The weekly newspaper for air cargo professionals No. 987
25 June 2018
Boeing delivers for Fedex
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edEx Express is modernising its airline fleet by ordering 12 Boeing 767 Freighters and 12 Boeing 777 Freighters, with a market value of $6.6 billion. The 767 can carry approximately 53 tonnes of revenue cargo with intercontinental range, making it flexible for serving long-haul, regional or feeder markets. They will be delivered between 2020 and 2022. The 777 is the world’s longest range twin-engine freight, able to fly 4,900 nautical miles with a payload of 102 tonnes, meaning FedEx can connect Asia with its hub in Memphis, Tennessee non-stop and reduce transit times by up to three hours. They will be delivered between 2021 and 2025. Boeing Commercial Airplanes president and chief executive officer (CEO), Kevin McAllister says: “We are honoured that FedEx has again placed its trust on the
CERBERUS TO BUY WFS FROM PLATINUM EQUITY
wings of the Boeing 767 and 777. This repeat order is a big vote of confidence in Boeing’s market-leading freighter family and the long-term outlook for airfreight.” FedEx Express president and CEO, David Cunningham says: “The Boeing 767 and 777 Freighters have brought greater efficiency and reliability to our air operations. The 777, with its tremendous range characteristics, has allowed us to provide faster transit times around the globe. We are excited to add more of these aircraft to our fleet.” FedEx Corp has released its fourth quarter and full year results for the fiscal year ending 31 May. Full year revenue increased from $60.3 billion in 2017 to $65.5 billion in 2018, while net income was up from $3 billion to $4.57 billion. In the fourth quarter, revenue was up from $15.7 billion to $17.3 billion, with revenue up from $1 billion to $1.1 billion.
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Trade war will hurt air freight, TIACA warns
FedEx chairman and CEO, Frederick Smith says: “It was a year of opportunities and challenges—anticipated and unexpected—and FedEx emerged more competitive than ever. In all my years at FedEx, I have never been so optimistic and so sure of our strategy and our ability to deliver an exciting future.” As for the 2019 fiscal year, FedEx Corp executive vice president and chief financial officer, Alan Graf says: “Our fiscal 2019 results will benefit from our continued focus on revenue quality as well as from synergy realisation as we make progress in combining TNT Express with FedEx Express. “We expect improved earnings, cash flows and returns this fiscal year and remain committed to improving operating income at the FedEx Express segment by $1.2 to $1.5 billion in fiscal 2020 versus fiscal 2017.”
OUTSOURCING AND CONSOLIDATION IS THE FUTURE
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Any trade war sparked by the imposition of higher tariffs by the Trump administration in the United States would damage the air freight industry in the long term, says Sebastiaan Scholte, chairman of the International Air Cargo Association (TIACA), talking to Air Cargo Week. Scholte said that even if a successor to Trump reversed his recent decisions and introduced an open trade policy, the harm would still Scholte be felt. “The effect [of a trade war] would not be felt in the short term but could hurt in the long term. It will definitely hurt trade volumes and so will definitely hurt our industry. “In the worst-case scenario that we will have a trade war, the effects might only be felt when there is another president in the United States with a whole different and open trade policy. If you then try to change [the policy] this will again take time to have an effect,” Scholte said. He added that the delay in feeling the effects of that tit-fortat increases in tariffs were because global supply chains are so inter-linked. Scholte added that globalisation was here to stay and that decisions to counter the effects of tariff rises, such as moving a factory from one country to another, took a lot of time and were not done lightly. “You don’t, from one day to another, shut down the whole factory and setup something somewhere else. You have to be really sure because you don’t do this just temporarily, but for couple of years, at least,” he says.
NCA suspends all operations
Nippon Cargo Airlines has suspended all operations while it investigates maintenance records for one of its aircraft that has been described as “inappropriate”. The Japanese airline says it found one inappropriate record concerning the lubricating oil supply to the aircraft parts at Tokyo’s Narita Airport on 3 April 2018. As a precautionary measure all aircraft have been temporarily ground for at least a week until all maintenance records have been “confirmed appropriate”, with flights from Narita ceasing on 16 June.
SCHIPHOL LOOKS TO PLAY MATCH MAKER
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LA DOLCE VITA AS CARGO GROWS IN ITALY
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NEWS
Panalpina takes over Newport Cargo
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analpina is continuing to extend its perishables network with the acquisition of Argentinian company, Newport Cargo, based in Buenos Aires. Newport Cargo was founded in 1978 and exports fish and berries to the US, where the company has a strong customer base and an office in Miami. Its headquarters are in the centre of Buenos Aires and with offices at Ezeiza International Airport, Newport Cargo handles 24,000 tonnes of airfreight exports per year. Panalpina traditionally imports high tech and consumer goods into Argentina, and cargo flows from South America northbound can be connected with or integrated in the Panalpina Charter Network with its gateway in Huntsville, Alabama. Panalpina chief executive officer (CEO), Stefan Karlen says: “Panalpina’s perishables activities originated in Latin America, which is one of the world’s high-production regions for fresh produce. By acquiring Newport Cargo, we are not only gaining control over Argentinian perishables exports, but from neighbouring countries too. Newport Cargo CEO and majority stakeholder, Roberto Fernandez says: “Over the past forty years we have built very strong relationships with customers and airlines, a very broad perish-
Cargobase marketplace launched CARGOBASE has launched the Cargobase Mercado, the world’s first online curated multifreight mode marketplace, providing SMEs with a one-stop quoting, comparison, booking and tracking service for air, ocean, road and parcel freight. With over 40,000 forwarding and logistics companies worldwide, Cargobase says it is a real challenge for SMEs to identify the best logistics provider to partner with, while logistics
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providers struggle to get exposed to reliable sales opportunities overseas. With a freight marketplace like Cargobase Mercado, SMEs can access an international network of reliable logistics providers through an automated filtering and matching systems. SMEs can invite logistics providers to submit a quote and receive responses in real-time from providers that best match their indicated requirements.
ables expertise and a successful niche business with live animals. “We can bring this expertise into Panalpina’s global network and benefit from established structures and processes that will upgrade our service offering and enable sustainable growth, also in the future.” The company’s 42 staff who serve 150 customers, and the 60 employees of Panalpina Argentina will be joined under one roof in Buenos Aires.
IAG’s Hangar 51 returns for another year IAG Cargo is seeking applications for the IAG Hangar 51 global innovation programme, inviting start-ups to to transform the aviation industry. The Hanger 51 programme offers disruptive companies 10 weeks of co-working alongside IAG, and IAG Cargo is seeking applications with ideas or products to optimise cargo operations. Ideas could include shipping analytics, asset tracking, measurement and monitoring tools,
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smarter operations such as big data analytics or robotic processes, and new products or wildcard disruptive ideas that have the potential to reshape the industry. Applicants will receive personalised mentoring and access to a vast network of industry contacts and experts, and successful applicants will showcase their achievements at a Demo Day before an audience of senior management members and investors.
Cerberus to buy WFS from Platinum Equity
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erberus Capital Management has entered into an agreement to acquire handling agent Worldwide Flight Services (WFS) from Platinum Equity. Founded in 1992, Cerberus specialises in alternative investing with approximately $34 billion in assets across complementary credit, private equity, and real estate strategies. Paris-headquartered WFS is the world’s largest air cargo handler and provider of ground handling services with over €1.2 billion of revenue, and a presence in 198 airport locations in 22 countries serving over 300 customers. Cerberus senior managing director and head of global private equity, Brett Ingersoll says: “WFS is a market leader in aviation services and is positioned to benefit from attractive long-term industry growth. Cerberus has extensive operational experience and a successful track record in aviation and we are excited to support WFS’s next stage of growth.” WFS chief executive officer, Craig Smyth says: “WFS has transformed into Smyth
WORLDNEWS VOLUMES at Etihad Cargo fell to 552,000 tonnes in 2017 as capacity was cut, while the airline as a whole reduced losses to $1.5 billion. Cargo fell from 596,000 tonnes in 2016 with capacity being reduced by six per cent, while revenue only decreased by 0.8 per cent to $900 million thanks to stronger load factors and yields. Total revenue increased by 1.9 per cent to $6.1 billion while losses were reduced by $432 million from $1.95 billion in 2016 down to $1.52 billion in 2017.
a leading global aviation handling player in recent years through growth and operational initiatives. We believe that Cerberus is the ideal partner to support our continued transformation.” Cerberus managing director of European Private Equity, Craig Brooks says: “We plan to partner with Craig Smyth, and WFS’s management team, and its 22,800 dedicated and hardworking employees, to enhance its growth and services. Cerberus has a longstanding presence in Europe and WFS will be a fantastic addition to our growing portfolio.”
CEVA Logistics has appointed Niels Weithe to the newly created role of global head of eCommerce, reporting directly to chief operating officer of contract logistics, Brett Bissell. He joins CEVA from Arvato where he was president of its consumer products division and brings more than 25 years experience of the fast-growing market segment to his new role, and will assist CEVA in expanding its B2C solution based on its strong and established global network.
Alaska opens up capacity on Virgin America flights
ALASKA Air Cargo is expecting cargo capacity to increase by 40 per cent in the US following its merger with Virgin America. The belly space in 71 Airbus aircraft has been utilised to provide customers with new shipping destinations and increased frequencies throughout the Alaska Airlines network from 19 June. Before the merger Virgin America did not provide a cargo service but now customers will be able to ship products including fresh seafood, e-commerce and other time-sensitive materials. Alaska Air Cargo managing director, Jason Berry says: “Our goal is to create a hassle-free experience for our cargo customer and with additional capacity, we are delivering on that commitment. “With our increased transcontinental connections originating across the west coast, we will be offering more frequency and reliability. Whether you are in Los Angeles, Seattle, San Francisco or New York, you can count on Alaska Air Cargo to deliver.” District manager for freight forwarding firm Lynden International, Jennifer Parker says: “I am very excited for the deployment of the Airbus fleet starting cargo service and can’t wait to see what opportunities it brings.
ACW REWIND
LHR, one of the most instantly recognisable airport codes in the world, could easily have become LWC had a Sunday newspaper campaign succeeded.
We will rename on the apron Vol 2 Issue 44 8 November 1999 A LEADING UK Sunday newspaper has started a serious campaign to have London Heathrow renamed with a more fitting and, it suggests, more instantly recognisable name. The US has JFK, France remembers the wartime leader Charles de Gaulle. The Observer suggests London airport be named London Winston Churchill rather than commemorate the village that was flattened in its construction. The newspaper goes on to add that November 1999 could be a good time to make the change - just prior to the new millenium and the 125th anniversary of the wartime leader’s birth. The newspaper suggests his famous profile and ubiquitious cigar would make a good logo while the very name - Churchill - would become as familiar and easy to identify as JFK. Presumably, though, without the WC code.
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LATAM Cargo replaces management system in ‘ambitious project’
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ATAM Cargo will replace its various cargo management systems with one single system, a step it describes as “one of the most important and ambitious projects in our history”. The airline has selected CROAMIS, a system developed by Indian-based WIPRO as its new cargo management system, which will provide customers with more and better tools, and will also enhance efficiency by standardising processes across different regions and reducing costs thanks to its software as a service model. Due to the project’s magnitude, 45 employees will be dedicated exclusively to its execution, with the support from more than 100 associates. LATAM Cargo says that once deployment is complete towards the end of 2020, it will have the industry’s most modern and sophisticated system platforms. LATAM Cargo chief executive officer, Andres Bianchi says: “Wipro’s CROAMIS cargo management solution will not only allow us to satisfy our customers’ current needs, but also will enable us to meet future challenges.
Andres Bianchi with Deviprasa Rambhalta
“In addition, deploying this new system will increase our reliability and optimise our cost structure. The CROAMIS platform meets all our requirements to take a big leap forward in our domestic and international markets.” WIPRO vice president and global head – travel, transportation, hospitality and public sector industries, Deviprasad Rambhatla
says: “With CROAMIS, we are bringing about digital transformation usually seen only in the passenger side of the airline industry to the world of air cargo. Wipro has assembled a highly talented team of Airline Cargo professionals from across the world, supported by a large pool of technology professionals to build a solid and scalable foundation for the CROAMIS community.” The company say the new system offer a number of advantages including giving more agility to satisfy the needs of its customers. CROAMIS will offer LATAM Cargo’s customers a new tracking system, self-service tools such as e-booking, e-claims, e-rates and a system in line with the highest industry standards. Replacing various systems will improve reliability and uptime; and will be flexible enough to allow modifications in response to industry needs and allow the incorporation of new technologies. Bianchi says: “This end-to-end system will transform our internal operations as well as the way we interact with our customers. Having it places us at the forefront of the global air cargo industry, giving us the opportunity to be more efficient while offering greater autonomy and transparency to our customers.”
Brussels launches first blockchain app BRUSSELS Airport has launched its first application using blockchain technology, marking the next step in the Landsite Management tool it is developing with stakeholders at BRUcargo. The app will closely cooperate with existing apps such as the Slot Booking App, or future apps yet to be developed. The focus of the next phase is to make the import process paperless, more efficient and transparent, contributing to Brussels’ strategic objective to have a digitalised logistical flow in place supported by a combination of applications offered via the BRUcloud platform. Compared to other cargo community systems, the BRUcloud’s main priority is not digitising the existing messages and communication between the different actors but making data sharing in a cloud environment possible. Brussels Airport cargo business development manager, Sara Van Gelder says: “It enables the different stakeholders of the air cargo supply chain to work more “integrated” and act as a network. Data will be stored only once, centrally. Once a company is connected to the cloud, it can start using the different existing applications and can start exchanging information very
easily with other stakeholders instead of maintaining system-to-system connections with all different partners individually.” Brussels Airport head of cargo and logistics, Steven Polmans who is also chairman of Air Cargo Belgium adds: “The new Freight Management App 1.0 will replace the handover of cargo from handlers to forwarder from a paper-based process by a digital rights / release process. The support of all our stakeholders, from gathering ideas to implementing new tools and applications, is crucial in the success of our BRUcloud platform.”
Quote of the week “The major groups are getting too big. The airlines don’t like it when their GSSA is as big or bigger than they are” 1GSA president, David Lee gives his views on the growth of large GSSAs
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Nestlé and XPO to build the digital warehouse of the future
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estlé and XPO Logistics will build what they call a “digital warehouse of the future” at the SEGRO East Midlands Gateway Logistics Park. The custom-designed 638,000 square foot distribution centre will be occupied predominantly by Nestle for its consumer packaged goods and will function as a test bed environment for XPO technology prototypes prior to global release. The distribution centre, which is scheduled for completion in 2020, will feature advanced sorting systems and robotics alongside state-ofthe-art automation co-developed with Swisslog Logistics Automation. The site’s digital ecosystem will integrate predictive data and intelligent machines to deliver one of the most advanced distribution management centres. The facility will benefit from access to the M1
motorway for road transport, East Midlands Airport for cargo flights, and an onsite rail freight terminal with direct access to the major ports of Southampton, Felixstowe, London Gateway and the Channel Tunnel. Nestlé director of supply chain, David Hix says: “This is a world-first investment for Nestlé that builds on a century and a half of proud history in this country. Our partnership with XPO will encourage innovation and experimentation in our UK logistics operations and help futureproof our business.“ XPO Logistics Europe managing director – supply chain, Richard Cawston says: “The new East Midlands centre will operate as both a think tank and a launch pad for XPO innovations, with far-reaching impacts on the way business is done. We look forward to an inventive collaboration with Nestlé.”
Bollore awarded TAPA FSR A in Milan
BOLLORE Logistics has obtained TAPA FSR A certification for its Milan warehouse, ensuring that it meets all the conditions to protect goods from theft and cargo related crime. The Transported Asset Protection Association (TAPA) FSR Level A is awarded to sites with the highest level of security requirements in storage services. The Milan warehouse specialises in the fashion and luxury sectors with a set of specific equipment adapted to the industry, and a dedicated team supports labelling and repackaging articles by destination site. Products are then transported on hangers mostly leaving for Asia, and computer systems integrated with customers’ IT provide monitoring of the entire process in real time and end-to-end. Additional arrangements to enhance security of the site include construction of a high value cage inside the warehouse; set up of a daily guard post at the entrance of the site providing
access control; implementation of access management restricted to the offices and store via identification badges with individualised and nominated access right; and strengthening of video surveillance and anti-intrusion devices. Bollore Logistics Italy managing director, Luigi Brunetti says: “Improvements have been made both in terms of equipment and safety and training processes for teams to ensure the maximum security of the goods of our high-end fashion customers, although they benefit also to other stored goods.”
K+N to lease space at East Midlands gateway KUEHNE + Nagel has agreed a 15-year lease on almost 200,000 square feet of space at the SEGRO Logistics Park East Midlands Gateway. The facility, which is estimated to be completed in March 2019, will be developed on the East Midlands gateway scheme adjacent to the south side of East Midlands Airport, just off the A453 between junctions 23A and 24 of the M1 motorway. The Lenton Lane and Riverside operations will be relocated and will also merge the Overland activities hosted at Kuehne + Nagel’s Midpoint
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Park, Minworth site, into a development including a 40,000 square foot temperature controlled area to accommodate growth within the pharmaceutical sector. Kuehne + Nagel UK overland director, Jim Hedderwick says: “The new facility will enable us to continue to develop our market-leading European groupage product and will be designed to include a 40,000 square foot temperature-controlled area to accelerate our ambitious growth plans within the Pharmaceutical sector.”
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GSSAs
Outsourcing and consolidation is the future
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here once cautiousness in outsourcing business prevailed among carriers and a high degree of fragmentation were hallmarks of the GSSA industry, times have changed according to industry players, Donald Urquhart reports. “Now more than ever,” airlines see outsourcing of cargo as a sensible option in terms of cost saving and incremental revenue, says Air Logistics Group COO Stephen Dawkins. “They are looking for partners that are Thominet reputable, financially
sound and can deliver in terms of revenue, network coverage and manpower,” he says. As airlines continue to focus on cost control, revenue maximisation – which also means a core focus on their main passenger revenue stream – outsourcing demand will continue. “GSSAs have naturally become outsourcing companies of choice for airlines, offering significant additional services such as trucking management, data capture, accounting and administration and IT development,” he says. As for consolidation, European Cargo Services (ECS) CEO, Adrien Thominet notes the market is becoming less and less fragmented with a substantial trend toward consolidation now in motion. Dawkins notes that it is a natural progression in the GSSA industry: Just as airlines, freight
Dawkins forwarders and handling companies have consolidated over the last 20 years, the GSSA business is following the same trend, he says.
A contrarian view
But not all are upbeat on the consolidation trend, with new entrant into the networked GSSA world, 1GSA, taking a contrarian view. While observing, “the market is buoyant, and the opportunities for GSAs are growing,” the problem according to 1GSA president, David Lee, “is that there has already been too much consolidation”. “The major groups are getting too big. The airlines don’t like it when their GSSA is as big or bigger than they are,” he says. Lee says the growth of the major groups has resulted in a lot of “hardworking, entrepreneurial GSA owners” leaving the business and ultimately being replaced by branch managers. “Service has deteriorated. Airlines are now often forced to use GSSAs who represent conflicting carriers. Choice has been reduced,” he says Fundamentally, he adds, airlines are not concerned with how large or small a local GSSA is, as long as they do the best possible job. And with airlines still tending to appoint station-by-station, rather than network-wide, the “swallowing small and highly-motivated independents and turning them into branches of major network operators is not necessarily what the airlines want,” Lee adds. But for ECS, which has frequently been in the news over the last few years for the acquisitions it has made, Thominet is keen to highlight that the “very selective” acquisitions “tends towards expansion, the dynamics remain true to the ECS spirit.” The importance lies in knowing how to integrate these partners, he adds. “It’s above all, a question of consolidating an already existing relationship. We don’t buy up GSAs – we invest in a long-term relationship. The GSAs that join ECS are first and foremost dependable partners,
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longstanding friends, men and women with whom we share values,” he says. He cites the example of Singapore/Bangkok-based AVS GSA which was acquired in July 2016. “Today, they are perfectly integrated into our group. They participate in our board meetings, it’s with them that we develop our business strategy in Asia, and it’s with them that we are building the future. We unite our respective expertise to advance together,” he says.
Integration is good
Integration is good, he adds, as it enables different cultures and operations to be combined. This has major benefits for the combined sales network, he says, citing the example of business generated in Asia on companies departing out of Europe, for instance. For Dawkins there is another key development that has been occurring in the industry in recent years: Airlines are now realising the value, “a large, well-financed and resourced organisation can bring”. “Airlines launching a new route do consider their existing suppliers because contracts, bank guarantees and compliance are already in place. More and more airlines are offering multi-country contracts because it just doesn’t make sense to have numerous different GSSAs,” he says. “A GSSA has to listen to the client’s needs and invest in what the client wants. Airlines see that and understand that we want a long-term partnership. We aim to secure our airline partners over the long term,” Dawkins says of the Air Logistics Group business. “The whole cargo business has become more professionalised and airlines know that we know the market well – so we can sell capacity at the right rate for the airline.” But selling is no longer the only a requirement of a GSSA, with airlines knowing exactly where their business is. What they demand, he says, is an organisation that can knock on the door of companies where that business is.
Expansion continues
GSSAs NAS looks for long term relationships
number of other multi-station opportunities. Our members are actively pursuing opportunities for themselves and for the network as a whole, and these are certain to bear fruit in due course,” he says.
Positive results
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rguably a much smaller player than either of the two big global GSSAs, 1GSA is nevertheless growing and spreading awareness of its brand after only one year of operations. “It’s still very early days, but we have added more members, now 16 countries, with a number of further interested parties who are expected to apply. “We would like to get to 50 members by the end of this year, but that may be a little ambitious,” Lee adds. And while 1GSA’s world map may have lots of blank spots on it, Lee says there are no real geographic priorities, as “all new members deliver new opportunities. Our priorities are finding the right kind of members, of the appropriate high calibre.” “We recently secured an airline contract for one of our members, and we are working on a
Lee also notes that two recent industry events yielded positive results, saying “airlines are starting to sit up and take notice of 1GSA. We have had some very positive dialogue with leading carriers, and a number have said that they really like our concept of uniting and supporting independents, and making it easier to do business with them,” Lee adds. For ECS, Asia – where much of its recent expansion has taken place, remains the core target – but the group is also pursuing other growth markets, like Latin America, where Paris-based ECS has just acquired a majority stake in the Brazilian GSSA, BCS. “It’s the leading GSSA in the country and our partnership has been up and running for years. We are delighted and honoured that this incredible team is joining our group. Our combined expertise will enable us to transform freight in Brazil,” Thominet adds. For the Air Logistics Group, Dawkins says it is comfortable to grow its business organically, continuing to focus its efforts on expansion in Asia. In the meantime it is very focussed on building a worldwide network with a solid IT platform to service its airline and forwarding clients, he says.
Network Airline Services (NAS), the GSA arm of the Network Aviation Group, represents some 30 airlines on a global basis, says NAS sales director, John Gilfeather (pictured right). “We have 300 staff in some 30 locations worldwide,” says Gilfeather. “We represent airlines in different geographical areas, such as Air Malta Cargo. Some we represent regionally, such as Astral Aviation.” Stressing that his company works to create long-term relationships with its airline clients, Gilfeather says: “We aim to provide the right quality and quantity of resources and services to our clients. We understand the relationship we have with them. In fact, we organise dedicated teams to work for our clients. They become so enthusiastic, they think they work for the airline itself!” The policy of NAS is to start small with a client, demonstrate its skills and then expand its
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representation into new markets. Gilfeather joined the company in 1997, aged 20, just as it was taking on a new client, which it retains to this day. “I joined as we gained Avianca, our most recent gain was Rwandair,” he says. Working with Rwandair demonstrates how NAS develops its selling role. “We work in partnership with Rwandair. This gives us access to passenger information that allows us to accurately plan capacity. Rwanda’s imports and exports are fairly balanced, with horticulture and flower traffic being a significant export traffic.” NAS has also taken a proactive approach to generating traffic for the airline and income for itself. A series of conference and business efforts saw NAS and the government encourage exports from the country, which some hope will become the ‘Singapore of Africa.’
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BELLY HOLD FREIGHT
Schiphol looks to play match maker
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hippers have reportedly been scrambling to avoid a repeat of last year’s capacity crunch when many found there was simply no freighter space left as the winter season took hold, writes Neil Madden. Yet at the same time, belly capacity is still often overlooked as an alternative for getting shipments quickly to end customers. This is all the more ironic given the spate of widebody passenger aircraft coming on stream. Data from consultancy Seabury van der Windt shows that freight-
ers accounted for just 33 percent of available capacity last year, the lowest ever, down from 35 per cent in 2016, and from 39 per cent in 2012. Belly capacity on order will account for 76 per cent of outstanding capacity between 2017 and 2021, the consultancy says. Yet, too few airlines seem to place a strategic value on marketing belly space, which should entail developing the sort of premium products that shippers and forwarders increasingly demand. However, Amsterdam’s Schiphol Airport is taking the initiative to match-make cargo and capacity, albeit as a way of addressing its own, much reported constraints. Faced with a capacity limit of 500,000 flights year until 2020, Airport Coordination Netherlands (ACN), which allocates landing rights, was
forced to invoke the 80:20 principle at the start of the busy 2017-18 winter season. Under this principle, an airline that uses more than 80 per cent of its allocated slots acquires an historic right to the set of slots and will automatically be allowed to operate its flights in the next season. But using fewer than 80 per cent of allocated slots means losing them. This disproportionately hits freighters as they have to be more flexible and operate less regular flight schedules. The split between freighter and belly volume at the Amsterdam hub is about 60:40, so even though freighters make up only three per cent of aircraft movements, they remain very important to the airport and the cargo community. Schiphol management concedes that the limit on aircraft movements makes adding more freighter flights “difficult”. As things turned out all requested full freighter slots were granted, and many freighters were able to continue business at Schiphol with ad-hoc slots.
that trend.” In 2017 Schiphol handled 1.8 million tonnes of cargo, maintaining its position as Europe’s third largest freight airport behind Frankfurt and Paris Charles de Gaulle, and staying above London Heathrow. Freight volumes increased by 5.4 percent, with cargo on freighters up 5.7 per cent and on passenger services by 5.1 per cent. Schiphol head of aviation marketing and cargo, Maaike van der Windt firmly believes passenger and cargo services complement each other in developing airport business. “It is the number of routes, and cargo volumes that are important for us to maintain,” she states in an online interview for Schiphol’s own website. “Where the two collide is in the current shift from full freight aircraft towards belly capacity – and it takes combined passenger and cargo expertise in order to best serve our airline customers who make use of Schiphol for belly cargo.”
But the capacity constraints have not gone away, and this year’s winter season could well throw up the same issues as last year. So this is the context behind moves the airport is making to look at boosting the use of belly capacity as way of soaking up rising demand for cargo space. In May, the airport published a discussion paper - Collaborating in Times of Capacity Constraints - to engage with airlines and exploit opportunities for cargo in the face of significantly growing demand for, and resources offered to, passenger flights. Part of this comes in the form of the recent integration of Schiphol’s aviation marketing and cargo teams to ensure that the passenger and cargo businesses work more closely together. The airport’s own research has highlighted opportunities for airlines to cater for rising cargo demand, including filling bellyholds on existing routes to raise yields. For example, the paper says there is significant unused belly capacity on North American routes. Schiphol also says there is a trend among network planners who are starting to include the potential for more cargo when launching new routes and the airport is “very keen to support
To this end the Netherlands hub has developed a belly cargo tool which combines cargo and passenger data to identify opportunities to update which aircraft runs on which route. “There are often cases where demand and capacity could be better matched; some routes are seeing an increase in belly cargo, for example,” van der Windt stated. “To optimise how we manage this, we need better information, and our tool, developed in conjunction with our own analytics team together with the cargo team, analyses the combined data to make suggestions. “Then, the passenger side talks to the network planners about new routes and aircraft updates to see how we can put larger aircraft on those routes that demand more belly capacity.” Schiphol accepts that airlines might fret about the risk of delays given the extra time to load and discharge cargo. On the other hand, this should suit time-sensitive shipments as passenger flights run to more rigid schedules. At the end of the day it is about changing attitudes and getting all players to accept greater information sharing. Digitisation, of which the belly cargo tool is one component, is seen as playing a significant role in achieving this.
Capacity constraints continue
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Belly cargo tool
BELLY HOLD FREIGHT
Ethiopian opens new routes across the globe
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new option for belly space between Spain and East Africa is being offered by Ethiopian Airlines. Ethiopian has finalised preparations to launch new services to Spain’s second city Barcelona from 1 July, deploying the B787–800 Dreamliner. Barcelona is also the second largest trade fair and exhibition centre in Europe. The four times weekly service takes the form of onward flights between Madrid and Barcelona, with the direct connection to Addis Ababa still operating from Madrid. Ethiopian Airlines Group CEO, Tewolde GebreMariam, says: “The start of this new flight to Barcelona is part of our global route network expansion plan. The new flight to Barcelona will provide seamless connectivity from Barcelona to our extensive African network of 58 destinations via our main hub in Addis Ababa.” Barcelona is not the only new destination for Ethiopian Airlines, having added a number of new flights across the world in 2018. On 10 June, it started flights to Chicago using a Boeing 787, the airline’s fourth destination in the US and the seventh in the Americas. GebreMariam says the flight will boost economic relations between the US and Africa, allowing greater flow of trade and investment. He says: “It is the third biggest city in the US and one of the most important global aviation hubs. We will be filling a critical air connectivity vacuum as our flights will be the only direct service between Chicago and Africa.” Chicago is the second trans-Atlantic service to be launched this year, having started flights to Buenos Aires, Argentina on 8 March. The Boeing 787 services operate via Sao Paulo, Brazil on Mondays, Wednesdays, Thursdays, Saturdays and Sundays. At the time, GebreMariam said: “Currently, Ethiopia is registering rapid economic growth with strong emphasis on industrialisation with the construction of industrial zones and the development of tourism in light of the truly unique natural, cultural and historical wealth of the country.” In Europe, the airline started thrice-weekly flights to Geneva, Switzerland operating a Boeing 787-8 on Tuesdays, Thursdays and Saturdays, flying via Milan, Italy. From 1 December, the airline will increase connections to the UK with flights to Manchester. The service will operate four times a week and transit via Brussels, Belgium. Ethiopian Airlines is also looking to Asia, with the launch of three flights a week to Jakarta, Indonesia from 17 July, flying via Bangkok, Thailand on Tuesdays, Thursdays and Saturdays.
Emirates expands reach
EMIRATES continues to expand its network with new routes and increased frequencies, providing significant cargo capacity in its passenger aircraft. The UK is benefiting from extra capacity, with London Stansted Airport receiving a daily Boeing 777-300ER. The Essex airport, located 40 miles north of the centre of London welcomed the first flight on 8 June and will offer local businesses about 20 tonnes of cargo capacity per flight (see ACW no.986). The airline also plans to add Scotland’s capital, Edinburgh to its UK network with daily 777-300ER flights from 1 October with capacity for exports including seafood and whiskey. Moscow’s Domodedovo Airport will receive a third daily flight from 25 October using a 777-300ER, complementing existing 777-300ER and Airbus A380 services. Cargo carried on the route is expected to include perishables, pharmaceuticals and car spare parts. Luanda in Angola will see flights reinstated, with five flights a week from 1 July. Emirates starting to Luanda in August 2009, increasing the frequency to seven a week in August 2014, before cutting it back to three a week in July 2017. Emirates started flying to Auckland, New Zealand via Bali, Indonesia on 15 June using a 777-300ER, complementing direct services to the city. Trade between Indonesia and New Zealand is worth NZ$1.5 billion, and 20 tonnes of capacity per flight will be filled with goods including fish and flowers.
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ACW 25 JUNE 2018
9
ITALY
La dolce vita as cargo grows in Italy
T
hink Italy and you might think fashion and fast cars – and Milan. What you might not think, is a Russian-owned airline and one with links to Luxembourg, that are transporting Italian goods around the world, writes Stuart Flitton. The Russian all-freight airline AirBridgeCargo (ABC), with a key base in Vignate, began operations from Milan’s Malpensa airport in 2009 but last year transported more than 60,000 tonnes of cargo, a 14 per cent increase over 2016. In the first five months of this year, there was a 12 per cent rise, compared with the same period last year. Around 70 per cent of exports are to China, made up of fashion, cars and parts and industrial equipment. The decision to launch operations in June
2009, with two flights weekly, coincided with a shortage of maindeck capacity in Italian cargo. ABC vice-president, Europe, Andrey Andreev says: “Our launch of services was very welcomed by customers from fashion and apparel with the focus on our long-term partnership with customers in this region. “Gradually we’ve been increasing our presence in Italy and currently, we operate eight flights a week from Milan, being among the top five cargo carriers from Italy.” The decision to fly out of Malpensa was also driven by the fact that the airport has a dedicated cargo terminal, easy access to road and rail connections. It is the busiest cargo airport in Italy and one of the few in Europe offering 24/7 services. This allows extra capacity to be provided on demand,
which occurred in May this year when ABC added five additional flights to accommodate demand. Volumes at Malpensa have grown by more than seven per cent a year last year and 2016, with even bigger growths in the previous two years, topping nine per cent in 2014. Another foreign-based cargo specialist at Malpensa is Cargolux Italia, which started operations in 2008 with one Boeing 747-400F only offering connections to Hong Kong. The offshoot of the Luxembourg all-cargo operator, Cargolux, is based at the Milan airport. The airline added three additional 747-400 freighters, dry leased from the mother company in 2014-15, and also has the option of using up to two aircraft in ACMI wet lease from the main Cargolux fleet. Cargolux Italia also broadened its network and now flies to eight scheduled destinations: Hong Kong, Osaka, Zhengzhou, Dubai, Kuwait, Dallas, New York JFK and Chicago.
Local and global
The dedicated freighter aircraft operated by the company are designed to hold up to 113 tons of goods within a range of approximately 8,240 kilometres. The freighters have side and nose cargo doors, which allows the company to cater for a wide range of shipments. Cargolux Italia offers specialised handling for fashion, automotive parts, the manufacturing sector, live animals, works of art, perishable materials and dangerous goods. “Our major customers are the main freight forwarders operating both worldwide and local,” says Cargolux Italia CEO Pierandrea Galli. He adds: “Thanks to the easy side and front access that the B747-400F offers, Cargolux Italia is able to take on oversized loads such as helicopters, engines, parts of ships and anything else that can be identified under this category. “The Italian market has always represented a priority market for Cargolux, so much so that
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ACW 25 JUNE 2018
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today it is the second European market after Germany.” Cargolux Italia accounted for 14.5 per cent of the national market share in 2016. Following in the footsteps of its counterpart in Luxembourg, the airline experienced a bumper 2017, flying 24,832 block hours, a 29 per cent increase over 2016 and boosted its load factor by 3.2 per cent. The airline continues to consolidate its operations towards Asia with plans for three weekly flights to Hong Kong with a stopover in Osaka, one weekly flight to Dubai, which will also continue on to Galli Hong Kong, as well as two rotations to Zhengzhou in mainland China. One of the leading Italian logistics providers is BCube, which was founded by the Bonzano family in 1952. Operating in some 100 European, American and Asian locations, it manages more than three million square metres of space. It provides cargo handling services, including warehouse management, cargo handling, documentation management and services for airlines at Milan Malpensa, Milan Linate, Rome Fiumicino and Venice. One of the world’s biggest manufacturers of security metal detectors, including cargo scanners, is CEIA, based in Azurro, Tuscany. The CEIA Electro-Magnetic Inspection Scanner (EMIS) is used on non-metallic cargo to detect detonators and electronic circuits from improvised explosive devices, ammunition and weapons such as knives and firearms. It can inspect goods such as fruits and vegetables, flowers and herbs and organic, breads and cakes and beverage in non-metallic containers. The largest EMIS scanners can be used to inspect entire pallets of non-metallic cargo.
TRADEFINDER Airlines
Freight Forwarders
Turkey
India
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Training
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ACW 25 june 2018
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HE PRETENDS TO KNOW WHAT HE’S TALKING ABOUT
Berlin ‘48: From blockade to airlift
Seventy years ago, peace between the Second World War victors nearly ended in the rubble of divided Berlin
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n June 25, 1948 Berliners awoke to an unseasonably warm day. For the superstitious, a ceiling of low, dark clouds covering the divided city did not bode well. No-one in the city could have known that within weeks, the western part of their city would be kept alive by the world’s first humanitarian airfreight operation. Overnight, Soviet dictator Josef Stalin had decided to cut all land access to Berlin for the Allies. This became known as the Berlin Blockade. Stalin’s aims were not to provoke war over the divided capital, nor did he want to drive the Allies out. Instead, he was flexing Soviet muscle to hold back what he saw as growing Western dominance over the defeated country. For weeks, the Soviets had been harassing the French, British and American authorities in an attempt to force them to leave the city. At 06:00 on June 26, 1948 all land, river and rail traffic was halted between the three Allied sectors of Germany and the Western sector of Berlin. The intention was clear - the Western powers must withdraw their military occupation forces from the city. The Soviets believed they would soon win their point by leaving the Western sector of Berlin without food, fuel and other necessities.
Operation Vittles
Only the air corridors between the western zones of German and Berlin on which the four victorious powers had agreed in the Air Agreement of 1945/46 were unaffected. That was how the three Western powers were able to plan an operation to supply vital fuel, food and material to the beleaguered citizens of the Western sector of Berlin. The plan to supply a city and its approximately two million entrapped inhabitants with the necessities
replied: “Sir, the Air Force can deliver anything.” One of the first flights into Berlin after the as a Douglas DC-4 piloted by Captain Jack Bennett of American Overseas Airlines. Sir Alan Cobham’s company Flight Refuelling Limited became the first private enterprise to assist the RAF during the Berlin Airlift. Never formally a military operation, the airlift was quickly dubbed Operation Vittles, only later becoming known as the Berlin Airlift.
Air cargo delivers of life was an ambitious plan on a scale never before attempted. Just three years after the War had finished, with much of Europe, and especially Germany in ruins, it was not clear that this plan would work. While much of the heavy lifting was undertaken by the British Royal Air Force and the US Air Force, commercial airlines showed how airfreight could play a peacetime humanitarian role in bringing relief supplies to a beleaguered population. As word of the Soviet action reached General Lucius D Clay, the highest ranking American officer in the Western sectors of Germany, he immediately called Lt Gen Curtis E LeMay, then commander of the US Air Force in Europe. Clay asked LeMay if his aircraft could airlift emergency supplies into the isolated city. LeMay
By nightfall, war-stained and battered twin-engine Douglas C-47s, capable of hauling three tons each and known as Gooney Birds to the Americans, had delivered 80 tons of flour, milk and medicines to the blacked-out western sector. Within four days, a C-47 was landing at Tempelhof every eight minutes to discharge 2½ tons of cargo. Supplies were immediately moved to warehouses strategically located throughout the western sector of the city. However, this was only about one-thirtieth of the food, fuel and medicines that would be required. LeMay’s staff worked out that it would require 2,000 tons of coal and 1,439 tons of food per day to meet the minimum basic needs of the inhabi-
tants. The normal total tonnage requirement for the city was 13,500 tons daily. By mid-July, 1,500 tons a day were being flown in by American planes, while the British were flying in 500 tons daily with smaller transports from their bases at Celle and Fassberg. When further airlift capacity was required, 225 Douglas C-54s began to replace the C-47s, all of which were relieved by October 1. Tonnage figures rose, and within 28 days 3,028 tons of food, clothing, coal, medicine and petroleum products were being flown into the city daily. In March, the tonnage leapt to 196,223 and in April rose to 234,476. On Easter Sunday, April 16, 1949, a record 1,398 flights carried 12,940 tons of coal in a joint USAF and RAF operation. Serious negotiations began that Spring and at Christmas midnight, the blockade was ended. The airlift was not called off until September 30, as supplies continued to be stockpiled just in case. By the end, 2.3 million tons of food and coal had been delivered at a cost of $345 million to the Americans, £17 million to the British and DM 150 million to the Germans. Seventy-five lives were lost in the operation. The Berlin Airlift was costly, but valuable lessons were learnt. It was a proving ground for air transport, showing the feasibility of sustained, round-the-clock mass movement of cargo by air.
Merry Xmas from Harry S Truman THE WHITE HOUSEWASHINGTON December 21, 1948
To The Men and Women of the Berlin Airlift This visit to Germany by Vice President elect Barkley affords me an ideal opportunity to express to you who are engaged in the Berlin airlift my deep appreciation of your outstanding service. The Berlin Airlift, under the direction of our Air Force, is an achievement of historic and far-reaching significance, by the joint efforts
of our Army, Navy, and Air Force, together with the forces of Great Britain and France. It expresses the unity of the Western nations in the cause of peace. Operation Vittles has assured the world of our faith in our ideals. We are grateful to all of you who have made this possible. At the Christmas Season the American people are thinking of you and your loved ones. On their behalf, I again wish you a very Merry Christmas. Harry S. Truman
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