Vol. 7 No. 142                                              WE COVER THE WORLD                                      Monday December 22, 2008

What Lies Ahead In 2009

     Did you ever notice that people you like and admire usually come up big when the chips are down?
     Maybe that is the measure that separates the good guys from the bad or maybe it is just that the real heavy duty people that pull the air cargo wagon and advance the industry best, also seem to stay on message no matter what the situation, while also refusing to panic.
     So in an industry that has its share of great people it just makes sense that some of the best and the brightest would offer some words of hope and positive attitude just as the old year that started out positive turned into an October to forget followed by less than spectacular November and December.
     So out with the old year and in with 2009.
     Here are some smart and thankfully outspoken people that cast some focus in what continue to be dark days top to bottom for many people in this business as latest news from Finnair says 80 out of 300 plus people in that carrier’s air cargo department are out of work one week before Christmas or 9,500 people that used to be DHL and ABX Air in USA are out of a job as DHL packs it in, while Kalitta Air has just said that eight B747s are about to be parked early next month.
     Our regular readers may have caught the exclusive live video we did recently (if not, click on photo or here) with Swiss World Cargo’s top executive Oliver Evans.
     Oliver, who speaks five languages has perspective from at least that many vantage points as he pilots a Swiss Cargo that is resurgent with new destinations and capacity and the business to prove it in 2008.
     “We see opportunities in the changing business climate,” Oliver says.
     “You just have to think into these things understanding that looking in a different direction can be beneficial all around.
     “Sure times are tough but there is always opportunity if you are willing to look for it.”
     Another concise take on doing business right now comes from Bill Boesch.
     We just love this guy for telling it like it is and never pulling his punches.
      Bill has been building logistics in Iraq in a selfless effort that is both patriotic and invaluable.
     Politics aside, someday Bill Boesch’s contributions to air cargo for more than 40 years from Seaboard World to Pan Am to his landmark tenure as President of American Airlines Cargo will be recalled for pioneering and innovation and courage.
     With enough money to be comfortable for the rest of his life Bill is now operating out of a foxhole somewhere while providing critical knowledge to creating a workable supply chain in and out of Iraq, spending long hours and months sleeping in tents often smack dab in the middle of harm’s way.
     An awards-happy air cargo industry both on a private organization and industry association level needs to recognize this guy as maybe the greatest pure air cargo devotee the world has ever seen.
     Earlier this year in the shadow of The Statue of Liberty when Bill was recognized in the USA receiving the prestigious Medal of Freedom on Ellis Island pictured here with daughters, Heather (right) and Robin (left) as the first person in the history of air cargo to receive this highly coveted award, many thought the lady’s lamp shone a little brighter.
     So it is no surprise when Bill sniffs the landscape of gloom and doom and he also says
     “Time for a reality check.”
     “Most people that I talk with in the air cargo business are looking at the present worldwide financial crisis as the horrific after effect of the last few years including soaring fuel prices, security rules and government’s antitrust investigations.
     “But some note that this financial crisis can be good for the industry.
     “Fuel prices are coming down and it looks like the worst is over on the antitrust situations.
     “As a result most of the airlines cargo executives have cut their costs, reduced their capacity, put in place their security programs and have understood the rules of the road for government compliance.
     “Now the world is being hit by a financial crisis and as a result of reduced consumer spending, inventories are decreasing.
     “Anyone who has been around this industry knows that reduced inventories are the prelude to increased air cargo volumes.
     “I believe that the economies of the world will rebound within the next 6 to 8 months, consumers will start to spend again and large amounts of air cargo will be needed to maintain the supply of goods because of the reduced inventory levels.
     “Air cargo industry is at the edge of major growth by mid 2009.”
     While others may be throwing their hands in the air and profess an economic downturn timeline of a few months to a few years, Jo Frigger (left), CEO of EMO Trans based near JFK International Airport in New York says that he is “cautiously optimistic.”
     “EMO Trans began providing professional air freight services in Germany in 1965 and has been around long enough at this point to have experienced every manner of bust and boom in air cargo.
     "We know that in order to be successful you must offer total capabilities to include virtually every facet of worldwide shipping.
     "Despite the current global challenges we remain confident in our abilities to weather any situation based on our ongoing commitment to providing door-to-door solutions for each individual customer.
     "In a business where creativity is often the key to problem solving, there is no substitute for human ingenuity.
     Dr. Andreas Otto (right), Lufthansa Cargo board member for sales and marketing provided a market outlook "Meet the Trends" earlier this month to a group of press at a prepare your own dinner in Frankfurt.
     For the first course Mr. Otto presented an optimistic outlook, for the second a realistic view and–for closers a third version–a rather gloomy crisis scenario.
     While the optimistic scenario predicts a market recovery by mid-2009, the realistic model foresees a 2 to 3 year term of recession.
     Worst case however, is a disastrous combination of financial crash, economic downturn in combination with a crisis of the economic system.
     Thinking worst case while charged with making our own dinner made us think of an old saying:
     “Life is uncertain—eat dessert first.”
     “This triple crisis could cripple the global market for as long as 5 years,” Dr. Otto stated.
     So what does Lufthansa Cargo think will happen?
     Thankfully LH Cargo does not foresee the catastrophic scenario, but rather expects instead a combination of short to medium term economic downturn.
     "The good news," Dr. Otto said, "is that Lufthansa Cargo is outperforming the market despite our temporary decline of tonnage.
     "Yes, we presently are having some difficulties but we feel strong and fit for coping with the challenges that lie ahead," he emphasized.
     Lufthansa Cargo AG is also adopting some flexibly in adapting capacity to declining demand by returning two freighters MD-11F and a Boeing 747-400F to World Airways and replacing those aircraft with Boeing 747-400ERF aircraft in the fleet of the German-Chinese airfreight carrier Jade Cargo International.
     “Lufthansa Cargo is adapting capacity in face of increasingly difficult economic conditions and a distinct falloff in demand,“ Lufthansa Cargo Chairman Carsten Spohr (left) said.
     “We will continue operating all our 19 MD-11 freighters, while utilising the capacity adjustments to further improve our quality, reliability and punctuality.“
     From mid-2009, Lufthansa Cargo will also have capacities on the new Boeing 777-200LRF freighters in the AeroLogic fleet at its disposal.
     “The challenges are immense in face of the poor economic situation.
     “But Lufthansa Cargo is positioned excellently and is embarking optimistically on 2009,” underlined Spohr.
     “We have proved so often in the past that we can react quickly and flexibly to fluctuations in demand and that we have a high synergy potential in our Lufthansa Cargo Group.
     “Therefore, we will emerge from this market crisis stronger than before.”
     Another view to tomorrow comes from Aleks Popovich, IATA Head of Cargo.
     Aleks doesn’t look much like a weight lifter but lately that is exactly what he has been doing pulling double duty as top cargo executive of IATA and also puddle jumping between Geneva and Miami to serve as interim President of Cargo Network Services (CNS), IATA’s landmark airline/forwarder partnership initiative in USA, that among other things holds the best annual air cargo conference on these shores called The CNS Partnership Conference.
     Of course, CNS like the tulips comes in May.
     Before CNS, Aleks and company will host the most important air cargo conference of the new century in Bangkok, Thailand.
     The Third IATA World Cargo Symposium March 2-5, 2009 will combine "Focus on the Customer," with a critical call for the cargo supply chain to simplify, operate and compete in increasingly turbulent times.
     “High oil prices and falling demand, wiped out industry profitability
     “Whilst there has been some relief in the oil price in recent months, fuel is expected to represent about 36% of a typical airline's cost (and much higher in the case of a freighter operator), and the total fuel bill for the airline industry is forecast to be $186 billion.      The airline industry has not been standing still in driving efficiency.
     “Since 2001, sales and distribution unit costs have been reduced by 25% while fuel efficiency has increased by 19%. “But depite all of this the airline industry still faces a 2008 forecast loss of $5.2 billion.
     “The IATA Cargo agenda is to reduce industry cost and increase industry quality.
     “Less industry cost is the continued launch of IATA e-freight and more industry quality will be realized in strengthening of Cargo 2000!
     “Globally, IATA e-freight is making good and steady progress, though significant challenges remain.
     “In 2007 IATA e-freight was implemented in the Netherlands, Hong Kong, Singapore, UK, Canada and Sweden.
     “This year IATA e-freight has been implemented in Korean (ICN) and Germay (FRA) and launched in Australia, Denmark Dubai, France Luxembourg and Mauritius, New Zealand, Norway, Spain and the USA with more to come.
     “Strengthening the Cargo 2000 global teamworking under the guidance of the Cargo 2000 Board is a new Cargo 2000 team with Mike White (Regional Cargo Americas), Lothar Moehle (Regional 2000 Director Europe Middle East Africa), Tom Presnail (Regional 2000 Director Asia Pacific) and Phil Sims (Cargo 2000 Advisor).”
Geoffrey

ECS Launches Aero Cargo

Germany Exclusive—Paris-based GSSA European Cargo Services (ECS) has set up a new subsidiary (100%) in Germany called Aero Cargo International GmbH, thus giving birth to a second baby after having established Globe Air Cargo GmbH in the German market years ago.
      GSSA Globe meanwhile has a fully packed portfolio of as many as 20 client airlines such as Israel’s El Al Cargo, Delta Airlines, Hungarian Malev or Belgian capacity providers Cargo B and Brussels Airlines. Beginning in January this number will be reduced to 13 airlines, with newly-born sister company Aero Cargo taking over up to seven of Globe’s customers. Their names: Peruvian Cielos Cargo, Cuban Cubana, Mexican Mexicana, Centurion of the U.S. Togolese Africa West and Senegalese Air Senegal. Sole European client is French leisure airline Corsair that belongs to German TUI group.
      “In order to give an even better service to each individual customer airline, the ECS top management decided to split responsibilities between our Globe and newcomer Aero Cargo,” explains Globe’s Commercial Director, Mark Grinsted (right). Although both ECS subsidiaries are closely related with similar set-ups in personnel and IT they will act as competitors in the market. This will happen in case of Brussels Airlines (Globe) and Africa West (Aero Cargo). Both carriers offer European shippers more or less overlapping routes and markets.
      “Our job will be to fill the main deck of Africa West’s B747 freighter to Togo with pallets and containers while Globe tries to acquire as many shipments as possible in the German market by selling belly hold space to German forwarders,” states Nouri Tiedke, (left) who further emphasizes that Aero Cargo is not the low cost variant of Globe but a full service provider that demands market prices accordingly.
      “Our financial aim for 2009 is to achieve positive results,” states a self confident Tiedke. The thirty-nine year old sales expert will shift from his desk at Globe’s office in Moerfelden near Frankfurt to neighboring office of Aero Cargo right at the start of 2009. He will be heading a staff of five with more jobs to come.
      “In the months to come we plan to set up a branch in Munich,” announces Tiedke. There, a lot of air freight traditionally originates for African or Latin American destinations. Aviation experts expect that ECS will strengthen its role in central Europe substantially due to the two fold strategy by setting up a second GSSA in Germany.
Heiner Siegmund