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The weekly newspaper for air cargo professionals Volume: 20
20 February 2017
LM-100J unveiled and Airlander 10 repaired
evelopments of two very different aircraft for air cargo have reached differing milestones. Lockheed Martin has unveiled the first LM-100J commercial freighter in a ceremony in Georgia for its inaugural flight in the spring. The security and aerospace company announced its intention to manufacture and market the LM-100J in February 2014 and has filed for Federal Aviation Administration civil type certificate update.
Brazilian logistics and defence group Bravo Industries ordered 10 at last year’s Farnborough International Air Show - to be used for air cargo operations in Brazil. South African company ASL Aviation Group also signed a letter of intent in 2014 for 10 LM-100J and there is at least one unnamed customer which has placed an order. The LM-100J is an updated version of the L-100 Hercules and incorporates technologies developed from the military C-130J. It will support a variety of tasks including oversized cargo, oil and gas, mining logistics, aerial fire fighting; aerial delivery; medevac/ air ambulance; humanitarian relief operations; personnel transport; austere field operations; and search and rescue. Lockheed Martin vice president and general manager, air mobility & maritime Missions, George Shultz says: “Today’s rollout not only marks another accomplishment for Super Hercules, but it also reflects the aircraft’s capability
to evolve to meet customer requirements. The LM-100J program has exceeded all expectations in moving from an idea to a reality.” Meanwhile, the Airlander 10 airship has been repaired and is being prepared to take to the skies again. The hybrid aircraft built by Hybrid Air Vehicles (HAV) took to the skies in August 2016, but sustained structural damage to the flight deck when it suffered a hard landing during its second test flight. HAV has identified the cause of the heavy landing and a number of changes in procedures and training have been implemented. HAV chief executive officer, Stephen McGlennan says: “We’re delighted to have made the progress we have in our repairs and look forward to restarting our test flight programme soon.” The test flight programme will be restarted soon, but HAV gave no date for the next flight. The UK airship is 92 metres long and designed to stay airborne for up to five days at a time and fulfil a wide range of roles including carrying cargo. The Airlander can take-off and land in a short distance from unprepared sites in desert, ice, water or open field environments.
be a strong customer focus as well as our innovative and consistently efficient operational processes. We expect a freight throughput of some 50, 000 tonnes a year. This gives the company a strong push.” LUG says Etihad wants to raise its service quality and productivity in Germany as well as lower costs and raise turnover. It considers Germany a strategic market due to the economic ties between the UAE and Germany. Main exports from Germany are cars, machinery, electronics and chemical products. Germany imports are primarily aluminium and chemical products from the UAE.
DSV handled 574,644 tonnes of airfreight in 2016 – a growth of 85 per cent on 2015 when it processed 311,193 tonnes. The Danish freight forwarder puts much of this down to the $1.35 billion 2016 acquisition of US freight forwarder UTi Worldwide. For the fourth quarter (Q4) alone of 2016, DSV’s airfreight volumes surged 86 per cent. In 2016, net revenue for airfreight was 15,800 million DKK ($2.2 billion) – up on the 9,171 million DKK in 2015, while gross profit for airfreight was 3,991 million DKK, up on the 2,234 million DKK in 2015. For DSV as a whole in 2016, net revenue was 67,747 DKK million compared with 50,869 million DKK in 2015 and operating profit before special items was 3,475 million DKK, up on 3,050 million DKK in 2015. DSV chief executive officer, Jens Bjørn Andersen says: “We expect to complete the integration of UTi and continue to take market share in 2017 creating earnings growth of 21-29 per cent.”
Etihad switches handler in Germany to LUG Tonnage up 85% at DSV
LUG air cargo handling has scooped contracts with Etihad Cargo at Munich Airport and Frankfurt Airport. The handler says the carrier was faced with strong competition and has reorganised itself in Germany leading to it changing its cargo handling partner. It will take over at Munich this month and at Frankfurt next month. Etihad Airways offers two passenger flights a day to each of the airports. In addition, Etihad full freighters – an Airbus A330-200F and Boeing 777-200F serve Frankfurt twice a week. LUG’s agreement with Etihad covers cargo handling services, including full freighter, belly cargo and road feeder services handling for Etihad Airways and partners such as Air Berlin. LUG air cargo handling managing director and chief executive officer, Patrik Tschirch says: “We are delighted that we have been able to convince a demanding customer such as Etihad Cargo of our high service quality and to land this big contract. “Key success factors for our cooperation will
FASHION AND PHARMA DRIVING GROWTH AT IAG AMBITIOUS SIGINON TO GROW IN NAIROBI ASTRAL COMMITTED TO 3 HUB STRATEGY YTO CARGO SIGNS FOR 3 B737-300 P2FS WITH PEMCO
Atlas to operate B747F for Asiana Cargo ATLAS Air is to operate one of its Boeing 747-400 Freighters for Asiana Cargo. The contract is initially for one aircraft to be provided and operated by Atlas Air, which will be flown on key global routes across the transpacific, connecting South Korea with several destinations in the US. The service is scheduled to begin this month. Atlas Air Worldwide president and chief executive officer, William J. Flynn says: “We are delighted to welcome Asiana Cargo as an important addition to our customer portfolio. “Asiana takes pride in providing reliable, high-quality service, and we are very pleased to be chosen to manage an important part of its international network. “We look forward to providing Asiana and its customers with unmatched service and a platform for future expansion.” Asiana Cargo executive vice president, Kwang Suk Kim says: “Asiana appreciates Atlas’ outstanding cooperation and expects to serve Asiana’s clients with enhanced freighter services.” Atlas Air Worldwide is the parent of Atlas Air, Southern Air, and Titan Aviation, and majority shareholder of Polar Air Cargo Worldwide with a fleet of 86 aircraft.
NEWS WEEK Dube Tradeport aiming for further expansion
016 was a very favourable year for Dube TradePort, with cargo volumes growing 20 per cent on 2015, chief executive officer Hamish Erskine tells Air Cargo Week. Dube TradePort Corporation owns and operates Dube Cargo Terminal at King Shaka International Airport 30 kilometres North of Durban has welcomed additional capacity and connectivity with new carriers. Erskine says: “The additional capacity and connectivity offered by more carriers staring operations in late 2015 was well received by the airfreight industry.” 2017 has started well, Erskine comments: “We see that there is an opportunity for steady, organic growth throughout the rest of the first quarter and 2017.” He feels Dube TradePort is in a prime location, as KwaZulu-Natal has the second largest manufacturing sector in South Africa, producing one third of the country’s exports. Erskine says: “We believe a combination of Dube TradePort Special Economic Zone’s (SEZ) location, facilities and services give air cargo companies a competitive advantage in doing business in Southern Africa.” The SEZ is home to King Shaka Airport with 77 hectares of light manufacturing facilities including electronics, medical and phar-
Cargolux targets more in Africa
maceutical goods. Dube Cargo Terminal offers dedicated facilities to handle outsized cargo for specialised freighter operations, and Erskine feels it is the most secure cargo terminal in Africa. He says: “All this is enabled by our advanced and modern technology coupled with highly trained staff. We also offer all these services at very competitive rates for the shippers.” Dube Cargo Terminal has 100,000 tonnes of annual capacity but Dube TradePort’s long term plans include expanding to accommodate two million tonnes. Erskine says the TradeZone for manufacturing, assembly, warehousing and distribution of pharmaceuticals, electronics, automotive, high-tech and aerospace, as well as textiles, is rapidly expanding, boosting airfreight. He adds: “Plans for phase 2 are underway which will open up further opportunities for KwaZulu-Natal and airfreight.”
CARGOLUX Airlines had an “excellent year” in Africa in 2016 and expects the market to remain stable for the first half of 2017, regional director Africa Jonathan Clark says. He says Cargolux registered a tonnage increase compared to 2015 and will remain an important market. The first few weeks of 2017 have been slow due to holidays in Southern Africa but northbound traffic has been strong helped by Cargolux’s Fresh product for perishable cargo. Clark notes overcapacity remains an issue in Africa: “As in other markets, there has been some pressure on the yields due to overcapacity, nevertheless Africa is and will be in the coming years a very important market for Cargolux.” He does not foresee any major peaks or drops in 2017, saying: “One of the reasons that we do not foresee the market growing is related to the lack of investment in the oil and gas industry.” The market is expected to continue to show moderate growth especially for imports, but exports are more concerning. Clark says: “The biggest problem will be exports, as most markets rely on perishables. Here, we don’t see a lot of volume growth potential in the coming years as they are already on a pretty high level.” Manufacturing is also limited to due poor infrastructure such as electricity, deficits in education and governments not attracting multinational companies through incentives. He says: “The car industry in South Africa is still quite strong, however many suppliers have, or will, move to Eastern Europe and China, where costs are lower and the infrastructure is better.” Cargolux is exploring new opportunities in Africa. “We see the potential to increase our presence in West Africa as well as in East Africa over the coming years.”
21% tonnage rise for Brussels
BRUSSELS Airport saw a huge 21 per cent rise in cargo volumes in January compared to the same month in 2016. The airport handled 44,952 tonnes, up on the 36,964 tonnes in January last year and a welcome start to 2017. In January, freighter traffic was 34,214 tonnes, a 35.5 per cent uplift on the same month last year. Of this, freighters made up 17,316 tonnes, up 81.4 per cent and integrators 16,897 tonnes, up 7.6 per cent. Bellyhold fell by 8.4 per cent to 10,739 tonnes from 11,720 tonnes in January 2016. The airport says this is mainly due to the departure of airlines like Jet Airways in March 2016. Brussels notes the share of exports of pharma and perishables grew.
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Love is in the air cargo as carriers send flowers for Valentine’s Day
he air cargo industry had a busy few weeks transporting flowers around the world in time for Valentine’s Day. Lufthansa Cargo filled entire freighters with flowers, connecting flower-growing countries with its Frankfurt hub several times a week, with charter flights from cities including Quito and Nairobi.
American Airlines Cargo began worldwide shipments for Valentine’s Day during the first week of February, transporting vast quantities of fresh cut flowers out of Amsterdam. American Airlines Cargo sales regional manager Northern Europe, Andy Cornwell says: “Valentine’s Day, Easter and Mother’s Day all drive demand and require that we go the extra
mile to deliver on the needs of our customers— and, ultimately, their customers.” American will start direct Dallas Fort Worth – Amsterdam services on 5 May supporting flowers and perishables. Emirates SkyCargo, painted one of its Boeing 777 Freighters with a unique rose decal, flying to Nairobi to be loaded with flowers headed to Amsterdam. It has operated four additional freighter flights in addition to the daily service from Nairobi, bringing almost 350 additional tonnes of flowers into Amsterdam, as well as extra capacity on the thrice-weekly service between Quito and Amsterdam. UPS added 34 temperature-controlled flights in the two weeks prior to the big day filled with roses and other flowers from Latin America, with the vast majority flying via Miami. Flower volumes at IAG Cargo bloomed 18 per
cent, particularly from locations such as Ecuador and Colombia, while high-end chocolate from Belgium and Switzerland travelled to the US and Asia. Cargolux Airlines International added a number of extra flights to cope with demand from South America and Africa. It says 35 per cent of sales of cut flowers in the European Union originate from Kenya. LATAM Cargo handled 9,000 tonnes of flowers between 16 January and 7 February, with 900 tonnes a week flying between Bogota and Miami and another 1,500 from Quito to Miami. Airports have also seen a boost, with London’s Heathrow Airport expecting to handle 570 tonnes in February, triple its normal figure. Kenya accounted for 60 per cent of rose imports at Heathrow in 2015, with the remainder from Colombia, India, Tanzania and Ecuador.
Full speed for FedEx Milan gateway FEDEX Express’ new international gateway to Southern Europe at Milan-Malpensa Airport is now fully operational, with advanced technology to improve efficiency to meet volume growth. The 35,000 square metre facility features advanced technology to boost package sorting capacity by 25 per cent, which FedEx says will enable it to better meet volume growth. FedEx has opened 24 stations across Italy since 2011 and introduced a direct cargo flight from Italy to the FedEx Express World Hub in Memphis, Tennessee. FedEx Express Europe and chief executive
officer of TNT, David Binks says the number of people in Italy making online purchases has doubled over the last five years and 2016 is expected to be 17 per cent above 2015. Binks says: “Expanding our operations in Malpensa is a key part of our network growth strategy, creating more capacity and enabling more business connections in Europe and around the world. This new Southern Europe gateway represents the next step in building Europe’s premier logistics network.” Milan-Malpensa has been FedEx’s Italian gateway since 1992 and is located in the Lombardy region.
Miami welcomes Qatar freighter flights
QATAR Airways Cargo has started its first freighter service to Miami International Airport (MIA) as part of a two weekly cargo-only flight schedule that began on 3 February. The carrier is using Boeing 777 Freighters twice a week from Doha via Luxembourg, the cargo carrier’s European hub, with stops in: Sao Paulo, Brazil; Buenos Aires, Argentina; and Quito, Ecuador. On the return trip, the freighter will stop in Miami and Liege, Belgium, before arriving in Doha. Officials from MIA and Qatar Airways
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Cargo celebrated the new service with a reception on 13 February, after a return flight from Quito. Miami-Dade Aviation director, Emilio T. Gonzalez says: “We appreciate Qatar Airways Cargo for choosing MIA as a strategic hub for its Latin American cargo operations.” Qatar Airways Cargo will handle temperature-sensitive commodities out of Sao Paulo, Buenos Aires and Quito such as fresh flowers and pharmaceuticals, in addition to high-value imports into South America including medicine, automotive equipment, chemical products, high-tech commodities and equipment for the oil and gas industry. Qatar Airways chief officer for cargo, Ulrich Ogiermann says: “We would like to thank MIA, local authorities and our valued customers for their tremendous support in making our newly launched freighter services in Miami another great success.”
DSA growing its cargo offering in the north of the UK
onnage trebled at Doncaster Sheffield Airport (DSA) in 2016 to 9,522 tonnes and the northern located UK gateway is aiming to grow further. The operator at DSA is Peel Airports and cargo manager, Dayle Hauxwell says it was line with planned growth, but it has exceeded expectations in the diversity of carri-
ers and business welcomed to DSA. “Although the core is large ad-hoc movements we are seeing much more repeat business and airlines returning as part of long term projects,” Hauxwell says. In 2016, DSA (image credit: Rob Burns) worked with DHL as a partner during the East Midlands Airport (EMA) runway closures. For the duration of closures it handled their weekend operation and diverts, totalling 90 movements and 1,000 tonnes. Hauxwell says: “This was a great test of our capabilities, proving our ability to handle intensive integrator operations and importantly, we were able to meet DHL’s high expectations.” DSA is now rivalling EMA in the north of
the UK. Hauxwell says: “Historically, EMA has been seen as the default choice because of its established position in the market, however we believe we provide available capacity and a more broader and flexible solution to serve the problem of increasingly congested airports across the whole of the UK. “In 2016 we opened a £60 million link road which has significantly improved access to the UK motorway network, which combined with our central location means we can serve the whole of the UK. Taking EMA specifically, there is less than 60 miles between us and negligible difference in both flying and fuel cost.” DSA has developed expertise in handling oversize cargo and types of cargo requiring specialist loading, and express handling solutions for ultra-time sensitive material. But what is it hoping for in 2017? Hauxwell says: “Our primary focus is to continue improving our product, listening and responding to our customer needs which is driving the fantastic levels of growth we are currently seeing. We have for example recently been approved as a Dedicated Port of Entry allowing us to handle certain categories of Perishables imports. “This is an area we are looking to grow through 2017 capitalising on our speed of handling and connectivity to key UK markets.” DSA is targeting inroads into the perishables market and hoping to see growth in time sensi-
tive consumer markets. Hauxwell adds: “Just as automotive relies on just-in-time stock management we believe many of the global retailers will move towards more dynamic logistics solutions and DSA is placed to meet those needs.” DSA will be investing in airfield infrastructure in 2017. But Hauxwell says most importantly, it will be investing in the Transit Shed itself to increase floor space to 50,000 square feet, to deliver an improved process for transit shed operator Anglo World Cargo. It will boost access and see a HGV parking area built. DSA is positive about Brexit. Hauxwell says: “It’s too early to predict the business implications of Brexit and much will depend on the UK’s final position on customs union and free trade. We do believe the UK market is resilient enough to adapt and find opportunities within whatever the final outcome may be.” As for a 3rd runway at Heathrow Airport: “We do not believe a 3rd runway will significantly improve Heathrow’s position to develop further pure cargo capacity, particularly given the demands of passenger traffic which we believe will be the major beneficiary. We believe long term cargo forecasts suggest the UK will need additional cargo capacity that is unlikely to be provided in the South East alone. DSA offers available capacity now, with space to grow within our existing footprint and is well placed to meet this long term demand.”
Strong start in 2017 for cargo at Heathrow
HEATHROW Airport is continuing to grow strongly in 2017 with cargo volumes rising 4.4 per cent to 124,101 tonnes in January. Between February 2016 and January 2017, cargo volumes were up 3.1 per cent to 1.54 million tonnes, while a record 5.74 million passengers passed through the airport in January, year-on-year growth of 4.2 per cent. Heathrow Airport chief executive officer, John Holland-Kaye says: “With record passenger numbers and cargo growth in January, Heathrow continues to serve the UK. We are getting on with our expansion programme, so that we can create the new routes that will deliver the Prime Minister’s vision of a global Britain, as quickly as possible.”
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Heathrow has also passed the first milestone to get a third runway with the publication of the government’s draft National Policy Statement. Holland-Kaye says: “The launch of the Government’s National Policy Statement consultation is a key milestone and we look forward to working with our local communities, airlines and the Government to ensure Heathrow expansion is affordable, sustainable and benefits all of Britain.” Over at Gatwick Airport tonnage continues to thrive boosted by new long-haul connectivity to emerging markets. The gateway handled 6,035 tonnes in January, up 15.4 per cent on the 5,321 tonnes in the same month in 2016. On a 12-month rolling basis, tonnage is up 8.2 per cent to 78,799 tonnes compared to 72,846 tonnes in the previous period. Gatwick Airport chief executive officer, Stewart Wingate says increased cargo volumes “once again prove the vital role the airport plays in the UK economy at this crucial time for the country, as we continue to offer the UK Government a credible and deliverable option for runway expansion.”
UK must adapt or miss out on vital trade opportunities
hile the UK waits for a third runway at Heathrow Airport, Manchester Airports Group (MAG) says it is its duty to help the UK grow and thrive internationally, head of cargo and business aviation Conan Busby (pictured) tells Air Cargo Week
(ACW). The UK government announced its backing for a third runway at Heathrow Airport in October 2016, and has published the draft National Policy Statement, with a vote in parliament expected by winter 2017-18. Busby says the industry cannot wait for the third runway to open, it must adapt or miss out on trade opportunities. He believes a UK-wide approach to air services is essential and many carriers have proved it works well. Busby tells ACW: “Across all of its sites MAG is delivering new, successful services which will support growth for both cargo and passenger services. The UK is one of the world’s most important
economies and as such we need to ensure that trade is facilitated now – not in 15 years.” Cargo volumes across MAG operated airports grew three per cent over 2016 to 692,398 tonnes with significant growth across all sites. Manchester Airport saw the strongest growth at 9.8 per cent to 113,253 tonnes, Stansted Airport was up 7.1 per cent to 254,051 tonnes while the group’s largest airport, East Midlands
Airport grew 0.7 per cent to 325,094 tonnes. Busby points out that the figures take into account the planned closures at East Midlands to invest £15 million ($18.7 million) to refurbish its runway. He tells ACW: “This was executed over seven consecutive weekends in order to minimise the impact on both cargo and passenger operations. These closures impacted throughput by more than 10,000 tonnes.” Busby says MAG will be happy to maintain a steady level of growth but feels opportunities exist for more. “DHL launched a peak season service into London Stansted in 2016 which has continued into the New Year and it is hoped this will continue to enhance service levels in the Essex and London regions.” The key growth sectors in 2016 included vegetable products, precious metals, fashion goods and works of art, while e-commerce continues to grow. He believes increasing consumerism and demand for UK manufactured or value added will drive growth, adding: “As new, post-Brexit trade agreements are signed with nations further afield it is hoped this will increase demand for regional long haul air capacity in the next few years.”
Fashion and pharma driving growth at IAG
THE growth of online fashion retail and more pharmaceuticals travelling by air are expected to drive growth in 2017, IAG Cargo regional commercial manager UK & Ireland, Andrew Jaye (pictured) tells Air Cargo Week (ACW). He says demand for premium cargo increased where speed is crucial in the shipping process. Demand from retail and online fashion was particularly high in 2016, with the Prioritise product proving very popular. Jaye comments: “Many customers in this sector now choose to ship items through our Prioritise product, to ensure the goods get to outlets before fashions change and to meet the ever more exacting delivery demands of today’s consumers.” He expects this to continue: “Online fashion retail is booming and shows no signs of slowing down – it was one of the main types of cargo we handled in 2016 and I expect it to be the same this year.” IAG Cargo’s new Critical product, launched on 3 October, is performing well too, processing over 600 shipments so far, with strong demand for emergency products including aircraft parts and spares, and oil and gas. Pharmaceuticals are doing well, Jaye says: “Manufacturers are increasingly appreciating the advantages of shipping their goods by air, and with our industry-leading Constant Climate product we’re in a strong position to tap into that demand.” There has also been strong demand for perishables, particularly salmon to North America and Asia Pacific, and high value foodstuffs to the Middle East and Asia Pacific, typically carried using Constant Climate. IAG Cargo saw much stronger demand for Asia Pacific destinations in 2016, and it increased London – Shanghai frequencies from seven a week to 10 for the winter schedule. Jaye tells ACW: “We see this as a long-term trend and are therefore continually looking at how we can strengthen our Asia Pacific network to meet the needs of customers.” He predicts China and India will remain strong: “We expect the rapid growth of the middle class in both India and China will lead to a greater demand for high end goods, which British produce is well placed to take advantage of.”
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Ambitious Siginon looking to grow its presence in Nairobi
enyan cargo handler Siginon Aviation is targeting a contract win with a European carrier in Nairobi in the near future as it looks to further expand its presence at one of Africa’s main airfreight hubs. Earlier this month it secured a cargo handling deal with Qatar Airways Cargo, adding to others it has with Cargolux, Singapore Airlines (SIA) Cargo, CargoLogicAir and more. Siginon Group managing director, Meshack Kipturgo (pictured)
tells Air Cargo Week he is not yet content and the company is looking to further grow business and expand the tonnage it handles. The Nairobi cargo handling market is competitive and players include big guns Swissport, Africa Flight Services (AFS) - part of Worldwide Flight Services (WFS) and Kenya Airways Cargo. He says: “We are always in the market to handle cargo for another carrier. Having Qatar Airways has boosted us and especially as we attracted it from Swissport. As for the contract, it is so far so good.” The Qatar contract is a big deal for the ambitious handler, as the Middle East carrier operates eight freighters a week into Nairobi along with 18 bellyhold services a week. In the week before Valentines Day, Qatar put on an extra five Boeing 777 Freighters as demand for Kenyan roses from the Dutch flower auction and around the globe soared. Siginon worked around the clock to meet demands of the extra services. Key to meeting the demand and driving growth is Siginon’s state-of-the-art $10 million facility spread over 5,000 square metres and opened in 2014 - situated the closest of any handlers to the apron at Jomo Kenyatta International Airport (JKIA).
The JKIA facility has special features unique to Nairobi including a cool corridor storage area (pictured left) for fast movement of perishables cargo, while the handler prides itself on its four-minute turnaround time from when perishables reach the facility by truck to being stored in its cool rooms. Siginon is looking to develop its facilities and has room to expand its 60,000 tonne facility at JKIA by 3,000 square metres for perishables and has already drawn up plans to develop the JKIA site. “The major expansion we want to do is we want to build a perishables centre as we have a huge cold room, but we want in future to build up perishables and the capacity. We will develop that as obviously Kenya does a lot of perishables. “As soon as we talk to our customers in the field and the time is right to build a facility then we will build one. If there is need in the market to build a dedicated perishables centre we will do that,” Kipturgo explains. Siginon has also now got a licence to carry out ramp handling, and is looking to start this for carriers in the future. The handler now outsources ramp handling for Qatar to Kenya Aerotech at JKIA, and does warehousing for SIA Cargo and Cargolux at JKIA. Kipturgo says: “We have acquired a license to do ramp handling in the future and that would really increase competition in Nairobi as there are already very many that do it. Swissport do it but AFS not yet, only warehousing, but you have Kenya Aerotech, Tradewinds and Kenya Airways Cargo. I think AFS will do ramp handling in the future and with us it will make it interesting. “This will make the Nairobi market more dynamic and be good for the airlines as in Nairobi now there is not new equipment being used and we will invest in new equipment. It will also be good for the shippers. Of course with the competition we have to be careful to make sure it is economically viable for all of us.” In 2016, Siginon handled about 50,000 tonnes of cargo of which exports were around 40,000 tonnes and the remainder imports. Perishables were about 80-90 per cent of exports and mostly consist of flowers, fish, avocadoes, mangoes in season, but also humanitarian aid and dangerous goods, while imports are generally made up of chemicals, textiles, electronics, motor vehicles and other general cargo.
Export and import imbalance
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However, the imbalance between exports and imports in Kenya and for Siginon is a concern. Kipturgo says it needs correcting to improve rates on outbound freight. He feels two things will drive a narrowing of this and notes at present for every six kilos of exports it handles, it handles one kilo of imports. Kipturgo says in most African countries imports make up more tonnage: “A lot of flights from South Africa come to Nairobi to pick up exports so if Kenya did not have these huge exports then there would be a challenge for airlines to come here from South Africa. “This ration of six to one is not good as it means all these airlines are coming empty to Nairobi to pick the flowers up, but it means they have to pay more. In Kenya there is a need to push the balance so you can have something like a six to three ratio of exports and imports.” He believes a solution is the Special Economic Zones (SEZ), which are set to come into affect this year in Kenya (Nairobi and Mombasa) and will include airports. Kipturgo says it will boost imports: “We can take cargo for the rest of Africa. It can be tipped into Nairobi and distributed to the rest of Africa. I don’t think it is something the airlines realise. The industry needs to work together. “The balance is a big problem in Kenya because if you talk to the shippers the balance is not right. If the balance was 50/50 then rates would definitely come down. I think it might come to a six to three ratio through the SEZ.” He also feels the growth of e-commerce in Kenya and Africa will drive import volumes and narrow the gap with exports as the sector is developing fast. The future is looking bright for Siginon and for airfreight in Nairobi and indeed the Kenyan market as a whole.
Astral remains committed to three-hub strategy
stral Aviation remains committed to its three-hub strategy for Africa even though it is reconsidering the planned Western base in Lagos, chief executive officer Sanjeev Gadhia (pictured) tells Air Cargo Week (ACW). Astral is planning a West Africa hub for the middle of this year and was looking at Lagos in Nigeria, but Accra in Ghana and Lome in Togo are now being evaluated due to better availability of jet-fuel and new airport infrastructure. Gadhia says Johannesburg is still the preferred option for a Southern hub. He tells ACW: “Astral remains confident with the “three hub” strategy as its difficult to have a single hub strategy due to the size of the continent. The West African hub is expected to be ready by mid-2017 while the South African hub will be set-up in 2018/9.” Astral Aviation’s main hub is in Nairobi, which Gadhia describes as “the premier air cargo hub in the continent” due to strong perishable exports, high quality infrastructure including five air-side terminals and one million tonnes of capacity, and its strategic location for East, Central, Southern, Horn of Africa and the Indian Ocean Islands, providing access to over 400 million
people. He says Nairobi exports an average of 6,000 tonnes of perishables a week resulting in numerous freighters flying in from Europe, Middle East and South Africa. Gadhia comments: “Inbound rates into Nairobi are low which makes it attractive for
transshipments into the intra-African region.” In 2016, Astral saw marginal intra-African growth with 550 flights on its fleet of F27s, DC9Fs and Boeing 727 Freighters, with a 75:25 split between scheduled and charter services. Gadhia says it utilised a twice-weekly wet-leased Atlas Air Boeing 747400 Freighter on its Nairobi – London sector that uplifted in excess of 10,000 tonnes of perishables in 2016. This year has started well for both scheduled and charter services including domestic flights within Somalia on the F27 while live-crab shipments increased on the Indian Ocean network due to high demand for Chinese New Year. Looking into the future, Gadhia says the intra-Africa air cargo market will average 10 per cent growth per annum with hubs including Nairobi, Addis Ababa, Cairo, Johannesburg, Lagos and Accra growing particularly strongly.
Volumes grow but overcapacity hits yields
AS a major player in the African market, Ethiopian Airlines has suffered from declining yields caused by overcapacity, but Ethiopian Cargo managing director Fitsum Abadi (pictured) says cargo traffic has grown strongly. He says the industry has seen huge capacity growth compared to demand, primarily due to extra space on wide-body passenger aircraft, hitting load factors and reducing yields. Describing the market as a whole, Abadi tells Air Cargo Week (ACW): “Demand has reduced mainly due to fuel cost reduction, India market slowdown and the decrease in exports has led to significant air cargo drop. Moreover the excess capacity deployed from belly hold of PAX services has also eroded the yield.” He says South Africa has been hit by a decrease in imports, especially spare parts due to weak demand while oil producing nations, in particular Nigeria, have been significantly affected by lower oil prices. Despite this, the fourth quarter was very good, Abadi comments: “Since 2010, we have not seen a better quarterly YoY performance than in Q4 of 2016: chargeable
weight increased by 7.5 per cent YoY.” He adds: “Regarding Ethiopian Airlines, as part of global air cargo industry has suffered from yield reduction but cargo traffic has growth by around 13 per cent as compared with previous year.” Abadi says 2017 has started well with demand and yields increasing, and he tells ACW: “With the strengthening USD, yields measured in other currencies actually grew even more. Rising oil prices may have played a role in these yield movements.” He believes there are many opportunities in Africa, as the continent is home to 12 per cent of the world’s population but less than one per cent of the global air service market. It has a very cheap labour force, which should create demand for air cargo services, and fast growing economies. But difficulties remain: “African countries needs to work on the underneath items to accelerate the growth of air cargo business.” Abadi tells ACW restrictions on overflying and navigation permits need to be improved, so does infrastructure, and the continent of 54 countries has 54 frontiers for different custom requirements. He also says infrastructure growth is low, trade links between countries are poor and intra-African trade is a fraction of intra-regional levels in Asia, all of which make for a challenging business landscape.
ACW 20 FEBRUARY 2017
YTO Cargo signs for three B737-300 P2Fs with PEMCO
EMCO World Services (PEMCO) has penned an agreement with Chinese carrier YTO Cargo Airlines for three Boeing 737-300 passenger to freighter conversions. China-based YTO is currently operating one B737300 PEMCO-converted aircraft, and will take redelivery of the three aircraft in the fourth quarter of 2017. YTO’s Bruce Lee says: “PEMCO was selected based on our experience with their product. We are pleased with the performance and recognize the operating economics to support our goal to be the ‘Choice of the Chinese’.” PEMCO director go conversion programs, Mike Andrews says: “We’re honoured to be selected by YTO. We look forward
ACW 20 FEBRUARY 2017
to our continued partnership and supporting their growth.” The B737-300 PEMCO-converted aircraft features nine pallet positions, up to 43 tonnes of payload, and 4,600 cubic feet of total volume. PEMCO chief executive officer, Pastor Lopez adds: “We continue to build relationships and market share in China. We’re proud to work with YTO on this upcoming project.” This news comes hot on the heels of PEMCO being acquired last month by Air Transport Services Group (ATSG) subsidiary, Airborne Maintenance and Engineering Services (AMES). The companies say acquiring the heavy maintenance, repair and overhaul (MRO) and passenger-to-freighter conversion provider will offer strategic benefits including combining operational strengthens, expanded capabilities and cost savings. ATSG president and chief executive officer, Joe Hete (pictured below) explained that the deal will combine PEMCO’s conversion and MRO sales of Airbus and Boeing products with AMES’ existing offerings. He says: “Based on PEMCO’s existing domestic and international scale, this acquisition will expand access to maintenance service for customers of ATSG’s expanding fleet of Boeing 767 cargo aircraft.” “It is consistent with our goal to diversify ATSG’s revenue and earnings, for an investment in the same price range as our planned and completed stakes in cargo airlines in China and Europe.” PEMCO has more than 60-plus customers.
More P2F deals for AEI
AERONAUTICAL Engineers (AEI) signed a contract last month to provide two CRJ200 SF freighter conversions to Mexico-based Aeronaves TSM (TSM). The first CRJ200 will commence modification in the second quarter of 2017 with redelivery in mid-2017. The second CRJ200 will commence modification in July of 2017, with redelivery scheduled for October. Both freighter conversions will take place at Commercial Jet’s Dothan, Alabama facility, which is one of three authorised AEI Conversion Centers around the world. AEI says TSM is a significant customer for AEI as the company currently operates three AEI MD-80SF series freighters and will take delivery of an additional two AEI MD-80SF series freighters during the first quarter of 2017. AEI also announced a deal in December to convert a third MD-80 series passenger-to-freighter conversion for Alaska-based Everts Air Cargo. The MD-83 aircraft commenced modification on 19 December and will be re-delivered to Everts Air Cargo in April 2017. Everts Air Cargo will use the MD-83SF for seasonal demand in Alaska, and on-demand business in North America. Commercial Jet’s Dothan, Alabama facility will carry out the modification and maintenance requirements on the aircraft. AEI’s senior vice president for sales and marketing, Robert Convey (pictured) says: “We are pleased to provide Everts Air Cargo with their third MD-80 series conversion. “We are seeing significant interest from the industry in AEI’s 12 position MD-80SF conversion and have recently provided multiple new customers with proposals.” AEI will certify its 737-800 full freighter and combi conversions in 2017. It has modified more than 430 aircraft with supplemental type certificates.
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