international edition the world’s top 50 cargo...

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JULY 2008 International Trends & Analysis

Inside China • Project Cargo • DHL Anew

The World’sTop 50Cargo Airports

The World’sTop 50Cargo Airports

INTERNATIONAL EDITION

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July 2008 1AirCargoWorld

INTERNATIONAL EDITION

COLUMNS

10 North AmericaDeutsche Post’s decision to

outsource DHL Express’domestic U.S. operations toUPS is not sitting well withunions and public officials •Joint Use

13 EuropeA growing Eastern European

and Russian market isredefining the center of Europefor logistics providers •Cargoitalia Wobbles

16 PacificUPS is decamping to China,

leaving the Philippineswondering about its burgeoningeconomy

DEPARTMENTS

2 Edit Note

4 News Updates

42 People

44 Classifieds

46 Bottom Line

Top Cargo Airports

Memphis, Hong Kongand Anchorage lead the listof the top 50 cargo airports,but what little growth thereis remains in the MiddleEast and China

DomesticChina

Demand for intra-Chinatransport is growing, butnot at the rate shipperswould like

SpecialProjects

Resource-rich Canadacould provide newopportunities to outsizecargo carriers, but howmuch remains unanswered

Cover: photo courtesy of Keith Gaskell

J u l y 2 0 0 8 C O N T E N T S V o l u m e 1 1 , N u m b e r 6

Air Cargo World (ISSN 1933-1614) is published monthly by Commonwealth Business Media. Editorial and production offices are at 1270 National Press Building, Washington,DC, 20045. Telephone: (202) 355-1172. Air Cargo World is a registered trademark of Commonwealth Business Media. ©2008. Periodicals postage paid at Newark, NJ and atadditional mailing offices. Subscription rates: 1 year, $58; 2 year $92; outside USA surface mail/1 year $78; 2 year $132; outside US air mail/1 year $118; 2 year $212. Single

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2 AirCargoWorld

International Trends & Analysis

Miles ApartAshaky world economy, skyrocketing fuel costs, increasing

security regulations and the disparity in exchange rates be-tween the U.S. dollar and euro are subjects this and other

magazines have covered thoroughly. What could use additional inkis the apparent decline in labor and management relations in the aircargo industry.

Labor accounts for 23 percent of an airline’s operating expenses, three per-centage points below fuel, according to the Air Transport Association.

Consider the full plate of labor concerns at the Air Transport ServicesGroup, the umbrella over ABX Air, Air Transport International and CapitalCargo International Airlines. These three carriers have long-standing contractdisputes with their pilots over pay and benefits and there doesn’t appear to be

any end in sight. The Teamsters represent ABX Air and ATI pi-lots, while the Air Line Pilots Association International repre-sents CCIA pilots.

The unions contend management is stalling and refuses tonegotiate in good faith, while management declined commentbecause negotiations are ongoing.

ABX Air pilots already voted down one tentative agreementand are in mediated negotiations, while ATI pilots, also in me-diation, voted down two tentative agreements since their con-tract became amendable in 2004. CCIA pilots have voted downthree tentative agreements since their contract became amend-

able in 2004 and are considering mediation.This is not a healthy working environment by any standard and is

bound to affect ABX Air’s long-term growth plans. To be fair, ATSG is in avery tough spot as it faces many issues listed along with the prospect of op-erating without its main customer DHL. Yet the pilots haven’t had pay rais-es in quite sometime and are paid below their peers at other airlines, ac-cording to ALPA.

ALPA leveled its complaints during the annual meeting this spring of theABX Holdings shareholders, which should raise a red flag for any investor.Bankers have been known not to return calls to representatives of cash-strapped airlines with poor labor relations.

Years ago, American Airlines, led by its usually forward looking ChairmanRobert Crandall, refused to compromise with flight attendants over pay andbenefits on a new contract. The result was a strike that wound up costing theairline millions of dollars more in lost revenue than the cost of the proposedpay and benefits package combined.

It turns out that poor labor relations at any carrier is bad business.

July 2008

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July 20084 AirCargoWorld

UpdatesNews

The restructuring will includingscaling back DHL’s infrastructure inthe United States by about a third, in-cluding reducing pickup and deliveryroutes by about 17 percent andground linehaul by about 18 percent.DHL will use the U.S. Postal Servicefor part of its surface delivery.

The changes will cut losses to $900million next year and to $300 mil-lion by 2011, but DHL wouldn’t fore-cast profitability in the United States.The company insists only a small per-centage of its volume will be affected,including 1 percent of its pickups.

“We can take a lot of cost out with-out having any material impact onour customer base,” said John Mullen,chief executive of DHL Express.

The moves will have a big impacton ABX Air and ASTAR, and on thecommunity of Wilmington, Ohio, thesite of DHL’s main sort hub and, bythe way, where DHL owns the airport.

ASTAR, partially owned by DHL,is facing a potential demise whileABX will find out whether its at-tempts to diversify away from itscore client — moves that sharplyangered DHL management — willbe enough for that cargo airline tosurvive. “If DHL does everythingthey’ve indicated,” said ABX Presi-dent John Graber, “We would di-rectly lose 6,000 positions.”

The airline has struck outsourcedflight agreements with airlines in-cluding All Nippon Airways for its767 freighters and is part of the partof the renamed Air Transport ServicesGroup since the purchase of a smallercargo airline last year. Still, DHL’sdeal with UPS came as a shock tomany in Wilmington.

“We knew DHL was losing lots ofmoney and we were for months dis-cussing ways to help them reduce theirlosses,” Graber said. “But I was very

DHL Calls on UPS

DHL is taking a “radical and decisive” restructuring of itsbusiness in the United States that will reverberatethrough the air express around the world. Trying to stemlosses that could reach $1.3 billion in North America this

year, DHL essentially will unravel a large part of the ambitious ex-pansion it undertook in the United States in 2003 with the pur-chase of Airborne Express and turn the air transport it had con-tracted out to ABX Air and ASTAR Air Cargo over to UPS.

For UPS, the agreement is a bonanza that will bring in an estimated $1 bil-lion a year for the next year, although the companies had not signed a formalcontract yet last month.

Both sides say they will continue to fight aggressively for express business.But the competitive landscape for express parcel business in the United Statesis clearly changed, and DHL, once adamant that it was going to break the gripof a UPS-FedEx “duopoly” looks to be most interested now in getting U.S. ex-press traffic for its sprawling international network.

The agreement with UPS in many ways mirrors a blockbuster agreementFedEx struck with the U.S. Postal Service several years ago. Deutsche Post WorldNet CEO Frank Appel, who took over after DPWN chief Klaus Zumwinkel re-signed under a tax evasion investigation, said the pact with DHL will include noagreement for the companies to cooperate elsewhere in the world.

DHL holds less than 7 percent of the domestic parcel shipping market inthe United States and appeared to be losing ground to FedEx and UPS despiteinvestments that ran into the billions of dollars and losses that seemed to beaccelerating. Those losses triggered a sharp backlash among investors, and atthe end of 2007 several prominent investment houses called for DHL to cutback and even withdraw completely to focus on its profitable areas.

04NewsUpdateINT 6/20/08 1:23 PM Page 4


surprised by the path they chose.”

Fuel Rockets

At least until this spring, airlineshad found only one surefire

method for keeping their fuel spend-ing under control — fly less. Eventhat isn’t working any longer.

For more than a decade, U.S. carri-ers as a group kept their use of jet fuelremarkably steady, consuming virtu-ally the same amount of fuel in 2007as they used in 1998. Over the sameperiod, fuel spending grew more thanfour-fold, from $9.7 billion to $41.6 bil-lion, and that is just the start of thebad news for the carriers at the pump.

Through the first quarter, U.S. air-lines spent 49 percent more for jetfuel than during the same period lastyear, according to the Air TransportAssociation, even as cutbacks inflights, capacity and even carriers re-duced fuel consumption 0.2 percent.

And that was even before a sec-ond quarter run-up in crude oilprices sent jet fuel pricing skyrocket-ing to undreamed of levels.

Jet fuel prices, which were below$1 a gallon as recently as 2004,soared past $4 a gallon on worldmarkets last month for the first timein history, according to the U.S. En-ergy Information Administration.

Prices in key world marketspeaked at $4.241 a gallon in Europethe week of May 19, reaching a highin the United States of $4.171 a gal-lon in Los Angeles.

By the end of that full week, thecheapest average jet fuel price in theworld was at New York Harbor,where the $3.98-a-gallon rate wasabout 12 percent above the averageprice in April.

The latest increases mean jet fuelhas almost doubled in just a year,

adding about $2 a gallon since theaverage prices of May 2007. Mostairlines have ratcheted up fuel sur-charges with the increases at thepump but many say they are strug-gling to keep up with the rapid paceof rising energy costs.

Lufthansa says it spent $5.7 billionfor fuel last year, expects to spend$8.3 billion this year and already isforecasting $11.1 billion for fuelspending next year. “Our hedgingprogram has worked quite well sofar,” said Nils Haupt, a spokesmanfor Lufthansa Cargo, “but it runs outat the end of the year.”

For U.S. carriers, fuel consumptionhas been flat or declining for years.

The airlines burned 4.7 billion gal-lons of jet fuel in the first quarterand spent $12.8 billion to power theplanes. By contrast, the airlinesburned less fuel in the first quarter of2000 — 4.9 billion gallons — andspent $4 billion for the stuff.

Thinning Planes

The downsizing at a number ofprominent U.S. major airlines

could have a profound affect on thebelly cargo segment.

Amid soaring fuel prices, Ameri-can, United, Delta and Continentalairlines announced plans to slashtheir work forces, eliminate and re-duce flights as well as ground narrow-body and widebody aircraft.

United said it plans to retire all 94of its 737s and six 747-400s, whileContinental would reduce capacity by11 percent. American plans to groundup to 45 MD-80s as well as some olderwidebody aircraft, a 12 percent reduc-tion in capacity. American was plan-ning meetings with the U.S. PostalService on the impact of the MD-80groundings on mail traffic.

“The good news is that we’re notclosing that many stations,” saidDavid Brooks, president of AA Cargo.There also will be a reduction inhigh frequency markets “in an effortcorral the capacity in lower load fac-tor flights.”

The airline also is suspending servicebetween Chicago and Buenos Aires inSeptember, a good market for cargo,Brooks said, and between Chicago andHonolulu during the off-peak season,as well as a few other routes.

“The largest impact for widebodieswill be in San Juan,” Brooks said, “ahuge cargo market for us.” A numberof older Airbus aircraft will be re-turned to lessors and American will re-place them with several narrowbodies.

The impact on forwarders will beimmediate.

“Obviously, this is not positivenews for our industry,” said BrandonFried, executive director of the Air-forwarders Association. “Because a re-duction of flights and aircraft avail-ability translates into fewer choices.”

In addition to grounding of six 747-400s, United asked the U.S. Depart-ment of Transportation to delay for ayear the start of its Guangzhou service,which was scheduled to start in June.

Delta Vice President of Cargo NeelShah doesn’t expect the cargo side tobe affected significantly because “we’remainly taken out MD-88s and CRJ100s/200s, which aren’t cargo friendlyaircraft to begin with.” Delta willground two 757s and two 767-300s,but the delivery of numerous 777 longrange aircraft will “more than balance”the drop in widebody capacity, he said.

At Continental, 43 737-300s and -500s will be retired and replaced with30 737-800s and 900 extended-rangeaircraft. The newer aircraft have dis-played “stellar results,” said JackBoisen, vice president of cargo. “We

UpdatesNews


often load two-and-a-half tons moreonto those aircraft and they carry thelowest unit costs in our fleet.”

No retirements of widebody air-craft are planned, he said.

“I think the major industry capaci-ty reductions will reveal some hiddenrevenue opportunities,” said Boisen.

China Hazards

Thousands of shipments of dan-gerous goods worth billions of

dollars could be disrupted by newrules from China’s civil aviation au-thority restricting air transportationduring the Beijing Olympic Games.

All domestic shipments of danger-ous goods, except for medical itemsrelated to human diseases, to theairports of Beijing, Shanghai, Tianjin,Shenyang, Qinhuangdao and Qing-dao were to be stopped from July 1through Sept. 30 to enhance securityduring the Olympics.

Mike Morrissette, president of theDangerous Goods Advisory Council,said members of his 180-companytrade group have relayed partial andsometimes conflicting reports aboutproposed restrictions that have cre-ated uncertainty and confusion inthe shipping community.

The International Air Transport

Association said China authoritieshad told them “the directive is notapplicable to foreign airlines.”

Hazmat experts say shippers willhave to pay close attention to thepotentially confusing restrictions.“It’s not a good situation,” Morris-sette said. “All these various peopleand agencies (in China) have yet tocoordinate a grand plan. And untilthat happens there will be anamount of insecurity.”

The Civil Aviation Authority of Chi-na’s directive, numbered CAAC [2008]52, also requires formal approval fortransportation of certain classes of“hyper dangerous” materials at air-ports throughout China for the dura-tion. These include toxic gases not in-cluding aerosols, infectious sub-stances and radioactive materials.

Most dangerous goods move inand out of China by ocean, Morris-sette said, although air cargo is asignificant mode for time-criticalshipments.

China has become a significantproducer and shipper of dangerousgoods for both import and export,he said, as the nation’s industrial de-velopment has accelerated.

However, “I would not expect thissituation to carry on much beyond theactual Olympics,” said Morrissette.

Paper Savings

Lufthansa Cargo is pressing aheadwith its plans to conduct the first

paperless cargo transport from Ger-many by the end of this year.

That declaration was made crys-tal clear at the International AirTransport Association’s annualmeeting last month in Copen-hagen. “With the help of this ini-tiative, we intend to accelerate [e-freight] processes for the benefit ofour customers,” said Lufthansa Car-go Chairman Carsten Spohr.

Spohr said the company is prepar-ing for the first paperless shipmentfrom Germany by the end of 2008.

The paperless initiative is expectedto save the air freight industry around$1.2 billion annually by eliminatingpaper documents, says IATA.

The e-freight project began as partof IATA’s “Simplifying the Business”program in 2004 and moved into apilot phase in five markets in 2007.The findings from the trials will beput into practice in Germany andother major markets following com-pletion of the project in 2010.

Bleu Skies

The recent framework agree-ment for a Sino-European car-

go joint venture between AirFrance-KLM and China Southern isthe latest in East-West accords de-signed to tap the lucrative cargomarket of China.

This agreement, which still needsregulatory approval, calls for AirBleu, a new subsidiary of Air France-KLM, to not only handle air cargo,but to provide grounding handling,warehousing and agent services aswell as customs clearance and im-port and export services.

China Southern would hold 75


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July 20088

percent and Air Bleu 25 percent ofthe joint venture.

Leo van Wijik, deputy chairman ofthe Air France-KLM Group said theagreement “combines the strengthsof both companies in the cargo in-dustry and represents the basis fordelivering long-term value” to thecarriers as well as customers.

In late March, Lufthansa Cargoand Jade Cargo, in which Lufthansahas a sizable minority interest, ex-tended their sales and marketingagreement. Lufthansa Cargo is re-sponsible for marketing the airfreight capacity on all Jade Cargo’sflights between Europe and Asiathrough the 2009 winter timetable.The latest agreement also transfersthe marketing and sales partnershipbetween Jade Cargo and SwissWorldCargo to Lufthansa Cargo

.

Dropping China

Whether because of freight orfuel, Northwest Airlines decid-

ed freighter service to Guangzho,

China, no longer makes sense. Northwest moved into the South

China industrial city only last year asa replacement gateway for HongKong. Now, the carrier is shifting itsentire China focus to Shanghai,where NWA Cargo will operate 12weekly freighter flights.

The move is related to NWA Car-go’s grounding of the fuel guzzlingPratt & Whitney-powered 747-200freighters, which were used for theGuangzhou service. NWA Cargo op-erated 12 747-200s.

Dropping Guangzhou did not ap-pear to be related to the airline’s fearof overcapacity in Asia.

But some major combination air-lines have pulled cargo capacity outof the market as younger airlines withnewer, more fuel-efficient fleets haveramped up freighter operations out ofthe country.

British Beat

While many airlines foundthemselves mired in misery

this spring, British Airways numberswere soaring.

“We had our best March ever,”said David Shepherd, vice presidentof Americas of British Airways WorldCargo. Boosted by booming U.S. ex-ports, the Atlantic trade lane wasparticularly strong, he said.

The airline, Shepherd said, capital-ized on the down market by chang-ing its cargo mix, pricing competi-tively, reorganizing to open up newalternative U.S. gateways and cash-ing in on other opportunities, suchas sea-air shipping networks.

The strong month helped BAWCfinish the fiscal year ending March31 with $1.2 billion in cargo revenue,3 percent ahead of the previous year.After the impact of exchange ratemovements is removed, commercialrevenue was up 4.7 percent, a signof the dramatic impact of the weakerdollar on results.

Cargo revenue gained 30.4 per-cent to $318 million in the fourthquarter to March 31 and yield gained15.5 percent. ■

AirCargoWorld

UpdatesNews


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ReportsRegional


Deutsche Post’s move would es-sentially unravel part of DHL’s ex-pansion in the United States, en-abling the company to focus on in-ternational business as DPWN looksfor ways to stem the U.S. operation’slosses, expected to reach $1.3 billionthis year.

But first, DHL has to sever ties withits current carriers, ABX Air and AS-TAR Air Cargo. That’s causing angstfor public officials and union leaders,especially those in Wilmington,Ohio, DHL’s main domestic hub.

Officials there foresee the loss ofthousands of jobs.

“If DHL does everything they’veindicated, the end result is a loss ofaround 7,000 jobs in Wilmington,”ABX Air President John GraberGraber said. “We [ABX Air] would di-rectly lose 6,000 positions.”

DHL also owns the Wilmingtonairport, the largest privately ownedairport in the country. Jonathan Bak-er, director of public relations forDHL said the Wilmington air sorthub would be closed once the com-pany ends its relationship with ABXAir and ASTAR.

Some freight, he said, would beshifted to UPS’Louisville hub this

year, and the rest would be shifted toLouisville at the end of 2009. Wilm-ington is also DHL’s largest groundsorting facility and is used to clear

Deutsche Post World Net’s decision to outsource DHL Ex-press’ domestic U.S. airlift to UPS is drawing fire from acoalition of public officials and union forces — and thestate of Ohio.

The 10-year deal, which could bring some $10 billion to UPS, will face ex-tensive antitrust scrutiny.

Ohio Gov. Ted Strickland is calling for an investigation into whetherDPWN’s plans for DHL would violate U.S. antitrust laws by reducing competi-tion in the express package delivery market.

Facing the legal hurdle and an outcry over the impending loss of thousandsof jobs in the state, DPWN board member John Mullen, CEO of DHL Express,and Wolfgang Pordzik, DHL vice president of public policy, met in Washingtonwith Strickland and with Ohio’s congressional representatives.

One of them, Rep. Michael Turner, R-Ohio, is calling for an an-titrust investigation that goes beyond the initial UPS-DHL deal, saying there aresigns the two companies will forge similar arrangements in Europe and Asia.

Several unions also are threatening to sue to block the agreement with UPSon antitrust grounds.

Reversing Delivery Union, state officials protest Deutsche Post plans to cut U.S. airlines

ties to DHL, shift domestic business to UPS

by Michael Fabey

NORTH AMERICA

10RegionalsINT 6/20/08 1:24 PM Page 10

and sort international air freight.“We’re studying what to do with

those operations, whether to remainin Wilmington or go to alternate loca-tions,” Baker said.

DHL hasn’t said what it plans to dowith the airport, a former Air Forcebomber alert airfield from the 1960s.

Expensive Plan

DHL will be under pressure to re-pay $270 million in bonds the

Dayton-Montgomery County PortAuthority sold in March 2007 to backDHL’s expansion and upgrade of theWilmington hub. DHL has 40 years torepay the state.

DHL also was required to contin-ue debt service payments at theCincinnati airport after the compa-ny left its relatively new hub thereto consolidate express operations inWilmington.

For ASTAR, industry observers be-lieve it is a death sentence, with themove costing the former DHL Airwayssome $300 million and $400 million inannual revenue. For ABX, it amountsto more than $1 billion a year.

The Air Line Pilots Association,which represents about 500 ASTAR pi-lots, is considering a lawsuit to blockthe deal.

Another union, The IndependentPilots Association, which representsUPS pilots, said it supports ABX Airand ASTAR pilots.

“Our first reaction on hearing ofthe proposed deal was to ask UPS togive every consideration to any AS-TAR or ABX Air pilot who mightseek a job at UPS,” said IPA PresidentBob Miller.

DHL told ABX Air officials June 2that it was going to reduce the aircraftit would need from the ABX Air fleetby 39 jets over 12 to 18 months.

Pick UpWhile UPS prepares to pick up

DHL’s domestic volume, the U.S.Postal Service is extending its agree-ments with DHL to handle shipmentson the ground at various points in thedelivery chain.

“This new volume is a natural ex-tension of the delivery service we al-ready provide to DHL and further rec-ognizes the inherent value of the de-livery reach of the Postal Service,”said Jim Cochrane, acting vice presi-dent of ground packages for USPS.

The DHL-USPS agreement is part ofa broad restructuring DHL announcedMay 28 of its troubled U.S. operations.

Since 2003, the Postal Service hasprovided last-mile delivery for DHL inover 20,000 ZIP Codes nationwidethrough its Parcel Select service. TheDHL agreement includes arrange-ments through USPS Priority Mail andParcel Selection and continues the hy-brid DHL@home service.

DHL’s restructuring could lead tosignificant market share losses forDHL on the ground, as it hands offmore freight to the USPS, and somemarket share loss in the air. UPS said itwill aggressively compete for businessfrom DHL customers. “Both UPS andDHL understand that this does notchange the competitive dynamics atall,” said UPS spokesman Ken Sternad.

UPS, meantime, expects to add ca-pacity in coming years to handle theDHL business. The company alreadyhad 12 new freighters set for deliverythis year and next.

DHL created ABX and ASTAR asspin-offs because the company need-ed to adhere to U.S. prohibitionsagainst foreign ownership or controlof American-flag airlines. DHL set upan often awkward outsourced air ser-vices structure with recently acquiredAirborne’s former airline, ABX Air,

and the remnants of the former DHLAirways, now called ASTAR.

Joint Use

Colorado and its two main air-ports in Denver and Colorado

Springs to the south are not oftenassociated with air freight.

But the Colorado Springs Airport ispart of a multi-million project involv-ing two branches of the U.S. militaryand millions of pounds of equipmentand personnel.

The Arrival Departure Airfield Con-trol Group, or ADACG, a $52 millionfacility, will open this fall. The highlysecured facility, located on 81 acressouth of the passenger terminal build-ing, has an enormous ramp capable ofparking six C-5s, which will be bathedin light at night by seven 140-foot talllighting masts.

Mark Earle, aviation director for theairport, described it as a “rapid de-ployment facility” for troops andequipment processing” from nearbyFt. Carson Army base and the rest ofthe West.

The airport owns the land onwhich the facility sits and the U.S. AirForce provides the terminal services.But the primary responsibility for thefacility is the Army.

… Briefly

The United States and Kenyaagreed to an open skies aviation ser-vices treaty. … ABX Holdings, par-ent company of ABX Air, Air Trans-port International and Capital CargoInternational Airlines, changed itsname to Air Transport ServicesGroup. … Cathay Pacific addedfreighter flights to Miami and in-creased flights to three times a weekto Houston. … Cargo traffic at San


ReportsRegional


Francisco International Airportfell 2.3 percent in the first quarter, in-cluding a 14.7 percent drop in do-mestic cargo in March. … NWA Car-go now has the ability to print do-mestic shipment labels on Cargo Por-tal Services. … FreightScan, a de-veloper of technology for the freightand logistics industry, introducedCargoVizion, a 3D imaging system forcargo screening. … Forwarder Asso-ciated Global Systems joined theEnvironmental Protection Agency’sSmartWay Transport Partnership Pro-gram. … Freight traffic at Seattle-Tacoma International Airportfell 7 percent in March, including a14.7 percent decline in internationalimports. That left the airport down

5.8 percent in freight the first quar-ter, with inbound internationalfreight off 16.9 percent. …. UnitedAirlines mechanics voted to havethe Teamsters union as their collec-tive bargaining representative, theNational Mediation Board an-nounced. … Boeing and Airbuswill cooperate on the developmentof a next-generation air traffic con-trol system that will most likely re-duce airport congestion. … Ameri-can Airlines started daily 767-300flights between New York andBarcelona’s El Prat and Milan’sMalpensa airports. …MartinairCargo named Air Logistics Group itsgeneral sales agent for Chicago, NewYork and Washington. ... Vancou-

ver Airport Authority is partner-ing with Citi Infrastructure Investorsto pursue the sourcing, funding andmaximization of potential airport op-portunities through YVR Airport Ser-vices. ... Pacer Logistics bought theassets of Cargo Connection Logis-tics, the $17 million New York-basedair freight transport business that in-cludes container freight stations atairport. … Stirling Capital Invest-ments completed its fourth industri-al center at the Southern CaliforniaLogistics Center in Victorville, Calif.,a 296,490-square-foot Class A facility.… Delta Air Lines and Air Francelaunched joint service to LondonHeathrow out of New York, Los Ange-les and Atlanta. ■


ReportsRegional

Legal Notice

1.866.249.1588+ 1.941.906.4822

www.AirCargoSettlement.com

What are the Settlements about?

Plaintiffs claim that Deutsche Lufthansa AG, Lufthansa Cargo AGand Swiss International Air Lines Ltd., along with numerous other air

in violation of U.S. antitrust laws and Canadian competition law. TheSettlements provide an $85 million U.S. Fund to pay valid class memberclaims, and $5.338 million USD Canadian Fund that Canadian Class

Canadian classes.

Who is a Class Member?

You are a class member if you purchased air cargo shipping services,from ANY cargo carrier, for shipments within, to or from either theUnited States or Canada. This also includes services purchased throughfreight forwarders. All you need to know is in the Notice of ProposedSettlement, including information on who is or is not a class member.

How do I get Payment in the U.S. Settlement?

information on deadlines, call the number below or visitwww.aircargosettlement.com.

What are my rights?

If you do NOT want to take part in the U.S. Settlement or the

Canadian Settlement, you have the right to “opt out.” To “opt out” of theU.S. or Canadian Settlements, you must do so by November 12, 2008.Class members have the right to object to the U.S. or Canadian Settlements.If you object, you must do so by November 12, 2008. You may speak toyour own attorney at your own expense for help. For more information onhow to “opt out” or object, visit www.aircargosettlement.com or call thenumber below.

Final Approval Hearings to consider approval of the U.S. andCanadian Settlements and requests by the lawyers for attorneys’ feesand costs will be held at the United States District Court for the EasternDistrict of New York on December 12, 2008; the Ontario Superior Courtof Justice on January 28, 2009; the Québec Superior Court on March 9-10, 2009; and at the Supreme Court of British Columbia onFebruary 27, 2009. For more information on the locations and times ofthe Hearings, visit www.aircargosettlement.com, or call the number below.

This is a Summary, where can I get more information?

You can get complete Settlement information, including a copy ofthe full Notice of Proposed Settlement and U.S. Claim Form, and registerto receive updates about the administration of the Canadian Settlement,by visiting www.aircargosettlement.com, calling the number below, orwriting to Air Cargo Settlement, c/o The Garden City Group, Inc., P.O.Box 9162, Dublin, OH 43017-4162, USA.

If you purchased Air Cargo Shipping Services within, to or from either theUnited States or Canada from January 1, 2000 to September 11, 2006,

your rights could be affected by a Settlement


http://www.aircargosettlement.com




http://www.AirCargoSettlement.com


ReportsRegional

Has the gravitational pullof Europe shifted irre-deemably eastward? Itwould seem so, with a

former down run airport in theCold War Eastern Bloc of a oncedivided Germany now the focusof a new logistics heart of Europe.

The anointment of Leipzig/HalleAirport comes with the opening byDHL Express of its new $475 millionEuropean hub at the airport.

The DHL move seems certain toshift the parameters of the Europeanexpress and air freight sector furthereastwards towards the burgeoningmarkets of Eastern Europe and Russia.

And as far as the Leipzig/Halle air-port authorities are concerned, it’sexpected to create a groundswell ofinterest and investment from otherairlines and logistics providers. MajorDHL customers such as Amazon.comhave already moved their Europeandistribution hub toLeipzig as a direct resultof the decision made by DHL, theyclaim. Others are expected to follow.

But Leipzig/Halle airport is notwaiting for DHL to fire the startinggun in its bid to become a centralEuropean logistics hub. It has al-ready invested heavily in its future.

Cargo FirstOne of the first priorities was the

reconstruction and realignment of the airport’s second runaway. Now com-pleted, it provides the airport with a vital parallel runway system.

More significantly, initial investment also has been completed on what isknown as Cargo Area South. Apron space is available for up to six freighteraircraft. A 215,000-square-foot user cargo terminal, capable of handling

200,000 tonnes annually, is also now operational and maysoon be fully subscribed.

“We understand that the building is already working at about one third ca-pacity, but interest from service providers has been so strong that we expectthe building to be in full use within a short period,” said Airport Managing Di-rector Eric Malitzke.

There is space aplenty at Cargo Area South for further development, but forthe time being Leipzig/Halle is dominated by DHL. DHL created a virtuallyself-sustained site covering more than 21.5 million square feet. The main sortcenter at 516,000 square feet is capable of processing 60,000 parcels and36,000 documents per hour.

Said Scott Price CEO DHL Express Europe, “We are currently moving around1,500 tonnes per night, but expect this to rise to more than 3,500 tonnes by

Eastward HoA growing Eastern European and Russian market is redefining the

center of Europe for logistics providers.

EUROPE

by Roger Turney


2012. We have the space here to addanother two sort facilities of the samedimension, should we need them.”

Malitzke wants to maintain the lo-gistics momentum at Leipzig/Hallebut that can only be assured if othermajor carriers start diverting theirfreighters in his direction.

“We achieved some initial successlast year when a Chinese cargo carrierstarted scheduled service from Shen-zhen in China to Stockholm in Swe-den with a stopover at Leipzig/Halle,”he says. “They have since stoppedthis service, but we do now have Sin-gapore Airlines Cargo operating regu-lar freighter services.”

Bear FactsThe Russian cargo airline Tesis has

served Leipzig/Halle once a week sinceOctober last year. The company oper-ates a 747-200 freighter, which con-nects Nanking, China, with Leipzig/Halle and Moscow Sheremetyevo.

According to Malitzke, the airportwill soon sign up a second majorRussian freighter operator.

The new DHL/Lufthansa Cargojoint venture cargo airline, AeroLogic,will be based at Leipzig/Halle when ittakes to the skies early next year. Aero-Logic will eventually operate a fleet ofup to 11 777 freighters. Meantime,Lufthansa Cargo continues to provideseven of its MD-11 freighters for theexisting capacity sharing agreementwith DHL, which are now based atLeipzig/Halle, having moved fromCologne. On weekends, LufthansaCargo uses the capacity to supplementAsia and North Atlantic lift.

The airline currently uses facilitieswithin the DHL hub to handle itsown traffic. According to the airportauthority, Lufthansa Cargo is expect-ed to invest around $24 million in

the construction of a logistics centerat the airport with an annual capacityof 170,000 tonnes.

Lufthansa Cargo spokesman, NilsHaupt remains cautiously optimistic.“No formal announcement has beenmade about our plans to build a car-go terminal at Leipzig/Halle, but wedo expect a decision to be made verysoon,” he said.

Malitzke understands the operatorsconcerns about Leipzig/Halle’s con-nectivity to the rest of Europe, partic-ularly to existing major gatewayssuch as Frankfurt.

Some of those concerns may be al-layed with news that Leipzig/Hallewill, by September, be provided witha direct rail link to Frankfurt. Dedicat-ed overnight “air cargo” trains willlink the two centers.

DHL said it would be a major userof this new service. “We have beenworking closely with the German railauthorities and are now looking for-ward to the introduction of a dedicat-ed service by September,” said Price.”Although we expect to be the primeuser of this service, it will be operatedon a neutral basis and be available toall parties.”

Once again, Lufthansa Cargo ap-pears to be non-committal.

“We have been looking closely atthis proposal,” said Haupt. “But ourmain concern at the moment is beingable to load standard air freight con-tainers onto rail trucks.”

Panagia Out

Cargoitalia is starting over with anew board of directors after the

departure the departure of itsfounder and its board chairman.

Founder and Chief Executive Offi-cer Massimo Panagia left the finan-cially troubled company along with

Stan Wraight, a industry veteranwho had came to the Italianfreighter operator after heading Air-Bridge Cargo.

“I leave after the accomplishmentof a successful launch of the compa-ny that is now entered into its phaseof consolidation,” Panagia said in aprepared statement. “In less thantwo years of operations, Cargoitaliahas achieved a remarkable marketposition.”

Shareholders, who apparently engi-neered Panagia’s departure and arelooking for a buyer for the carrier,might debate whether the companyis that well positioned.

But the airline said in a statementthat it is looking at a “new industrialphase” under new CEO Holger vanden Heuvel and Chief Financial Offi-cer Paolo Giacometti.

"The commercial alliances, one ofCargoitalia’s strategic assets, will seefurther consolidation and develop-ment in order to cope with an in-creasingly difficult environmentwhich, however, still bears many in-teresting opportunities both locallyand globally," the airline said.

Panagia leaves a company that of-fers services to 10 destinations in theUnited States, Mexico, the UnitedKingdom, Germany United Arab Emi-rates, India and China.

“[It is] to early to say what I will donext,” Panagia said. “However, Istrongly believe in the potential oftalented organization in this indus-try, currently affected by this absurdpressure of [high] jet fuel cost.”

… Briefly

European airlines’ freight trafficedged up 2.8 percent in April on a 6.3percent surge in North Atlantic busi-


ReportsRegional


ness driven by exports out of theUnited States. Asia trade measured bythe Association of European Air-lines fell 1.1 percent in April. … TheAirbus Material and Logistics Centeropened at the Dubai InternationalAirport Free Zone. … The EuropeanGeneral Sales Agent Consortiumexpanded into its 35th country withthe addition of IBL Cargo in Mauri-tius. … Finnair’s freight traffic grew32.5 percent in the first quarter overthe same quarter a year ago. … TheFraport Group’s earnings beforetaxes rose 1.1 percent to $178.4 mil-lion for the first quarter of fiscal year2008, although revenue of $816.7million fell 5.9 percent short of theprevious year’s level. … Ceiba Cargostarted weekly A300 freighter flightsbetween Paris-Vatry Airport andMalabo, in Equatorial Guinea off thecoast of West Africa. … New Tunisiancarrier SBA Airlines named Glob-al Aviation its cargo general salesagent for the carrier’s developingA320 network and planned additionof A330 aircraft. Etihad CrystalCargo signed up for Abu Dhabi’s“customs gold card” program, whichincludes faster processing of goodsthrough customs and 90-day creditterms with Abu Dhabi Customs. …DHL opened its $473 million air

freight hub at Leipzig/Halle Airportin Germany; it expects to handle2,000 tons of air freight per night by2012. … British airline bmi namedTransnautic Aero Poland its car-go general sales agent for bmi’s of-fline business in Poland, whereTransnautic will use truck feeder ser-vices and flights by bmi sister com-pany bmiBaby to connect to the car-rier’s main network. … Cargo gener-al sales agent Transnautic Aerostarted 737 freighter service threetimes per week from Frankfurt Hahnto Moscow. … ForwarderPanalpina started direct freighterlink between Hungary, Russia andHong Kong, as part of its efforts tostrengthen its overall network andbetter serve Eastern Europe. … Car-go 2000 certified Brussels-basedground handler Aviapartner formeeting the standards requirementsof its quality management system. …GE Commercial Aviation Ser-vices placed six 737 freighters withthe four cargo airlines, including oneto Bluebird Cargo, part of the Ice-landair Group, and two to new cus-tomer, Bangalore, India-based Quik-Jet Cargo, which leased two. …Pointer Telocation, a producer ofautomatic vehicle location technolo-gy for ground fleet management,

and Madrid-based consultancy Tec-nosegur a, completed a pilot pro-gram to manage and secure passen-ger and cargo ground vehicle fleetsat Madrid Barajas InternationalAirport. … United Airlines Car-go appointed the Air LogisticsGroup its general sales agent inItaly, Austria, Hungary, Poland, Slo-vakia and the Czech Republic. …Skycooler, the cool container leas-ing company, signed its first long-term leasing contract with BritishAirways. … US Airways signed acontract with Aviapartner Cargofor cargo handling at the airline’s 13stations in Europe. … BimanBangladesh Airlines ordered four777-300 extended range aircraft andfour 787-8s. … Midex Airlines, acargo airline for the UAE, signed upfor Mercator’s SkyChain Lite, thenew end-to-end cargo reservationand business management softwaresystem. … Canada’s Zoom Airlinesnamed British Airways its cargohandling agent for its 42 weeklyflights through London Gatwick Air-port. … Maximus Air Cargo, theAbu-Dhabi based heavylift provider,more than tripled its revenue duringthe first four months of 2008 to$33.43 million compared to $10.2million in 2007. ■


ReportsRegional

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ReportsRegional


er cut-off times for 150 city pairs. For45 city pairs delivery can shift fromafternoon to morning.

“UPS is now working on the rout-ings and we do not expect increase intransit times for any major lanepairs,” Flick said.

Extensive air rights for UPS opera-tions and access to common carriagewere two other factors that appealedto the integrator.

In addition, the proximity to HongKong means that UPS will be able totruck intra-Asian traffic to and fromthat metropolis, with better cut-offand delivery times.

This is where Shenzhen trumpsGuangzhou in the eyes of UPS man-agement. “Guangzhou takes too longto truck to Hong Kong to allow allground movements,” Flick said.

Bigger Brown Perhaps more than anything else, it

was the robust growth of traffic to andfrom China itself that prompted BigBrown to opt for the Pearl River Delta.

The decision was driven by thebuoyant express pack-age sector, but air cargo

is also a strong magnet. “Since UPSbegan flying direct to China in 2001,we have watched the region grow ex-ponentially, not only from a smallpackage perspective but also in heavyairfreight,” said Flick.

To lose one integrator hub may look a trifle careless, to loseseveral suggests a problem. China’s gravitational pull isdrawing UPS to the Pearl River Delta to set up a new hubfor intra-Asia traffic.

As the epicenter for Asian express traffic follows the dragon, the Philippinesare drifting further to the periphery of air trade lanes. Ironically this is happen-ing after their strongest year of growth.

After six years at the former Clark Air Force Base, where it has been runningits $300 million intra-Asia hub, UPS announced this spring it is going to estab-lish a new hub facility for traffic flows within Asia at Shenzhen. The integra-tor’s future Asian center, which has a price tag of $180 million, isscheduled to be fully operational by 2010. It is going to occupy amillion square feet and will be able to process up to 18,000 pieces per hour inthe initial stage, with expansion capacity to twice that amount.

The integrator cited several reasons for the move. For one thing, transittimes will be shorter, as its intra-Asian flows have shifted west over the years.

According to UPS international spokesman John Flick, management expectsto shave a full day off transit time on almost 200 city pairs and anticipates lat-

Manila’s Outbound UPS is decamping to China, leaving the Philippines wondering

about its burgeoning economy

PACIFIC

by Ian Putzger


Over in Manila, the Filipino gov-ernment felt compelled to approachUPS to discuss keeping some activitiesat Clark, perhaps even to relocatesome functions from elsewhere in theregion. According to reports citing anaide to the president of the Philip-pines, UPS has been asked to changethe set-up at Clark to offer “logisticsand supply chain solutions patternedafter its facilities in Louisville.”

UPS said it was exploring placingalternative facilities at Clark, addingthat “the country continues to be animportant market for us. We willmaintain our presence in Clark andManila and continue to use Clark asour gateway for imports and exportsin the Philippines.”

The worries in Manila are under-standable.

A few years ago, the Philippineswere the center of the Asian expressworld, boasting the regional hubs ofUPS, FedEx and DHL. Deutsche Post’sexpress arm has since decamped toHong Kong, and FedEx this year isshifting its Asian hub to Guangzhou,where it has spent $150 million to setup a facility with twice the capacityof its operation at Subic Bay.

Outbound Freight The exodus from the Philippines al-

so extends to regular freighters. KoreanAir concluded late last year that vol-umes in the Philippines did not justifya full 747 freighter service and com-bined Manila with a freighter servicefrom its home to Singapore and Jakarta.

Lately there have been rumors thatIntel is looking to move out of thePhilippines.

What adds to the frustration is thatall this is happening after a recordyear of growth. Having fallen behindmany Asian rivals with annual growth

of around 2 percent, the economygrew by at least 5 percent per annumfor the past four years and recorded arecord 7 percent increase in 2007.

Recent developments have beenless inspiring, however. High fuelcosts have further undermined the vi-ability of garment exports to NorthAmerica, which were already saggingas a result of the exchange rate.

According to Global Cargo Carri-ers, an outfit established to promotedevelopment of air cargo and logis-tics industries in the country, manygarment exporters that used to relyon the U.S market have closed shop.On the ocean side, the Philippine In-ternational Seafreight Forwarders As-sociation reported a visible decline incargo volume headed for the UnitedStates during the past six months.

Shortly after the UPS announce-ment, the Philippines and Canadaconcluded a new aviation treaty thatushers in greater access for passen-ger airlines and unlimited cargoflights and fifth freedom rights forfreighter operators.

The air cargo community in thePhilippines welcomed the agreement,but they would be more delighted ifinternational carriers were to makeuse of existing traffic rights.

… Briefly

International air freight traffic grew2.1 percent in April among Asia-Pacif-ic airlines, but carriers reduced capaci-ty 0.3 percent from the same month ayear ago, according to the Associa-tion of Asia Pacific Airlines. Ca-pacity has been virtually flat for theairlines since last September. … DHLExpress Singapore renamed its de-livery portfolio based on shipping op-tions, calling the new services speed,

destinations and weights. … CathayPacific Airways received its first ofsix 747-400 extended-range freighters.… Japan Airlines internationalfreight revenue fell 1.2 percent in itsfiscal year ending March 31 to $1.77billion as traffic fell 1 percent fromthe previous year. The decline acceler-ated in the last three months of theyear, with traffic falling 2.3 percent inthe January-March period, including a4.6 percent drop in March and fol-lowed by a 2.1 percent slip in April. …Freight volume for Hong Kong AirCargo Terminals expanded 6.3 per-cent in April and was up 6.5 percentin the first four months of 2008, in-cluding a 16.9 percent gain in trans-shipment cargo. … Tonnage for AsiaAirfreight Terminals, the No. 2cargo handler in Hong Kong, grew 11percent in the first quarter over lastyear. … AirBridge Cargo launched747 freighter service to Moscow out ofHong Kong and Shanghai. ABC alsonamed Indo-Trans Logistics Avia-tion Services its general sales agentin Vietnam and Eurussia Air Cargoits GSA in Korea. … Shenzhen-basedJade Cargo International wet-leased a 747-400 extended rangefreighter for one year to Singaporebased Jett8 Airlines Cargo. Jadealso boosted its Amsterdam-Shenzhenservice to daily. … India’s Jet Air-ways began accepting dangerousgoods on its international flights. ...Logistics operator Dascher signed acooperation agreement with theGaungzho Baiyun InternationalAirport aimed at improving clear-ance and transit times for goods mov-ing through the airport. … The Civ-il Aviation Authority of Singa-pore and Certis CISCO signed a five-year contract to provide a wide rangeof security services at SingaporeChangi Airport. ■


ReportsRegional



http://www.dhl.com/georgehannon

Feature Focus: Top 50 Airports

20F1-TopAirports’08INT 6/20/08 1:25 PM Page 20


The rapid growth in cargo trafficat airports in Asia and the Middle East may be slowingdown, but the expansion remains the dominant featureon a world cargo trading map that is tilting decidedly to-ward the regions. The shifting global landscape comes asthe cargo map in the United States is showing the impactof big changes in both the international arena and do-mestic shipping, leaving many second-tier airports facingdeclining freight numbers in the wake of an economicslowdown and capacity cutbacks by belly carriers.

The latest Air Cargo World list of the world’s largest car-go airports, compiled from numbers from Airports Coun-cil International and the airports, shows Memphis Inter-national, home to FedEx, still at No. 1 in the world.

But Hong Kong International remains No. 1 for in-ternational air transport, and Hong Kong is edgingcloser to Memphis. HongKong’s growth outpacedMemphis again last year andit was even ahead of the FedEx hub again inthe first few months of 2008, putting HongKong in reach of surpassing the world’slongtime top cargo airport.

Hong Kong’s expansion comes even as governmentand carrier attention increasingly flows toward HongKong’s closest competitors, the airports of MainlandChina.

In Southern China, a short drive from Hong Kong,Baiyun Guangzho grew 6.4 percent last year and nearbyShenzhen was up 10.1 percent, but both will see stillgreater growth soon enough. FedEx’s hub at Guangzhohas been under construction and UPS announced thisspring that it will move its intra-Asia hub to Shenzhen.

At No. 5 overall, Shanghai Pudong remains the topgrowth market by cargo volume, with a 15.5 percentgrowth, reflecting the continued potential from theworld’s most populated country.

Seoul Incheon remained No. 4, despite a slowdownfrom its primary carrier, Korean Air, as well as the threatposed by Chinese airports as alternative gateways forNortheast Asia. China figures strategically in Incheon’sfortunes. Last year, transshipment traffic for the firsttime surpassed origin/destination cargo, and China ac-counted for a large portion of that cargo.

Anchorage International, a transit stop for East-Westtraffic and a maintenance center for Northwest Airlines,remains at the No. 3 spot and all signs point to furthergrowth in cargo volume at this Alaska gateway.

At No. 38, Liege, the main hub for TNT, and transit

point for Atlas Air, leads year-over-year growth among theTop 50 cargo airports, with 20.6 percent increase in cargovolume, followed by Milan Malpensa Airport (16 percent)and Beijing Capital Airport (15.8 percent).

Frankfurt came in at No. 7,despite only posting a 1.9 per-cent growth in tonnage last year. Lufthansa and DHL Ex-press are moving cargo to Leipzig and elsewhere and Frank-furt must contend with onerous nighttime flight restrictionsthat allow for only 17 flights between 11 p.m. and 5 a.m.

The bright spot for airport expansion remainsthe Middle East and India. At No. 13, Dubai, which has be-come a viable gateway for cargo to Europe and Asia and

transit point for cargo from Africa, grew 11 percent in car-go volume last year. Although not yet in the Top 50, AbuDhabi and Sharjah continue to inch up the list with 22.7

percent and 16.2 percent traffic growth in 2007, a sign thatDubai is not the only cargo center of note in the

Middle East.Freight tonnage for Mumbai and

New Delhi continue to increase with12.1 percent and 8.7 percent increases in 2007, despite

an infrastructure that significantly limits long-term growth.A disturbing trend is the continued decline in cargo vol-

ume at many U.S. gateways. Cargo volume at New York’sJohn F. Kennedy and Newark airports declined last year 2.8percent and 2.7 percent, respectively. Cargo volume alsodeclined at Chicago O’Hare, Oakland and Dallas/Ft Worth.

Even more alarming is the precipitous drop in freighttonnage at the mid-size and small markets, indicating fur-ther the deterioration of the domestic air cargo market. Theslides at several airports stretched into double digits andmany are facing lighter traffic this year and in the future asmajor U.S. passenger carriers slash flights and aircraft guage.

The consolidation of DHL Express traffic onto the UPSnetwork also will consolidate that volume at the airportsserved by UPS.

Cargo volume plummeted 25.7 percent at San Diego,while Charlotte-Douglas saw a 16.3 percent drop. Colum-bus Rickenbacker and Tampa dropped 12.1 percent and10.6 percent, respectively, while San Jose, Calif., cargo vol-ume was off 9.5 percent. Indiana’s Ft. Wayne Airport saw a44.6 percent drop in cargo volume, largely because of thedemise of Kitty Hawk Air Cargo.

Even growth at the front running Middle East and Asiaairports, whose growth in the past led the way, likely willcontinue to taper off until the economy improves and fuelcosts become manageable. For now, any growth in freighttonnage is good news. ■




WORLD PERCENT (%)RANK AIRPORT COUNTRY TONNAGE CHANGE COMMENTS

1 MEMPHIS (MEM) United States 3,840,574 4.0 The main hub and headquarters for FedEx Express is also a regional passenger hub forNorthwest Airlines

2 HONG KONG (HKG) China 3,772,673 4.5 Third cargo terminal to be finished in 2011; an Asia hub for DHL and main hub for Cathay Pacific/Dragonair.

3 ANCHORAGE (ANC) United States 2,826,499 0.6 Figures include transit cargo; a major trans-Pacific transit point for carriers including FedEx, UPS, Northwest

4 SEOUL INCHEON (ICN) South Korea 2,555,582 9.4 Hub for Korean Air; centerpiece of government plan to foster Asia logistics business

5 SHANGHAI PUDONG (PVG) China 2,494,808 15.5 Secondary hub for freighter operator Great WallAirlines China Eastern hub; UPS China base

6 PARIS DE GAULLE (CDG) France 2,297,896 7.8 Main hub for Air France; a European hub for FedEx and La Poste

7 TOKYO NARITA (NRT) Japan 2,252,654 (1.2) Hub for Japan Airlines and gateway for Northwest Airlines Cargo

8 FRANKFURT (FRA) Germany 2,169,025 1.9 Hub for Lufthansa Cargo; manager Fraport also runs nearby Frankfurt Hahn Airport; Main air hub for UPS

9 LOUISVILLE (SDF) United States 2,078,290 4.8 Main air hub for UPS, now taking on DHL Express domestic U.S. traffic

10 MIAMI (MIA) United States 1,922,982 5.0 Main gateway for U.S.-Latin America traffic; a regional hub for American Airlines

11 SINGAPORE (SIN) Singapore 1,918,159 (0.7) Home to Singapore Airlines; Swissport opened cargo terminal in 2005 as third freight handler at Singapore Changi

12 LOS ANGELES (LAX) United States 1,877,876 (1.5) Largest U.S. trans-Pacific gateway; FedEx has largest single share of cargo, all domestic; Korean Air is largest international carrier

13 DUBAI (DXB) United Arab Emirates 1,668,506 11.0 Emirates base; Dubai Cargo Village being expanded

14 AMSTERDAM Netherlands 1,651,385 5.4 Hub for KLM; AirBridge Cargo, Jade Cargo; SCHIPHOL (AMS) hosting TIACA Air Cargo Forum in 2010

15 TAPEI (TPE) Taiwan 1,605,681 (5.5) Base for EVA Airways and China Airlines M



http://www.thaicargo.com


http://airbus.com



16 NEW YORK KENNEDY (JFK) United States 1,595,577 (2.8) The largest U.S. trans-Atlantic gateway; American Airlines holds more than 10 percent of cargo market, FedEx 9 percent.

17 CHICAGO O’HARE (ORD) United States 1,524,419 (2.2) Main hub for United Airlines; controversial proposal to add third Chicago region airport under consideration Emirates base; Dubai Cargo Village being expanded

18 LONDON HEATHROW (LHR) United Kingdom 1,395,909 3.9 British Airways hub

19 BANGKOK (BKK) Thailand 1,220,001 3.2 Thai Airways hub; the new Bangkok Suvarnabhumi International Airport replaces Don Muang airport

20 BEIJING (PEK) China 1,191,048 15.8 Main base for freighter oprator Great Wall Airlines, and for Air China Cargo

21 INDIANAPOLIS (IND) United States 1,056,517 1.2 The second-largest FedEx Express U.S. hub

22 NEWARK (EWR) United States 943,174 (2.7 Continental Airlines hub; FedEx regional hub

23 LUXEMBOURG (LUX) Luxembourg 856,740 14.0 Cargolux hub

24 TOKYO HANEDA (HND) Japan 851,551 1.7 Mainly domestic but fourth runway in 2009 to add international Asia flights

25 OSAKA (KIX) Japan 845,996 0.5 Freighters from FedEx, UPS and NCA;

26 BRUSSELS (BRU) Belgium 728,689 2.1 Base for Cargo B freight airline

27 DALLAS/FT WORTH (DFW) United States 724,957 (3.5) American Airlines hub and regional hub for UPS; Cathay Pacific, KLM have added freighter flights

28 ATLANTA (ATL) United States 720,209 (3.5) Harsfield-Jackson is world’s busiest passenger airport and a Delta Air Lines hub

29 COLOGNE (CGN) Germany 710,244 2.8 UPS Europe hub

30 GUANGZHO (CAN) China 694,923 6.4 China Southern base; construction of FedEx intra-Asia hub to be completed in 2008; picked by UPS as new intra-Asia hub UPS Europe hub

31 KUALA LUMPUR (KUL) Malaysia 648,015 (3.7) MASKargo; hosting TIACA Forum 2008

32 OAKLAND (OAK) United States 647,613 (2.9) FedEx regional hub





33 SHENZHEN (SZX) China 616,058 10.1 Jade Cargo, FedEx, Lufthansa Cargo

34 SAN FRANCISCO (SFO) United States 560,501 (5.8) United Airlines hub; Cargolux service

35 PHILADELPHIA (PHL) United States 543,450 1.9 UPS regional hub

36 MUMBAI (BOM) India 536,432 12.1 Jet Airways, Kingfisher Airlines, Cathay Pacific freighters Air Canada hub, Canada’s largest airport undergoing 10-year improvement plan, including new infield cargo terminal

37 TORONTO (YYZ) Canada 511,388 1.0 Air Canada hub, Canada’s largest airport undergoing 10-year improvement plan, including new infield cargo terminal Varig; United Airlines

38 LIEGE (LGG) Belgium 489,746 20.6 TNT Express main European hub; tonnage has doubled since 1999.

39 SAO PAULO (GRU) Brazil 488,485 (1.5) Varig Logistics; United Airlines

40 MILAN MALPENSA (MXP) Italy 486,169 16.0 Alitalia MD-11 freighters, including new cargo flights this year to Miami; tied with Frankfurt among all European airports for first in annual Excellence survey

41 ONTARIO (ONT) United States 483,310 (1.9) UPS regional hub, including China flights; UPS with 70 percent tonnage share, FedEx 23 percent

42 NEW DELHI (DEL) India 432,961 8.7 Blue Dart Express base; Jet Airways; Air India Philippine Airlines hub

43 MEXICO CITY (MEX) Mexico 411,385 (1.3) Aeromexico; American Airlines; Estafeta Cargo

44 HOUSTON (IAH) United States 410,632 0.8 Continental Airlines hub

45 JAKARTA (CGK) Indonesia 399,381 4.0 Garuda Indonesia

46 COPENHAGEN (CHP) Denmark 395,506 4.1 Freighter tonnage grew 7.6 percent

47 SHANGHAI HONG QIAO (SHA) China 388,815 6.9 Shanghai’s older, second airport

48 MANILA (MNL) Philippines 387 154 (5.6) Philippine Airlines hub

49 BAHRAIN (BAH) Bahrain 378,672 5.6 Gulf Air hub Shanghai’s older, second airport

50 TOLEDO (TOL) United States 361,846 2.4 BAX Global U.S. hub

Source: Airports Council International, airport reports





Europe’s top 40 cargo airports in 2007(in tonnes)

WORLD %RANK AIRPORT COUNTRY TONNAGE CHANGE

6 PARIS DE GAULLE (CDG) France 2,297,896 7.8

8 FRANKFURT (FRA) Germany 2,169,025 2.0

14 AMSTERDAM (AMS) Netherlands 1,651,385 5.4

18 LONDON HEATHROW (LHR) U.K. 1,395,909 3.9

23 LUXEMBOURG (LUX) Luxembourg 856,740 14.0

26 BRUSSELS (BRU) Belgium 728,689 2.1

29 COLOGNE (CGN) Germany 710,244 2.8

38 LIEGE (LGG) Belgium 489,746 20.6

40 MILAN MALPENSA (MXP) Italy 486,169 16.0

46 COPENHAGEN (CPH) Denmark 395,506 4.1

53 MADRID BARAJAS (MAD) Spain 356,427 (1.0)

55 ISTANBUL (IST) Turkey 341,514 14.7

60 EAST MIDLANDS (EMA) U.K. 304 853 1.2

63 ZURICH (ZRH) Switzerland 290,653 3.4

69 MUNICH, DE (MUC) Germany 265 607 (0.7)

80 LONDON STANSTED (STN) U.K. 228,759 (6.9)

86 VIENNA (VIE) Austria 205,045 1.6

95 LONDON GATWICK (LGW) U.K. 176,807 (19.7)

98 MANCHESTER (MAN) U.K. 166,438 10.0

102 ROME (FCO) Italy 154,439 (6.1)

107 HELSINKI (HEL) Finland 139,328 3.3

109 MILAN LINATE (BGY) Italy 133,941 (4.0)

110 MOSCOW DOMODEDOVO (DME) Russia 133,662 5.8

112 MOSCOW SHEREMETYEVO (SVO) Russia 128,152 5.4

117 STOCKHOLM ARLANDA (ARN) Sweden 122,922 10.5

118 ATHENS (ATH) Greece 118,959 (1.0)

122 HAHN (HHN) Germany 111,687 (0.5)

124 OSTEND-BRUGES (OST) Belgium 108,952 10.6

125 DUBLIN (DUB) Ireland 107,921 (7.5)

127 BARCELONA (BCN) Spain 100,009 1.3

130 OSLO (OSL) Norway 97,310 7.9

132 PARIS ORLY (ORY) France 94,920 (0.4)

133 LISBON (LIS) Portugal 94,693 (4.8)

139 HAMBURG (HAM) Germany 86,997 5.3

142 LIEPZIG (LEJ) Germany 85,361 NA

161 LILLE (LIL) France 68,413 8.0

169 GOTEBORG (GOT) Sweden 61,790 3.6

170 KEFLAVIK (KEF) Iceland 61,534 (0.4)

174 BUDAPEST (BUD) Hungary 58,885 (9.6)

176 BILLUND (BLL) Denmark 58,612 4.7

Source: Airports Council International, airport report

Europe Top 40North America’s top 40 cargo airports in2007 (in tonnes)

WORLD %RANK AIRPORT TONNAGE CHANGE

1 MEMPHIS (MEM) 3,840,491 4.0

3 ANCHORAGE (ANC) 2,825,511 0.6

9 LOUISVILLE (SDF) 2,078,947 4.8

10 MIAMI (MIA) 1,922,982 5.0

12 LOS ANGELES (LAX) 1,884,317 (1.2)

16 NEW YORK KENNEDY (JFK) 1,595,577 (2.8)

17 CHICAGO O’HARE (ORD) 1,524,419 (2.2)

21 INDIANAPOLIS (IND) 1,056,517 1.2

22 NEWARK (EWR) 943,174 (2.7)

27 DALLAS/FT WORTH (DFW) 724,957 (3.5)

28 ATLANTA (ATL) 720,209 (3.5)

32 OAKLAND (OAK) 647,613 (2.9)

34 SAN FRANCISCO (SFO) 560,501 (5.8)

35 PHILADELPHIA (PHL) 543,285 1.9

37 TORONTO (YYZ) 511,388 0.1

41 ONTARIO, CALIF. (ONT) 483,310 (1.9)

44 HOUSTON (IAH) 410,632 0.8

50 TOLEDO (TOL) 361,846 2.4

52 WASHINGTON DULLES (IAD) 358,526 2.2

57 SEATTLE-TACOMA (SEA) 319,582 (6.5)

61 BOSTON (BOS) 298,046 (8.3)

70 DENVER (DEN) 260,287 (7.7)

71 PHOENIX (PHX) 256,817 (10.5)

73 PORTLAND (PDX) 254,744 (0.8)

75 MINNEAPOLIS/ST PAUL (MSP) 249,759 (9.3)

76 ALLIANCE (AFW) 235,062 13.8

82 DETROIT (DTW) 214,152 (3.8)

83 VANCOUVER (YVR) 223,267 0.1

88 ROCKFORD (RFD) 214,094 7.5

89 ORLANDO (MCO) 196,771 2.5

94 SALT LAKE CITY (SLC) 177,686 (2.0)

101 HARTFORD/SPRINGFIELD (BDL) 162,930 (2.4)

102 MONTREAL-TRUDEAU (YUL) 156,947 2.4

106 WINNIPEG (YMG) 148,601 (0.1)

107 SAN DIEGO (SAN) 140,308 (25.7)

109 CHARLOTTE (CLT) 139,693 (16.3)

110 FORT LAUDERDALE (FLL) 137,219 (7.4)

111 CALGARY (YYC) 134,250 5.5

115 SAN ANTONIO (SAT) 127,808 (0.8)

116 KANSAS CITY, MO (MCI) 127,620 (5.5)

Source: Airports Council International, airport reports

North America




Asia’s top 25 cargo airports in 2007 (in tonnes)


2 HONG KONG (HKG) China 3,772,673 4.5

4 SEOUL INCHEON (ICN) Korea 2,555,582 9.4

5 SHANGHAI PUDONG (PVG) China 2,494,808 15.5

7 TOKYO NARITA (NRT) Japan 2,252,654 (1.2)

11 SINGAPORE CHANGI (SIN) Singapore 1,918,159 (0.7)

15 TAIPEI (TPE) Taiwan 1,605,681 (5.5)

19 BANGKOK (BKK) Thailand 1,220,001 3.2

20 BEIJING (PEK) China 1,191,048 15.8

24 TOKYO HANEDA (HND) Japan 851,551 4.3

25 OSAKA (KIX) Japan 845,996 0.5

30 GUANGZHOU (CAN) China 694,923 6.4

31 KUALA LUMPUR (KUL) Malaysia 648,015 (3.7)

33 SHENZHEN (SZX) China 616,058 10.1


46 JAKARTA (CGK) Indonesia 384,050 11.5

47 SHANGHA HONG QIAO (SHA) China 388,815 6.9

48 MANILA (MNL) Philippines 387,154 (5.6)

56 CHENGDU (CTU) China 328,429 11.1

62 FUKUOKA (FUK) Japan 292,671 0.1

64 NAGOYA (NGO) Japan 276,377 (10.0)

67 SAPPORO (CTS) Japan 274,253 2.7

74 NAHA (OKA) Japan 249,870 5.2

78 KUNMING (KMG) China 232,647 6.1

84 JEJU (CJU) Korea 223 379 (12.8)

85 PENANG (PEN) Malaysia 208,826 (7.6)

89 XIAMEN (XMN) China 193,625 10.6

Source: Airports Council International

Asia Top 25 Airports

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Region Focus:Intra-China

China Seeks

DomesticBliss

b

China Seeks

DomesticBliss

30F2-ChinaINT 6/20/08 1:27 PM Page 30

The dragon hasn’t been soaring quite as high over the past 18

months. China’s seemingly insatiable appetite for air freight capacity to

North America and Europe is no longer guaranteeing stellar yields for

airlines, as capacity out of the major gateways has grown faster than

demand. Several carriers, including notables such as Air Canada or

Northwest Airlines, have even pulled capacity out of the market.

By contrast, China’s domestic sector appears to be a bonanza waiting

to be fully tapped. Growth rates have been strong and are expected to

keep their momentum, drawing more carriers into a market with a

population estimated at 1.3 billion people.


by Ian Putzger

Forwarders and shippers

say demand for

intra-China transport is

growing, but capacity is

lagging behind

Forwarders and shippers

say demand for

intra-China transport is

growing, but capacity is

lagging behind


Jingli Zhang, head of Beijing-basedexpress provider BPS Global said thatChina’s express business grew well inexcess of 10 percent last year, “proba-bly close to 20 percent.”

By Boeing’s measure, China’s do-mestic air freight market has grown 20percent a year since 1990 and shouldreach $3.35 billion in 2010. The CivilAviation Administration of China pro-jects the country’s airports will process11.8 million metric tons in 2010, withan average annual growth rate slightlysouth of 14 percent.

According to Airbus, China willneed some 130 new freighters overthe next two decades to cope with theincrease in traffic during that period.The plane maker’s analysts forecastChina’s international market to grow8.5 percent a year on average, whilethe domestic sector should show an-nual average growth of 10.5 percent.Boeing predicts 10.8 percent annualgrowth for China’s domestic air cargomarket over the next 20 years.

Over the next decade some 48 newmajor airports are expected to becomeoperational, adding to the existing130 around China today. The govern-ment has ambitious plans to maintainthat momentum beyond 2018.

Beijing is looking to spend $64 bil-lon on infrastructure developmentsfocused on building air cargo traffic.

This spring, the central govern-ment unveiled its long-term plans todevelop air cargo. The document callsfor the construction of 97 new air-ports, consolidation of some smallerairports and upgrading some existingones — namely the major hubs — be-tween now and 2020.

Under the plan, GuangzhouBaiyun and Shanghai Pudong will beupgraded to fulfill greater theirstrong potential as international car-go hubs. Beijing should get a secondairport, with the capital’s existingone to be developed into an interna-tional cargo gateway.

In central China, the governmentintends to upgrade Wuhan andZhengzhou into regional centers,while Shenyang has been earmarkedas the major hub in northeasternChina. Other key hubs in the net-work will be the airports at Chengdu,Chongqing, Urumqi and Kunming.

So far, China’s domestic marketis dominated by home grown

players, but the major multination-al operators are finding it increas-ingly difficult to resist the siren callof the market.

“It’s quite a key point in ourgrowth strategy. It’s a small numbertoday, probably 4 to 5 percent of ourvolume, but it is growing,” said An-drew Jillings, chief executive officerfor China of Schenker.

Armed with domestic air freightlicenses for 17 cities, DHL GlobalForwarding launched a intra-Chinaforwarding network at the start oflast year. This year it added branch-es in Changsha, Hefei and Chang-shun. Through partnership agree-ments, the network now includes40 cities.

This year, DHL Global Forwardingintends to set up four hubs for do-mestic air freight transit, according toSteve Huang, country manager forChina. By 2013, the company wants



Bill

ion

s o

f F

TK

s

0

1

2

3

4

5

6

7

2017F2016F2015F2014F2013F2012F2011F2010F2009F2008F2007E20062005

Forecasted Annual Growth Rate (2008-20017): 7.1%

Intra-China: 2008 - 2017 Freight ton kilometers

Source: OAG


to have altogether 30 licenses to cov-er 70 cities.

FedEx struck an alliance with bud-get carrier Okay Airways, which hadearlier flirted with Korean Air Cargo,and established a hub in Hangzhoulast spring. At the end of May 2007,the integrator was ready to launch itsown domestic China express servicewith a next-business-day, time-defi-nite offering and a 48-hour day-defi-nite service available in 30 and over200 cities respectively. Three 737freighters operated by Okay are thebackbone of the operation.

Airbus estimates China’s freighterfleet will grow 11-fold over the next20 years. Forwarders would love tosee this happen, and better tomorrowthan the day after, as freighter lift isscant at the moment.“With the exception of some routes,there is no maindeck capacity avail-able,” said Robert Timmerman, re-gional chief executive for GreaterChina at Panalpina.

The integrators and their contractairlift providers such as Okay orYangtze River Express, which flies forUPS, have shown little inclination tomake capacity available to the for-warding community, agents reported.

Jade Cargo International and GreatWall Airlines, the joint venturefreighter carriers backed by interna-

tional carriers, are likewise not activein the domestic market at the mo-ment, although they do fly some in-tra-China sectors. BPS Global usesChina Post Airlines on a regular basis.“They have some capacity for themarket, and their departure times suitexpress shipments well,” said Zhang.

By his estimate, well over 90 per-cent of China’s domestic air freightmoves in bellyholds of passengerplanes. The distribution of that lift israther lopsided, however. There is

ample widebody capacity on thetrunk routes connecting the majorhubs, but on most other sectors thepassenger airlines are using narrow-body equipment.

“Capacity constraints are a fact oflife,” said Timmerman.

He said infrastructure in China’s in-terior needs improvements, and oper-ators face concerns over runway ca-pacity and security issues to cargo ter-minals and customs clearance capabil-ities. Outside the major hubs, “many


Ot’s generally accepted that soaring fuel costs are promptingshippers and forwarders to shift traditional air freight goods toocean for international but some believe there could be a moresurprising modal shift in the domestic China market.

“In view of oil price increases, we expect air freight’s sharewill be eaten away step by step by rail transportation,” TobiasLubecki, a spokesman for Jade Cargo International. “Rail trans-port speed keeps increasing.”

Forwarder investment in rail transport has been growing in Europeand officials there and in Asia say that is both because of cost and thestate of road infrastructure, where congestion can slow down goodson highways.

China has many thousands of miles of highways under constructionbut rail transport is largely seen as a more dependable, and secure,method of shipping.

Road feeder systems exist in major economic regions, said Lubecki,but connections between gateways and many points are not nearly asregular as rail.

For Jade, linehaul connections with domestic carriers have beenproblematic.

“Commercially, the very low international inbound revenue willnot provide additional profit when connecting the domestic flightsbecause of the additional terminal and handling costs involved,” he said.

Even then, the carriers would have to deal with freight moving fromwidebody 747s to the smaller 737s. “Operationally, it is difficult to con-nect the main deck freight to the belly capacity of domestic pax flights,which is unattractive in terms of efficiency,” Lubecki said.

International freight carriers could set up their own domestic feederoperation, of course, but that likely would need intra-China service tomake economic sense and Jade has a very specific amount of domes-tic freight it is interested in: “I would say zero, as Jade doesn’t reallyfocus on the intra-China market,” said Lubecki. ■

Tracking Competition




warehouse facilities are still belowstandard and the security may be con-sidered weak at some airports. Howev-er, the airports are currently upgradedin many cities, involving high invest-ments in cargo terminals,” he said.

The airlines’ service levels alsocome in for some criticism. For onething, product diversification is still inits infancy. The airlines offer onlystandard airfreight service so far, al-though some have started looking atpremium offerings, Zhang said.He also bemoaned the lack of elec-tronic tracking capabilities. “Domestictrack-and-trace is very poor; it’s in theearly stage. We normally have to callthe airlines, again and again,” he said.

To some extent, forwarders are fill-ing the gaps in China themselves.

DHL Global Forwarding offers itscustomers on-line tracking and elec-tronic proof of delivery, but “e-book-ing still needs time to be worked outin the China market,” Huang said.

Due to the lift constraints, interna-tional forwarders truck most of theirair freight to and from the majorgateways. “Unless you put in afreighter — like for Dell in Xiamen —the cargo will be trucked to the likesof Guangzhou or Hong Kong,”Jillings said.

Air freight trucking is not exactlyfree from challenges. Timmermancites several, from licensing issues toa fragmented market with many localheroes but no provider that coversthe entire country. In addition, truck-ers’ service levels are rather patchy,despite improvements in recentyears, Jillings said.

DHL Global Forwarding intends tobuild up its trucking offerings as wellas a rail freight service. Panalpinalaunched a rail-air product from Chi-na to Europe last year, which movesfreight from Chinese origin points byrail to Urumqi for dedicated freighterflights to Luxembourg.

“Rail solutions become more andmore interesting since the railwayhas a longstanding tradition in Chi-na and the government is heavily in-vesting in railway infrastructure,”Timmerman said.

International cargo from second- orthird-tier points of origin is rarelyflown directly, and seldom to an inter-national Chinese gateway. Besides ca-pacity issues, such ambitions are ham-pered by red tape. “Through mastersare not always viable for examplefrom Chengdu to Shanghai becausegoods are customs cleared in Shanghaifor export and need to be deconsoli-dated in Shanghai,” said Timmerman.

For the foreseeable future, for-warders will have to continue to nav-igate through these issues. The largeChinese carriers have undergone littlechange over the past year, Huang re-ported. For the most part, they havebeen too busy building up their pas-senger networks to concentrate muchon cargo, be it in the domestic or theinternational arena.

In this situation, many forwarderswould welcome new freighter flights.

Zhang sees scope for more freighteractivities in China, but he is not ex-pecting any quick solution.

Even if the focus in airline board-rooms and the equipment were theretomorrow, the industry would stillhave to contend with the shortage ofpilots that has been bugging Chinaand derailed the expansion plans ofJade a year ago. It took the Shenzhen-based freighter airline about a year toget enough pilots to fully operate itssix 747-400 extended-range freighters.

However, having coped for a longtime with only a fraction of its fleet,Jade announced in May it would wet-lease one aircraft for a year to Singa-pore-based Jett8. Apparently thislooked more appealing than boostingJade’s international network or tack-ling China’s domestic market, regard-less of its long-term promise. ■


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Feature Focus:Special Projects

A resource-rich region may provide

new opportunities to outsize cargo carriers,

but it’s unclear how much

36F3-SpecialProjectsINT 6/20/08 1:29 PM Page 36

aunch into a conversation about busi-ness activities in Canada’s Northwestand you’re bound to conjure up imagesof the late 1800s when burly, adventur-

ous gold diggers flocked tothe region in the quest for

buried treasure. These days, the coun-try’s vast supply of natural resources ishelping to cushion the blow of a weak

global economy, and much of this isthanks to both oil and diamonds.

There are a number of factors thatmake Canada an attractive destinationon both fronts — especially for its clos-est neighbor and largest trading part-ner, the United States. Whereas at onetime, extracting crude oil from the na-tion’s northern tar sands was an un-profitable venture, the technologiesnow exist to do so in a far more cost-ef-fective manner, and purchasing blackgold from a country that boasts a stablepolitical climate and good internationalrelations is appealing to foreign buyers.

The same can be said for the dia-mond industry, whose reputation hasbeen marred by the infamous ‘blooddiamonds’ that help fund the terrorand war campaigns that ravaged coun-tries like Sierra Leone. Not only arethey ‘clean’ politically, but Canada’sdiamonds are also recognized for theirhigh quality. Over the course of thelast decade, several mines have beenestablished in the Arctic regions of the

LCanada Su

per-S

izing

by Carolyn Heinze


Northwest Territories andNunavut — operations expect-ed to reap considerable resultsfor the next 20 years.

All of this points to significantbusiness potential to Canada’s outsizecargo industry, which is facing in-creasing demand to extract the re-sources that are in large part responsi-ble for the nation’s reigning status asone of the richest in the world. A pro-ject cargo industry that has been fo-cused over the years on Africa, theMiddle East and Russia increasingly ispointing toward the thinly populatednorthern region of Canada.

The problem is that althougheveryone agrees that demand for out-size cargo flights is outweighing sup-ply, there are few hard numbers toback these arguments up.

“Data is always a substantial prob-lem in Canada, and certainly in thisarea because it’s such a niche area,and there are only a few private oper-ators,” said David Gillen, professor oftransportation policy at the Center forTransportation Studies at the SauderSchool of Business, University ofBritish Columbia in Vancouver, B.C.

“Traditionally in Canada, unlike theUnited States, United Kingdom, Aus-tralia and the EU in general, informa-tion is not easily or readily available.”

Specific numbers may be hard tocome by, but Adrian Pruden, op-

erations manager for PentagonFreight Services in Calgary, Alberta,said there are weekly outsize cargo ac-tivities, including Antonov flights, atthe city that has become the center ofCanada’s oil boom.

“It ranges from everything to smallparts and crates to compressors andvessels,” he said.

For Antonov aircraft, freight for-warders source from Volga-Dnepr and

Polet Cargo Airlines, and Cargolux of-fers service on a 747-400 freighter di-rect out of Calgary. “It’s somethingthat can be quite challenging at timesfor us in the local market, because theaircraft availability is not readilyhere,” Pruden said. “We often have tosource aircraft from Europe, whichbumps the pricing up for our clients.”

Pruden said space is a major chal-lenge, and it’s necessary for freight for-warders to move shipments by ground— often to Chicago or farther — tomeet outsize cargo flights into Europe.“The frequency of flights with Car-golux, for example, is only three timesa week,” he said. “Of course, you’vegot multiple freight forwarders thatare vying for space on that, and book-ings can be difficult at times.”

Common sense suggests the pro-jected reserves that exist in Canada’sArctic, in combination with rising oilprices, would result in a growing out-size cargo business. How to capitalizeon this situation is another question.

“One of the problems, particularlywith outsized cargo, is that in Cana-da, we really don’t have a handle onits potential, how large it really is,”said Barry Rempel, president and CEOof the Winnipeg Airports Authority inManitoba. “It’s very difficult to showan air carrier what the potential mar-ket would be here for out-sized cargo.What ends up happening is, whereverpossible, it ends up going by road orrail. In many scenarios, we can’t makea good business case for it.”

The changing climate is also pre-senting a number of challenges to notonly air travel, but also any groundcomponents offered by shippers, as

the periods during whichthe Arctic ice roads thatfreight operators rely uponare shrinking.

“North of Edmonton,the number of roads that can be usedis relatively small,” Gillen said. “Oneof the things that we are finding isthat the winter roads that use thefrozen tundra and lakes are becomingless usable and for shorter periods oftime because the changes in weatherpatterns that are going on.”

Gillen predicts that this will resultin greater movement of outsize cargoby sea — at least to staging points,where it can then be transported intoareas of exploration — especiallysince Arctic waters are opening up forlonger periods of time each year,thanks once again to global warming.

“It’s much more logical to move itby ship or barge along the MackenzieRiver, or by air,” he said.

Gillen said it is unclear whether theoutsize cargo business serving the dia-mond mining industry will grow asquickly as the oil and gas business.

Diamond mining is an area that ismuch more difficult for this out-sizedcategory, because this is going intoareas that are fairly remote, which areaccessible only by helicopter, andthere are relatively few kinds of heli-copters that can move this kind ofequipment,” he said. “You’re lookingat a multiple-stage activity, whereyou are moving this equipment to apoint where something like the Siko-rsky could move something to a site.However, it’s getting pretty expensiveto do those kinds of things.”

Gillen estimates Canada’s cargo in-dustry moves at about three times therate of the GDP.

Outsize cargo, however, is just onesmall part of this business, and due tolack of hard data, it’s unclear as to




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whether this same rate applies to it.Because there are few outsize cargocarriers in Canada, most outsize cargoflights are chartered. “This is in part

because it traditionally has been rela-tively spotty – there hasn’t been acontinuous demand,” Gillen said.

Only a couple of carriers, such asPolet Cargo Airlines and Air North,provide these services. “Now there aregoing to be increases in the amountof exploration going on, and theremay be an opportunity for an existingcarrier to expand its presence, or foranother player to enter the market be-cause there will be a much more con-tinuous demand, and so the invest-ment will start paying off,” he said.

Air cargo airlines know the poten-tial in Northern Canada. Air-

BridgeCargo, part of the Volga-DneprGroup, recently won an Air Operator’sCertificate from Transport Canada.

The AOC gives the airline the abili-ty to fly “to and from Canada in thefuture,” said Denis Ilyin, senior vicepresident of strategy and commercial.

One development that could con-tribute to expaning existing freighteroperations in outsize cargo offerings isrelated to passenger transport.

With its sparse population across awide geographic range, Canada hasseen passenger transportation shifttoward regional aircraft. Becausethese aircraft are incapable of carry-ing any amount of freight, the cargothat was once carried in the bellies ofaircraft is now being transported byfreighter operations.

“As freighter carriers have that kindof a base to draw upon for their ownbusiness plan, it means that they arenow available to do more out-sizedcargo as well,” Rempel said. “Theirbase is no longer just relying on theodd out-sized shipment; now theyhave a base in many of these commu-nities, particularly in Western Cana-da, where there are very long dis-tances and smaller population bases.

“They have access to that base offreight that allows a freighter opera-tor to be successful, and to be therefor the out-sized cargo demand.”

There are, however, numerous ju-risdictional issues that worry poten-tial investors that consider establish-ing regular outsize cargo operations.

Last summer, when Russia planted aflag on the Arctic floor, it hinted at theterritorial discussions Russia will havewith, Canada, Norway, the UnitedStates and Denmark (through Green-land), as oil exploration efforts expand.“This means that no firm will invest agreat deal of capital until Canada estab-lishes exactly where it does have juris-dictional authority,” Gillen said.

Canada continues to face theadded challenge of ongoing nativeland claim talks. How the federal gov-ernment decides to draft its policieson who can provide outsize cargo ser-vices to its oil and mining industriesis a real concern.

Said Gillen, “An American or Russ-ian firm coming in and offering thesekinds of services to far north posi-tions is unlikely to me, given howconservative the current governmentpolicy is, and how it moves at a slow,if not at a glacial, pace. You are notgoing to see a lot of foreign playersentering this market.”

This could result in a steady in-crease in demand without the suffi-cient capacity to service shippers.

“As the price of oil continues to bestrong, our Canadian Western oil in-dustry is going to continue to boom,”said Ruth Snowden, executive directorof the Canadian International FreightForwarders Association. “There are verystrong projections for the oversized aircargo business to support the oil andgas industry and our Fort McMurrayOil Sands project. We have increasingvolumes and decreasing capacity.” ■





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Airlines

AirBridgeCargo: The scheduledcargo airline of the Volga-DneprGroup appointed Ludwig Ham-burger regional director for Europe,the Middle East and Africa. Hamburg-er, a 25-year industry veteran, was re-gional manager of Europe for AirNew Zealand before coming to ABC.

ABX Air: The car-go airline namedMike Gerdes seniorvice president offlight operations, re-placing Robert Mor-genfeld, who retired.Gerdes, 50, is a 20-year flight captainwho had been at ATA Airlines, wherehe was vice president of flight opera-tions. He also flew for Pan Am, East-ern Airlines and Comair and hadbeen a chief pilot and a fleet manager.

Active Aero: Thecargo charter special-ist named AngelaBradley to the newposition of marketingmanager. Bradley, 37,joined the Michigan-based company in2006 as a marketing

coordinator and was promoted tomarketing communications special-ist. She was earlier at Banta DirectMarketing.

Aloha Airlines: Shipping man-agement and investment company,Saltchuk Resources named MichaelP. Coffman chief operating officerfor Aloha Airlines air cargo operation,which the Seattle-based company ac-quired for $10.5 million. Coffman, aformer FedEx executive, will handlethe day-to-day operations of the re-named Aloha Air Cargo, a division ofSaltchuk subsidiary Aeko Kula.

United Airlines: United Cargonamed Laurent Bernet regionalcargo sales manager based in Paris forFrance, the Benelux, Italy, the MiddleEast and the Indian sub-continent.Bernet started at United in 1994 ininternational passenger sales. Hemoved into cargo in 1998 and wasmost recently a regional account ex-ecutive for the U.S. Central region.

South African Airways: SAA Car-go appointed Jasprett Bamrah cargomanager for the United Kingdom andIreland, following the retirement ofMick Rowley. Bamrah, who will bebased at London Heathrow, workedfor SAA Cargo for eight years, most re-cently as a sales account executive.

British Airways: BA World Car-go named Faisal Yaqoob countrymanager for Bangladesh. Yaqoob,who has worked for BAWC since2004, will oversee all commercialand customer service in Pakistan.

Integrators

FedEx: The carrier promoted Bri-an D. Philips to president and CEOof FedEx Kinko’s. Phillips was execu-tive vice president and chief operat-ing officer of the division and hadbeen acting CEO since the departureMarch 31 of Kenneth May, who hadbeen CEO for two years. Philipsjoined FedEx in October 1993. Heserved as vice president of U.S. mar-keting at FedEx Services.

Third Parties

Pilot Freight Services: ThePennsylvania-based forwarder namedlongtime company executive FrankPerri to the new position of execu-tive vice president of franchise devel-opment. Perri, who has worked at Pi-lot for over 21 years, began his career

at the company as avice president of na-tional accounts andlater was senior vicepresident of sales andmarketing and mostrecently executive vicepresident.

Mallory Alexan-der InternationalLogistics: The Mem-phis-based forwarder,named TerryMaready chief infor-mation officer.Maready had beenvice president and

chief technology officer of AegisCommunications Group, a providerof business process outsourcing ser-vices. He worked earlier at Mark VIITransportation, now Exel Transporta-tion Services, where he was corporatesenior director of the technology andglobal freight management division.

Schenker: The logistics operatornamed Thomas C. Lieb chairman ofthe board of management. Lieb, 49,will remain responsible for theAir/Ocean Freight division as well asfor the Asia-Pacific and America re-gions. At the same time, Schenkernamed Karl Nutzinger to the boardwith responsibility for Europe and theEuropean land transport business uniteffective Jan. 1. He succeeds Hans-JörgHager, who resigned. Nutzinger, 50,was chairman of the Wincanton inGermany. He earlier was chief execu-tive officer of Geologistics in Londonfrom 2003 until 2006 and before thatwas regional director for Central Eu-rope for Schenker.

Wincanton: The British contractlogistics operator named Erik GrootWassink managing director in theNetherlands. Wassink has been withWincanton since 1988 and was most

People

July 2008AirCargoWorld

Gerdes

Bradley

Perri

Maready

42

42PeopleINT 6/20/08 1:30 PM Page 42

recently in charge of network for-warding in Heerenberg.

Logwin: The German operatorformerly known as Thiel Logistiknamed Volker Hoebelt director ofglobal air freight. Hoebelt, 43, will tryto optimize processes and coopera-tion with core carriers and will holdthe position in addition to his role asdirector of global sales and marketingfor air and ocean.

Seko Synergy: The forwardernamed Ian Richardson managing di-rector of its new Greater China of-fice, based in Hong Kong. Richard-son has 15 years experience in theindustry, most recently at UPS Sup-ply Chain Solutions.

Textron: The aircraftfinance company namedAngelo Butera execu-tive vice president andchief credit officer, a po-sition overseeing portfo-lio quality managementfor Textron Financial. Hesucceeds Rod Weaver,

who is retiring after 31 years withTextron. Butera joined Textron Fi-nancial in 1987 as a credit analystand had been a senior vice president.

AMI: The British freight whole-saler named Louise Jackman a re-gional sales executive covering partof East Anglia and the London regionin the United Kingdom. Jackman,who will be based at LondonHeathrow, has worked for airlinesand general sales agents during her20 years in the air freight industry.

Associations

Cargo 2000: The industry work-ing group operating through the In-ternational Air Transport Associationnamed Tom Presnail regional di-rector for the Asia-Pacific. Presnail

has been workingwith training for Car-go 2000 recently butspent 10 years in vari-ous senior executivepositions in Asia forKLM. He was the Sin-gapore-based directorof operations for the

Asia-Pacific for the airline and direc-tor of sales and operations for NorthAsia, based in Tokyo.

TAPA: DavidReid became actingchairman of theTransported AssetsProtection for Eu-rope, the Middle Eastand Africa asThorsten Neu-mann stepped down

to focus on work commitments atMotorola. Neumann, who has beenchairman for three years, will remainthe Motorola representative at TAPAEMEA. Steve McHugh will replaceReid as vice chairman. ■

People

Advertiser Index

July 2008 AirCargoWorld 43AirCargoWorld

Aeronautical Engineering..................................6

Airbus..............................................................24-25

Air Charter Services..........................................34

Air India.............................................................CV4

Atlanta-Hartsfield Airport ................................38

Cargolux...............................................................39

Cathay Pacific.......................................................3

Cologne-Bonn Airport .......................................29

Coyne Airways....................................................15

Dallas-Fort Worth Airport ..................................9

DHL ..................................................................18-19

Garden City Group..............................................12

Houston Airport ...............................................CV2

MASKargo .............................................................8

Ruslan...................................................................40

Singapore Airlines...............................................7

Thai Airways.......................................................23

TIACA....................................................................41

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AirCargoWorld July 200846

Bottom LinetheAirCargo

Carrying International

2%

3%

4%

5%

6%

7%

1%4/083/082/081/0812/0711/0710/079/078/077/076/075/074/073/072/071/07

Capacity Traffic

Monthly year-over-year percent change in total scheduled international freight trafficand capacity worldwide, in freight tonne-kilometers and available tonne-kilometers.

4/083/082/081/0811/0710/079/078/077/076/075/074/073/072/071/07–6%

–4%

–2%

0%

2%

4%

6%

8%

Asia-Pacific

Overall

Source: Association of European Airlines

Carrying Europe

Monthly year-over-year percent change in overall freight traffic and Asia-Pacificfreight traffic for European airlines.

4/083/082/081/0812/0711/0710/079/078/077/076/075/074/073/072/071/07

TrafficCapacity

–4%

–2%

0%

2%

4%

6%

8%

10%

Source: Association of Asia Pacific Airlines

Carrying Asia

Monthly year-over-year percent change in capacity, in available tonne kilometers,and traffic, in freight tonne kilometers, of Asia-Pacific airlines.

Source: International Air Transport Association

46BottomLineINT 6/20/08 1:31 PM Page 46

AirCargoWorldJuly 2008 47

U.S. Airlines

3/082/081/07812/0711/0710/079/078/077/076/075/074/07–6%

–4%

–2%

0%

2%

4%

6%

8%

10%

InternationalDomestic

Monthly year-over-year percent changein domestic and international cargotraffic for U.S. airlines.

Source: Air Transport Association of America

Semi Months

–6%

–4%

–2%

0%

2%

4%

6%

4/083/082/081/0812/0711/0710/079/078/077/076/075/074/07

M-O-MY-O-Y

Worldwide monthly year-over-year percentchange in sales of semiconductors andmonth-to-month percent change.

Source: Semiconductor Industry Association

Sharing Markets

–15% –10% –5% 0% 5% 10% 15% 20%

Total

Africa

Latin America

Asia/Pacific

Europe

North America

Middle East

International air cargo year-over-yearpercent change in first quarter of 2008.

Source: IATA

Making Goods

47

49

51

53

55

5/084/083/082/081/0812/0711/0710/079/078/077/076/075/07

Monthly index of manufacturing activityin the United States over last two years.A reading above 50 shows expansion,below 50 contraction.

Source: Semiconductor Industry Association

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

6/08*5/084/083/082/081/0812/0711/0710/079/078/077/076/075/074/073/072/071/07

Rotterdam

Singapore

New York

*Through June 13Source: U.S. Energy Information Administration

Pump Price

Average monthly jet fuel prices in key markets over the past year.

46BottomLineINT 6/20/08 1:31 PM Page 47

July 28-30

Atlanta: Global Logistics Sum-mit, at the Westin Buckhead, aWorld Business Research event in-cludes shippers from Circuit City,Nike, Home Depot, PETCO andproviders to examine global sourcingand logistics. For information, call(212) 885-2744 or visit: www.globalo-gisticssummit.com.

Aug. 20-21

Miami: MATTECH 2008, at theMiami Beach Convention Center, theMaterial Handling, ManufacturingTechnology, Logistics & SupplyChain Expo for the Americas & theWorld will focus on the total manu-facturing process. For informationcall (941) 320-3216 or e-mail: [email protected].

Sept. 14-17

Park City, Utah: 2008 MaterialHandling and Logistics Confer-ence, at the Grand Summit Resort,exploring ways to eliminate wasteand get a better handle on movinggoods through automation. For infor-mation, call (262) 860-6715 or visit:www.mhc2008.com

Sept. 15-17

Miami: CargoFacts 2008, at theMiami Loews Resort, bringing togeth-er aircraft buyers, sellers, financiers,service providers and operators ofboth passenger and freighter aircraft.For information, call (206) 587-6537or e-mail: [email protected].

Sept. 15-17

Toulouse, France: The Ninth

Annual Aviation Industry Sup-pliers Conference, at the Hotel Pal-ladia, bringing together the variousparts that make up the aviation in-dustry. For information, contact:[email protected].

Sept. 17-19

Bangkok: Fourth AnnualIATA Air Cargo Claims and LossPrevention Conference, lookingat how carriers, forwarders and air-lines cover their assets. For informa-tion, calll: +41 22 770 2944, or visitwww.iata.org/events/calendar.

Sept. 23-26

Vancouver, B.C.: FIATA WorldCongress, at the Vancouver Conven-tion and Exhibition Centre, the annu-al meeting of regional freight for-warders. For information, call +41 2233 99 586 or visit: www.fiata2008.com.

Sept. 21-24

Boston: Airports Council In-ternational-North America an-nual conference and exhibition, look-ing at whether the aviation businesshas the facility to ramp up. For infor-mation, call (202) 293-8500 or visit:www.aci-na.org/conferences.

Oct. 5-8

Denver: CSCMP 2008, the annu-al mega-meeting is educational, in-ventive and packed with shipperslooking for, and often finding, theleading trends in managing supply

chains and moving goods. For infor-mation, call (630) 574-0985 or visit:www.cscmp.org.

Oct. 15-17

San Francisco: SustainableSupply Chain Summit, at theStanford Court Hotel, the eye-for-transport event includes parallelmeetings in which shippers and lo-gistics operators work to sustain a co-operative environment. For informa-tion, call +44 0207 375 7207 or visit:www.eft.com/Green.

Nov. 4-6

Kuala Lumpur: InternationalAir Cargo Forum, the bi-annualevent is the air cargo industry’ssprawling global meeting and stopsthis time in Malaysia. For informa-tion, call (786) 365-7011 or visit:www.tiaca.org/2008.

Nov. 11-13

Seoul: AVSEC World 2008, theInternational Air Transport Associa-tion event looks at risk managementand what it calls a “common senseapproach” to aviation security. Forinformation, call +41 22 770 2525, orvisit www.iata.org/events/calendar.

Nov. 16-18

Ft. Lauderdale, Fla.:Transcomp and IntermodalExpo, the annual meetings of theNational Industrial TransportationLeague and the Intermodal Associa-tion of North America includes talk

of shipper-carrier relations and alarge exhibition. For information,call 703-524-5011 or visit:www.iana.org. ■


Events

For more events, visit:www.aircargoworld.com/dept/events.htm

48EventsINT 6/20/08 1:31 PM Page 48

http://www.mhc2008.com



http://www.iata.org/events/calendar

http://www.fiata2008.com

http://www.aci-na.org/conferences

http://www.cscmp.org

http://www.eft.com/Green

http://www.tiaca.org/2008

http://www.iata.org/events/calendar

http://www.iana.org

http://www.globalogisticssummit.com

http://www.globalogisticssummit.com



http://www.aircargoworld.com/dept/events.htm

http://www.aircargoworld.com/dept/events.htm


http://www.tiaca.org


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