ACW 9th December 19 by Azura International

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The weekly newspaper for air cargo professionals No. 1,061

9 December 2019

New decade, new opportunities?

Airports unite for wildlife

Pages 6-10

INSIDE NALLIAN LAUNCHES APP

NALLIAN has launched the Acceptance and Delivery app, giving forwarders and their drivers information about booking slots for freight pick-up ... PAGE 2

CEOS UNVEIL MANIFESTO

EUROPEAN air cargo CEOs unveiled key policies for the new EU mandate in the first ever Airlines for Europe (A4E) Air Cargo Policy Manifesto ... PAGE 3

our more airports have joined the fight against illegal wildlife trafficking with Hong Kong, Munich, Sydney and Toronto Pearson signing the United for Wildlife Transport Taskforce Buckingham Palace Declaration. The declaration sets out to make tangible steps to close the routes exploited by traffickers of the illegal wildlife trade as they attempt to smuggle rare and vulnerable products. The airports join more than 100 transport companies who have supported the initiative since 2016. Angela Gittens, director of ACI World welcomes the airport’s commitment, saying: “Wildlife trafficking has become a multi-million-dollar

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business and, as the world becomes more interconnected, poachers are looking to abuse the air transport system to move illegal wildlife goods. Airports continue to be central to stamping out this trade.” The Buckingham Palace Declaration contains 11 commitments to raise standards across the transport industry and focuses on information sharing, staff training, technological improvements and resource sharing. Vivian Cheung, executive director of airport operations at Airport Authority Hong Kong says: “Hong Kong International Airport (HKIA) adopts zero tolerance policy regarding illegal wildlife trafficking and we are honoured to be a signing party

of the Buckingham Palace Declaration. At HKIA, we work closely with the whole airport community to fight illegal wildlife trade, while efforts to raise public awareness continue through publicity means such as posters and model displays.” Dr Michael Kerkloh, chief executive officer of Munich Airport says: “At Munich Airport we have worked closely with the authorities for many years, using state-of-the-art technologies, to combat the unlawful transport of endangered plant and animal species. Consequently, we are fully committed to supporting all efforts to impede the activities of international traffickers and promote the legal protection of endangered

species.” Hugh Wehby, chief operating officer of Sydney Airport says: “Australia’s unique wildlife is often a target of illegal wildlife trafficking, which makes Sydney Airport especially proud to support this important initiative.” Kim Stangeby, vice president and chief strategy officer of Greater Toronto Airports Authority says: “Illegal wildlife trafficking threatens the existence of many of the world’s species. Since airports play a major role in facilitating cargo, it’s important for us to work collaboratively to tackle this issue. Signing the declaration will help to harmonise our action against trafficking.”

THE peak season has got off to a weak start with demand falling 3.5% in October, the International Air Transport Association (IATA) reports ... PAGE 4

CANCUN IS OPEN FOR EXPORTS

SWISS WorldCargo has opened its Cancun, Mexico station for exports with flights from Zurich operated by Edelweiss. The three Zurich - Cancun flights ... PAGE 5

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Nallian launches acceptance and delivery app

allian has launched the Acceptance and Delivery app, giving forwarders and their drivers information about booking slots for freight pick-up and delivery at Brussels Airport. The relevant freight handover information allows forwarders to save time, reduce admin, eliminate fraud-sensitive handover of paper documents and improve visibility. The app joins existing BRUcloud apps at the Brussels Airport cargo community. The Acceptance and Delivery app, which integrates with the Slot Booking app, allows drivers to consult all slot details, linked freight and documents on their mobile device. They can register timestamps during the handover process at the handling agent and register damages or shortages when han-

dling freight. All information is stored digitally to reduce disputes between handlers and forwarders, giving the airport reliable insights in performance. Sara Van Gelder, cargo business development manager at Brussels Airport Company says: “Drivers typically appreciate the fact that they have easy access to information, are more involved in the process and no longer need to lose time going back and forth between warehouse and reception.” Jean Verheyen, CEO of Nallian says: “This application is yet another step towards efficient, paper-less cross-company processes

at the connected cargo hub. It complements our powerful suite of landside management apps, which already include apps such as the Slot Booking App, Freight Management App, Check-it for Air Cargo, and many more.”

DHL delivers for troops DHL Express is delivering 500 fresh-cut Christmas trees and other festive items for US troops stationed abroad. The trees, along with thousands of handwritten letters, menorahs, festive decorations and other gifts will arrive at US bases in Afghanistan, Bahrain and Kuwait to give service members a traditional holiday experience. DHL Operation Holiday Cheer, a charitable programme DHL runs in partnership with the New York community, is in its 16th year. The operation will kick off today (Monday 9 December), with a celebration at New York-based Dees’ Nursery, where community members, veteran groups, school children and Nassau County dignitaries including Santa will appear bearing gifts from DHL. From Dees, a police motorcade will escort the vehicles to the DHL Gateway facility at New

York’s John F Kennedy International Airport. From there, DHL employees, the VFW, law enforcement personnel and members of the community will work together loading the donations onto a DHL aircraft. After a stop at the DHL America Hub at Cincinnati/Northern Kentucky airport, a DHL Boeing 777 Freighter will travel non-stop to Bahrain where the special cargo will be dispatched to military bases and troops stationed in the Middle East. Greg Hewitt, CEO of DHL Express US says: “The holiday season is especially difficult for our servicemen and women overseas, who sacrifice celebrating with their friends and family to instead protect our nation’s freedom. DHL is honoured to be able to partner with local organisations to bring a little bit of the love, support and holiday cheer from home directly to our troops abroad.”

CARGOLUX Airlines International has renewed its Cargo iQ certification for three years, ensuring it complies with standards in the supply chain. IATA-interest group Cargo iQ aims to improve processes throughout the transport journey from shipper to consignee. The objective is to implement processes, backed by quality standards that are measurable and supported by data. Franco Nanna, director global logistics services at Cargolux says: “Cargolux has been committed to the Cargo iQ project since the very beginning and has been actively involved in the development and implementation of improved business processes. We are proud to have achieved

the Cargo iQ re-certification, a testament to our engagement in the establishment of a smooth and seamless logistics chain.”

Cargolux renews Cargo iQ certificate

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CEOs unveil air cargo manifesto

uropean air cargo CEOs unveiled key policies for the new EU mandate in the first-ever Airlines for Europe (A4E) Air Cargo Policy Manifesto. The manifesto outlines specific ways that EU policymakers can support air cargo carriers through efficiency, digitalisation and sustainability. It calls for harmonisation among member states when implementing EU rules on security and customs practices; more ambitious joint efforts to digitalise the entire logistics chain and increasing the use of sustainable aviation fuel. Speaking at A4E’s Air Cargo: Europe’s Bridge to the Global Economy event in Brussels on Wednesday 4 December, Peter Gerber, CEO of Lufthansa Cargo says: “To ensure air cargo’s continuous, sustainable growth over the next decades, joint efforts are needed to preserve and enhance the competitiveness of the sector for the benefit of European consumers and businesses alike. This includes the development of a regulatory framework which focuses on seamless and efficient EU trade with the rest of the world – prioritising security, customs and digitalisation initiatives.” The majority of A4E members have air cargo and mail operations, and though companies are improving efficiency, these often require high investments on the part of airlines. Thomas Reynaert, managing director of A4E says: “Given its high

Five years together

LUFTHANSA Cargo and All Nippon Airways (ANA) Cargo plan to integrate further products as their joint venture celebrates its fifth anniversary. The joint venture was launched in December 2014 on routes from Japan to Europe and later widened in the opposite direction. Customers benefit from direct access to more destinations, faster and more frequent connections and more efficiency due to shared standard processes and consistent prices and bookings. The cooperation covers standard and express shipments as well as perishables, but further products and improvements in efficiency and transparency will be added. Toshiaki Toyama, CEO of ANA Cargo says: “We, ANA Cargo and Lufthansa Cargo, are commemorating the fifth anniversary of the very first joint venture in the air cargo industry, worldwide. Taking this opportunity, we extend our sincere gratitude to Lufthansa Cargo for their supportive partnership of this joint venture’s stable growth, and we will make full commitment to further enhance our valued customers’ convenience with first priority by creating new values under this joint venture.” Peter Gerber, CEO of Lufthansa Cargo says: “We are very pleased to have launched the first air cargo joint venture of its kind together with ANA Cargo five years ago. We would like to thank our partner for the excellent cooperation and look forward to continuing to offer our joint customers many advantages in the future.”

AIRFREIGHT throughput at Singapore Changi Airport declined 10.6% to 170,000 tonnes in October. So far this year, throughput has fallen 6.9% to 1.66 million tonnes. A Turkish Cargo Airbus A330-200 Freighter, registered TC-JOV collided with an Ethiopian Airlines A350-900, registration ET-AWO while taxiing on the ground at Kinshasa N’Djili Airport in the Democratic Republic of Congo on Wednesday 27 November.

operational and infrastructure costs, commitment from EU leaders to the air cargo sector is increasingly important to streamline complex EU regulations and implement them at national level.” He adds: “Policymakers can also make a lasting contribution to carriers’ transformation efforts by enabling funding for digitalisation and innovation projects, as well as incentivising sustainable aviation fuel use. Our members look forward to contributing to the sustainable growth of the sector by working hand-in-hand with the European institutions in the coming years.”

Hola and ola from Qatar

QATAR Airways Cargo will expand South American services with new flights to Brazil, Chile, Peru and Colombia from 16 January. The flights will use Boeing 777 freighters, with twice-weekly services Bogota from Doha operating via Luxembourg and Miami, returning via Liege. Twice-weekly flights to Campinas from Doha will go via Luxembourg, returning via Santiago, Lima, Dallas and Luxembourg. The destinations will come on the heels of the arrival Qatar Airways Cargo’s 21st 777F on 25 November. His Excellency Akbar Al Baker, chief executive of Qatar Airways Group says: “Air cargo is a crucial element in the global transport system that supports international trade and the free flow of goods around the world. The addition of these four new routes in South America further reinforces our position as one of the world’s leading air cargo providers, operating one of the largest networks in the world with the youngest and most environmentally efficient fleet in the industry.” Guillaume Halleux, chief officer cargo of Qatar Airways says: “We are very excited about our expansion in South America. The Americas are a very important market for us and there is a huge demand for South American fresh produce in Asia. With the introduction of our twice-weekly Boeing 777 freighter services, we offer exporters in South America a direct route for their cargo and a global network. Importers also stand to gain from the huge capacity to bring in their cargo to South America.”

Looking east from the Midlands

OFFICIALS in Sichuan province and representatives from neighbouring Chongqing Airport are looking to launch direct cargo flights to East Midlands Airport. In October, a delegation from Leicestershire including airport managing director Karen Smart, had meetings with officials from the CPC Sichuan Provincial Committee, who own key state assets including airports and airlines. Smart also visited Chongqing Airport to meet the airport’s deputy general manager to discuss

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opportunities for new commercial relationships. Smart says: “I was really encouraged by the response we had when visiting both Sichuan Province and Chongqing Airport. There is a real appetite for making this happen and there is recognition on both sides that there would be significant mutual benefit from direct flights whether they’re to and from airports in Sichuan or Chongqing Airport. I look forward to continuing these discussions and playing a key role in ensuring we achieve this.” Trevor Pendleton, cabinet member at Leicestershire County Council says: “I am very pleased to hear how beneficial the recent visit was. This continued partnership will lay the foundations of the future work between Leicestershire and Sichuan which will further the economic growth and development of our county. We will continue to work closely with Sichuan to ensure the best outcomes for Leicestershire.” The visit builds on a strategy launched by the county and city councils designed to boost trade and investment with China unveiled in 2018 to mark 30 years of twinning arrangements between Leicestershire and Sichuan. East Midlands Airport handles 368,000 tonnes of cargo a year, £11 billion of which is to and from non-EU countries. It is hope to major logistics companies including DHL, UPS, FedEx/TNT and Royal Mail.

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THE board of directors of the Greater Toronto Airports Authority have appointed Deborah Flint as president and chief executive officer. Flint will take up her new role in April 2020 after more than four years as CEO of Los Angeles World Airports. In her role at Los Angeles World Airports, covering Los Angeles International and Van Nuys general aviation airports, Flint oversaw a $14 billion modernisation of terminals, runways, roadways and intermodal facilities. LUFTHANSA is facing a $6.4 million fine from the US Department of Transportation’s Federal Aviation Administration for allegedly conducting almost 900 flights that were not compliant with Federal aviation regulations. Lufthansa is alleged to have operated flights to and from San Diego and Philadelphia, Frankfurt and San Diego and back, and Frankfurt to Philadelphia. Foreign airlines can only conduct scheduled flights into and out of airports listed in their FAA-issued Operations Specifications, and the FAA alleges neither airport was in Lufthansa’s Operations Specifications. FLUGHAFEN Zurich has won the concession to develop and operate the new Noida International Airport in Jewar, India. Under a 40-year concession, Flughafen Zurich will build and manage the greenfield airport located 80 kilometres south of Delhi. Capital investments in the first phase are expected to amount to 650 million Swiss francs. VIVIAN Cheung was appointed executive director airport operations at Airport Authority Hong Kong on 1 December, succeeding Ng Chi-kee, who is retiring. She is a director of Hong Kong – Zhuhai Airport Management Company and vice chairman of Shanghai Hong Kong Airport Management Company. Cheung will report to Airport Authority chief executive officer, Fred Lam. AIR Serbia will operate flights to Istanbul-Belgrade three times a week in the initial phase and increase the frequency to four times a week by the end of the year. In the first months of next year, the Serbian airline plans to increase the frequency to seven times a week. With the launch of Air Serbia, 74 airlines currently operate flights from Istanbul Airport. ALBERTINE Hanin has been appointed EVP Group Legal & Insurance at GEODIS. She becomes a member of the group’s management board, directly reports to Marie-Christine Lombard, CEO of GEODIS. INNOVO Shipping & Logistics have announced that they have relocated in Yangon to a new upgraded office. in the country to better serve their customer base. WILLIS Towers Watson (WTW), a leading global advisory, broking and solutions company, has highlighted the top 20 risks faced by airports with climate risk becoming a major concern. At a recent conference held by the WTW Airport Risk Community (ARC), 86% of the audience felt that airports are either very exposed or somewhat exposed to climate risk with 48% hilighting flooding as their main weather risk.

ACW 9 DECEMBER 2019

IATA: The peak season gets off to a slow start

– the weakest annual outcome since the global financial crisis. It has been a very tough year for the air cargo industry.” Around the world, Africa was the only area to grow, the declines in Europe, Latin America and North America were moderate, but more serious in Asia Pacific and the Middle East. Africa was up 12.6% helped by strong trade and investment links with Asia. Europe was down 1.5% with better than expected economic activity in the third quarter in several large economies. North America declined 2.4% due to the strength of the US economy helping domestic services, making up for international performance being impacted by trade tensions with China. Latin America fell 2.6% as social and economic headwinds in key economies impacted performance. Asia-Pacific demand was down 5.3% with US-China and South Korea-Japan trade wars affecting the region, and disruption in Hong Kong continuing to impact activity. Middle Eastern volumes fell 6% due to operational and geopolitical challenges facing key airlines.

he peak season has got off to a weak start with demand falling 3.5% in October, the International Air Transport Association (IATA) reports. The fall in freight tonne kilometres was the 12th consecutive month of year-on-year declines, and is not a good start to the traditional peak season. Air cargo has suffered from the effects of the trade war between the US and China, the deterioration in global trade and slow economic growth. Capacity measured in available freight tonne kilometres rose by 2.2% year-on-year in October, the 18th consecutive month it outstripped demand growth. Alexandre de Juniac, director general and CEO of IATA says: “Air cargo’s peak season is off to a disappointing start, with demand down 3.5% in October. Demand is set to decline in 2019 overall

Engine pod strike for SIA 747

A Singapore Airlines Cargo Boeing 747-400 Freighter suffered a pod strike to engine number one during a missed approach at Sydney Airport.

The Australian Transport Safety Bureau (ATSB) is investigating the incident, which took place on 28 November at 20.40 local time with aircraft 9V-SFO flying from Singapore’s Changi Airport. The ATSB will interview the flight crew and other directly involved parties and obtain other relevant information including recorded data. The safety bureau adds a report will be released, and should a critical safety issue be identified during the course of the investigation, the ATSB will notify relevant stakeholders so appropriate safety action can be taken.

We are the CHAMPions THE prime minister of Luxembourg, Xavier Bettel visits CHAMP Cargosystems to mark the company’s crystal anniversary. Bettel was joined by his advisor Anouk Agnes to discuss current topics, such as cyber security risks and how to further develop digitalisation in Luxembourg. The delegates were welcomed by CEO Arnaud Lambert and shareholder representatives, Richard Forson, CEO of Cargolux Airlines International and the airline’s CFO Maxim Strauss. The IT service provider shared its knowledge with the prime minister, who offered his support for further business development abroad. The meeting also addressed the importance of collaboration between business players and the government to discover and recruit new IT talent and tackling issues in cyber security. Bettel and Lambert agreed that the ministries and business can be excellent partners in tack-

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ling mutual challenges such as the digitalisation of Luxembourg’s economy. Lambert says: “The international success of CHAMP is directly linked to its Luxembourg roots. With a highly skilled workforce, multi-cultural society, political neutrality, high-end IT infrastructure and close collaboration of the public-private realms – like Luxembourg, CHAMP has the assets for growth and prosperity.”

Cancun is open for exports

wiss WorldCargo has opened its Cancun, Mexico station for exports with flights from Zurich operated by Edelweiss. The three Zurich – Cancun flights a week use an Airbus A340-300 offering a payload in excess of 15 tonnes for inbound and outbound figures.

Skylog, a member of ECS Group will manage all commercial activity for the service while Swissport will oversee ground operations. Flights from Zurich depart in the afternoon and arrive in Cancun in the evening, while outbound flights leave Cancun in the evening and arrive in Zurich the following afternoon. Customers in Mexico benefit from late delivery times in Cancun and same-day connections to Swiss WorldCargo’s worldwide destinations via Zurich. Hendrik Falk, head of cargo for USA West, South and Latin America says: “With this new development, we will create additional export options for numerous customers shipping a wide variety of products from the Yucatan Peninsula to Switzerland, Europe and the rest of the world. Having a strong foothold in the Latin American market remains a critical focus point for us.”

North Star BT-67 crashes near Sachigo Lake A Basler BT-67 cargo aircraft operated by North Star Air was involved in an accident near Sachigo Lake, Ontario, Canada. The accident happened at 9.10 local time on Tuesday 3 December. There were no passengers

on board and the flight crew did not sustain injuries. North Star Air has activated its Emergency Response Plan and the Transportation Safety Board and Transport Canada have been notified, and will be leading the investigation.

Air Zimbabwe passes IOSA

and all IATA members must remain registered to maintain association membership. The airline has two Airbus A320s, two Boeing 737-200s, two Boeing 767-200s and two Xian MA60s in its fleet. Of these, only one 767 is operational but a 737 is being prepared to resume service.

AIR Zimbabwe, the national carrier of Zimbabwe has passed its IATA Operational Safety Audit (IOSA). The programme assesses the operational management and control systems of an airline,

time:matters moves dangerous goods TIME:MATTERS will offer urgent transport of dangerous goods covering cargo in hazard

classes 2-6 and 8- 9. The service was launched in 10 markets in September 2019, and the loading on the apron is personally supervised at the four hubs in Frankfurt, Munich, Vienna and Brussels.

Pilots give management vote of no confidence

PILOTS at ABX Air flying aircraft for Amazon and DHL casted a near unanimous vote of no confidence in management on Wednesday 4 December. Results indicate over 99.5% of voting pilots have no faith “in management’s willingness to negotiate or reach an agreement for the benefit of all stakeholders to include the shareholders, the customers, and the employees”. Voting was open to 230 member pilots from 18 November to 26 November, with 205 voting for a Resolution of No Confidence with only one pilot voting against. Pilots represented by the Airline Professionals Association Teamsters Local 1224 have been working for more than five years to negotiate and complete an amended contract. They accuse management of delaying and obstructing negotiations, and the only progress in the last two and a half years has been to agree to a single definition. The pilots say management’s negotiating strategy and its refusal to invest in its pilot employees results in poor retention, difficulty in recruiting and low morale. They add that without management changing course, it will be difficult to attract skilled and experienced pilots. Captain Rick Ziebarth, an ABX Air pilot and executive council chairman of Airline Professionals Association Teamsters Local 1224 says: “As we head into the busiest time of the year, ABX pilots should be focusing on delivering results for our customers. However, management’s current delay strategy serves to undermine what should be our common goal.”

SAS receives first A350-900

SAS has taken delivery of its first Airbus A350-900 as part of an extensive fleet modernisation for the Scandinavian carrier. The airline has eight A350-900s on order, and will also take delivery of 54 Airbus A320neos through direct purchase and lease contracts. The first A350-900 will start operating on Copenhagen – Chicago services on 28 January 2020, followed by other North American and Asian routes. The A350 XWB features the latest aerodynamic design, a carbon fibre fuselage and wings, plus Rolls Royce engines. New technologies improve operational efficiency and reduces fuel burn and emissions by 25%.

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ACW 9 DECEMBER 2019

2020: CARGO MARKET FORECAST

DRONES AND AIRPORTS CAN MIX IAG Cargo invited members of the airfreight media to an exclusive Proof of Concept (PoC) demonstration at its Madrid hub of a drone that might prove drones and airports CAN mix.

TECHNICAL questions aside, IAG Cargo is in the process of Proof of Concept testing for a drone solution to a prickly manpower and financial problem that arises out of a regulatory requirement to account for transit cargo it has in its premises. Once a week, a member of staff must manually record the barcodes of freight in its terminals to provide a so-called Bond Check. This is undertaken in all IAG Cargo warehouses across its network. Some 100 different designs in barcode information need to be scanned in the process. IAG Cargo found it was spending an average of 6,500 hours each year recording the barcodes and location data of freight across their individual warehouses. If the trial is successful, then the drones will enter service in 2020. IAG Cargo claims they may be the first use of indoor drones at any worldwide airport. Its use will be undertaken through IAG’s three main hubs in Madrid, London and Dublin.

Efficiency and accuracy Carly Morris, head of innovation, IAG Cargo, commented: “We are continuously looking for solutions to increase the efficiency and accuracy of our logistical operations. [This year] has been a busy year for innovation at IAG Cargo. There’s a lot going on. We had the final of the Hanger 51 competition, which was won by a ULD stock taking function.” She explained that the purpose of the drone was to avoid the spending of 6,500 hours a year on something that can be automated. The company is keen to point out this will not lead to job losses for warehouse staff but redeployment instead to other functions. She said: “We looked at custom-built, bespoke solutions to provide the drones. However, after trials, we found that they have an Achilles’ heel: repairs are difficult to organise and parts are very hard to find. “Instead we turned to off-the-shelf drone equipment. This means that should we require to replace any equipment, we can just go to an e-commerce site and buy a replacement.” Conducted using technology developed by drone software start-up FlytBase, the trials come after IAG Cargo decided to end the 6,500 hours each year spent recording the barcodes and location data of freight across their individual warehouses. Due to the drones’ use of the 3D space, degree of autonomy, and continuous advancement in intelligent automation software, IAG Cargo identified a viable solution to increase accuracy within the warehouse. FlytBase is an enterprise drone software company whose mis-

sion is to help businesses automate and scale drone operations. With a hardware-agnostic platform that features edge intelligence, cloud connectivity and APIs, FlytBase is positioned to leverage cost-effective drones, at scale, for indoor application. Working indoors presents some challenges. The main one is the absence of GPS signals, that means the onus is on the equipment to safety locate its position and navigate in any given location. The autonomous solution FlytWare for warehouses, DCs, cargo hubs and other inventory-heavy facilities features not only precision landing and obstacle avoidance, but also an operator-friendly dashboard which requires minimal training. With the cloud connected option built into the solution, FlytWare can potentially be used at each hub - as well as at corporate headquarters - to plan, execute, monitor, repeat and audit inventory counting missions. Two separate trials have now been successfully completed by IAG Cargo which saw the FlytBase developed technology complete tasks including: 1/ Drone autonomously navigates across multiple racks by flying over-the-top 2/ Drone accurately detects and reads AWBs and identifies empty slot locations 3/ Drone automatically returns itself to charging dock for self-charging. There will be a continuation of testing of certain elements of the

SLOW MARKET FOR AIR CARGO WE see the airfreight market next year growing at a maximum of a few percent only. This will materialise predominantly in the second part of the year, resulting in a steep increase during the traditional peak period. The higher yielding e-commerce market will continue to dominate this increase. In the first part of 2020 we expect a relatively slow market, although it will be interesting to see how global politics will influence the buying behavior of consumers. This can have a direct impact on the developments specifically in the retail and fashion segment. We do expect the automotive segment to stay at the relative low level we know it today, while we see the pharma market growing at a similar pace as 2019. On top of the continuing focus on the expansion of its leading market position in the retail and fashion vertical, Damco will further

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capitalise on its ambitious growth plans in developing business in the hi-tech, Industrial and chemical segments.”

It’s not too late to share your predictions for 2020 and the world of airfreight. Send them in by Tuesday, Dec 10 for inclusion in the last issue of 2019. Send them to james. graham@azurainternational. com

Erwin Wieringa, global head of air freight, Damco

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drone operation early next year in order to make improvements on what has already been achieved.

Potential Morris said: Watching our autonomous drone take off, navigate our warehouse, collect valuable location and barcode data, and then return itself to an origin point for self-charging is an incredible sight, and shows the huge potential drones have in the aviation and logistics sectors. “This trial is only one aspect of IAG Cargo’s continuous programme of innovation and investment which changes how logistics works, challenges the status quo and ensures our customers receive the best possible service. “We have more exciting new technology tests and trials in 2020 that will help change the way our industry approaches some ageold problems.”

2020: A BIT BLURRY

A 2020 Vision seems rather blurry at the moment. However, not much change is likely to happen in the cargo scene both for imports and exports. Growth in imports may be impeded by the government’s desire to generate more revenue to fund the national budget including debt repayment. The proposed increase in the railway development fund (RDF) is expected to have a negative impact on the import volumes if implemented. Exports are expected to be steady particularly for flowers and other fresh produce as the Kenya Shilling is expected to do well against other hard currencies. The trade wars between China and US is a source of concern although the impact is expected to be minimal if the wars remain at the policy level.” Jared Oswago – imports manager, Siginon Aviation’

2020: CARGO MARKET FORECAST

Good start to 2020 for LUG

What do you think the highs and lows of next year might be?

Effective January 15, we are happy to serve a new customer in Frankfurt: Delta Cargo. Our team and I are absolutely delighted that we have been able to win this contract. We have actually had Delta Cargo in our customer portfolio in Munich for more than five years. All this time we worked hard to win over the airline for the Frankfurt station too. Delta is expected to add over 1,000 tonnes annually to our throughput in Frankfurt. I am also counting on clients such as Korean Air Cargo with whom we have been able to renew the contract in 2019. LUG aircargo handling has served Korean for some 23 years now, handling freight for passenger and all-cargo aircraft as well as road feeder services. The airline is LUG’s longest standing customer. In close collaboration with our airline customers as well as selected forwarding-agents and shippers we are also developing additional services that will hopefully bear fruit next year or the year after. However, I don’t think 2020 is going to be an easy year.

IATA downgrades 5-year forecast on weak 2019 start NEXT year and beyond is not looking good for global airfreight. That is the claim of the International Air Transport Association (IATA) which has downgraded forecast for freight tonne kilometre (FTK) flown by 2024 to an average of 4.4% a year, down from the 4.9% average it forecast in 2018. The downgrade is due to the weak start in 2019. FTKs did not grow on average after January 2018 and then declined in Q4 and further in January. IATA anticipates growth of 2% at best this year. In addition, the macroeconomic outlook has deteriorated, with GDP (Gross Domestic Product) and world trade forecasts revised down. However, the 70-year association, which has weathered the Great Depression, the 1970s oil crisis, the dot.com crash and the 2008 financial crash, continues “to be optimistic that airfreight can outperform world trade over the forecast period, as e-commerce and other beneficial structural changes impact the trend.” Airfreight’s share of world trade is always very cyclical. Whenever there is an economic upturn, as there was in 2017, shippers turn to air to speedily restock inventories. Once inventory-sales ratios are back to a comfortable level the need for speed dimin-

ishes and there is a switch back to slower but cheaper surface modes of transport. IATA has downgraded its five-year forecast for global FTK growth in 2019 from 3.7% to 2%, reflecting cyclical weakness. Thereafter, it forecasts airfreight to outperform world trade growth, boosted by emerging structural gains. Cargo volumes stopped growing more than a year ago. That might look odd, since FTKs were on average 3.5% higher in 2018 than in 2017, but that average growth was entirely due to the high starting point at the beginning of 2018. The data adjusted for seasonal ups and downs shows that, after January 2018, there was no more growth during most of 2018 and then in the final quarter FTKs began to shrink, which continued in January this year. On top of the weak start to 2019, most forecasts for GDP growth and world trade have been downgraded. Weak cross-border trade is slowing economic growth. The assumption IATA makes in its baseline forecasts is that the growth multiplier is 1 i.e. world trade grows in line with GDP growth (PPP basis). A decade ago the typical experience was for world trade to grow twice as fast as GDP. “The world has changed since then,” said IATA, wistfully.

Do you foresee recovery or are tonnages likely to fall? The economic outlook for Germany and globally is not buoyant, and this has put the brakes on air freight growth. German exports have been in decline more or less throughout 2019 and are expected to decline further in 2020. Experts predict a growth of German GDP (Gross domestic product) of 0.5% in 2019 and 1.1% in 2020. But the estimate for the coming year might be over-ambitious. Looking at airfreight only, the IATA is not very optimistic either. What about Amazon Prime – will this be its year? E-Commerce will continue to boom. I don’t think it will peak in the next few years yet. Cross-border eCommerce, B2B, B2C, and C2C, continues to drive sales and has a positive effect on airfreight. The pharmaceutical sector is still strong. The US economy is in good condition. The Chinese and Indian economies are still growing even though at a much slower pace. The air cargo-handling sector profits from these trends. Thus, I am very confident that our long-term prospects are good. In the short term, the sluggish export growth in Germany is worrying. Will trade wars and tariffs keep you up at night? No. They will not rob me of my sleep. But we have to work harder to remain viable. Targeting both infrastructure and processes, we have to make further efforts to raise our efficiency. We are firmly committed to digitalisation. We are not only part of the FAIR@Link air cargo platform in Frankfurt, but also in Hamburg. We are looking at all new tools from AI to robots, self-drive forklifts, and sensors to track digitalised ULD. There are ever-stricter safety and security regulations by governments and industry organisations. The demand for speed, quality, transparency, and cost reduction continues to challenge the handling sector. Competition remains tough in Germany. The success of an air cargo handler depends on many factors. First the shipper has to decide whether the products are to be sent by air or sea and if by air with what airline. Secondly, we need to have a service contract with the appropriate airline so that we can profit from the shipper’s orders. There is considerable competition for these contracts among the different handlers at any airport. Finally, in our case the freight needs to be routed via Frankfurt, Munich or Hamburg. Patrik Tschirch, CEO, LUG aircargo handling GmbH, Frankfurt

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ACW 9 DECEMBER 2019

2020: CARGO MARKET FORECAST

espite softening in the air cargo market recently, US freight forwarders remain optimistic that global trade tensions will ease in 2020, creating more favourable economic conditions and increased volumes. Of course, forwarders remain concerned about the continuing gateway airport truck congestion that not only dilutes the timevalue proposition of airfreight shipping due to excessive waiting time and its related unrecoverable costs. Brandon Fried, executive director, Airforwarders Association

ith indecision over B re x i t and the trade war between USA and China - I believe like I suspect most in the business that for Q1 and Q2 growth will be sluggish or negative but e-commerce will continue to gather pace . As will activity by Amazon and Alibaba in following their own agendas and handling more and more of their transport needs themselves . However should some of the mist clear with Brexit and the trade war during the first half of 2020 then we should see some growth in Q3 and Q4. Gerry Burgin, principal Gerry Burgin Cargo Associates

A A

E E

E K K E

Steady as it goes ON the domestic side, which is where the regional air cargo carriers operate, we do not see any changes but rather business as usual. We are not seeing any decrease in demand for lift nor are we seeing our customers reducing routes. I think it is going to be steady as it goes because there aren’t many operators that have the capacity to expand. In fact, new regional aircraft won’t be coming into the system until late 2020 or 2021. So, we don’t expect any change until after 2020 and then we’ll see some growth in the system. Well, the SkyCourier which has been ordered by FedEx will be entering service in that time frame as is the ATR72-600. The ATRs will likely be more for aircraft replacement but at some point they will be available for expansion. Similarly, the SkyCourier will replace old Caravans but it will be the big one that will allow for expansion. Before those two aircraft are ready, we do not see any opportunities to expand significantly until they come on line. A lot of the issues we are seeing in air cargo pertain to international markets, tariffs and trade impacting the industry. But we have seen no loss of demand on the domestic side. So for regional cargo carriers in the US, it is steady as she goes because we are not seeing the impact

happening on the international side in our markets. For regional cargo carriers I don’t see either highs or lows. Of course, the activity always picks up in the peak season but that happens every year. I don’t see any significant impact either positively or negatively for 2020 at Empire Airlines, or for that matter, at other regional carriers. Amazon is still feeling its way in the delivery business so it is hard to tell and building out its infrastructure has required a lot of investment. I wouldn’t be surprised to see them seeking regional type feed aircraft and rumours have been flying about that for two to three years. That could be something that could potentially provide growth for the regional cargo carriers or we could see new operators. But the issues for expansion remain the same as for our current customers so I’m not sure where Amazon will get the aircraft and pilot resources to make it happen. Trade wars are always concerning but from my standpoint the worry is on its impact on my customers. For the regional cargo carriers we have seen no direct impact. Tim Komberec, Chair Regional Air Cargo Carriers Association and CEO Empire Airlines.

Reasons to be cheerful WE remain positive about 2020, despite 2019’s ‘flatness’. We have had a number of contractual renewals and also grown established contracts, despite a contracting demand. We have also spent a lot of time focusing on our digitalisation and to improve efficiency in our work flow. We have built an offshore services team in Poland and this team has taken on more activity year on year. The branch offices across the network then can focus on business development for our carriers and customers. We look forward to possible highs of the release of pent up demand from Brexit, trade deal resolutions and some growth in the global economy, essential drivers of our industry. In terms of lows if we see no movement on the above then there will be the decreased demand and yields will suffer. We do believe tonnages will grow as we do not think the stagnation will continue indefinite. We do see the Amazon Prime

ACW 9 DECEMBER 2019

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offering growing, it has developed a unique space between the Integrator and the postal authorities and we see it continuing on a cross boarder – intra European basis. Anyone in our industry needs to keep up to date with global trade developments as it drives our demand. However, it also creates opportunity by

developing solutions for our customers we can help them be more successful, win more shipments from their competition and feed the airlines we represent.

Colin White, group managing director, HAE Group

2020: CARGO MARKET FORECAST

After the feast, is famine coming? 1. These are not perhaps the best of times for airfreight, or are they? Indeed, 2019 is not the best of times – for some in the industry this is not an easy period. And that is set to continue at least for the beginning of 2020. After many years of good growth, it is not surprising to have a period with less or no growth. It shows once again the volatility of our business. But as it is volatile, we also know this can change quickly. 2. What do you think the highs and lows of next year might be? To my mind, the protectionist reflex currently being seen all over the world is a longer-term concern. One of TIACA’s roles is to facilitate collaboration and multilateralism between air cargo stakeholders. Indeed, the past has taught us that international trade benefits from bilateral agreements, open doors and collaboration. Also, I do feel that digitalisation will be at the forefront in 2020, and that its implementation, started a few years ago, will be fully effective. 2020 could be an important year in which our industry can take a big step forward. Lastly, I’m confident that collective awareness about Sustainability in the broad sense (part of our 3+2 vision) will arise across the whole industry in 2020. 3. Do you foresee recovery or are tonnages likely to fall? Forecasting activity in 2020 is not an easy exercise, as there are some uncertainties (Brexit, trade wars and oil prices, to name just a few), plus there is the volatility of our business. But according to economists, 2020 should provide a more

favourable business backdrop for the air transport industry overall than 2019 has delivered (especially taking into account the IMF expectations that economic activity will lift in 2020). We can expect that the current trend will continue in Q1 and perhaps Q2 of 2020, but we should see an improvement after. 4. What about Amazon Prime – will this be its year? I’m not sure if 2020 will be the year for them or if they will surprise us even more in the near future… In any case, they are challenging the “traditional” industry and traditional ways of doing business by making other air cargo players undergo transformation. 5. Will trade wars and tariffs keep you up at night? They certainly are a big deal, and they’re definitely at the top of any executive’s list these days. Individually, we can’t do anything about these matters, but TIACA has a role to play. Indeed, one of its main missions is air cargo advocacy, especially by lobbying governments and regulators, helping to shape policies with the aim of providing a unifying voice for the industry, working for global standards, and raising the profile of air cargo. This is why it is really important we continue to strengthen our partnerships with organisations as IATA, the WCO and the ICAO. Steven Polmans, chairman of TIACA

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Will cargo flatine in 2020?

INDEED, it is a difficult period but it’s hard to settle on the underlying reasons. It’s probably a combination of several factors, such as political and economic issues at the global level (trade wars, Brexit, customs tariffs, etc.). The industry as a whole might also have its share of responsibility: we need to be more proactive when it comes to addressing the air cargo industry’s delay in terms of digitalisation, for instance. 2020 could be flat in the worst case, but won’t deteriorate further. The economic context is pushing everyone to find savings. Amazon Prime has expanded its air cargo fleet by leasing many more aircraft in 2019 and will continue doing so in 2020. Their aim is to have a better control of their own deliveries but facing the same constraints as all other players (first and last miles delivery as usual). Overall the expectations to accelerate deliveries is a good trend for development for the airfreight industry so that to hopefully create more demands too.

Adrien Thominet, CEO of ECS Group

ACW 9 DECEMBER 2019

KOREA

The barometer is negative Global slowdown hits

he outlook is not good for South Korea, with negative growth on the horizon, according to the DHL Global Trade Barometer. The index hit 43, a decrease of two points compared to the last update in September with contracting air trade weighing on overall results. Air trade declined one point to 39, and ocean trade was down three points to 45. Air trade has been strongly affected by the deceleration in exports across all industries, notably land vehicles and parts. Air imports are predicted to contract largely caused by the downturn of machinery parts, high technology and consumer fashion goods offsetting a positive outlook for temperature-controlled goods.

The price is right at Korean Air IBS Software’s iCargo platform has overhauled Korean Air Cargo’s pricing model to improve yields and boost profitability. The solution provides intelligent, intuitive analysis and algorithms, integrated to the sales and booking system to deliver insights into commercial operations. This allows Korean Air to determine the selling price of capacity and ensure maximum profitability per shipment carried. The revenue management was an extension of IBS’s iCargo cloud platform, and working in close collaboration, IBS incorporated its full data analytics and machine learning capabilities. As part of the rollout, IBS rolled out the Sales App mobility module, designed to support sales and marketing teams with maximum conversion of opportunities by providing real-time access to customer profiles, analytics and capacity predictions. Noh Sam Sug, head of cargo and senior vice president of Korean Air Cargo says: “I am very pleased to announce the successful go-live of IBS’ iCargo Revenue Management solution at Korean Air Cargo. I also take this opportunity to

ACW 9 DECEMBER 2019

thank the teams from IBS and Korean Air who worked together to develop the integrated revenue management solution that will help Korean Air to better match the cargo supply and demand while improving profitability.” Ashok Rajan, senior vice president and head of airline cargo services at IBS Software says: “The addition of revenue management to the iCargo platform is an exciting new development in our mission to support airlines all over the world generate maximum value from their operations and gain a competitive edge. We are proud to be associated with an industry stalwart like Korean Air in this journey.”

Asia hard

GLOBAL airfreight volumes continue to fall, and Asia Pacific has been hit very hard, according to the International Air Transport Association (IATA). Freight tonne kilometres around the world are down 4.5% in September, and one of the reasons for the continuing weakness is the trade war between South Korea and Japan. Other factors are the US-China trade war, the deterioration in global trade and weakness in some of the key economic drivers. Asia Pacific represents 35.4% of global cargo volumes, but freight tonne kilometres were down 4.9%, with the US-China and South Korea-Japan trade wars along with the slowdown in the Chinese economy impacting the region. IATA says with the size of Asia-Pacific, the performance is a major contribution to general weakness for global air cargo. Capacity in available freight tonne kilometres are were up 2.7%, pushing down load factors by 4.3 percentage points to 53.9%.

Moderate economic growth expected

ECONOMIC growth in South Korea is projected to rise at a moderate pace, according to the Economic Outlook November 2019 published by the Bank of Korea. The economy is expected to grow at a moderate pace of between 2.3 and 2.4% in the next two years, up from the 2% this year. The bank says the fiscal stance is expected to remain expansionary, with consumer spending likely to pick up gradually as consumer sentiment improves and government transfer payments

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increase. Facilities investments are forecast to rebound, driven by semiconductor and display equipment. Exports are forecast to rebound due to a moderate recovery of global trade. Private consumption is expected to gradually recover late in 2020 due to improving consumer sentiment as long as domestic and global uncertainties do not increase significantly. Facilities investment has been sluggish due to the delayed recovery of the semiconductor industry, but is forecast to rebound next year. IT investment is expected to improve based on a recovery of the global semiconductor market and an expansion of 5G implementation. The growth of goods exports is forecast to rebound, with IT products shifting to an increase driven by a recovery of the semiconductor industry, while exports of non-IT products are expected to decline slightly due to the ongoing drop in unit prices of petrochemical products.

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