Also unexpected was the rapid return of business travel—we predicted it, but it is good to see that it happened. While virtual meetings and collaboration tools like Microsoft Teams and Zoom had become essential during the pandemic, it was surprising to witness how swiftly business passengers expressed their eagerness to return to face-to-face meetings. In-person meetings for building relationships and closing deals is important in every industry.
     On the cargo side, there was an unexpected drop in air freight yields as passenger travel demand picked up. This was due to the increased availability of cargo space on passenger flights, intensifying competition and lowering yields.
     The post-COVID landscape has highlighted the resilience of the travel sector.

FT:  Two words that seem to continue to be on everyone’s lips “Sustainability” and “Digitalization”. United has certainly been on the forefront of emissions reduction, carbon footprint advocacy and the investment in electric. Can you comment on both subjects?
JK:  We believe the industry needs to be bolder when it comes to climate change; our strategy to become 100% green is centered around four key pathways:
     A.   Reducing our environmental footprint with investments in Sustainable Aviation Fuel (SAF),
     B.   Innovating transformative carbon reduction technology,
     C.   Removing carbon emissions in the atmosphere, and most importantly:
     D.   United seeks out suppliers with commitments to sustainable business practices in order to enhance the sustainability of United’s operations, products, and services. Collaborating with our partners: freight forwarders, Cool-chain container providers, passengers, airports, and policymakers to facilitate faster action and the commercialization of technology solutions concerning climate change.
     From a cargo perspective, collaboration is key. We must work together to and empower and define how customers and shippers make smarter choices to reduce emissions.
     Digital innovations in the air cargo industry can increase revenue by improving operational efficiency and enhancing the customer experience online. Digital automation in cargo handling and documentation ultimately reduces labor costs, removes human error brought on by manual work, and streamlines processes.      Digital solutions enable better forecasting, optimizing cargo capacity, and pricing strategies which all ultimately lead to increased revenue opportunities. Prioritizing digital capabilities will help the freight industry adapt to changing market dynamics, meet customer needs and drive revenue growth.

FT:  United is positioning itself in Asia. What are your initiatives for cargo in that region?
JK:  Our key message is clear, we are back again. We have in our pockets the biggest increase of flight activity in the past years. We are going to increase flights more than double in Oceania and increase flights in Hong Kong, Taipei, Shanghai and Tokyo. We are restarting Beijing again and start new services to Manila. As more countries open up, we will look at restarting routes and expanding our network.

FT:  Can you share other priorities?
JK:  Our priorities at United Cargo are driven by a commitment to excellence and customer satisfaction. First and foremost, we maintain a customer-centric approach, placing our customers' needs, preferences, and challenges at the forefront of our operations. Building strong relationships within the industry is another core focus. Collaborative partnerships with stakeholders, including airlines, logistics providers, and government agencies, form the foundation of our growth and innovation efforts. These relationships open up new avenues for us to better serve our customers.
     Adding value is an fundamental aspect of our approach. This includes providing specialized services, offering end-to-end solutions, or creating unique selling points that set us apart from the competition.
     Quality assurance is non-negotiable for us. We uphold consistently high standards of quality throughout our operations, from cargo handling to shipment tracking. This unwavering commitment builds trust and reliability.
     Adaptability is a vital trait in the ever-evolving air cargo industry. Staying ahead requires agility and a keen eye on market trends. We proactively explore emerging opportunities and remain ready to pivot as needed.
     Having a global perspective is imperative in our increasingly interconnected world. We closely monitor global shifts in manufacturing and trade, especially the relocation of factories, such as those in Asia. This presents both opportunities and challenges that we are prepared to address effectively.
     Our approach also emphasizes the importance of two-way agreements with customers, moving beyond one-way transactions to create mutually beneficial partnerships that leverage our strengths and add value to both parties.      
     Expanding our global footprint with the same customer in different regions is a winning strategy.
     Additionally, we are focused on enhancing our e-strategy, facilitating direct connections with customers' systems, and offering innovative ways to book shipments.
     Sustainability remains a top priority, aligned with the crucial need for environmental responsibility in the aviation industry.
     Keeping our customers close and increasing the range of added-value products, including our Specialty offerings like TempControl, QuickPak, LifeGuard, and LifeGuardXL, are integral to our service portfolio.
     In essence, our priorities are rooted in delivering exceptional service, fostering collaboration, staying adaptable, and addressing the evolving needs of our customers and the industry as a whole.

FT:  You came to your post as a professional agent of change. What you headed up was going through IT changes, rapid expansion, adding new destinations both at home and abroad and then had to exist during a global pandemic during which the employee demographics changed drastically. Give yourself and the team a report card.
JK:  When reflecting on the challenges and transformations we've experienced, I would give myself a rating of 8. However, I firmly believe that it's the extraordinary dedication and perseverance of our team that deserves the highest praise. I would rate my team a 10.
     Our team has been the driving force behind the IT changes, rapid expansion, and the successful addition of new destinations, both domestically and internationally. They have consistently demonstrated a commitment to innovation, excellence, and adaptability. Even in the face of the global pandemic, when employee demographics changed drastically, our team rose to the occasion.
It's our collaborative effort and the remarkable teamwork of our employees that have enabled us to overcome obstacles, drive positive changes, and emerge stronger. I'm proud of what we've accomplished together, and I have a lot of confidence in our team's ability to excel in the future.
     Business report: What parts of the world look good moving forward in 2024?
When we assess the global landscape for 2024, several regions stand out with promising prospects:
       SE Asia appears to be on a positive trajectory and a key focus for United Cargo.
       Certain parts of Europe, including France and Italy, show particularly encouraging signs.
       Specific regions within the United States are displaying positive indicators.
       India's economic potential and burgeoning middle class continue to make it an attractive market. However, it's important to note that geopolitical conflicts, such as airspace restrictions due to tensions involving Russia, have impacted operations in this region.
       An increase in stability and economic activity in certain Middle Eastern countries could translate to growth opportunities for air cargo.
     While these regions hold promise, it's important to note that the geopolitical landscape and other external factors can influence the air cargo industry's trajectory. We remain adaptable to navigate any challenges that may arise, ensuring that we continue to deliver reliable and efficient cargo services to our customers worldwide.
GDA


Chuckles For November 14, 2023

Vineet Malhotra, Amar More, Rajesh Panicker

  Kale Logistics Solutions (Kale) will be implementing an Airport Cargo Community System (ACS) for Istanbul Grand Airport (IGA), making it the first airport in Turkey to embark on digitalising cargo data exchange.
  The state-of-the-art cargo community platform, Airport Kargo Paydas¸ Platformu (KPP), developed by Kale, will be implemented at IGA in collaboration with TroyNet, the airport’s digital transformation partner.
  The ACS platform will assist IGA in becoming a regional cargo transfer centre for the world's leading cargo companies by facilitating end-to-end digitalisation, enhancing efficiency, streamlining procedures, and automating communication for stakeholders at its cargo precinct.
Selahattin Bilgen  "Istanbul is a critical air cargo connection point and we are determined to develop and expand our air cargo network – the implementation of KPP is an important milestone in providing best-in-class services to our customers and stakeholders," said Selahattin Bilgen, (right) Deputy Chief Executive Officer (CEO), IGA.
  “We want to take our place in the sector as one of the world's most important global transfer centres and with this system, we will encourage digital trade, facilitate business, and establish a digital infrastructure to ensure that cargo moves faster at the least possible cost.”
  The ACS platform will offer IGA’s operators and its allied community, including agents, transporters, cargo handling companies, airlines, Customs, and security agencies, access to all cargo-related information on one common platform.
Emre Serpen   “For more than a decade, Kale has been combining its deep industry knowledge and experience of working with more than 100 air cargo stations to help airports transform into smart logistics hubs,” said Vineet Malhotra, Director and Co-Founder of Kale Logistics Solutions.
  “Our next-gen ACS is transforming IGA’s cargo operations with tech agility by supporting seamless customer experience, and optimising value chains for airports and nations at large.”
  The integration will contribute to the reduction of cargo lead times, speed up processing, reduce costs, and improve asset utilisation for all stakeholders.
“We are very pleased with IGA’s decision to implement this project with our partner Kale, and we look forward to KPP making a positive contribution to all stakeholders by enabling air cargo and logistics sector growth,” said Dr. Emre Serpen, (left) Chief Executive, TroyNet.
GDA

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Gautam Adani

     Happy Diwali 2023 as The Adani Group, headed by the second-richest man in the world, Gautam Adani, could be seriously looking at starting a cargo airline.
     A whisper of the word although no official announcements yet from the Group regarding a cargo airline venture , but with all things Adani, it cannot be ignored!
     On October 23 this year, the Adani Group, announced in a regulatory filing with the Bombay Stock Exchange and the National Stock Exchange of India that the “Adani Ports and Special Economic Zone Limited (APSEZL) has incorporated a wholly owned subsidiary company Udanvat Leasing IFSC Ltd”.
     Udanvat has been incorporated to carry out business activity of owning and leasing of aircraft and it is registered to function from Gujarat International Finance Tec-City (GIFT City), in the state of Gujarat.
     GIFT City is a modern business center that offers liberalised corporate regulations and tax incentives.
     The move was not surprising. The group manages seven airports in the country – Mumbai, Ahmedabad, Jaipur, Thiruvananthapuram, Guwahati, Lucknow and Mangaluru – and, as a major player in the aviation sector, it was a logical move. Additionally, the group is involved in logistics too.
Karan Adani      Headed by Gautam Adani’s son, Karan Adani, APSEZ is being transformed to form an integrated logistics company with an objective to add further value for the customers.
     APSEZ has expanded rapidly starting with two ports to a string of ten ports and terminals. Today, it is said that there is an Adani port at almost every 500 km of the Indian coastline.
     The seven airports promise to provide 2-3 million metric tons of cargo and 700 thousand take-offs and landings in addition to around 100 million passengers. Added to the seven, the Adani Group in a joint venture with the City and Industrial Development Corporation of Maharashtra (CIDCO) has been working on the Navi Mumbai International Airport (the Navi Mumbai Greenfield International airport has been conceived as an alternative to the present Mumbai International Airport or the Chhatrapati Shivaji Maharaj international airport, which has reached its saturation point).
     The airport is being constructed in four phases and the first two phases will be completed by December 2024, and “is preparing for Operational Readiness and Airport Transition by December 2024,” Gautam Adani mentioned in his address at the Adani Group AGM in July this year.
     By 2032, the airport will be able to handle 2.5 million tons (MT) of cargo and around 90 million passengers
     In short, the group, in the near future will be master of two major airports from the city which sees high tonnages and high-value cargo.
     In little over three years, the Adani Group, through the Adani Airports Holding Limited (AAHL), has become the largest airport operator in India. In a statement in July 2021 mentioned that, “AAHL is now India's largest airport infrastructure company, accounting for 25 percent airport footfalls. With the addition of MIAL (Mumbai International Airport Limited), it will now also control 33 percent of India's air cargo traffic”.
Jeet Adani     Readers of FlyingTypers might remember the interview with Jeet Adani, Gautam Adani’s other son, around June 2022, who spearheads the Adani Airports business, about the group’s plans for cargo. Speaking about Adani Airports Cargo’s plans to boost cargo tonnage, he said, “All our airports present immense air cargo growth potential, both domestic and international. In the short term, focus is on increasing interim cargo infrastructure in the quickest way possible so that all airports provide enough cargo capacity and infrastructure to improve service levels, provide seamless IT connectivity and improve volumes. In the (not so) long term, all our airports will be equipped with Integrated Cargo Terminals (ICT) with all products and services under one roof (including Transshipment) while the ICTs will be designed and developed to provide enough capacity at least for the next 5 years, based on foreseeable volume demand. All the ICTs will be modular and scalable, with some being highly automated. Roll out of ICTs are expected to bring global service and infrastructure standards to our airports.”
     Perhaps, what is more important is that there are no Indian aircraft leasing companies and most carriers lease aircraft – 80 percent of India’s fleet is leased—from those based in Ireland. A major issue faced by lessors for the lease rentals is currency fluctuations. In fact, Air India was the first scheduled Indian airline to have acquired an Airbus A350—from an aircraft lease company registered in GIFT City.
     Udanvat Leasing IFSC Ltd has made no announcements regarding its business but aviation experts believe that an air cargo carrier could be coming soon from the group. According to air cargo stakeholders, the carrier, when it starts operations, would be focusing on e-commerce. The group has the infrastructure, the ports and airports -- with the foremost among them being Mumbai -- and it will mean taking just a logical step to complete the circle.
     It may be mentioned that in January 2021, the Gujarat government signed a Memorandum of Understanding (MoU) with APSEZ to set up the country’s biggest multi-modal logistics park at Virochan Nagar, near Sanand in Ahmedabad. The park, spread across 1,450 acres, will attract an investment of Rs 50,000 crore, while providing direct and indirect employment to 25,000 people. The park will have a dedicated air cargo complex and provide direct air, rail and road connectivity.
     The announcement also said, “The air cargo terminal will have a 4.6-km runway, which will be capable of handling large carrier vehicles like airplanes. It will also provide a global platform to the local export and import market. A rail freight terminal will also be established. This will be directly connected to the Delhi-Mumbai industrial corridor.”
     However, it might be mentioned that the moves for a cargo airline by the group could take some time given the adverse publicity it has been receiving after Hindenburg unearthed wrongdoings, which the Group has refuted. Also, it might be worthwhile to point out that India will see a general election in 2024 and if Prime Minister Narendra Modi’s Bharatiya Janata Party (the Prime Minister has been a staunch supporter of Gautam Adani) sees a decline in its fortunes, the Adani Group could find the going tough.
Tirthankar Ghosh

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