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The weekly newspaper for air cargo professionals Volume: 20

Issue: 31

7 August 2017

Strongest half-year for air cargo industry since 2010

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he air cargo industry has been flying this year and the first half of 2017 was one of the strongest for years. Latest figures released by the International Air Transport Association (IATA) and WorldACD reveal that the growth shows no signs of slowing down. IATA reports in the first half of 2017 freight tonne kilometres (FTK) were up 10.4 per cent on the same period in 2016, which was the best first half-year performance since air cargo’s rebound from the Global Financial Crisis in 2010, and nearly triple the industry’s average rate of 3.9 per cent over the last five years. Airlines in all regions have seen first half surges in FTKs with Asia Pacific up 10.1 per cent, North America 9.3 per cent, Europe 13.6 per cent, the Middle East 7.6 per cent, Africa 25.9 per cent - the highest regional increase and even Latin America saw a 0.3 per cent rise. The association says the sustained growth is consistent with an improvement in global trade, with new global export orders remaining close to a six year high, but there are signs the cyclical growth period may have peaked. The global inventory-to-sales ratio has

stopped falling, indicating the period when companies look to restock inventories quickly may be nearing the end, but IATA still predicts eight per cent growth during the third quarter. Freight capacity, measured in available freight tonne kilometres (AFTKs), grew by 3.6 per cent in the first half of 2017 compared to the same period in 2016. Demand growth continues to significantly outstrip capacity growth, which is positive for yields. IATA says the year-on-year (YOY) monthly growth continues its strong momentum and in June there was a YOY uplift in FTKs of 11 per cent while capacity grew by 5.2 per cent and the load factor was 45 per cent, up 2.4

percentage points on June 2016. IATA director general and chief executive officer, Alexandre de Juniac says air cargo is “flying high” on the back of a stronger global economy, but more importantly, the industry is taking advantage of this momentum to accelerate “much-needed process modernisation and improve the value it provides”. Air cargo market analyst WorldACD also says the strong industry growth is not tapering off as volumes increased 10.5 per cent YOY in June, and yields measured in US dollars were seven per cent higher. WorldACD says this was a bonus for airlines and a development not reported since the recovery of 2010-2011 and the second quarter (Q2) of 2017 was the best in almost seven years, with origins Germany and Hong Kong growing most in absolute kilograms. Yields had been stable in the first quarter, but WorldACD says Q2 showed a “remarkable improvement” of 5.4 per cent in US dollars and 8.1 per cent in Euros. Improvements were particularly visible in the origin markets Asia Pacific to North America and Asia Pacific to Europe.

Equity investments made by three airlines $1.87bn loss for Etihad Air France-KLM, Delta Air Lines, Virgin Atlantic and China Eastern have announced plans to grow their strategic partnerships through various equity investments. As part of the agreement penned, Air FranceKLM will acquire Virgin Group’s 31 per cent stake in Virgin Atlantic for around £220 million ($287 million). The transaction is set to take place in 2018. Air France-KLM will become the second largest shareholder in Virgin Atlantic after Delta, which holds 49 per cent. Virgin Atlantic will hold the remaining 20 per cent and remain as a UK carrier with a British operating certificate. The Air France-KLM stake in Virgin Atlantic supports creation of a combined long-term joint venture between Air France-KLM, Delta and Virgin Atlantic, which is subject to the signature of agreements and the approval of the relevant regulatory authorities. It is set to be established for a 15-year period.

Delta and China Eastern are to also each acquire a 10 per cent stake in Air France-KLM by subscribing new shares through capital increases worth about €751 million. Air France-KLM has also strengthened its ties with China Eastern. Meanwhile, Dominic Kennedy (pictured) is to take over as managing director of Virgin Atlantic Cargo from John Lloyd on 14 August. He joined Virgin Atlantic in 2005 beginning his career in the fleet and network planning team before moving to cargo in 2008, and held a number of positions before becoming director of commercial planning. David Geer, who was due to take up the post will now assume the role of senior vice president revenue management & digital distribution at Virgin Atlantic.

Etihad Airways made a whopping loss of $1.87 billion in the 2016 financial year. This compares to a $103 million profit in the 2015 financial year, with major costs including $1.06 billion charges on aircraft, reflecting lower market values and the early phase-out of certain aircraft, and a $808 million charge on assets and financial exposures to equity partners, mainly related to Alitalia and airberlin. Meanwhile, slowdown in the cargo market put increased pressure on cargo revenues and yields, with revenue down from $1 billion to $900 million, though tonnage was marginally up from 591,000 tonnes to 596,000 tonnes. Etihad Airways chief executive officer, Peter Baumgartner says: “We are in an industry characterized by overcapacity, declining market sizes on key routes, and changing customer behaviour as a weak global economy affects spending appetite.” He adds: “Our answer to these challenges is innovation and reinvention.”

STRONGER MARKET BOOSTS UPS’ FIGURES EXTENSIVE OPPORTUNITIES FOR SIGINON FRANKFURT OPTIMISTIC FOR REST OF 2017 DEMAND REMAINS STRONG AT VOLGA-DNEPR

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Atlas Air posts strong Q2 numbers

SECOND quarter profits at Atlas Air have almost doubled to $38.9 million with all business segments seeing strong growth. Net income for the period is up from $20.5 million in 2016 and net income for the first half is up from $21 million in 2016 to $38.2 million this year, while total operating revenue rose from $443.2 million in 2016 to $517.3 million this year. Revenue for ACMI was up from $211.7 million to $229.1 million. Charter revenue was up up from $202.4 million to $225.8 million. Higher revenue in the dry leasing segment primarily driven by placing six Boeing 767-300 converted freighters with Amazon between August 2016 and June 2017, while reducing interest expenses due to the scheduled repayment of debt for dry leased Boeing 777s also helped. Atlas also announced the ACMI placement of three Boeing 747-400F with Hong Kong Air Cargo on 2 August, with the first due in service in September 2017, with the others expected to follow in 2018.

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NEWS WEEK 1st half turnaround for Lufthansa’s logistics business

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he Lufthansa Group’s cargo and logistics division posted first half year earnings of €78 million – up on the loss of €45 million in the same period last year, but it says the global airfreight market “remains challenging”. The division, which includes Lufthansa Cargo, time:matters, Jettainer, and stakes in Aerologic and cargo handlers, saw revenue climb year-on-year (YOY) by 18.6 per cent to €1.2 billion in the first half of 2017. Other operating income went up by 73.3 per cent YOY to €52 million, largely as a result of compensation for damages. Total operating income was 20.3 per cent higher at €1.2 billion. Lufthansa Cargo says performance varied between regions. Capacity was expanded in the Americas and Asia Pacific traffic regions. The cargo load factor improved in all regions, with the exception of the Middle East/Africa. Traffic revenue and yields were up in all regions. Regionally, revenue in Europe was up 5.7 per cent to €93 million, up 16.5 per cent to €451 million in the Americas, up 20.2 per cent to €458 million in Asia Pacific and up 1.2 per cent to €84 million in the Middle East/Africa. Total revenue cargo kilometres were 4,249 million, up five per

cent on the six months last year. Available cargo tonne kilometres were up two per cent to 6,177 million. The cargo load factor was up two percentage points to 68.8 per cent in the first half of 2017. Yields were up 10.3 per cent. This raised Lufthansa Cargo’s constant currency yield by 9.3 per cent, thanks to “favourable trends in demand” and it expects cargo to break-even or make a profit for the year, against earlier expectations of a loss. Demand for airfreight has been better than expected this year due to lower capacity and a recovery in global economies. The Lufthansa Group as a whole increased revenues by 12.7 per cent to €17 billion in the first half of 2017. Net profit was €672 million, a 56.6 per cent improvement on the prior-year period.

IAG gets commercial boost

COMMERCIAL revenue at IAG Cargo surged 7.6 per cent in the second quarter (Q2) to €260 million ($304.3 million) with growth coming from cross border e-commerce and pharmaceuticals, and strong performances in Asia Pacific and Europe. Overall yield in Q2 was up 1.1 per cent at constant exchange, with volumes increasing 6.4 per cent and capacity growing 5.9 per cent. Cargo revenue in the first half of 2017 was up 2.6 per cent to €516 million. Volumes in Asia Pacific were up 8.7 per cent in Q2 partly due to sea freight congestion between China and Europe, as well as strong consumer demand from high-end electronic tech to the globally trending fidget spinners. India was strong, with high demand for express and time-sensitive freight, especially pharma. IAG Cargo chief executive officer, Lynne Embleton (pictured above) says the airfreight market remains very competitive but IAG’s performance has been robust.

Volumes rise for Aeroflot

Aeroflot’s cargo and mail volumes continue to grow with a 39.2 per cent increase in June to 17,946.4 tonnes. The growth came from international volumes, which were up 81.9 per cent to 11,503.9 tonnes, while domestic cargo and mail saw a dip of two per cent to 6,442.5 tonnes. Cargo and mail volumes were up 40.4 per cent between January and June to 104,195.6 tonnes, again with the most significant growth from international cargo and mail, up 77.3 per cent to 67,699 tonnes, and a small increase of 1.2 per cent to 36,496 tonnes on domestic routes.

Tonnage up, revenue down

CARGO at Air France KLM saw some improvement in the second quarter (Q2) with increased traffic but revenue dipped slightly. Tonnage was up 1.4 per cent in Q2 to 286,000 tonnes, though remained at 558,000 tonnes for the first half. Q2 revenue tonne kilometres (RTK) were up 2.7 per cent to 2.1 billion with capacity increasing 1.7 per cent to 3.6 billion, and load factors improving by 0.7 percentage points to 59.2 per cent. For the first half of 2017, RTK increased 1.6 per cent to 4.2 billion, with capacity up 0.3 per cent to 7 billion, and the load factor rose 0.8 percentage points to 59.7 per cent. Total cargo revenue at Air France KLM was down 0.2 per cent to €506 million ($595.5 million) in Q2 and 2.5 per cent to €1 billion in the first half.

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NEWSWEEK Stronger airfreight market boosts UPS’ figures but brings challenges

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perating profit at UPS rose 8.7 per cent to $2.2 billion in the second quarter (Q2) of 2017 with growth in the US domestic package and supply chain and freight sectors making up for profits declining in international packages. Supply chain and freight sector operating profit grew 24 per cent to $238 million as revenue increased 12 per cent to $2.8 billion with tonnage gains in freight forwarding. In the first half of 2017 total operating profit was up 3.6 per cent to $4 billion, and supply chain and freight by 23 per cent to $417 million. UPS Global Freight Forwarding vice

president of global airfreight, Stuart Lund (pictured) says it has shown strong results for international and domestic airfreight services and seen an increase in manufacturing demand with a reduction in customer inventory levels. He explains: “We continue to see strength in our high-tech and industrial products on the APAC-US and APAC-EU lanes. This is through a continued effort toward customer collaboration and forecasting to ensure we plan accordingly and meet service needs. “We have seen solid growth in both our large enterprise and middle market customers. With improvement in consumer confidence and the rise of e-commerce, demand has been strong with middle market customers and UPS has been able to meet their needs with our integrated North American network.” Lund says the supply chain and freight revenue rise over 2Q 2016 was due to strengthened

Lund expects growth to continue through the peak season and as for new trends, he notes while previous year’s capacity exceeded demand it is now in a market with multiple factors putting a squeeze on freight capacity. Lund adds: “These factors range from a shortage of pilots and flight cancellations with increased demand, economic growth and new product launches. UPS is working with airline

carriers and customers to insure we meet this changing market. “E-commerce is also impacting our customers as they are looking for a variety of mode and consolidation options to manage inventories and meet their customer’s expectations..” Lund says keeping on top of the ongoing capacity constraints and ensuring it is providing the best service and sharing market intelligence with customers to help them stay abreast of the industry’s changes is the main challenge. Lund says UPS sees continued opportunity for growth with large and middle market customers using its hybrid model, while trade border barriers whether they’re low or high, is an important area of focus. Lund says: “It’s better for our customers when the barriers are lower because they can do more at less cost. International trade is good for UPS. That’s because it’s good for our customers and it supports jobs at UPS.”

HONG Kong Air Cargo Terminals (Hactl) saw a 16.6 per cent uplift in the first half of 2017. Hactl handled 860,242 tonnes with growth from exports, imports, transhipments and mail/express and has now outperformed the market in every month since September 2016. Other noteworthy achievements include handling an additional 100 charter flights between January and May, bringing the total to 602. Results are attributed to a modal shift from sea to air, overflow from mainland Chinese airports, and the growth of e-commerce. Hactl chief executive, Mark Whitehead says: “Deliberate reductions in ocean capacity, continued slow-steaming and port

congestion due to mounting use of mega vessels are all playing a part in the shift from ocean to air. The volumes involved will be of little concern to the ocean business, but are a significant bonus to the airfreight industry.” E-commerce remains a major driver of imports and exports to and from China via Hong Kong and Hactl expects growth to continue for the rest of 2017, but at a slower place. Whitehead adds forwarders and airlines are planning and booking ahead for the final quarter, having been caught out in 2016 by high spot rates.

revenue management initiatives while market conditions improved across all business units. He says growth was in all industries but mainly in industrial products, diversified vehicles and parts, high-tech and healthcare: “We are not showing any substantial weakness, however, capacity constraints continue to put pressure on key lanes and industries.”

Strong peak season

Tonnage up 16.6% at Hactl in HK

New control centre opened by Delta Cargo DELTA Cargo has officially opened of its Cargo Control Center (CCC), which will support daily cargo operations across the globe. The new Atlanta facility provides comprehensive coverage of all aspects of cargo transportation and management, with the ability to track shipments, trucks, mail, and freight – domestically and internationally. Delta Cargo, president and senior vice president for airport customer service, Gareth Joyce says: “The new Cargo Control Center is the culmination of our significant investment in technology systems and operation reliability, all with the aim of enhancing the customer experience and ensuring that they are at the center of everything we do. ”Our Cargo Control Center will now know

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exactly where freight is at all times, anywhere on the globe. With that information, we will be far more proactive in predicting potential service issues and providing freight solutions to our customers, and that really is a game changer in the logistics industry.” CCC will be staffed by a cross divisional cargo team from capacity management, warehouse management, trucking, rebooking, unit load devices (ULD) management, service recovery and call center operations. The CCC is open Monday to Friday, but will be a 24/7 operation by the end of the year.


ETHIOPIA AND KENYA

Extensive opportunities but imports slow this year

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enyan cargo handler Siginon Aviation believes there are plenty of future opportunities for it as Kenya and Nairobi ‘s airfreight market continues to grow. Siginon handles for Qatar Airways Cargo, Cargolux, Singapore Airlines Cargo, CargoLogicAir and others at Nairobi’s Jomo Kenyatta International Airport (NBO). Imports manager, Jared Oswago (pictured) says Kenya is the regional economic powerhouse and Nairobi is becoming a financial and commercial hub for East Africa and the planned construction of a second runway at NBO will cement its position in the region. He explains: “This presents big opportunities for the aviation industry to provide necessary linkage and support for business. The Kenya government continues to invest in aviation infrastructure within the country including construction of new airports in various

parts of the country including Kisumu and Isiolo airports, which will increase opportunities for trade. “The impending direct flights between Kenya and US operating from NBO will present an opportunity for Siginon Aviation to boost its cargo volumes and airline clients it handles.” However, he says the aviation industry in Kenya faces serious challenges arising from insecurity as Kenya, due to its position, has endured security threats from Somalia.

Security investments

Oswago says: “This increases the cost of doing business through additional security investments to ensure cargo safety and security. In NBO, there is over investment in cargo handling facilities, which poses a challenge as airlines are spoilt for choice. “This has driven the rates down and reduced incomes. As a result some ground handlers are facing challenges in purchase of new handling equipment that are required to sustain quality service provision.”

In 2017, import cargo volumes have been lower than expected for Siginon, Oswago notes. This he attributes to the general slowdown in Kenya’s economic performance as 2017 is an election year, although exports continue to record a good and steady performance. He says a lot of importers tend to wait and see the climate pending the outcome of the election and anticipates business will go up once the election is finalised and contribute to increased business towards the end of year. Oswago says there has been a rise in perishables (fruit) and motor vehicle imports while exports remain steady in all sectors. He reveals Siginon is in discussion with several regional and international airlines and is upbeat it will sign contracts soon and welcome new clients into its state-of-the-art cargo terminal.

Economic zones

The Special Economic Zones (SEZ) that came into affect in Kenya this year are also set to boost trade and airfreight. Oswago says the SEZ act has been signed into law and started in various parts of the country including Nairobi and Mombasa. “The impact is anticipated to be positive and shall be determined once the program substantively picks up,” he explains. He says the handler is also eyeing further investments: “There are opportunities for investments in Kenya and Nairobi and we are definitely looking to take them up. There are particularly great opportunities in perishable handling.” Siginon has drawn-up plans to develop its state-of-the-art $10 million NBO facility spread over 5,000 square metres, but Oswago says expansion will be guided by customer demand: “We continue to have our ear to the ground to ensure we provide services that meet our customer needs. Siginon Aviation air cargo terminal was built with sufficient expansion provision to keep in tandem with dynamics in the market and the customer.” In 2016, Siginon handled about 50,000 tonnes of cargo of which about 40,000 were exports and 80-90 per cent perishables.

Africa’s largest cargo terminal

AFRICA’s largest air cargo terminal was opened by Ethiopian Airlines at Addis Ababa Bole International Airport on 29 June. The state-of-the-art $150 million Cargo Terminal-II gives the carrier’s cargo arm Ethiopian Cargo a capacity of one million tonnes. Once phase two opens it will give it another 600,000 tonnes and the new terminal adds to the existing Terminal 1. Covering 150,000 square metres the new terminal includes a dry cargo terminal warehouse, perishable cargo area with cool chain storage, full automation, and an apron area to accommodate five additional freighters. Ethiopian worked on development of the terminal with Acunis, a joint venture of Amova and Unitechnik specialising in air cargo intralogistics. As general contractor, Unitechnik was responsible for planning the entire terminal and implementing the technical equipment, specifically the logistics systems. Amova contributed the mechanics for the cargo handling system. The heart of this installation are two automatic warehouses for unit load devices (ULD) with space for 1,000 10-foot ULDs with a total of four elevating transfer vehicles.

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ETHIOPIA AND KENYA Fresh African perishable trends

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analpina is well positioned to grow its airfreight perishable volumes from Kenya, but there are some new trends emerging and challenges ahead. In May, it said it would acquire Kenyan forwarder Air Connection, a specialist in the export of flowers and vegetables. This follows the buy-out last year of Airflo in Kenya and launch of its global Perishables Network. Panalpina Airflo managing director, Conrad Archer says it is now the low season, but it has seen strong growth and prices are stable and he expects the second half of 2017 to be busy as demand rises with the Far East picking up. He believes the peak season ahead will be interesting as capacity and supply could be stretched, which it has not seen for a while, but it bodes well for business, despite the challenges it creates. “It is difficult getting south bound capacity into Africa and has been difficult from January/ February this year and it is causing carriers to look at their routing, which could cause a shortfall of capacity,” he explains.

Renaissance of fruit and veg

Archer says Panalpina has seen some emerging trends in perishables from Kenya including the “renaissance” of fruit and vegetables, which is really encouraging. “Avocadoes have been strong in the last year and we are seeing a good number moving from sea freight to airfreight, which never used to be the case. The Middle East is importing a lot, mangoes in particular have been really good, and direct imports to Qatar from Nairobi have increased as a result of the embargo situation,” he notes. Flowers continue their growth, there has been a five per cent increase this year, which is at the top end of the average annual three to five per cent growth. But Archer says the market is changing somewhat: “There is a shift from the mass freighter cargo flights (flowers) into Amsterdam (AMS) and a good portion going directly to consuming countries like China, which is expanding and

there has been a decline of volumes of flowers terminating in AMS. There has been increasing belly capacity into China, Australia, the Middle East and other non-European destinations,” Archer says. Panalpina global head specialty vertical perishables, Colin Wells notes there are emerging flower markets where demand is high and Asia Pacific is probably the most active and more and more are being now moved from Kenya to different destinations, rather than just AMS. He also says there has been a resurgence of fruit and vegetables not only from Kenya, but from other African countries like Zimbabwe, Uganda and Tanzania, which are exporting much more, something they had done back in the 1980s. Both Archer and Wells highlight the impact e-commerce is having on perishables and will continue to in the exporting as the demand from consumers for fresher products ramps up.

company carries out quality standards checks with shippers. Pa n a l p i n a is expanding its infrastructure in Nairobi to meet projected future perishables demand. Archer says it is adding a further 1,500 square metres of cool chain space, the same area of offices and additional vacuum coolers. “That is a substantial investment, which will bring us to 4,000 square metres of cold chain capacity making us the forwarder with the largest cold storage capacity in Nairobi,” Archer says. Despite both Archer and Wells being very positive about the Kenyan market and Africa, there

is political uncertainty, as many producers are worried about the impact of Brexit and elections taking place in Kenya this month that could have negative affect on business. Panalpina itself is shielded due to being a global player, and Wells says it moves where the shift is. However, he says it does not just want to be seen as a “box mover”. “We want to know what is in the box and make sure it is of a high quality. It is going to be interesting in the future, but people will always pay for quality.”

The impact of e-commerce

Direct shipments are a trend in the perishables market, explains Archer as increasingly, buyers of perishables want to source directly from the producer and producers want to sell directly to the country of consumption. Joining forces with Air Connection will offer additional opportunities for Panalpina to grow perishables business in Kenya, especially with the export of vegetables, herbs and cuttings. To meet e-commerce demands, Archer says Panalpina is investing in track and trace technology for shipments, more comprehensive labelling, airside reefer transportation and it is working on other projects to meet the rising future demand for even fresher goods across the globe, being driven by growing middle classes, changing consumer needs and the digital age. Wells notes making cool chain processes and the supply chain more efficient, is something Panalpina sees as its “responsibility” and it works with the supply chain in Africa to improve and find solutions to concerns arising. He says the quality of products is paramount and the

Kuehne + Nagel makes acquisition THE battle for perishables business in Kenya is hotter than ever as heavyweight forwarders grow their market presence. Last month, Kuehne + Nagel announced it had acquired Trillvane Ltd, one of the largest perishables specialists in Kenya. The forwarder says the acquisition will enable it to strengthen its position in perishables between Kenya and Europe, especially to the UK.

The company specialises in the export of flowers and vegetables and is located at Jomo Kenyatta International Airport in Nairobi. Kuehne + Nagel member of the management board responsible for airfreight logistics, Yngve Ruud says the potential in the “steadily growing global perishable sector is huge” and it will scale business opportunities and accelerate growth in the sector.

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GERMANY

Frankfurt optimistic for year following strong start

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argo volumes have grown 4.8 per cent in the first half of 2017 at Frankfurt Airport, and Fraport senior vice president for cargo, Dirk Schusdziara (pictured below) is confident this will

continue. Frankfurt handled just under 1.1 million tonnes in the first half of 2017, the highest for the period in six years, with the Far East performing well and North America also looking strong. Schusdziara notes that Latin America is recovering with double-digit growth in some countries, with exports to Brazil

increasing significantly. He says: “As a result of the ongoing economic growth, particularly in the Eurozone’s industrial sector, we are very optimistic for the rest of the year. This is underlined by the market preview at Frankfurt Airport. For the winter timetable, movements are predicted to increase considerably.” Frankfurt Airport is often considered the backbone of German industry, handling almost 50 per cent of German air cargo. The main goods have remained the same in recent years, mainly machinery parts and components, and raw materials. Fashion and high technology remain major imports, though there is an interesting development for the latter. Schusdziara explains: “While technological goods have decreased in terms of tonnage, they have increased in terms of value. This underlines the trend to always smaller and

lighter high-end technological products.” Exports of vehicles and chemicals remain strong, though temperature controlled goods have increased “tremendously” over the past few years. Schusdziara says parties are expanding cool chain facilities to cope with huge demand from the pharmaceuticals sector. He says: “At the end of 2017, Frankfurt Airport will feature 10,000 square metres of temperature-controlled areas for guaranteeing fast and reliable handling of pharmaceutical products,

underlining our position as Europe’s largest pharma hub.” Fraport is always looking to improve service with faster processes, greater reliability and transparency, and Schusdziara says the way the cargo community works together sets it airport from other airports. He says: “Our ‘Air Cargo Community Frankfurt’ brings together all the players involved in the air cargo business. We closely cooperate, so we can maintain our position as Europe’s leading cargo hub.”

Growth exceeds expectations

TONNAGE rose 20 per cent in 2016 for Frankfurt Cargo Services (FCS), and continues to grow due to the security, safety and service the customers receive, explains managing director Hans-Georg Emmert. FCS, which merged with Worldwide Flight Services in 2016, has been busy due to strong growth for its customers while winning new contracts. The first half of 2017 has exceeded expectations with a 30 per cent rise in tonnage. Emmert says: “We have seen strong and sustainable growth over the last 18 months so we are very positive about the rest of the year. Our customers are continuing to see their cargo volumes increase, and we are also working hard to win more new business.” Improving service is as important as upgrading infrastructure, with innovations including a new ramp control system to improve service levels for truck drivers delivering and collecting cargo, providing more transparent cargo processing and capacity to grow in the future. Emmert comments: “It allows us to optimise the use of our resources and to avoid challenging peaks in vehicle processing. For our customers than means shorter wait-

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ing times because we have live information from the warehouse which enables us to manage the handling of our customers’ vehicles more efficiently.” This gives FCS the ability to measure quality of service and identify opportunities for improvements, and has the environmental advantage of reducing CO2 emissions from trucks having to spent time waiting to be served. FCS has also expanded and enhanced its truck docks, increasing capacity to handle vehicles and reducing waiting times for customers, with 94 gates available in the 56,000 square metre warehouse area. Upgrades are also planned for the cool storage area for temperature controlled cargo and FCS will be investing in improving ULD storage facilities. Emmert comments: “We are also the first station in the WFS network to roll-out the Crises Management System which will allow us to proactively inform customers of activities in or around our facility as well as notify directly all our customers, customers if desired.” FCS is committed to developing its presence in Frankfurt and investing in the long-term future, with including further qualifications and knowledge for employees, investing in new safety and handling technology, electronic billing and embracing IATA’s e-freight project. Emmert says: “Using our Hermes handling software we are well prepared for e-freight and see a lot of potential for electronic transmission of freight data.”


GERMANY

No summer slump for Munich as cargo keeps booming

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mports and exports continue to boom, and Munich Airport director of traffic development for cargo, Markus Heinelt does not expect to see a ‘summer slump’. He says Munich has posted its best half-yearly results in history, including a nine per cent increase in cargo turnover to 180,000 tonnes, outpacing the industry and more aircraft at the airport should help. The Lufthansa Group has announced it will station 15 Airbus A350s in Munich and move five A380s from Frankfurt to Munich, which will be joined by a number of aircraft from its subsidiary, Eurowings. The outlook is very good, with Heinelt saying: “German exports and imports continue to boom and Munich Airport does not expect a so to call ‘summer slump’. Counting with the mostly regular autumn peak the airport is quite positive regarding good cargo results for the complete year of 2017.” Munich’s catchment area still offers potential for growth; Heinelt explains: “Since 2010 Munich Airport increased its cargo share in Southern Germany from 29 per cent to 39 per cent. This means that 61 per cent are still handled through other gateways.”

Air Partner celebrates 20 successful years

Further growth depends on expansion projects including a third runway. Heinelt says: “This project is awaiting approval by the airport’s shareholders. A positive decision on a third runway

will be crucial for Munich Airport’s future development. If the third runway is confirmed, further growth would be guaranteed.” While it waits for the third runway, other projects are underway including finalising plans for an enlarged express centre, an extended staging area and Munich wants to initialise plans for a 25,000 square metre telematics-controlled trucking area. Heinelt expects Germany to continue to play a dominant role in foreign trade, saying: “E-commerce tends to develop rapidly especially in the B2C segment due to the fact that Germany builds the largest European consumer market with a population of 81 million. I expect that the trade by airfreight – import and export – will grow above average in the German market. “Munich offers a wide catchment area, premium industries, a top consumer market which is excellent for e-commerce business. Therefore, respective political conditions allowing airlines to fly direct to Germany will be even more crucial in future.” Heinelt also expects green logistics will gain importance, and Munich has ambitious aims. He says: “Munich Airport gets ready for this – aiming on becoming Germany’s first carbon-neutral airport by 2030.”

AIR Partner is celebrating its 20th anniversary in Germany and has moved into a bigger office in Cologne, director of freight Mike Hill (pictured) tells Air Cargo Week. The Freight division started operations in 2007 and Hill says business has continued to grow year-on-year with sustained growth in the first half, and though the freight charter business is unpredictable, Hill says the signs are positive and the rest of 2017 should be busy. The German office is responsible for looking after clients in continental Europe, and has worked hard to retain and develop relationship with established clients, as well as attracting new ones. He comments: “Alongside our usual adhoc charter and On Board Courier (OBC) business, we have carried out a number of exciting projects this year as well; these have included transporting film equipment for a Hollywood movie, and flying 80 tonnes of medicine and medical equipment from Jordan to Yemen on behalf of a leading humanitarian aid organisation.” The automotive industry makes up a significant part of Air Partner’s business, especially time critical movements within Europe and North Africa. Hill says this is helped by its confirmation and real-time tracking system, Red-Track, giving smart, in-transit visibility on every order. He also says: “Business in the automotive sector has seen a clear and gradual movement to Eastern Europe since 2007, as more car manufacturers and their suppliers have expanded their manufacturing plants in that area. However, in recent years the activity seems to now be slowly balancing out between Western and Eastern Europe.” Other industries including aerospace, pharma, project cargo and humanitarian aid are also important, and oil and gas is slowly picking up again after a major decline a few years ago. Hill believes there are constant opportunities to increase market share in Germany, due to the strength and experience of the team in Cologne, who provide 24/7 dedicated charter and hand carry services in multiple languages. He says: “We have created a European competency centre with the experience concentrated in one place, rather than spreading our talent out more thinly over numerous offices in Europe.” There has been a surge of new broker companies in Germany, and Hill says some are beginning to blur the commercial boundaries of the broker/forwarder by working with shippers. He believes Air Partner’s service will continue to set it apart, saying: “We, however, are committed to maintaining our close relationships solely with the freight forwarder community and this – along with our global presence and the financial transparency afforded by Air Partner’s plc status – has played a large part in our past success, and no doubt will continue to do so in the future.”

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OVERSIZED CARGO

Antonov seeing good demand for defence and aerospace payloads

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versized cargo payloads are Antonov Airlines’ main focus and in 2017 business has been consistent since it went it alone. The decade-long Ruslan International joint venture between the Antonov Company and Volga-Dnepr Group came to a close on 31 December 2016 and since then Antonov’s sales and marketing has been handled by Dreamlifts Ltd at London Stansted Airport. Business development director, Michael Goodisman (pictured) says it is happy with how it has gone, noting it has operated just above, or below 20 flights a month in 2017.

Goodisman says the switch has opened up more opportunities: “This has given us the opportunity to develop a lot. There is a lot of clarity in the market now and if we are presenting ourselves it gives us a lot of opportunities to show what we can offer and the unique points.” He explains the strongest sector is defence and aerospace, which continues to grow and makes up a significant amount of business, and across the board in all sectors demand is mainly coming from the Middle East, Africa and Asia and are these are mainly from Europe and the US to these regions. He says: “In terms of aerospace it is quite consistent and demand there continues and we see projects in the pipeline there for the long-term. “O&G is dependent on oil production and it developing and we are seeing a little increase on that and have just secured four long-range flights, which is good.”

Antonov has seen consistent demand for power generators, rotas, compressors and rotors and business is being boosted by the uptick in general air cargo. “Predicting the market is difficult, but there is a relationship with general cargo and project cargo and we have seen an uptake in some sectors (automotive and industrial),” he says. A major part of the strategy moving forward is to grow the presence of Antonov in global markets and it is to open new offices in Hong Kong and the US and to drive this it appointed general sales agents (GSA) in Japan, India and Australia and more could follow. It has also developed links in the US and has been granted an operators certificate so it can fly more freely. Goodisman says: “It is necessary to grow our presence and to have a strong com-

petitive ability and we have to have some local offices in markets. If we only have Hong Kong and the US it will help in terms of timezones. “There are certain things we are doing to work on that and then we can work with brokers, freight forwarders and where possible try to be a little bit more local, which is what we are doing with our GSAs. “In certain markets we feel there is strong potential and we want to be well positioned and proactively develop our business. Overall, we are in a good position.”

Demand remains strong at Volga-Dnepr VOLGA-Dnepr Airlines has seen strong growth in demand for charters and a lot of diversity in the types of outsize and heavyweight cargoes it has delivered this year. Commercial director, Alexander Kraynov (pictured) notes flying hours operated by its An-124-100 and IL-76TD-90VD freighters in the first six months rose 29 per cent and 37 per cent, respectively, compared to 2016. He says year-on-year it is busier as halfyear figures demonstrate and its ‘Cargo Supermarket’ service has boosted business as cleints can access use of the world’s biggest fleet of 12 An-124-100 freighters, other freighters and additional services to help reduce costs. Volga has a global focus and aside from its headquarters in Ulyanovsk, for Russia and the CIS, it has bases at London Stansted and Leipzig for Europe, Sharjah for the Middle East and Africa, Houston for North and South America, and Hanoi for Asia Pacific and Australasia. Kraynov says: “We not only have the option of offering IL-76TD-90VD as part of a solution, we also regularly use Boeing 747Fs and 737Fs if they enable us to offer better cost efficiency. “We also combine charters with the scheduled cargo services of our sister airline, AirBridgeCargo Airlines, which is another effective way to lower cost for our customers. “We have a growing number of similar examples and customers are increasingly beginning to recognise we have the capability and in-house expertise to identify ways to deliver their cargo as planned, but with potential opportunities to bring down their costs.”

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Aerospace has been the fastest-growing sector in the last two to three years and accounts for around 35 per cent of annual business and includes high value and sensitive satellites, aero engines, aircraft components and helicopters. O&G remains strong, and even with the reduction in new projects as a result of lower oil prices, Kraynov says it is performing regular flights to support existing oil fields and gas plants as well as emergency response services when replacement parts and equipment are required quickly, while Volga also serves a lot of customers in the energy and power industry. The gas industry it has found to be resilient in terms of demand along with flights for the oil industry, and it is operating for clients carrying equipment and replacement parts for existing projects. Kraynov adds: “We expect to see a continued recovery in demand in 2018 with several new projects dues to commence.” Payloads have included 20 IL-76TD-90VD flights carrying trucks and trailers to help production at an iron ore mine in North Baffin, Canada, a 57-tonne generator rotor for Siemens from Germany to Kuwait, 197 tonnes of automotive equipment for Nippon Express from Japan to the US, and six An-124-100s carrying 11 generators for a power plant in Madagascar.


TRADEFINDER Airlines

Airports

Turkey

Lithuania

Freight Forwarders Iran

Freight Forwarders Hong Kong

United Arab Emirates

USA

Industry Events

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NEWSWEEK Cole appointed as new VP of Delta Cargo American extends EU trucking services

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elta Air Lines has appointed Shawn Cole (pictured above) as its new vice president of its freight arm Delta Cargo. Cole will be responsible for ensuring the airline’s logistics division continues to deliver on commercial, financial and operational performance. The carrier says he joins the leadership

team of Delta at a time when it is realising the benefits of its multi-year transformation with double-digit operational performance improvement and unit revenue growth surpassing industry averages. Delta Cargo president and senior vice president of airport customer service, Gareth Joyce says: “Shawn is a solutions-driven Delta executive of nearly 10 years. “He has consistently motivated organisations to deliver maximum productivity, improve top-line growth and control costs through the most effective use of available resources and tools. “This expertise positions Shawn to continue cargo’s successful momentum as well.” Cole recently served as vice president for finance and corporate planning at Delta, and is well known for his support for many community partners such as the Atlanta Children’s Shelter and Atlanta Public Schools.

AMERICAN Airlines Cargo is extending its European trucking network to serve a greater number of customers connecting offline cities and online points with its 450-plus flights a week from Europe. The Netherlands, Germany and France all feed nightly freight into Heathrow Airport operations, which operates 20 flights a day direct into the US, with almost two million kilos per month being fed into the online destinations for carriage on aircraft. Regional manager for sales in Northern Europe, Andy Cornwell says services enable it to be players in markets it would not be able to serve otherwise. He adds: “By offering overnight trucks, we now can serve customers in countries like Denmark, Hungary and beyond.” American has increased uplift from Heathrow with the introduction of cargo

friendly aircraft including Boeing 777-300s and 787s. New trucking services from Lyon, Toulouse, Bordeaux and Marseille in France, along with Frankfurt in Germany have been set up to serve seasonal flights from Barcelona to Chicago. Regional manager for sales in Western Europe, Kathleen Lesage says it could see an opportunity to maximise capacity from Spain by launching trucking services to connect with flights and, with southern cities closer in miles to Spain than Paris, it “made perfect sense”.

Growth for both Dubai hubs

FREIGHT volumes at Dubai World Central (DWC) grew 3.2 per cent in the first half of 2016, handling 443,835 tonnes. DWC is ranked as the 20th busiest international cargo airport in the world and the volumes were up from 430,132 tonnes in the same period of 2016. Dubai’s second airport is home to 26 scheduled cargo operators flying to 70 destinations around the world, as well as eight passenger carriers operating 95 flights a week to 14 international destinations. Cargo operations at DWC started on 27 June 2010, and will be developed into the world’s largest airport with the capacity to handle 12 million tonnes of cargo per annum. Nearby, Dubai International Airport’s freight traffic was up 1.6 per cent in the first half of 2017 as it handled 1,302,911 tonnes. Operator Dubai Airports says this was a rise on the 1,282,025 tonnes that it handled during the same period in 2016. The gateway handled 215,668 tonnes of freight in June, down on the 226,174 tonnes during the same month last year, a contraction of 4.6 per cent.

Changi Airport on the up

CARGO volumes at Changi Airport continue to grow with a 5.5 per cent year-on-year increase in June to 172,040 tonnes. Singapore’s hub has seen year-on-year growth in every month of 2017, varying from 0.5 per cent in January to 12.6 per cent in May. It has handled 1.02 million tonnes in the first six months of 2017, a rise of 6.8 per cent on the same period of 2016. Changi has also welcomed new services, with Scoot operating four flights a week to Athens from 20 June, IndiGo introducing daily services to Bengaluru on 1 July, and Singapore Airlines doubling weekly flights to Rome, and increasing frequencies to Sydney from 33 a week to 35.

ACW 07 August 17  
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