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The weekly newspaper for air cargo professionals Volume: 20

Issue: 9

6 March 2017

Atlas ends ‘historic year’ with Q4 profit

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tlas Air Worldwide Holdings returned to profit in the fourth quarter of 2016 with an income from continuing operations, net of taxes, of $28.7 million for the three months ended on 31 December. Results compared with a loss from continuing operations, net of taxes, of $37.6 million for the three months ended 31 December, 2015, which was primarily due to charges of $102.8 million associated with an air cargo cartel litigation settlement.

On an adjusted basis, income from continuing operations, net of taxes, in the fourth quarter of 2016 totaled $59 million, compared with $39.4 million, in the year-ago quarter. President and chief executive officer, William J. Flynn says 2016 was a “historic year”, saying: “We acquired Southern Air, expanding the array of aircraft and services that we provide, especially to the fast-growing express market. We entered into strategic, long-term agreements with Amazon to serve its rapidly growing e-commerce business.

“In ACMI, we benefited from Southern Air’s (Boeing) 777 and 737 express CMI services and better contributions and synergies than originally anticipated. We also continued ramping up for Amazon, which enabled us to place the second of 20, 767-300 aircraft into service for the this month.” Atlas Air announced deals with Nippon Cargo Airlines and FedEx in 2016, and this year it will operate a Boeing 747-400F for Asiana Cargo and will be increasing operations with Amazon. For the 12 months ending 31 December, 2016, continuing operations generated income of $42.6 million. For the 12 months ended 31 December, 2015, income from continuing operations totaled $7.3 million. On an adjusted basis, income from continuing operations in 2016 totaled $114.3 million, compared with $125.3 million, in 2015. Both reported and adjusted results in 2016 reflected the impact of startup expenses for our new service for Amazon, 2015 results benefited from US West Coast port-congestion-related earnings.

IAG revenue fall in ‘tough environment’ Air volumes rise at K+N and Panalpina IAG Cargo’s commercial revenue was €1,022 million ($1,078 million) over the period from 1 January 1 to 31 December, 2016, a decrease of 6.6 per cent on 2015. Adjusting the prior year’s figures to reflect a directly comparable operation, commercial revenue fell by eight per cent versus last year. IAG says the competitive trading environment of 2015 continued into 2016 and on a like for like basis, overall yield for the year was down 9.3 per cent on 2015. Volumes were up three per cent while capacity grew by 10.5 per cent, partially reflecting the integration of the Aer Lingus network. IAG Cargo chief executive officer, Drew Crawley says: “These are resilient results in the face of

challenging market conditions. Growing supply from freighter and new generation passenger fleets have continued to outstrip flat demand for general freight. “Our focus on aggressive cost management combined with premium product growth has enabled us to offset some yield pressure and grow our revenue share of the market this year.” He says after a robust start to 2016, the second and third quarters were challenging but the peak season was strong. E-commerce proved strong and the new ‘Critical’ product handled over 600 emergency shipments during the peak season. Crawley says IAG Cargo will invest in infrastructure and technology throughout 2017.

Kuehne + Nagel’s (K+N) profits rose by six per cent to 720 million Swiss francs ($715 million), helped by strong growth in the airfreight segment. Airfreight earnings before interest and tax (EBIT) was up from CHF265 million in 2015 to CHF298 million in 2016 despite revenue dipping from CHF5.5 billion to CHF5.4 billion. Airfreight tonnage rose 4.3 per cent to 1.3 million tonnes in 2016 helped by products including KN EngineChain, a package for production and spare parts logistics as well as maintenance of aircraft engines, and new business for temperature sensitive, pharmaceutical and perishable products. K+N chief executive officer (CEO), Dr Detlef Trefzger says: “In

a market environment characterised by multiple challenges, we were successful with our focus on customer requirements, our solution-oriented approach and our balanced service portfolio.” Over at Panalpina, airfreight volumes were at their highest since 2007, with growth of 10 per cent to 921,400 tonnes but gross profit per ton was down 7.5 per cent to CHF646. Airfreight EBIT was CHF93.5 million in 2016 while total company profits were down to CHF80.2 million. CEO Stefan Karlen says: “In the second half, the Hanjin collapse and the very busy air freight peak season led to tight capacities and soaring rates which put strong pressure on our margins.”

FLYING START TO 2017 FOR ASIA INDUSTRY MUST EMBRACE DIGITAL WORLD TONNAGE UP BUT YIELDS DOWN AT ATC INTRA AFRICA TRADE MUST GROW

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Record number of charters for ACS AIR Charter Service (ACS) arranged almost 12,500 charter contracts in 2016 – making it the company’s record year. ACS chief executive officer, Justin Bowman says: “We completed 12,462 contracts in 2016, an average of more than 34 every day, and an 11 per cent increase on 2015. Often one charter contract entails many different flight sectors. “We have done some interesting charters in the last 12 months; one that springs to mind is the Iron Maiden tour that we helped to arrange. It was 48 separate flights over the course of four months on a fully customised Boeing 747 nicknamed ‘Ed Force One’.” He says another unusual one was an onboard courier job to take some shoes from a hotel in New York to their owner, who had left them there, in Indonesia. Bowman adds: “Our growth in the past five years has been remarkable – we arranged 6,500 charter contracts in 2011 and now we’re doing almost double that. “It is a true testament to our global team’s continuous hard work over the past 12 months and previous years. We are yet to receive audited figures as our year end was 31 January, but this is due to be another record year in terms of revenue.”

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NEWSWEEK OR Tambo to reduce tariffs and upgrade facilities

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R Tambo International Airport is to reduce tariffs by 35 per cent from 1 April and plans to improve access to cargo buildings, and will build a midfield cargo terminal. Speaking after the Air Cargo Africa conference and exhibition on 22 February, OR Tambo general manager, Bongiwe Pityi (pictured second left) said air cargo remains under pressure and new infrastructure is needed. Cargo volumes fell 10 per cent in 2016 to 350,500 tonnes, but Pityi hopes the air cargo sector will be grateful for a 35 per cent reduction in tariffs from 1 April 2017, saying: “While landing fees, parking fees and other charges make up a relatively small component of total costs, margins are such that a significant reduction in charges can make a real difference at the margins.” Describing the importance of infrastructure, Pityi says it is a balancing act to have enough in place for when its needed but not too far in advance to be a burden, commenting: “No one likes a white elephant, but it would be most unfortunate if the infrastructure is not there when it’s needed most.” Its operator, Airports Company South Africa (ACSA) will reconfigure and upgrade access and frontage roads to ease congestion and reduce transit times, while it plans a midfield cargo

terminal and a master development for the entire airport precinct in the longer term. ACSA says it will actively pursue new cargo routes and additional flights with a particular focus on the “southern corridor” including South East Asia and South America. Pityi says: “The business development function is the practical mechanism for helping us achieve our vision to attract more air cargo traffic via South Africa and to maintain our status as the logistics and distribution hub for sub-equatorial Africa.” (See a review of Air Cargo Africa on pages 8 and 9)

Flying start to 2017 for Asia

AIR cargo in Asia Pacific has started strongly in 2017 with freight tonne kilometres up 4.7 per cent in January, the Association of Asia Pacific Airlines (AAPA) says. The data from the 31 Asia Pacific based carriers showed freight tonne kilometres (FTK) were up 4.7 per cent to 5.4 billion. Capacity also increased by 3.8 per cent to 9 billion available FTKs, with load factors increasing 0.5 percentage points to 59.4 per cent. AAPA director general, Andrew Herdman (pictured) says: “The year started on an encouraging note for Asian carriers, with both international air passenger and cargo markets growing strongly, boosted by the timing of the Lunar New Year holidays.” FTKs grew 1.8 per cent in 2016 to 66.2 billion with volumes picking up in the second half of the year following a slow start, FTKs in December were up 8.7 per cent 6.1 billion.

WFS extend China Airlines US deal CHINA Airlines has extended its 19-year working relationship with Worldwide Flight Services (WFS) in North America with a new cargo handling contract at Chicago O’Hare International Airport. The new contract takes to five the number of locations in the US where WFS provides services for the airline. WFS won its first contract with China Airlines in North America in 1998 at New York’s John F. Kennedy International Airport, where it continues to handle some 47 million kilos of cargo a year for the airline. In addition to providing further cargo handling services in Dallas/Fort Worth and Houston, WFS also manages passenger and ramp operations for China Airlines in Honolulu. Under the terms of this latest agreement, WFS will handle up to seven direct flights a week connecting Chicago with Taipei, and an estimated 56 million kilos per year. Overall, WFS will now handle more than 130 million kilos of cargo a year for China Airlines in North America. WFS senior vice president for sales and business development in North America, Ray Jetha says: “We have demonstrated our ability to deliver the quality and reliability expected and sincerely appreciate the airline’s continued confidence in WFS. We look forward to a growing partnership based on the mutual respect and trust between our organisations.”

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NEWS WEEK Call for industry to embrace the digital world

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hippers want all sectors of the air cargo supply chain to embrace new processes and technology, according to a paper by TIACA’s Shippers’ Advisory Committee (SAC). The paper says change is needed and all sectors must work together to drive adoption of new technology, innovations and greater transparency. SAC was formed last year and is chaired by Tosoh Corporation head of supply chain and general affairs, Lars Droog (pictured right). It aims to bring the voice of the shipper to existing discussions and initiatives, as well as spark debate. SAC has several short-term goals, including investigating a logistics data backbone solution, according to authors of the paper, who include seven shippers from various sectors. It is supported by the Global Shippers Forum and European Shippers’ Council. “At the moment, the air cargo supply chain requires 21 documents to be sent 40 times, in 20 steps,” the SAC paper says. “It is complicated, expensive, outdated, slow. A decentralised open platform with a shared collaborative environment would enable seamless integration and real time visibility over freight. “We would be eliminating data re-entry and errors, instead having first-time-right data, updated by real time events and

maintained to reflect one version of the truth,” the paper adds. SAC is championing innovative technology such as smart labels and intelligent boxes and calling for ways to increase transparency, looking at “new ways to communicate data and providing options that reduce the need for physical consolidations and allow for virtual ones”. Droog says: “This is a high-level document, which will start an important dialogue for the industry. Each shipper faces different challenges and has different needs and, in the coming months, we will explore these as part of the conversation. “It is only by working together that we will be able to get results and improve the industry.” SAC will be meeting regularly to discuss options for the industry to better collaborate. Each member will be drafting an essay outlining concerns and challenges based on the sector they are in.

WORLDNEWS DUBAI International Airport began the new year in top gear as freight volumes registered gains during the first month of 2017 on 2016. In January, the gateway handled 208,271 tonnes – an increase of 3.4 per cent compared to 201,483 recorded in January 2016. Last year, the hub handled 2,592,454 tonnes of freight, up 3.4 per cent on the 2,506,092 in 2015. After seeing a fall in the third quarter of 2016, volumes recovered in fourth quarter. BUDAPEST Airport saw tonnage growth in January 2017 of 26.8 per cent compared to the same month in 2016 as volumes reached 6,487 tonnes. The airport explains the underlying factors include the strong performance of the Hungarian processing industry and exports of high value-added goods, such as electronics, pharmaceuticals and vehicle parts. Integrators are on the up and construction has started of two new integrator buildings to be ready this summer. Preparatory works have begun on a ‘Cargo City’.

More UK-US routes for Virgin

VIRGIN Atlantic Cargo is to provide more UK – US services in 2017 with daily London – Seattle flights and more routes from Manchester. It will start London Heathrow – Seattle Tacoma flights on 26 March followed by three Manchester – San Francisco services a week from 28 March and a twice-weekly service to Boston the following day. Virgin will also start daily Manchester – New York JFK flights at the end of May and a weekly London Gatwick service to Varadero in Cuba. Virgin senior vice president for cargo, John Lloyd says Seattle is in the top 15 of import/export markets between the UK and US and there has been a lot of interest from customers. He notes: “It is clearly an important and growing origin, transit and destination point for cargo as demonstrated by the 10.2% increase in tonnage in 2016 through Seattle-Tacoma. It is a great addition to our U.S network.” Lloyd says 2016 was challenging but he is optimistic the new routes will help it grow in 2017. He adds: “We are very encouraged by the growth in our volumes from the UK to the U.S, which were boosted by particularly strong increases on our routes to Atlanta, Miami, New York JFK and San Francisco.”

New conversion centre for AEI

AERONAUTICAL Engineers (AEI) has chosen KF Aerospace as an authorized conversion centre to provide additional capacity for passenger-to-freighter conversions. KF Aerospace has major facilities in Kelowna, British Columbia and Hamilton, Ontario, and will start converting Boeing 737-400s from April this year. AEI says the success of its 737-400SF, MD80SF, CRJ200SF and soon the 737-800SF when certified this year, required additional conversion capacity to handle demand. It has three conversion centres including Commercial Jet in Miami, Florida, Commercial Jet Services in Dothan, Alabama and Boeing Shanghai Aviation Services in Shanghai, China, offering 11 to 13 conversion lines at any one time.

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NEWSWEEK

Americas hub in Cincinnati to be expanded by DHL Express

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HL Express is to add around 900 new staff as it completes the latest $108 million expansion of its Americas Hub at Cincinnati/Northern Kentucky Airport (CVG) in the US. The expansion to a new day sort operation and projected growth in shipments is set to increase the hub’s workforce to more than 3,300. DHL Express Americas chief executive officer, Mike Parra says: “As we look to the future, we know the continued investment in motivated people is the key to ensuring that we meet the demands of our customers and have the ability to handle the continued growth and expansion that will occur at our CVG Hub location.” This latest expansion features a new north ramp built on 45 acres of land and provides parking space for 16 additional aircraft, bringing the hub’s total capacity to 65 gates.

The expansion includes additional automated sorting capability and 40 new reload positions that will enhance the hub’s ability to handle the growing shipment volume expected to be seen in the US and throughout the Americas. It also adds new storage and warehouse space for ramp equipment and shipping containers. The Americas region encompasses North and South America as well as the Caribbean and

shipment growth will require DHL to add a new day shift seven days a week, beginning in May. Meanwhile, DHL’s e-commerce division DHL eCommerce is expanding in Thailand by enhancing its coverage and providing what it says is “affordable B2C international shipping”. The pick-up service the express freight integrator runs is also to be extended to small e-commerce merchants, which

is set to benefit Thailand’s 2.7 million small-medium-enterprises. DHL eCommerce launched in Thailand in January last year and offers end-to-end domestic delivery services and access for local businesses to expand globally. It also has pay-per-use fulfillment services through a global network within Deutsche Post DHL Group. DHL eCommerce Thailand managing director, Kiattichai Pitpreecha says: “The e-commerce market in Thailand is currently second largest in Southeast Asia and expected to grow 22 per cent annually till 2020.” DHL eCommerce’s 3,222 square metre hub in Bangkok and its delivery network have capacity to handle 15 million shipments annually. A recent DHL Express report on the e-commerce industry also found the cross-border market offers growth rates of 25 per cent.

Inaugural flight for Express Air Cargo EXPRESS Air Cargo – a new Tunisian airfreight carrier has operated its inaugural flight from Tunis to Paris Charles de Gaulle Airport. The Boeing 737-300 which it received on 13 January this year took off for France from Tunisia on 25 February and it is set to get another B737 soon. Express Air Cargo’s eventual aim is to offer daily scheduled services linking 15 African countries to the main European cities utilising its Boeing 737 fleet. Its first destinations will be Paris, Co-

logne-Bonn, and Malta, but the network will eventually be extended to reach the Sub-Saharan Africa and central Africa. The carrier says because time is valuable, it is offering a large variety of services to satisfy requirements, mainly special handling such as live animals and heavy cargo. Express Air Cargo is looking to be the ’bridge between Europe and Africa’ and its major aim is to deliver quality services and strengthen the customer experience by providing different offers.

Bao Bao hops aboard FedEx Express

BAO Bao the 3½ year-old giant panda has been flown by FedEx Express from Washington Dulles International Airport to Chengdu, China. The panda departed the Smithsonian’s National Zoo on-board a FedEx Boeing 777 Freighter, which took 16 hours before being taken to the Dujiangyan Panda Base. Boa Bao will stay in quarantine for 30 days and then enter a breeding program

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when she reaches sexual maturity between five and six years old. FedEx president and chief operation officer, Dave Bronczek says FedEx through its charitable shipping program, was honoured to do Bao Bao’s journey to her new home, adding: “Our team of skilled logistics experts, pilots and drivers are honoured to support the efforts to preserve this beloved, rare animal.” In 2010, FedEx Express transported Bao Bao’s brother Tai Shan from The National Zoo to the China Conservation and Research Center in Chendgdu. FedEx Express also provided the transport for Bao Bao’s parents, Mei Xiang and Tian Tian, from China to the US in 2000. Giant pandas are listed as ‘vulnerable’ in the wild by the International Union for Conservation of Nature. There about 1,800 in the wild. (Picture credit: Smithsonian’s National Zoo)


NEWS WEEK

Delta on the dash as it launches GPS same-day product

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elta Cargo has launched DASH Critical & Medical to the US domestic market – the first fully GPS-enabled same-day product offered by a US freight carrier. The new service provides real-time tracking and monitoring of any eligible shipment. Customers can ship items up until 45 minutes prior to scheduled flight departure. DASH Critical & Medical is available from 10 US locations Atlanta, Chicago, Cincinnati, Detroit, LaGuardia (New York), Los Angeles, Memphis, Minneapolis, Rochester and Seattle with service to 89 mainland US destinations and Hawaii. It will be launched internationally sometime later this year. Delta Cargo’s senior vice president, Gareth Joyce (pictured) says: “We’ve tailored and developed this product around our customer needs with the highest boarding priority of any Delta Cargo product, and the fastest transit times

in the logistics industry. No one else offers a comparable service. “Through our soft launch at the end of 2016 customers made it clear that our eyes on approach to these shipments gave them great confidence and the fact that the products such as legal documents or organ transplants got to their destination quicker than

if taking the product themselves. “We are working to expand the program across our domestic and international network as well as make enhancements.” DASH Critical & Medical shipments have clearly visible pink packaging and include GPS tracking proactively monitored by a specialist team throughout the journey. This helps ensure important shipments are in the right place at the right time throughout the shipping process. The service offers premium domestic service for time-sensitive, small packages such as medical commodities, legal documents, essential machinery parts and aircraft on the ground (AOG) components. FAA lifeguard/medevac-designated shipments must also ride as DASH Critical & Medical. If delivery is impacted by irregular operations, such as limited flying due to bad weather, the monitoring team will proactively contact local airports to help coordinate the export, transfer and import of all DASH Critical & Medical shipments. DASH Critical & Medical is available for anyone shipping items less than 16 oz. Those up to 100 pounds per piece from companies with TSA Known Shipper status can also be accepted as DASH Critical & Medical.

New x-ray scanners for Alaska

ALASKA Air Cargo has ordered Astrophysics XIS-1517DV 200kV x-ray scanners for its Pacific northwest airline hubs. The x-ray systems will replace and upgrade ageing cargo scanning equipment being phased out of service and standardise Astrophysics’ technology across its US facilities. The Transportation Security Administration (TSA) requires that all cargo transported on bellyhold aircraft is to be 100 per cent screened prior to being loaded onto aircraft. X-ray scanners used for cargo screening must be TSA-qualified and included in the agency’s list of approved screening technologies.

Air NZ aids freight forwarders

AIR New Zealand (NZ) has joined Unisys Cargo Portal Services (CPS) to allow current and prospective freight forwarding clients to book and track shipments online. Unisys says the online portal will enable freight forwarders to interact with multiple carriers via a single website to view availability, make bookings and track shipments, as well as other services including producing electronic air waybills and interacting with customs systems. Unisys senior vice president and president for enterprise solutions, Eric Hutto says it will help Air NZ expand its global reach by allowing more freight forwarders to choose the airline. He adds: “We understand how important freight management is. In the case of delivering fresh food, fragile pharmaceuticals or valuable items, freight forwarders need to be able to quickly view availability and book shipments with reliable airlines such as Air NZ.” Air NZ has used Unisys Logistics Management System (LMS) since 2010. It has three dedicated international cargo terminals in New Zealand, in Auckland, Wellington and Christchurch, as well as a North America hub in Los Angeles, with gateways in Honolulu, Houston, San Francisco and Vancouver.

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GERMANY

New cool centre to open at Leipzig/Halle in April

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eipzig/Halle Airport’s new cool centre will start operating in April and is set to boost the gateway’s cool chain tonnage. Last year was a sterling year as the airport passed the one million tonnage mark for the first time as freight handled reached 1,052,000 tonnes. This investment is part of Leipzig/Halle’s efforts to continually and actively expand its portfolio of services. The airport’s operator is Mitteldeutsche Flughafen and board spokesman and managing director, Johannes Jähn says the cool centre at the World Cargo Center, will accommodate complete aircraft loads in different cool zones. He explains construction has involved a sixdigit investment and it is directly linked to the growing demand for cool chain services in Eastern Germany, Poland and the Czech Repub-

lic, which can be reached in a short time via the direct motorway links. “We attach great importance to this sector and believe that we have long-term development potential here. We also assume that growth fields with the opportunity of one-stop shopping for all transport matters will open up in other sectors too and therefore strengthen our general cargo business beyond just the management of cool freight,” Jähn says. Jähn is a member of the steering committee of the German Airports Association and heads the new specialist committee for airfreight and logistics set up in 1 January 2017. He says 2017 has started in the same vein for Leipzig/Halle with significant volume growth. The increase in January alone was about seven per cent at a figure of about 84,800 tonnes, while he notes a similar development

looks likely in February too and the gateway is optimistic about prospects for 2017 with growth set to be fuelled by express business and the general cargo segment. Jähn says the sectors driving this are e-commerce, military logistics, machinery and growing volumes of pharmaceutical goods, while the key trade lanes with the largest volumes involve services to and from the Far East and the Middle East. The drivers are DHL, which operates its largest hub in Leipzig/Halle, and the Volga Dnepr Group, but he adds: “Developments in the freight charter business are largely positive too and the Antonov Design Bureau (AN-225 above) is actively involved here, among others.

“Overall, flights involving more than 40 airlines operated from Leipzig/Halle to 220 airports around the globe in this market segment alone in 2016.” Europe’s fifth busiest gateway for cargo looks set to go from strength to strength and odds on to welcome more belly and freighter routes. Jähn says: “We will continue to expand our activities in areas like freight charter in 2017 too. We are also working on long-term projects in the field of e-commerce, but also the transportation of large live animals. “One flight took off for the Middle East with 165 cattle on board in February and was handled through our Animal Export Center.”

Strong January for Germany’s gateways

GERMANY’s gateways saw combined yearon-year (YOY) air cargo growth of 7.9 per cent in January, according to the German Airports Association (ADV). Europe’s busiest market by tonnage handled 370,136 tonnes in the month, a surge on the 340,000 tonnes in January 2016. Of this total unloaded cargo made up 179,751 tonnes, a YOY rise of 8.8 per cent and loaded made up 190,385 tonnes, up YOY by 7.1 per cent. Notable increases were recorded by Frankfurt Airport at 5.8 per cent, Leipzig/ Halle 7.4 per cent, while Berlin’s gateways saw a combined uplift of 16.7 per cent, Dusseldorf 22.7 per cent, Hamburg 10.7 per cent, Cologne-Bonn 7.1 per cent and Munich (above) 7.8 per cent.

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The number of commercial aircraft movements also increased by 4.7 per cent to nearly 150,000 take-offs and landings. ADV says airfreight continues its stable growth trend in 2017: “The volume of cargo increases once again on December 2016 - and this in the weak economic month of January. “The trend to be observed that the difference between the loaded and unloaded tonnage is becoming less and less declines.” Germany’s gateways saw growth in tonnage in every month in 2016. It grew tonnage levels. of 7.8 per cent in December, 4.3 per cent in November, 4.9 per cent in October, 6.3 per cent in September and 4.2 per cent in August.


GERMANY

2016 was tough, but Lufthansa optimistic for 2017

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ast year was challenging for Lufthansa Cargo, but the German carrier is optimistic 2017 will be a lot better. Falling yields, overcapacity battles, pilot strikes and other challenges negatively impacted business in 2016. Head of PR and internal communications, Andreas Pauker says 2016 was “primarily a difficult year in a challenging environment”, but the year-end rally had a positive effect on air cargo demand and the carrier was satisfied with the peak season. Lufthansa Cargo will publish its annual results on 16 March and any affect of the pilot strikes is likely to be detailed. Talks with the union Vereinigung Cockpit on all open tariff-related matters is continuing to achieve alternative cost-savings within the framework of an overall solution. “We regret last year’s strikes also affected some of our customers, but we did our utmost to minimise the impact. We actually succeeded in operating most of our freighter flights during the strikes,” Pauker explains. Lufthansa Cargo’s strategy this year is to grow with its customers to be their first choice for air cargo. Pauker says this is why it started innovative online products and will continue to push digitisation to unlock further potential. He adds: “Lufthansa Cargo is even boosting the advantages a combination carrier can offer by cooperating with cargo airline partners. Furthermore, our charter product network-on-demand complements the various products we offer, allowing us to meet all of our customers’ needs.” The best performing trade lanes Pauker says was northern

Asia, which it is set to grow through a new Sharjah-Hong Kong freighter service and North America (eastbound). Investments in infrastructure are key to growth plans and Pauker says it will continue to build and make processes more efficient to meet market demand. The Lufthansa Cargo Cool Center in Frankfurt will be nearly doubled in size from 4,500 square metres to 8,000 square metres. Pauker says: “We continue to see good growth opportunities in pharma shipping. The expanded facility should open this summer.” Last year it was awarded IATA CEIV Pharma certification, which Pauker says was the fruit of work done on its Cool/td product over the last few years. This combined with further innovations and product improvements, he believes will make the carrier an

even more attractive proposition to pharma customers.” As for its fleet, Lufthansa Cargo plans to operate a Boeing 777F-only freighter fleet within the next decade, Pauker says. He notes: “Further details remain to be defined. Our MD-11F fleet is operating economically. The Airbus A350 with its 15-tonne freight capacity represents a useful extension to the fleet.” Partnerships are seen as key to growth, and it forged a oneroof agreement in Frankfurt with Cathay Pacific in 2016. Pauker says it is generating even more efficiency and customers benefit from time-savings and having one location for exports and imports. The joint venture (JV) with ANA will grow: “We will collaborate more closely with ANA through our JV in 2017. We plan to use more of each other’s capacity, gradually expand the product scope and continue working towards aligning our sales strategies.”

Tonnage up, but yields down

FALLING yields led to a revenue drop for ATC Aviation last year on 2015, but the general sales and service agent (GSSA) still moved a record tonnage figure in 2016. In Germany ATC represents - Air Madagascar, Air Serbia, Air Tahiti Nui, ANA Cargo, Avianca Cargo, Bulgaria Air, Camair-Co, Croatia Airlines, Ethiopian Airlines, Etihad Cargo, Georgian Airways, Jet Airways, Royal Air Maroc, SRX, TNT, and from 30 March Air Seychelles. Chief executive officer, Ingo Zimmer (pictured above) says Germany is one of ATCs biggest set-ups with four branches covering all regions from north to south, west and east. “In Germany we are the number one cargo GSSA with monthly tonnage of +7,000 tonnes and with this cumulated tonnages among the top four air cargo capacity providers,” he explains. Zimmer says the last quarter of 2016 was very positive with strong tonnage and improving yields, while 2017 has started well and January and February have been very good, giving ATC an optimistic outlook for the rest of the year. He says: “Our focus in 2017 will be on the vertical sales. We have employed dedicated pharma, express and VAL managers. “In Europe we are already strongly represented with own offices in Austria, Benelux, France, Germany, Spain and Switzerland. “Our focus in 2017 will be on the Asian market.” Zimmer notes that the strongest trade lanes for ATC in Germany are Europe – Asia and Europe - Africa, while he believes the offices it has in Berlin, Dusseldorf, Frankfurt, and Munich give it the wide coverage it needs in the marketplace, covering the full length and breadth of the country. Germany is clearly important, he explains: “Germany is one of the biggest market for ATC due to the strong export. Together with the US market one of our back bones.” As for what problems and barriers Zimmer sees for the air cargo industry as a whole, he notes: “Mainly political reasons. Lets see what impact Trump’s trade direction with regard to the isolation of the American market will have.”

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AIR CARGO AFRICA REVIEW

Africa has huge potential and challenges to overcome

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frica is expected to make up 20 per cent of the global population by 2050, creating a huge potential labour force and consumer market but the numerous challenges were a major talking point in the first panel discussion of Air Cargo Africa in Johannesburg. During the session, ‘Unlocking Africa’s civil aviation potential: the time is now to set the rules for tomorrow’ on 21 February, delegates heard how, according to the International Monetary Fund, 11 of the top 25 countries by GDP growth will be in Africa, but 18 of the bottom 20 nations with the lowest GDP per capita remain in Africa. Other interesting statistics included that Egypt, Kenya and South Africa are the only African countries among the top 50 on the logistics performance index, while 13 of the

bottom 20 are in Africa. The session was moderated by International Air Transport Association global head of cargo, Glyn Hughes, who said: “It is the youngest continent with a lot of labour force potential and large consumer market. If infrastructure is in

place, it could be leading the global labour force if things are addressed.” Hughes was joined by Kenya Airways chief operating officer, Jan de Vegt, Saudia Cargo vice president – commercial, Rainer Mueller, Swissport senior vice president cargo – global accounts & commercial, Rudolf Steiner, Worldwide Flight Services group chief operating officer, Barry Nassberg and Atlas Air vice president – sales and marketing (EMEIA), Graham Perkins. De Vegt explained cost structures in Africa are some of the highest in the world, which has a negative influence on development, saying: “If costs were used for important structures, we would be better off.” He also said African airport runways wear out tyres five times faster than elsewhere, while overfly and landing rights are seen as an easy

What next for forwarders?

THE future of freight forwarders was a major topic on 22 February during the session ‘Freight forwarders, the critical link in the air cargo supply chain: Will the current model continue to work in the future?’. The panel included Cargolux Airlines International regional director for Africa, Jonathan Clark, Fraport senior vice president cargo, Dirk Schusdziara, Turkish Airlines chief cargo officer, Turhan Ozen, South African Association of Freight Forwarders chief executive officer, David Logan, Kale Logistics Solution director, Vineet Malhotra and AirBridgeCargo Airlines vice president for EMEA, Georges Biwer joined moderator Kuehne + Nagel senior vice president for products & services - air logistics, Marcel Fujike. Biwer told delegates he cannot see how airlines could take over the job of freight forwarders as they add value for carriers, saying: “In the future there will be more synergies with freight forwarders how to encounter new ways of logistics and the pace of e-commerce. Definitely for myself I am positive that yes freight forwarders will remain in business.” Clark agreed that freight forwarders are not going away, saying: “From an airline point of view, we want to be closer to the shipper, understand where the market is going. For us

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way of making money. De Vegt described Africa as still being in “baby shoes” and needing more time to develop internally before opening everything up. He said there were advantages to not being protectionist but measures need to be taken step by step. Mueller believes import and export infrastructure is generally good but pointed out: “One of the biggest challenges on ground transport is combining air cargo with road feeder services. Something is lacking, it cannot be that difficult to set up.” Nassberg told delegates told African airports did not have an integrated approach to develop cargo, saying: “Facilities are treated as ancillary or a simple opportunity for land revenue or tenancy revenue without giving any thought towards a cohesive development of cargo policy.”

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we have to learn a lot more the from shipper and agent, and tailor make our services.” Logan explained to delegates that freightforwarders need to know everything, saying: “The value of freight forwarders is they have to be experts in everything. If you are moving cargo from London to Tokyo they need to know best rates, best airline to use, host of knowledge. Their value is the knowledge, they are the architects of transport.” After Biwer said shippers never seem to be happy, sometimes it is in their nature, but also because of the cost of airfreight, which the customer normally has not budgeted for, Fujike asked whether start-up firms pose a threat. Malhotra said the answer is yes and no, that there is a lot of ‘Uber-isation’ as they try to address gaps in the market. Logan said time would tell if start-ups are a threat, saying: “Freight Forwarders need to be aware of what is out there, include it in their strategy and even copy some things. As long as they are aware of it they will continue to survive.” Schusdziara believes transparency and digitalisation will benefit the entire supply chain, telling delegates: “There are a lot of opportunities to streamline and make processes more efficient. It is all very fragmented, digitalisation can bring a lot more transparency into the supply chain which shippers request.” He said the Air Cargo Community Frankfurt was founded to improve efficiency and collaboration between supply chain partners. He explained as an airport and the home of supply chain partners: “We built up a cargo community platform. It only works if we work together, and we also need trust.”


AIR CARGO AFRICA REVIEW

Intra-Africa trade must grow

I

ntra-African trade must grow and the continent must gain extra air connectivity before it plays a bigger role on the global stage, according to South African Airways Cargo general manager, Tleli Makhetha (pictured below left). In the panel discussion, ‘Trade Agreements: what’s there in them for the African air cargo industry’, how trade agreements affect Africa was the major talking point along with the Yamoussoukro Declaration not being fully implemented, which was meant to help develop intra-African and international air services with the creation of a single African air market. Makhetha told delegates on 23 February: “We need more trade within Africa and more air connectivity before it plays a bigger role in international space. Africa represents about 2-3 per cent of global airfreight.” He added: “I’m not sure if there is still a chance to go back to Yamoussoukro, time has overtaken it, maybe it needs to be enhanced. We need to take into account the current realities.” Makhetha was joined by International Air Transport Association global head of cargo, Glyn Hughes (pictured right), The International Air Cargo Association secretary general, Vladimir Zubkov and Boeing Commercial

Airplanes regional director – airline market analysis – market & business development, Tom Crabtree, who moderated the session. Hughes described the lack of ratification of Yamoussoukro is a major inconvenience freight shippers. He commented: “Air cargo and connectivity would be huge benefit for intra-regional trade. It is a shame Yamoussoukro has not been fully ratified but the benefits are worth pursuing.” The session came after ratification of the World Trade Organization (WTO) Trade Facilitation Agreement, and Hughes said a number of measures were pro-air cargo. He said: “Any agreement that leads to growth, anything that leads to simplification and enhance it is good and should be supported. One benefit is the economic impact, reduction in trade costs will be close to 15 per cent.” Hughes said IATA does everything it can to promote the benefits of aviation, and that air cargo is necessary to develop an area’s economy. Makhetha believes trade agreements are very important and said: “If there is no investment in facilitating trade then there will be no air cargo movements. No airline will fly to an area where there is nothing to move. Areas need to have access but if they have nothing to move there will be no growth.”

Drones to be part of life THE potential of other transport methods including drones, UAVs and airships in Africa provided an interesting discussion to end the Air Cargo Africa conference and exhibition. The panel discussion, ‘Innovations in cargo delivery: from drones to UAVs to airships’ was moderated by BeCon Projects chief executive officer (CEO), Uwe Beck, who was joined by Astral Aviation founder and CEO, Sanjeev Gadhia, Hybrid Enterprises chief commercial officer, Brian Bauer, Dronamics founder and CEO, Svilen Rangelov, and Cargo iQ executive director, Ariaen Zimmerman. Infrastructure is a problem across many regions in Africa, with few or no roads in remote areas and limited facilities for aircraft, so companies are testing different ways to transport cargo. Astral Aviation founded Astral Solutions to test drones, which Gadhia expects to be the next big thing in Africa. Astral is testing drones including one capable of flying 1,200 kilometres with two tonnes of cargo on board. He told delegates: “Our clientele are very keen. The aid and relief sectors are immediate takers. Aid and relief is about timely delivery

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to the final destination that may not have the infrastructure or logistics capabilities for commercial aircraft.” Gadhia says African public awareness of drones needs to rise, but this was the same with mobiles phones, which are now part of life. He predicts: “Drones will be widely adopted, they will be part of life for a lot of people and humanitarian work. Five per cent of Africans have a postal code, their mobile phone is their post code, they won’t need post office.” Rangelov’s drones are aimed at e-commerce with one centralised warehouse to distribute products. He explained: “Our plan is to work with domestic airlines, creating a product dedicated for e-commerce and using drones to serve communities in more remote places.” Airships are another mode for areas with limited infrastructure. Bauer explained some of the advantages of the LMH1, like carrying up to 21 tonnes of cargo to remote locations and being capable of landing on any surface. As he put it: “The future of airships is they will never see an airport and don’t need infrastructure, they can go from any field to any remote site.”

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PHARMA ROUND-UP

Africa carrier Ethiopian looking into gaining IATA CEIV

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thiopian Airlines is working on pharmaceutical infrastructure and equipment, and looking into the International Air Transport Association (IATA) Centre of Excellence for Independent Validators in Pharmaceutical Logistics (CEIV), regional manager for Southern Africa, Abel Alemu told delegates at Air Cargo Africa in Johannesburg on 21 February. Alemu was one of a number of panellists discussing the issues surrounding pharma in the Air Shippers’ Forum session, ‘Pharma by air – establishing end to end integrity’. He said carriers need to focus on infrastructure and equipment, and Ethiopian is building the biggest cargo terminal in Africa, with a capacity of 1.2 million tonnes, which is set to be finished around May/June time. Alemu told delegates: “By working with ground handlers and customs authorities we can maintain standards, that is what we are currently doing.” Communication across the supply chain, the importance of IATA CEIV certification and harnessing the available data were

other key talking points in the session, moderated by Brussels Airport Company cargo marketing manager, Johan Leunen. Other panellists included Pharma.Aero chairman, Nathan de Valck, Brussels Airlines vice president global cargo, Alban Francois and Expeditors branch manager BeLux, Peter van Domburg. Brussels Airport was the first hub in the world where stakeholders underwent IATA CEIV certification. De Valck, who is

the gateway’s cargo & product development manager for sales & marketing says it took the initiative to standardise processes for pharma shipments, form a group with shippers and create a checklist to specify operational realities with the community, which was implemented and developed with IATA. De Valck explained: “We identified strong points and improvements and it was up to the company to improve, the second point was training experts in company. It really is just the starting point and we continue to improve.” Francois added CEIV is the first step to make sure companies had the right processes and mentality to continue improving. He said the supply chain needs to learn from mistakes rather than blame each other, and Brussels Airlines uses customer feedback to continue improving its offering. He told delegates: “We share information with business partners, we don’t always have right solutions. It is not always an issue at the airline but maybe we can look at the package but if you don’t have transparency you will keep the risk. If you have transparency throughout the whole chain you can improve.”

Hactl awarded IATA CEIV certification

HONG Kong Air Cargo Terminals Limited (Hactl) has gained the International Air Transport Association (IATA) CEIV Pharma certificate – becoming the first cargo handler in Hong Kong to obtain the certification. Hactl’s certification was sponsored by Hong Kong Airport Authority, in which all relevant industry players at the airport will undergo validation for the IATA CEIV pharma standard. The validation report praised Hactl’s preparations for the audit process, the helpful attitudes of its staff, and its total cooperation. IATA’s general manager for Hong Kong and Macau, Yvonne Ho says: “I congratulate Hactl on being the first to receive CEIV certi-

fication in Hong Kong. In doing so, Hactl has achieved an internationally recognised standard for pharmaceutical handling.” Hactl’s senior manager for quality assurance, Benny Siu says: “We are very pleased with the positive outcome of the IATA CEIV Pharma Validation, and value the cross-departmental team effort that resulted in Hactl becoming the first to obtain this important certification.” Hactl chief executive, Mark Whitehead adds: “We applaud the Airport Authority’s initiative in sponsoring this drive to adopt IATA CEIV Pharma in Hong Kong. It’s an excellent example of what can be achieved through collaboration, and will benefit the entire airport cargo community and its customers.”

More European chain stations added by United UNITED Cargo has added gateways in Spain at Barcelona El-Prat Airport and Bordeaux-Merignac Airport in France to its growing network of tempcontrol certified handling locations. The US carrier now has 67 locations in its tempcontrol network after it added Belfast in Northern Ireland at the end of 2016. United Cargo operates a five times a week bellyhold

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service using a Boeing 767 between Barcelona and Newark Liberty. Bordeaux-Merignac is served by road feeder service from Paris Charles de Gaulle Airport where it runs services to Newark, Washington Dulles, Chicago O’Hare and San Francisco. All these flights then connect to route into Central and South America and Asia Pacific as well as its vast domestic network.


TRADEFINDER Airlines

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