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The weekly newspaper for air cargo professionals No. 1,058

18 November 2019

SAS gets ready for new arrival Lufthansa Cargo to retire MD-11Fs

ufthansa Cargo will accelerate fleet modernisation by purchasing two new Boeing 777 Freighters, with the last 10 MD-11Fs being retired by the end of 2020. The 777Fs will be delivered in 2020 and based in Frankfurt, with their higher cargo capacity and range offering the same freight performance but with fewer aircraft movements. Customers will have the same freighter capacity at the end of the rollover as when 18 MD-11Fs were in operation. Lufthansa Cargo first put MD-11Fs into operation in 1998, replacing four-engine freighters until 2005, but the 777F is 20% more efficient and emits less CO2 than the MD-11F. Peter Gerber, CEO and chairman of Lufthansa Cargo’s executive board says: “We are investing in maximum reliability and significantly lower emissions. The modernisation of our fleet is the biggest contribution we can make to the future in the

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INSIDE ANTONOV BANGS THE DRUM

ANTONOV Airlines has delivered two rotary drying drums from France to Australia, providing the customer a doorto-door service ... PAGE 2

ALIBABA UPS CAINIAO STAKE

short term. We combine responsibility for our company with corporate responsibility.” One MD-11F was retired in July, with three more going by the end of the year, and the other eight joining them in retirement by the end of 2020. The news comes as Lufthansa’s logistics business segment, which covers Lufthansa Cargo posted a loss of €40 million in the first nine months of 2019 as global demand proves

weak. The loss compares to earnings before interest and tax (EBIT) of €159 million for the same period of 2018. The third quarter was difficult, with the 2018 profit of €33 million turning into a loss of €49 million. Capacity in 2019, measured in available cargo tonne kilometres increased by 9% to 10.9 billion, while demand in revenue cargo tonne kilometres stayed at 6.6 billion, pushing down the load factor by 5.5 percentage points to 60.3%. Revenue was down 7% to €1.7 bil-

lion due to pricing especially in Asia Pacific, while operating expenses were up 5% due to increases in costs of materials and services partly due to taking over Brussels Airlines’ belly capacity, higher depreciation and investing in new freighters. For the rest of 2019, Lufthansa Group says the logistics business segment, which includes Lufthansa Cargo is expected to post an adjusted EBIT margin of between 0 and 2% due to weak market demand.

ISSA Baluch has been inducted into the TIACA Hall of Fame, recognising his work across the air cargo industry. His portfolio of skills includes being an author, speaker and advisor, as well as being founder and CEO of Swift Freight International. Baluch is also chairman of the FIATA Logistics Academy and was the founder and first president of the National Association of Freight and Logistics before receiving two Lifetime

Achievement awards for services to the air cargo industry. In 2011, Baluch was invited by Harvard University to become a Fellow in their Advanced Leadership Initiative programme and he acts as a visiting Chair Professor at several universities, focusing on multimodal transport. Baluch says: “I am honoured, humbled, and mighty grateful for this award. Family and friends are equally joyed and to me this is a testament to

the many teams and individuals that have worked side by side with me to excel, be it in the logistics world, or in Corporate Social Responsibility!” Sebastiaan Scholte, chairman of TIACA’s chairman’s council says: “Issa is an exceptional individual who came from humble beginnings. He has not only been successful in business but has also contributed to wider society and therefore deserves the honour of receiving this prestigious award.”

Issa Baluch inducted into TIACA Hall of Fame

ALIBABA Group will invest $3.3 billion to increase its equity stake in Cainiao Smart Logistics Network from 51% to 63%. The increased equity stake will ... PAGE 3 TRAINING WITH VIRTUAL REALITY

CELEBI Aviation has added virtual reality to its training module, making it the first ground handler in Turkey to use the technology ... PAGE 4

YOUR PRIDE AND JOY IS SPECIAL

IN an average year, Emirates SkyCargo moves about 1,500 cars, and has a specialist team to ensure they are handled with the utmost care ... PAGE 10

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Banging the drum for door-to-door service

ntonov Airlines has delivered two rotary drying drums from France to Australia, providing the customer a door-to-door service. The drums were moved from Paris-Vatry Airport to Port Hedland International Airport on behalf of chemical company Yara Pilbara Nitrates. Eight sub-contractors were employed to complete the door-to-door project that involved two AN-124-100 flights. Graham Witton, managing director of Antonov Airlines’ UK office says: “Executing a shipment like this one requires extensive planning, as we not only had to secure the flight permits, but we also had to organise road permits and transport, as well as crane loading and unloading from truck to aircraft and vice versa at the destination.”

He adds: “Antonov Airlines UK office was instrumental in arranging the ancillary services and it shows that Antonov Airlines is able to respond as comprehensively as necessary beyond the role of charter flight mission when our customers call us to go that one, or in this case eight steps further.” Road transport from the vendor, cranes

for loading and unloading, delivery to YPN’s remote facility, as well as documentation preparation and processing were all required to move two 21-metre drying drums each weighing 57 tonnes. Stewart Thatcher, project director at Yara Pilbara Nitrates says: “The transportation went very smoothly, and this critical equipment was delivered safely and on time to allow handover to our construction contractor as planned.” The drying drums were transported in tailor-made wooden saddles designed by Antonov’s engineering team to secure the cargo and prevent abrasive damage to the equipment. The rotary drums were transported from the factory to the end user, with Antonov’s custom loading ramp being used to load and offload them from the aircraft.

AN-22 is ready for action

ANTONOV Airlines’ AN-22 Antei returned to commercial service by operating two flights between Spain and Iraq. The AN-22 performed two Madrid-Baghdad-Madrid flights between 27 – 31 October for DSV Spain, the logistics operator of the Spanish Ministry of Defence carrying helicopters and spare parts. Due to the height of the AN-22’s cargo compartment at 4.4 metres, the helicopters’ rotors did not need dismantling. Coordination and supervision of the flights was undertaken by Cargoplanet Spain, the representative of Antonov Airlines in Spain. Staff at Cargoplanet and DSV travelled with the cargo to and from Baghdad to assure smooth operations. Vitaliy Shost, first deputy director of Antonov

Airlines says: “We are pleased to announce that the AN-22 is back in the commercial market of outsized air transportations after scheduled maintenance. A few decades ago, the appearance of the AN-22 Antei opened the era of the widebody transport aircraft. This aircraft is still the largest turboprop air freighter in the world and its services are still in demand in the global airlift market.”

HEPPNER has established a presence in West Africa with a branch in Dakar, Senegal providing links to neighbouring countries. The branch became fully operational in June and the French company says the region is becoming more attractive due to natural

resource projects and the growing middle classes demanding western consumer goods and retail products. Shippers require an integrated supply chain offering air and ocean freight, and also customs clearance, warehousing and distribution.

Heppner opens branch in Dakar

Double trouble in Istanbul

EDITOR James Graham and development director Martin Kingwell flew the flag for Air Cargo Week at logitrans Turkey on 13-15 November. Look out for the show review in our next issue, out on 25 November.

ACW 18 NOVEMBER 2019

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Alibaba to increase stake in Cainiao

libaba Group will invest $3.3 billion to increase its equity stake in Cainiao Smart Logistics Network from 51% to 63%. The increased equity stake will come from newly issued ordinary shares in its latest financing round and purchasing certain equity interest from an existing Cainiao shareholder. With more financial resources, Cainiao will continue to invest in technologies and logistics infrastructure services to strengthen its smart logistics network and enable innovations in business models, services and technological capabilities. Daniel Zhang, executive chairman and CEO of Alibaba Group says: “Cainiao strives to enhance service and user experience for merchants and consumers through superior technology and digital solutions, both within China and around the world. We are committed to supporting its ongoing development, to realising greater syn-

ACWBITES A Sikorsky S-58JT operated by Midwest Helicopter Airways crashed after its main rotor blade struck a stationary cargo trailer while trying to land at an XPO Logistics facility on 135 S Mt Zion Road, Lebanon, Boone County, Indiana on Sunday 10 November at about 13.00. The pilot received minor injuries but the other two occupants were uninjured. THIRD quarter cargo volumes at Dubai International Airport declined 5.9% to 636,575 tonnes, bringing the year-to-date to 1.8 million, down 4.1% on 2018. The fall is due to reduced capacity during the runway rehabilitation project.

ergies throughout the entire Alibaba Economy and accelerating digitisation of the logistics industry.” Alibaba Group kicked off the 2019 11.11 Global Shopping Event with $1 billion of sales settled through Alipay in one minute eight sec-

EASA awards BelugaXL with Type Certification

onds, and $12 billion in the first hour. In the hours leading up to the shopping event, Alibaba’s video streaming platform Youku hosted the fifth annual countdown gala, which included interactive performances from Taylor Swift and other celebrities.

AMERICAN Airlines expects its fleet of Boeing 737 MAXs will return to service on 5 March 2020. Once the aircraft is certified, the airline expects to run exhibition flights or flights for team members and invited guests only prior to 5 March.

THE European Aviation Safety Agency has awarded the BelugaXL with Type Certification, paving the way for entry-into-service by early 2020. The BelugaXL offers 30% extra transport capacity than its predecessor, the BelugaST due to being seven metres longer and one metre wider. It can carry two Airbus A350XWB wings compared to one in the BelugaST, and has a maximum payload of 51 tonnes with a range of 2,200 nautical miles. EASA approval follows an intensive flight test campaign that saw the BelugaXL complete more than 200 test flights, clocking over 700 hours. Six aircraft will be built between 2019 and 2023, gradually replacing the BelugaSTs. Based on the A330-200F, the BelugaXL reuses existing components and equipment, and is powered by Rolls Royce Trent 700 engines. The lowered cockpit, the cargo bay structure and rear-end and tail were newly developed with partners, giving the aircraft a distinctive look.

Virgin will be big in Japan

JAPAN will join Virgin Australia’s cargo network with daily services between Brisbane and Tokyo Haneda from March. Daily flights will be launched on 29 March 2020, with cargo space being marketed by Virgin Atlantic Cargo using an Airbus A330 offering 15-20 tonnes of cargo capacity. The route, Virgin Australia’s first service to Tokyo is expected to attract strong demand from both passengers and cargo customers. With the launch of Brisbane route, services between Hong Kong and Melbourne will be suspended from 11 February due to softening passenger demand. Dominic Kennedy, managing director of Virgin Atlantic Cargo says: “Cargo customers in Australia and Japan will be very pleased to see the launch of Tokyo-Haneda services and we expect this new direct route to open up significant opportunities for both imports and exports when it commences in March.” Commenting on the planned suspension of Hong Kong-Melbourne services, Kennedy says: “Although this route will be stopping in February, we will continue to offer capacity on Virgin Australia’s daily Sydney-Hong Kong flights and provide a direct trucking service between Melbourne and Sydney to ensure customers retain access to the important Hong Kong cargo market.”

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ACW 18 NOVEMBER 2019

Celebi Aviation trains with virtual reality

elebi Aviation has added virtual reality to its training module, making it the first ground handler in Turkey to use the technology. Using virtual reality in the training module means co-workers will learn and practice the activities on virtually real aircraft and the apron. The training will place users inside the experience, and instead of viewing a screen in front of them or imagining the experience, users are immersed and able to interact with operations. Real life situations that are hard to simulate on the apron including night

Air Partner opens office in Dubai

AIR Partner is extending its presence in the Middle East with the opening of an office in Dubai, United Arab Emirates. The office in the Dubai Multi Commodities Centre, offers Air Partner’s full suite of charter services including group charter, private jets and freight. Clients also have access to the group’s consulting and training services in aviation safety management and fatigue risk management. The office is headed up by Jobby George, who has extensive experience in VIP and commercial aviation in the region, having previously worked for Chapman Freeborn in Dubai.

Prior to this, George held sales and finance roles at Air Partner for five years, also in Dubai. The Dubai office is the fourth new opening in 18 months, following Los Angeles in June 2018 and Houston and Singapore in early 2019. Mark Briffa, CEO of Air Partner says: “Dubai is one of the world’s leading financial hubs and so it was a logical step for us to establish our first office in the Middle East here, given the range of sectors and customers that will benefit from our extensive portfolio of services. We see a wealth of opportunity, both in Dubai itself and the surrounding areas, and are excited about our future in the Middle Eastern market.”

Changi aims for CEIV Fresh certificate CHANGI Airport Group will work with other parties in Singapore to earn the first IATA CEIV Fresh certificate in Southeast Asia by April 2020. The airport operator will work with the Civil Aviation Authority of Singapore, Enterprise Singapore and Workforce Singapore to support the air cargo community with dnata Singapore and

Singapore Airlines as pioneer members. The four parties will co-fund certification costs, with SAAA@Singapore acting as programme manager. Perishable cargo represents about 13% of Changi’s exports and imports, and is one of the key drivers of the airport’s growth in recent years.

RIOGALEAO Cargo has renewed its IATA CEIV Pharma certification, having been the first been recognised in 2016. When RIOgaleao was certified in 2016, it was the only airport in the Americas with CEIV, and recertification recognises that standards have been adopted and maintained. The programme requires audits and technical training, and must be repeated every three years with teams passing IATA courses covering the latest trends. Training addresses topics such as risk man-

agement, internal audits, nonconformity analysis, change management, operational controls and SLAs. Patrick Fehring, director of RIOgaleao Cargo says: “The pursuit of excellence must be a permanent endeavour. The achievement of CEIV Pharma Recertification shows that we are keeping our focus on going the extra mile, always providing the best services to our customers, adopting the best practices in moving products in the pharmaceutical sector.”

Pharma keeps rocking in Rio

AMERICAN Airlines celebrated the 75th anniversary of its first cargo flight in October. This photograph marks a time when loading an aircraft was as

ACW 18 NOVEMBER 2019

time operations and emergencies can be replicated. Celebi says virtual reality not only improves the learning experience but safety and quality can be maintained. Based on initial feedback from the module, Celebi plans to rollout the module across its network. Dave Dorner, CEO of Celebi Aviation Holding says: “We continue to pursue our commitment to be an innovator in the aviation sector and invest in our people. VR is one example of how technology can be harnessed to provide a more effective and safer training environment to our valuable co-workers.”

CELEBI Aviation Holding has promoted Burak Kurt to the role of CEO of Celebi Delhi Cargo Terminal Management India. Previously, he was working as regional director – Istanbul at Celebi Hava Servisi, a role he has held since 2016. Kurt took up his new role in Delhi on 4 November.

ACS expands US base for future growth AIR Charter Service (ACS) has expanded its US headquarters in New York to manage future growth of the nine offices across the region. The project of moving ACS’s second largest office is off the back of its most successful year in 2018. Richard Thompson, president of ACS Americas says: “Last year ACS Americas arranged just shy of 6,000 charter contracts across the nine offices and saw revenue of more than $250 million. This expansion was essential as our HQ supports the ever-growing network of offices across the region – three of the nine have opened in the past two years and we have more planned in the near future.” He says ACS opened its first US office in 2004, a small shopfront premises on Long Island, and now there are more than 50 people, with continued expansion the reason to move to new offices.

Thompson says: “The project to move here has taken almost a year to complete, in order for it to be as seamless as possible. The new office is 20,000 square feet, more than double the floor space of our previous premises. We now have the space to allow us to grow and expand our sales, operations, HR, accounts, legal and customer experience teams.”

DHL Latvia has signed cooperation agreements with Riga Airport and real estate developer Castor Construction to build one of the most advanced logistics centres in Europe. The agreement to provide a regional DHL shipment processing and logistics centre covering 4,500 sq m will see DHL Express move to the new terminal and have a new sorting facility allowing for more efficient shipment handling. Energy-efficient solutions are planned for the new terminal, and DHL will operate a fleet of electric vehicles. Ilona Līce, chairperson of Riga Airport’s board says: “Considering the rapidly changing dynamics of air cargo shipments, the main and decisive role in attracting and developing the interna-

tional cargo logistics solution at Riga Airport is the development of low-cost infrastructure, high quality of services, clear and simple customs procedures, and added value that based on innovations can be created by cargo companies and regulatory authorities.” Krists Ezeriņš, operations director for DHL Latvia says €12 million will be invested in the facility, saying: “The agreement with the investor for the lease of the terminal has been concluded for a period of 10 years, with an option to extend it to 15-20 years.” Infrastructure is being developed at Riga Airport, with a new cargo apron doubling handling capacity, which along with DHL’s new facility, will make it a more attractive location, the airport operator says.

DHL to invest €12m at Riga Airport

straightforward as loading a railroad boxcar: you pull your pickup or flatbed to the door of the aircraft and heave.

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TO think: the work being carried out by all these AA Cargo people, using those landlines in front of hundreds of records, can all now be undertaken on one smartphone or tablet.

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SAS gets ready for its first A350

In January 2020, SAS will start operations with its first Airbus A350, offering considerably lower fuel burn and emissions than aircraft it replaces. On Tuesday 5 November, Air Cargo Week’s deputy editor, James Muir (pictured below) visited the Airbus factory in Toulouse to see the A350 and find out more about the latest innovations in aviation.

Airbus eager to welcome SAS to the A350 party

AS Group will benefit from a whole new design with excellent reliability when its first Airbus A350 enters service. Speaking at a briefing attended by Air Cargo Week, other media and SAS representatives at Airbus’ Toulouse base on Tuesday 5 November, Claire Thomas, marketing director for the A350 XWB was eager to explain more about the aircraft. It has been very popular with customers, providing new standards of efficiency not only in economy but in economic efficiency. Sales have been strong, with Thomas saying: “We have 913 firm orders from 51 customers coming from all regions and all operations from low cost to premium carriers including leasing companies. There have been 312 deliveries as of September. They are flying everywhere and we look forward to adding SAS at the end of the year.” Since entering service the A350 has had operational reliability of 99.3%, which

Thomas says is the most successful entry to service of any wide-body aircraft. She puts this down to the mature design and the engine. Thomas says: “We were close to operators to ensure a smooth entry to service and the engine was a key factor. The Rolls-Royce Trent XWB has had 99.9% reliability and it was designed specifically for the A350.” The A350 is operating about 400 routes with the centre of gravity going from Europe to Asia, but also on long-haul services from the Middle East to the US, and on trans-Pacific services. Thomas added that Singapore Airlines uses A350s on its shortest route between Singapore and Kuala Lumpur, and its longest service to New York. The A350-1000 entered service in 2018 with a range of 8,000 nautical miles. Thomas says this benefited from the same clean sheet design, a high level of commonality and experience from the A350-900. Thomas told the audience that the A350

is the only whole new design for 3-400 seat aircraft, and that it benefits from a number of innovations. It is made from advanced materials, mainly composites; the wings are inspired by nature and adapt during different flight phases in what is known as biomimicry; engines designed specifically for the A350; and simple robust systems to reduce the number of parts. SAS’s first A350 is in Toulouse where it is undergoing pre-delivery tests. SE-RSA Ingegerd Viking will be delivered from the factory by the end of 2019 and is scheduled to officially enter service on 28 January 2020 on services between Copenhagen and Los Angeles. It will also feature SAS’s new livery.

CARGO customers are looking forward to the arrival of SAS’s first Airbus A350, thanks to its capacity and environmental credentials. SAS Cargo tells Air Cargo Week that customers are eagerly awaiting the A350 entering service, saying: “It’s an entirely new type of aircraft for SAS and it will enable us to offer our customers a more sustainable air transport with temperature-controlled compartments. Ideal for our important and valuable pharma trans-

ports and other temperature sensitive goods.” The A350 is around 30% more fuel efficient than the A340s it will be replacing with significantly reduced CO2 emissions. This means cargo, up to 20 tonnes per flight, will be moved in a more sustainable way. SAS Cargo says: “We have committed to UNs global compact goals 2030 and so have many of our customers. Using the A350 on our intercontinental routes will enable us together with our customers to

further commit to bridging the gap to sustainable air freight.” The environment and sustainability are issues customers are taking very seriously, and expect SAS to do the same, so more efficient aircraft are an important move. SAS says: “It’s a high priority for our customers – just as it is for us. We all know we need to take urgent action to combat climate change and its impacts. And it’s a joint, global task we must address together.”

Cargo customers are looking forward to new arrival

ACW 18 NOVEMBER 2019

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SAS wants to fly in a sustainable and responsible manner THE aviation industry has been put into the global spotlight due to the climate crisis, as it is known, and airlines need to show what they are doing to improve sustainability. The aviation industry has made major strides in reducing its environmental footprint, and has ambitious targets to cut emissions into the future. As head of environment and CSR, Lars Andersen Resare’s role covers all issues of sustainability at SAS. Not only does his role cover the airline’s climate impact, but also working conditions and diversity. Resare (pictured) tells Air Cargo Week: “Legal requirements and business ethics topics are of course on the top of the agenda.” Renewing the fleet with A320neos, A350s and A321LRs is an important environmental programme, along with sustainable aviation fuel and other operational measures to increase

energy efficiency. The A350s will help SAS grow with a smaller footprint, with Resare saying: “To replace our A340 fleet one by one with A350 enables a growth in TK as well as considerably lower

greenhouse gas emissions. Our long-haul operations contribute to a large share of our total greenhouse gas emissions.” SAS plans to reduce total carbon emissions by at least 25% by 2030, and fleet renewal is one part of the strategy. Using sustainable aviation fuel and improving energy efficiency in daily operations are also important. Resare says: “The latter includes weight reductions, improved procedures and behaviour from different employee groups and improved punctuality.” SAS and Airbus are looking into hybrid and electric powered aircraft, and Resare is optimistic about the benefits this can bring in the future. He says: “I think there will be a commercial aircraft available in the 2030’s that has integrated the mentioned technology that reduces the greenhouse gas emissions considerably.” With flygskam or flight shame entering the

vocabulary, and people following Swedish schoolgirl Greta Thunberg’s lead by refusing to fly, the aviation industry is not only having to take action to reduce its environmental impact, but also spread the message of what it is doing. In a speech at the 52nd AACO AGM, Alexandre de Juniac of IATA told the audience that while it has to be welcomed that people are adjusting personal habits to avoid a climate calamity, it is the industry’s duty to ensure they have the facts to make the right choices. Resare says the Scandinavians take environmental issues seriously, and hopes the public realises that SAS is serious about its commitments. He says: “We have a good track record and are continuously reducing our greenhouse gases from our operations. The dialogue/discussions are important in order to involve our stakeholders and accelerate the development.”

SAS and Airbus share electric dreams

HYBRID and electric power has become very popular in the automotive industry in recent years, and could be very important for aviation if it is to hit environmental targets. Following Claire Thomas in making a presentation was Glenn Llewellyn, vice president of zero emission technology for Airbus, who explained what the company is doing to meet tough targets. The aviation industry has set the target of cutting aviation emissions to 50% of 2005’s levels by 2050 but with traffic expected to double every 15 years, different technologies will be needed. He says the industry has already made significant progess, as emissions per seat are 80% lower today than at the start of the jet age. Saying this is already an extremely ambitious starting point, the reduction is about bringing down CO2 even further. Llewellyn says that Airbus’ E-FAN, which flew across the English Channel in 2015 uncovered interesting insights. He says: “It taught us about the opportunities the technology brings to aviation and that you can have a very simple propulsion system with an electric motor and batteries. We were also able to rethink how an aircraft was designed with the Vahana vertical take-off and landing machine. It is different to a helicopter, the wings tilt to allow vertical take-off and landing. These machines have taught us a lot about electrification.” The CityAirbus four-seat eVTOL had its first flight on 3 May 2019, showing the flexibility that being electric can bring. Airbus has gained confidence and the E-FAN X will operate its first flight in 2021, with the test aircraft featuring a

two megawatt electric motor, making it more than 30 times as powerful as the E-FAN. Llewellyn says: “With this sort of power level, we will be able to test full electric and hybrid flights.” Airbus has opened a facility in Munich to test 20 megawatts of hybrid and electric propulsion. Llewellyn says: “This is 10 times the power level we have today and shows the level of ambition attached to the technology. It has the power level of one A320 engine and is a serious technological commitment to help reduce CO2 emissions.” In May, SAS and Airbus signed a memorandum of understanding to study the requirements of hybrid and electric aircraft. Llewellyn says: “What was missing was the operator’s perspective, how it would change operating the aircraft, and how the fleet or network was organised. It is similar to the automotive world, we have the same starting point for aviation as earlier electric cars with less range. We need to look at how this will change and how to get benefits for the network.”

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FIATA publishes best practices on prevention of bribery

IATA, the International Federation of Freight Forwarders Associations, released a best practices paper on prevention of bribery during its 2019 World Congress in Cape Town, South

Africa. This paper aims at addressing the challenge of corruption and bribery in the international logistics and freight forwarding industry. It provides practitioners with advice on internal control measures against bribery and on cooperating with other stakeholders to prevent it. The Corruption Perceptions Index 2018 of Transparency International reported that more than two-thirds of 180 countries and territories covered by the Index scored below 50 on a scale of between 0, highly corrupt, and 100, very clean, revealing that the world economy is still heavily burdened by corruption. As a sector deeply involved in cross-border

trade and frequently interacting with public officials, the international logistics and freight forwarding industry has a relatively high risk of exposure to corruption or bribery. Richard Gluck, chair of FIATA’s Advisory Body Legal Matters, stated, “Our member companies requested a guide to combat bribery and corruption. “This best practices paper, developed with support from FIATA’s Customs Affairs Institute, emphasizes the significance of establishing and implementing a systematic anti-bribery policy in the enterprise, with a strong leadership commitment against bribery behaviour. “It recommends adoption of clear rules on sensitive issues like gift-giving, facilitation payments and employment of third-party service providers. Recommended processes to deal with bribery solicitations from public officials are also included to help members in such

situations.” FIATA President Babar Badat commented, “Fighting against corruption and bribery is critical to create a level-playing field for the logistics and freight forwarding industry and to lower the costs of trade for the entire supply chain. No one can win this fight on their own. FIATA will continue to work with all stakeholders and strive for a better business environment for the industry.”

K+N enlarges Geel distribution centre as pharma booms KUEHNE + Nagel has inaugurated its enlarged pharma distribution centre in Geel, Belgium making it one of the largest within the global KN PharmaChain network. By offering standardised, reliable and compliant end-to-end logistics solutions, the new facility plays an important role for Kuehne + Nagel’s customers in search of pharma & healthcare supply chain solutions to support their own strategic growth plans. The new facility offers multi-modal, temperature-controlled forwarding and warehousing services and is fully GxP compliant and certified. KN PharmaChain encompasses a global network of more than 220 operations, 600,000 sq m of industry dedicated warehousing space and a team of specially-trained operators. Tobias Jerschke, managing director of Kuehne + Nagel BeLux comments at the occasion of the opening ceremony: “The enlarged

pharma hub in Geel is an inherent part of our strategy to offer integrated logistics solutions to our customers, at the very centre of one of Europe’s strongest pharma clusters. Leveraging our distribution network, we make sure that hospitals, pharmacies, doctors and patients are supplied in full and on time.” The Geel hub is centrally located in close proximity to the Brussels and Liège airports and with fast connections to the other 15 main European KN PharmaChain locations. The facility covers a total area of 22,000 sq m (plus another 10,000 sq m of extension space) and has two cold chambers to handle varying temperature requirements. In addition to the Geel pharma hub, Kuehne + Nagel is currently investing in a 15,000 sq m airside pharma facility at the Brussels cargo airport (BruCargo), due to open in the second half of 2020.

From left to right: Robert Coyle, SVP Kuehne + Nagel Pharma & Healthcare, Dr. Hansjoerg Rodi, Regional Manager Kuehne + Nagel Europe, Dr. Detlef Trefzger, CEO Kuehne + Nagel, Tobias Jerschke, Managing Director Kuehne + Nagel BeLux, Gerry Bosmans, Director Contract Logistics Kuehne + Nagel BeLux

ACW 18 NOVEMBER 2019

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Kerry Logistics sees a 194% first half profit surge

ong Kong-based Kerry Logistics’ first half (H1) of 2019 turnover increased by 13% to HK$19.8 billion ($2.5 billion) over 2018’s HK$17.4 billion. This translated into a profit of HK$2.8 billion for the business. The Integrated Logistics (IL) business recorded a segment profit of HK$1.1 billion and International Freight Forwarding (IFF) business recorded HK$288 million, which represent an increase of 5% and 22%, respectively Special dividend of 35 HK cents per share was paid. An interim dividend of 9 HK cents per share was paid in September. William Ma, group managing director of Kerry Logistics, said: “Global economic growth has markedly slowed down in H1 2019, with weakened trade and manufacturing. The [continuing] international trade disputes and unresolved negotiations have created further adverse conditions and accelerated changes in the global supply chains. Rising political and social turmoil in Hong Kong added pressure to the already softening economy. In view of the slower world economy, the group continued its efforts in strengthening its service capabilities, expanding its network coverage and building its business scale in order to give itself a competitive advantage in adapting to the changing global logistics landscape.”

IL profit rose

Buoyed by positive performance of its Hong Kong business and continued expansion in Taiwan, coupled with the steady growth of its operation in Asia, the Group’s IL division recorded a moderate increase in segment profit, which accounted for 80% of the Group’s total segment profit in H1 2019. In Hong Kong, supported by new customer wins across various industries and business growth of some of the key accounts in the fashion and food and beverage industries, the segment profit of the logistics operations remained in an upward trend by rising 18% in H1 2019. In Mainland China, benefitting from shifting the focus to multiple higher-growth verticals including pharmaceutical, imported food and beverage and automotive parts to minimise impact from global trade volatility, the segment profit of the Group’s IL business turned around in H1 2019. In Taiwan, driven by Kerry Pharma and the newly acquired Science Park Logistics, the IL profit grew by 11% in H1 2019. Kerry Pharma, as the sole certified pharmaceutical logistics provider in Taiwan, has continued to expand in the niche market. The acquisition of Science Park Logistics in January 2019 strengthened the Group’s capability in serving high-tech customers.

In Asia, the growth momentum of the Group’s business moderated in H1 2019. While Kerry Express Thailand continued to expand its service coverage and business scale across Thailand, the profit growth was slower. The performance of the Thailand operation remained robust. Kerry Express Thailand’s daily delivery quantity has grown to more than one million parcels, and the number of service points has doubled (compared to 2018 Q4) to 10,000 locations. Segment profit in Asia increased by 7% during the period. The increment was only moderate as the Group is still financing the Kerry Express operations in Malaysia, Vietnam and Indonesia, which incurred an aggregated loss of approximately HK$40 million during the period.

IFF volume swelled

Riding on the increased trade from Mainland China to other Southeast Asian countries and within Asia, the IFF division achieved a 22% growth in segment profit, which contributed 20% to the Group’s total segment profit in H1 2019. In Mainland China, the logistics centre in Wuhan was completed in 2019 Q2. In Taiwan, the 15,400 sq m transit hub in Xinshi District commenced operation in 2019 Q2, and the 43,000 sq m logistics centre in Guanyin is expected to complete in 2019 Q4. In Thailand, construction of Phase three of the Kerry Bangna Logistics Centre began in 2018 Q4, and is expected to complete in 2020 Q1.

Asset monetised

In June 2019, the disposal of the Group’s warehouses in Chai Wan and Shatin to a subsidiary of Kerry Properties Limited was completed. The total gain of the disposal was approximately HK$2 billion. The group will continue to actively consider opportunities to unlock the value of its assets on the balance sheet, which will provide capital for strategic investments and ongoing expansion, and crystallise value for its shareholders.

Softening Asia growth

Recent events in Hong Kong are creating unfavourable conditions for the Group’s business in the second half (H2) of 2019. However, the group believes that the stronger results elsewhere in Asia should be able to offset the weak performance in Hong Kong. In particular, Taiwan will remain one of the growth drivers in Asia in H2 2019. Ma concluded, “Global economic growth is expected to remain weak in 2020, as policy uncertainties and

The calm before the storm? IN addressing the annual shareholders meeting of Taiwan’s Dimerco Express Group in the summer, Edward Lin, chief executive officer took a look back at the group’s business in 2018. He told attendees that in 2018, Dimerco “continued to develop the two major strategies of its business blueprint, with Dimerco Express (DIM) focusing on airfreight services.” The first three quarters of 2018 were bolstered by the economic boom of 2017; then the global economy took a sharp downturn in the fourth quarter, resulting in a 36.3% drop in annual net profit and a 38.3% drop in net profit by quarter for all listed companies. “This means 2018 has been a challenging year,” Lin said. The group’s consolidated operating revenue was NT$18.4 billion, increased by 5.2% compared with the previous year. Despite the modest 5.2% growth, this is the first time that the group crossed the US$600 million turnover mark. The net profit after tax, NT$263 million, increased by 27.2% from NT$206 million in last Guven

year (2017), after-tax earnings per share (EPS), NT$2.09, increased by NT$0.42 (25.1%) from NT$1.67 in 2017.

Unstable times “Since the global financial crisis toward the end of 2008, the global economy has been largely unstable and currency fluctuations have been volatile, making it highly difficult to predict the future state of the economy. Looking forward to 2019, the trade war between China and the USA and Brexit have both cast shadows over global economic growth,” noted Lin. Dimerco will continue to be active in North America, Europe, India, China and Southeast Asia business development and investment. Effective 1st October 2019, Dimerco Express Group restructured and set up an Executive Management Board (EMB), which will consist of five executive management members. This will be led by Jeffrey Shih on Lin’s retirement.

geopolitical tensions continue to cloud the trade environment. The current political and social disquiet in Hong Kong, which is the group’s key market, is expected to adversely impact the Group’s performance in H2 2019. “Nevertheless, the group is in a resilient position to withstand difficult market conditions, sustained by its expanding global network and diverse range of businesses. Taking into consideration the challenging market outlook, the group will remain watchful and keep reinforcing its foundation through enhancing its service capabilities, expanding its network presence and enlarging its business scale.”

Agility and JD Logistics tie-up AGILITY’S digital innovation arm, Shipa, has signed a memorandum of understanding with JD Logistics, an independent business group under JD.com, China’s largest retailer, to collaborate on logistics in fast-growing e-commerce markets. Agility and JD Logistics will work together to make it easier for consumers to get access to JD’s product range and products offered by JD Logistics’ merchant partners. The new agreement focuses on cross-border logistics, procurement and retail and covers markets in Southeast Asia, the Middle East and Africa. Agility and JD will also co-operate in retail and procurement by promoting high-quality products made or assembled in the Middle East and Africa to Chinese sourcing merchants and creating more sales channels for Chinese merchants. Agility will also help strengthen JD’s international supply chain. At the same time, JD will leverage its extensive logistics network and industry expertise to help Agility and its

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partners further enhance their footprint in the Chinese market, and increase overall operations efficiency. Henadi Al-Saleh, chairperson of Agility, said: “Agility has a long record of providing specialised services in emerging markets. By partnering with JD Logistics, we will leverage our respective strengths to make it easier to connect the businesses looking to tap the consumer demand in fast-growing markets such as ASEAN and the Middle East with the vast supplier base in China.” Zhenhui Wang, CEO of JD Logistics added: “JD Logistics has developed advanced supply chain systems, technology and operations, and has extensive supply chain and logistics management experience. “By partnering with Agility, we will provide customers with a variety of transportation services for ocean, land, air and rail transportation, helping us design the optimal logistics solution to reduce costs and increase efficiency for customers.” Martinelli

ACW 18 NOVEMBER 2019

AUTOMOTIVE

A specialist service for your pride and joy

n an average year, Emirates SkyCargo moves about 1,500 cars, and has a specialist team to ensure they are handled with the utmost care. Dennis Lister, vice president cargo commercial development for Emirates says the types of vehicles and clients are varied, but they are all handled with care. Sometimes they are personal vehicles being transported for holidays or relocation, or manufacturers moving cars for testing or distribution to market. High end cars for racing events or collectors’ cars also get moved. Personal vehicles traditionally get moved from the Middle East to European destinations in the summer. In London, June to August is popular with wealthy Middle Eastern visitors keen to escape the heat in what is known as the ‘Ramadan Rush’. Affluent areas, particularly Knightsbridge and Kensington are filled with Arab registered supercars for ‘Supercar Season’, much to the delight of car spotters though residents complain about the noise and disruption. This is not the only time cars get moved, Lister says: “Some owners also tend to move their cars when they relocate to another destination whereas others get their premium cars transported to car manufacturers’ facilities to get them serviced by factory technicians in the best conditions. These tend to happen through the year.” Whatever the car, whether it is the latest piece of exotica from a manufacturer such as Lamborghini, or a racing car or a classic, must be handled with care. The Emirates Wheels product consolidates experience from transporting cars and outlines specific procedures for loading and unloading. Lister says: “We have a team of car loading supervisors to ensure that the vehicles are correctly manoeuvred on and off the aircraft and who will also accompany the vehicle in case the handling agents at the various stations do not have sufficient expertise in this area.” Two levels of cover are on offer, with the entry level airport-to-airport Emirates Wheels, which is popular for B2B customers. The door-to-door Emirates Wheels Select is popular with private individuals. Safety is the primary consideration, and Lister admits it can seem over cautious, Emirates SkyCargo has a special reservation procedure for vehicles being loaded in the belly of passenger aircraft. He adds: “Unlike a number of other airlines we will not engage the engine when loading or unloading the vehicle. This is done to reduce the possibility of heat damage to the car and to mitigate any risk to the aircraft. These were procedures that were put in place at the time of the launch of Emirates Wheels.” Of the 1,500 cars that fly with Emirates SkyCargo a year, some are very special like the BMW M850i Night Sky, which was exhibited at the Dubai Automotive Show. The one-of-a-kind concept car featured a hand painted exterior and hand-crafted interior designs including the use of tiny pieces of a meteorite. Four Mercedes Benz AMG GT63s were moved from Dubai to the Gumball Rally, which went from Mykonos to Ibiza, before flying them back to Dubai. Lister says: “The cars were transported on our Boeing 777 freighter aircraft which has one of the widest main deck doors in its aircraft type allowing for easy loading and unloading of outsized cargo.”

ACW 18 NOVEMBER 2019

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