INTERNATIONAL EDITION
MARCH 2009
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Year of the Ox Human Resources Express Guide Select your service level. Tender your shipment. Fasten your seatbelt and prepare for a great experience.
You’ll notice the difference long before your shipment leaves the ground. We’ve developed proactive. communication tools. Provided increased visibility for tracking and rates. Enhanced our products. Improved the overall experience. Why? Simple really. We may have 3400 fl ights every day around the. globe. But only one true destination. Your satisfaction..
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henever the logistics industry goes consistency and you will be building a barrier to into a period of reduced demand we entry for competitors. see an emphasis on very short-term Product Development: Survey your costs. Sure, airlines, forwarders and customers to find out their needs. Then 3PLs must watch costs but what is hap- identify pre-and post-transit services now Wpening now is what happened in 2000: panic being outsourced that you may be in a posi- and much short-term thinking. tion to offer with existing core transport. Investments and innovation are put aside as Maybe value-added or value-reduced ver- companies frantically reduce costs. So when we sions of your core services can drive revenue have the invariable upturn - and trust me, there growth and diversify your value proposition. will be an upturn - we find most suppliers of Technology: Shippers cannot buy expen- third party logistics offering the same services sive logistics software packages. Providing with little change from the last business cycle. web-based applications that improve customer At BAX Global in 2000 we faced quarterly service, reporting, compliance, performance losses in the millions of dollars as demand for monitoring, decision support and documenta- core integrated heavy air cargo services fell. tion reconciliation are an opportunity for addi- But we did not just downsize, we developed tional revenue or marketplace differentiation. value added services at the origin and destina- Sales Training: When was the last time Jerry Levy has a 20-year tions of the supply chain. High security servic- your sales people taught customers something? career in the logistics es were added along with a low-cost surface Are your teams simply viewed as suppliers or industry including senior distribution product. We also invested in a new are they consultants? Are they the people your management positions at extranet to give our clients detailed shipment vis- clients call when they have a logistics problem? BAX Global and Agility. ibility, reporting and documentation. Sales teams that understand the unique needs This enabled BAX to further penetrate the of the marketing, purchasing, operations and customer’s supply chain and build market share. financial functions of their customers close new As demand returned in 2004, it became the num- business before an RFP is issued. ber one provider of domestic heavy air cargo and Compliance: Shippers are concerned achieved record profits. about the proliferation of global compliance My point in telling this story is that providers issues. The new 10+2 rules, changes in SED are facing a similar situation now. So they have requirements and security pre-screening a choice of cutting short-term costs to survive processes offer an opportunity to provide ad- with the same business model or use this time ditional services and consulting. to innovate and then reap the rewards of provid- Assets: Importers find themselves with un- ing a differentiated, higher value service when wanted space as product demand is reduced. If demand returns. forwarders, airlines and 3PLs have extra space So logistics suppliers have an opportunity in terminals and freight stations they could to enhance their offerings and build new value enable end-user customers to eliminate their for their companies in the following areas: fixed assets by incorporating a logistics opera- Customer Experience: Ask the question, tion into their underutilized facilities. “How can we become easier to do business Yes, short- term cost reduction is appro- with?” When a 3PL gets the shipment config- priate but if that is all a supplier can do, it is ured, cleared, documented and billed correctly business as usual which means they will be in every time, they become a critical part of the the exact same boat (or plane, or warehouse) customer’s business and not just a supplier. after the next upturn becomes a slow-down - Shippers may be willing to pay a bit more for and yes, that will happen again too. ACW
ACW MARCH 2009 1 March, 2009 Volume 12, Number 2
International Edition contents Air Cargo Excellence 2008/09 19Delta makes a comeback Year of the Ox 26 So where’s the glossy coat? Express Delivery Guide 19 31One-stop, door-to-door Human Resources 42Legal lip service - or treasured asset?
31 42
26
2 MARCH 2009 ACW International Edition
EDITOR Simon Keeble [email protected] CONTRIBUTING EDITORS Roger Turney, Ian Putzger CONTRIBUTORS Douglas Nelms, Trish Williams, Peter Conway COLUMNISTS Paul Forster, Brandon Fried
ART & PRODUCTION DIRECTOR 4 Jay Sevidal [email protected]
EDITORIAL OFFICES WORLD NEWS 1270 National Press Bldg., Washington, DC 20045 (202) 355-1153/1172 • Fax: (202) 355-1171 04 Americas PUBLISHER • TSA Security For Five Cents? Steve Prince • IPC Signs With UN Compact [email protected] • World Gains From Distressed Investors ASSISTANT TO PUBLISHER • TNT Acquires Chile LIT Susan Addy • In the News… [email protected] • (770) 642-9170 DISPLAY ADVERTISING TRAFFIC COORDINATOR Linda Noga 08 Europe [email protected] • Staying On Top Of The Cashflow ADVERTISING/BUSINESS OFFICE • K&N Gets Hapag Lloyd 1080 Holcomb Bridge Rd., Roswell Summit Building 200, Suite 255, Roswell, GA 30076 • And Air France Gets A New Freighter (770) 642-9170 • Fax: (770) 642-9982 • In the News… WORLDWIDE SALES U.S. Sales Hong Kong, Malaysia, Associate Publisher Singapore 12 Middle East Pam Latty Joseph Yap (678) 775-3565 +65-6-337-6996 • Gulf Adds Capacity As Others Cut [email protected] [email protected] • Agility Writes Off 2009? Europe, United Kingdom, Japan Middle East Masami Shimazaki David Collison [email protected] +44 192-381-7731 +81-42-372-2769 16 Asia [email protected] Thailand • More To Come From JAL/NCA China Chower Narula • Biofuel Cheaper Than Kerosene? Beijing Office| [email protected] Nancy Sun (Sun Junqin) +66-2-641-26938 [email protected] Taiwan ++86 10 5879 5885 Ye Chang Shanghai Office [email protected] Isabella Hou (Hou Ying) +886 2-2378-2471 [email protected] Australia, New Zealand DEPARTMENTS ++86 (21) 5116 8877 Fergus Maclagan Viewpoint Guangzhou/South China [email protected] 01 Sherry Yuan +61-2-9460-4560 People/Events [email protected] Korea 46 ++86 10-5879-5885, ext. 601 Mr. Jung-won Suh +82-2-3275-5969 48 Bottom Line [email protected]
CUSTOMER SERVICE OR TO SUBSCRIBE: (888) 215-6084 Air Cargo World (ISSN 1933-1614) is published monthly by UBM Aviation. 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 UBM Aviation©2009. Periodicals postage paid at Newark, NJ and at additional 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 copies $10. Express Delivery Guide, Carrier Guide, Freight Forwarder Directory and Airport Direc tory single copies $14.95 domestic; $21.95 overseas. Microfilm copies are available from University Microfilms, 300 North Zeeb Road, Ann Arbor, MI 48106. Opinions expressed by authors and contributors are not necessarily those of the editors or publisher. Articles may not be reproduced in whole or part without the express written permission of the publisher. Air Cargo World is not responsible for unsolicited manuscripts, photographs or artwork. Please enclose a self-addressed envelope to guarantee that materials will be returned. Authorization to photocopy items for internal or personal use is granted by Air Cargo World, provided the base fee of $3 per page is paid directly to Copyright Clearance POSTMASTER: Send address change to: Center, 222 Rosewood Drive, Danvers, MA 01923, and provided the number of copies is less than 100. For authorization, contact CCC Air Cargo World at (508) 750-8400. The Transactional Reporting Service fee code is: 0745-5100/96/$3.00. For those seeking 100 or more copies, please 3025 Highland Pky Ste 200 contact the magazine directly. Downers Grove, IL 60515 POSTMASTER and subscriber services: Call or write to Air Cargo World, Subscription Services Department, PO Box 5051, Brent- For more information visit our website at wood TN 37024; telephone 888-215-6084. www.aircargoworld.com
ACW MARCH 2009 3 worldAMERICAS EUROPEnews ASIA MIDDLE EAST AFRICA IPC Signs UN Just Five Cents A Pound Global Compact For Sustainability For TSA Screening? he International Post Corporation (IPC) has signed up to the United Na- Ttions Global Compact as part of its ongoing sustainability program. The UN led initiative provides businesses with a policy framework for their sustainability strategies, based on ten universally recognized prin- ciples covering human rights, labor, environ- ment and anti-corruption. IPC President and CEO Herbert-Michael Zapf said, “Now that we have the environ- mental measurement and monitoring system in place, it is important that we not only build on this but that we take an active part in the wider debate so that we can share our expe- riences with others, learn from them and be part of the overall solution.” U.S. postmaster general and CEO John Potter added that postal services are in an unique position to “take a tremendous lead- ership role in addressing concerns about the environment. “In the United States alone, as an example, we have more retail outlets than Wal-Mart, Mc- he Air Cargo Security Alli- ACSA wants to persuade Congress Donald’s and Starbucks combined. We are the ance (ACSA) has drafted that the TSA should provide a pre- largest retail outlet network in the world. We a proposed amendment to screening option for cargo agents paid have more factories than all of the automakers U.S. legislation that currently for by a five cent per pound charge. combined when you look at postal plants. “ mandates 100 percent air A Congressional hearing is scheduled Potter said postal services should begin put- Tcargo screening by August 2010. this month. ting demands on their suppliers to provide the According to Dave Wirsing of ACSA, ACSA says the five cents would right technology. “We’re in a state of flux; no the object is to enable the government cover the cost of hiring, training and one knows whether to buy hydrogen or natural to put in place a TSA-managed pre- employing the necessary TSA person- gas or whether we should be going electric.” screening security option for the U.S. nel plus equipment in order to provide Despite a switch from hard copy to elec- air cargo industry. a “level of security commensurate with tronic mail, the postmaster general predicted As part of the new legislation, ACSA the level of security for the screening mail services will be around for generations suggests the Department of Homeland of passenger checked baggage.” to come because of their intrinsic value. “We Security establishes an Air Cargo Se- As Air Cargo World goes to press, need to involve not just ourselves as posts curity Fund of “at least” $400 million several airlines have said they will but obviously we touch everyone. We have a from user fees in 2010. charge for cargo that requires screening. huge mailing community. As of Feb 1 2009, 50 percent of all British Airways has notified custom- “When you think about paper that mail U.S.-related air cargo on passenger air- ers of a $2.75 charge per piece and $30 is printed on, what’s the recycled content? craft has to be pre-screened under the minimum and $125.00 maximum per Should we be thinking about having rate Certified Cargo Screening Program. waybill. structures that incent people to use recycled Early signs suggest that airlines and Other examples include Delta and recyclable material? forwarders have anticipated any prob- charging $.01 per pound (lb) for do- “ We want to make sure that we leave lems. What Wirsing is concerned about mestic shipments and $.05 per kilo this earth in better shape for future genera- is the 100 percent mandate in less than (kg) for international with a maximum tions,” he added. 18 months. of $150 per waybill; the United charge
4 MARCH 2009 ACW AMERICAS EUROPE ASIA MIDDLE EAST AFRICA
IN THE NEWS… is $.01/lb and In January 2009, Delta’s total cargo tonne miles as well as prospective capital and governance $5.00 mini- declined 12.7 percent to 77.32 million from 88.61 structures and their effect on Virgin’s U.S. citizen- mum per way- million in the prior year month; Northwest total ship status. U.S. law requires air carriers to be bill for domes- cargo tonne miles collapsed 51.5 percent to U.S. “citizens.” To qualify, the outstanding voting tic shipments 72.52 million from 149.52 million in the prior year interests of the air carrier must be at least 75-per- and $.06/kg, month… Boeing says all of its major manu- cent owned by U.S. citizens and the carrier must $15.00 minimum facturing facilities have received the ISO 14001 also be effectively controlled by U.S. citizens… for international; environmental certifi cation. “We recognized many FedEx Express has a larger cargo terminal and SAS is charging $.05/ areas of excellence at Boeing in one of the most bonded warehouse at Miguel Hidalgo y Costilla kg, $10 minimum aggressive ISO 14001 certifi cation efforts we’ve International Airport in Guadalajara, Jalisco for its for international shipments; and the seen,” said Sidney Vianna, director of Aviation, international and domestic Mexico shipments… American rate is $.02/lb, $6 minimum Space & Defense Services for independent audi- Expeditors’ net income for 2008 was $301 mil- and $150 maximum for domestic plus tors Det Norske Veritas…Following the with- lion, up 11.8 percent from 2007. Gross revenue $.05/kg, $15 minimum and $150 max drawal of DHL from the U.S. domestic market, for the year was $5.6 billion, a 7.6 increase over for international shipments. Cargo Aircraft Management, a subsidiary of 2007. CEO Peter Rose commented, “Given the Lan Cargo is charging $0.07/kg with Air Transport Services Group, has signed an incessant tales of woe emanating from Wall a $20 minimum and $200 maximum option to lease Amerijet International fi v e Street these days, we hope the consistency and per waybill and Qantas is charging Boeing 767-200 freighters. Under the agreement, stability projected by these results will be reas- $0.10/kg for a freighter and $0.30/kg Amerijet has exercised options for its fi rst two suring to our employees, to our customers and to for passenger aircraft. freighters under seven-year dry-lease agreements. our shareholders”…DHL has expanded its Trade Southwest says it has no plans to Amerijet is expected to begin operating the two Automation Services (TAS) to cover 90 percent impose a security surcharge for pre- aircraft following FAA approval around mid-year... of the world’s trade fl ows. TAS, which provides screened shipments. Additionally, Alaska Airlines has petitioned the U.S. Depart- trade and customs data for 63 countries, now it won’t “impose an additional sur- ment of Transportation (DOT) to conduct a public includes Bolivia, Chile, Costa Rica, Ecuador, Gua- charge” for unscreened cargo. ACW inquiry to investigate Virgin America’s current temala, Venezuela and the Philippines.
ACW MARCH 2009 5 AMERICAS EUROPE ASIA MIDDLE EAST AFRICA
World Gains From Distressed Investors TNT Acquires Chile LIT lobal Aero Logistics, the hold- general commercial market with two NT has acquired Chile-based LIT Cargo - a ing company for World Airways cargo B747-400Fs and nine MD-11Fs. Tfamily-owned, road express company with Gand North American Airlines is Last year, on behalf of its airline 1,500 employees, 55 depots and 496 vehicles changing its name. stable, MatlinPatterson ordered six serving the automotive, pharmaceuticals and From this month the company, owned A330-200 freighters. high tech sectors. by MatlinPatterson Global Advisors, will Sanborn says World’s main competi- The company says the $210 million Chil- be known as Global Aviation Holdings. tors are Evergreen and Atlas Air – the ean domestic express market is expected to MatlinPatterson is a $9 billion private latter has just reported pre-tax earn- rise by about 21 per cent a year during the equity fund manager specializing in dis- ings of $55-60 million for 2008 and a next five years. The overall South American tressed investments on a global basis. $115 million gain from a 49 percent internal expedited market was valued at $2.8 Founded by former Credit Suisse sale of Polar Air Cargo to DHL. billion in 2007. distressed debt experts David Matlin and Atlas is also taking a $85-$95 million TNT has also reported a 2008 net profit of Mark Patterson, it takes controlling posi- charge for the early disposal of seven $915 million on revenues of $14.6 billion – a tions in companies either in bankruptcy B747-200 freighters. drop of 18.6 percent over 2007. or threatened with debt defaults. “The current pronounced downturn Commenting on the result CEO Peter According to World’s chief marketing in global airfreight demand has caused Bakker said, “The extremely tough trading officer Jeff Sandborn, the airline and its us to accelerate our plans to retire a conditions we saw for our express business in owners now want the market to know it’s portion of our older 747-200 assets,” the second half of 2008 are continuing into in the capacity business – rather than the said CEO William Flynn. 2009 so far. cargo or passenger business vertical. Atlas Air Worldwide Holdings is the “For 2009 we target cost cuts up to Euro MatlinPatterson provided the capital parent company of Atlas Air and is 400 million ($500 million) in all of our activi- for the now former Global Aero Lo- the majority shareholder of Polar Air ties while maintaining good service quality as gistics to acquire World Airways and Cargo. With the seven aircraft disposal, we weather this major economic downturn. North American Airlines for $315 mil- it will operate a fleet of 22 B747-400 “2009 looks set to be a very challenging lion in August 2007. and seven B747-200 freighters. year; predictability in today’s economic environ- Reported 2006 combined revenues While Atlas Air and Global Aviation ment and the express markets in particular is were $1.6 billion. appear to be underwritten by long- very limited and pressure on volumes is expect- Last year the private equity firm ac- term contracts and stable equity, given ed to remain high during the year, “ he noted. quired an 85 percent interest in Miami the state of the global economy some based Arrow Air – which has for many of the more distressed air cargo opera- in distressed company investing report- years provided scheduled air cargo ser- tors might be knocking on the Matlin- edly said recently, “All you need is a de- vices between the U.S. and Central and Patterson door this year. fault rate of three, four or five percent South America. As Marc Lasry, founder of hedge fund and you will have $1 trillion to $2 trillion According to Ron Menke, World’s Avenue Capital Group and a specialist of distressed debt out there.” ACW Marketing Director, Arrow is now a customer. At the time of the acquisition Lap Chan, a Managing Partner of MatlinPat- terson commented, “Arrow is a strong competitor in the air cargo industry and a highly complementary addition to our portfolio. “We intend to modernize and ex- pand Arrow’s existing fleet by intro- ducing B757’s in late 2008 and A330’s in early 2010 to facilitate the compa- ny’s continued growth and improve the company’s profitability.” Menke says World currently provides American Airlines Cargo says it has met the U.S. Transportation Security Administration’s (TSA) B747-400 freighter capacity under an mandate to screen 50 percent of cargo on all passenger planes. Dave Brooks, President AA ACMI (aircraft, crew, maintenance and Cargo said, “We are pleased to report that since the new mandate went into effect two weeks insurance) contract for Arrow. ago, our customers have observed no service disruptions and the number of pre-screened ship- World splits its capacity 50:50 be- ments tendered at our facilities has increased tenfold. This tells us the Certified Cargo Screening tween U.S. military contracts and the Program (CCSP) is not only working, it is working well.”
6 MARCH 2009 ACW OVER 200 TRAVEL OUTLETS 3.4MILLION TONNES OF CARGO 90 MILLION PASSENGERS
BEHIND THESE BIG NUMBERS IS ONE SMALL WORD.YOU.
Our journey began 50 years ago as a ground handling company at Dubai International Airport. Today, with our cargo, ground handling and travel management operations, we are the largest, most CELEBRATING 50 YEARS OF innovative and successful supplier of air travel services in the DREAMING BIG. ACHIEVING MORE. Middle East, and have made our presence felt around the globe. It's an achievement that calls for celebration, but more importantly dnata.com it's an inspiration to exceed your expectations in everything we do. v worldAMERICASEUROPE ASIAnewsEUROPE MIDDLE ASIA EAST MIDDLE AFRICA EAST AMERICAS AFRICA EU Approves “In today’s conditions, Kuehne & Nagel Bid For Hapag Lloyd stay on top of the cash-flow“ he European Commission has ap- proved plans for joint control of THapag-Lloyd by a group of Hamburg- based investors including Kuehne & Nagel (K&N) and TUI. ‘Examination of the proposed transaction showed that the horizontal overlaps of the activities of the parties are very limited,’ the Commission said in a statement. Hapag-Lloyd is the world’s fifth-largest container line employing 7,000 people at 320 locations in 130 countries. Following EU approval of the sale by TUI for $5.7 billion, Maersk Line CEO Eivind Kold- ing said he didn’t rule out a bid for Hapag- Lloyd. Klaus-Michael Kuehne, head of K&N said he would hold a 25.1 percent blocking minority in the shipping line and has no plans to give Maersk a stake. According to reports he said, “This is not being discussed. We want (Hapag-Lloyd) to remain as pure-bred German as possible.” TUI has retained 33 percent of Hapag- argo traffic in near freefall, sition by UPS. Lloyd for $894 million. freighter capacity ground- “Many of us can bear witness to pre- “Despite an adverse environment, the ed, lay-offs and short-time vious downturns in their various forms price we have achieved for container shipping working. - the three day week in Britain, the reflects its fair value even under normal market It is doubtless the in- SARS epidemic, and 9/11 - all had very conditions“, said TUI CEO Dr Michael Frenzel. dustryC downturn of all downturns. Yet dramatic impacts on our businesses at “Selling only two thirds of Hapag-Lloyd some industry veterans will insist they the time.” has made this price possible. In addition, our have seen it all before. Forwarders, he maintains, are more entrepreneurial stake will offer us the op- Well, perhaps on not such a seismic resilient to sudden fall-offs in business, portunity to benefit from the future earnings scale, but in such distraught times how because they do not have high fixed potential,” he added. do you keep your head when many costs in the form of aircraft or trucking Employing over 54,000 people in 100 about are obviously not? More impor- fleets, but they still have to look at cost countries worldwide, K&N has now been tantly, how do you prepare to come reductions and economies. recognized in Ireland with an Excellence out the other side leaner, fitter and “There is one simple piece of advice Through People (ETP) Standard for all its perhaps just that bit meaner? for the forwarder in today’s conditions Peter Quantrill is director general of and that is to stay on top of the cash- business divisions and sites. The ETP is Ire- the British International Freight Asso- flow“, say Quantrill. land’s national standard for human resource ciation. He can certainly claim experi- “Customers will want to take more management. ence of previous downturns. For many credit and run the risk of pushing the The company pursued this standard in years he headed up the operations of forwarder into greater debt. Debt has a order to benchmark its human resource US forwarder Emery and then that of habit of morphing into bad debt.” activities against best practices in the UPS in the United Kingdom, before The other firm piece of advice from areas of business planning, training & heading to the States to become joint Quantrill is for forwarders to stay very development, internal communications and senior executive at Menlo Worldwide close to their customers. recruitment. Forwarding prior to its eventual acqui- “Don’t wait for them to come to you
8 MARCH 2009 ACW AMERICAS EUROPE ASIA MIDDLE EAST AFRICA with their problems, go to them with the air cargo business as CEO of fledg- the company would immediately set your solutions first.“ ling Belgium cargo carrier Cargo B. about offsetting its fixed fleet costs by He says forwarders should actively “What has surprised me with this moving as much traffic as possible to be looking at how they can offer more downturn, as an airline operator, is the the commercial carriers and off-loading economic solutions in the current en- speed with which it has descended and any leased aircraft capacity. vironment through suggesting perhaps the fact the so few seem to have seen it “I know the major leasers are hurt- greater use of consolidations or a shift coming”, says Kuijpers. ing very much at the moment, because in transport mode. all the major cargo carriers are today “Talk to your customers and make “What has surprised me adopting the same policy and off-load- sure your are on the same page as ing their contracted capacity as quickly them and see how you can work more with this downturn, as as possible.” closely together through ’gain-sharing’ The survival strategy of Cargo B, your various costs.” an airline operator, is says Kuijpers is to stay as lean as pos- Quantrill sounds one bright note: the speed with which it sible, seeing advantage in being a small “You have to remember that forward- niche market player. ers and service providers make their has descended and the “The South American market is money through the number of shipping fact the so few seem to down, particularly with auto parts to transactions handled. Volumes may be Brazil out of Europe, but we still have down but in many cases the number of have seen it coming.” good return loads of fresh flowers and transactions is still quite high.” produce.” Rob Kuijpers has worked both sides He compares this with his time at The airline also has the odd surpris- of the fence when it comes to indus- DHL when it was a different story. ing ace up its sleeve, with which it try downturns. For many years he “Then, as an express operator, I can hopes to maintain the initiative. It ac- was CEO of DHL Worldwide Express, recall that we always had indicators of quired its new build B747-400F direct before becoming chairman of Belgian a slowdown at least six months in ad- from Boeing courtesy of a lease agree- passenger carrier SN Brussels Airlines. vance and could act accordingly.” ment with Japanese cargo carrier NCA. More recently he has moved back into As a major integrator, says Kuijpers, “We are in fact forging quite a