Payload Asia | December - January 2022

THE TRADE MAGAZINE FOR THE ASIA-PACIFIC AND MIDDLE EAST REGION VOL 38, NO. 1 DEC/JAN 2022

E-commerce

pushes cargo players to go extra mile

MCI (P) 002/07/2016 ISSN 2010-4227

Subscribe to the leading source of high-quality coverage on the latest information and news on the global air cargo sector, with a focus on Asia-Pacific and India-Middle East air cargo markets.

www.payloadasia.com Connect with us on our social media channels: @payloadasia

For inquiries and more information email us at: editor-pla@harvest-info.com

@payloadasia

Payload Asia

EDITOR’S NOTE

EDITORIAL/PUBLISHER

Dear reader, Welcome to a brand new year. Whilst December did not produce the ‘peak of peaks’ as most experts and analysts have expected, air cargo and logistics players nonetheless are looking at 2022 as a restart to a brand new season.

For shippers, suppliers and manufacturers, better visibility or ‘predictability’ and more control in their supply chains has become an important consideration in choosing their logistics providers. In some way, this change in customer expectations has accelerated the need for digitisation amongst stakeholders, and software and data science experts have started to notice the opportunities.

In this issue, we talk to Wiremind’s chief commercial officer to talk about the company’s recent move to double down on air cargo. Turn to page 10 to read our C-suite interview.

We also get an in-depth look into how e-commerce is driving innovation and expansion amongst leading players in Asia Pacific, and why small businesses have a huge part to play to grow the business. In our cover story, we get a chance to catch up with Teleport and UPS, who are both upping up the ante when it comes to servicing customers in the e-commerce space.

Also included in this issue is a special feature on regional airlines from the perspective of both a pure cargo player and a combination carrier. Skip to page 14 to learn more about how Thai Vietjet and Raya Airways are navigating the current business landscape.

Of course, this bimonthly issue won’t be complete without the latest industry roundup on our favourite newsmakers, as well as insights and a country report from our hardworking forwarders. We hope you enjoy reading the pages and catch us again in our next issue!

Raymond Wong Publishing Director raymond@harvest-info.com Giullian Navarra PLA Editor editor-pla@harvest-info.com

OPERATIONS Mari Vergara Head of Operations mari@asiantvawards.com

MARKETING Franco Rafael Marketing Manager mktg@harvest-info.com

SALES Simon Lee Hong Kong, Europe and Middle East sales@harvest-info.com Chua Chew Huat Asia Pacific sales-sg@harvest-info.com Matt Weidner North America mtw@weidcom.com

TECHNICAL SUPPORT

Giullian Navarra

Michael Magsalin tech@harvest-info.com

Chief Editor

Harvest Information Pte. Ltd. 1100 Lower Delta Road #02-05-8, EPL Building Singapore 169206

Pte. Ltd. 1100 Lower Delta Road #02-05-8, EPL Building

SEPTEMBER 2021 |

www.payloadasia.com

1

CONTENT PAGE

10

C-SUITE: Meet Wiremind’s commercial chief

18

COUNTRY REPORT: Sri Lanka

NEWS aircraft inspection

05 Brussels, Abu Dhabi launch pharma air corridor

06 UPS innovation centre makes debut in Singapore

07 Japan-based drone investor bets on Wingcopter

08 CEVA Logistics doubles its

bet on e-commerce with new merger

09 Maersk boosts fulfilment service with LF Logistics takeover

JANUARY 2022 |

SPECIAL FEATURE: An air cargo tale of two carriers

C-SUITE

04 Korean Air tests drones for

2

14

10 Wiremind doubles down on air cargo with software and data science expertise

COVER STORY 12 e-Commerce boom drives air cargo, logistics players to up their game

SPECIAL FEATURE 14 An ‘air cargo tale’ of two regional carriers

www.payloadasia.com

INSIGHTS 16 Kuehne+Nagel shares outlook on Asia Pacific, logistics and sustainability

COUNTRY REPORT 18 Sri Lankan forwarders group

chairman gives rundown of the market

WELCOME TO MIAMI

B O O K N O W A N D S AV E !

Early Bird until 30 November 2021

November 08–10, 2022 Miami, Florida, USA

A M E R I CAS

www.aircargoforum.org www.tl-americas.org

supply chain forum

JANUARY 2022 |

www.payloadasia.com

3

NEWS - CARRIERS Air Belgium eyes B747-8 cargo operations Air Belgium plans to start B747-8 freighter flights next year, as the charter airline is looking to hire captains and first officers with at least 2,000 flight hours, with a type rating on the Boeing 747, 777, 787, or 737NG. Air Belgium has two fresh A330900s and two A340-300 aircraft in its fleet. It also operates four dedicated A330Fs for shipping giant CMA CGM. With Boeing set to shut the production line of the widebody jet, analysts say the charter airline will be looking for secondhand jets with only a handful operators left that are flying the Queen.

Korean Air tests drones for aircraft inspection

allows the drones to take photos continuous trials before officially of pre-planned areas. Korean Air launching the inspection drones shares the inspection data through next year. the cloud and has also applied a collision avoidance system and geo-fencing to maintain safety Korean Air held a demo on 16 distances from surrounding facilities December to showcase its latest and prevent breakaways from the aircraft inspection technology using mission area. multiple drones, which is expected to shorten the inspection time and The airline has revised regulations to improve drone maintenance improve workplace safety. procedures and will work to improve This new technology uses four safety and convenience for workers, drones to inspect aircraft fuselage stabilize operations and increase with an operations programme that accuracy of inspections through

SIA to replace widebody freighters with A350F order Singapore Airlines has signed a letter of intent with Airbus for seven A350Fs, with options to order five more. The freighter, with a 109-tonne payload capability, can carry similar cargo volume as that of its nearest competitor. It also burns up to 40 percent less fuel on similar missions.

Deliveries are scheduled to begin in the fourth quarter of 2025, which will see the gradual replacement of the airline’s existing cargo fleet of seven B747-400Fs. The arrival of the A350Fs is expected to reinforce the airline’s position in the air cargo sector and support its commitment to net zero carbon emissions by 2050 with a young fleet of modern aircraft.

4

JANUARY 2022 |

www.payloadasia.com

NEWS - AIRPORTS MNG Airlines boosts presence at Cologne/Bonn airport Istanbul-based carrier MNG Airlines was welcomed at its European air hub at Cologne Bonn Airport (CGN) as it launched a new regular CGNJFK service with its newly converted A330-300 P2F, which was modified

by Elbe Flugzeugweke.

tonnes per flight, now brings the total of MNG’s growing freighter fleet to 9 units.

MNG Airlines will operate the air freight service between CGN-JFKCGN three times a week, which will coincide with its 6 weekly regular The addition of the widebody roundtrip flights between Istanbul freighter, which can carry up to 63 and CGN.

WFS investment at Copenhagen Airport to support air freight growth Worldwide Flight Services has signed a contract for a third cargo terminal at Copenhagen Airport (CPH) covering 3,700 square metres, which is scheduled to open in Q4 next year.

well as cargo handling services for another 127 offline carriers.

Over the last year, WFS has renewed airline contracts at Copenhagen Airport with Qatar Airways and Sichuan Airlines. It now handles WFS is considered the largest handler 100,000 tonnes of cargo annually in the city, providing inbound and across its facilities, whilst providing outbound services for 31 airlines as airside cargo handling services.

Brussels, Abu Dhabi launch pharma air corridor

consortium to Brussels Airport to by flag carrier Etihad Airways and showcase its collective capabilities. leading forwarders and ground The consortium is represented handling agents.

A collaboration led by the Hope Consortium, Abu Dhabi Airports Company (ADAC), Brussels Airport Company and Pharma.Aero will see the formation of a pharma air corridor between Abu Dhabi and Belgium.

The development of the dedicated air corridor will leverage the latest technologies, including API and IoT devices and webforms shared with all relevant stakeholders, to monitor pharma shipments with a keen eye.

The move follows an earlier visit by Abu Dhabi’s vaccine distribution

JANUARY 2022 |

www.payloadasia.com

5

NEWS - EXPRESS Air Charter Service logs record quarter revenue for air cargo

London-based Air Charter Service has recorded its busiest quarter for its cargo division with 1,445 cargo charters in the period from August to October.

Combining all of its other divisions, ACS logged its highest ever revenue in one quarter, amounting to a total of US$430 million (£321.1 million).

Dan Morgan-Evans, Group Cargo Director at ACS, said his division had one charter departing every 90 minutes over the course of each month during this period.

The group also saw some of the highest charter prices it has ever experienced—paying US$2 million to charter Boeing B777 for a trans-Pacific flight, a flight that would normally cost less than US$750,000.

UPS innovation centre makes debut in Singapore UPS Supply Chain Solutions (SCS) has officially opened the company’s first ever innovation centre in Singapore, which will serve as a testbed for new technologies to manage efficiency gaps in supply chains, including autonomous mobile robots, RFID, and drones.

The facility features specialized zones, including a mock-up of a warehouse for real-time demo, as well as dedicated areas in a

real warehouse for hands-on pilot collaborations with customers.

The logistics integrator said it is already testing new innovations with industry partner Geek+, a Chinese tech company that developed the tote-picking robot RoboShuttle® RS-5 that UPS has already deployed in Singapore. It plans to expand the innovation centre concept to other parts of the world.

Cainiao to kickstart chartered flights from Kuala Lumpur hub Cainiao Network has announced plans to launch a series of chartered flights from Malaysia to provide intraAsia capacity and enhance air freight connectivity in the region.

6

JANUARY 2022 |

www.payloadasia.com

The first chartered flight will run weekly from Kuala Lumpur (KUL) to Shenzhen (SZX) via the newly launched Cainiao Aeropolis eWTP Hub. The Kuala Lumpur-Shenzhen air freight charter service will operate thrice a week, with a 13-tonne capacity to deliver Malaysian exports within four hours, including local produce and electronic products. The Alibaba logistics unit said it will launch more direct flights connecting major cities, including Hangzhou, Sydney, Singapore, and Jakarta.

NEWS - LOGISTICS Singapore to host air cargo, logistics events in 2023 The Singapore Tourism Board and MMI Asia have signed a memorandum of understanding in November to jointly organise the Southeast Asia editions of well-attended industry event transport logistic and air cargo.

Sands on 13 to 15 September 2023, will feature a high-level conference to tackle specific subjects and issues facing the logistics ecosystem under a central theme of “Integrated Logistics for a Disrupted World.”

transport logistic and air cargo Southeast Asia are the latest in a series of trade shows in other parts of the globe, including India, China, Turkey, the US and the parent logistics show in Munich.

Changi Airport Group, SATS Ltd and DHL The event, which is scheduled to Express, have all expressed their support take place at Singapore’s Marina Bay to the future event.

Japan-based drone investor bets on Wingcopter German drone developer Wingcopter has received an investment from Japan-based venture capital company Drone Fund, which specializes in startups related to drones and air mobility.

The investment, made out of a US$90 million third fund, comes in the run-up of Wingcopter’s Series B investment round. This would

be the VC’s first investment in drone technology and in a German company.

Last year, Wingcopter signed a partnership agreement with Japan’s ANA to establish a drone delivery network in rural areas across the country, with extensive trials already taking place in the past months.

Geodis partners with Unilode for ULD solutions Geodis has entered into a five-year deal with unit load device supplier Unilode Aviation Solutions who will provide the full range of ULD management solutions, which includes procurement, planning, logistics, repair and digitalisation.

Unilode will rely on its network of repair centres to cover air cargo container requirements for Geodis across its operations in The Netherlands, the UK, the US, and Hong Kong.

The forwarder recently leased its own A330-300 converted freighter, complete with its own livery, to overcome the capacity shortages.

The air freight charter flies to AMS, ORD, STN and HKG.

JANUARY 2022 |

www.payloadasia.com

7

NEWS - FREIGHT FORWARDERS DB Schenker extends charter contract with Atlas Air

Schenker’s global network. The new arrangement extends the dedicated capacity secured in 2020, which Atlas operates on multiple flights each week.

“The timely and reliable operation of Atlas Air fits perfectly into our commitment to provide our customers a reliable service for air transportation in their supply chain,” said Björn Eckbauer, senior vice president, global operations Atlas Air will provide charter capacity and procurement airfreight at DB for transpacific shipments on DB Schenker.

Atlas Air last week announced the extension of its partnership with Schenker Flight Services GmbH (DB Schenker) to provide transpacific service for the German freight forwarder

CEVA Logistics doubles its bet on e-commerce with new merger CMA CGM is strengthening its supply chain capabilities in contract logistics and e-commerce with the planned acquisition of ‘most’ of US-based Ingram Micro’s contract logistics business (CLS), including order fulfillment platform Shipwire.

of contract logistics services, with the CLS business complementing its existing ecommerce capabilities and accelerating further growth in key market segments, including technology, retail and fashion.

The combined workforce of the The transaction, valued at US$3 billion, two companies will constitute is expected to propel CEVA Logistics approximately 90,000 people across to fourth largest global provider nearly 1,100 sites in 160 countries.

Bolloré receives best bid for African logistics unit from major shipping line MSC Group French transport and logistics firm Bolloré Group has received an offer for 100 percent of its African logistics unit from major container shipping line Mediterranean Shipping Company (MSC Group).

The deal, estimated at €5.7 billion or US$6.4 billion, includes all of the forwarder’s transport and logistics activities in Africa. Aside from ocean, road, and air freight, warehousing and terminal operations, Bolloré Africa Logistics manages the entire administrative and customs The group will continue to develop telecoms and publishing, which procedures for its customers in 47 its activities in other sectors like include pay-TV operators Canal+ and countries on the continent. communication, entertainment, MultiChoice.

8

JANUARY 2022 |

www.payloadasia.com

NEWS - E-COMMERCE Qantas A330s to undergo freighter conversion for ecommerce Qantas will convert two of its Airbus A330-200 passenger aircraft into freighters which are expected to start conversion next year and operational by 2023.

One of the converted widebody freighters will be used in Qantas Freight’s international network, whilst the other will be a new addition to the dedicated fleet that

serves Australia Post’s domestic parcel and mail business.

The converted A330 aircraft with payload capacity of 50 tonnes each flight will be converted by EFW, a joint venture between Airbus and ST Engineering.

Conversion work will include removing seats, replacing the existing cabin door with a larger door and the installation of a cargo handling system.

Maersk boosts fulfilment service with LF Logistics takeover Leading shipping line Mærsk A/S has reached an agreement to acquire 100 percent of the shares in the contract logistics business of Hong Kong-based LF Logistics in an allcash deal valued at US$3.6 billion.

provides omnichannel fulfilment services for the fashion, retail and FCMG industry.

The company has an extensive network of 223 warehouses covering 2.7 million sqm across 14 countries LF Logistics, owned by fashion in Asia Pacific. Its contract logistics and retail enterprise Li & Fung and unit reported revenue of around Singapore’s Temasek Holdings, is US$850 million last year.

JD.com signs with top Chilean cherry exporters JD Fresh signed agreements at the Embassy of Chile in Beijing on 6 December with exporters Garces Fruit, Copefrut, Nature South, and Fruittita Co., for direct sourcing of Chilean cherries.

The e-commerce giant explained that one important reason to choose exporters for direct sourcing is their capability and willingness to work with the company to elevate standards in the industry.

Nearly 95 percent of Chilean cherries for export are sold to China. As of end-November, the Chinese company has seen its transaction volume of the sweet fruit soar 200 percent compared to the same period last year. It logged cherry sales of around 500 million yuan in 2020.

JANUARY 2022 |

www.payloadasia.com

9

C-SUITE

Nathanaël De Tarade, Chief Commercial Officer, Wiremind

Wiremind doubles down on air cargo with software and data science expertise Whilst

the

world’s

transport

modes

tried

to

navigate bottlenecks to manage supply chains, software experts and data scientists have been working remotely to speed up the digitalisation and automation of the air cargo and logistics industry.

Software and optimization company Wiremind recently has doubled down on its air cargo division and is actively hiring. The company’s data scientists and software experts are working with the likes of Emirates, Qantas, United and Atlas Air to speed up the movement of air cargo on and off the ground.

10

JANUARY 2022 |

www.payloadasia.com

Its flagship software Skypallet digitalizes the space calculation for each booking or quotation, which is essential for pricing, standardizing, and improving customer feedback.

In an interview, Payload Asia talked to Nathanaël De Tarade, chief commercial officer at Wiremind, as he discussed what the company is doing to help air cargo and transport stakeholders move towards digitalisation and optimize their revenue at a time of tight capacity.

Can you give us a rundown of Wiremind? Where are you based and which industries do you serve?

Wiremind is a software and optimization company

C-SUITE based in Paris, France. We mainly serve the industry of transportation for both freight and passenger. We are over 50 people, and we offer a range of solutions to help airlines, railway and bus companies to optimize their revenues and capacity; we count air cargo industry leaders among our customers, such as Emirates SkyCargo, Qantas, United Airlines and Atlas Air. What led to the decision to launch a dedicated air cargo team?

We have a clear strategy: increase our product offer and become a major player as a solution provider in the Air Cargo industry. We have grown the team and are already working on these new products - our intent is to offer Software & Data Science expertise in several strategic areas, like pricing.

Does this require training for first time users?

How long does learning the software take?

As a matter of fact, we are launching a new training platform on our software in Q1 2022. This will make the life of our users easier, with most questions they tend to have being answered directly inside the app. In any case, the learning curve is quite fast, as we try to make systems that are as userfriendly as possible. We apply best practices in the field of UX, which has proven to deliver value, particularly in terms of user adoption.

Is the Skypallet software already available in the market? Can you share who you are talking with on proof of concepts? From which markets or regions?

Not only is it available, it has been in production for almost 4 years. We have improved the solution year after year, and grown our customer base.

There are two main added values to consider with SkyPallet: the first one is what we call the ‘Volume Calculator’, which helps to optimize revenues through enabling volume-based pricing decisions. That means a quotation should not merely look at weight and water volume in order to quantify the space that will be sold to the customer, but also at operational volume.

The second one is the ULD & Flight optimization: based on real data, our studies have found that we can lead to an improvement of several percent in capacity optimization, which ultimately means substantial incremental revenue.

In terms of markets, we are addressing all regions : we are currently doing demos with several prospects from all continents.

Similar service providers I can think of are already offering automated cargo handling with robotics on ground as an end-to-end solution. For Wiremind, is this something you are looking to do as well?

What would be your idea of an end-to-end solution?

We do offer an end-to-end solution, through our partnership with GPCSL, a company based in the UK that we believe offers the best solution in the market in terms of dimension capture. The solution integrates with SkyPallet to offer a seamless experience, and we definitely believe that blending the best expertise of both worlds (3D capture on the one hand and Optimization algorithms on the other) is the right strategic approach.

In terms of robotics on ground, I believe that there is a lot to do, and I know that GPC also offers solutions in that field, but at the moment we are focusing on the end-toend optimization: ‘from quotation to booking to build-up.’

How has the pandemic changed your operations, culture and vision? For a tech company such as Wiremind, what are the open jobs and what type of people, partner or client are you looking for?

In the tech space, if you are not attractive to candidates as a company, you will not succeed. You can have a good product, but in the long run your growth and stability will also largely depend on what team you have to run, maintain and improve that product. The pandemic has not really changed our culture, which I see as a good sign. Of course, like everybody else, we have adjusted our organization to be remote-friendly, but this was already the case before, so we can’t say it has been a huge disruption of our values or habits.

In terms of open jobs, we are always looking for high-level software engineers and data scientists, with a passion for solving complex problems in an international context.

JANUARY 2022 |

www.payloadasia.com

11

COVER STORY

e-Commerce boom drives air cargo, logistics players to up their game Across industries, e-commerce has emerged as one of the key drivers for air cargo and logistics, and managing peak season demand has become an important conversation, particularly in Asia Pacific where most of the production is based.

Regional carrier AirAsia, through its forwarding and logistics unit Teleport, said it plans to play a key part in the e-commerce supply chain as well. Adrian Loretz, chief operating officer at Teleport said the company intends to evolve from being a pure air freight player Over the last year we’ve seen to a real multimodal operator. airlines and logistics players, and even big shipping lines, make the “e-commerce is a rapidly growing necessary investments to tap this revenue stream for Teleport, both as ever-growing market, whether it’s a cargo carrier for the larger players buying more aircraft or acquiring as well as the delivery product which fulfillment and distribution centres. we offer in our own right. We are focusing a large part of our resources e-commerce the driver on playing a key part in that supply In December, UPS extended its chain and expect that this segment orderbook with Boeing with new will continue to significantly grow orders for 19 factory-fresh B767 over the coming years, Loretz added. freighters. The company said the aircraft, scheduled to be delivered To add more air capacity for as early as 2023, will give it a shipments in the region, the AirAsia flexible platform to serve long- unit introduced its own branded haul, regional and feeder markets. 737-800 freighter in November.

12

JANUARY 2022 |

www.payloadasia.com

These enhancements also lowers cost for logistics providers who can better consolidate shipment volume at selected hubs, and reduce the frequency of ‘send-agains’ due to missed deliveries.

The freighter, operated by local Thai carrier K-Mile Asia, will be based in Bangkok to serve key markets, including Hong Kong, Shanghai, Chennai and Mumbai.

Big business in SMEs In Singapore, UPS Supply Chain Solutions launched its first global innovation centre to serve as a testbed for new technologies that can

COVER STORY help ease and narrow the efficiency gaps in supply chains, particularly for small businesses that rely on e-commerce and transact online.

“Besides serving some of our large enterprise customers, SMBs are a key focus for us. “UPS’s role is to create supply chain solutions for SMBs so they don’t get left behind.

We do this by leveraging advanced technology to help small businesses thrive in today’s increasingly complex supply chain environment,” noted Sebastian Chan, president of UPS SCS. These small businesses represent at least 97 percent of all businesses and contribute to more than half of Asia’s economy, according to Chan.

Teleport’s Loretz believes logistics services providers have a ‘great business opportunity’ at hand in the SME market as an underserved sector.

“During the pandemic, SMEs had to make fast changes and the function of logistics became all the more important, moving towards the centre of SMEs’ relationships with suppliers and customers.

“Unfortunately, SMEs often don’t have the infrastructure to create and maintain the logistics of delivery efficiently, cost effectively and on time—and some make the mistake of trying to do it themselves,” Loretz added.

User and last-mile experience At the UPS Innovation centre, Chan said his team is collaborating with

customers and leading technology partners to converge innovations to future-proof customers’ supply chains, including autonomous mobile robots, radio-frequency identification, and drones.

SMEs often don’t have the infrastructure to create and maintain the logistics of delivery efficiently, cost effectively and on time—and some make the In particular, he noted that businesses in Asia are increasing investments in mistake of trying to do it warehouse automation technologies themselves.

to enhance productivity and competitiveness. Companies are team and every party is in constant also investing in digitalisation and communication to ensure parcels customer experience, particularly are delivered safely and on time.” in the last mile and returns.

More to come “When it comes to express package With capacity still quite below as deliveries, the last-mile experience that seen before the pandemic, has seen rapid change in recent Teleport is relying on AirAsia’s years, from wider availability of network in Asia with a total of 252 lockers for end consumer pick-up and jets under its belt. The company has drop-off, to near real-time tracking dedicated eight passenger aircraft visibility, and greater flexibility for for cargo-only flights, including people to choose where and when the use of passenger cabins. Aside they wish to receive their shipments. from the new freighter with K-Mile, it also modified an A320 by having “All these enhancements result in the seats removed for increased greater convenience not just for capacity. It plans to increase its the end consumer, but also lowers current freighter fleet to six. cost for logistics providers who can better consolidate shipment volume “We expect that this demand at selected hubs, and reduce the overhang and the resulting higher frequency of ‘send-agains’ due to yields will continue to be in place for missed deliveries,” Chan noted. a few years to come, and Teleport is filling the gap left from missing Teleport’s Loretz believes the last passenger operation with dedicated mile is the ‘trickiest’ but also the cargo capacity, both from passenger most important part of the delivery aircraft as well as dedicated process. “At Teleport, we assign freighters which will go live in specific teams to communicate with Malaysia in 2022,” Loretz noted. our vendors, our riders and manage the in and out operations of the For UPS, Chan thinks Singapore deliveries. This is to ensure that every will continue to play an important role as a regional and international cargo hub, and he has high hopes that the innovation centre will be a platform for more companies to innovate, collaborate and embrace digital transformation.

“Digitalization is key to success in modern-day logistics. Our freight forwarding and contract logistics customers want to go beyond basic visibility of their global supply chain. The supply chain challenges we’re witnessing today solidifies the need for businesses to have access to advanced data analytics that allow them to forecast and plan ahead for greater supply chain predictability,” Chan explained.

JANUARY 2022 |

www.payloadasia.com

13

SPECIAL FEATURE

An ‘air cargo tale’ of two regional carriers 2021 looked like a repeat of 2020 with new variants, transport curbs and supply chain disruptions settling in with the new norm. For aviation, air cargo continued to run the show, with passenger demand still taking a back seat on the road to recovery.

”Air cargo demand is not just recovering from the COVID-19 crisis, but it is growing,” commercial chief MD Hidayat Rahim told Payload Asia. “It is crucial for us as a B2B key enabler to establish other connectivity options to cope with this growing demand.”

As combination carriers found creative ways to add cargo capacity and enjoy the elevated yields, pure cargo operators like Raya Airways saw the situation as a ‘big opportunity’.

In Thailand, another airline has responded to the crisis and pivoted to cargo similar to its parent company Vietjet. Thai Vietjet topped other registered airlines in Thailand, with a dominant share of domestic 2021 highlights The Malaysian cargo airline has been air freight at 42.2 percent in the third operating weekly flights for DHL quarter of 2021. since February 2021 to transport Combination carrier woes Covid-19 vaccines to Kuching, Despite dominating the air freight Sarawak and Kota Kinabalu. In June market in Q3 of last year, Thai Vietjet of the same year, it started offering admits a few challenges in running freighter services to the southern cargo operations as a combination Chinese city of Nanning in Guangxi, carrier with a fleet that consists China, becoming the first Malaysian mainly of younger Airbus A320 and cargo airline to do so.

A321 totalling 16 aircraft.

14

JANUARY 2022 |

www.payloadasia.com

One of the biggest challenges for the airline in terms of cargo operations is not having a freighter fleet to provide more capacity for each flight upon market demand.

Pinyot Pibulsonggram, commercial director at Thai Vietjet said one of the biggest challenges for the airline in terms of cargo operations is not having a freighter fleet to provide more capacity for each flight upon market demand.

To overcome this, the airline had to fully maximize and optimize current capacity with efficient cargo handling, arranging cargo in passenger cabins following authorities, and having favourable commercial policies to support partners for different routes.

SPECIAL FEATURE “Before Covid, the airline extended its flight network to many destinations in the region, with good preparation and handling of operational tasks, as well as extensive partnership, enabling the airline to smoothly convert part of capacity into and operate air cargo services since the pandemic,” Pibulsonggram explained.

Cargo airlines play Over at Subang airport in Malaysia, Raya Airways runs its own cargo complex, which includes its head office, a cargo centre and 24-hour customs facilities.

expanding its network to destinations within the Asean, Asia Pacific, and Oceania regions. It also plans to expand its product range in shipping live seafood and fresh vegetables, as well as odd-sized cargo, such as aircraft engines and motor vehicles, with an expertise on dangerous goods’ uplift.

to operate services connecting Hanoi, Ho Chi Minh City and Nha Trang with Moscow, a plan that the carrier describes will help realise its expansion into Europe.

“Thailand’s domestic air cargo market is not very big, so Thai Vietjet focuses more on the international market,” said Pibulsonggram. “With good land transport infrastructure, it’s not easy for air transportation to penetrate the market at the moment. So diversifying products, adding more value to current services would help the airline gain more share on cargo.”

“Raya Airways is looking to establish multiple centralized hubs for the growing e-commerce transactions outbound from China, namely, Shenzhen and Macau, just to name a few,” noted Rahim. “The key is to establish a resilient network With three Boeing 767-200F and expansion plan to ensure unified Meanwhile, Rahim admits that he one 737-400F aircraft, the cargo connectivity to serve growing does not have an exact indication of when the airline will stop transporting airline operates scheduled services demands.” the Covid-19 vaccine with the into regional hubs like Indonesia, country’s immunisation programme Singapore, Vietnam and Hong Kong. Looking ahead The airline has also been instrumental Whilst bigger airlines are trying set to complete by February 2022. in moving Covid-19 vaccines to East every ounce of effort to stay afloat, Malaysia together with DHL Express. Thai Vietjet is confident that it will The commercial chief noted that the continue to gain more market share plan is to continue growing as a key Rahim pointed out that with the in Thailand and abroad with its parent enabler in the business-to-business shift in consumer behaviour and company Vietjet leading the way. The space but well aware of and prepared the growth in e-commerce, the Vietnamese carrier has received its for the risks and opportunities company’s primary focus is on first widebody A330-300 and plans that comes with it, including new technology, new market entrants, new customer expectations, and new business models.

Whilst Raya does not share the same backdrop as Thai Vietjet as a pure cargo airline, what they do share is the current reality that has put the spotlight on air cargo. In 2020, air cargo made up over a third (36 percent) of the airline revenues, up from 10 to 15 percent in previous years, according to IATA. Cross-border e-commerce, a main factor for the sector’s growth in the last few years, is expected to outgrow the domestic market with a predicted 20 percent share of air cargo trade volumes by 2022, according to McKinsey.

JANUARY 2022 |

www.payloadasia.com

15

INSIGHTS

Kuehne+Nagel shares outlook on Asia Pacific, logistics and sustainability With sustainability hanging at the forefront of almost every industry discussion in transport and logistics, Marcus Balzereit of Kuehne+Nagel, warns that carbon neutral ambitions do not come cheap, and not everyone is willing to pay the price.

In an interview with Payload Asia, the senior vice president for sales and marketing for Asia Pacific gives his take on what it takes to achieve carbon neutrality in Asia Pacific’s logistics sector.

be able to reduce these emissions and impact. This can be difficult for the retailer to achieve on their own, without affecting their productivity and shipment volumes.

Additionally, going green does not necessarily come cheap. Efforts to reduce waste, cut emissions, and change different parts of the supply chain will come with additional costs. With the competitive nature of the market today, even the smallest difference in price matters What are some common challenges to customers. Companies are thus for Asian retail companies in going inclined to prioritise customer carbon neutral? prices over the greater good of Many companies are not completely sustainability. aware of the impact of their operations on the environment. How is Asia’s e-commerce boom They do not necessarily have the further pushing environmental data on how their logistics activities costs, and what Kuehne+Nagel is are impacting the environment, and doing to help businesses in this that has to be the starting point in area? making greener choices.

E-commerce is growing rapidly, with the Asian region predicted to Even with an awareness of the account for 57% of global growth effects of their shipments on the between 2020 and 2025. With this environment, retailers will need to comes an increase in packaging

16

JANUARY 2022 |

www.payloadasia.com

materials, shipping volumes, truck trips, and overall more emissions and environmental impact.

To overcome these challenges, Kuehne+Nagel has invested heavily in new systems and technologies to make our customers supply chain management more efficient – with load and route optimisation, multimodal solutions, and full visibility of the entire supply chain process.

When customers have the visual and quantitative tools to measure their environmental impact, they are more conscious of it, and are more empowered to make a change.

When customers have the visual and quantitative tools to measure their environmental impact, they are more conscious of it, and are more empowered to make a change.

INSIGHTS How does Kuehne+Nagel manage customers’ needs and expectations in terms of sustainable logistics solutions? How have they made it easier for customers to meet their sustainable logistics goals?

In 2019, we launched Our Net Zero Carbon programme to support customers in reducing their carbon footprint, and address carbon emissions reduction in the transport and logistics sector. The programme consists of solutions to address full CO2 visibility, carbon emissions reduction and carbon offsetting.

This is why we have also signed up to the Science Based Targets (SBTi) due to the importance of reducing our CO2 footprint in our value chain.

While we have made great strides in addressing visibility and reduction, the unfortunate reality is that carbon emissions cannot yet be wholly avoided. This is where carbon offsetting is essential.

We can empower like-missioned customers to fully offset their carbon emissions, through investments in nature-based projects that help reduce greenhouse gas emissions by taking carbon dioxide out of the atmosphere. A close collaboration with all partners in the supply chain, especially air and shipping lines, is essential to significantly reduce the carbon footprint of international shipments and for all to achieve their individual sustainability goals.

our customers access to the most updated information. Our myKN app similarly provides customers with information regarding multimodal options for their shipments, and allows them to select more sustainable transport routes and modes, effectively cutting the environmental impact of their logistics activities.

However we must be mindful that achieving carbon neutrality is a huge undertaking, and will require more than new technology, innovative solutions and even fuel transformation. Making this change requires a shift in industry behaviour and culture, and companies who are ready to embrace this will be at an advantage. Kuehne+Nagel continues to work with such like-minded customers and partners to help them make a difference in building a more sustainable world.

What can you tell us about the exclusive partnership with Lufthansa to promote the use of atmosfair’s synthetic SAF? Are there carriers and fuel producers in Asia who can be tapped to do the same?

Kuehne+Nagel’s partnership with Lufthansa Cargo is another milestone in our commitment to sustainable logistics and to maximise our use of renewable sources of energy. This is an initiative that we are very proud to be a part of, as What does the road to carbon this fuel is considered the fuel of neutrality look like for Kuehne+Nagel and its customers in Asia?

Kuehne+Nagel has been carbon neutral since 2020 for its own emissions under scope 1+2, and we aim to achieve full carbon neutrality including our suppliers’ and customers’ footprint (scope 3) by the end of 2030. This is done through effective resource management throughout all operations, including our partners’ and to provide sustainable services and solutions that prioritise the environment.

We also invest in technology such as big data and predictive analytics, like our seaexplorer platform which allows for real-time updates on port traffic and shipping routes, to give

Even the smallest difference in price matters to customers. Companies are thus inclined to prioritise customer prices over the greater good of sustainability. the future, capable of bringing the CO2 footprint of aircraft engines to zero. it is not just beneficial to us and our customers, but to the logistics industry as a whole.

Recently, Kuehne+Nagel has also become the first air logistics provider to offer customers the option to purchase Sustainable Aviation Fuel (SAF) instead of fossil fuel for air transport and thus benefit from net zero carbon emissions air freight services.

This new add-on is available on all Kuehne+Nagel air freight quoting platforms and channels such as the myKN platform, with price add-on instantly calculated alongside all other transport charges, on a per kilo basis for a single shipment, and presented as a selectable option.

Previously, SAF pricing has always been quoted on a per litre or CO2 tonne avoided basis, however it is now linked to the actual weight of a shipment, allowing Kuehne+Nagel to provide a quote in the well-known and customer-friendly “per kg” air freight pricing basis.

Marcus Balzereit, senior vice president for sales and marketing in Asia Pacific, Kuehne+Nagel

JANUARY 2022 |

www.payloadasia.com

17

COUNTRY REPORT

SLFFA appointed Dinesh Sri Chandrasekera as chairman at its 40th annual general meeting is September of last year

Sri Lankan forwarders group chairman gives rundown of the market Here’s an interview to give you an idea of Sri Lanka’s freight market from the words of Dinesh Sri Chandrasekara, chairman of the Sri Lanka Logistics & Freight Forwarders Association.

Which trade routes does Sri Lanka connect by air or sea? What makes the country ideal for such cargo connections?

Sri Lanka’s strategic position off the Southern tip of India places it within twenty nautical miles of the major East-West shipping route that connects major ports. The Colombo Port is viewed as the subcontinent hub of India, as 70% of cargo passing through it is transhipment cargo. Larger vessels prefer to dock at Colombo due to the deep draft offered by the port, and feeder vessels transport cargoes from Colombo to Bangladesh and Indian Ports. The country also has smaller ports at Galle, Trincomalee and Kankasenturai, as well as the newest

18

JANUARY 2022 |

port in Hambantota on the Southern connectivity makes it an attractive coast. This port is closest to the East- international cargo hub.

West shipping route.

What is the main hindrance in Sri In terms of air connectivity, Sri Lanka’s cargo hub aspirations?

Lanka lies approximately halfway The main hindrance is the presence between the major air connectivity of excessive red tape, and slow hubs of Dubai and Singapore. pace of change in the state sector regulatory environment.

The Bandaranaike International and Airport is the major international The Covid-19 pandemic was a air gateway to the country, located major driver in digitalising several just thirty kilometres from the processes pertaining to customs and commercial capital Colombo, and port operations, but redundancy has direct expressway connectivity still exists as certain functions still to it. A second international airport, require physical documentation. the Mattala Rajapakse International The area of payments has enjoyed Airport is present in Hambantota evolution as facilitators such as but remains to be effectively LankaPay have teamed up with the utilized, however its proximity to the major banks in the country, enabling Hambantota port and direct road payments to now be performed via

www.payloadasia.com

COUNTRY REPORT online banking, as opposed to being made physically, with cash paid at counters and printed receipts issued.

granted to the freight forwarding and logistics sector. Currently, it is not adequately recognized as a separate function and is simply clustered under ‘Transportation’ in the Central Adopting a more macro viewpoint, Bank of Sri Lanka’s relevant reports.

Sri Lanka achieves less per year on the LPI indicator than other In terms of opportunities that are not SAARC countries. One reason for properly utilized, the country could this is that changes in Government further capitalize on its attractive bring about changes in policies that location to step up offerings in terms cause setbacks for the industry. of marine lubricants, bunkering, Furthermore, the Maritime and freshwater supplies, slops and Aviation industries are under two sludge removal, offshore supplies, separate Ministries, which is one ship chandling, ship repairs and reason why the ‘Five Hub Concept’ maintenance, shipbuilding activities for Sri Lanka has been elusive to and crew management, as well as achieve. offering more specialized services aimed at the cruise ship and yacht There is a distinctive lack of segments. concessions and infrastructure Taken from an earlier statement: why is there a reluctance to adopt e-freight for some of the country’s Changes in government top airlines? bring about changes in The reluctance of adopting e-freight policies that cause setbacks by some of the country’s top airlines for the industry. is a factor that lies with each airline.

Most airlines are represented by a general sales agent in Sri Lanka, whilst the operations are handled at their regional or head offices. Thus, the decision to adopt e-freight for a particular market such as Sri Lanka can only be made by them, and the volumes may not justify such a move. Another factor is that their management or IT systems may not be conducive to the adoption of e-freight and may require modernization. Such modernization may not be financially feasible to the airline, or not planned for our region.

What are the challenges for freight forwarders and logistics in Sri Lanka right now?

A major challenge is that the infrastructure of the country needs to be developed to a greater degree.

Sri Lanka is heavily road-dependent for carriage of cargo, as the railways transport less than 1% of total cargo volumes. The road network has been steadily developing, with major roads and even expressways connecting

Sri Lanka’s five-hub concept

JANUARY 2022 |

www.payloadasia.com

19

COUNTRY REPORT ensure that issues are highlighted, solutions strategized, and robust implementation plans effected. The industry consists of players of all sizes, and an individual player may struggle to have their voice heard.

We, as a collective body, provide them a strong and clear voice, and we deal with a myriad of parties, including the Sri Lanka Ports Authority, Airport and Aviation Services Limited, Shippers’ Council, Sri Lanka Customs, and other stakeholders. If Sri Lanka is to achieve the Five Hub Apron view at the Bandaranaike International Airport (Photo credit: Wikimedia Commons) concept, the SLFFA is best poised to influence relevant stakeholders and the major export processing zones for airport expansion, with no policymakers with robust plans and (EPZs) and industrial zones. However, alternative provided at the time of implementation strategies. there is a trend for industries to writing. move away from these zones due to a dearth of labour, as well as high Port infrastructure and customs The facilities for air freight labour turnover. Thus, factories processes can be cumbersome at the Bandaranaike have turned to setting up operations too. We have faced confusions with International Airport have in rural areas, near small towns and HS code classifications, and these not significantly changed or villages where there is an ample need to be in an easier and clearer upgraded for at least three decades. and willing workforce, particularly format. Confusions with HS codes for unskilled or semi-skilled roles. when clearing result in delays and However, road connectivity to these lower productivity as a result. The Where are local players in terms areas can be moderate to marginal, lack of adequate digitization as a of digitalisation and adopting and thus, moving raw materials in whole causes significant hindrances automated processes? and finished goods out in a timely to cross-border trade. There is no There is an observed laggard manner can be a challenge. This was simple cross-docking facility to behaviour in this area. Larger well reflected with the recent heavy cater to imports in the airports and companies saw the benefits of rains that the country faced, turning seaports to increase efficiencies in digitalization in terms of cost many rural roads into quagmires, distribution when multimodal freight reductions and pushed for it. The Covid-19 pandemic was another and disrupting movements for days. is involved. driver that forced more players Another challenge is that the How important is the SLFFA in to adapt somewhat reluctantly.

There was, and still is a reluctance facilities for air freight at the addressing such issues?

Bandaranaike International Airport The Sri Lanka Logistics and Freight among some players who are have not significantly changed or Forwarders Association is the apex used to a manual way of doing upgraded for at least three decades. body that represents the freight things, with physical signatures The Air Cargo village that was set up industry, across a transparent and and bank cheques, and they find in the early 90s is still the same. The collaborative platform. We have it overwhelming to adopt digital storage area is no longer sufficient, subcommittees for sea freight, signatures and online banking, for and cargo tend to get subjected to air freight and other areas, and example. They are not yet convinced the effects of weather as a result. our subcommittees actively and that it is secure or safe enough, and A part of the storage area has also tirelessly engage with the relevant we are working to reassure them been taken over by the authorities public and private sector entities to that it is.

20

JANUARY 2022 |

www.payloadasia.com

COUNTRY REPORT

SEE YOU AT THE 9TH EDITION IN 2022 JANUARY 2022 |

www.payloadasia.com

21

The 9th Edition of the Payload Asia Awards is coming in 2022 Interested in being a part of celebrating the Air Cargo Industry?

Get in touch with us: mktg@harvest-info.com