www.airlogisticsinternational.com February 2021
DISTRIBUTION 09 Moving the vaccine PAYMENT OPTIONS 22 Online monetary solutions CARGO SECURITY 31 Are vaccines a prime target? FEBRUARY 2021 • AIR LOGISTICS INTERNATIONAL LOGISTICS AIR • 2021 FEBRUARY END OF YEAR SURVEY 36 Will 2020 be the year to forget?
Space age Conversions market snapshot
Connecting the air cargo community TSA MEET ECAC QUALIFIED PERFORMANCE STANDARD
® EMIS series EMIS 130200 FOR PALLETIZED CARGO AUTOMATIC SCREENING FOR NON-METALLIC CARGO
INSPECTION OF PACKAGES AND PALLETS OF EMIS 8075 FOR PACKAGE INSPECTION
Perishable goods and flowers Paper products Textiles and Clothing Plastic and wooden products
AUTOMATIC DETECTION LOW COST NO DEDICATED & HIGH THROUGHPUT OF OWNERSHIP OPERATOR
T +39 0575 4181 E [email protected] W www.ceia.net/security/emis ISSUE 1 / VOLUME 4 FEBRUARY 2021 CONTENTS
12 16 31
MANAGING EDITOR Alwyn Brice tel: +44 1322 221144 e-mail: [email protected] DEPUTY EDITOR Felicity Stredder tel: +44 1322 221144 e-mail: [email protected] DESIGNER Heather Woodley tel: +44 1322 221144 e-mail: [email protected] 36 PRODUCTION Nicki McKenna tel: +44 1322 221144 e-mail: [email protected] COMMMERCIAL MANAGER Anthony Smith tel: +44 1322 221144 e-mail: [email protected] PUBLISHER Marc Young tel: +44 1322 221144 e-mail: [email protected] CONTRIBUTORS Stanley Chao, Thorsten Neumann, Holly Stewart and Lionel van der Walt
Air Logistics International is published in February, April, June, August, October & 5 Editor’s welcome 22 Payment options December. Subscription rate per year applies to UK and overseas: Trade sanctions really have no Forget cash - online payments are Qualifying subscription: £64 or ¤92 or US$100 place in a world wrestling with a being increasingly adopted, says Non-industry subscription: £170 or ¤240 or US$250 pandemic, reckons the Editor PayCargo’s Lionel van der Walt 6 Logistics update 24 Chinese economy Qatar Cargo pulls out the stops; Stanley Chao on the emergence of Dutch backtrack on levy; digital China from the ashes progress at Dallas Fort Worth 28 Conversions update www.markallengroup.com 9 Distribution The Editor with a round-up of news The sector agrees that rolling out from this specialist sector Published by MA Business the COVID vaccine will be a major a Mark Allen Group Company Hawley Mill, undertaking. The Editor considers 31 Cargo security Hawley Road, Dartford, a new report on the topic TAPA’s Thorsten Neumann Kent DA2 7TJ. Tel: 01322 221144 provides an update on criminal CHIEF OPERATING OFFICER MARK ALLEN GROUP 12 World analysis activity in the COVID vaccine Jon Benson tel: +44 1322 221144 Alwyn Brice reviews the Middle supply chain e-mail: [email protected] East over the last 12 months © 2021. All rights reserved. No part of Air Logistics International 34 E-commerce forecast may be reproduced or transmitted in any form, by any means, electronic or mechanical, including photocopying, 16 Industry interview Predictions from the integrators on recording or any information storage or retrieval system, without permission in writing from the Publisher. Felicity Stredder talks to Delta how 2021 will shape up The views expressed do not necessarily represent those of the editor or the Air Logistics International. Advertisements in the Cargo’s Rob Walpole about his new journal do not imply endorsement of the products or services role and the carrier’s strategies 36 End of year survey advertised. Front cover courtesy of Precision Conversions The Editor examines a recent Print - ISSN 2633-2450 21 Integrator focus XOP Logistics study on retailers, Online - ISSN 2633-2469 Holly Stewart charts the progress consumers and third party
Printed by Pensord Press Ltd, NP122YA of the big names during 2020 providers in the US and the UK
www.airlogisticsinternational.com February 2021 3 www.airlogistics transportation. with theworldofair the reader uptodate and theUS,aimstobring based inbothEurope skilled teamofwriters a comprehensive and experience and,with 20 years ofindustry such, itbuildsonover titles of for thewell-established same teamresponsible ALI ALI STATEMENT MISSION Equipment News Equipment International International comes from the Ground Handling Handling Ground international and . As Ramp Ramp .com H What goesaround… stalling passengerflights. has beenlesscapacity, somethingthathasbeenoccasionedbythe pandemic inundated withdemandwhichithasstruggledtofulfil.Why?Becausethere were upbyover46%. seemingly boundless.Infact,ChineseexportstotheUSinNovemberlast and whatdoesonefind?AmericandemandforChinesegoodsthatwas toDecember2020, yes, thelevieswerenotwelcome–butfastforward were ameansofcurtailingthelatter’s prominenceontheworldstage.And manufacturing hubweredesignedasprotectionistmeasuresand,allegedly, headlines throughmostof2020.Tariffs andsnubbingtheFarEastern was limited.Theaviationsector, inasense,isreapingwhatithassowed. and othersdecimatedmillionsbetweenthem,buttheirsphereofoperation mankind haseverfaced.Yes, theBlackDeath,smallpox,BubonicPlague travel networkthathasnowcontributedtothegreatestbacterialthreat in termsofthepandemicisunprecedented.Fullstop. petty in the extreme. petty intheextreme. the problemissimplyexacerbated. Add tothatthevaccineswhichrequirespecial,sub-zero containment,and More glassisneeded–andthatmeansacargotransportation requirement. finishing stage,whichisthepointthatbottlingcomes intotheequation. be shackledbytheself-samecapacityproblem.That, anddifficultiesinthe Alwyn Brice, Managing Editor The ironynow, as2021getsunderway, isthatvaccinedistributionwill It’s aviciouscircle. The loserinthisscenariohasbeenthecargosector, whichhasbeen Trade war?Whattrade Move ontothespatbetweenUSandChinathathasoccupied Bit bybittheworldhasbuiltupacomprehensivecommunicationsand In retrospect, intercontinental trade sanctions and tariffs suddenly seem In retrospect,intercontinental tradesanctionsandtariffssuddenly seem ever faced. Forget living memory –what’sever faced.Forgetlivingmemory happeningatthemoment ave youevernoticedhowlifeisfulloflittleironies? Here we are, paused at the biggest crossroads that the world has Here weare,pausedatthebiggestcrossroadsthatworldhas February 2021
EDITOR’S 5 WELCOME AN ILL WIND FOR SOME One unwelcome knock-on effect of the current pandemic, and all that it entails, has been the escalation in charges for freight transportation and cargo handling. Forwarders have slammed increases levied by Worldwide Flight Services in particular, calling the new tariffs “monstrous” and complaining that the service offered is not worth the increases; fewer staff and problems of readiness have simply exacerbated the situation. Quoting Air reig t donation a cce rates of around £2,500 for a ten tonne s part of the 1 pro ect of atar Airways this pro ect, ensuring that shipment, forwarders have pointed out million kilos Cargo, under the terms of UNICEF cargo was safely that they are effectively being held to charitable initiative, which the airline donated transported to the UNICEF ransom, since their options are limited. uehne Nagel and atar a million kilogrammes of lobal Supply Hub in In its defence, WFS has said that Airways Cargo have been freight for humanitarian Copenhagen, Denmark. The it continues to invest in technology to donating airfreight services aid including medical various essential supplies, assist the sector and that the onset of to UNICEF, supporting the supplies until the end of including protective the pandemic had occasioned it much agency’s global efforts in the 2020. The kilogramme offer equipment, were an more (unexpected) expense in order to fi ght against the C ID-1 was allocated to freight important part of UNICEF’s comply with safety regulations. pandemic. forwarders to give to the efforts to keep health At the time of writing it was Triggered by the crisis, the charities of their choice. workers safe so that they understood that WFS’ latest tariffs initiative is part of the larger uehne Nagel oined could continue to deliver exceeded those of handlers dnata, sustainability We are atar Airways Cargo in quality care. Menzies and Swissport. DUTCH VOLTE-FACE DRY ICE PROTOCOLS ate last year it looked as aircraft, they argued, were not With vaccine distribution kept at about - 4 C and dry if the Dutch government necessarily bigger polluters now well underway, in a ice is the only widely available would be levying a tax compared with their smaller safety alert the FAA has urged material that will maintain on freighters in Holland, siblings. Added to this is the caution and awareness in its that temperature. according to their MT W. irony that handling companies transportation, particularly The threat is that as the However, a study into the typically look to optimise where the packaging dry ice sublimates or moves impact of the proposed tax cargo loads, with maximum requirement is one of dry ice. from a solid to the gaseous revealed the short-sightedness capacity the overall goal The situation has seen cargo state , it might overwhelm of the concept, with in so doing, they would be carriers loading up aircraft the ventilation system on an opponents pointing out that effectively penalised. with up to fi ve times as much aircraft and threaten the crew. any introduction of such a tax The Dutch government dry ice than they would The issue is even more acute would merely oblige aircraft subsequently backtracked on normally be allowed to carry. on aircraft because the dry ice to relocate to other airports. its proposals and instead said With the recent approvals sublimates faster in lower air Moreover, analysts also noted that it would work towards granted by various pressure. Inter alia, the FAA that this environmental tax a freighter tax that would be governments for use and recommends the installation
was skewed, citing that the introduced at a European level. distribution of the vaccine, of C 2 detectors and ensuring MT W ignored the most The amended bill also included dry ice has been one main key that all air handling systems important part of the equation, a recommended increase in to that effort. are in full operating condition namely how green the aircraft a proposed tax on passengers Certain vaccines have to be before take-off. was in the fi rst place. Bigger taking international fl ights.
February 2021 a r og st sinternational o CEVA in African expansion CEVA Logistics’ strategic expansion plan across the African continent is further gathering in co-operation with its parent company the CMA CGM Group and contract logistics activities pace, with the acquisition of ASTI Group in Morocco. CEVA Logistics and ASTI have been in both Casablanca and the Tangiers Free Zone. The new operation will be looking to partners for more than two decades and have delivered a range of multi-modal services to capitalise on the strength of the automotive industry in the country, a vertical in which CEVA customers across the North African country in that time. Logistics is a market leader. CEVA Logistics will expand its range of export capabilities, specifi cally reefer services, ASTI is already a top ten logistics player in the Moroccan market. i ital o e at alla ort ort well as trucking companies, Nallian, added We are empowering them to co- honoured to work with ordinate their cross-company Dallas Fort Worth airport processes. which is committed to raising Dallas Fort Worth the bar for innovation and airport continues to focus excellence in air cargo. With and invest in our cargo Nallian’s mission in mind - to business. This new platform make the world operate as makes processing cargo one - we are thrilled to see more effi cient by providing how our infrastructure also accurate and timely empowers forward-thinking information to our cargo airports such as Dallas and community, explained ohn their partners to leverage the Ackerman, Executive ice power of digitisation on a President of lobal Strategy global level. and Development at the This new application- airport. We are excited to based technology will allas Fort Worth airport chain. ver time, this will work with Nallian and our reduce the amount of time is using Nallian’s include freight forwarders, international airport partners and paperwork required for cloud-based data shippers, ground handling to offer this digital platform cargo shipments coming sharing platform for cargo agents, third party logistics to our cargo and logistics through the airport and is customers, allowing seamless providers, airlines, Customs customers. part of the airport’s digital transactions across the supply and Border Protection, as ean erheyen, CE at transformation strategy. New facility at Manchester eodis has announced Freight Forwarding of Dnata has opened a new, state-of-the 125,000 square foot of warehouse the continuation of E DIS, said ur art cargo complex, dnata City North, space and is capable of processing its scheduled wn customers on both sides at Manchester airport. Representing in excess of 150,000 tonnes of cargo Controlled Network service of the Atlantic have been an investment of over £30m, the annually. It is equipped with the latest linking Europe and the suffering from a severe 150,000 square foot facility allows the technologies and complies with the US. The current service, shortage of regular, company to significantly expand and highest industry standards, ensuring providing three full rotations guaranteed air freight consolidate its Manchester operations. efficient and safe handling of all types each week, has been options. We foresee this Particularly well-situated for ease of cargo, including pharmaceuticals, confi rmed throughout 2021. situation remaining for some of airfield access, dnata’s perishables, dangerous With transatlantic time and so have committed purpose-built, on-airport goods, aircraft engines airfreight capacity continuing resources to provide stability facility includes and vehicles. to be tight and forecasted and assure the continuity of to remain so well into 2021, our service through the full E DIS is contracting year of 2021. freighters to operate within As a critical element of its CN as part of its global our CN programme, we can AirDirect service offering. The ensure seamless end-to-end 2021 schedule is confi rmed delivery through consistent between Amsterdam Schiphol monitoring and control of and Chicago ’Hare, with all shipments, including three departures and three pharmaceuticals and medical return fl ights a week. equipment, as well as vaccine Eric Martin-Neuville, delivery as it becomes Executive ice President, available.
a r og st sinternational o February 2021 HYBRID CONTAINER DEAL IN BRIEF Vietjet has partnered with UPS for Asia-US pilot to showcase the benefi ts and s 2020 closed, SkyCell and Air France KLM Martinair Cargo airfreight operations, but the low cost feasibility of the initiative. signed a partnership agreement. The agreement set out the carrier has not given up on its long- The ONE Record project proposes a reintroduction of hybrid containers for those shipping with standing ambition to have a freighter fl eet. solution by defi ning a common API for Air France KLM Martinair Cargo, supporting a push to increase the The Vietnamese airline said that all electronic platforms used by various sustainability and safety of pharmaceutical shipments. the weekly service carried cargo stakeholders in the supply chain involved The agreement coincided with the rising demand for greener including garments, seafood and medical in the data provisioning process. This solutions and ambitious environmental goals set out by pharma commodities collected from Bangkok, Kuala standardises the data exchange protocol in companies. As the pharma logistics industry pushes onwards with Lumpur and destinations across Vietnam. the air cargo industry and provides added the global distribution of COVID-19 vaccines, sustainable solutions benefi ts of better data quality, control, will be crucial, given the volume and global scale of the distribution Pharma.Aero has enlarged its membership transparency and ease of connectivity. ahead. Since SkyCell’s solutions are able to secure products within a base with three new Full members – Dubai- temperature range of 2-8°C and 15-25°C and now -70°C, SkyCell is based logistics and transportation services After the launch of a direct freighter well-prepared for the varying needs of vaccines and other sensitive company First Priority Cargo, global 4PL service from Johannesburg to fi ve African pharmaceuticals. BDP International and Lima-based ground destinations in late November, Kenya The deal with Air France KLM Martinair Cargo has marked part of handler SAASA (Servicios Aeroportuarios Airways Cargo began direct cargo fl ights a shift towards the adoption of enhanced technological solutions to Andinos). Over the course of the last two from Moi International, Mombasa, to meet both the demands of pandemic logistics and requirements of months, Pharma.Aero has signed up a total Sharjah. Initially a weekly fl ight, this is environmental agreements. of eight new members. expected to gradually increase in frequency and more destinations will be added. EDIfl y’s Aviation Messaging 2.0 has just marked its tenth anniversary. Built from Amazon Air recently bought seven retired scratch, it has developed into a household Delta Boeing 767 aircraft, along with four name for messaging solutions for the WestJet aircraft for conversion purposes. aviation industry. The initial four will be in operation within 12 Starting in the cargo arena, currently months. Elsewhere, it is preparing to open more than one hundred EDIfl y servers are a US$1.5bn air cargo hub at Cincinnati/ in operation at airlines, ground handlers, Northern Kentucky International airport. airports, government agencies and logistics centres. To support its local clients and be closer to the high-growth Asia Pacifi c region, data CHAMP Cargosystems, along with Qatar sharing specialist Nallian has opened up a Airways Cargo and Agility, has completed new offi ce in Singapore. Geert Van Brempt the fi rst phase of the IATA ONE Record has been appointed Managing Director. APPOINTMENTS In what has been a year of great change association’s 2020 Hall of Fame Recipient. worked for almost 20 years for the Ramirez, and Ken Nieze. Ramirez becomes for the air cargo industry, Peter Gerber will company, of which the last two years he the new Global VP, Human Resources, leave the position of Chief Executive of The new term of offi ce for the Air Cargo spent as CEO. based at PayCargo’s Florida headquarters, Lufthansa Cargo to take over at Brussels Community Executive Board will begin with while Nieze has been appointed VP of Sales, Airlines. Gerber will become the Chief two new members. Susanne Klingler- In December at Delta Cargo, Shawn Cole West Coast, and will be based in Seattle. Executive of the Belgian airline, which is Werner and Dr Pierre Dominique Prümm became the new Vice President Global owned by Lufthansa, on March 1, taking have been elected to the committee for Sales, a newly created role focusing on Ashwin Bhat is to take over as Lufthansa over from Dieter Vranckx. In turn, Dorothea the fi rst time. Patrik O Tschirch will replace identifying enterprise-wide synergies with Cargo’s Chief Commercial Offi cer and member von Boxberg will become the new Chief Harald Gloy as Chair. Delta’s portfolio of global corporate and of the executive board for the carrier’s Executive and Chair of the executive board travel management companies. Separately, product and sales division on March 1. of Lufthansa Cargo. World Freight Company announced that Rob Walpole was named VP Delta Cargo. from November 23, 2020, Sebastiaan Jannie Davel has joined Delta Cargo as Larry Coyne, CEO of Coyne Airways Scholte would become CEO of Kales Group. Online freight payment platform PayCargo Managing Director–Commercial and Vishal and Coyne Aviation, has been selected Scholte takes over from Dirk Hazenoot, has appointed two new Vice Presidents Bhatnagar has been promoted to Managing by TIACA’s Chairman’s Council as the who decided to step down after having to its senior management team: Marta E Director–Global Cargo Operations.
February 2021 a r og st sinternational o
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ccording to Ti’s recent supply chain, and thus the accine c aracteri tic and logi tic study (Logistics logistics resources required, will The report suggests that the logistics of production of mRNA (and Requirements for the evolve over a short period of attenuated virus-vector vaccines) is probably less complex than COVID-19 Vaccine), the time. Thus the critical nature of that of traditional attenuated ‘live’ virus and inactivated ‘dead’ distribution of vaccines for the deployment of the vaccine virus vaccines. Production lead times are shorter and any increase COVID-19 will be a task of will be signifi cant and therefore in production capacity is easier. At present, the most advanced some, but not overwhelming, large volumes of vaccine will vaccines likely to be deployed are mRNA and attenuated virus- size and complexity. It will be exported from production vector vaccines. In the case of mRNA vaccines, the ability of tread a familiar path for centres in the UK, Belgium the RNA to replicate comparatively quickly and simply through inoculation programmes in and the US. However, after a normal genetic processes enables rapid production with a less both the developed and the fairly short period of time, new demanding production infrastructure. developing world. The logistics production centres will open In the case of mRNA vaccines, the time between the solutions are familiar and will up around the world, with the commencement of design and production is very compressed, with use resources that are widely result that different logistics the major proviso that the effi cacy and safety trials remain and are available in almost all major solutions will be adopted. a substantial lag on the introduction of the vaccine. economies; in fact, the report Theoretically, the longer- Virus-vector vaccines are slightly more complex. As their name believes that the demand term prospect is that demand implies, they need an attenuated virus to deliver the RNA to the for specialist resources will for COVID-19 vaccines will cell wall proteins, making the vaccine more complex. However, be limited to areas such as moderate and the sources will this virus-vector is essentially a platform that delivers and actuates packaging. Indeed, packaging broaden, suggesting a merging the cell in order to deliver the piece of RNA. emerges as one of the pivotal of COVID-19 vaccines into Thus it can be seen that compared with traditional vaccines, issues within the supply chain. the existing vaccine logistics new technology in vaccines has created a different environment
© Steak - stock.adobe.com A further issue is that the channels. for supply chain management and logistics.
a r og st sinternational o February 2021 DISTRIBUTION
Vaccine production geography This will have important once the vaccine is decanted and exits any storage facility it will At present, production locations implications for inventory and have a strict shelf life. This is complicated by the frozen state of any are concentrated in Europe, transport strategy. mRNA vaccine, as shelf life is likely to be different once the vaccine the US, China and possibly The study also references the is defrosted and brought to a temperature suitable for injection. Russia. At the time of writing vaccine production capabilities The nature of demand for COVID-19 vaccines is more uncertain the production base was being within India. Although the than might at first be imagined. For example, there exists expanded to other locations extent of the disease is not uncertainty over the number and location of people to receive the across the world, notably proportionately as intense vaccine. France and Japan, with further as in many other regions, Although it is presumed that a substantial proportion of the markets such as Brazil or this sub-continent has a very developed world populations will receive some type of vaccine, Australia constructing their own large population and thus the there is, surprisingly, a strong likelihood that most people will not production facilities. However, quantity of demand is likely to receive the vaccine. For example, the UK Vaccine Task Force has the supply chain is likely to be very great. India possesses disclosed that its aim was to vaccinate just 30% of the population. be effectively sourcing at the significant vaccine production Worth bearing in mind is the fact that vaccination campaigns regional level and at the global capabilities, although this is are often short, seasonal operations lasting just a few weeks or level; very advanced economies, focussed on traditional vaccine months. Activity can be intense and, combined with the shelf life such as those of the UK or types (in common with most of constraints of the vaccine, a premium is thereby placed on the US, will be largely utilising the rest of the world). speed of response. Consequently, we may see an intense period of domestic production whilst activity and then a falling away. other economies would look to Product profile and constraints Geography is another factor: aside from the irregular incidence import production from global Needless to say, here shelf life of COVID-19, the seasonal nature of the disease also complicates locations. is a key determinant of logistics the logistics operation. That said, both Europe and strategy within the vaccine the US will have distribution supply chain. Although it Last mile considerations patterns that are fairly standard appears that both mRNA and As with any logistics schedule, it’s the last part of the journey that to the distribution of many attenuated virus-vector vaccine is the most critical. If that cannot be effected with precision and industrial and consumer can be kept for several months timeliness, then what has gone before is essentially wasted. In the products, with a central adjacent to production facilities case of sensitive drugs, the last mile takes on a new significance, production facility capable of and, in the case of mRNA especially since the indications are that a follow-up injection will be
serving the entire continent. vaccine, at lower temperatures, required at some point after the first. Here, shelf life is everything, © Dimitrios - stock.adobe.com
10 February 2021 www.airlogisticsinternational.com O ID o a llen, T
temperature control vital and Fleets are leased or operated have a secondary function of increasing control over logistics supporting equipment (needles by the manufacturers. operations. This is especially true with vaccines. In order to model and the like) essential. These containers are heavy, the effectiveness of their operations, pharmaceutical companies expensive, complex to manage can use the data they have generated through their information ac aging trategy and need to be rented from systems. This results in supply chains that have somewhat higher This is arguably the most specifi c operators but do offer levels of design than similar operations in other sectors; however, important part of the whole a higher degree of security this effect should not be exaggerated, says the study. operation. for consignments. Bearing in The vaccine is put into vials mind the time and handling ran ort trategie which are boxed in cardboard; specifi cations of vaccines, Finally, what’s the best means of delivery? the box has its own insulation there is a tendency to use At the tactical level, transport management is shaped by the or cooler pack, typically active containers to a greater structure of the supply chain and in particular, production strategy. containing CO2 and which can degree than usual in the rest of In terms of producing state-of-the art vaccines, there are relatively be supplemented by further pharmaceutical logistics. few production facilities at present, although as discussed above, injections of the gas. Step three this looks likely to develop throughout 2021. involves putting the boxes e in or ation ly c ain The study’s fi ndings point to road freight as likely to be a major into a pallet shipper which An important characteristic resource for serving markets in North America and Europe. The allows handling en masse of contemporary attractions of road freight solutions are considerable, not least that and which can further help pharmaceutical supply of the integrity of the consignment. Moreover, any need for hub with keeping the contents at chains is their investment in or trans-shipment facilities is negligible and normal packaging the right temperature. Here, data generation capabilities. solutions are highly appropriate for road freight. Critically, it is a the choice is either an active Central to this is the ability very cheap solution. or passive solution, ranging to monitor the temperature Airfreight is often assumed to be the default solution for from a simple, cardboard (or of consignments. The pharmaceuticals in general and vaccines in particular. It is other material) container to monitoring of consignments presumed that it is faster to move consignments by air than by the specialised refrigerated of all pharmaceuticals, but road or sea. container commonly used especially vaccines, is now However, although there are strengths appertaining to within the cargo sector. a salient requirement for all airfreight, there are also weaknesses. That said, the attraction When it comes to packaging pharmaceutical companies. of airfreight for certain supply chains, such as globally sourced proper, the choice falls into Evidence of the correct production, is very great, if not unparalleled. Chief in its favour is active or passive options. handling of consignments must cost competitiveness for smaller volume, high value loads. Passive packaging covers be produced in acceptance or Weaknesses include the frequent loading and unloading of the various forms of cardboard and use of any pharmaceutical by consignment (hence the need for consignment integrity), together other material boxes. Some of the end user. with a lower level of transparency and control. There is also these are remarkably advanced, This is invariably in enforced reliance on a number of logistics service providers. such as SkyCell, whose boxes electronic form and is in Finally, sea freight. The facility is very widely used by the cool the consignment and effect, generated through pharma sector generally. However, because of its slower speed, sea can be recharged in cooler the use of data loggers freight is less used for the movement of vaccines, not least as the environments. These solutions inside or approximate to the shelf life constraints of vaccines are typically signifi cantly more are light, cheap and fl exible. consignment. There are several restricted than many other pharmaceuticals. Nonetheless, for the They are, however, perceived variations of this technology. movement of a large consignment, such a solution could have its by some to be less reliable The more elaborate are active attractions. For example, combined with an air freight component, than active solutions and less transmitters that provide vaccines could be moved into a region in large quantities and appropriate for high value near real-time data to ‘control stored in a temperature-controlled box reefer. Such a facility could and highly critical cargoes. towers’ operated by the hold suffi cient volumes of vaccine to inoculate a substantial They are, however, the pharmaceutical companies population. dominant solution within the on a continental or even a pharmaceutical sector. global basis. These systems oncl ion Active packaging really are created by and are the The paper, in some respects, reveals no surprises. Vaccine applies to refrigerated possession of pharmaceutical distribution began in early December 2020 and the media has containers which are largely companies. They are rarely, if made much of the initial deliveries. Road, air and marine transport used in the airfreight sector. ever, outsourced to third party facilities all have a role to play in this battle against the pandemic These have a powered logistics providers. and for some countries, a combination of these transport modes refrigeration unit within what Although these systems are will see the vaccine effi ciently distributed. The good news, though, is essentially a large multi-pallet designed to support regulatory is that the sector is well prepared for this huge undertaking, and container. obligations, they may also has the necessary tools and equipment in place.
international OR D OR D N SIS T Middle I Alwyn Brice
any would like to efface 2020 from their memories. Yet, necessary measures in place for e-commerce volumes over despite all the challenges, life continued – and cargo their protection. last year, says Allaham, and aircraft still took to the air. We also implemented certain markets had increases According to ubna Allaham of Etihad, the carrier’s cargo a work from home policy of over 0% compared to arm was kept busy and operated over 0 charters to support the for the offi ce staff and this the previous year, especially global aid programme on behalf of the government. was supported by the great around the holiday seasons. As a key stakeholder under the Hope consortium, we digitalisation efforts in which And what about 2021? have transported millions of C ID-1 vaccine doses we had invested. ur online Was any change envisaged? already. ur pharma product has seen an increase of 0% bookings saw a great surge We are optimistic about in pharma shipments with Etihad Cargo, thanks to the trust in addition, our e-AWB the year ahead. We have that our partners have put in us and our IATA CEI Pharma penetration increased, putting already recovered in many certifi cations. us amongst the top airlines. areas, including the strong In fact, Etihad Cargo was amongst the fastest airlines to roll ike many freight carriers, equine and automotive out the so-called mini freighters or preighters that occurred Etihad Cargo has had to movement sectors, within 24 hours of the suspension of the normal passenger adapt to the rise of which were greatly fl ights. e-commerce. affected during the Allaham continues We have participated in key government We have early months of the programmes, moving incinerators of over 60 tonnes to bringing witnessed a pandemic. We are C ID swabs from Europe to be tested in the UAE labs. The sizeable expecting to see a rolling out of the preighters was a ma or change for us, to increase in large movement introduce the necessary capacity into the market and ensure of temperature- that the world trade lanes remained connected. We controlled items, worked closely with customers and partners, especially the achieving record loads on some fl ights and we ensured that our front line staff had all the
international C ID-1 vaccine, where the Hope consortium is estimating of the vaccine that the world at handling almost 1 bn doses by the end of 2021. Finally, has been eagerly awaiting. with the recovery of the passenger network, we expect to be Being no stranger to pharma reopening several scheduled routes within our network. and having the world’s largest DP certifi ed facilities A c allenging year and extensive experience Before 2021 fi nishes, the word challenging will probably go from our daily movement enri A a , down in history as the most mentioned ad ective in connection S O of pharmaceuticals, we look with the coronavirus forward to facilitating this For Henrik Ambak, S P Cargo perations Worldwide at essential distribution task. As Emirates, 2020 was one of the most challenging years for us also had to make a complete the end of the pandemic does humans in a very long time – and therefore also challenging safety evaluation and develop not yet seem in sight, 2021 is for aviation. If we are speaking in strict business terms, it also guidelines for our worldwide going to continue several of provided an opportunity for air cargo to step up its game and team to follow. In the month the trends from the previous prove its importance to society in a diffi cult situation, which I of une, we also removed seats year, not the least disruptive think the industry managed very well. Here I mean the industry in Economy Class from ten change at short notice to no in the widest sense of the word airlines, forwarders and handlers, Boeing - 00E aircraft to notice at all. Although there as well as the regulating authorities. The magnitude of the convert them into what we like has been a recovery in our challenge we faced was more than the combined impact of all to call mini-freighters. And we passenger operations, we are other previous upsets. have now operated cargo-only not yet close to the scale of our Prior to the C ID-1 pandemic, we’d never had a situation fl ights on Airbus 0 aircraft. pre-pandemic operations. We where our entire passenger operation remained suspended for an Aside from the initial anticipate that we will continue extended period of time. When C ID-1 forced the complete surge in PPE, the year to use our mini-freighters and suspension of passenger fl ight operations in late March, we lost brought substantial growth in passenger aircraft for cargo-only access to the capacity on passenger fl ights, which normally offer e-commerce, as many of us no operations in the near to mid- more than two thirds of our total global cargo capacity. We were longer went shopping in shops term to meet market demand. only left with our full freighter operations, with a fl eet of 11 Boeing but instead clicked ourselves As vaccine production scales aircraft. to what we needed. iven up and countries start ramping However, there was an immediate and urgent demand in the the convenience e-commerce up delivery of the vaccines to market for air cargo capacity in order to transport medical supplies offers, this is not likely to their citizens and residents, such as PPE, equipment and food, in addition to the normal air be a short term blip but the we expect to see increasing cargo. And so, we had to innovate very quickly, almost reinvent acceleration of an already volumes of these vaccines our complete business model overnight and ensure that we were existing change of consumer moving on our fl ights. doing the business and fulfi lling our social responsibility by behaviour an acceleration we transporting urgently required commodities across the world. are happy to facilitate. B y ti e or atar argo ur fi rst order of business was to restore air cargo connectivity His year ended with the For atar Cargo’s uillaume to markets around the world so that we could continue beginning of the distribution Halleux, 2020 started off with transporting essential commodities that were required in the response to C ID-1 . In order to do this, we started operating our Boeing - 00E passenger aircraft as cargo-only aircraft. This eman s on the cargo sector ha e been immense but carriers rose to the challenge had never been done before and our team had to work within a very short time to plan our new route network and work with our partners across the world they also had to work with the relevant authorities to get the required permissions to operate the fl ights. We were able to deploy these and increase our destination network from about served by our 11 Boeing freighters at the end of March, to around 0 by April. Within 100 days from the end of March, we had re-established a network of more than 100 destinations across six continents, he adds.
nno ati e ol tion In the meantime, Ambak relates, Emirates also came up with other innovative solutions to increase the amount of air cargo capacity. This included loading cargo on the seats of passenger aircraft and in the overhead bins. f course, before we introduced this, we
international WORLD WORLD ANALYSIS
Emirates found itself initially relying on 11 freighters but innovation saved the day an expansion of the network, seeing freighters to Campinas, A range of initiatives International. As a result, we Santiago, Bogotá and Osaka. To support Australian transported over 1.5m tonnes “However, with the spread of the COVID-19 virus, the months exporters, the carrier joined the of cargo in 2020, this a 4% ahead proved challenging. Its impact on the aviation industry was International Freight Assistance increase over the previous year. tremendous and as border and travel restrictions were introduced, Mechanism in Australia, an In fact, QR Cargo’s market it significantly affected our bellyhold capacity. The disruption initiative whereby exporters share has grown since the started in China first and slowly spread throughout the world, in the country could swiftly start of the pandemic because resulting in Qatar Airways Cargo losing more than 650 tonnes of transport their produce with of the increase in demand cargo capacity each week from China alone. The pandemic was reduced airfreight costs. for freighter aircraft capacity, another test of human resilience, although we had been through a “To lead the way for a further consolidating our similar situation when the blockade happened few years ago. more sustainable and socially position as a major player in “We were quick to adjust to the situation and compensate for the responsible air cargo industry, the global air freight market.” loss of capacity. During the peak of the pandemic, we operated 180 we also introduced our Predictably, COVID-19 cargo flights per day. That compares with 60 (cargo-only) flights per sustainability programme brought change to the day pre-COVID, so we tripled the number of operations.” WeQare through its Chapter operation. He adds that alongside freighter and charter operations, Qatar 1 – One million kilos. We also “We made a conscious operated passenger aircraft for cargo only, putting lightweight added SkyCell’s temperature- decision to continue flying packages on the seats, optimising freight capacity on passenger controlled 100% recyclable our freighters and introduced flights and maintaining the freighter network, albeit sometimes at hybrid containers to our passenger freighters and a loss. pharma product offering. mini-freighters to complement “We introduced additional capacity to several airports Qatar Airways Cargo also our network and support our worldwide, prioritising transport of essential medical supplies and received IATA’s CEIV Pharma customers. Our teams showed aid relief. Air bridges were created between China and France and certification for our expertise in the tenacity, versatility and Vietnam and France to transport essential aid and supplies. B777 handling pharmaceuticals and resilience required during such freighters were launched to Melbourne and Perth while passenger life science products. a time, even though most of us freighters were introduced to Ostend-Bruges airport, Châlons Vatry “Qatar Aviation Services were working from home. airport, Lyon–Saint Exupéry and Harstad-Narvik. Six new bellyhold Cargo, our ground handling “Given the uncertain destinations were launched in 2020, while the airline also received partner, also received the CEIV outlook caused by new A350 aircraft.” Pharma certification at Hamad COVID-19, we had to impose
14 February 2021 www.airlogisticsinternational.com Etihad as the ui est arrier last year to ma e use of the mini freighter on e t
extraordinary measures to prioritise aid and relief shipments. For are, but we were well prepared Atlanta. This is good news example, we introduced special pricing structures for medical to support this increased for cargo in terms of belly products and PPE to avoid the risk of overpricing and worked demand for e-commerce capacity, where we currently with our customers to put all the capacity agreements and block shipments,” he relates. “With have over 120 destinations. We space agreements on hold to cater to the massive relief aid over 70% of our network are planning to keep supply transport. equipped with the latest chains in place by working “Through WeQare’s Chapter 1 – One million kilos, we offered technology and handling with freight forwarders freight forwarders the opportunity to allocate one million capabilities, our solutions and other stakeholders to kilogrammes of airfreight space to charities of their choice and QR E-commerce, Courier and overcome challenges as best transport humanitarian aid – including medical equipment and Mail tackle demands of the as we can, while keeping our personal protective equipment – free of charge on our aircraft global airmail and e-commerce operations and development to our extensive global network. In addition, working closely industry. sustainable. As a leading air with governments and NGOs around the world, more than “E-commerce was a major cargo carrier, we want to 250,000 tonnes of medical and aid supplies were transported on contributor to our operations give back to communities we our fl ights to impacted regions. Additionally, over 500 charters and business during the serve and make a difference. transporting essential aid, medical supplies, food and live pandemic and we continue to Sustainability will be top of animals, amongst other cargo, were fl own last year. see high demand this year, as our agenda this year as we “Despite the travel restrictions, we still continued discussions well. Apart from transporting introduce more chapters in with our customers and stakeholders through Webex, Skype these shipments on our our WeQare programme. We and other such platforms. Even amongst our teams, though scheduled freighters and have just launched Rewild they were working from home, we worked really hard as one fl ights, we operated more than the Planet, Chapter 2 of team, constantly communicating with phone calls or online 40 charters with e-commerce our WeQare programme to meetings and making sure we were able to support our customers. goods last year.” show our commitment for COVID-19 has also fast-tracked the demand for digitalisation conservation of wildlife. and we have introduced several digitalisation initiatives, such t re ers e tives “Digitalisation is also a key as Robotic Process Automation for shipment tracking, Salesforce Finally, looking ahead, how area of focus for us this year, (Service Cloud), IATA’s One Record Pilot project with CHAMP and did he see 2021 panning out? as it is set to bring a massive e-bookings via WebCargo by Freightos that will go live in selected “The year began well for us; change to our fragmented countries on February 7 this year. we took delivery of three brand industry. We strive to expand “In spite of the hurdles, we have achieved the highest fl ying new Boeing 777 freighters our leadership in the airfreight hours of any airline in the world and that has allowed us to to be able to better support market by driving digitalisation maintain suffi cient cargo capacity, which was good for our the global demand and our within Qatar Airways Cargo. customers, as they could continue their activities. As a result, customers’ business this year. Another step is the WebCargo Qatar Airways Cargo’s market share in CTKs as published by IATA Other great news was that after roll-out that will take place on increased from 6.8% pre-COVID to 8.5% by the end of 2020.” more than a three-and-a-half February 7 in France, Germany, year blockade, the borders Italy, the Netherlands, South e e o er e fa tor have now opened up with our Africa and Spain. Through As Halleux points out, the rise of e-commerce isn’t new; however, neighbouring country Saudi WebCargo bookings, given the lockdown, travel restrictions and uncertainty during Arabia, allowing us to resume forwarders in these countries the pandemic, shopping behaviour has drastically changed, airfreight and air travel. We will be able to conduct leading to an increase in e-commerce shipments. have therefore, started fl ights real-time e-Bookings, access “Our customers are dealing with the same uncertainty as we to Egypt, UAE, Saudi Arabia. live rates and see available “There will be challenges in capacity with us. As part of 2021 as countries try to curb the launch, we are offering the spread of the second or the most competitive rates on third wave of the virus while WebCargo or the Qatar Airways We made a adapting to the new normal, Cargo website by introducing a conscious decision but we will continue operating discount scheme to forwarders, our scheduled freighter resulting in an average saving to continue fl ying fl ights, passenger freighters, of US$0.06/kilogramme for the cargo charters and bellyhold fi rst 20,000 shipments booked our freighters fl ights. Qatar Airways recently via the platform in these i a e a e Chief Offi cer Cargo, announced several frequency countries. Additional countries Qatar Airways Cargo increases to US destinations will be added further in the and resumption of fl ights to year.” www.airlogisticsinternational.com February 2021 1 INDUSTRY INDUSTRY INTERVIEW DELT COURSE Felicity Stredder asked Delta Cargo’s new VP, Rob Walpole, how the airline plans to navigate 2021.
fter joining Delta in this and its approach to the year in general in what continues to be Areas of opportunity August 2019, Rob a time of great uncertainty. The final area of focus for AWalpole became Vice “The first half of the year we expect to be a lot like 2020: very Delta concerns the return to President of Delta Cargo short on capacity, very choppy in terms of passenger flying and regularity of the business and in November 2020, taking network planning. The model that we that we and our competitors preparations for the future, over from Shawn Cole pursue of continued cargo-only flying, using passenger fleets for which Walpole is unequivocal and becoming responsible cargo-only flights, running routes that we might not otherwise will look quite different from for commercial, revenue necessarily run because the supply chains are not there to fulfil today. With such challenges, management, cargo operations services in certain areas.” come opportunities. and logistics for the company. The second pillar in Delta’s strategy is one of growth, which “One of the things that In January it was announced relies on cargo-led markets, explains Walpole. “As our business we’ve tried to do is not that the cargo arm would be on the passenger side does begin to come back, whether that’s only make the most of the joining Delta’s commercial late spring, whether it’s late summer, we use the cargo business as opportunity that exists right organisation as part of a lead for those markets that we will ultimately be looking to fly now for a cargo business, but accelerated efforts to improve passengers back into. Atlanta to Madrid, for example, we run as a also take stock on how to use operational performance. cargo-only flight now with the full intention that as the passenger this time to prepare ourselves Says Walpole, “We moved demand bounces back, we’ll put passengers on there – but cargo is for what the market will look the cargo organisation across what’s driving the economics in the short term.” like in the future. A lot of the to align more closely with the In its third pillar, in response to the network limitations trends, the most obvious being commercial side of the business currently experienced by all industry players, Delta is focussing the change in e-commerce, and that’s a very deliberate efforts on building products and services with its alliance partners. won’t revert back when the measure around enabling our “Particularly in the market we’re in right now, where we’re flying market returns to relative cargo business to connect fully less, the partner connectivity is very important,” asserts Walpole. normality,” he asserts. with the other elements of “Our connectivity with our partners is a critical part of being able The global surge in the broader entity of Delta – to put together multi-node solutions for our customers because e-commerce has already network planning, commercial there are areas we may not be flying. With the SkyTeam Alliance, presented an opportunity and sales – so that we can we’re able to do that more comprehensively than some of some of for Delta to support global maximise the commercial value our competitors.” supply chains, enthuses of the business,” he relates. Walpole, where purchasing “We believe we’ve built a patterns and the way people very strong operational and buy, sell and distribute service-driven platform. It’s products have changed. “For about growth, it’s about new us it’s different locations, products, it’s about extending it’s different frequency of our digital platform and distribution and adapting our leveraging those to improve our products and services to meet customers’ experience.” that requirement.” Domestic distribution of e-commerce Strategy for the year products within the US has Based out of the US, Walpole’s particularly flourished, he adds. new objective is to lead the “We’re able to provide faster, Delta Cargo team in continuing more time-definite solutions this growth. He explains the on certain point-to-point airline’s strategy for achieving distribution activities than
16 February 2021 www.airlogisticsinternational.com I do believe that the air cargo sector will continue to grow, and faster than GDP globally Rob Walpole, Vice President, Delta Cargo
some express carriers who market there, as a passenger airline cargo business. We’ve built our customers has forced the would all hub their products digital platform in terms of booking and the ability for customers airline to adapt its business through certain locations.” to manage their business with us via deltacargo.com, and we’ve model and build ad hoc Working with ground carriers seen a five- or six-fold increase in the last month in terms of the solutions more than it would and other partners in the US traffic that’s going via our dot com platform.” like. “The challenge there is market, Delta is able to provide Delta has also built a strong vaccine distribution network and we’re not flying full network. a full door-to-door solution to has been able to support the COVID-19 vaccine distribution within There’s a lot of one-off customers, he explains. “So in the US in its initial phases, with export efforts from the US into solutions and things that some sectors, we are able to other markets expected in the first quarter of this year. As the first need to be built to support provide solutions that are more wave of the global vaccine distribution nears completion in 2022, customer demands, and it’s efficient in meeting customer Walpole foresees this line of business becoming a regular one. less systematic than the way needs.” “We’ll still need to distribute vaccines every year, and so there’s we would usually run the Naturally, Delta has also for sure some opportunity in terms of the pharma distribution business. It’s become more been spurred by the changing networks and how those are operated.” usual in the last month, but face of the industry to invest it continues to be a challenge in its digital offering, Walpole Challenges persist for our people to be flexible notes. “We’ve invested in Extreme market conditions continue to create challenges as and to be able to react to those APIs and we think we lead the we enter 2021. Significant supply chain disruption to Delta’s opportunities.” www.airlogisticsinternational.com February 2021 17 his year elta argo oined I D I D I VI elta s ommer ial organisation
Perhaps the most obvious Any operational challenges are far outweighed by those relating a three to fi ve-year timeframe. example of airlines adapting to staff and their wellbeing, Walpole maintains. “People have “The complexity of that their business model to been core to us being able to get through the challenges of the commercial model, I think, accommodate customers was last months in an extremely challenging environment. There are will change in the next few the initiation of preighter continued challenges for people to be able to operate effectively in years,” he says, predicting fewer fl ights in 2020. Walpole what’s a relatively constrained environment,” he notes. “Focusing participants in a simplifi ed comments on this line of on making sure people on the frontline have got everything they supply chain. business. “For the cargo-only need to protect themselves from a health standpoint and to be able “I do believe that the air fl ying, our forecast is that it’ll to support our business is a big challenge for the organisation and cargo sector will continue be a requirement in the market for the people. And that will continue for the foreseeable future – to grow, and faster than this year on a reducing scale as certainly the fi rst half of the year.” GDP globally, largely driven capacity returns. As it stands To this end, Delta has engaged with the Mayo Clinic to offer a by consumer purchasing today, we see it as unlikely that testing capability for staff everywhere across its network, Walpole behaviour and changes. And the service would be continued relates, emphasising that businesses should be prepared for COVID that faster-than-GDP growth rolling into next year. safety measures to change, and to remain in place long term. needs to be met by the air “The important thing for cargo industry. us from a Delta standpoint, is rther t re “Therein lies the using that capability to help Beyond the immediate need to stay agile and adapt to industry opportunity for companies like our network back into those challenges, Walpole glimpses future promise. Rapid digitalisation ourselves: how do we leverage markets where we would look will drive changes for all cargo operators, he believes, changing our network to meet that to fl y passengers in the future.” the relationship between actors in the cargo supply chain within increasing demand?”
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1 ebruary www airlogisticsinternational co Freight Service Awards 2020 The Winners The following organisations and individuals have been recognised by the British International Freight Association as the ‘best in industry’ in the BIFA Freight Service Awards 2020 competition
General Categories Specialist Categories Individual Categories
Project Forwarding Award Extra Mile Award Young Freight Sponsored by: Sponsored by: Descartes Forwarder Award Peter Lole Insurance Brokers Sponsored by: Virgin Atlantic Cargo
Katy Hopkinson, Kuehne + Nagel
Cool & Special Cargoes Award Specialist Services Award Sponsored by: TT Club Apprentice of Presented by: Transaid the Year Award Sponsored by: Seetec Outsource
Ryan Wilkes, Kuehne + Nagel
Staff Development Award Modal Categories Sponsored by: Albacore Systems
Air Cargo Services Award Sponsored by: ASM UK To view the winner announcement videos and see the full list of our winners and nalists visit Supply Chain Management Award awards.bifa.org/awards Sponsored by: BoxTop Technologies Ocean Services Award Sponsored by: Port Express
British International Freight Association Redfern House, Browells Lane, Feltham, Middlesex TW13 7EP United Kingdom T: +44 (0)20 8844 2266 E: eventsof [email protected] W: bifa.org/awards AND COUNTING...
[email protected] ACLairshop.com I G C
re s ess o begin the year oll te art of i, ta es a brief loo bac at integrator erfor ance during
lsewhere in this issue, stories to tell, as the increase in sector over the third quarter integrator predictions for volumes is a large part of period of 0 0. After the 0 1 are given space. Here, revenue growth and, most severe weakness in economic though, the focus is on the last importantly, profi tability. All activity earlier in the year, the 1 months. companies recorded quite build-up in demand and No-one could deny that remarkable and indeed requirement to re-stock over 0 0, the coronavirus somewhat unexpected results. inventories led to a surge of pandemic has caused DH ’s Express division volumes, once businesses got unprecedented disruption to revenue rose by 1 . % in the back into gear. As economies the logistics industry. third quarter to approximately began to reopen and recover, However, towards the end of .9bn, as operating profi ts the e ress so volumes for B B improved second quarter and during the rose by a staggering .9% over and B C continued in their third, economic activity began the prior-year level to reach a sector saw a boo upward trajectory. The lack of to recover as virus control record 3m. This growth was airfreight capacity actually measures were lifted. In line partly driven by volumes, in volu es and contributed to the integrators’ with this, the express sector which were signifi cantly revenues success, since shippers turned saw a boom in volumes and higher in all regions of the to them to carry their volumes oll te art revenues as well as profi ts. world during the entire third i because of their large air Deutsche ost DH Group, quarter. The network also networks after other logistics FedEx and U S’ recent fi nancial adapted to respond to the domestic demand. Despite markets saw capacity crumble results all showed the increased share of B C this, operating profi ts fell by under lockdown measures. surprising growth that was business as well as the return 9. %, to US 1.1bn. The The rapid growth in cross- realised. of B B volumes. international segment’s border e-commerce seen by all The integrators’ most As for FedEx, its fi rst quarter revenue increased by 1 .0% to integrators, especially from recent results have laid bare results revealed that the attain US .1bn. Average daily the Asia acifi c region, was a revenue growth for their Express segment’s revenues volumes grew by 1 .1%, with major driving force in the whole business. For the rose to US 9. bn, equating to double-digit export volume success witnessed during the quarter ending September 30, an increase of .9%. Operating growth globally and a third quarter of 0 0. This DH saw its revenues increase income more than doubled continued strong outbound expansion was above and by . % year-on-year to compared to its 019 demand from Asia. Unlike its beyond when compared to . bn, whilst U S announced performance, showing an domestic counterpart, the the strong domestic consolidated revenue of income of US 10m in the fi rst international business reported e-commerce growth rates. US 1. bn, representing a quarter, which was up by its operating profi ts to have The upturn brought by the 1 .9% increase year-on-year. 1 9.1% from US m in increased by . % to third quarter coupled with the FedEx (whose fi nancial year is 019’s fi rst quarter. The US 9 m from US m in easing of the pandemic different from that of other revenue rise can be attributed the third quarter of 019, measures led to improved companies) reported its fi rst to volume growth seen in the illustrating that the segment performances by DH , FedEx quarter results for the period Asia acifi c and Europe, was almost as profi table, and U S. The increase in ending August 31, which saw resulting from strong demand. despite the domestic business volumes and boost to total revenues attaining For U S, its domestic posting more than three times revenues was signifi cant, as US 19.3bn, this up by 13. % segment reported a 1 . % rise the sales. was their ability to operate at over the previous year. in revenues to reach such a high capacity; but most US 13. bn, as its average daily ppl an e an importantly, the integrators ne pe te res lts volume increased by 13. %; it Overall, there are several grew their profi ts in a time The express operations of the saw growth across all products factors behind the when many other providers integrators have interesting and continued elevated performance of the express were making losses.
www airlogisticsinternational co ebruary 1 P P P I a ing onta t
ionel an er Walt C and President of the ericas at PayCargo, loo s at the changing face of the onetary ar et lace
inancial systems have evolved over the millennia at least, ro th at a Cargo SC, Ocean Network Express, barter has given way to more standardised and refi ned methods ayCargo helped to process over Alliance Ground, Swissport, of payment for services or goods. And with the arrival of Bitcoin US bn in payments in 019 ufthansa, United Airlines, and its imitators has come a further advance: that of a virtual and was on track to process American Airlines, Delta and Air currency. Whilst this may well be the future, or at least a part of it, US bn in 0 0. This was all France, to name but a few. routine, transparent transactions remain the norm, and this holds achieved via reliable technology It is fair to say that the true for all sectors and industries. platforms and electronic airfreight industry has et’s be honest here: the banknote may not be dead, yet, but payment networks that can lagged behind in adopting when did you last make a cash payment instead of going contactless handle every transaction in the digitalisation, relying too much with an online payment or with the wave of a credit or debit card supply chain. on legacy manual processes and It is no surprise that digitisation in the supply chain is growing at an The ayCargo customer base failing to go paperless, despite exponential rate, and ayCargo is one proponent that has been at includes a veritable Who’s Who the exhortations of bodies such the forefront of this development. of global logistics companies: as IATA, which has been pushing these include Kuehne Nagel, this matter for years. This has he big DH , DB Schenker, BD , SEKO been due partly to airline and Digitisation is being driven by the online consumerism of ogistics, U S and USEN airport boardrooms investing e-commerce and lockdown privations that have arisen through ogistics, as well as Hapag- loyd, heavily in the passenger side COVID-19. eople are buying more online, and that means of the business, rather than in logistics growth. cargo. For example, Alibaba’s digital infrastructure handled 3,000 However, COVID-19 and the orders per second, yes per second, during the peak of activity resultant tsunami of e-commerce in the recent Double 11 , generating US .1bn in gross has provoked a cultural change merchandise volume, this representing a % increase over 019. in business thinking, where If that’s not impressive enough, Alibaba’s logistics arm, Cainiao shippers today want to buy their Network, processed more than .3bn delivery orders in the space logistics services as if they were of 11 days. ordering a book on Amazon: the ikewise, Amazon held approximately % of the American tenets of rapid, seamless, and e-commerce market in 019 (which was set to rise to % in 0 0) reliable hold sway here. Today, and in 019, US-based small to medium-sized business (S Bs) sold the customer wants to receive more than ,000 items per minute through Amazon. Amazon had a quote, make a booking, track the two biggest days ever for S Bs across 19 countries, surpassing the airfreight and trace, settle the invoice US 3. bn between October 13-1 last year: this equated to a electronically and have instant year-on-year increase of nearly 0%. The fourth quarter sales industry has access to all the associated data. for Amazon were projected to be between US 11 1 1bn, lagged behind But can airfreight adapt highlighting just how much people and businesses today are quickly to this digital revolution ionel an er Walt
relying on online purchases and logistics growth. President of the ericas, PayCargo es, it can. © ick - stock.adobe.com
ebruary www airlogisticsinternational co Hare today expediting the release of time- venture capital and private The sleeping giant of air cargo responded to the COVID challenge, sensitive cargo with our state- equity firm Insight Partners, that when the tortoise finally morphed into a hare. In a frightening of-the-art payment platform we plan to invest in order to scenario, the air cargo industry was witness to bellyhold space in technology. Furthermore, we expand the global adoption of passenger aircraft disappearing overnight, and with it some 50% of are continuously looking for our electronic payments network global airfreight capacity. opportunities to implement and accelerate investments in Cargo departments thus became very creative, with freighters and new value-added services as part our market-leading technology. then preighters (passenger aircraft stripped of their cabin seats) that of the much-needed push for This will enable PayCargo criss-crossed the world to deliver much-needed personal protective the industry to fully digitise. to strengthen its position as the equipment. One such project, IATA’s ONE global logistics online payment The industry, be it airlines, airports, ground handlers, freight Record standard, that creates a platform of choice, which we forwarders or truckers, are now preparing for the global distribution single record view of an air cargo feel will be uniquely positioned of billions of doses of COVID-19 vaccines. Such an undertaking shipment, we fully endorse. to meet the payment needs of involves extending the capabilities of existing temperature-sensitive We believe that air cargo, the entire value chain, with pharmaceutical supply chains that will be handling the vaccines, as post-COVID and because automation and enhanced some will need to be in deep freeze for the duration of transit, which of the changes in business efficiency for both payer and is a difficult task. thinking that it has wrought, vendor alike. But it hasn’t been just the physical assets, such as aircraft and will accelerate the adoption of In short, we are optimistic warehouses, that have proved their worth. Airfreight is a people digitisation. As a measure of about the future and look business, and those people need the right tools to meet the our confidence in this, we have forward to playing our role challenges of an uncertain world. also recently secured US$35m of in the transformation of the We have always prided ourselves on the value we add in investment funding from global industry.
Wherever your pharma goes. We keep cool. When it comes to delicate cargo, both logistics experts and global pharmaceutical manufacturers value our dependability. As a CEIV-certified airline, we strive to play our part in the cool-chain and meet our customer’s temperature requirements. Even in the toughest conditions.
swissworldcargo.comwww.airlogisticsinternational.com We careFebruary for 2021 your23 cargo. CHINESE CHINESE ECONOMY
growth in 2020, an almost unbelievable feat given an economy China is back in action and the business that was shut down for nearly six months. opportunities are booming, says Stanley Add the recently inked EU-China trade agreement, and 2021 looks even better. The World Bank has projected a whopping Chao. So, what are you waiting for? 7.9% growth rate for China this year, taking the country back to pre-pandemic growth scenarios.
said it after the Tiananmen COVID-19 containment policy, Life after COVID riots in 1989 and I’m saying China has emerged from the I haven’t been back to China in almost 12 months, but my Iit again now, during the pandemic largely unscathed. colleagues all say life in China is back to what it was in the pre- worst epidemic the world has Consumer spending, COVID days. Life is normal again, which is more than we can say seen in more than 100 years. infrastructure construction, for those of us still locked down in Los Angeles and London. China is back! factory production and private Tom Ward, President of PIM China, a market research firm Hey, air logistics industry, investments all experienced based in Shanghai, told me: “All appears well in Shanghai. are you listening to me? major upswings in the third Shopping malls and restaurants are busy again, but we still wear The numbers don’t and fourth quarters of last year. masks on subways, buses and airplanes.”
lie. Through a successful As a result, China saw 2.1% With normalcy comes consumer spending and better business - stock.adobe.com © Mike Mareen
24 February 2021 www.airlogisticsinternational.com of more than US$13bn, can’t keep up with demand. “We went from total closure to 100% full production in a matter of weeks,” exclaimed Kingston’s CEO, John Tu. “It’s like 1.4bn Chinese suddenly decided to buy computer memory all at the same instant. Unbelievable! We didn’t have enough computer chips, manufacturing equipment or staff to handle the orders.” Although Kingston has increased production capacity, it’s now the air logistics that impedes their throughput, both on the back and front ends. Higher shipping costs combined with shortages of cargo flights have delayed chip components being transported to Shanghai. Conversely, finished products aren’t shipping out to customer sites, especially to heavily hit pandemic areas like the US or the UK. “Just when we started getting production back to normal, the air logistic delays hit us like a freight train. We didn’t expect it. We’ve got millions of dollars of finished goods piled up in our Shanghai warehouses waiting for pick up,” said Tu. Come on, air logistics people. Time to fly a few more A321s to Pudong!
No China exodus Airlines are hedging their bets flying “preighter” flights to China, but these half-passenger, half-cargo aircraft won’t suffice as the world recovers from COVID and repressed demand jumps. So why aren’t airlines scheduling more flights immediately? “For one, we really don’t know how fast the recovery will take shape. We’d rather be on the pessimistic side, than fly empty cargo holds,” said a logistics company executive who asked to remain anonymous. “We got Trump’s tariffs on China, the world blames China for COVID, so much anti-China rhetoric and a mass exodus of foreign companies leaving China. What’s there to be so gung- ho about?” A whole lot! There’s no “mass exodus.” Companies are not exiting China, just de-risking their China exposure with some opportunities. My relatives During the reopening period, tweaking and fine tuning. I know. I’m helping companies look for in China saw the country’s they were making stuff like alternative sources. Some have found second and third suppliers economic resurgence firsthand bicycles, kitchen appliances in Vietnam or Indonesia, while others have set up smaller, during the week-long Golden and vinyl flooring to fill pent- “safety” factories in their mother countries like Japan, the US and Week holiday in October. “I up domestic demand. Now Mexico. can’t buy an airline or train they’re facing up to six month China is, and will remain, the world’s factory because it ticket to anywhere in China. backlogs to fill the entire possesses the most advanced infrastructure, government- Everything’s booked solid,” world’s pent-up demand. And friendly, highly skilled labour force and can-do attitude that lamented Uncle Zhao, who factories expect more orders money can buy. tried to book a last-minute as countries vaccinate their UBCO, a New Zealand company that exports electric family holiday. citizens and open up their motorcycles from its manufacturing partners in Yantai and economies. Shanghai, faced many hurdles doing business in China (EU anti- Factories humming again Kingston Technology, dumping duties, Trump tariffs and factory closures because of Chinese factories, after being the world’s largest producer COVID) but still insists on maintaining a presence there. shut down for three to six of computer memory, with “Chinese factories are extremely adaptable and lightning- months during the pandemic, production facilities in quick at it,” explained Vanessa Ho, former Executive Vice are now humming again. Shanghai and annual revenues President at UBCO. “Our partners can go from assembling a www.airlogisticsinternational.com February 2021 25
pedal bike to an electric bike consumer goods will continue to fl ow to the Middle Kingdom. overnight.” China and the US became partners when the US backed UBCO realised it would be China’s entry into the World Trade Organisation in 2001. impossible to fi nd a substitute Soon after, they became competitors. Now they’re frenemies’. factory so skilled and fl exible Companies will have to walk a tightrope to ensure their business at making bicycles, so it looked in China falls in line with the Communist Party’s domestic for ways to legally circumvent policies, while also being sensitive to the geopolitics back home. the Trump tariffs. It’s tough, but it can be done. Take a few lessons from Nike, “We went from shipping Starbucks and Disney. They’re doing a pretty good job in China. fully assembled bikes to CKD Starbucks’ CEO and President, Kevin Johnson, announced in (completely knocked down) October that they would open 1,100 stores this year, in addition form, and reassembled them to their existing 4, 00 throughout China. in the US. We now only pay ot o ly are ike Starbucks, the air logistics industry needs to show a little % (down from 2 %) tariffs,” com a ies stayi g more confi dence in China’s economic future. said Ho. ut i i a but iden and China ou ing do n on China ma y are oubli g Without a doubt, the US relationship with China is the most Not only are companies important foreign affairs matter for President Biden. Expect a staying put in China, but ow o t eir Jekyll and Hyde approach to China from the new administration. many are doubling down on Mr Hyde will seek unity and common ground on climate control, their business there. China’s busi ess t ere green energy, North Korea and containing future pandemics. At commerce ministry reported tan e Chao ll o sulti g the same time, Dr Jekyll will hit China hard on human rights that for November 2020 alone, issues, Hong Kong, unfair business practices and cyber espionage. foreign direct investment Unlike Trump, however, Biden plans to take a multi-lateral rose . % from a year earlier approach and will invite Germany, the United Kingdom, Japan to more than US$1 bn. and others to the negotiations table. Incredible numbers to post in a “I believe the Biden administration will stabilise the pandemic-stricken year. deserved, and have wrought relationship,” says Professor Houlden. “Biden recognises that it In my own consulting irreparable damage on an must work with China to solve both global as well as regional business, I have eight China- already tenuous relationship. issues.” related projects with businesses We are undeniably heading That’s what’s needed now a de-escalation of hostile asking for increased production towards bifurcation. competition, tit-for-tat sanctions and name-calling in exchange capacity, higher head counts or Some China experts for some tough but fair negotiations and competitive co-operation. loftier marketing campaigns. even say the two countries PIM China’s Ward feels are already divorced. “The s stems go that there’s no better time bifurcation is partially in My crystal ball sees a very bright future for China and the to invest in China than place,” explains Gordon companies doing business there. I mean, what’s not to like about now. “The current situation Houlden, Director and that? The pandemic is under control. Millions of Chinese are is much the same as it was Professor of Political Science getting vaccinated daily. Think tanks expect near double-digit twenty years ago. If you have a at the University of Alberta’s economic growth rates this year. Foreign-direct investments leading technology and a good China Institute. “ G, chip are fl owing again. And Biden plans for a reset with President i understanding of the China fabrication and design are Jinping. market, I see no reason NOT to examples of this, but it’s hard China is back! Are you getting the message? enter China.” to see this extending to the full range of trade.” i urcated or d No matter what happens, Trump has been tough on Chinese corporations and E @stanleychao6 China. His efforts to penalise consumers will still buy Boeing Stanley Chao is Managing Director of All In Consulting (allinconsult.com), assisting Western China included blacklisting 3 s, iPhones, Air Jordans companies in China, and the author of Selling to China: A Guide for Small and Medium-Sized Huawei, banning TikTok, and Big Macs, while America’s Businesses. closing China’s Houston insatiable appetite for rare consulate and delisting Chinese earth materials, pharmaceutical The opinions and views given by the writer in this editorial are personal and do not stocks. Some of these were well- ingredients and inexpensive necessarily refl ect those of any institution or corporate body.
2 February 2021 www.airlogisticsinternational.com Miami International Airport
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• Largest CEIV Pharma Airport Community in the Western Hemisphere • Most on-airport refrigerated facilities for temperature controlled products in the hemisphere • Greatest access to Latin American and Caribbean Region markets • Founding member of PharmaAero. Learn more at www.Pharma.Aero Pharma gateway of the Western Hemisphere
www.iflyMIA.com | | [email protected] CONVERSIONS UPDATE
Second time around As the industry girds up its loins for 2021, cargo capacity remains stubbornly restricted. The Editor considers the conversion business.
hichever way one the e-commerce boom, What’s involved significantly reduces the looks at it, it’s a vicious coupled with a pandemic- The P2F conversion is an overall costs while eliminating Wcircle. Subtract full fuelled marketplace, means engineering challenge that complexity with a single point passenger flights from the that in excess of 1,500 aircraft requires a number of complex of control that handles the aviation equation and one is left conversions are now desirable. structural modifications to the material flow end-to-end in with freighter aircraft; burden If this sounds implausible, IATA aircraft, such as the installation line with layover schedules these the ever-increasing levels reckons that just providing a of the main deck cargo door, and manufacture serial number of e-commerce, the recent single dose of the coronavirus the removal of all passenger sequence. The solution includes end-of-year buying boom and vaccine to 7.8bn people would amenities, the installation fully digitised ordering and the requirement for millions fill 8,000 B747 cargo aircraft. of floor grid and freighter supplier management, proactive and millions of vaccine shots Aviation devotees will probably floor panels for increased multi-modal transportation to be distributed and delivered, know that the world does not weights besides many other management, customs and and the scenario begins to take actually have 8,000 Boeing 747 modifications. Needless to warehousing, as well as end-of- on a nightmarish tint. Who aircraft. say, the massive quantity of life solutions. would want to be in the cargo It’s a stark picture, which structural items used during the Erik Goedhart, Senior Vice business? is why K+N has become conversion procedure requires President, Global Head of One sliver of solace is to be involved with manufacturers, precise and reliable material Aerospace at Kuehne+Nagel, found within the conversions maintenance and repair management. commented on the initiative. sector, though, and whilst in the organisations, airlines and KN InteriorChain is the “Since the outbreak of the bigger picture, the conversion leasing companies. outcome of Kuehne+Nagel’s pandemic, Kuehne+Nagel has business is but a colour on the Kuehne+Nagel has developed close collaboration with proven its agility to adapt to artist’s palette, it nonetheless an integrated end-to-end suppliers and customers and an changing market requirements has a part to play, a part that is logistics solution to support in-depth air cargo and aerospace quickly. With the new P2F growing in magnitude as the passenger aircraft into freighter expertise. The solution is based aircraft conversion programme, months roll past. aircraft conversions. With on Kuehne+Nagel’s global, we now offer a reliable end- the changed cargo market round-the-clock aerospace to-send solution to manage Input from K+N requirements and a significant network, ensuring connectivity conversions of retired passenger In the operation that sees a amount of unused passenger and visibility down to part and aircraft into a long-lasting second life given to passenger equipment because of the serial number level globally, all freighter, so our customers aircraft, Kuehne+Nagel has pandemic, Kuehne+Nagel the way from origin until the can scale up their operations, been facilitating the passenger has tuned its proven KN handover to the engineer. reduce costs and boost cargo to freighter (P2F) conversion InteriorChain service towards Taking a modular and capacity. I am very pleased process. According to analysts, these P2F conversions. integrated approach, it that the initial feedback out of
28 February 2021 www.airlogisticsinternational.com TWO FOR AIR CANADA Air Canada has said that it will be selling two of its passenger of its cargo operation. It is expected that the first of the pair will B767-300ERs to Cargo Aircraft Management in order that they can be converted in March 2021, with both anticipated to be ready be converted into freighters. It will then lease them back as part before the end of the year.
validation sessions with leading airlines and companies for P2F conversions is very positive.” The mechanics of the InteriorChain are fairly straightforward, according to Goedhart. “Above all, just to make sure, since we have had many discussions on the P2F solution, we do the logistics set-up and support around the conversion. We make sure the shipset of parts is ready and have it in the hangar next to the aircraft when rolling in for conversion. Also, we can take parts coming out away and dispose of them in an environmentally friendly manner.” K+N has a number of certified facilities all over the world, as well as with specific Space - the final frontier? Demand for P2F conversions has customers; such sites can be been growing rapidly used at any time. However, the key location will be close to the technical conversion centre but in the end the more we doing the conversion, or even at digitise, the more we rely on top the facilities of the conversion quality people. They need to company itself. have the K+N training in order “In the case of other to be allowed to act on K+N locations, the set-up time will InteriorChain or P2F projects. be approximately two to four In parallel, the tooling and weeks after the agreement on equipment for storing, kitting leasing of the building. Of out and quality inspection is course, this depends on the part of the set-up process as scope and number of parts. For well.” the K+N InteriorChain we do British charter airline, that of Managing Director of Titan A380 interior refurbishment A first for BBAM Titan Airways. Airways. “Titan Airways has over support which is more complex Aside from end-to-end Steve Zissis, President and 32 years of successful freight and than an A320 refurbishment solutions, the work that is Chief Executive Officer of passenger operations, and has line, for instance. Also, the converting hasn’t slowed down. BBAM, said: “ST Engineering, been an Airbus operator since number of aircraft running in ST Engineering and Airbus, Airbus and EFW’s A321P2F 2013. The A321P2F will enable parallel determines the scope together with its joint venture programme delivers strongly us to utilise all the benefits and site needed. partner Elbe Flugzeugwerke, in the areas of innovativeness of this type in our airfreight “With new sites, the have redelivered an A321 and value enhancement. We activities, including best-in- facility needs to be set up passenger-to-freighter aircraft are pleased to partner with class economics, reduced noise, and certified according to the to BBAM Limited Partnership, them and our customer, Titan a lower carbon footprint and industry standards. The K+N an aircraft leasing management Airways, on a solution that real-time health monitoring, InteriorChain set-up is above company. This represents the fully meets our customer’s ensuring the highest levels of the industry standard to make first A321P2F redelivery made requirements and drives value reliability.” sure that it offers reliability, to BBAM, and there are several for our investors.” The A321P2F is the first visibility, dashboards of more units destined to come, “We are delighted to take in its size category to offer parts and locations and cost as per the terms of the contract. delivery of our first A321P2F containerised loading in reporting, as well as people. In This first BBAM A321 converted from BBAM and EFW,” both the main (up to 14 full this way the IT set-up is key freighter will be leased to a responded Alastair Willson, container positions) and lower www.airlogisticsinternational.com February 2021 29 CONVERSIONS UPDATE
VALLAIR IN CHINESE FIRST Vallair, the multi-faceted aviation business and launch customer of the Airbus A321 freighter, is pioneering the first passenger to freighter conversions to be undertaken in China. Says Gregoire Lebigot, CEO of Vallair: “MSN 1017 will be the first of nine aircraft scheduled to be converted in China; this is an important milestone.” The work is being undertaken for Vallair by EFW at the ST Engineering facility in Guangzhou and the aircraft is planned for delivery in the third quarter Source: K+N of 2021 to cargo operator SmartLynx. Vallair has previously partnered with deck (up to ten container for A321P2F, ST Engineering, are a critical component in EFW in Asia on the conversion of its positions). EFW’s A321P2F along with EFW, plans to set up delivering e-commerce and, inaugural A321F. This was undertaken solution has a generous and additional conversion sites in most importantly, COVID-19 at its Singapore facility and delivered proven gross payload of over China, the US and Germany, vaccines. As much of the to launch operator Qantas Freight in 28 tonnes, with further upside which will ramp up its global B757 and A321 fleet remains October 2020. potential in future conversions. conversion capacity to 25 slots grounded, we have seen a Recently, the company signed The solution, which comes with per year by 2023. dramatic increase in interest in an MoU with US operator GlobalX for optimised weight distribution both programmes.” ten conversions, and it has leased a to enable empty flights and The critical component Young adds that the further two to SmartLynx Malta. random loading, accords high Zachary Young is Director of company expects to induct flexibility to operators, in Sales at Precision Conversions/ between 15 to 18 B757-200PCFs particular express carriers. The Precision Aircraft Solutions. in 2021. “Pending the A321- conversions per year to fulfill fact that EFW’s programme “For Precision, 2020 was 200PCF STC award, we could a B757-200PCF fleet renewal is the only OEM solution for a year of preparation and induct as many as four or five requirement for DHL EAT to A321P2F in the market also anticipation for 2021. We saw A321-200PCFs for conversion replace the ageing ST Aerospace ensures lifecycle value, given its hundreds of A321s and 757s this coming year. Fortunately, conversions. quality, reliability and ease of get parked – and some will be Precision has a history of being “We take great pride in maintenance. parked for good. Others will nimble, with the ability to both the A321-200PCF and “We want to thank our return to passenger service. increase production to meet B757-200PCF, having the customer, BBAM and operator Some will be converted to demand. As an example, lowest operating empty weight of this freighter, Titan Airways freighters. For many in the between 2014-2015 Precision and highest standard payload for entrusting us with growing industry, 2020 was a year of went from approximately eight when compared to the their freighter fleet with a new unprecedented uncertainty. conversions per year to 22 competition.” member of the Airbus freighter The scale of the COVID-19 family,” added Andreas Sperl, pandemic was not yet known. Chief Executive Officer of EFW. Was it short term? Long term? “As our A321P2F programme Typically, when an operator steadily gains traction with or lessor plans their freighter more redeliveries, we will, portfolios, it requires a long together with our parent term outlook. Without knowing companies ST Engineering the duration of the pandemic, and Airbus, double down on it was hard to predict how delivering this innovative soon passenger aircraft would solution to the market and return to service. Now that capturing more narrow-body we are 12 months into the freighter market share.” pandemic, it is becoming To meet the rising demand more obvious that freighters
30 February 2021 www.airlogisticsinternational.com SECURIT CAR O
eli erin the oo T D E COVID TAPA Thor ten e mann
n November, the Middle East & Africa region, he explained. global community will be Transported Asset Protection explained then what raised With an active black much more far-reaching than IAssociation (TAPA) referred the stakes so high. “So much market controlled by supply the theft of a single shipment to the imminent global is expected from both a and demand, the threat of of vaccines. As we have distribution of COVID public health and economic cargo theft is always lurking. already seen this year with vaccines as the perspective. It is no Ahead of the global vaccine the high number of thefts of pharmaceutical supply chain’s coincidence that on the day deliveries, TAPA highlighted Personal Protective biggest security challenge for we saw an announcement that organised crime groups Equipment (PPE) from supply a generation, with an about successful vaccine aware of the value of the chains, cargo thieves are very estimated 7-19bn doses of the trials, European stock markets doses were highly likely to be active in targeting COVID- vaccine required globally to soared by 7%, so there’s so looking for ways to intercept related products so, as an stop the virus from spreading. much at stake for both the supply chains to steal such industry, we must be ready,” Thorsten Neumann, President pharma industry and its shipments. “If such losses do Neumann added.
© rostock-st dio - stock.adobe.com © rostock-st dio & CEO of TAPA in the Europe, logistics service providers,” arise, the impact on the TAPA advised all supply
international 3 CAR O CAR O SECURIT
chain stakeholders involved TAPA is the leading global deter thieves, he continues. which helps companies avoid in transporting the vaccines association for supply chain “They are the subject of routing deliveries through to “leave no stone unturned” security and resilience. Its intense media attention and cargo crime hotspots. in assessing the associated members include hundreds of major governmental focus and cargo Neumann offers up some cargo security risks and manufacturing brands and their thieves may consider the of the IIS cargo crime data requirements on a country- logistics service providers, as well vaccines as too hot to from 2020. “To date, for 2020 by-country basis, encouraging as over half of the world’s top 25 handle’ and are fearful of the (with reports still being fi led), TAPA members to use the pharmaceutical companies. consequences if they are over ,000 cargo thefts have Association’s cargo crime apprehended. There is almost been reported to TAPA’s intelligence tools and certainly also a realisation Incident Information Service industry standards to support among cargo thieves that it is database in the Europe, their supply chain security highly unlikely that anyone is Middle East Africa region programmes. going to buy a vaccine on the for all types of products. black market, which is their Some 3 pharma cargo thefts o ar o oo traditional method of have so far been reported to With global vaccine disposing of stolen goods,” TAPA in EMEA. Pharma thefts distribution now well Neumann explains. were recorded from supply underway, Neumann Furthermore, vaccine chains in 1 EMEA provides an update on the supply chains are fast countries,” he relates. situation from a security moving, with emphasis on Of the ,000 recorded standpoint. “I am pleased to getting the goods to patients cargo thefts, therefore, only say that as of mid- anuary, as quickly as possible; thus, 1.2 of crimes were in the TAPA EMEA has recorded no the opportunities that pharmaceutical product data relating to thefts or typically arise when products category. “The total value of attempted thefts from sit idle in facilities or parked products stolen in these 1.2 CO ID vaccine supply up in trucks are not available, of incidents exceeded 10. m chains. This is almost he highlights. Additional but not all crimes gave any certainly due to several key security measures are also at value,” he adds factors. First of all, play, he adds. “Armed Neumann puts this data pharmaceutical supply security escorts, additional into context. “In terms of all chains are already the most vehicle tracking technologies, cargo thefts for all products, secure of any industry, with driving in secure convoys and the vast majority are still not companies adopting very military support are also recorded in TAPA’s IIS because effective security protocols to being deployed to varying law enforcement agencies not only prevent losses but degrees in different countries which provide a high to ensure patient safety and to safeguard shipments and percentage of the protect their own brand to accelerate their safe Association’s data often add reputations,” he begins. distribution.” these incidents into general “No-one in the crime categories such as pharmaceutical or logistics ar o the t in 0 0 motor vehicle or commercial industries wants to be In preparing their security property crimes,” he informs. associated with a vaccine protocols, TAPA members It is important to note, he loss, and the same is involved in vaccine says, that because of the probably true in distribution were encouraged nature of the products, governments, too. A loss of a to utilise the Association’s pharmaceutical supply chains single shipment could result C Incident Information Service are among the most secure in a much higher number of (IIS). The IIS allows users to and resilient of any industry vaccines with the same batch view trends relating to and need to be to protect number also having to be recorded thefts of patient safety. Nonetheless, destroyed if the stolen doses pharmaceutical cargoes by when these supply chains are are not recovered.” types of incident, location, compromised, the The high-profi le nature of Thor ten e mann P CEO product stolen and the modus repercussions are far reaching. the CO ID vaccines may also TAPA E EA operandi used by offenders, “The true cost of loss for
3 international pharma shipments stolen from supply chains has been estimated to be between five to seven times the value of the product because of the domino-effect it creates, including wide-scale product recalls, to say nothing of the reputational damage to companies,” explains Neumann. “Product losses are clearly the biggest threat but contamination of pharma cargoes during a cargo crime – even if they are not actually stolen – can be just as damaging.” Meanwhile, the stolen goods will earn a pretty penny on the black market, he continues. “Cargo criminals, however, are very The onset of the pandemic and subsequent uptick in medical shipments aware of the revenue they can coincided with a surge in cargo thefts from March to April 2020 generate from the most in-demand products. In 2020, this resulted in a series of crimes involving thefts of PPE various similar cases around Cologne, Germany, on March such thefts have yet been from warehouse facilities and the same time last year. 16, and a shipment of hand reported from the COVID trucks operating in the EMEA Millions of respiratory sanitiser from a truck at a vaccine supply chain itself, region.” masks were stolen from an MSA in Odsmalsbron in either attempted or aviation transportation Sweden on April 6.” successful. But he concludes Spike in PPE theft facility in Kenya on March Meanwhile, further face that this positive account is When PPE was in high 20; 680,000 face masks were masks were taken from a no reason for the industry to demand during the early stolen from an unknown vehicle in Coulounieix- let its guard down. months of pandemic last location in the Czech Chamiers in France on March “Vaccine supply chains are year, a surge in related thefts Republic on March 17; 18, boxes of facemasks were clearly going to be occurred. 500,000 face masks were stolen from an authorised operational for a considerable “The supply and demand then taken from a truck in third party facility in Moscow time to come. It is important nature of the black market France as it headed to towns on March 19 and further that the high standards of for stolen goods prompted a across the Spanish border on protective medical gowns and supply chain security and spate of thefts of Personal May 7 and a further 200,000 gloves were taken from an resilience we are currently Protective Equipment as face masks disappeared from authorised third party facility witnessing is maintained offenders looked to cash in a truck parked at a in Bergen, Norway, the because there may still be on one of the most sought- motorway service area in following day. organised crime groups that after products to help fight Spain on May 8. Evidently, facilities storing see potential in targeting the outbreak of the The list of PPE thefts is not and trucks delivering medical doses of the vaccine once the coronavirus,” reports limited to masks. “Some products in high demand initial high level of business, Neumann. “The highest 50,000 medical suits were have been prime targets for law enforcement and value loss reported to TAPA taken from a shipping robberies. governmental focus on EMEA was the €5m theft of warehouse in Turkey on April shipments begins to level face masks from a facility 7,” continues Neumann. No margin for error out,” he warns. “As with every in Spain.” “And 50,000 respirators from Importantly, as per form of cargo crime, there is
© chaiyapruek - stock.adobe.com TAPA’s IIS was notified of a destination facility in Neumann’s earlier point, no no room for complacency.”
www.airlogisticsinternational.com February 2021 33 E-COMMERCE FORECAST Peak performance Will 2021 witness the continued ascent of e-commerce? Or will the bricks-and-mortar sector fight back? The Editor turns to the logistics specialists for their thoughts.
hortly before the end of last year, Houston Mills, Vice President, Flight Operations and Safety, UPS, penned San article on e-commerce, highlighting the progress made during 2020. He put e-commerce’s growth at 18%, a not insignificant figure by any means. Describing the result as “robust”, even in the face of a pandemic-fuelled recession, social justice protests and a contentious political environment, he felt that this represented a truly significant result. Addressing TIACA members, he went on to say that such a EBIT of €160m contrasted to support our customers by figure represented opportunity during times of uncertainty, when favourably with the losses investing ahead of the curve, order fulfilment is sometimes in the lap of the gods and when a incurred in 2019. Moreover, such as the €750m committed perpetual question mark hangs over the supply chain in terms of its E-commerce Solutions and to boost our air and ground its length and speed. Express divisions reported the network in Asia Pacific. Whilst According to UPS’ research, two main factors will contribute largest revenue increases, of 19% the COVID-19 pandemic has to the success of the retail sector. The first is the familiar one: that and 12% respectively. accelerated the e-commerce of developing further e-commerce to capture market share. The The Group has said that boom as businesses migrated second is simply that of differentiation; differentiation, that is, it now expects its EBIT to online to counter lockdowns, between online sales and traditional bricks-and-mortar activity. further grow in 2021 from the technological and process An interesting observation from Mills was that relating to underlying base in 2020 of enhancements have equally focus: the research would seem to indicate that UPS customers around €5.4bn. And, tellingly, it enabled the transition.” (and indeed, those of other logistics giants, like FedEx and DHL) estimates Group EBIT for 2022 would be better off focusing on one strategy, rather than two sales to be above that of 2021. FedEx: growth ahead strategies. Opting for both bricks-and-mortar and online service was Ken Lee, CEO of DHL Express Marlies Tillmann, Senior not recommended in the long term, as dilution of product might Asia Pacific, commented: “We External Communications ensue. For an online offering to work, a large product selection and have identified e-commerce as Specialist, FedEx Express Europe, a quick shipping speed were prerequisites. This much, though, is one of the megatrends shaping was in bullish mood when asked known and understood by many within the sector. the logistics sector from 2020 about how 2021 would pan out. According to UPS, consumers want to confidently shop with the to 2025 in our Strategy 2025 “We expect the world’s full knowledge of what products are available – and when they will agenda. DHL Express is of shipping needs to continue arrive. And everyone, stresses Mills, wants ease of returns. the view that e-commerce growing over the next 12 Today, trust and transparency are emerging as key value drivers will continue on its growth months. E-commerce, fuelled for customers as they decide where they shop. At bottom, the trajectory and we remain ready by the pandemic, is one of the COVID-19 pandemic has only accelerated this trend. Brands that can demonstrate that they are doing the right things for customers, their employees and the community will have an opportunity to win and retain new customers. BLACK OR BLEAK? According to one data source, consumers spent US$9bn on the Web on Black Friday in DHL: building on success 2020 in the US, representing a 21.6% increase over Black Friday sales in 2019. COVID-19 problems notwithstanding, DHL ended 2020 on a high. Physical stores, however, appear to have had more of a bleak Friday. A large The company posted full year revenues of €4.8bn, which was up 19% portion of consumer spending had moved online long before the pandemic, but the year on year; more impressive still, the fourth quarter yielded revenues global health crisis has simply accelerated that trend. of €1.5bn, which was up 33% compared with 2019. DHL’s full year
34 February 2021 www.airlogisticsinternational.com Growth has been the name of the game at FedEx main drivers for this growth expectation. By 2023, over 80% of months and years ahead; future EU parcel growth is expected to come from e-commerce. Prior however, there still is a vibrant WEBCARGO to COVID-19, average online activity as a total proportion of the community of bricks-and- POINTERS total retail sales in Western Europe was forecast to reach 15.3% by mortar businesses across Europe, WebCargo publishes a monthly 2022 – now that level will be reached by 2021. [1] many of whom we support report on the impact that e-booking “In line with these statistics, we have seen a clear change over every day. As we move into the is having on the industry. It has the past months in customer demand for logistics services, and we future, it will be interesting seen a significant increase of expect that trend to continue. Consumers have increasingly shifted to keep a keen eye on the e-bookings over the past several to a shop-from-home mindset. Digital adoption has accelerated, effects of another important months; in November 2020 alone, leading not only to an increase in e-commerce sales but also to COVID-19 lesson: that is, the e-booklngs on WebCargo increased changing expectations from shippers on flexibility in last mile strong need for human beings by over 15%. delivery and real time transparency for their shoppers. to go out and interact. Coming More significantly, and on a “Over the years, ongoing investments in network capacity, out of COVID-19, those effects much larger scale, the total number automation and technology have helped us build the most flexible may be a strong influencer on of e-bookings in November was over and responsive network in the industry. Throughout the COVID-19 the balance between online ten times more than they were in pandemic, this flexibility has allowed us to play a vital role in the sales and bricks and mortar, November 2019, perhaps the best distribution of critical supplies and COVID-19 vaccines, serving forcing businesses and logistic indicator of industry traction. communities globally as well as supporting supply chain resilience. specialists to continuously “Moving forward, that same flexibility will allow us to support adapt and be flexible to many small- and medium-sized companies recovering from ensure an aligned online and [1] Savills report: https://www.property-forum. COVID-19, regardless of how they sell their products and services. offline experience for their eu/news/covid-19-to-accelerate-europe- “The online shopping trend will inevitably continue over the customers.” an-e-commerce-growth/6746 WEIGHT FOR IT! 3,086 lbs/1400 kgs (est) Lower Empty Weight
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www.airlogisticsinternational.com February 2021 35 END OF YEAR SURVEY
BREAKING POINT Late last year he study was actually But that was not all. An average of 60% of retailers in the two fed by the results of two countries had added or planned to add warehouse support; and an XPO Logistics Tsurveys commissioned by equal percentage had added or planned to add third party logistics or XPO, one of retailers and the transportation support. Clearly, anticipation was a key element here. conducted a study other of consumers, conducted covering the UK by Statista in the latter part of Planning for the unexpected October 2020. Respondents to “A poorly planned Black Friday and holiday campaign could collapse and the US to the retailer survey represented the supply chain. In order to help our customers respond to this 600 companies, while there historic peak in demand for e-commerce, we integrate artificial gauge the flexibility were 4,000 respondents to the intelligence and increased automation into our processes.” These are of retailers, the consumer survey, evenly split the words of Rui Marques, Iberia Managing Director, Supply Chain, between the US, the UK, France XPO Logistics Europe. engagement of and Spain. Adoption of technology is the only cast-iron way in which to XPO’s survey found that 94% counter seasonal vagaries, and the quartet of countries examined consumers and the of US retailers and 87% of UK clearly had such an expedient to the fore in their portfolios. Actually, resourcefulness of retailers agreed or totally agreed gearing up for the surge was not only farsighted but also prudent. that they were prepared for the An average of 51% of consumers across the surveyed geographies third party logistics 2020 peak holiday season. In reported that online shopping was their number one preferred way providers. The the US, 88% said that they had of purchasing gifts in the recent holiday season. A significant 55% upgraded, or planned to upgrade, agreed (or totally agreed) that they had been spending more time Editor summarises their e-commerce platform since shopping online in 2020 compared to the previous year. In fact, the pandemic began. In the UK, multiple records in the US were reportedly broken over the 2020 the findings. that figure was 91%. Cyber Weekend.
36 February 2021 www.airlogisticsinternational.com According to Adobe eturn to ender Analytics, Black Friday saw a T E CON ENIENCE A colossal US 70.5bn, equating to more than 0% of all online 48% drop in bricks-and-mortar O ERBSI E holiday purchases, are likely to be returned to the supplier. XPO’s shopping in 2020, while online A survey of consumers in North America survey found that about two-thirds of retailers in the US and the UK shopping hit US 9bn, up conducted in 2020 by the Canadian (68% in the US, 66% in the UK) have witnessed an overall increase in 22% from the preceding year. e-commerce company Shopify found online returns during the pandemic. Also citing Adobe Analytics that 0% of online shoppers opted eedless to say, processing those returns isn’t an easy task 47% fi gures, C BC reported that for kerbside pick-up in the fi rst three of retailers in the US and 4% in the UK declared that they found Thanksgiving Day shopping months of the pandemic, with % returns to be challenging or very challenging. also broke a record, totting up saying that they would continue to do The answer for many retailers has been to turn to third party US 5.1bn in online sales, which so going forward. logistics providers like XPO to manage their returns processing, was up by 21.5% compared The driving factors behind these otherwise known as reverse logistics. In XPO’s case, the specialist to Thanksgiving Day 2019. assertions included cost savings and works with its retail customers to customise their distribution centres, Moreover, Cyber Monday set convenience. preparing for spikes in returns as part of that advance planning. XPO’s a record for the biggest online predictive analytics technologies, which are tightly integrated with its shopping day in US history, with US 10.8bn chalked up in spending this was up ON INE OPPING 15.1% over the previous year. Meanwhile, in the UK, over 1.9m orders containing more B A K RI A BER ON A than 5.1m items were processed during the 2020 Cyber Weekend. That represented a 27% increase in orders over 2019.
eli er pro i e With more online shopping A poorl comes more expectation a mouse click needs to lead planned lack to rapid gratifi cation for the concept to be successful. A Frida and holida relatively low fraction (26%) campaign could of US retailers, along with only 17% of UK retailers, reported collapse the that they considered delivery to be a “very challenging” factor suppl chain. n in serving their e-commerce order to help our BER EEKEN customers during the CO ID-19 OR ER PRO E E pandemic. customers respond IN K CO ID-19 has been the catalyst, of course. “Everything to this historic we thought we were going to peak in demand get over the next three years, we got overnight with CO ID. for e-commerce With e-commerce, we’re still in we integrate the early innings of growth, and we’re going to see more going artifi cial intelligence forward,” commented Drew Wilkerson, President, orth and increased American Transportation, XPO automation into our Logistics. And with more online processes shopping comes ancillary ui ar ue beria Managing irector SO RCE https www.adobe.com special retail-shopping-insights demands. Suppl Chain O ogistics Europe www.airlogisticsinternational.com Februar 2021 3 The increase in e-commerce is a trend that s going to pla out for a long time to come. The pandemic has accelerated e-commerce to le els that we would ha e e pected in 202
E OF EAR S R E hfa ue ho dhur resident Suppl Chain Americas and Asia acifi c O ogistics
RETAI ER ARE PREPARE OR PEAK retail customers’ systems, assists and-mortar stores increasingly in accurately forecasting future serving as e-fulfi llment centres; O I A EA ON product return rates. Once this will work in tandem with again, technology comes to the the explosion in e-commerce. rescue. “The increase in e-commerce is a trend that’s going to play ric to go out for a long time to come,” K Bricks-and-mortar retail has declares Ashfaque Chowdhury, been in the headlines all year, President Supply Chain, albeit usually for all the wrong Americas and Asia Pacifi c, XPO reasons. Sales have slumped Logistics. “The pandemic has and chains have closed down, accelerated e-commerce to levels some after many decades of that we would have expected in Source O ogistics high street success. So will 2025.” e-commerce sound the death According to the survey, only same frequency that they did prior to the CO ID-19 outbreak. knell for these traditional about one-third of consumers A telling statement indeed. bastions of commerce interviewed in the US and Unsurprisingly, the XPO Logistics survey concludes that there is It would seem that the three countries in Europe every sign that future consumer demand will support the accelerated adaptation is the key word as indicated that they expect to pace of e-fulfi llment. For retailers, this means that there is no choice the world goes forward, with return to shopping at bricks- but to ensure their supply chain is confi gured to meet that demand. the likelihood of retail bricks- and-mortar retail stores with the What used to be labelled peak is fast becoming the norm.
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