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Asia Pacific carrierssee cargo decline

CONSOLIDATION FOR HACTL AHEAD OF GROWTH

CpSL CONTINUESEXpANSION INTO2015

HIGH HOpES FOR HONG KONG’S pEAK SEASON

E-AWB TOO SLOWAND pROMOTIONNEEDS CHANGING

The weekly newspaper for air cargo professionals

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WEAKNESS in major economies such as China, India and Japan has caused air-freight in Asia to fall by 0.7 per cent in October, according to the Association of Asia Pacific Airlines (AAPA).

In the association’s October report, it says freight tonne kilometres (FTK) contracted by 0.7 per cent to 5.6 billion, blamed on weak imports and exports in the important regional economies.

Between January and October 2015, FTK has increased by 2.2 per cent to 53.3 billion, helped by a very strong start to the year, caused by the US West coast sea-port strike.

AAPA director general, Andrew Herdman says: “For the January – October period, air cargo demand grew by 2.2 per cent, held back by lacklustre global trade con-ditions that continue to dampen Asian air cargo markets.”

Capacity in the region measured in available freight tonne kilometres has in-creased by 2.7 per cent to 8.7 billion in October. The load factor fell by 2.2 per-centage points to 64.2 per cent.

Herdman adds air cargo markets are ex-pected to remain soft, given weak global trade conditions.

New UK cargo airline CargoLogicAir has gone live with its website as it looks set to launch ser-vices from Stansted Airport.

The website www.cargologicair.com (pic-tured right) says CargoLogicAir is a new British cargo carrier offering customers the “highest levels of service, safety and security, and all delivered by our highly knowledgeable and experienced team of air cargo professionals”.

The airline says its headquarters will be at Stansted Airport, where it will operate sched-uled Boeing 747-400 Freighter services as well as global air cargo charter flights for customers around the world.

It says the development of CargoLogicAir’s services and network will ensure customers “enjoy a consistently high quality of service, and this will be further enhanced as we explore

new market opportunities”.The airline explains that it is in the process of

receiving the Air Operator Certificate from the UK’s Civil Aviation Authority.

Media reports suggest the carrier is a sub-sidiary of the Volga-Dnepr Group, which also includes AirBridgeCargo Airlines.

CargoLogicAir says it is aiming to become the leader in the European air cargo market offer-ing cargo services on scheduled and charter services.It will use a Boeing 747-400F with a payload of 110 tonnes, which it acquired through a lease agreement with Aircastle.

Industry on security alert after global terrorist acts

Security is on the minds of air cargo industry decision makers after the wave of terrorist attacks and the intense

scrutiny of shipments and pro-cesses has been further stepped up.

Operators across the supply chain are on high alert to potential attacks after the Metrojet flight 9268 on 31 October was ripped apart by a bomb claimed by the Islamic State of Iraq and the Levant (ISIL), which investigators say was planted in the luggage hold of the aircraft in Egypt at Sharm el-Sheikh Airport.

Last week, on 24 November there was a security concern at Cairo International Airport after two DHL packages were seized on suspicion they contained explosive materials.

Media reports in Egypt had reported an X-ray scanner had detected the materials in the shipments destined for the US via London, but after further screen-ing of the packages, thankfully, it turned out to be a false alarm.

A DHL corporate communi-

cations statement says: “As part of our standard screening and security procedure, we identified a shipment at DHL’s Cairo air-port facility that required further screening by the authorities.

“The Egyptian authorities have subsequently informed us that the shipment contained no explosives or explosive devices.”

Cairo International Airport had tightened security since the terrorist attack in Egypt on 31 October by fitting new X-ray scan-ners, while other gateways have ramped up their screening.

Governments are on high alert and the UK and US have restricted Egyptian air cargo shipments after the Metrojet crash due to safety concerns.

Airlines have also taken action and EgyptAir has banned the car-rying of commodities on flights to the UK, US and Canada, while other carriers have done the same such as Alitalia, which has suspended freight in holds from Cairo Inter-national Airport. This is all set to negatively impact Egypian air-freight volumes and the market.

Terrorism hit the air cargo industry in a tragic way on 20 November when six staff members of Volga-Dnepr Airlines were killed by terrorists at the Radisson Blu Hotel in Mali.

The crew had transported con-struction machinery to Bamako and were among 12 airline employees who had moved the equipment from Oslo using an Antonov AN-124-100 on 18 and 19 November. They were staying at the hotel when the terrorist attack took place. Special forces rescued six other Volga-Dnepr crew.

The members of staff have been named as flight navigator, Alexan-der Kononenko; radio operator,

Vladimir Kudryashov; flight engi-neer, Konstantin Preobrazhenskly; loadmaster, Sergey Yurasov; mechanic, Stanislav Dumanskly; and mechanic, Pavel Kudryavtsev.

Volga-Dnepr says: “At this time, our priority is to provide the utmost support, comfort and assistance to the relatives of the Volga-Dnepr employees killed in the tragic events in Mali.

“Volga-Dnepr Airlines expresses its deepest condolences to the families and friends of our dear col-leagues. The airline has declared a period of mourning and all the flags at its head office have been lowered in respect to our lost crew members.”

UK cargo carrier CargoLogicAir set to take-off

Volume: 18 Issue: 47 30 November 2015

aircargoweek.com

NEWSWEEK

Budapest Airport has boosted its cargo relations in China after signing a strategic cooperation agreement with Ningbo Interna-

tional Airport & Logistics Development Company.

Ningbo International is seen as an area with significant cargo potential and is located in a highly developed economic region of China, approximately 200 kilo-metres from Shanghai. In 2014, it handled 113,000 tonnes of freight, but plans to expand tonnage to 500,000 by 2020.

Budapest and Ningbo primarily expect an upturn in cargo relations and volumes handled from the cooperation.

Budapest Airport property and cargo executive director, René Droese says: “The signing of this strategic cooperation agreement is of great significance, it is in

the interest of both Budapest Airport and Ningbo Airport to have a direct cargo flight between China and Hungary in the near future.”

“This agreement foresees even broader cooperation. Budapest would be an ideal Eastern European logistics and distribu-tion hub for Chinese exporters with the 1,000km catchment area of our airport including no less than 19 countries,” Dro-

ese adds.Budapest Airport’s total cargo volume

increased by two per cent in 2014, and vol-umes were up by 7.6 per cent at the end of October, compared to 2014 figures.

Chinese cargo traffic is growing dynam-ically, with the relaunch of the direct flight between Beijing and Budapest by Air China playing a key role.

The flight operates four times a week between the two capitals, with each car-rying 10-12 tonnes of bellyhold cargo on each service.

Budapest says almost the entire cargo capacity has been booked by Hungarian exporters transporting primarily electron-ics and pharmaceutical products to China, exceeding the volume of Chinese goods brought to Hungary by approximately a quarter.

2 ACW 30 novemBeR 2015

China cargo link forged by Budapest

THE Airports Council International (ACI) Asia Pacific says that the airfreight market was weak in the region in September.

The association says in its FreightFlash statistics for the month that tonnage continued to be impacted by slowdown across Asian export markets and oil producing economies.

ACI Asia Pacific says freight volumes were essentially flat in Asia-Pacific in September with a rise of 0.5 per cent and there was a decrease in the usually buoyant Middle East of 3.9 per cent.

The Asia Pacific region’s busiest three gateways by vol-umes saw small rises in the month.

Hong Kong International Airport (pictured), the region’s powerhouse freight hub and busiest in the world saw an increase of 1.1 per cent in September.

Freight at Shanghai Pudong International Airport was up 0.2 per cent in September and volumes at Dubai Interna-tional Airport were up 2.4 per cent, which came despite the Middle East decline in September.

Weak month for Asian airports

ONLINE retail giant Amazon has announced plans to build a one million square-foot fulfillment centre in the Rickenback-er Global Logistics Park, on the doorstep of Rickenbacker International Airport.

Rickenbacker continues to grow its cargo volumes and in October Cathay Pacific Cargo and Emirates SkyCargo upped flight frequencies. This news by Amazon is set to drive the number of e-commerce shipments it handles.

The gateway itself is set to open a new 100,000 square foot cargo terminal sometime in the middle of next year to meet rising demand for cargo.

Columbus Regional Airport Authority operates Rickenback-er and president and chief executive officer, Elaine Roberts says: “By locating in a high-speed, multimodal logistics hub that’s within a day’s drive to nearly half of the US population, Amazon will have the geographical advantage to keep world-wide customers very happy with unrivaled speed to market and last-mile service.”The centre is expected to be ready in the third quarter of 2016. Amazon also plans to build a fulfillment centre in Ohio.

aircargoweek.com

Amazon boosts Rickenbacker

NEWSWEEK

3ACW 30 NOVEMBER 2015

T urkey is a strategically important market to connect with the Eurasian region, but capacity will remain a problem until Istanbul’s third airport is built, says TNT Airways commercial

director, Todd Hildreth (pictured second right).Speaking to Air Cargo Week (ACW) at the Log-

itrans Istanbul trade show on 20 November, Hildreth says Istanbul’s location connecting Europe and Asia offers huge opportunities for business. The Turkish air cargo market has seen strong growth but is suffering a bottle-neck as Ataturk International Airport is full and Sabiha Gokcen International Airport has restricted capacity.

Hildreth tells ACW: “The challenge over the next couple of years before the next airport is dealing with restricted capacity for growth in the region … There is no more capacity for growth, there is a bottleneck right now.”

TNT flies from its European express centre at Liege Airport in Belgium to Sabiha Gokcen

using a Boeing 737. Hildreth says: “Right now we have regular flights to Sabiha Gokcen con-nected with Liege with daily flights. In addition we have a network with Turkish Airlines using their flights to Eastern Europe and CIS [Com-monwealth of Independent States].”

Hildreth was representing TNT on a stand with Liege Airport and Liege Port Authority at Logitrans Istanbul at the Istanbul World Trade Center. He praised the show for how it had

matured over the years and was a useful way of meeting local companies who may not attend larger shows such as Air Cargo Europe or Air Cargo China. He says TNT and Liege had a suc-cessful show conducting business meetings and networking with people from Eastern Europe and the CIS.

“Logitrans gives a unique opportunity in enabling us to interact in depth with play-ers from the region … Here we can meet with regional representatives and management from regional players missing from other events.”

He tells ACW: “The entire team have been here since the beginning. I have seen the event in the years past, I am very impressed how it has matured and grown up. A few years ago par-ticipation was low and it didn’t have the depth but now this event starts to rival other regional events in the industry.”

He says Logitrans provides good exposure to regional companies including carriers, freight forwarders, airlines and charter brokers.

Growing need for Istanbul’s third airport to open

AIRBRIDGECARGO AIRLINES (ABC) has added Atlanta (US) to its North American route network with the launch of twice-weekly flights.

The new Boeing 747 Freighter services will operate on Fridays and Sundays and connects ABC’s global route network to Atlanta, maximising cargo connections to the growing US market for ABC’s customers.

At present, ABC provides scheduled all-cargo services to and from Chicago, Dallas, Los Angeles, and now, Atlanta with onward connections to Europe and further to the air-line’s online stations in Russia and Asia.

ABC’s senior vice president for sales and marketing, Rob-ert van de Weg says: “With these new Atlanta flights, ABC continues to improve its offering on Asia-U. lanes following the successful launch of Los Angeles earlier this year.”Hartsfield-Jackson Atlanta International Airport aviation general manager, Miguel Southwell says growing air cargo is a top priority and a critical factor in Atlanta’s logistics growth, at the same time, providing shippers even greater connectivity to key markets throughout the world.The US is one of the main focus markets for ABC.

WorldNewsCEVA LOGISTICS has opened a new headquarters in Sao Paulo (Brazil) and launched a fourth Centre of Logistics Excellence. CEVA says it brings togeth-er operational and back-office functions under one roof.

THE Air Cargo Community Frankfurt continues to grow after Georgi Trans-porte and Menian joined the trade association at Frankfurt Airport.As a result, the number of members has grown to 35. Georgi Transporte is an airfreight feeder transport firm and Menian a logistics firm and freight forwarder.

EVA AIRWAYS has finalised its order for up to 24 Boeing 787-10 Dreamlin-ers and two Boeing 777-300 Extended Ranges (ER) in a deal worth $8 billion.

Security on the agenda in londonTHE Transport Security Expo takes place from 2-3 Decem-ber at London’s Olympia with more than 4,500 security professionals expected from all regions of the globe.

Now in its 13th year, the Expo brings government, indus-try and academia together to counter the threat against transportation networks. This year it will include delegates from 36 foreign governments; all aiming to strengthen global defences against the threat of terrorist attacks.

The organiser is Thirteen Events and its chief executive officer, Peter Jones says this year more than 20 buyers have already signed up for the buyer programme and, col-lectively, there are in excess of £47 million ($70 million)worth of security contracts to be awarded.

These include with the likes of Airports Company South Africa, Dublin Airport Authority, Heathrow Airport, Hong Kong International Airport, Iberia, London Luton Airport, PKP Cargo and TAP Portugal.

The Expo also features an exhibition with 200 suppliers to the transport security sector, as well as a range of con-ferences and security seminars.

Atlanta service for ABC

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NEWSWEEK

4 ACW 30 novemBeR 2015

More acquisitions on horizon for IAG

THE International Airlines Group (IAG) is eyeing more airlines acquisitions, according to chief executive Willie Walsh.

Speaking at the Airport Operators As-sociation’s (AOA) UK Aviation Conference at the Hilton Metropole in London on Monday November 23, he says the group, which bought Aer Lingus in August for 1.4 billion euros ($1.5 billion), is in the market again.

“We would like to collect a few more and there is ambition in IAG and we have been heartened from the success of the acquisi-tions of BMI, Vueling and Aer Lingus.

“We have demonstrated we can do it and have demonstrated we have the structure to have multiple brands and airlines in differ-ent sectors,” Walsh explains.

“If the right opportunity presents itself we are open and ready, but we are not actively pursuing it at the moment. We are being ac-tively contacted by governments and airlines keen for us to take on these challenges (such as costs),” Walsh adds.

Speculation has been rife this month that IAG was in discussions with Finnair and LATAM Airlines, but Walsh says there is nothing there and it is not in discussions with any carriers.

“Consolidation has benefitted the industry and Europe is very fragmented and Europe is where we need further consolidation. It is part of the solution,” he explains.

As for where Walsh thinks a new runway should be built in the UK, he says plans for a third runway at Heathrow Airport are too ex-pensive. “We have concerns about the costs of Heathrow. I do not think it is relative and the cost is outrageous and I cannot see it justified and we are not prepared to pay to support it.”

However, he says the economic case for expanding Heathrow is stronger than a sec-ond runway at Gatwick Airport and adds: “It is not the answer to build a runway at Gatwick and Heathrow as there would be wasted capacity if both are built. The de-mand does not exist for a runway at each.“

Walsh feels the political belief is not there for another runway at Heathrow as the UK government does not have “brave politicians”.

He says freighters will struggle to get slots if either airports are expanded and cargo will struggle. IAG Cargo has stopped using freighters and Walsh says it has no intention of changing this strategy. “Going forward our focus is on bellyhold and it is a more effi-cient way to move cargo. We are not going to be interested in dedicated all-cargo air-craft as do not think it is sustainable due to the available space that exists in bellyhold on passenger aircraft,” Walsh adds.

He welcomes Open Skies agreements and says the “more the merrier” and feels US carriers’ stance against the three Gulf air-lines is “embarrassing the industry” and is “pathetic”. Walsh adds they want to restrict competition for their own benefit.

IAG Cargo has launched its new Cargo Con-nector delivery service in the US.

Customers in the country now benefit from an import delivery service that takes

freight direct from the aircraft, delivering it to the forwarders handling facilities.

Originally, Cargo Connector was offered as an export collection service, but with the addition of the import delivery service customers now benefit from reduced costs and increased reli-ability on incoming goods.

The new service is available in eight US air-ports in San Francisco, New York, Los Angeles, Chicago, Dallas, Atlanta, Seattle and Houston for shipments under 300 kilogrammes.

IAG Cargo’s regional commercial manager in North America, Joe LeBeau says: “Cargo Con-nector has proved to be a huge success in the North American market, and beyond. Our new delivery service builds on this success; making it easier for importers to get goods to market quickly and with minimal effort.

“IAG Cargo prides itself on making it as easy as possible for freight forwarders to do business with us and the new Cargo Connector delivery service reflects this perfectly. At the same time it provides us with an important competitive differentiator.”

The Cargo Connector import service, which is offered upon booking, is available Tuesday through to Saturday. Freight screening can be arranged as required.

Heathrow now knows importance of cargoHEATHROW AIRPORT chief executive officer, John Holland-Kaye says the gate-way “didn’t understand the significance of cargo” until the Airports Commission studied whether it or Gatwick should get another runway.

Speaking at the Airport Operators As-sociation’s UK Aviation Conference at the Hilton Metropole in London on Tuesday 24 November, Holland-Kaye says: “You may not be surprised to know that we didn’t un-derstand the significance of cargo to our airlines or the economy until we started working on the Commission process be-cause we make no money out of it directly, we neglected it.

That has changed. Last month I outlined our Cargo Blueprint which will help get Brit-ish exports through the UK’s biggest port more quickly and predictably.”

Holland-Kaye says it will make exporters more competitive, but doesn’t get over the real issue that some cargo routes are already full. “How do you grow exports if your largest port is full? With expan-sion, we will double our cargo capacity, providing the infrastructure need-ed to meet the government’s goal of becoming Europe’s second largest exporting nation. Just think how much more we could export if we had di-rect flights to... Xian, Chongqing, Wuhan, Tianjin (in China). If the government is serious about keeping Britain as a leading trading nation, they will back Heathrow expansion.”

Import delivery to the US launched by IAG

aircargoweek.com

ACW 30 NOVEMBER 2015 6

C hina’s slowdown is happening but maybe not on quite the scale some nay-sayers envisage, the chief executive of Hong Kong Air Cargo Terminals Lim-

ited (Hactl), tells Air Cargo Week.The facility is taking the long-term view and

preparing not so much for retrenchment but consolidation ahead of further growth, Mark Whitehead (pictured) says: “Trade into and out of China has definitely slowed; although its

economy is still growing faster than most other countries

around the world, the reduction to six per cent growth is impacting air-freight, and particularly exports.

“Given Hactl’s position in Hong Kong, which is

still China’s most import-ant international gateway,

our tonnages are naturally impacted by this sit-uation: but, fortunately, not as much as might be expected.”

The statistics though are not entirely comfort-able for Hactl, or indeed any facility, and are all the more striking given the generally improving air cargo markets. By early November Hactl had handled 1,291,166 tonnes of cargo, a reduction of 10 per cent on 2014 and one not likely to be reversed by the traditional end-of-year rally even in a good year such as this.

Hactl is not only dealing with falling Chinese exports, which are impacting many carriers’ load factors but an increasingly competitive local environment as Whitehead pointed out.

Where he is cautious is going forward is about the future. The official Hactl line is the slow-down is temporary but with effects, possibly strong ones, rolling over into next year. “If we can match 2015 traffic levels, we will be happy,” says Whitehead.

Not that there will be any battening down of hatches and waiting for the storm to pass that is not either Hactl’s, let alone Whitehead’s, style. “Business is tougher, so we are running faster,” he explains.

Whilst the facility is continuing to streamlin-ing of procedures based on IT enhancements, provision of GDP-accredited facilities for phar-maceuticals, new services and upgrades to its terminal the main focus of further development is added-value logistics subsidiary, Hacis.

Hacis’ primary activity is providing sched-uled, bonded, express road feeder services between Hong Kong and China. These operate as Superlink China Direct and mostly operate to its own, International Air Transport Associa-tion coded inland cargo depots on the mainland. “We have just increased this network to seven locations,” says Whitehead.

The latest of these is located in Nansha, in the new Guangdong Free Trade Zone, within an

area designated for e-commerce – something the Chinese government is fostering through preferential tax arrangements, special customs procedures etc. The suppliers of these goods to save costs ship in in bulk and then distribute from nearer to the consumers.

“Hacis is responding with fast, secure and economical links from Hong Kong through to Nansha, which is co-located with a growing number of these e-commerce fulfilment cen-tres,” says Whitehead.

What doesn’t seem to have hit Hactl or Hong Kong yet is the consolidation of handling agents.Whitehead acknowledges handling margins being squeezed as a by-product of low airfreight rates and revenue, something he puts down to “overcapacity on most routes,” but he himself takes a cautious, almost demure approach when asked.

“It’s not surprising that some investors are exiting the market when the opportunity arises. We have not seen this in Hong Kong yet, but it cannot be ruled out,” he explains.

Consolidation for Hactl ahead of further growthCARGO HANDLING AGENTS

Superlink network

SKYLINK HANDLING SERVICES has been appointed air cargo handler for IAG Cargo at Amsterdam Airport Schiphol.

Skylink is part of the Rhenus Group and has been awarded a three-year contract, that became effective from 1 August 2015.

Skylink branch manager, Frans Meerens, says: “We have worked hard to win the three-year contract with IAG Cargo and are excited to welcome them to our expanding portfolio of customers.

In August, our dedicated team of employ-ees started work with IAG Cargo and the integrated team is now fully operational.”

IAG Cargo regional manager for Europe, Chris Nielen, adds: “Skylink will help us provide the high-quality service that our cus-tomers have come to expect from IAG Cargo. We look forward to working with Skylink and

anticipate that they will enhance our opera-tions at this major European airport.”

Swissport International has gained Oman Air as a new customer in Europe.

The two companies have signed a multi-station agreement for full cargo han-dling services at Heathrow Airport, Munich Airport, Frankfurt Airport and Paris Charles de Gaulle Airport.

Swissport says the new agreement un-derlines it ability to provide standardised services across a multi-station environment.

As of 3 September 2015, Swissport took over full cargo handling services for Oman Air at Heathrow followed by a phased transition of the other three stations, with completion by 1 November 2015.Through the one-stop approach, both parties will benefit from increased standardisation in process flows with a common service level agreement and KPI measurements.

Swissport executive vice president for global cargo services, Nils Pries Knudsen says: “We are very much looking forward to developing our global relationship with Oman Air and establishing a fruitful partnership in the coming years.”

Skylink gains IAG contract at Schiphol

aircargoweek.com

C onsolidation of air cargo handling agents is happening with one of the main protagonists, Worldwide Flight Services (WFS) president and chief executive officer, Olivier Bijaoui tells Air Cargo Week (ACW): “I’m doing it in fact.”

Despite WFS’s high profile role as a consolidator Bijaoui takes a qualified view of it. “Some consolidation is taking place” he says. He believes the process is not coming to an end soon but won’t say what the next step of WFS’s own plans, just immediate ones.

The company is going through a phase of aggressive expansion either via organic growth or acquiring companies. The coming year might be as busy as the last 18 months have been for WFS.

With a strong profile in Europe and North America, although as the recent acquisition of 51 per cent of Fraport Cargo Services (FCS) proves, WFS is not likely to remain still for long anywhere, much of the action has been elsewhere.

Africa is one particular focus with openings over the past two years in South Africa, Nairobi and Dar Es Salaam. “We are also focused on Africa,” acknowledges Bijioui, who adds this was tem-pered by an aversion to political risk in some countries.

There has been work in the star of the emerging markets class, Brazil. Here WFS bought Orbital, giving it a claim in 19 airports

in that huge and rising country. The plan is to use it to develop a platform in Brazil and South America, Bijaoui tells ACW. Even the European market has been developed with five Italian airports and five new licences in Spain including Madrid.

The position is less buoyant in Asia. The operations here are limited to Singapore, New Delhi and Hong Kong. Something which is not really WFS’s fault. “We haven’t had much opportu-nity in Asia” Bijaoui says adding: “The cargo market in the region is not easy to penetrate.”

What is curious is while the plans are for more, and seemingly lots of it, and the focus on developing new destinations and air-lines, Bijaoui does not exude great confidence about 2016. Maybe it’s a time and a place issue Paris in late November has other things to think on. Bijaoui’s view of the market is fairly neutral: “I don’t really look on it with concern,” he says.

Partly it’s a reflection of this year. “We moved around 4.2 mil-lion tonnes which compares to last year in terms of volumes,” Bijaoui says. He notices what others did in some markets did bet-ter than others whilst others dipped. “There was little slowdown out of Asia, North America has held OK, we have seen some prog-ress on volumes on the Middle East carriers,” he says.

Within this part he is sceptical about fears of a China slow-down: “I am not very concerned. Its not as bad as people would like to see,” he says pointing out people were getting used to China booming along, usually at eight per cent which makes this year’s five to six per cent seem worrying when a couple of years back that figure would have set pulses racing.

What he flags as more vital is China’s middle class whose will-ingness to spend is what people like to hear, being stable. “There is a growth of middle class so exports to China are not bad at all,” he says. A comment maybe for this year, next and the years ahead.

WFS not likely to remain still for long as expansion continues

7ACW 30 NOVEMbER 2015

CARGO HANDLING AGENTS

AIRFREIGHT volumes at Singapore’s Changi Airport re-mained firm for the first nine months of the year despite strong growth in niche sectors.

Changi handled 1.37 million tonnes of cargo shipments, a marginal 0.2 per cent decline year-on-year (YOY), Changi Airport Group senior manager for cargo and logistics devel-opment, Phau Hui Hoon tells Air Cargo Week.

One of the explanations for this is China and its slowdown which as Asia’s premier air cargo hub Changi cannot help but feel, although not strongly as the figures show.

“The Chinese cargo market remained positive for Chan-gi, posting a 1.1 per cent growth for the first nine months of 2015. China’s growth is attributed to the increase of imports (into Singapore) and transhipments, which out-weighed a decline in exports (to China),” Phau says.

Another part of the mix is the cross dynamics involved. General cargo might have held steady but specialist mar-kets have become the ones to watch.

“There are pockets of growth for Changi. In terms of niche cargo segments, there was strong double-digit growth in the live animals and pharmaceuticals cargo segments, growing 11 per cent and 34 per cent year-on-year respectively from January to September 2015,” Phau adds.

These two factors are well connected as Changi acknowl-edges pointing out the growth of the Chinese market is due to the strong growth of temperature-sensitive cargo segments, such as pharmaceuticals and perishables. These posted increases of 145 per cent and 14 per cent YOY re-spectively for the first nine months of 2015.

Sadly such growth rates will not be the norm for the com-ing year or years ahead at the gateway.

Changi’s forecast is that in 2016, volumes are likely to remain flat, because of the slowdown in major economies such as Europe, and a weaker-than-expected recovery in the US economy. “Nevertheless, we remain cautiously op-timistic that air cargo volumes will recover by the end of 2016,” explains Phau.

Helping matters will be new facilities at Changi to support growing demand for express cargo and e-commerce. This will include the new 140 million Singapore dollars ($99 mil-lion) DHL South Asia Hub, which will be completed in 2016 to support the growth of e-trade within the region.

According to Changi, it will increase DHL’s throughput by three times and processing speed by six times.

SATS is investing in an e-commerce hub at Changi to tap the region’s booming e-commerce market, with SingPost as its anchor customer, due to complete in December 2016.

Niche sectors helping Changi

aircargoweek.com

ACW 30 november 2015 8

C athay Pacific Services (CPSL), the operator of Cathay Pacific Airways’ cargo facility has seen its customer base grow as it comes to the end of its second full year of operations.

CPSL operates Cathay Pacific Cargo Termi-nal (CPCT) (pictured), which cost 5.9 billion Hong Kong dollars to build ($761 million) and became fully operational in October 2013. In its first full year of operation in 2014, CPSL started

handling cargo for AirAsia, Air Hong Kong, Royal Brunei

Airlines and Thai AirA-sia, in addition to Cathay Pacific and Dragonair. It started handling EVA Air Cargo services from January and AirAsia

Zest from May. From July 2015, CPSL has also been

providing ramp services for

FedEx.CPSL chief executive officer, Kelvin Ko (pic-

tured) tells Air Cargo Week (ACW): “With these new business opportunities and the organic growth from our existing customers, we look forward to seeing an increase in the tonnage throughput at CPCT in 2015.”

Like many companies in the Far East, CPSL

noticed a significant upturn at the beginning of the year to the US before momentum slowed. Ko says: “The industry experienced a marked increase in airfreight volumes in the first quarter of 2015, benefitting from the additional air traf-fic as a result of the West Coast shipping disputes in the United States. However, the momentum has slowed down since the beginning of the sec-ond quarter.”

Asia Pacific has seen a slowdown during the middle of the year, but Ko tells ACW he is opti-mistic about the rest of the year, as the peak season is starting.

“The operating environment for the aviation industry as a whole remains challenging. As we enter the traditional peak season, we do expect to see stronger demand and tonnage throughput at our terminal.”

Hong Kong International Airport (HKIA) is the busiest cargo airport in the world, having handled 4.4 million tonnes on a rolling 12 month

basis up to October. The airport is nearing capac-ity and competition from China is increasing.

Ko comments: “In recent years, we see robust infrastructure development from neighbour-ing airports in China and in other parts of Asia. Hong Kong, on the other hand, is facing runway capacity constraints, which will limit an airline’s ability to serve additional and secure preferred takeoff and landing timing slots.”

Ko says there is strong competition from established hubs in the region, such as Incheon Airport in Seoul, South Korea, and Singapore’s Changi Airport while Chinese airports are rap-idly expanding.

To cope with this, HKIA is to construct a third runway, which should be completed by 2023. Ko supports the expansion, telling ACW: “A third runway is certainly an essential investment to protect connectivity and flight frequency.”

“We believe the construction of the third run-way is crucial to sustaining Hong Kong’s position as the premier international aviation hub and maintaining the city’s long term economic growth and development.”

CPSL continues expansion into 2015HONG KONG

Peak season starting

CATHAY PACIFIC CARGO general manager cargo sales and marketing, Mark Sutch (pictured) says the airline has had a strong year, helped by the US West coast seaport strike in the first quarter.

Sutch tells Air Cargo Week (ACW): “2015 has real-

ly been a year of two halves - or shall we say one quarter and the rest!”

He says “The first three months started very strong

but this was a di-rect impact of the

West coast port strike in the US - Trans-Pacific business boomed!”

After flat second and third quarters, Sutch is expecting the usual end of year peak though Cathay Pacific will not get the same boom as in 2014, because the seaports are operating normally.

Sutch is expecting the first quarter of 2016 to see negative growth. He tells ACW: “For 2016 one should expect negative

growth in the first quarter - once again an affect of the port strike that made 2015 so strong.”

This year, Cathay Pacific has launched freighter services to Kolkata (India) in March, and passenger flights with belly-hold capacity to Dusseldorf (Germany) in September.

Sutch says he is happy with how the new routes are doing. Talking about Dusseldorf, he tells ACW: “We have had very healthy cargo loads on this flight, which has been very welcomed. Dusseldorf is not a tradi-tional forwarder gateway but we have seen some good innovative solutions and truck-ing is very convenient.”

Sutch is also happy with Kolkata’s prog-ress: “Kolkata is doing very well as is the remainder of our Indian air cargo operation. We offer the only main deck capacity into Kolkata and that makes a difference.”

He says the main imports and exports re-main the same, with a lot of electronics and fashion. He says perishable imports have increased because of bonded cool chain truck services to South China.

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Cathay Pacific volumes rise

T his year has been an interesting year, with the US West Coast seaport strike giving the start of 2015 a major boost, which has returned to normal levels, but now the peak season is starting again, IAG Cargo tells Air Cargo Week (ACW).

IAG Cargo regional commercial manager for Asia Pacific and India, John Cheetham (pictured) tells ACW that business remains challenging as ever but he remains confident, especially with the popularity of its premium products, such as Prioritise and Con-stant Climate.

Cheetham says: “The first quarter of the year was very strong, but much of the strength was related to the West Coast port strike in the US, which artificially inflated airfreight demand. Since that congestion has cleared, we have seen demand for air-freight return to more regular levels.”

He expects a big upturn in volumes as the US celebrates Thanksgiving and many parts of the world prepare for Christmas. Cheetham tells ACW: “Now that China’s golden week is over, we are just moving into the peak season for Hong Kong.”

“We expect there to be significant increases in demand to the US in the run up to Thanksgiving and then a buoyant season for demand into the UK, Europe and elsewhere in the run up to Christmas, all regions that are well supported by our network.”

He says the basic commodities have remained the same, con-sisting of electronics, garments and accessories. One thing that is noticeable is the fall in laptop and desktop computers, replaced with demand for tablets and smartphones. “The need for the shipper, of course, remains the same: they want to get their goods to market as quickly as possible, especially during the peak season. This is why our express product, Prioritise, continues to perform well out of this market.”

Cheetham is expecting a peak but is unsure how long this will last, but no matter what, IAG Cargo will continue to work with its regular customers.

He says: “We have been working in partnership with our regu-lar customers all year and so we expect to work closely with them through this period to ensure they get the capacity that they need to support their shippers.”

IAG Cargo has one passenger Boeing 777 and one Airbus A380 flight a day to Hong Kong International Airport (pictured) and it also leases space on five times a week Boeing 777 freighter ser-vices to Stansted Airport with Qatar Airways.

Cheetham tells ACW: “Hong Kong was the first market to bene-fit from our new freighter strategy, where we replaced wet leased freighters with capacity bought from partners. This strategy allows us to support our customers and grow capacity without having to invest in new aircraft or unprofitable freighters.”

Hong Kong, Cheetham says, is an easy location to do business in, helped by low taxes and light regulations.

“Its Freeport status makes it attractive to shippers and for-warders to consolidate business from China.”

The biggest challenges, Cheetham says, are a lack of space and the weather, particularly ultra heavy rain known as black rain. He tells ACW: “There is a lack of land which always makes any infrastructure project a challenge. Also, the climate means that there is always a few instances a year when businesses are closed or disrupted due to typhoon or ultra heavy rain.”

Freighter leasing strategy

High hopes as Hong Kong’s peak season is about to start

9ACW 30 NOVEMbER 2015

HONG KONG

Lufthansa Cargo noticed strong growth to North Amer-ica at the start of 2015, though traffic to the European union (EU) has been slower.

The carrier’s director for South China and Taiwan, Kon-stantin Stathopoulos tells Air Cargo Week (ACW) the Pacific lane had a very strong start to the year, while the EU was very slow. He says: “We faced a difficult first quarter but are meanwhile achieving growth again and are also gain-ing market share in the EU. However, the market remains challenging.”

Stathopoulos says he is expecting the usual end of year surge and the market to continue to grow. He tells ACW: “The market will grow but on a lower level. An extraordinary hike to the US as seen in the first quarter of 2015 cannot be expected, at the same time the EU market should de-velop slightly better than in 2015.”

Stathopoulos says: “The growth in the region will contin-ue, even if it won’t be the big growth rates we had seen in the past. The Chinese economy will further focus on indus-trial production and exports, while the development of the domestic consumption further pushes Western products and imports.”

There is a lot of competition in the region. Stathopou-los tells ACW: “Challenges are the increasing capacity and competition by belly carriers and the push of local carriers in Southern China region especially in the cargo segments.”

End of year peak

Americas strong,

EU slower

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ACW 30 november 2015 10

T he air cargo industry needs to use dif-ferent language to push the electronic air waybill (e-AWB), in the view of Worldwide Information Network’s (WIN) managing director, John

DeBenedette (pictured).He tells Air Cargo Week if the dialogue used by

airlines and the International Air Transport Association (IATA) is changed it can boost the adoption. “The language to promote e-AWB and e-freight used by airlines and IATA is not com-pelling,” DeBenedette explains.

“Instead of speaking about eliminating a paper document, this needs to be presented as a means of gaining better service (faster cargo acceptance, fewer errors and risk of delay, and shipment visibility). And these benefits need to be delivered operationally,” adds DeBenedette.

He feels the industry is still mixing the “big technology picture” as it still relies on a ‘store and forward’ messaging paradigm.

“Though we are slowly upgrading from car-go-imp message formats to cargo-xml (which is a better way to express the information), we are missing the big technology picture and replicat-ing these messages endlessly at great cost.

“B2B and retail e-commerce powered by secure, real-time web-services, freely exchanged over the internet have transformed the global economy yet air cargo is still struggling to upgrade from the 1960’s technology to the early

1990s,” DeBenedette says.In his opinion, the issues are less about tech-

nology although he thinks real issues with technology do still exist, and the real challenge is more a question of marketing this transfor-mation better. “Carriers in their local offices guiding agents to get moving seems to be the best way forward would like to see more of this,” DeBenedette adds.

He says WIN provides a platform for air cargo agents to collaborate with each other, reuse data, and gain end-to-end shipment visibility, and in that process deliver high quality e-booking and e-AWB transactions to airlines at no cost. DeBenedette says: “An airline centric approach which does not help the agent with his process is insufficient.” He adds WIN makes e-AWB easy, which is exactly what the company set out to do.

Operators are investing in technology DeBen-edette feels, just not in the right things at the moment. “The traditional technology players

in the industry are chipping away at the problems incrementally rather than leaping over them. Some may have vested inter-ests in messaging as a revenue stream there-fore limiting innovation to preserve the status quo,” he says.

DeBenedette feels adoption of e-AWB is still too slow, although on a positive note he says it is nice to see ‘fast lanes’ popping up at airports to reward agents doing e-AWB with faster cargo acceptance.

Jet Airways was the latest carrier to accept e-bookings via the WIN e-platform and the carrier’s acting vice president, James Gilliard, said in September it had seen steady growth in electronic transactions with small-medium enterprise forwarders on the platform.

e-AWB too slow and promotion needs changingE-FREIGHT

ElEctronic air waybill (e-AWB) penetra-tion is increasing, but it is still someway of targets set by the international Air trans-port Association (IATA).

The association says in September it was 34.2 per cent, more than 10 per cent below the target for December of 45 per cent.

However, this was a rise of 2.5 per cent on August so the industry is moving in the right direction and away from air waybill paper documents, which many commenta-tors consider is so important.

During September the e-AWB penetration was 482,767, up on the 456,100 in August and a significant rise on the 320,447 in Oc-tober 2014.

In September, IATA says the Middle East led the way as region of origin for pene-tration, at 61.8 per cent, according to its e-AWB international monthly report.

In second was Africa at 46 per cent, North Asia was third at 40.5 per cent, Asia Pacific fourth at 38.4 per cent, the Americas fifth at 31.2 per cent and lagging behind was Eu-rope at 24.8 per cent.

Asia Pacific handled the most e-AWBs at 127,334 with Europe second at 111,287

and North Asia third with 105,874.Among countries, the US has more than

doubled the number of e-AWBs processed in a year, from 31,705 in September 2014 to 68,081 in September 2015.

By airports, Hong Kong international Airport processed 66,321 e-AWBs in Sep-tember, the highest by airport of origin and penetration was 66.1 per cent. changi Air-port’s penetration was 69.9 per cent, while Dubai international Airport’s was a mas-sive 86.7 per cent.

Again, Europe is behind and Heathrow Airport’s penetration was 27.3 per cent and Frankfurt Airport’s was 24.7 per cent.

By airline, Flydubai had the highest e-AWB penetration, at 99.9 per cent, fol-lowed by FedEx at 71 per cent, Sri lankan Airlines at 67.9 per cent, cathay Pacific at 67.7 per cent and Ethiopian Airlines at 63.2 per cent.

Among freight forwarders, Panalpina had the highest penetration at 50.2 per cent, followed by SDV Group at 49.7 per cent, Hellmann Worldwide logistics at 49.4 per cent, UPS at 45 per cent and Schenker at 44.8 per cent.

e-AWB penetration up, IATA says

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Freight Forwarders

11ACW 30 NOVEMBER 2015

TRADEFINDER

Turkey

Airlines

USAIraq

Freight Forwarders

Hong Kong

Industry Events

USA

Associations

Worldwide Germany Italy

Freight Forwarders

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NEWSWEEK

The air cargo industry is still stuck in the past when it comes to technology, according to logistics IT pro-vider Descartes Systems Group.

The firm tells Air Cargo Week airfreight seems to be “hardwired in outdated processes”, from bookings

made on the phone (and even via fax), to calls to get the best rates, to stacks of paper including airway bills physically shut-tled to the airline.

In the view of Descartes, the industry will benefit by adopt-ing more and updated technology, as it will be able to respond swiftly to the evolving needs of the customer by offering diverse options and add value to customers.

The company sees technology as a way of maximising existing profitable – yet competitive – trade lanes and keeping an eye on market trends. Other advantages of digitising airfreight pro-cesses it says, are developing niche specialities in parallel with a global strategy of superior, localised services and top quality customer experiences.

But Descartes continues to see resistance from within the industry to investing in the technology needed, The firm explains: “Now more than ever, global logistics trends are

impacting the industry’s bargaining power and have further driven up competition. More competition drives the need for added efficiency for all parties.

“Creative methods are developed to make sure carriers are getting the information to comply with security filing require-ments in the easiest possible way. This helps to overcome earlier investment resistance.

“Especially, when combined with on-demand solutions and a multi-party platform like the Global Logistics Platform of Descartes that enable large and small organisations to take advantage of robust capabilities for bookings, security filings and customs entries, shipment and financial management.”

It says the airfreight industry is being “shaken up” with adop-tion of electronic air waybills (e-AWB) and by charging freight forwarders for paper airway bills it is having an effect.

Descartes also notes the Single Process e-AWB will make it easier for forwarders to provide data and it will boost the indus-try. The firm says e-AWB will soon be the preferred means of shipping to all destinations and as a result - “forwarders are get-ting creative. They are using the information in new ways and to compete at a higher level”.

AMSTERDAM AIRPORT SCHIPHOL’S tonnage trends moved closer to those of 2014 in the third quarter of 2015, narrowing the deficit to 1.44 per cent for the year-to-date (YTD).

Q3 saw a total of 409,034 tonnes of cargo handled, frac-tionally down by 0.08 percent on the same period of 2014.

Weakness in Asia (down 5 per cent) and Europe (down 10 per cent) business was counteracted by stronger per-formances in North America (up 2.3 per cent), Middle East (up 8 per cent), Africa (up 4 per cent) and Latin America (up 12 per cent). The quarter’s stronger performance brought YTD tonnages to 1,193,604 - down 1.44 per cent on 2014.

Amsterdam Airport Schiphol director for cargo, Jonas van Stekelenburg says the gap between 2015 and 2014 narrowed, due to major shipments of mobile phones, and strong performance in non-Asian markets. “We can never escape the volatility of airfreight markets, but can and will insulate our carriers and logistics community as far as possible by continuing our campaign to drive paper, ineffi-ciency and cost from the supply chain.”

AIR PARTNER is winding down its Ebola relief work in Sierra Leone as the West African nation is declared free of the dis-ease that has taken the lives of over 11,000 people across West Africa.

Between 26 October 2014 and 11 November 2015, it operated 128 flights from the UK to the capital, Freetown, for governments, non-governmental organisations and aid agencies. Air Partner flights included equipment to construct and run a 92 bed treatment facility, including ambulances, tents, generators, air conditioning units and lighting sets.

As part of the United Nations World Food Programme, it shipped over 14 tonnes of blankets, tarpaulins, sleeping pads, water tanks, jerry cans, generators and tents on a Boeing 737-400 Freighter from Accra, Ghana to Freetown, and over 15 tonnes from Accra to Roberts Airport in Liberia.Air Partner director of freight, Richard Smith says to date the charter firm has flown 3,400 tonnes of aid to West Africa.

Industry lagging behind when it comes to technology

Siauliu International Airport is now able to receive cargo aircraft loaded with animal and vegetable ship-ments and can also offer services at a veterinary post.

The station is complete with refrigeration equipment and provides opportunities for animal and vegetable exports of goods through the Lithuanian gateway.

The airport says it is negotiating with European Union flow-er-growing companies which are “eager” to transport flowers to Ukraine, Belarus, and Russia. Siauliu says there is a market worth 110 million euros in the Baltic region market open to export and import of perishable goods, animal and vegetable products.

Siauliu adds: “The emergence of the veterinary post means perishable goods, food exporters and exporters gain new access to the international airport and the new markets in Europe, Asia, Americas.” The airport adds the veterinary station will be the “New Baltic Cargo Gate”.

Lithuanian airport ups offering

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Schiphol tonnagesolid

Ebola relief workwound down