INTERNATIONAL EDITION

MAY 2009

Emerging EU Markets Germans and Logistics Incheon International Airport (ICN) Republic of Korea

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operate in a politically charged environment that ill Government tempts them to substitute emotional rhetoric for Take Control? a rational, reasoned approach to security. And so even as the private sector strives mightily to meet During a recent congressional hear- Congress’ unrealistic demands, their elected of- ing on air cargo security, one message fi cials question their motives and capabilities. dominated: frustrated members of the House Congress’ skepticism was most evident in its Homeland Security Committee wanted to know examination of CCSP, a voluntary program that why the Transportation Security Administration spreads the screening process across the supply (TSA) may fall short of the 100 percent screening chain by allowing shippers and forwarders to of all air cargo by August of 2010. screen and secure cargo at their facilities prior to Although TSA cannot yet verify to Congress tendering it at the airport. To participate, shippers that it has met the February 2009 deadline to must be certifi ed by TSA according to a rigorous screen 50 percent of all cargo aboard passenger set of security standards. aircraft, it is working on a verifi cation system. CCSP is one of the most promising ideas to The agency has also made signifi cant progress by emerge from TSA’s efforts to collaborate with screening 100 percent of air cargo carried on nar- the industry on creating fl exible approaches to row-bodied aircraft; revising or eliminating most meet Congress’ mandates. Yet during the hear- Asa Hutchinson screening exemptions for domestic air cargo; and ing, former committee member Rep. Ed Markey is the Chairman of the creating the Certifi ed Cargo Screening Program (D-MA), who was one of the primary drivers of Safe Commerce Coalition (CCSP) as a fl exible way to meet the mandates. the 100-percent screening/scanning provisions, and served as the Amer- Despite these laudable efforts, members of the challenged the effi cacy of CCSP and suggested ica’s first Undersecretary committee demanded to know why TSA is likely new legislation may be necessary. of Border and Transpor- to miss the far more challenging August 2010 While the exact composition of potential new tation Security at the deadline to screen 100 percent of cargo. Meet- legislation is unknown, some stakeholders have Department of Homeland ing the 50 percent benchmark for cargo shipped begun arguing for the government to federalize Security. Prior to his work domestically is one thing. Meeting 100 percent the cargo screening process, much in the way it at DHS, he led the U.S. and including all air cargo coming into the United has done for screening passenger baggage. Drug Enforcement Ad- States from abroad is a much higher bar. Federalization is a drastic and shortsighted ministration and was a One major stumbling block to meeting this high solution that would further erode our proven risk- member of Congress. threshold is that the proper technology does not based inspection strategy. yet exist to screen large cargo pallets. Addition- There is still time to inject common sense into ally, our international partners disagree with the Washington debate, but the private industry Congress’ questionable idea of moving away from must understand that such rational reasoning will a risk-based security model toward indiscriminate not prevail on its own. We have seen the short- scanning or screening of every piece of cargo in sighted “solutions” that emerge when Congress is an effort to prevent every single threat. left to its own devices, without the counsel of the Foreign governments bristle at the idea that private sector and experienced security experts. the U.S. government would unilaterally dictate The industry has a tremendous opportunity to trade policy to them and abandon its oft-touted offer fl exible solutions that improve security, meet risk-based approach. the intent of the 9/11 Act and keep commerce Despite these obvious challenges, Congress moving, but it must be willing to proactively continues to demand results. It’s not that they engage. fail to understand the facts at hand; it’s that they In short, it must lead. ACW

ACW MAY 2009 1 May, 2009 Volume 12, Number 4 contents

Germans and Logistics 14 14Why do they dominate the forwarding industry?

Avoiding a Panda to Coke 30Cooperation is good business for NGOs

Emerging EU Markets 38Will the financial meltdown stall growth?

30

38 30

2 MAY 2009 ACW EDITOR Simon Keeble [email protected] ASSOCIATE EDITOR Trish Williams [email protected] CONTRIBUTING EDITORS Roger Turney, Ian Putzger CONTRIBUTORS Douglas Nelms, Peter Conway COLUMNISTS 12 Paul Forster, Brandon Fried ART & PRODUCTION DIRECTOR [email protected] WORLD NEWS EDITORIAL OFFICES 1270 National Press Bldg., Washington, DC 20045 04 Americas (202) 355-1153/1172 • Fax: (202) 355-1171

• “Lucky” Deutsche Post PUBLISHER • Teach First DHL Steve Prince • Delta’s Cargo Exit [email protected] ASSISTANT TO PUBLISHER • Huntsville Lures Asia Susan Addy • In The News [email protected] • (770) 642-9170 DISPLAY ADVERTISING TRAFFIC COORDINATOR 8 Europe Linda Noga [email protected] • GSA Makes a Comeback ADVERTISING/BUSINESS OFFICE • K&N Profit Drops 1080 Holcomb Bridge Rd., Roswell Summit Building 200, Suite 255, Roswell, GA 30076 • Russia Awards ABC (770) 642-9170 • Fax: (770) 642-9982 • In the News... WORLDWIDE SALES U.S. Sales Hong Kong, Malaysia, 10 Asia Associate Publisher Singapore Pam Latty Joseph Yap • TNT Advances in Asia (678) 775-3565 +65-6-337-6996 [email protected] [email protected] • More Cuts From Cathay Europe, United Kingdom, Japan • In the News... Middle East Masami Shimazaki David Collison [email protected] +44 192-381-7731 +81-42-372-2769 [email protected] Thailand China Chower Narula Beijing Office| [email protected] Nancy Sun (Sun Junqin) +66-2-641-26938 [email protected] DEPARTMENTS Taiwan ++86 10 5879 5885 Ye Chang Shanghai Office [email protected] 1 Viewpoint 46 People/Events Isabella Hou (Hou Ying) +886 2-2378-2471 [email protected] Australia, New Zealand 45 Bottom Line 48 Forster’s Focus ++86 (21) 5116 8877 Fergus Maclagan Guangzhou/South China [email protected] Sherry Yuan +61-2-9460-4560 [email protected] Korea ++86 10-5879-5885, ext. 601 Mr. Jung-won Suh +82-2-3275-5969 [email protected]

CUSTOMER SERVICE OR TO SUBSCRIBE: (866) 624-4457 Air Cargo World (ISSN 1933-1614) is published monthly by UBM Aviation. Editorial and production offices are at 1270 National Press Building, Washington, DC, 20045. Telephone: (202) 355-1172. Air Cargo World is a registered trademark of UBM Aviation©2009. Periodicals postage paid at Downers Grove, IL and at additional mailing offices. Subscription rates: 1 year, $58; 2 year $92; outside USA surface mail/1 year $78; 2 year $132; outside US air mail/1 year $118; 2 year $212. Single copies $10. Express Delivery Guide, Carrier Guide, Freight Forwarder Directory and Airport Direc tory single copies $14.95 domestic; $21.95 overseas. Microfilm copies are available from University Microfilms, 300 North Zeeb Road, Ann Arbor, MI 48106. Opinions expressed by authors and contributors are not necessarily those of the editors or publisher. Articles may not be reproduced in whole or part without the express written permission of the publisher. Air Cargo World is not responsible for unsolicited manuscripts, photographs or artwork. Please enclose a self-addressed envelope to guarantee that materials will be returned. Authorization to photocopy items for internal or personal use is granted by Air Cargo World, provided the base fee of $3 per page is paid directly to Copyright Clearance POSTMASTER: Send address change to: Center, 222 Rosewood Drive, Danvers, MA 01923, and provided the number of copies is less than 100. For authorization, contact CCC Air Cargo World at (508) 750-8400. The Transactional Reporting Service fee code is: 0745-5100/96/$3.00. For those seeking 100 or more copies, please 3025 Highland Pky Ste 200 contact the magazine directly. Downers Grove, IL 60515 POSTMASTER and subscriber services: Call or write to Air Cargo World, 3025 Highland Parkway Suite 200, Downers Grove, IL For more information visit our website at 60515; telephone 866-624-4457. www.aircargoworld.com

ACW MAY 2009 3 worldAMERICAS EUROPEnewsEUROPE ASIA MIDDLE EAST AFRICA

DHL Underwrites Deutsche Post Teach First “Lucky” In 2008 Profit Germany

eutsche Post DHL CEO Frank Appel Dsays the global logistics giant takes great pride in its Teach First Germany initiative to jump-start Germany’s educational system and build a better society as a whole. In comments to shareholders to announce fi rst quarter 2009 results last month, Appel said the initiative is in keeping with DHL’s desire to support children, fi ts with its social responsibil- ity agenda, and makes smart business and economic sense. “We need to commit ourselves to education. If you are the CEO of a company with 500,000 peaking to shareholders at underlying value. He told shareholders employees you have a corporate responsibility the Deutsche Post annual he intends to “unleash the company’s to make economies and society more successful. general meeting on April 21, unexploited potential” following the We cannot stand by and wait for the politicians SCEO Frank Appel said he aggressive expansion of recent years to take action. We need to take action too.” was “very happy” about the under disgraced former chairman Klaus The Teach First Germany initiative marks a progress to relocate DHL’s international Zumwinkel. fi rst milestone in an effort to bundle ongoing hub to the Cincinnati/Northern Ken- After investing $389 million (€300 DHL activities into a focused education program tucky airport from Wilmington, OH. He million) to upgrade facilities at Leipzig that will be expanded systematically. The pro- noted the 2008 cost of closing the do- Halle airport, DHL opens its new hub gram, which takes a page from a similar effort mestic operation was $900 million. this month and launches its AeroLogic launched in the U.S. 20 years ago, was unveiled The company reported a net loss joint venture with Lufthansa at the end in February. of $4.09 billion (€3.16 billion) for the of June. A spokesperson confirmed that At that time, Appel said he was convinced fourth quarter of 2008 compared to a AeroLogic would eventually operate that Germany’s education system must be net profit of $328 million (€153 million) eight B777 freighters with the first one improved “only through cooperation and action in 2007. due for delivery this month. By 2012, undertaken by political leaders, businesses, For the first nine months of last year, DHL says it will have created 3,500 new schools and organizations like Teach First the group had a net profit of $1.90 bil- jobs at the facility. Germany.” lion (€1.46 billion) — an increase of Appel said that DHL’s express rev- In Appel’s view, education represents “the 29.3 percent over 2007. enue declined two percent in 2008 to most valuable resource” in the country. For this Overall profit for 2008 was $2.19 bil- $17.73 billion (€13.63 billion) and pro- reason, he said, “it is critically important for all lion (€1.68 billion). This was achieved duced a profit before interest and taxes children and young people to have equal oppor- from the partial sale of its Postbank sub- (EBIT) of $277 million (€214 million) tunities to gain access to education and receive sidiary to Deutsche Bank for $6.3 billion — a drop of 34 percent over 2007. He the support they need to develop their talents.” (€4.9 billion). noted, however, that without the U.S. Under the program, university graduates As a result of the operating loss, loss, the EBIT would have been $1.5 bil- work at selected schools in Germany’s educa- Appel and his management did not lion (€1.16 billion) — an increase of 11 tion system for two years. The teacher trainees take performance bonuses for 2008 percent. then typically progress to positions in industry and he acknowledged they had been During 2008, global forwarding EBIT with a better perspective for a career. very “lucky” in agreeing to a deal with rose five percent to $557 million (€430 Among other things, the effort is designed Deutsche Bank a week before Lehman million) that included $389 million to break down educational barriers and provide Brothers went bankrupt. (€300 million) in new business from support to underprivileged children and young The Deutsche Post DHL CEO said Sandvik. However, the company’s sup- people. Deutsche Post DHL is a founding partner that the company’s stock price, which ply chain business was hit by the global of the initiative together with Lufthansa and has dropped 59 percent since the end financial crisis and subsequent drop Vodafone. ACW of 2007, is not a true reflection of its in economic activity. The EBIT fell 15

4 MAY 2009 ACW AMERICAS EUROPE ASIA MIDDLE EAST AFRICA

percent overall to $571 million (€441 Huntsville Opens New Gateway For Asia million). On the plus side Appel reported $1.42 billion (€1.1 billion) in new busi- he opening of a new air cargo facility had been in talks with several carriers ness including a contract with British Tin Huntsville heralds a new era for and forwarders with ties to the Asian Airways to handle the airline’s catering the thriving city in Northern Alabama market but the global recession put logistics. that has plunked down $7.8 million to their plans on hold. However, they plan Noting that results for the first quarter lure more carriers and put the “inland to continue discussions this fall with 2009 suggest that the global economic port” on the map. carriers that serve the Asian market. decline has bottomed out, Appel told The project, which almost doubles “We would have done this even if the shareholders that the company “should in size the current 100,000 square foot economy had not slowed but we might prepare for a long recession.” He expects facility where Panalpina has been since have taken a bit of a slower approach,” additional cost reductions — including 1990, includes a new 92,000-square-foot Bradley said. In fact, he and other a saving of $194 million in phone costs air cargo facility with a 5,200-square-foot officials said that the cost of the project — will enable Deutsche Post to realize cold storage area. was not as extreme as once projected an additional $1.29 billion (€1 billion) in While Panalpina’s arrival opened thanks to the softening of the economy. consolidated profit by end of this year. Huntsville as an international gateway Air traffic at Huntsville declined by Commenting on the future vision of to airfreight and distribution between 20 percent in January 2009 compared the company, Appel said it should be the U.S., Asia and Europe, Huntsville to the same period one year ago, based on reconciling two fundamentals officials’ latest quest is to attract a carrier Bradley added, with the economic — respect and results. He explained that serves the Asia market. meltdown taking a similar toll on local that while results were dependent on “I think it’s going to be awhile before rail operations. “We’re seeing the same respect for co-workers and customers, the air cargo market ramps back up but type of numbers on the rail side, so that “you can’t show respect and not show a we think we can save carriers money,” shows you the dynamics of what’s going profit.” said Mitch Bradley, director of the on in the world.” He said his dream was for every one of International Intermodal Center. “In Local officials call Huntsville a Deutsche Post DHL’s 500,000 employees these times, it’s all about saving money port because it encompasses a multi- worldwide to start their week with the and businesses can save money if they fold operation spanning the new air objective of making life simpler for their move their operations here,” he said. cargo center, nearby rail operations, customers. ACW According to Bradley, local officials an industrial park and Huntsville International Airport. Delta Exits The All-Cargo Business It is also the home of the U.S. Army’s Aviation and Missile Command, elta Air Lines will exit the all- The now-combined Northwest Cargo a National Aeronautics and Space Dcargo business at the end of and Delta Cargo units produced revenue Administration facility, and a strong 2009 with the grounding of its of $331 million for the quarter — a drop aerospace and defense contractor remaining Northwest Airlines’ B747 200 of $146 million or 44 percent over the community flourishing thanks to military freighters due to “age and inefficiency.” same period last year. base realignments that could see A spokesman said the company had Delta says the result reflects significant relocations of up to 5,000 people by 2012. no plans to replace the seven aircraft weakness in demand and yields due to Besides Panalpina, forwarders and with new capacity or contracts with other the global economic recession and declin- airfreight companies that currently have operators. Currently the freighters — five ing fuel surcharge revenue, as well as re- operations at Huntsville include Atlas Air, of which had engine upgrades last year ductions in dedicated freighter capacity. Schenker, Cargolux, CEVA, Expeditors, — operate on the trans-Pacific linking Delta President Edward Bastian com- Kuehne & Nagel, and integrators FedEx the U.S. with several Asia markets via mented, “Despite signs of stabilization and UPS. DHL also had a presence Anchorage, AK. in recent demand trends, we expect the in Huntsville before it suspended its The freighter decision is part of a cost revenue environment to continue to be domestic operations early this year. reduction program as the company an- under significant pressure for the remain- During the past few years, the city nounced a first quarter operating loss der of the year.” has been expanding its infrastructure of $483 million and a total loss of $794 The airline will reduce international to position Huntsville “as the air cargo million - that included interest payments capacity by 10 percent, compared to airport for the Southeast region and of $308 million. The net loss, excluding a 2008, beginning in September. By De- beyond,” according to Bradley. This work fuel hedge cost of $684 million, was just cember 2009, Delta expects system included the extension of two runways at $9 million. capacity to be reduced 6 percent to 8 Huntsville International — one is 10,000 Delta says the Northwest net loss for percent and international capacity to be feet and the other 12,600 feet — giving the first three months of 2008 was $4.14 down 9 percent to 11 percent over last it claim to the second longest runway in billion. year. ACW the area after Miami. ACW

ACW MAY 2009 5 AMERICAS EUROPE ASIA MIDDLE EAST AFRICA

IN THE NEWS... for “engaging and shaping public response to that corporate reputation, corporate culture and climate change and for substantially reducing technological advancements will be the drivers for As expected, DHL Express will move its U.S. greenhouse gas emissions.” Since 2003, the sustainability. Some 43 percent of those surveyed gateway and national package sorting operations USPS has reduced overall energy use by expect their companies to increase marketing of from Wilmington, Ohio to the Cincinnati/Northern 15 percent, increased alternative their sustainability programs because custom- Kentucky International Airport in Hebron, Ky. energy use by 41 percent and ers are asking for more informa- UPS says it has terminated talks between UPS and has a goal to reduce petroleum tion; it is supportive of the corporate DHL to handle DHL’s package business in the USA. use by 20 percent over the next fi ve culture; and because sustainability offers ABX Air, which provides aircraft to DHL under a years. The CCAR serves as a volun- a clear and distinct business advan- contract due to expire in 2010, says it will tary greenhouse gas (GHG) registry tage…James Oberstar, U.S. House of help DHL move to Cincinnati in order to for entity-wide emission inventories Representatives Transportation Committee start operations “in mid- to late sum- and also establishes protocols for Chairman, wants the Obama administration mer”…The U.S. Department of Transporta- GHG emission reduction (offset) projects through to determine who owns Virgin America. In a let- tion (DOT) has tentatively approved the addition a Climate Action Reserve program… Three inter- ter to U.S. Secretary of Transportation Ray LaHood, of Continental to the Star Alliance and given the national airlines have agreed to plead guilty and Oberstar said the carrier might be “outside the green light to a new joint venture between Air pay fi nes totaling $214 million for conspiring to fi x legal limits for foreign ownership.” Oberstar cited Canada, Lufthansa, United and Continental prices on air cargo shipments, the U.S. Department reports that two U.S. equity funds have sold their called Atlantic Plus-Plus. The new operation would of Justice said. Asiana Airlines Inc., Cargolux shares, amounting to 47 percent of the airline’s allow the carriers to jointly arrange capacity, sales Airlines International S.A. and Nippon Cargo voting stock, to Sir Richard Branson’s Virgin and marketing as well as share revenues. The DOT Airlines Co. Ltd. have agreed to cooperate with Group. The lawmaker noted to LaHood that the says granting antitrust immunity to Continental the Department of Justice’s ongoing investigation Virgin Group has not denied the claim. To meet and approving the four-carrier venture would be into the air transportation industry, the agency U.S. citizenship requirements in setting up Virgin in the public interest because it would support said. Under the plea agreements, which are subject America, the Virgin Group attracted two hedge increased levels of service. The Department states to court approval, Luxembourg-based Cargolux will funds, Black Canyon Air Partners and Cyrus the carriers must implement the proposed co- pay $119 million. The agency said it engaged in a New Joint Structure, as shareholders… The operation within 18 months and fi le annual reports conspiracy in the US and elsewhere to eliminate U.S. Air Transport Association reports a 21.2 on their activity. U.S. Airways has announced a competition by fi xing cargo rates for international percent drop in overall cargo traffi c for February code-share agreement with Qatar Airways… air shipments from September 2001 through Feb- 2009 compared to the same month last year. U.S. The US domestic and international air cargo sector ruary of 2006. Japan-based NCA, which will pay domestic revenue tonne-miles (RTMs) were down will grow 4.1 percent in 2010 after a 7.6 percent a $45 million fi ne, engaged in fi xing cargo rates 18.4 percent; North Atlantic was off 20.9 percent loss this year, according to a market forecast from charged to customers in the US and elsewhere for and traffi c on Asia routes declined 25.7 percent the U.S. Federal Aviation Administration. In international air shipments from April 2000 until during February. Overall international traffi c for its 2009-2025 forecast, the agency predicted that at least early 2006. South Korea-based Asiana will U.S. reporting carriers dropped 23.6 percent for total air cargo revenue tonne-miles (RTMs) (freight/ pay a $50 million fi ne for fi xing both cargo rates the month. FedEx RTMs declined 16.7 percent express and mail) would increase from 38.9 billion and passenger fares from at least as early as Janu- domestically and 18.4 percent internationally. in 2008 to 78.6 billion in 2025, an average of 4.2 ary 2000 until 2006. The announcement brings to UPS reported a decline of 15 percent domestically percent per year. Domestic RTMs would increase by 15 the number of companies that have pleaded or and 13 percent internationally during the month. 1.8 percent a year and international RTMs would agreed to plead guilty in the Justice Department’s The major U.S. combination carriers experienced jump 5.3 percent a year, the agency said. The investigation, the agency said…British Airways even greater setbacks. Southwest domestic projections, which are based on economic assump- Plc, Korean Airlines Ltd, Qantas Airways RTMs dropped 21.7 percent; Northwest -48.1 tions tied to the Gross Domestic Product (GDP), Limited, Japan Airlines International Co. percent; Delta, -31.0 percent; Continental -31.3 also indicate the U.S. cargo fl eet will grow from Ltd., Martinair Holland N.V., Cathay Pacifi c percent; United -14.4 percent and American 949 aircraft in 2008 to 1,584 aircraft in 2025, an Airways Limited, SAS Cargo Group A/S, -36.6 percent. International traffi c showed similar annual average increase of 3.1 percent…Boeing Société Air France and KLM Royal Dutch declines with Northwest reporting -44.3 percent; says it is reducing B777 production from seven Airlines, LAN Cargo S.A., Aerolinhas Brasile- Continental -22.8 percent; United -38.6 per- to fi ve aircraft per month beginning in June 2010 iras S.A., and El Al Israel Airlines Ltd. have cent; US Airways -39.4 percent and American as a result of customer-requested deferrals. The also pleaded guilty. Collectively, the companies -27.7 percent…CargoWise, a logistics manage- company will also delay previous plans to increase have paid or agreed to pay fi nes totaling more ment system supplier, has moved its U.S. regional B747-8 and B767 production. Boeing says the than $1.6 billion…A new survey by the American headquarters to a new facility near Chicago. The production decisions and unfavorable price escala- Marketing Association (AMA) says 58 percent regional headquarters in Schaumburg joins two tion are expected to reduce fi rst-quarter 2009 of marketing executives believe their companies other global headquarters, one in Sydney and the net earnings by approximately $0.38 per share. will focus more on developing sustainability other in Milton Keynes. The move offers additional The company adds that no B767, B747 or B777 programs despite current economic conditions. training center space for clients of the company’s orders have been cancelled this year…The U.S. More than half of those surveyed believe that supply chain software solutions and should help Postal Service has won a climate award from sustainability is an essential element of their expand its customer base. ACW the California Climate Action Registry (CCAR) company’s reputation. Nearly 75 percent believe

6 MAY 2009 ACW Project1 10/27/06 8:40 AM Page 1 worldEUROPEAMERICAS ASIA news AFRICA MIDDLE MIDDLE EAST EAST AFRICA ASIA AMERICAS EUROPE

Kuehne & Nagel Profi t Drops Back 17 Percent to The uehne & Nagel (K&N) net profi t fell Kalmost 17 percent to $109 million (128 million Swiss Francs) for the fi rst Future quarter of 2009 compared to a year ago. Gross turnover was $3.67 billion (SF 4.29 billion) for the period – 19 percent down from 2008. With a The global fi nancial meltdown hit the Swit- zerland-based logistics company’s airfreight GSA? business especially hard with a global market decrease of more than 20 percent compared with the previous year. n these challenging times airlines ability to take on the individual identity K&N said its contract logistics business are being called upon to question of any number of airlines. fell by 23.1 percent; its road and rail logistics every aspect of their operations The image might not have gone com- dropped 45.5 percent and its sea freight sector Iin an effort to reduce costs and pletely, but the concept certainly has. dipped by 4.7 percent. maintain revenue flow. In many European Cargo Service ranks itself “The solid performance in the fi rst quarter cases it is a matter of returning to fun- as not only the top GSA in Europe, but confi rms the effi ciency of the measures we damentals and the basic graft of the air also in the USA. A global network of have taken at an early stage and implemented cargo business. 65 owned subsidiaries in 30 countries on a worldwide scale to adapt our enterprise And that might not be a bad thing. provides testament to the strength of its to today’s economic environment,” said Most carriers grew their cargo business- operation today in all the key markets. It Reinhard Lange, CEO of K&N. “Since it remains es and extended their overseas sales currently represents more than 100 air- impossible to predict by when the global networks through the use of one simple lines, handling on their behalf 360,000 economy will recover, we will adhere to our tool of the trade. tonnes annually. dual strategy of rigorous cost control with a The general sales agent was a quick Sales topped $620 million (Euro 470 commitment to market share expansion.” and easy solution to gaining early mar- million) in 2008. In its outlook for the rest of 2009, the com- ket entry until an airline’s flight sched- According to Guy Tordjman, presi- pany noted that there are no indications that ules, capacity and service capability dent of ECS, the core of the company’s the world economy will recover quickly and increased to where it would establish its business remains in Europe, with over that it anticipated further volume reductions in own in-house sales operation. 85 percent of annual revenues continu- all business units. Other smaller airlines, with fewer ing to be earned in the region. In March, the company said its market frequencies and less market penetration “Our European operations, until re- share of German airfreight exports organically choose to remain with the GSA solution. cently, have continued to grow by five to grew to 12.4 per cent over 2008 despite the But in these changing times the ques- six percent a year, and turnover in the general decline in airfreight tonnages. tion now being asked is whether the region has increased by 50 percent in Klaus-Michael Kuehne, Chairman of K&N’s GSA solution is one which could now the previous three years,“ he says. Board of Directors, commented, “Thanks to suit some of the larger carriers, anxious This, he explains, has been the result Kuehne & Nagel’s strong position across the to reduce their ground costs in perhaps of both general organic growth of the globe, our logistics competence and our fi nan- lesser markets. business and the signing of new con- cial strength, we have reason to be confi dent Until now, the rebuttal has been that tracts with carriers such as Thai Airways about the further development of our the the GSA does not have the IT infrastruc- in France and Italy; Cargo B in France, company. ture, tracking and tracing ability or bill- Germany and Switzerland and with Eti- A K&N spokesman said the company an- ing capability demanded of most major had Airways in Italy. ticipates consolidation in the logistics industry carriers. After developing in Europe, ECS ex- to continue and that companies able to gain That is a concept that perhaps harks tended its activities to the USA, where market share organically and via acquisitions back to the original, “one man and his its extensive GSA operation, under the will be even better positioned once the global dog” concept of the GSA, complete with banner of Globe Air Cargo (USA), is the economy picks up. ACW desk, bank of telephones and the unique recognized brand leader in the market.

8 MAY 2009 ACW AMERICAS AFRICA MIDDLE EAST ASIA EUROPE

US contract signings include those of IN THE NEWS... Emirates SkyCargo, British Midland and Cargo B. Hoffmann Air Cargo Equipment and DSM Elsewhere, the company enjoys a Dyneema are launching a new lightweight growing presence in Asia: its Singapore air cargo net that weighs less than eight kilos office has been the starting point for (17.6 lbs). The material is up to 15 times regular operations in China, where it has stronger than steel, fl oats on water and is established the first independent GSA. resistant to moisture, UV light and chemicals. “But the most satisfying thing of all The two companies say each new net in service has been the testimonials of our custom- will cut aviation fuel consumption by up to 700 ers, which prove that ECS understands kg per year. This translates to a six-fold saving the needs of individual markets and how AirBridgeCargo Airlines, the scheduled cargo in greenhouse gases or 4.2 tonnes of CO2. to react quickly, which can make the business of The Volga-Dnepr Group, has won a For a typical mid-size cargo airline operat- outsourcing of a cargo operation a vital Wings of Russia Award as “Airline of the Year — ing 5,000 nets, total annual CO2 emissions factor in an airline’s performance.” Cargo Carrier Operating in Domestic and Inter- could be cut by more than 20,000 tonnes say Understanding the needs of individual national Air Lines”. Launched in 1997, Wings of the companies. Thomas Lieb, Chairman of the markets also means that ECS is not Russia is the national airline award of the Russian Management Board of Schenker AG, says that above providing its own solutions, when Air Transport Operators Association. Over 50 Rus- during the past four years, the market share of no other opportunities exist. sian carriers compete annually in 10 categories, ocean intermediaries has grown 18.8 percent Three years ago ECS acquired a 60 including domestic and international passenger compared to only 4.3 percent by ship owners. percent shareholding in Africa West, a transport, air cargo, business aviation and carriers As a result, Lieb believes that major logistics Togo registered carrier based in West serving industries of the Russian economy. companies will play an increasingly important Africa. role in future international trade. Lieb adds “It effectively provided us with the and constantly improving our quality of that “Green” logistics is one of the four key opportunity to launch our own cargo air- service.” trends for the future: “We already have a line, using chartered capacity, to serve That he says includes extensive in- whole number of options for designing logistics West African markets,” says Tordjman. vestment in fully-automated IT systems, as a truly sustainable process. These include “Today we operate a twice-weekly B747- to provide on-line and on-time booking lowering CO2 emissions, close cooperation with 200F service from Brussels, via Dubai to confirmations, secure access to book- partners and suppliers, innovative solutions Lome in Togo. From Lome we service ings, automated pre-billing to airlines such as a combination of ocean and air freight, up to 14 other West African destinations and quality automated reporting. choosing the most suitable transport mode, as using AN-12 and A300F capacity.” “In effect we have to be an airline well as measures to save energy,” he explains. But Tordjman admits that even as a within an airline and provide the same Kuehne + Nagel (K&N) a four-year contract seasoned GSA, he failed to spot the cur- level of service which to the customer for the logistics management of its fi nished rent downturn coming and the severity makes us indistinguishable from the products in Italy. The newly built warehouse in of its impact across all markets in the air airline.” Trezzo sull’ Adda, 19 miles northeast of Milan, cargo industry. It is a strong selling point, which Italy was specifi cally designed by the logistics “As a global GSA operation you get Tordjman believes, in today’s environ- group. Agrati says it gave the contract to K&N used to handling blips in individual mar- ment, may tempt some airlines to return because of the logistics company’s experience kets, but this is a phenomenon which to the GSA concept. in managing technical parts’ supply chains in has swept across the globe. The greater “A GSA operation like ECS can today the automotive industry as well as its ability concern for me in, some respects, is not offer airlines a comprehensive service to handle seafreight imports. K&N’s chairman being able to identify when the upturn which encompasses all aspects of their Klaus-Michael Kuehne, and not the logistics may come.” cargo capacity management, enabling group, is a 25.1 percent shareholder in the re- However he insists this current them to maximize their cargo capacity cently approved acquisition of Hapag-Lloyd by a global “blip” will not detract from the and sales yield, whilst at the same time, group of Hamburg-based investors. AES Cargo long-term goals and strategy of the ECS reducing their costs.” has changed its name to Move One Logistics. network. But, admits Tordjman, the concept The company is based in Dubai, UAE. TNT and “We have always positioned ourselves of the GSA can still be difficult to get Con-way Freight have linked their road net- as the partner of airline companies, across to some airlines. works in Europe and the USA for express ship- with the intent to increase earnings “We have found it particularly dif- ments. TNT has a nightly transatlantic fl ight to and reduce costs on their behalf,” says ficult to prove to some Asian carriers New York and operates three gateways in New Tordjman. “Our strategy is to support that we can provide them with full ser- York, Los Angeles and Miami. Con-way Freight this positioning by further strengthening vice support across Europe, when they will pick up and deliver U.S. export shipments to the connections of our global network, still tend to think in terms of individual TNT and vice versa for last mile distribution on diversifying our outsourcing solutions markets.” ACW both continents. ACW

ACW MAY 2009 9 worldASIA MIDDLEnews EAST AFRICA AMERICAS EUROPE

Cathay Cuts TNT Mixes Modes Cargo Capacity In Asia Advance rastic cost cutting continues at DCathay Pacifi c with an 11 percent reduction in cargo capacity from this month. The airline says it will park two more B747- 400 freighters — taking the total to fi ve. In addition to an eight percent cut in passenger fl ights — and complementary bellyhold capacity — from May the airline is reducing its weekly freighter fl ights from a high of 124 last year to 84 with a reduction to Europe from 32 to 22; to North America from 31 to 26; to China from 23 to 15; fl ights to Japan and Taiwan are halved from 20; and to S.E. Asia from nine to three. The only destination to remain unaffected by the cuts is the Middle East and India that Mrs. Lim Hwee Hua, (center) Minister in Singapore’s Prime Minister’s Office and Second Minister also sees an increase in passenger fl ights to for Finance and Transport, officially opened TNT’s upgraded Singapore regional Hub on April 15. Bahrain and Riyadh. Singapore is a permanent stopover for the express carrier’s B747-400ER freighter linking its air Cathay Pacifi c Chief Executive Tony Tyler hub in Liege, Belgium to Shanghai, China. Pictured with Mrs. Lim are Regional Managing Director said, “In the fi rst quarter of 2009 we saw a Onno Boots (left) and Peter Bakker, TNT’s CEO. marked deterioration in our business com- pared to the same period last year. Turnover ouble-digit growth rates, in the region, management decided to for the fi rst three months of this year was long taken for granted embrace a fundamental strategy shift 22.4% lower than the same quarter in 2008.” in Asia, are a distant and expand into this segment. “Asia is a In addition to the parked freighters, Cathay Dmemory in the current freight market,” Boots declared. is trying to sell fi ve aircraft and has asked Boe- downturn, which has hit Rather than chase airfreight to top up ing to defer the delivery of two B777 aircraft the region hard. Still, TNT reckons it the loads on freighters moving express until 2010. can boost its volumes and revenues in traffic across Asia, TNT opted to apply The company has also asked its 17,000 the region by 20 percent this year. its European surface strategy to a mar- staff to take unpaid leave of one to four weeks “We are still growing at more or ket that has traditionally been served ei- for the next 12 months and senior managers less the same speed as last year,” said ther by air or ocean. Based on strategic will not get their 2008 bonuses. Onno Boots, regional managing direc- acquisitions of leading truck operators Cathay’s cost-cutting measures follow tor for Asia. In 2008 the integrator’s in China and India, it began to develop last month’s award as the world’s best airline revenues in Southeast Asia were up day-definite domestic surface offerings according to London-based research company, over 30 percent. while building up trucking links be- Skytrax. “The downturn should not affect us tween the countries in the region under More than 16 million customers from over too much. Some of our largest custom- the ‘Asia Road Network’ banner. 95 different nationalities took part in the latest ers are shipping less volume, but be- Boots admitted that the timing was independent survey of airline standards. This is cause we have moved into new spaces fortuitous. Just as the trucking network the third time in ten years that Cathay has won and created new markets, we have been came fully on stream, stratospheric the award. compensating for the down trend,” he fuel prices were prompting shippers to Notably, the top ten Skytrax winners are all commented. “If you move into a bigger reconsider the role of airfreight in their Asia or Middle East based: Singapore Airlines, pond, how the economy performs does logistics. Priced significantly lower than Asiana Airlines, Qatar Airways, Emirates Air- not matter that much.” airfreight but offering much faster tran lines, Qantas, Etihad Airways, Air New Zealand, The bigger pond he is referring to is sit times than ocean, the new trucking Malaysia Airlines and Thai Airways. ACW freight. Having previously concentrated network had a huge appeal, he said. An- on documents and small parcel traffic (continued on page 12)

10 MAY 2009 ACW © 2009 Continental Airlines, Inc. THE ECONOMY MAY BE STUCK ON , BUT WE’RE STILL PUSHING .

With 50 new aircraft on order plus new routes to Shanghai and Rio, we’re pointed in the right direction.

Even in these tough times, Continental is determined to move forward. We’re bringing our award-winning cargo products to new, high-traffic routes like Newark-Shanghai, Houston-Rio and Houston-Frankfurt. And we’re growing our jet fleet — already the youngest among U.S. network carriers — by adding 13 new, fuel-efficient aircraft this year. At Continental, rewinding our plans is simply not an option. For us, it’s one direction only and that’s headed toward the future. For more information or to book a shipment, contact your Continental Airlines Cargo sales representative, or visit cocargo.com.

Rio (summer) and Frankfurt (November) service is subject to government approval.

Work Hard.

Fly Right. ® AMERICAS EUROPE ASIA MIDDLE EAST AFRICA

other boost came last fall, when protest- One of the markets under consid- derscored by the opening of an interna- ers blockaded Bangkok’s Suvarnabhumi eration is Vietnam. Despite the recent tional and domestic operations centre airport. “TNT was the only integrator downturn, the country “clearly stands in the Vietnamese capital last summer. that was operating unrestricted in and out,” Boots said. In addition to the Further infrastructure development in out of Thailand at the time,” Boots re- momentum of the Vietnamese market, called. Hanoi has become a key transit point He was quick to stress that the sur- for traffic between Southeast Asia and face network should not be seen as an China in TNT’s network, which was un- alternative to transportation by air. “The combination of road and air in one solution is key. A lot of our custom- ers move their product in two modes, air-road or road-air. Our road and air networks are fully integrat- ed, with the same depots,” he said. The main tenet of TNT’s air capacity in the region is a B747-400 freighter link- ing its European hub in Liege with Singapore and Shanghai. Within Asia Vietnam is on the agenda this year, TNT relies on commercial lift — as Boots said. it does across the Pacific, although India is going to be another a good chunk of its Asia-US traf- major focus for development. TNT fic moves within its own dedicated intends to beef up its infrastructure flights via Liege (Singapore-Liege and in key gateways like Mumbai and Liege-New York). There are no plans Bangalore and to establish inte- to field dedicated freighter capacity grated air and road facilities. across the Pacific, but TNT is looking A year ago TNT announced that to step up flying activities within Asia. it would invest 100 million Euros “We will likely launch additional ($132.6 million) in Asia through flights in the region by the end of the 2013. An $8 million regional distri- year. We are now studying where,” bution center for life sciences traf- Boots revealed. fic was opened at Singapore Changi

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12 MAY 2009 ACW 391-05-09_SKYPORT_Inzerce_Transport-185x85_EN.indd 1 9.4.2009 13:26:45 AMERICAS EUROPE ASIA MIDDLE EAST AFRICA

“Some of our largest IN THE NEWS and Europe declined 24.7 percent, 21.2 percent ... and 24.8 percent respectively…The U.S. Depart- customers are shipping Technogym has chosen CEVA Logistics as ment of Justice has fi ned Asiana, Cargolux and less volume, but its logistics provider in the Middle East. The two Nippon Cargo Airlines (NCA) a total of $214 companies announced a pact covering the import of million for conspiring to fi x prices on air cargo ship- because we have professional gym equipment to the UAE and man- ments. Cargolux will pay $119 million, NCA will moved into new agement of warehousing operations for the Middle pay $45 million and Asiana will pay $50 million... East. CEVA will also take charge of Technogym’s Emirates SkyCargo has taken delivery of its fi rst spaces and created home delivery operations, product assembly and B777 freighter – a lease from Dubai Aerospace new markets, we have business installation services to gyms and sporting Enterprise Capital that has eight on order. A venues in the region…Etihad Crystal Cargo second aircraft arrives later this year. The aircraft can been compensating for says it is the fi rst carrier in the Middle East to win fl y non-stop between Dubai and Frankfurt or Hong the down trend.” Cargo 2000 quality certifi cation. The IATA initiative Kong with a 103-tonnes payload. This year Emirates is designed to improve the end-to-end cargo process becomes the largest B777 operator in the world. The via measurable quality standards. Four of Etihad’s company begins a three times weekly service to Lu- airport in 2007. The life sciences/ key account customers were tested during the past anda, Angola – its 17th African destination - with an pharmaceuticals sector is one of six months at Abu Dhabi, Paris, Sydney, Frankfurt, A330-200 from Dubai in August 2009. American three industry segment that TNT has Bangkok and Munich. The cargo subsidiary of Science and Engineering (AS&E), a supplier of in its sights. The others are high-tech/ Etihad Airways recently chose Descartes as X-ray detection solutions, has received a $6.3 mil- electronics and industrials (which its Cargo 2000 cargo data management platform lion follow-on order for multiple cargo and vehicle evolved out of the company’s massive provider…Hong Kong Air Cargo Terminals screening systems to protect critical infrastructure involvement with the auto industry). Limited (Hactl) reports March tonnage declined in the Middle East. Abu Dhabi Customs is already Given TNT’s sale of its logistics 21.1 percent compared to the same month last a customer of AS&E. The systems will be used to division a few years ago, the appetite year. Cumulative tonnage for the fi rst three months scan vehicles and trucks entering high-risk facilities for Asian freight seems somewhat of 2009 was 463,014 tonnes, down 24.7 percent to detect explosive threats and contraband… ironic, but Boots sees no contradic- compared to the 2008. Export volume in March Vietnam Airlines has signaled its intent to join tion there. was down 26.9 percent for the month while export the SkyTeam alliance in 2010. This follows a March “TNT did not move out of the lo- tonnage for the fi rst quarter dropped 28.4 percent announcement by Prime Minister Nguyen Tan Dung gistics space altogether when it sold year-on-year. Exports to China showed a drop of for the Hanoi-based airline to buy 10 Airbus A321 TNT Logistics, it moved out of con- 38.4 percent in the fi rst quarter, while USA and aircraft for delivery between 2011 and 2014… tract logistics. Now we do warehous- Europe recorded a decline of 29.0 percent and 28.9 Volga-Dnepr has successfully completed its fi rst ing as part of a network management percent respectively. Hactl says March imports fell IL-76TD-90VD fl ight from Townsville, Australia to concept. We do warehousing where year-on-year 19.3 percent and the three-month Noumea in New Caledonia with an emergency it feeds into the network,” he com- cumulative fi gure was down 24.8 percent against shipment of 10 meter pipes and related construction mented. ACW 2008. First quarter import traffi c from China, USA equipment. The modernized freighter is approved for worldwide operations and fl ies to and from Australia under an Australian Foreign Operators’ Certifi cate… SkyTeam member China Southern, China’s largest airline, has received a $2.9 billion line of credit from the China Construction Bank. The airline reports a net loss of $700 million for 2008. Cargo and mail revenue, which accounted for 6.5 percent of its total revenue, fell 5.3 percent to $512 million in 2008 due to the global fi nancial crisis and subsequent “Others have fixed dimensions. impact on Asia exports…Giovanni Bisignani, IATA’s We provide all the space Director General and CEO has signed an avia- you need.” tion agreement with Russia’s Interstate Aviation Committee (IAC). Speaking in Moscow he said, ““Russia’s vast geography makes aviation a critical link domestically and internationally. After achieving 100 percent e-ticketing, the next big challenge is to implement e-freight. To make this a reality, Russia must sign the Montreal Convention 99 recogniz- ing electronic airway bills. Russia is too important to be left out of the US$4.9 billion in benefi ts that e-freight will bring.” ACW [email protected]

ACW MAY 2009 13 “Germans are simply very smart and lovely people”

14 MAY 2009 ACW regionfocus Germany

Is this why they dominate the forwarding business? I t seems the role of German-centric companies in the worldwide logistics arena is tied to a heritage of family-run freight businesses, Germany’s strong educational system and a culture that trumpets its leadership role as a vital trade hub. The country, which has been the world’s export leader for six years running, also owes its logistics might to a central geographic location, vast transportation infrastructure and regional banks that have long supported trade ventures, industry experts say. The glaring German influence in worldwide logistics was underlined in a study by UK-based Transport Intelligence last year that showed five of the top ten global freight forwarders were either German or German-speaking companies. Deutsche Post’s DHL Global Forwarding led that list, fol- lowed by Kuehne + Nagel (Switzerland), Deutsche Bahn (DB) Schenker (Germany), Panalpina (Switzerland), UPS SCS (US), Expeditors (US), (continued on page 16)

ACW MAY 2009 15 regionfocus Germany

Sinotrans (China), Hellmann Worldwide development, he says. Underpinning is highly dependent on information Logistics (Germany), CEVA (Holland) this industry, Chasdi explains, are 48 technology and to a great extent on and Nippon Express (Japan). universities and 63 colleges that offer modern engineering skills — things While the superiority and scope of logistics-related courses, which adds to government officials have acknowledged Germany’s education system today is the sector’s strong position. they must enhance to stay on top. arguable, government and industry of- Joachim Frigger, president of New But Germany can only build on its ficials say a potent combination of a York-based Emo Trans Inc., says Ger- perch in the high-tech logistics field if it tradition of nurturing innovation in the many’s “comprehensive education in expands education and boosts training, field and top-notch logistics training freight forwarding and logistics” has led research and innovation, according to a has had significant bearing on the array to its clout in the global logistics busi- blueprint released by the German gov- of top players in the global freight for- ness. And the “lack of similar education ernment last September. warding market. in other countries” is likely to prolong Indeed, the government is pushing David Chasdi, Senior Manager Logis- this trend, he says. for increasing education levels in the tics for Germany Trade & Invest, calls The German freight logistics sector’s logistics sector, and putting its weight the “world-class education system” revenue ranks third in the country after behind the concept with a training ini- in Germany a major contributor to its retail trade and the automotive industry, tiative designed to boost the supply of success in the freight logistics sector. according to government statistics. The skilled personnel in all fields of freight A main reason for the high standing 2008 turnover for the freight logistics transport and logistics. of German products and services, he sector was estimated at $337.1 billion The overall objective for Germany says, is the well-trained, highly qualified (205 billion euros), or roughly seven is to address working conditions in the workforce. percent of German Gross Domestic freight transport and logistics sector “in Companies often locate their busi- Product. order to unlock potential for improve- nesses in Germany because of its work- German industry and universities ment.” ers who get their skill set through a “have a very close collaboration,” ac- By quickly relieving the shortage of German education system that ranges cording to Jan-Phillip Gortz, Vice-Head personnel and raising the skills level from apprenticeships and vocational of International Relations for Lufthansa. of the workforce, the plan says, “we training to cutting-edge research and He and others note that logistics today will lay the foundations for good work-

Source: Germany Trade and Invest

16 MAY 2009 ACW ing conditions and good training in the The World Economic Forum’s 2007- Germany has sophisticated transport freight transport industry.” 2008 Global Competitiveness Report systems, including major hubs at Frank- Certainly one basis of the country’s crowned Germany the global leader in furt and Munich with world-leading strength in logistics is its geographic lo- terms of infrastructure and business airlines, as well as major ports and “a cation. Germany is and has always been, sophistication. It also named the coun- globally unique railway system,” Gortz a transit country due to its try one of the top five most com- explains. central location in the heart petitive economies in the world Approximately three million people in of Europe. Other contrib- overall. the country are currently working in the uting factors are its dis- German industry tradi- field of logistics including some 4,600 tribution of economic tionally has been to a great employees at Lufthansa Cargo, accord- muscle and political extent specialized in high- ing to Gortz. organization, according end manufacturing, which Regarding the approximately 60,000 to industry officials. requires trade in parts and German companies that offer logistics The differences be- the organization of produc- services, Chasdi says this is likely the tween the many regions tion and transport processes, case because Germany “is by far the of the country and therefore according to Gortz. largest logistics market in Europe and the division of labor, as well as un- Organizing such systems, as well as also boasts the world’s largest intralogis- even economic specializations within skills in transport and infrastructure, he tics market.” Germany, “have laid the cornerstone for says, “is a German specialty” that has “In this field, Germany outpaces the intense transport of freight,” adds brought forth companies such as Luf- all others, almost doubling the U.S. in Gortz. thansa Cargo with its 300-plus destina- profits from intralogistics and projecting Germany serves more than 82 mil- tions worldwide. Gortz says it is not sur- high growth figures,” says Chasdi. His lion Germans, 150 million consumers in prising that Germany produces highly agency, which opened in January, advis- 10 neighboring countries and over 460 evolved transport technology and know- es foreign companies seeking to expand million EU residents, government data how in building efficient cars, trains and into the German market and assists Ger- shows. other machines used for transportation. (continued on page 18)

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ACW MAY 2009 17 regionfocus Germany

man companies looking to enter foreign years, cites many reasons for Germany’s and industrial engineering and manage- markets. dominance in the logistics arena. The ment including ETH (Swiss Federal In- With freight transport and logistics country has long been dependent on stitute of Technology) Zurich; the Kühne among the country’s major economic exports and imports, he says, and the School of Logistics and Management at factors, people in the sector hold the logistics companies followed their cli- the Hamburg University of Technology; key to its continued success. In its mas- ents to markets throughout the world to the WHU — Otto Beisheim School of ter plan, the German government noted service them. Management in Vallendar, Germany; and that operators are finding it increasingly Germany and neighboring countries Tongji University in Shanghai. difficult to recruit sufficient numbers such as Austria and Switzerland have Willhaus says other factors include of skilled personnel. One of the reasons been offering an “excellent education the geographic and cultural makeup of cited is because working conditions are for logisticians” for many years and have Germany and its citizens. Germans as generally considered “unattractive” ow- a dual system of schooling and educa- well as their Swiss and Austrian coun- ing to weekend work, shift work, heavy tion in the company, says Willhaus, terparts have always liked to travel in physical work and low pay. whose foundation recently funded a part because they tend to view their However Germany Trade & Invest’s new chair of international logistics net- nations as small and filled to capacity, Chasdi sees nothing but continued works at Technische Universitat Berlin. according to Willhaus. strength and dominance by Germany The chair, announced by the Schin- And don’t forget the long-standing in the sector, “especially based on the dellegi, Switzerland-based foundation tradition of German interest in difficult growth projections for the German this spring, is aimed at extending re- tasks, he says, which has earned them logistics industry compared to other search in the field of international logis- bragging rights as “best engineers in countries.” tics and strengthening courses offered the world.” Also, Germans are used to Martin Willhaus, Secretary General of in degree and non-degree programs. The working hard in areas that might not the Kuehne Foundation who has been Kuehne Foundation finances a total of have been considered especially attrac- living in Switzerland for the past 20 10 chairs in the field of logistics research (continued on page 20)

The University of Hamburg, with close to 40, 000 students, is Germany’s fi fth largest university. Two former students of the University of Hamburg were recipients of the 2009 Logistics Prize of the Metropolitan Region of Hamburg.

18 MAY 2009 ACW Project3 1/28/08 9:40 AM Page 1 regionfocus Germany

tive in the past, he explains. “In the old knack for survival in “competitive and simply very smart and lovely people.” days, logistics was considered a dirty tough markets.” Says Willhaus: “They Not all industry officials buy into the business.” have elbows.” theory that Germany is the power play- Other dynamics that have led to the For all their toughness and assertive- er in the logistics marketplace. “The strength of German companies in the ness, however, Willhaus claims German’s biggest forwarder, indeed, is a “true global logistics arena can be traced to have a softer side. Says the former resi- German company: DB Schenker with the ability of the Germans to make mon- dent of Stuttgart, which he equates to the sole owner Deutsche Bahn AG, com- ey in a small-margin business and their California’s Silicon Valley: “German’s are plemented by Bax Global — a former

Source: Germany Trade and Invest

Source: Germany Trade and Invest

20 MAY 2009 ACW U.S. company,” says Werner Schuessler, Managing Partner of Lufthansa Consult- ing GmbH. But he notes that Kuehne + Nagel, which has German roots and was origi- nally founded in 1890, has its headquar- ters in Switzerland, and points out that Deutsche Post/DHL, on the forwarder’s side, is a patchwork family: DHL having its origin in the United States and the same for AEI; Danzas was Swiss, Excel was British. In this context, he explains, it should not be overlooked that SDV — a French company — is not too far behind Schenker. In the airfreight section, a lot of airwaybills “are issued and charged in Germany” although the cargo comes cross-border from several countries in Europe, notes Schuessler. He states that this is simply achieved through the central location of Frankfurt and the presence of the prime carrier Lufthansa Cargo, which has a hub there.

Schuessler rejects the notion that Photo Credit: DB AG/Ralf Kranert Germany’s education system and its vo- DB Schenker launched its Trans Eurasia Express service last year. The freight cation track of career development have service from the logistics arm of the German rail operator, Deutsche Bahn, given it such a big leg up in the logistics runs container trains between China and Germany. sector. “Rather than that,” he says, “it was the right decision makers at the down does not wipe out globalization al- in volumes will be able to position them- right times with sufficient deep pockets together, most experts say trade will pick selves stronger than they were before and/or the best ideas.” up and Germany’s logistics industry will the crisis set in, says Philipp Reinke, Vice Looking to the future, he does not be well positioned for future growth. President Corporate Development, at “foresee a German concentration.” This Germany Trade & Invest’s Chasdi cer- Kuehne + Nagel Management AG. business is so heavily internationalized tainly shares this sentiment. “Though the At the same time, he says, those com- that everybody can be bought by almost economy has been slowing, we do not panies being able to gain market share anybody with the right level of funding expect this to change Germany’s status organically and through acquisitions will or “a little help from hedge funds,” he as a global player and market leader.” be even better positioned once there is a says. Players who will be able to adapt their normalization of market conditions. Presuming the global financial melt- cost structure to the current decrease (continued on page 26)

ACW MAY 2009 21 regionfocus Germany

advertisement hy do the Germans ATLAS : now Innovative Approach, dominate Unmatched Expertise global forwarding? tlas Air Worldwide Holdings, Inc. is dedicated to off ering innovative, best- A in-class solutions for our customers. Funny, but in the thin air at higher altitude, I thought I had something Our unmatched operational and technical on that question of the Germans. But after an 11-hour drive down to sea expertise allows us to provide service that level, all sorts of other questions tried to drive out that something. consistently ranks at the top of the industry Questions like: If cultural influences do play a role, will a whole nation for overall quality. AAWW’s operating units: Atlas Air, Polar Air Cargo, and Titan Aviation of forwarding recognize this and know how to mould it into a position of Leasing work with our customers to deliver prominence? Or: Why can’t it simply be coincidence? customized, value-added cargo programs But, having recently read The Island at the Center of the World by matched to their specifi c needs. Russell Shorto — how the Dutch acquired Manhattan, struggled with the Atlas off ers the scale, fl exibility and diversity they had themselves introduced from their homeland culture and effi ciency our customers need to grow in the end lost it, not least to their own internal bickering, I guess there is their cargo operations. Whether you something to be said for cultural influences. need ACMI or a Dry Leasing solution, Well then, to Germans and forwarding/distribution. we can customize a program to meet your The first thought I had needs some introduction. While building up KLM business requirements. Cargo’s diversified strategy, which at that time No one can offer more technologically included XP, IML, Northwest and Frans Maas and led to discussions with advanced aircraft. Flying Tigers, FedEx, Airborne, and many others, I noticed that however Our highly effi cient and reliable central the “network” was as a theme in all these discussions, it still Boeing 747-400 freighter fl eet will be meant something different all the time. further enhanced with our order for 12 So, in order to get a handle on that, I started to produce a survey new-technology Boeing 747-8Fs. Only Atlas can give ACMI customers early of network layouts and drivers. I have since refined that survey into a access to this next generation of effi ciency comprehensive theory of network design, operating principles, control and performance. mechanisms and paradigms. Parts of this theory have been used in various publications (McGraw- Operational effi ciencies Hill’s Handbook of Airline Marketing) and the complete theory is being We help you develop your network, used as reference material by consulting parties like Seabury. provide the aircraft and crews, and take on In order not to confuse reactions to the theory with airline folklore and the risks and costs involved in operating knee jerks, I checked with a lot of non-airline people in my research. The a freighter. funny thing was that every party engaged in, or normally depending on, Global platform line-haul transport could not see the logic of evolving a network beyond In 2008, Atlas Air served a single hub; while every party engaged in, or normally depending on, 316 destinations in 110 countries on ZIP code level distribution could not envisage a good network if it did not six continents. evolve further than a single hub. Flexibility to meet demand Cultural influences indeed! Our unmatched outsourcing solutions My survey included air carriers, deep sea, line-haul truckers, and give you the opportunity to fl exibly wholesale distributors re-positioning strategic inventories. Distribution meet demand and capitalize on market parties included integrators, forwarders, energy grids, telecom and opportunities. production and assembly lines. Find out how we can help optimize Production and assembly line people have a network requirement that your cargo operation: is wildly different from A-to-B haulage. They need stuff at the assembly (914) 701-8400 or www.atlasair.com line, not at the nearest port. For more on this, see the emergence of Just in Time/Place. So to Germany: After World War II it had its foreign relations, including its national carriers, severely curtailed. In a new bid for stability,the

22 MAY 2009 ACW country was encouraged to rebuild its economy, was even helped with the Marshall Plan - but of necessity it was to be self-sufficient, as most people had seen more than enough of Germany for quite a while. So the country was left to itself and the Wirtschaftwunder (“miracle economy”) evolved as a self- production economy while most other nations enjoyed new openings in international trade through all sorts of initiatives. On the back of these bilateral and multilateral relationships, airlines grew their line-haul networks based on the bilateral reciprocity model established by ICAO. For Germany, preoccupied with economic and social rebuilding, it relied on line-haul operators in neighboring countries for handling imports and then, subsequently, outlets for its exports. In no time at all, certainly after the advent of widebodies in the mid-60’s, the multimodal line-haul was straining under some 30 percent structural overcapacity - ideal for those who do not want to operate machines and have learned to do their business via someone else’s. To this day, Germany’s economy still uses places like Schiphol, Rotterdam and Antwerp extensively. Its own infrastructure has increased too, but by the looks of it the country has learned to balance its own with off-shored networks. It has learned from the results of this strategy and developed a similar balance between own line-haul facilities and forwarding through other networks and, quite importantly, understood that depending on other networks still requires offices at both ends. Most other nation’s forwarding communities have at one time tried to expand internationally. They’ve managed for a while — even made a profit — but where have they gone? For the U.S. and the UK: largely to Deutsche Post. And, as far as distribution networks are concerned, my guess is that as in other nations’ agriculture, production, trading and professional services, they have pretty much all traveled their own roads. They have never been confronted with situations, like Germany was, of being thrown back upon itself in a sort of isolation, and all that still within the domain of current technology. What else did they have as a blueprint for distribution networks then their production and assembly networks? Plus, Germany already had a history of self-reliance. The Nebengebühren, a tax levied on parties servicing areas they were not indigenous to, expresses quite adequately this sense of close-knit community. Now the tax has gone and the borders are open again. Germans are once again members of the international community. So why the self- reliance? Well, despite the need to support a production economy, my reasoning is that Germany’s forwarding and distribution imperative is part of its collective DNA.

Boubby Grin is a former 30-year veteran of KLM and the architect of the company’s famous added-value business approach to expedited logistics. As a consultant, he now divides his time between Switzerland and the Netherlands. SWISSWORLDCARGO.COM

ACW MAY 2009 23 WC_Styropor_54x187.indd 1 04.02.2009 16:11:16 Uh

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Key trends are therefore contrac- tion of volumes on certain main routes, continued growth on certain routes and sectors, and ongoing consolidation of logistics providers. And companies with a strong balance sheet, standardized, scalable operations and the right mix of business activities will benefit from the current situation, Reinke adds. In March, Kuehne + Nagel claimed the top slot for airfreight export traffic based on IATA Cargo Accounts Settle- ment System (CASS) data. Last year’s turnover grew 12.4 percent to $156.2 million. The logistics giant’s offerings span seafreight, airfreight, contract logistics and overland businesses with some 54,000 employees at more than 850 locations in over 100 countries. “That we were able to become num- Munich Airport’s strong growth and continued expansion have made it one ber one in a declining market through of Europe’s top cargo hubs. organic efforts was due to delivering the right service offerings to our demanding success was also based on our intensive a contributing factor.” customers, as well as due to the close care of our existing, partly long-time Looking ahead, Lufthansa’s Gortz cooperation between our airfreight customers, as well as the continued sees “a great chance” for Germany if it and sales colleagues,” said Hans-Georg expansion of our part-charter routes focuses on the combination of “green Brinkmann, K +N Germany’s Managing for consolidated shipments with our technology and logistics.” Director. Southern-, Brazil- and China-Connex Such a combination is obvious, he Rainer Wunn, Member of K + N’s products. The concentration on Frank- adds, since “even the carriers them- German Management Board and re- furt and Munich, Germany’s primary in- selves” must take steps to become sponsible for airfreight, added, “This ternational departure airports, also was greener as companies and nations

Source: Germany Trade and Invest

26 MAY 2009 ACW worldwide come to grips with demands tics by the Danish company DSV. within the European Union.” to reconcile the ecological and econom- “With globalization driving interna- What’s more, Chinese exports “will ic aspects of the logistics business. tional trade volumes, the interest in create more wealth for a new middle “If we consider the outsourcing of forwarders with networks spanning class. So a creative Chinese newcomer assembly lines, the intra-industry trade continents will continue,” the UK-based will have a lot of chances here if they is growing further and requires trans- global logistics analysis group said in its can create an almost global presence.” portation, liberalization and political report. And that could be done best through integration.” Those players that are best posi- buying companies abroad, Schuessler And despite the global doom and tioned to adapt to the changing mar- says. “All you need is the right manage- gloom, the Lufthansa official is quite ketplace wrought by consolidation “will ment and tonnes of money.” bullish on the carrier’s future prospects. come of out China,” according to Luf- Adds Schuessler: “I have no doubt While it is necessary to differentiate thansa Consulting’s Schuessler. If there that either one is available in China between logistics within Europe and is any company with the right depth of these days already. What’s missing is the abroad, he says, Lufthansa Cargo has pocket, he says, “then I would say the igniting spark.” great possibilities in long-distance lo- time to buy is now.” Emo Trans’ Frigger points out that gistics and already has a strong position His company, which is doing consult- the changing market structure wrought worldwide. Using Germany/central Eu- ing in the Chinese market and has for- by consolidation will affect the larger rope as hubs “offers great perspectives warders as clients, dispenses advice that leading players more than medium size for business.” is almost “a no-brainer,” he says. organizations. “The reduction of person- Last year, Transport Intelligence “What we keep telling (them) is that nel and other cost savings, as well as singled out the emergence of CEVA China in terms of population is the big- loss of value will impact big companies Logistics’ 2007 purchase of Texas-based gest country in the world. It has already more than small ones,” he says. freight forwarder EGL and its ultimate passed Germany as the second largest Jens Tubbesing, the former president re-branding as an example of market economy when it comes to exports, and of Miami-based Cargo Network Services consolidation. This trend continued in one should not forget that the lion’s and founding partner of New York-based 2008 with the purchase of ABX Logis- share of German exports is being done (continued on page 28)

ACW MAY 2009 27 regionfocus Germany

American Network Services, credits multiple dynamics for the influence of German-centric companies in the logis- tics sector. The country’s training and appren- ticeship programs and everything that go along with that has been a key for turning out a well-educated and trained workforce. Another consideration is that em- ployees in Europe and Germany tend to stay with companies for a long time, he said. “The jumping around” that is frequently seen in the U.S. “is not so common there,” he says. He points out that German or Ger- man-speaking companies have consis- DHL at Leipzig. The company launches its AeroLogic joint venture with tently dispatched people overseas since Lufthansa in June. World War II with the idea of growing their operations and establishing new have used lines of credit or other credit total tatters. offices across the globe. As a result, facilities.” This could become an issue “This younger nation of Germans “Kuehne + Nagel and Schenker and for smaller firms and that could lead to are more tempted to move around, Panalpina” are huge success stories increased activity on the consolidation first studying in one place, and then as all these companies play a significant front, Tubbesing says. somewhere else,” he says. Since they role in the global freight forwarding Gary Litman, vice president of Eu- are “more footloose” than their elders, market. rope Policy and Initiatives for the U.S. the trend toward even greater mobility “Most other companies didn’t really Chamber of Commerce, does not sub- should continue, he suggests. follow that process through to the same scribe to the notion that Germany’s edu- But Litman also thinks one interest- extent as the German or German-speak- cation system has catapulted German- ing aspect of the global trade downturn ing companies,” he explains. Also, most centric companies to top spots in the will be its impact on labor mobility. of these players have enjoyed a strong logistics sector. “We’ll see how the financial crisis af- capital structure and have been fairly German company executives com- fects” the ability of workers to relocate, well funded. plain frequently about the quality of “because it is not inexpensive to move Noting that K&H currently has no education in their country, Litman says. away from home.” debt, Tubbesing allowed that the finan- And while the apprenticeship system Addressing the future of international cial strengths these companies have works well in manufacturing segments, trade and financing, Litman welcomed built up over the years has helped them it is less obvious that the workers have “the huge promise” by world leaders at both weather economic storms and fend any educational advances in the ser- the G-20 summit in London to commit off acquisitions. vices realm. $250 billion to finance new global trade. Such companies, with their colos- Litman also maintains that most of “There’s a serious threat that many sal size and critical mass in the form today’s logistics-related work is done in companies will not be able to survive in of their many far-flung locations and English rather than German. Therefore, the global expedited logistics market modes of activities, “are in a very good the German government needs to en- because of decreasing demand and cut- position” because they can downsize courage more of its workforce to become throat competition among suppliers,” he in times of market slowdowns, reduce fluent in English — something their added. their footprint and cost elements, yet Dutch and Danish counterparts have Meanwhile, Lufthansa and DHL are remain formidable players, he suggests. done with outstanding results, he claims. adding another piece to the German What’s more, the financial stability of Yet Litman says there is plenty of logistics map with the June launch of such companies cannot be overlooked reason for optimism about Germany’s their AeroLogic joint venture linking when customers start extending their future prospects because of its vibrant newly emerging EU markets with Asia payment terms. Global companies with economy. Although the deepening and North America via Leipzig. strong balance sheets are far better global recession has spelled a drop No doubt the residents living around positioned to manage their operations in exports and hit the automotive, Frankfurt airport will be pleased with during slowdowns than some of their machinery, electrical and textile indus- the relocation of new capacity and pos- medium-sized competitors “that might tries, the German economy is not in sible decline in night-time flying. ACW

28 MAY 2009 ACW

Avoiding a Panda to Coke

Non-Profi t Helps Keep Open

30 MAY 2009 ACW managementseries NGO

oca-Cola is worried about water. The ubiquitous soft drinks manufacturer consumes 79 billion gallons a year — and without access to an adequate supply, the com- pany says it will be out of business. So it has teamed up with the non-government organization (NGO) World Wildlife Fund US (WWF) to improve water ef- ficiency and reduce carbon emissions, promote sustainable agricultural practices and help conserve some of the world’s most significant freshwater basins. Coke chose the WWF to help keep it in business because it has representation in over 100 countries and nearly 50 years of experience in science-based conservation — starting with the Giant Panda. Historically, NGOs and corporations have not been bedfel- lows - not even uneasy ones. Non-profits came into existence to highlight the poor behaviors of governments and companies in both developed and developing nations. According to Wikipedia, there are about 40,000 interna- tional NGOs around the world lobbying for issues that include human rights abuses, government and corporate bribery and corruption, environmental destruction, poverty, the arms trade, slavery and climate change. Yet there are non-profits and non-profits. Technically speak- ing the American National Rifle Association and the famine- relief organization Oxfam are both NGOs. For some of the more well known such as Greenpeace, Ox- fam, Friends of the Earth, the Rainforest Action Network, Save the Children and the WWF, their campaigns have proved so successful that corporations have gradually realized that coop- eration not confrontation is more productive. Yet the move to conjugate has been subtle. And not always long-lasting. Happiness A few years ago Starbucks and Oxfam divorced over accusa- tions from the NGO that the coffee retailer opposed a plan by (continued on page 32)

ACW MAY 2009 31 managementseries NGO

the Ethiopian government to file trade- mark applications of its Sidamo, Harar and Yirgacheffe coffee brands in order to help impoverished coffee growers. Oxfam claimed that Ethiopia’s farmers produce some of the finest coffees in the world — including coffees that have been sold under Starbucks’ Black Apron Exclusives line for up to $26 a pound — but received only five to 10 percent of the retail price. After initially denying Oxfam’s claim, the Starbucks then-CEO Jim Donald and Ethiopia’s Prime Minister Meles Zenawi eventually met (over coffee?) to resolve the issue which was having a severe negative impact on the retailer’s image as a corporately responsible company. At the time, Oxfam noted, “Small- scale coffee farmers are economically vulnerable, in part because large foreign buyers, such as Starbucks, are dictating trading conditions with their extraordi- nary market power. If poor countries are able to obtain trademarks for unique, locally grown products like coffee, they can capture more of the value of their products for the benefit of the people who produce them. This initiative is a significant and innovative approach to alleviating poverty.” In the case of the WWF US, it real- ized in 2004 that working with corpora- tions could extend its expertise and influence. Today, it boasts 21-corporate members of its “climate savers” initiative including HP, IBM, Johnson & Johnson, Nike, Nokia, Sony and Sagawa Express. And Coke. By next year, these companies expect to have cut carbon emissions by 14 mil- lion tonnes. Sagawa Express remains the only logistics company to have signed up to the WWF. The Kyoto-based group has a goal to reduce its carbon emissions six percent by 2012 via 7,000 liquid natural gas-powered delivery trucks. The WWF (www.panda.org) partners with Notwithstanding the partnering pro- gram, the WWF and its peers remain businesses including KLM, Sagawa Express, selective in aligning with organizations that might injure their hard-won reputa- HP, IBM, Nike, Nokia and Coca-Cola tions. UK-based War on Want is an NGO that remains implacably hostile to Coca- (continued on page 34)

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A Refl ection on NGO Partnerships Cola citing the company’s behavior over water use in rural India. And a n 1971 Walt Kelly’s famous cartoon character, Pogo, stood in a trash filled swamp and remarked with spokesperson for WWF US says it has Iprofound simplicity — “We have met the enemy, and he is us.” refused to work with some companies As a rallying cry for decades of environmental activism and conservation, Pogo’s turn of phrase precisely because of a lack of trust. speaks to a hard truth confronting all who strive to do business today without limiting opportunities “Greenwash” — the use of PR spin for future generations. “Am I actually doing anything wrong, are we all equally at fault, what needs to by companies to appear socially re- change?” There is no shortage of corporate villains with deep pockets (still); egregious mining, harvesting, sponsible — is a growth industry. manufacturing, and transportation practices continue on a global scale; and short-term, profi t maximizing There is even a wire service for green- behavior is still handsomely rewarded as the cornerstone of a system of market capitalism supported by ing a corporate image. complex systems of marketing, advertising and manipulation of people as consumers. But — and it is a big ‘but’ — the enemy today is somehow more obscure, more dispersed. Have the battle-lines shifted In January this year the Washington fundamentally or is it just better camoufl age? DC-based Center for Science in the Leading NGOs are working with Fortune 100 companies, from Federal Express and DuPont, to Eastman Public Interest (CSPI) filed a class- Kodak and BP. Stakeholder engagement sessions bring strident activists into the boardrooms of the action lawsuit against Coke. The NGO largest global companies — and even, if grudgingly, to the Darth Vader of corporate America, Exxon- claimed, “The 33 grams of sugar in Mobil. For some this is nothing more than green washing taken to scale. And if green-washing means each bottle of Coke’s VitaminWater putting a good face on environmental problems while spending as little as possible to actually rectify root do more to promote obesity, diabetes, causes for environmental degradation then surely the whirr from engines powering corporate washing and other health problems than the machines has reached a din never heard before. vitamins in the drinks do to perform After all, even for large collaborative projects, the costs of NGO/corporate partnership are generally little the advertised benefits listed on the more than a rounding error in the travel budgets of global corporations. bottles.” But just as corporate success cannot be measured by profi ts alone — but must ever more reconcile social and environmental accounts as well — so too the relatively minimal costs of these corporate/non- The VitaminWater web site says the profi t partnerships may not be the best measure of their value. drink is “naturally sweetened with a Ideas are shared, learning is encouraged, trust is deepened, and new business and environmental proprietary blend of rebiana, talline approaches are generated. fructose and erythritol”. And there’s no As captured in a 2008 report prepared by a business consortium known as GEMI (Global mention of Coca-Cola. Environmental Management Initiative) in partnership with the Environmental Defend Fund, there are a To avoid possible negative publicity host of high-profi le initiatives. from taking corporate handouts, the Few, for example, would argue with the value of revamping the FedEx fl eet of more than 30,000 WWF US focuses strictly on its core vehicles, a project undertaken with the Environmental Defense Fund, to reduce emissions. However, many competence. In this way it cannot be might challenge the merits of a partnership between The Southern Company and the National Fish and accused of endorsing a company’s Wildlife Foundation to protect bird habitats in the southeastern part of the U.S. products — or in the case of Coke, be- While real habitats were no doubt protected, that likely palls in comparison to the overall damage done to global ecosystems by this utility’s power generating plants combined annual release of 206 million ing part of the controversy associated tonnes of carbon dioxide. with them. Noting the positive patina around Wal-Mart’s decision to sell energy effi cient compact fl uorescent The current relationship began with bulbs, skeptics will also rightly observe that installing more energy effi cient light-bulbs may have philanthropy in 2007 and has now unintended consequences. Will it make us all even less conscientious of turning out the light when we developed into four business-specific leave a room? Will it diminish efforts to address more fundamental issues of building redesign? Why areas: water, energy, packaging and design for the use of more natural light, when we can just buy better bulbs? the supply chain. As Kelly observed through Pogo many decades ago, the deeper underlying issue is about consumption By 2008, as both sides began to itself — and all the efforts made by manufacturers to encourage consumption. It is for this reason that trust each other, they launched a pro- boycotts still evoke a crisis management response from companies. gram with $20 million from the bever- Buying on a deep level is more important than what one buys. age giant to find ways of conserving Can we consume our way to a better world? Do “we” who have consumed so much already — mostly some of the world’s most important in the North and West — have any right to urge others to learn from our mistakes and tread more lightly on ecosystems now in trouble due to our methodical exploitation for decades? freshwater resources — including the If corporate/NGO partnerships have a common vision of a more sustainable future, a plan for Yangtze, Mekong, Danube, Rio Grande innovation in core business models, room to explore and fail before they have to succeed, and a and waterways in the southeast U.S. commitment of top executives and investors, then perhaps these will indeed be the melting pots out of Currently the WWF is producing which rich, new ideas and approaches will percolate forth. models for addressing four key chal- As with the electricity buy-back schemes being tested by some utilities — whereby they can earn lenges to river basin conservation: gov- money by encouraging more effi cient consumption of the product they manufacture — so too may ernance and management; resource innovative companies come to redefi ne themselves and their products as agents of conservation rather protection; making conservation and than consumption. This, for sure, would make Pogo proud. development mutually supportive; and Jonathan J. Halperin is Executive Director of the Campaign for Climate Stability, Ecosystem Restoration, and Poverty Eradication of the Environmental Education Media Project. www.eempc.org. biodiversity conservation. Coca-Cola says more than a dozen

34 MAY 2009 ACW production plants in the areas surround- ties, we don’t have a sustainable busi- water in the right place. “It’s no good ing these rivers are now developing and ness. And you can’t have sustainable pointing to the progress you are mak- implementing water stewardship plans communities without access to water ing in Scotland, where there is plenty to serve as models throughout resources. of rainfall, if you are doing too little to its global operations. “This is also why I protect aquifers in drought-hit Africa,” Currently the com- believe that those explains Guha. pany uses 47.5 bil- who think the Coke is now involved in 120 projects lion gallons a year global down- in 60 countries — from building small in its manufac- turn will see community reservoirs in India to clean- turing process environmen- ing up Lake Malawi. “We have just com- and a further tal concerns mitted ourselves to spend another $30 31.7 billion for downgraded million dollars to provide clean water its drinks. by compa- and proper sanitation to two million According nies have more people in Africa, “ Guha adds. to a company got it wrong. While water remains its primary busi- spokesman, the Indeed, in ness issue, Coke has pledged to reduce aim is to be man- tough times its carbon footprint five percent by 2015 ufacturing water- when control- compared to a 2004 baseline. The result neutral by 2010 — so ling costs moves will be growth while saving more than it won’t be using more right to the top of the two million metric tonnes of CO2 — the water than it recycles. Coke agenda, reducing energy equivalent, it claims, of planting 600,000 uses about 1.5 liters of water to make and water bills becomes more, not acres of trees. a liter drink. However adding the indi- less, important. So I believe sustainabil- Now the Washington, DC-based rect use, including growing sugar cane, ity itself will remain a driver of business non-profit World Environment Center the figure rises to 150 liters per liter. behavior. And certainly for Coca-Cola has recognized Coke’s enthusiasm for UK Coca-Cola President Sanjay Guha that’s the case.” sustainable development with its 25th says preserving water supplies is now a The WWF says it takes 50 gallons of annual gold medal award. Previous win- top business priority. “It’s not altruism. water to make your favorite latte. The ners have included Starbucks and Dutch It is simply self-interest. The skeptics UN says the world’s population is grow- bank ABN Amro — whose purchase by are right that companies like ours have ing at 80 million a year — which means the Royal Bank of Scotland led to the not overnight become charities. Our aim the commensurate demand for fresh- biggest collapse in UK company history remains to sell more drinks. But if we water is increasing by 64 billion cubic this year. intend to keep growing, this growth has meters. In March, U.S. House of Representa- to be achieved in a sustainable way. So for Coke or Starbucks, while the tives Committee members Henry Wax- “Sustainability is key to our long-term opportunity for growing consumer sales man and Edward Markey announced success. Without sustainable communi- is obvious, so is the need to have clean (continued on page 36)

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ACW MAY 2009 35 managementseries NGO

the American Clean Energy and Security Act. The WWF US responded in a state- ment saying, “The draft bill recognizes the need to reduce emissions globally by promoting clean technology cooperation and providing incentives for reducing tropical deforestation. Emissions as- sociated with the destruction of forests account for roughly 20 percent of global greenhouse gas emissions each year — more than the combined emissions of every automobile, train and plane on the planet. It’s a position acknowledged by KLM in a partnership with another WWF off- shoot – this time in the Netherlands. In September ’07 the airline pledged to not increase its carbon footprint of 10 million tonnes per annum in the next four years — or until the European carbon trading scheme is introduced in 2012. A spokeswoman noted that pressure on the company to maintain its carbon The Air-France KLM Group has begun testing these compressed air-powered neutral growth position has been alleviat- vehicles (made in France) to replace diesel-powered tugs for towing baggage ed somewhat by recent economic events. and cargo carts at Paris Charles De-Gaulle and Amsterdam, Schiphol airports.

36 MAY 2009 ACW In the UK, the WWF has joined with sanitation is estimated at $28.4 billion a 17th African destination — in support other NGOs including Greenpeace in a year, or around five percent of GDP. of an oil boom and Chinese guest work- legal challenge to the British govern- In Kenya, which depends on Western ers, the UN report points out that the ment’s plan to build a third runway at markets to buy its flowers, coffee and inhabitants of sub-Saharan Africa will London Heathrow. WWF Director of vegetables — delivered by air to Eu- not have an adequate supply of clean Campaigns David Norman said, “The ropean markets despite NGO and con- drinking water any time soon. decision blows the chances of setting The UN says much of the one million the UK on a low carbon pathway com- “So I believe deaths a year by malaria in Africa could pletely out of the water. Why expand a be avoided by eliminating stagnant carbon-intensive industry such as avia- sustainability itself water bodies, modifying reservoir con- tion, which will make it incredibly dif- tours, introducing drainage or improv- ficult and expensive for the UK to meet will remain a driver ing irrigation management. the government’s carbon targets, when So for Coke, providing clean drink- there are green alternatives such as of business behavior. ing water for its bottling plants and its video conferencing and high-speed rail consumers turns out to have the same available instead?” Certainly for Coca- business imperative. While governments and corporations In Mozambique, it says it was easier of developed nations are harried by Cola that’s the case.” “to rebuild an entire town’s water NGOs to adopt climate-neutral behavior, system than just concentrate on our the economic drivers of developing na- sumer angst — the combined economic own plant.” According to a company tions remain handicapped by climate impact of floods in 1997/98 and drought statement, now the inhabitants can change. between 1998 and 2008 has been esti- also, “Open a Coke and share a little According to the third United Na- mated at $4.8 billion — effectively a 16 happiness.” tions water report, published in March, percent reduction in GDP. Something with which the WWF and the overall economic loss in Africa due As Emirates begins a three times its other business partners would surely to lack of access to safe water and basic weekly service to Luanda, Angola — its agree. ACW

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ACW MAY 2009 37 38 MAY 2009 ACW regionfocus Emerging EU Markets

Emerging EU Countries Face Economic, Political Hurdles

heh up and coming engines of EU growth are sputtering at the moment, with ththe economic crisis spilling over into the political arena. Instead of firm leader- shship needed to pull the countries out of their troubles, there is now also politi- cacal turmoil. Two of the four larger young EU economies (Hungary, the Czech Republic, SSlovakia and Poland) found themselves rudderless within a mere 24 hours. Hungary’s prime minister announced his resignation March 23, and the ruling Tcoalition in the Czech Republic lost a vote of confidence in parliament the following day. Both countries, as well as the rest of the region, are engulfed in economic problems, which predictably have had a knock-on effect on air cargo traffic. However, Hungary is widely seen as facing a steeper slope to climb. The government forecasts a 3.5 percent decline in GDP for this

ACW MAY 2009 39 regionfocus Emerging EU Markets

year, but independent estimates are proudly displaying the “Detroit of Eu- turn as yet either, but this is probably closer to the 7.5 percent mark. rope” moniker. But the drastic slump in a reflection of longer cycles in this “Until last October business in Hun- this industry is now casting a long shad- sector, warned Braunsberger. “The gary was quite good, in line with our ow, as it does in the Czech Republic and main impact is yet to come,” he said, expectations. We have seen a heavy Poland, albeit to a lesser extent. The adding that so far Poland has been fall in volume since the crisis began. impact on airfreight traffic has been stronger than its neighbors in terms of Hungary is probably airfreight. one of the most affected In the electronics countries,” remarked industry — the second Rolf Hauer, managing “There is a review under way in driver in development in director for Austria and the region besides the CEE at Panalpina. many companies about moving automotive segment — Franz Braunsberger, the downward trend has senior vice president for at least part of the production prompted soul searching airfreight, Eastern Eu- about producing in East- rope of Kuehne + Nagel, elsewhere,” said Hauer. ern Europe. What makes shares this assessment this trend especially of Hungary’s airfreight ominous for the region is market. “With Hungary and Ukraine you relatively moderate so far, according to the fact that most of the business is in have to be very careful. In the Czech Hauer. “There may be a much greater the hands of multinational corporations Republic, Slovakia and Poland the situ- impact on the trucking side. About 80 based elsewhere. Few firms have their ation is not so dramatic. The auto in- percent of the suppliers of these manu- headquarters in Eastern Europe. dustry there has slumped, but volumes facturers are located in Europe.” “There is a review under way in are still moving,” he said. Poland’s budding aerospace sector many companies about moving at least About a year ago, Slovakia was has not shown any significant down- (continued on page 42)

Austrian Airlines offi cials said in April that syndicate partners had accepted Lufthansa’s takeover bid, marking an important milestone in the privatization process.

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part of the production elsewhere,” said Executive Board, Dr. Andreas Bierwirth Luxembourg, Frankfurt and Vienna,” Hauer. and Dr. Peter Malanik, issued a state- said Hauer. Likewise, Bratislava is According to Braunsberger, investors ment saying the move “marks an impor- served almost exclusively by truck. The based in Western Europe tend to be tant milestone in the privatisation pro- Slovakian capital is less than 70 miles more inclined to maintain their pres- cess” and that the process is “another from Vienna, making for quick and easy ence in the region. “Companies with step closer towards the closing.” trucking connections from Austria, head offices in Asia or the US are more For Vienna, much depends on Aus- agreed Braunsberger. likely to reconsider their presence and trian Airlines. It remains to be seen Austrian Airlines has been focusing examine the viability of moving else- where that goes and what will happen,” on selling Eastern Europe besides its where,” he said. said Markus Forster, product manager home market. However, pressure on Airfreight capacity has shrunk in airfreight at Schenker in Vienna. yields has intensified in recent years recent months as airlines responded The Austrian capital has marketed as more carriers enter the fray. “In to the downturn with cutbacks. Some itself successfully as a major gateway Poland, the Czech Republic, Slovakia of this is returning with the introduc- to and from Eastern Europe. However, and Hungary, we have less of an advan-

“Naturally we won’t route everything via Frankfurt. We will evaluate options on a customer basis,” he stressed.

tion of the summer schedule. Austrian costs there are rather high, compared tage than in Slovenia or the Ukraine,” Airlines is increasing frequencies on its to counterparts in Western Europe, Schleinzer said. Austrian has joined routes from Vienna to New York and Braunsberger said. hands with Air Ukraine for a B737F Washington again. However, there are Rather than the reductions in capac- from Vienna to Kiev, with onward no plans to resume flights to Chicago, ity so far, it is the unpredictability of trucking connections in bond, so the which were suspended in the winter, supply in the foreseeable future that is clearance can be performed at the final said Peter Schleinzer, area manager causing some forwarders to reconsider destination. cargo for the Americas. their strategy. If frequencies or entire The odd one out in the quartet is Bu- With a few exceptions, such as a routes are going to be suspended, this dapest, which can boast a 747 freighter Cargolux Boeing 747-400F operation is more likely to happen on routes to link to Asia. Moreover, the airport is the linking Budapest with the Far East, second-tier points than to and from natural gateway for cargo to and from direct airfreight capacity is mostly bel- the hubs, reflected Braunsberger. Kue- western Romania, the part of the coun- lyhold lift of passenger carriers, chiefly hne + Nagel is planning to push more try where most international companies narrowbody equipment. The airlines’ airfreight, especially consolidations, like Nokia have set up shop. flight reductions, dictated by passenger through its major gateways, primar- Arguably the emphasis on road considerations, have had little impact ily Frankfurt. Markets like Ukraine or feeder service to and from gateways on the capacity situation for cargo. Romania are too far from the German in Western Europe is just as well when With demand falling faster, there is gateway, but Frankfurt is fine for mar- it comes to the state of air cargo in- ample lift available, forwarders agreed. kets as far as Poland, the Czech Repub- frastructure at airports in the region. “Capacity is not a big issue. For the lic or Hungary, Braunsberger said. Prague has earned some plaudits for time being there is no real need for “Naturally we won’t route everything its set-up and investment, but its rivals more,” said Hauer. via Frankfurt. We will evaluate options come in for some harsh criticism. “Car- Still, uncertainty over capacity de- on a customer basis,” he stressed. go facilities still have to catch up about velopments is causing agents to at least In the absence of significant wide- 50 percent with Western European look at alternative options. Probably the body capacity (let alone main deck lift) gateways,” commented Braunsberger. biggest question mark looms over Vi- in most of the region’s airports, such a Some, like Warsaw or Zagreb, would enna and Austrian Airlines, which had shift is not going to change the overall need a complete overhaul, he added. been in the market for a major investor. picture dramatically. Already trucks The contrast to the passenger side is However, Austrian Airlines an- carry the lion’s share of the region’s air striking. Most airports have developed nounced last month that the syndicate cargo. gleaming new passenger terminals, partners had accepted the takeover bid “The Czech Republic has not been an which only underscore the age and of Lufthansa. Members of the Austrian airfreight hub. We feed it basically over inadequacy of the cargo buildings. “By

42 MAY 2009 ACW and large we don’t see great commit- Vienna airport wanted to take it over, any significant development. “It scares ment to cargo in Eastern Europe,” said but the Slovakian government changed off investors,” he said. Braunsberger. its mind over giving private investors For their part, forwarders are mov- At least the crisis has not led to a majority stake in the airport and de- ing slowly in terms of new investment the demise or temporary suspension cided to retain it. in the region. Panalpina’s plans depend of airport development projects, he Forster reckoned that Budapest had on how the situation is going to unfold added. On the other hand, little along potential, but the airport has changed in the months ahead. “It’s really dif- these lines has happened recently, hands frequently in recent years, with ficult to predict what’s going to happen forwarders criticize. Bratislava seemed each new owner bringing in a business in six, 12 months,” said Hauer. “Our poised for a significant upgrade when plan. As a result, there has not been expansion plans are reviewed on a quarterly basis.” Kuehne + Nagel is considering an expansion of its footprint in Poland to 1991 • TENTH BIENNIAL • 2009 Kracow and Katowice, which would likely go ahead in 2010, not this year, remarked Braunsberger. In terms of geographical expansion, he is more interested in opportunities further east, such as the potential of the intra- Russian market. WTC Miami Panalpina recently opened its first airfreight office in Slovenia in a bid to develop air cargo in the country. Next it is looking at Zagreb. Management had originally envisaged this to hap- 1/2-page pen in the near future, but this is now under review, pending improvement in the market. “I’m not putting myself under pressure to open that tomorrow,” Hauer commented. Island The large European forwarders have been well entrenched in the gateways across Eastern Europe and see little need for additional outposts or larger facilities in the present cli- Ad TK mate. Their focus is more on curtailing costs through streamlining activities and on honing their capabilities in handling freight with special require- INTERNATIONAL CONGRESS ments. Schenker is pushing more into aerospace parts, and it is working on AND EXHIBITION temperature-controlled solutions aimed first and foremost at the pharmaceuti- cal and life sciences sector, Forster revealed. This approach resonates well with Schleinzer. Austrian recently acquired its own fleet of temperature-controlled NOVEMBER 4-6, 2009 containers and has since re-branded its perishables offering under the “Aus- MIAMI, FLORIDA trian Cool’ banner. “The pharma market HOST is showing a rising trend,” Schleinzer DOUBLETREE MIAMI MART said. HOTEL AND CONVENTION CENTER The region’s political leaders would love to see more. ACW

ACW MAY 2009 43 aircargoClassifieds

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44 MAY 2009 ACW bottomline

CARRYING EUROPE U.S. AIRLINES Monthly year-over-year percent change in overall Monthly year-over-year percent change in domestic freight traffic and Asia-Pacific freight traffic for and international cargo traffic for U.S. airlines. European airlines. 15% 5 10% 0 5% -5 0% -10 –5%

-15 Overall –10% Asia-Pacific –15% Domestic -20 International –20% -25 –25% -30 –30% 2/091/0912/0811/0810/089/088/087/086/085/084/08 1/0912/0811/0810/089/098/087/086/085/084/08 2/09

Source: Association of European Airlines Source: Air Transport Association of America

CARRYING ASIA SHARING MARKETS Monthly year-over-year percent change in capacity, in International air cargo year-over-year change for available tonne kilometers, and traffic, in freight tonne February 2009 vs. February 2008 kilometers, of Asia-Pacific airlines. Middle East 5

0 North America

-5 Europe

-10 Asia/Pacific -15 Latin America Capacity -20 Traffic Africa -25 Total -30 2/091/0912/0811/0810/089/088/087/086/085/084/08 -12% -10%% -8 -6 % -4% -2% 0246% %%% Source: Association of Asia Pacific Airlines Source: IATA

CARRYING INTERNATIONAL SEMI CONDUCTORS Monthly year-over-year percent change in total scheduled Worldwide monthly year-over-year percent change international freight traffic and capacity worldwide in sales of semiconductors and month-to-month in freight tonne-kilometers and available tonne-kilometers. percent change. 10 10

5 5 0 0 -5 -5 -10

-10 Capacity -15 Y-O-Y Traffic -20 M-O-M -15 -25 -20 -30 -25 -35 2/091/0912/0811/0810/089/088/087/086/085/084/08 2/091/0912/0811/0810/089/088/087/086/085/084/08

Source: IATA Source: Semiconductor Industry Association

ACW MAY 2009 45 peopleevents

AIRLINES Global Forwarding, Freight. In his new chain solutions to civilian and military Virgin Atlantic Cargo has role, Schaecher will lead the strategic branches of the U.S. government. “ appointed Colin Nicholls as its new development of the global airfreight Mainfreight is now offering a range of Regional Sales Manager for Australia product on a worldwide basis. Schaech- logistic services to federal, state and and New Zealand. He er, who joined the company in 2005, municipal governments as well as pri- will handle all com- has been responsible for Starbroker, vate contractors serving these entities. mercial operations the DHL Global Forwarding in house Crossan said the company can respond in Australia and New carrier, as well as for Network Manage- to emergency shipments via surface and Zealand, looking after ment. He succeeds Victor Mok, who has solutions for military bases and de- both Virgin Atlantic has been selected to lead the growth of fense contractors. Cargo and V Austra- DHL Supply Chain in the Greater China Mark Holmes, VP Global Integrated lia. Nicholls, who be- region. Mok, who has worked in DHL Solutions for the Tennessee-based gan his career in the NICHOLS Global Forwarding since the Group’s global logistics provider OHL, has been air cargo industry in acquisition of Excel in 2005, will help named chairman of the American 1983 as an Operations Clerk with Union strengthen its platform in China, Society of Trans- Air Transport at London’s Heathrow Hong Kong and Taiwan. portation and Lo- Airport, will report to Hong Kong-based gistics. Holmes most James Williams. Williams, Virgin Atlantic MANUFACTURERS recently served two terms Cargo’s Vice President Asia-Pacific, said Boeing has appointed Mar- as vice chairman of the so- Nicholls’ proven track record would help cello Bruni director of corporate ciety, which was founded boost volumes both on Virgin’s London communications for Italy and in 1946. Under Holmes’ service and V Australia’s recently intro- Southern Europe. He succeeds An- leadership, ASTL will fo- duced trans-pacific operations. tonio De Palmas, who has been cus on membership satis- DHL Global Forwarding has appointed president of European HOLMES faction, implementing the appointed Michael Schaecher its new Union and NATO Relations. Bruni will new global logistics management certi- Global Head of Air Freight. In this func- be responsible for developing the com- fication program with the group’s China tion, he is Member of the Board of DHL pany’s communications strategies and office, and continue to develop relation- engaging with key stakeholders in Italy, ships with other leading industry organi- Advertiser Index Greece and the Balkans. In his new role, zations. Hundreds of supply chain pro- Bruni will work to enhance the com- fessionals enter AST&L programs every AirBridge Cargo Airlines...... 36 pany’s presence at the national, regional year. The society offers a Certification American Airlines Corp...... CV4 and local levels. Bruni joins Boeing from in Transportation and Logistics and a Amsterdam Airport ...... 37 Lockheed Martin, where he served Professional Designation in Logistics Atlas Air ...... 17 as communications manager for Air and and Supply Chain Management. Missile Defense and Tactical Missiles. GAC Logistics has named Darren Avient ...... 21 Prior to that, he held various communi- Ball as its dedicated Regional Projects Boeing ...... 24-25 cations positions within the United Logistics Manager for the Continental ...... 11 States Department of Defense and Middle East. He reports Coyne ...... 35 for Western Kentucky University. directly to Dan Hjal- marsson, Regional Direc- Incheon Airport ...... CV2 THIRD PARTIES tor for Middle East. Based Karagandy International ...... 27 Frank Crossan has been ap- in Abu Dhabi, Ball’s key Lufthansa Cargo ...... 13 pointed Director, Government responsibility will be to Lufthansa Technik ...... CV3 Services, a new position at Main- identify and develop new freight, a freight forwarder and project business in the Macau International ...... 19 BALL logistics provider based in New Middle East. Saudi Arabian Airport ...... 29 Zealand. The new government services Michael A. Kluger has been ap- Skyport ...... 12 division is part of Mainfreight’s planned pointed Member of the Board for SkyTeam ...... 33 program of growth in the U.S. In an- Contract Logistics at Schenker nouncing the move, George Frey, Vice Deutscheland AG. Kluger most Swiss World Cargo ...... 23 President-Sales & Marketing, said Cros- recently worked as Group Director Busi- Thai Airways ...... 7 son brings “years of specialized knowl- ness Development for a German con- World Trade Center Miami ...... 43 edge and experience in devising supply tract logistics service provider. He has

46 MAY 2009 ACW events

MAY 12-15 also worked as Manager International Munich: Air Cargo Europe 2009, the 4th chairman and chief executive of Emirates Logistics in the USA and as Director International Conference for the global Airline and Group, is the patron of the Logistics Engineering Europe for an au- air cargo industry, features a four-day event. It will be held at the Dubai Inter- national and Convention and Exhibition tomotive manufacturer in Germany. exhibition and two half days of confer- Centre. Epoc Messe Frankfurt GmbH is Patrick Major has joined the Wash- ence sessions May 13-14. Participants in the trade conference will include Michael the organizer of the event, which is being ington, D.C.-based safety business unit Kerkloh, CEO of Munich Airport; Ulrich held in association with VDMA. of ICF Corp.’s SH&E consulting Ogiermann, President of Cargolux Airlines company as vice International; Ram Menen, Director of the JUNE 7-9 president of Flight Cargo Division at Emirates Airline, and Kuala Lumpur: IATA’s Annual General Operations, Air Car- Andreas Otto, Board Member of Lufthansa Meeting will feature more than 600 rep- rier Certification, Cargo. Their talks will cover the current resentatives from IATA’s member airlines, industry associate partners, international Training, and Orga- economic climate and factors affecting the sector including emissions trading in the and regional associations, manufacturers nizational Develop- EU, long-term prospects for the air cargo and industry suppliers. For more informa- ment. In this posi- sector, and the next major logistics hub. tion, visit iata.org/events/agm. tion, he will spear- The event will be held at the New Munich head development MAJOR Trade Fair Centre. For more information, JUNE 8-10 of the unit’s Air visit www.aircargoeurope.com. Düsseldorf: SCL Europe 2009, the 11th Transportation Oversight System airline Annual European Supply Chain & Logis- certification enterprise, and augment air MAY 13-15 tics Summit will feature ways to minimize San Francisco: ACI-NA Human Resources supply chain costs and identify efficiencies carrier auditing, training and civil avia- Conference will focus on a wide range of in the current economic climate. Issues tion support activities. Major has 20-plus human resource issues in economically to be addressed include demand planning years of experience spanning airline cer- challenging times. Topics will include and precision, cost management and maxi- tification, flight operations, regulatory strategic staffing, health and welfare ben- mizing working capital, customer service compliance, management and training efits, ACI global training hub and human levels and satisfaction, and cost-efficiency experience. resources finances. All sessions will take and business value through sustainability. YRC Worldwide Inc. has an- place at the Grand Hyatt San Francisco at The event will be held at the Swissotel Union Square, for more information, con- Düsseldorf, Germany. For more informa- nounced plans to partner with Women tact Amy Peters. Tel. 202-293-8500. tion, visit www.supplychain.eu.com. in Trucking, Inc. to address barri- ers that have discouraged women from MAY 17-20 SEPT. 8-10 entering the transportation industry. Cairo: The 22nd IATA Ground Handling Hong Kong: Air Freight Asia 2009 Confer- The collaboration will span best-in- Council (IGHC) Annual Meeting & 2009 ence & Exhibition will feature the confer- class programs and initiatives to tackle IATA Ground Operations Symposium will ence on Sept. 8-9 with four panel discus- misconceptions that have historically offer sessions where key industry play- sions, each comprising a handful of rep- discouraged women from pursuing ers will examine operational efficiencies resentatives from the industry. As part of and cost-savings measures, ramp safety, the four-day Asian Aerospace International careers in transportation, said Jim and regulations and economic conditions expo and Congress, the exhibition will take Kissinger, YRC Worldwide Executive facing the ground handling community. place in its own dedicated exhibition hall Vice President of Human Resources. For more information, visit www.iata.org/ at the World-Expo. For more information, Among other things, the partnership events/ighc. contact [email protected]/hk. covers memberships for 25 female YRC drivers to the association; development MAY 26-28 SEPT. 20-23 of a national survey of women driv- Rio de Janeiro: The IATA Aviation Fuel Chicago: Council of Supply Chain Man- agement Professionals Annual Global ers on issues such as training, safety Forum will be a platform for airline rep- resentatives, fuel suppliers and strategic Conference will be held at the McCormick and job satisfaction; talks with the partners to discuss priorities and reach Place West in Chicago. Kickoff speaker on travel center industry about devising a consensus on actions that enhance pro- Sept. 21 will be Gary Maxwell, senior vice scoring system for truck stops to rate ductivity. For more information, visit president, Global Supply Chain for Wal- cleanliness, safety and other issues, ww.iata.org/events/aff. Mart, who will present “World-Class vs. and extending recruiting programs to Best-in-Market Supply Chains.” The con- encourage women to pursue positions MAY 31–JUNE 2 ference will feature solutions and insights from top supply chain management execu- such as dock workers and drivers. El- Dubai: Materials Handling Middle East is a global exhibition for logistics, supply chain, tives and explore ways to invest in busi- len Voie, president and CEO of Women freight and cargo products and services. nesses and employees during challenging in Trucking, Inc., said these initiatives Sheikh Bin Saeed Al Maktoum, president economic times. For more information, would help women find success in a of the Dubai Civil Aviation Authority and visit cscmp.org. ACW male-dominated industry.

ACW MAY 2009 47 forster’sfocus

Dr. Paul Forster is the Adjunct Professor, Hong Kong University Business School of Science & Technology and a member of the HongKong Climate Change Business Forum. His current focus includes carbon management in the logistics industry. Changing the Energy Habit

s Earth Week reminded us recently, the quest to aircraft and a new distribution infrastructure. find a sustainable alternative to fossil fuel is be- So while there is potential for hydrogen applications in coming more urgent. power generation and road transport, the consensus is that use A While the earliest aircraft piston engines were in commercial aviation is several decades away. powered by gasoline, Jet A-1/Jet A kerosene has Meanwhile, biofuels derived from biomass can be converted been used by the air transport industry since the 1950s. to jet fuels by extracting natural oils and using hydroprocess- A global jet fuel distribution system has also evolved to an- ing to covert into aviation fuels without the FT reaction. First nually supply 85 billion gallons of the stuff to 3,500 airports and generation biofuels such as ethanol, corn and soybeans had the 13,000 aircraft worldwide. problem of competing for land with food production and en- The properties of Jet A-1 and current fuel formulations have couraging deforestation - as well as not meeting specifications implications for every part of the aviation industry from engine for Jet A-1. design to distribution. For a new fuel to enter the picture, it has Second generation biofuels such as Jatropha, babassu, to be a “drop-in” replacement, have favorable economics, not switchgrass and halophytes (plants that root in salt water) create competition with world food supplies, and have a better present opportunities to grow a multitude of bio-fuels but emissions profile than existing jet fuel. A tall order. without impact on food crops or deforestation. An additional The drivers behind the quest for alternative fuels are par- advantage of these plants is that they absorb CO2 emissions as tially a response to the long-term projections of unsustainable they grow. Jet A-1/ Jet A consumption – particularly as most of the future However, the big challenge for second generation biofuels is demand will come from developing countries. the low yield per hectare. One estimate suggests twice the area The April ruling by the U.S. EPA on six greenhouse gases of France would be required to produce today’s jet fuel require- (GHG) as health hazards is just the latest signal that airlines ments. will have to count their emissions. Boeing, Airbus, Shell and many others have now embraced The search for alternative fuels has been around for a long algae, often referred to as a third generation biofuel. Without time. Hydrogen as a fuel for jet engines was tested as early as leaves or stalks, it is a very efficient energy source; uses much the 1930s. Pratt and Whitney’s 304 jet engine used liquid hy- less land area and has a low carbon footprint. It also yields 15 drogen in 1957. Fischer-Tropsch (FT) synthesis emerged from times as much oil as second generation biofuels and has the research in the 1920s in Germany. Microalgae were proposed as added benefit of being a carbon sink. biofuels in the early 1950s at MIT. The FAA considers the use of algae-based biofuels to be However, with innovation, timing is everything – and per- feasible in eight to 10 years. Boeing estimates that algae could haps the time for alternative jet fuels has finally arrived. produce all the world’s jet fuels in an area the size of Belgium. The big attraction of FT synfuels is their “drop-in” quality, So good news for France. requiring no change to engines or infrastructure. So FT synfuel Energy is deeply rooted in our economic, social and political is a step towards solving the supply problem, although perhaps psyche. New technologies are creating a surfeit of possibilities, not the GHG problem. but in the end, these have to be rooted in reality. How much Biodiesel is the conversion of vegetable oils or animal fats change the existing energy infrastructure will be willing to into an alternative to petroleum-based diesel. A process of sustain has to do with the degree of global urgency on energy combining the oils and fats with methanol converts them into security and climate change. fatty acid methyl esters or FAME. FAME has properties similar Al Gore said in An Inconvenient Truth that old habits and to diesel but is not a “drop in”. new technology yield unpredictable consequences. In the long Liquid hydrogen and methane have a high-energy content term, alternative fuels will be matched with new engines and and are compatible with gas turbine engines. They are almost infrastructure and develop new habits. ideal in terms of low GHG emissions, but their low density In the immediate future, the challenge is to find a new fuel requires completely new aircraft fuel systems design, larger that fits well with our old habits. ACW

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