September 2015

THE SOURCE FOR AIRFREIGHT LOGISTICS International Edition • AirCargoWorld.com • September 2015

THE DEFINITIVE RANKING OF THE WORLD’S TOP 50 CARGO CARRIERS p.26

WILL GOOD TIMES LAST AT AIRBRIDGECARGO? p.20 WHEN WILL DRONE TECHNOLOGY TAKE OFF IN CARGO? p.32 THE RISE OF SOUTHEAST ASIAN E-COMMERCE p.36 SEIZE THE OUTSIZE OPPORTUNITY. 283mm Bleed 276mm Trim 254mm Live

747-8 FREIGHTER. A BETTER WAY TO FLY. The 747-8F is the world’s most capable high-volume freighter. The only freighter to offer both front and side loading, the 747-8F carries outsize cargo others can’t— and carries it more proﬁtably. Moreover, the 747-8F can operate in challenging environments like high/hot airports,

creating additional opportunities and ﬂexibility. As the freight market strengthens, the 747-8F enables operators to maximize its potential now. Right now. That’s a better way to ﬂy.

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creating additional opportunities and ﬂexibility. As the freight market strengthens, the 747-8F enables operators to maximize its potential now. Right now. That’s a better way to ﬂy.

boeing.com/freighters

8mm Gutter 386mm Live 406mm Trim

413mm Bleed

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Client - Frontline Job # - 136986 Ver. - AD01A Cyan Magenta Yellow Black THY CARGO ILAC AIR CARGO WORLD 20,3x27,5 cm ING YENI.pdf 1 06.08.2015 16:58

CMY

K Contents Volume 18 • Number 8 • September 2015

THE WORLD’S TOP 50 CARRIERS RANKED AND EVALUATED p26 FREIGHT 50

News Inside:

8 UpFront A quixotic quest for a “ghost airport” in Spain; lost money RISE OF THE Down Under; Boeing threatens to move; and more. CAN DRONES CHANGE THE 12 Asia FACE OF AIR LOGISTICS? The steppes of Central Asia seem like perfect stops for Europe-Asia travel, but are they worth the hassle?

16 Americas Hawaii says “aloha” to new ATR 72 freighters for inter-island cargo transport. 32 20 Europe Things seem to come easily for AirBridgeCargo. How long will the good times roll? 22 Africa & Middle East A Kenyan cargo carrier makes the case for more direct flights from Nairobi to the United States. SOUTHEAST Departments 6 Editor’s Note 10 Cargo Chat: Peter Gerber, Lufthansa Cargo 24 People & Places ASIAN E-COMMERCE IS NOT 40/42 Marketplace 41 Events/Advertiser’s Index JUST ABOUT CHINA ANYMORE 36 44 Bottom Line 46 Forwarders’ Forum

Air Cargo World (USPS 364-590) (ISSN 1933-1614) is published monthly (except December and January are combined) and owned by Royal Media. Air Cargo World is located at 1080 Holcomb Bridge Rd., Suite 255, Roswell, GA 30076. Known office of publication is located at 80 Broad Street, Suite 1701, New York, NY 10004; telephone 212-564-8972. Air Cargo World is a registered trademark. Periodicals postage paid at New York, NY and at additional mailing offices. Subscription rates: 1 year, $80; 2 year $128; outside USA surface mail/1 year $120; 2 year $216. Single copies $20. Express Delivery Guide, Carrier Guide, Freight Forwarder Directory and Airport Directory single copies $14.95 domestic; $21.95 overseas. 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 Center, 222 Rosewood Drive, Danvers, MA 01923, and provided the number of copies is less than 100. For authorization, contact CCC at (508) 750-8400. The Transactional Reporting Service fee code is: 0745-5100/96/$3.00. For those seeking 100 or more copies, please contact the magazine directly. Member of Audit Bureau of Circulations Ltd. POSTMASTER: Send address changes to Air Cargo World, 80 Broad Street, Suite 1701, New York, NY 10004. ACW SEPTEMBER 2015 5 Editor’s Note What’s in a number? THE SOURCE FOR AIRFREIGHT LOGISTICS SENIOR EDITOR David Harris “Numbers don’t lie.” That’s what they always say. “Do [email protected] the math. Make sure it all adds up.” EDITOR Randy Woods It’s usually good advice, but it’s not always so simple. [email protected] • (206)-801-8478 While numbers themselves are usually innocent, it’s who’s ASSOCIATE EDITOR doing the counting – and who may be withholding other Linda Ball [email protected] • (206)-237-0799 numbers – that really matters in the end. SPECIAL CORRESPONDENT In this issue, we discuss a lot of numbers – tonnage, Martin Roebuck CONTRIBUTING EDITORS FTKs, net income – that can help us better understand Roger Turney, Ian Putzger trends in the air cargo logistics business, but it’s never COLUMNISTS easy to reach definite conclusions. Here are a few impor- Doug Brittin tant numbers for this month: Brandon Fried Ned Laird 50 – That’s the number of large cargo carriers that we list in our “Freight 50” cover story (see page 26). Supplied Randy Woods PUBLISHER by our friends at the International Air Transport Associa- JJ Hornblass [email protected] tion (IATA), the annual list of top 50 cargo carriers provides one of the more defini- VP OPERATIONS tive snapshots of the major players in the industry, but it’s hardly the last word on Molly Stewart carrier performance. Some airlines don’t report their figures to IATA. Some may have CREATIVE DIRECTOR been late sending their data before the deadline. Others, such as DHL, carry so much Alex Kwanten of their cargo on other carriers that it’s almost impossible to get a firm grasp on the [email protected] ASSOCIATE DESIGNER total and to avoid double-counting. Adnan Jusupovic That’s why, for our Freight 50 ranking, we delved deeper into the data, with a little help from our sister publication, Cargo Facts(www.cargofacts.com), and provided a MARKETING modified list, based on scheduled freight tonne kilometers carried, and ranked accord- Breanna Punzone [email protected] ing to major airline groups, where applicable, as well as individual carriers. We think this will give readers the best possible sense of which carriers have the greatest lift. CIRCULATION [email protected] 4 – That’s the number of propellers used on a standard “quadcopter” unmanned AIR CARGO WORLD HEADQUARTERS aerial vehicle (UAV), the subject of our next feature (see page 32). Just a year or two 80 Broad St., Suite 1701, New York, NY 10004 ago, the idea of using drones in any serious cargo delivery capacity may have sounded (646) 837-5945 • Fax: (646) 304-7987 WORLDWIDE SALES ludicrous. But in the last few months, some express companies and cargo carriers U.S. Sales & Emerging Markets have begun to take the technology seriously and are beginning to take steps toward Sales Director creating viable drone-based systems. Tim Lord [email protected] • +1 678 775-3565 The question, however, will be the degree to which governments embrace the use Europe, United Kingdom, Middle East of drones in the logistics industry. At the moment, UAVs are severely limited in their David Collison [email protected] • +44 192-381-7731 capabilities due to stringent regulations. But as UAV systems become larger and more Hong Kong, Singapore, China, sophisticated and carriers make stronger business arguments in favor of drones, there Malaysia, Australia, New Zealand, India may come a time when the regulations soften and your next express package may Michelle Li land at your doorstep. Literally. [email protected] • +852 2516 1510 Japan 10 – That’s the number of countries that make up ASEAN, the Association of South Mikio Tsuchiya East Asian Nations, members of which are currently riding a wave of e-commerce suc- [email protected] • +81 45-891-1852 cess that is transforming the logistics landscape across the region. From a rising mid- Korea dle class in countries like Indonesia and Malaysia, to a growing network of low-cost Jung-Won Suh [email protected] • +82 2785-8222 factories in Vietnam and the Philippines, Southeast Asia is becoming an e-commerce Taiwan powerhouse in terms of both affordable labor supply and consumer demand. On page Paula Liu 36, we talk to some forwarders in the region and discuss how these revving economic [email protected] • +886 2-2523-8268 engines are giving China a run for its money – and its market share. Thailand Anchana Nararidh Speaking of digits, here are a few more: +1-206-801-8478. Dial those and let’s chat [email protected] • +66 26-412-6938 sometime about numbers that are affecting your air cargo logistics business. We want Marketplace to hear from you – you can count on that. Alyssa Stebbins [email protected] • +1 212 991-6735 Special photo credits (Freight 50): Air China - Richair/Dreamstime; Air Hong Kong - Tupangato/Dreamstime; ANA - Kentaro Lemoto; Randy Woods, Air India - Gordon Tipene/Dreamstime; Avianca - Joao Carlos Medau; Editor, Air Cargo World China Southern - Eric Salard/Flickr; JAL - Bo Li/Dreamstime; KLM - Maarten Visser; Korean Air - Robert Stankiewicz; Singapore [email protected] Airlines - Jordan Tan/Dreamstime; Thai Airways - Aero Icarus/Flickr; Transaero - Leukhin Fedor/iStock; CI/VS/DL/WN/AA/QR/5X/BR/CX/ OZ/SU/CV/9W/FE/ET/5Y/LX/AS/MF/3S/PO - Alex Kwanten.

6 SEPTEMBER 2015 ACW B:8.25” T:8” S:7” B:11.125” T:10.875” S:10”

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Photographers name: None Studio #: FILE: PP: Kim Fijan Created: 8-13-2015 3:04 PM COLOURS: Usage info: None 1123237 AC-15-280_Air_Cargo_World.indd JWT #: 1123211 Sauce Designer: Patrick SD: Patrick Saved: 8-14-2015 12:40 PM Cyan AD: Denise Cole Printed: 8-14-2015 12:40 PM Magenta Client: Air Canada Mech Size: 8” x 10.875” Yellow Job Name: Cargo Generic CW: None Print Scale: None Black Version/Item: English Safety: 7” x 10” Gutter: None AE: Fareed Ramezani Printer: Xerox 700 EX Campaign: None Trim: 8” x 10.875” Pub Date: August 14 AS: None Media: Print Rev: 0 No of Pages: 1 Bleed: 8.25” x 11.125” Publication: Air Cargo World ACD: Gary Westgate Type: Magazine Ad#: AC-15-280 CLIENT: Air Canada Vendor: None

DOC PATH: STUDIO:CLIENT:AC:1123237_Cargo_Generic:Release_Materials:AC-15-280_Air_Cargo_World.indd FONTS: Bliss 2 (Bold, Light; OpenType) IMAGES: AC_White_Leaf_14 10 12 0_pattern.ai 150% Studio:LOGOS:Air_Canada:Leaf_Patterns_Final:Final_Patterns_From_Client:AC_White_Leaf_14 10 12 0_pattern.ai de plane_MAG.tif CMYK 565 ppi 53.01% Studio:CLIENT:AC:AC_Images:Live_Images:Planes_Clouds_Mountains:de plane_MAG.tif GoingFurther_Wordmark.ai 10.59% Studio:CLIENT:AC:1123237_Cargo_Generic:Supplied:GoingFurther_Wordmark.ai CargoLogo.ai 130% Studio:LOGOS:Air_Canada:Air_Canada_Cargo:CargoLogo.ai Star_Alliance_En_BW.ai 48.43% Studio:LOGOS:Air_Canada:Air_Canada_Star_Alliance:Star_Alliance_En_BW.ai IMAGE USED IN PREVIOUS JWT DOCKET #’S: None UpFront Photo: © Africa Twin @WikiMedia Ghost of Quixote In 2008, just before the recession took Spain in its grip, an airport called Ciu- dad Real opened in La Mancha, home of one of the country’s most famous Photo: ©Eric Salard/Flickr deluded fictional characters, Don Quixote. By 2010, the literary connection was prophetic, as the quixotic project quickly went belly-up and has been out of Fly forward service ever since. Built at a cost of just over €1 billion, the “ghost airport” was LAN Cargo, TAM Cargo, Mas Air and recently snapped up at auction by Chinese consortium, Tzaneen International, LAN Cargo Colombia introduced which was the only bidder, for a bargain at just €10,000. Assets included a “Cargo Rewards” in August, a new 4,000-meter-runway (perfect for tilting at phantom windmills), aircraft hangars corporate rewards program that allows and a control tower. Tzaneen and other Chinese companies have indicated they cargo customers to accumulate credit want to purchase the terminal building and parking garages, and convert the for travel for each ton of cargo they airport into a European point of entry for e-commerce cargo. But not just yet book internationally. The program – because Tzaneen’s offer fell well below 70 percent of the €40 million asking is for cargo agents who use LATAM price, the court presiding over the sale has given other bidders until Sept. 15 to Airline Group’s network and cargo submit a better offer. Any takers? affiliates. With each shipment, loyal customers are rewarded with cargo credits, which can be exchanged for Say it ain’t so tickets on oneworld airlines. The Boeing Co. is considering mov- Now hear this ing key parts of its operation to A special, super-size other countries if the United States loudspeaker built by Congress doesn’t revive the Export- animal communication Import Bank, which expired at the researchers at the end of June, according to Boeing University of Vienna was CEO James McNerney. McNerney transported by logistics firm Logwin to Addo Elephant National Park in South said Boeing is the biggest beneficiary Africa, where it will send out ultra-low- of the bank in total dollars lent to frequency sounds of other elephants – Photo: © Mk2010 @WikiMedia other countries to buy U.S. goods, inaudible to the human ear – in order to but there are more actual deals for observe the reactions of members of the smaller and midsize companies than Show me the (lost) money species. Logwin transported the highly A shipment of 13 bags of cash for big companies. “Every time a sensitive equipment to the elephants over worth approximately NZ$10 million 777 lands in Beijing, it takes seven several legs by truck and aircraft – ensuring (US$6.5 million) bound for the Bank or eight thousand small businesses that protective measures were observed of China on the Mainland was be- to Beijing,” McNerney said. Is Boeing over the entire journey. The loudspeaker ing shipped in late July from Cathay bluffing? We’ll wait and see. At last was taken as airfreight from Vienna to Port Pacific’s cargo terminal at HKIA. The look, the Senate voted 64-29 on Aug. Elizabeth, where the journey continued by box containing the money, however, 3 to add an amendment to a highway truck to the national park. was transferred by trailer with no bill that could revive the bank. guards – bad idea. When it stopped at the HKIA cargo terminal, only 10 bags could be found. Two were later SkaterBIRD migration recovered, but a third bag, contain- DSV Global Transport and Logistics transported a mas- ing about $654,000, was never seen sive stainless steel sculpture that weighs 3,500 pounds, again. The transportation service is 22 feet tall, 6 feet wide and 10 feet deep, from China responsible for the transfer, Hong to Dallas. The sculpture, called “SkaterBIRD,” was Kong Airport Services, a wholly created by artist Brad Oldham at his foundry in China, owned subsidiary of Cathay Pacific, but it did not “skate” easily. The journey took the bird will likely have to file a claim with its around the West Coast, avoiding the massive back- insurer to cover the loss, said insur- ups from the port slow-down earlier this year; sailed ance-sector lawmaker Chan Kin-por. through the Panama Canal; was slammed with unprec- Meanwhile, a Hong Kong Legislative edented weather along the East Coast during vessel Council security panel member has rotation; delayed by a Houston Port Canal collision; asked Cathay Pacific to review its finally making its way into Dallas without damage or transport procedures – good idea. incident. Perhaps this bird should have flown?

8 SEPTEMBER 2015 ACW SIAC-004-T14 Air Cargo [email protected] 1 12/6/14 4:58 pm CargoChat Gerber aims for LH Cargo’s 2020 vision Three years ago, Lufthansa Cargo embarked on an ambitious future strategy to modernize its cargo operations – a strategy inherited by Peter Gerber, CEO of Lufthansa Cargo. Called “Lufthansa Cargo 2020,” the program involved the purchase of five new freighters, an overhaul of its IT system, and, as the crown jewel, a new, automated US$775 million cargo terminal at Frankfurt, to be called LCCneo that would increase productivity by 35 percent. Along the way, however, a wrench was thrown into the plans. Earlier this year, while Gerber was still months into his new role as CEO of LC, revenues failed to meet expectations. Lufthansa said the plan was too costly for now, and would be delayed indefinitely. Throughout this difficult time, Gerber has remained upbeat about the future of the “2020” program. Air Cargo World spoke with him about it, as well as about some creative ventures by the German carrier.

How is the Lufthansa Cargo 2020 program shaping up? Unlike the other two “Big 3” combination carriers in It’s moving along – our next steps will just be trying to get Europe, LH Cargo has remained committed to every completed project integrated right now. The big news freighters. How has this strategy worked out so far? is that we just finished the rollout of our IT project [on June We remain committed to freighters, and it’s really paying off 30], where we got rid of our old legacy systems and replaced commercially. We’re doing quite well. We think it’s still very it with a new system called the IBS iCargo system. This new important to having a worldwide network of main-deck system is closely linked to the freight handling system and capacity, like the five 777s we received and the fleet of it’s workflow-based, so it will make our operations much MD-11s. We may even decide to order another freighter. We more efficient. iCargo IT went live at 120 stations in its also have no plans to get rid of our MD-11s. At the moment, network, including the major hubs at Vienna, Munich and they are fine for two reasons: 1) the price of fuel has come Frankfurt. down enough that they are no longer too expensive to fly; With the recent postponement of the US$775 million and 2) they happen to be some of the youngest MD-11s LCCneo project, how will this affect the 2020 program? ever built, near the end of the production line, so there are still many years left in them. It was unfortunate that the Lufthansa Cargo Center [LCCneo] had to be put on hiatus, but the reason was a This summer, you planned to expand the joint purely financial decision. When [LH] looked at the quarterly venture with ANA Cargo. What are some of the early figures and realized the costs, they looked for the biggest results from that partnership? project they could identify, and this was our billion-dollar Indeed in the first quarter, the joint venture, from Japan baby. We’re still moving forward with every other step of the to Europe, was quite a good one – in fact, it was a lot bet- 2020 program. Some of these steps are half done, some have ter than we expected, probably because of the effects of had no change, but we will get them done, although it may the U.S. West Coast port crisis. By the end of April, more take one or two years more. LCCneo’s future is still up in the than 800 additional consignments had been carried with air right now, but we know that this will be something we a total volume of around 940 tonnes. Now we’re about to will be discussing for next year. expand it from Europe to Japan. We’re already seeing a LH Cargo recently added an unusual stop in Natal, lot of demand in that direction. Both partners are offer- Brazil, on the São Paulo-to-Frankfurt run. How did ing their flights in a shared network on the cooperation that come about? routes. European customers will now have access to the shared network, made up of over 90 weekly direct flights That’s one of those cases where we look for whatever busi- between Europe and Japan. First customers in Germany, ness we can make along our existing routes. Natal is directly France, United Kingdom and Austria will participate in along the route of the Viracopas-Dakar-Frankfurt service, the partnership. All other European countries will follow, so there’s no detour needed. There are mostly mangoes, step by step. passion fruit and papayas there for export, and it gives us another option to bring in car parts for car manufacturers in What is your outlook for the rest of 2015? the area; they can get no one else to fly there. It just makes Business has been quite volatile in Asia and greater China an ideal stopover point. in recent months. We will remain cautious about the Asia-Pacific lane for the rest of the year. But the ex-Europe Unlike the other members of Europe’s “big three,” Lufthansa has retained a large fleet of market is developing much better than we had expected. freighters, including 14 MD-11Fs. Traffic from Europe to the United States has also been very good business. Bio: Since 2014, Peter Gerber has served as the chairman of the executive board and CEO of Lufthansa Cargo AG. Gerber has been responsible for human resources, IT and services on the executive Photo: ©Faisal Akram/Flickr board of Lufthansa German Airlines since June 2012. Prior to that, he was in charge of finance, IT and human resources on the executive board of Lufthansa Cargo from 2009 to May 2012. ACW 10 SEPTEMBER 2015 ACW

Around the world ASIA Ashgabat, Turkmenistan’s capital and home to the Presidential palace (with the gold dome), remains a tempting destination, but its regulatory environment remains a challenge.

By Roger Turney CentralBy Ian Putzger Asia beckons, but red tape still tangles By Ian Putzger

s capacity growth goes, Turkmeni- “These are small markets. Fifteen years Besides oil and gas – the mainstay of stan is a hot mid-year contender to ago people hardly knew where they Turkmenbashi’s volumes – the capital be crowned “shooting star of the were; now they go in,” remarked Larry also attracts other commodities, such as A year.” Admittedly, the Central Asian Coyne, CEO of Coyne Airways, which healthcare products, flowers and baby country did not require a huge influx of pioneered many airfreight routes into chicks. Becker noted, “We concentrate lift, given its relatively low stature as an Central Asia. on Ashgabat because we want to offer a international air cargo market so far. While the Central Asian region is in broad spectrum of products, not just oil The start of regular flights by Cargolux the spotlight these days as the ideal and gas.” through Turkmenbashi, on the eastern way-station between Europe and Asia, Becker said he expects Lufthansa to shore of the Caspian Sea, at the end of the daily realities of doing business in move about 1,400 tonnes into Ashgabat June marked the second launch of in- the region have caused some misgiv- this year. However, Turkmenistan is a ternational widebody freighter flights to ings among many carriers. With difficult pure import market for the carrier. Ex- Turkmenistan this year, following the in- regulations, poor infrastructure, a weak- ports are small and leave the country by troduction of Lufthansa’s all-cargo flights ened oil and gas market, and increased truck, for the most part. from Frankfurt to Ashgabat in March. competition from rail, the bloom may Coyne noted that one appeal for Cargolux’s 747 freighters now touch down already be fading for this region as an air freighter operators in Turkmenistan lies in Turkmenbashi four times a week – cargo center. in low kerosene prices, although they twice each eastbound from Luxembourg For instance, Lufthansa, which has are also lower in Baku, the better-estab- and westbound from Hong Kong. a weekly flight to Turkmenistan, using lished Azerbaijani air hub on the other A spokesperson for the airline listed a 777-200F en route to Hong Kong, is side of the Caspian. Turkmenistan’s huge natural resources, eagerly awaiting a new airport for the More challenging than the infrastruc- related investments and an “interesting capital city of Ashgabat, scheduled to ture can be the rules for operators. In market” as reasons for the new service. open in 2016. Christian Becker, Lufthan- 2013 the authorities loosened traffic re- Lower oil prices don’t necessarily help sa’s regional director for Russia and the strictions, but this was compensated by investment in the region, but Car- Commonwealth of Independent States, a steep rise in offloading charges levied golux’s volumes into Central Asia have said he is looking forward to the new on aircraft. If carriers brought in haz- remained stable, she reported. “Fur- cargo terminal, as the current facilities ardous materials, the charge doubled, thermore, the geographic location of and available handling equipment are which famously produced a levy of Turkmenbashi is advantageous for our limited. US$86,000 for an An-124 that was flights going to or coming from South- Lufthansa had opted for Ashgabat, carrying cars and ended up stuck in east Asia,” she added. rather than Turkmenbashi, as its hub. Ashgabat for a week in the ensuing dis- pute. “The joke is: They don’t offload. There is no equipment,” one industry These are small markets. Fifteen years ago people hardly executive said privately. Those who look elsewhere in the knew where they were; now they go in. Central Asian region are finding similar —Larry Coyne, CEO, Coyne Airways Continued on page 14 12 SEPTEMBER 2015 ACW MIA Air Cargo world 6 Dec 2013.pdf 2014/1/27 5:47:44 PM

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THE BEST GATEWAY FOR CARGO IN AND OUT MAINLAND CHINA Since opening in 1996, Macau International Airport has grown by increasing parking stands and scaling-up our logistics facilities, doubling our annual cargo throughput, until in 2006 we handled 220,000 tonnes of cargo. Our robust e ciency and zero-loss record enable us to handle all kinds of cargo, from vintage wines to Formula One cars, leading us to win the ‘Best Emerging Airport – Asia’ Award and ‘AirCargo Excellence Award’ ve times. With no taris, a free port, highly competitive rates and Macau’s close economic partnership with China, makes us your airport of choice. Take o today! AsiaNews Continued from page 12 Coyne regards the imposition of problems in nearby countries, as red these customs standards as a road- tape stymies ambitions to move cargo block to broader flows through the beyond the designated gateways or Central Asian republic. “I cannot see build up regional flows. The complexi- Kazakhstan develop as a hub until ties are overwhelming, commented Luf- these restrictions are removed,” thansa’s Becker, adding that road condi- he commented. Photo: ©AeroIcarus/Flickr tions pose another challenge for road Meanwhile, competition is creeping By far, the biggest question in Central Asia feeder service activities. in from an unlikely source: railfreight. air cago today is “What will happen if Lufthansa has a weekly freighter to Operators in the region are watching sanctions are eased in Iran?” Above, an Iran Air aircraft. Tashkent, capital of neighboring Uzbeki- the evolution of DB Schenker and DHL stan. Like the Ashgabat flight, it contin- rail services from China into Kazakhstan “The China export business is down, ues east, where it turns into a DHL flight and further west. For his part, Becker so a lot of aircraft owners have spare back to Europe. And, like Turkmenistan, said he sees opportunities for rail-air capacity, and lower fuel costs have Uzbekistan is a pure import market for activities, saying that rail should boost brought back some 747-400s,” he said. Lufthansa, albeit a growing one. overall cargo demand in Kazakhstan. “Now you have a lot of capacity chasing But Coyne was less sanguine about the little freight. Some get 12 to 15 tonnes Kazahkhstan, on the other hand, new Silk Road 2.0. “This is going to im- on a 747, which does not make any provides both import and export op- pact badly on the air cargo business,” he sense at all.” Moreover, the region has portunities for the carrier, which serves predicted. been hit by the drop in oil price, which Almaty and Astana with freighter has led to the postponement of energy flights. While Almaty’s market has been The most functional hub for the projects and weakened demand for air- relatively stagnant, Astana is growing, Central Asian region has been Tbilisi, freight. Becker reported. But transit activities in as the Georgian government has been Kazakhstan also face stiffening red tape. quite liberal in granting traffic rights to Where this market is headed is dif- The customs union between Russia, international carriers. However, Georgia ficult to predict, especially with one Kazakhstan and Belarus has curbed the has become a victim of its own suc- huge factor looming on the horizon. flexibility previously shown by Kazakh cess. According to Coyne, as many as “The big question in the region is customs, due to pressure from Moscow nine widebody freighters a week pass Iran,” Coyne added. “If that opens up, to adopt the Russian customs codex, through Tbilisi now, which he said is far it should be huge.” one operator observed. too much for this market.

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14 SEPTEMBER 2015 ACW AsiaNews Australian forwarders expect more business from ChAFTA A busy day at the Port of Melbourne. The Famous Pacific Shipping Group the agreement is in force, more than 85 (FPS), a sea- and airfreight network percent of Australian goods will be duty- covering the Australian states of Victo- free, increasing to 93 percent in four ria, New South Wales, South Australia years, and eventually 95 percent. Mean- and Tasmania, said it is gearing up for while, Australia’s tariffs on 80 percent of an expected boom in freight traffic to imports from China will be removed im- and from China and Australia. In June mediately, if the agreement commences; the governments of Australia and China the removal of remaining tariffs will hap- signed the China-Australia Free Trade pen in stages, with full removal in four “We are currently consulting with im- Agreement (ChAFTA), which would re- years. porters in order to determine if it’s in move most of the trade tariffs between “Our biggest trade lane is China, and their best interests to apply for tariff the two nations. since the announcement of the signing concessions now – a process which can The ChAFTA treaty has been in talks of the agreement we have been inundat- be costly and take considerable time since 2005, and now the Australian Joint ed with enquiries from both importers – or wait until [ChAFTA] is fully imple- Standing Committee must review the and exporters about how the agreement mented.” agreement and report back to Parlia- will benefit them,” said Karen Marsh, China is already Australia’s larg- ment, which will consider if it needs customs manager for FPS. “With the est trading partner and its top export amending. Once these talks are com- removal of customs tariffs, goods will be market for agricultural produce. The pleted, the Australian government is cheaper for both countries, and this can new ChAFTA agreement is expected to expected to ratify the trade deal. When only result in a healthy increase in ship- encourage trade and investment, and both countries are satisfied with the ments between Australia and China.” improve market access. Although China agreement, ChAFTA should take effect Until the trade deal takes effect – pos- is the world’s second-largest economy, it 30 days later. sibly later this year – Marsh said she is currently has few free trade agreements Presently, China levies tariffs on most advising her clients about whether or with developed countries, so ChAFTA imports from Australia, such as beef, not their products will qualify for the is likely to provide Australian business milk and cream. Only around 8 percent removal of the tariffs under the agree- with an advantage over international of these imports are duty-free. When ment, based on the origin of the goods. competitors. –Linda Ball

ACW SEPTEMBER 2015 15 Around the world

The mainstay of Hawaiian’s inter-island AMERICASservice is the carrier’s Boeing 717 fleet. ATR freighters will soon offer a main-deck complement to this belly capacity.

Hawaiian gives inter-island cargo ‘Ohana treatment By Linda Ball Photo: ©Daniel Betts/Flickr iving on the most isolated island United States, the other islands in the destinations in the continental U.S., chain on the planet, separated by state or from international connec- as well as its international destina- Lnearly 2,400 miles from the near- tions. The lion’s share of the perish- tions. Hawaiian currently flies to New est dry land, Hawaiians have a special ables goes to local supermarkets, but York, Seattle, Portland, San Francisco, relationship with air cargo. “Being some also goes to the large, luxury Oakland, Los Angeles, San Diego, San an island state, we do have to rely on hotels and resorts of the islands. That Jose, Phoenix and Las Vegas in the the mainland,” said Brad Matheny, the said, imports from abroad could be U.S., and to Australia, New Zealand, director of operations for Hawaiian anything, given the state’s isolation, Korea, Japan, China, America Samoa, Airlines Cargo. Indeed, the 1.4 million Matheny said. Hawaii imports elec- and Tahiti. people in the archipelago depend on tronics from Asia and “whatever the Hawaiian is just beginning to offer airfreight for much of what cannot be need is” from everywhere else. cargo service to Asia, so the carrier produced or grown on the islands. The ATR 72 can carry about 8.2 doesn’t have a firm grasp on what With population growth in the tonnes of cargo and accommodate five types of cargo will be carried to for- Hawaiian Islands projected to grow 88 x 108-inch pallets or up to seven eign markets, but Matheny said that steadily through 2040, demand will LD3 containers, as well as skidded car- for now the carrier is focusing on also expand for inter-island cargo ship- go. “This new business will help fortify supporting Hawaii’s farmers and ments, prompting Hawaiian Airlines our belly market,” said Matheny, add- businesses. Cargo to look inward, as well as out- ing that express services for smaller The inter-island flights will be branded ward. Last month, the airline added shipments will still be available on ‘Ohana (meaning “family” in Hawai- three ATR 72 turboprop freighters to Hawaiian’s 160 daily short-haul flights ian), an extension of the current its fleet in order to expand its inter- throughout the day, using belly space ‘Ohana interisland passenger flights. island cargo delivery capacity. Airline on 717 aircraft. The livery of the ATR 72 aircraft will Contract Maintenance & Equipment The new inter-island freighter ser- feature the same kapa patterns cre- will own the planes, and Empire Air- vice will begin in the first half of 2016, ated by Hilo-based artist Sig Zane and lines, which already operates several with flights between Honolulu Inter- his son Kuha‘o for the ‘Ohana passen- ATR passenger aircraft for Hawaiian, national Airport and Kona, Kahului, ger operation. No schedules have been will operate the service. Lihu’e and Hilo. Matheny said the new set yet, but the new inter-island flights Matheny said 80 percent of inter- aircraft and new service will allow will connect with the international and island cargo traffic consists of per- Hawaiian to make seamless onward domestic routes Hawaiian operates. ishables, whether from the mainland connections to the carrier’s many “This [service] is something we’ve been looking at because our customers have been asking about skidded freight. We’re really excited about [O]ur customers have been asking about skidded freight. boosting the state economy and local farmers,” Matheny said. And, as an added incentive, Customers will also We’re really excited about boosting the state economy be able to accumulate double miles for each mile of cargo shipped. These and local farmers. miles can then be converted for pas- —Brad Matheny, director of operations for Hawaiian Airlines Cargo senger travel. ACW

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NOTE: PUSHED HEADLINE AND BODY COPY DOWN INTO LIVE AREA; PUSHED DELTA LOGO AND UP INTO LIVE AREA. URL NUDGED DOWN 4x PER DELTA. AmericasNews UPS chases Coyote Logistics AirNet, Kalitta Charters pair up UPS has confirmed that it plans to ac- strong market positions among food- Kalitta Charters, LLC, has acquired quire Coyote Logistics from private equity and-beverage and consumer-goods operational assets of U.S.-based char- firm Warburg Pincus for US$1.8 billion. customers, as well as paper, packaging, ter service firm AirNet, and will pro- Chicago-based Coyote is a non-asset- industrial and retail segments. Follow- vide financial and operational backing based truckload freight brokerage coming the acquisition and integration of for the company. pany, which markets itself as a tech-savvy Access America Transport to its net- Based primarily in Columbus and firm with a young staff. The 17th largest work last year, Coyote added flatbed St. Louis, AirNet provides scheduled 3PL in the United States, Coyote reported service segments, such as heavy equip- and on-demand cargo charter ser- annual revenues of $2.1 billion in 2014. ment and construction. vices, avionic installations and aircraft As this issue went to press, closing of The addition of Coyote to UPS maintenance. AirNet has a fleet of the deal was expected quickly, perhaps would give the latter a foothold in Beechcraft Barons and Bombardier as soon as early September, subject to the freight brokerage business, which Learjets. the usual conditions and regulatory ap- grew 20 percent overall last year, ac- AirNet also offers specialized ser- provals. UPS said the transaction will cording to Nasdaq. The 3PL sector is vices for transporting nuclear mate- be financed with cash and through ex- expected to reach almost $200 billion rials for radiopharmaceutical uses. isting and new debt. The acquisition will in overall sales revenue by 2018, ac- The company is one of a few carriers be added to UPS’s earnings in 2016. cording to research firm Armstrong & granted special permits from the U.S. Coyote arranges shipments with Associates. Department of Transportation and trucking companies, which the com- This has been quite the year for Transport Canada to provide the high- pany said number more than 35,000 in mergers and acquisitions in the logis- est level of radiopharmaceutical cargo its network. Coyote employees, along tics sector. FedEx is getting closer to charter service. with their systems and culture, will be accomplishing its $4.8 billion bid for Kalitta, owned and operated by supported by UPS. Coyote CEO Jeff TNT Express, and U.S.-based XPO Doug Kalitta, provides executive Silver will continue to lead Coyote as a Logistics is in the process of acquiring charters, air ambulance service, and UPS subsidiary. the larger French logistics firm Nor- air cargo service, and is also a Depart- ment of Defense-approved air carrier. Coyote has seen very rapid growth bert Dentressangle. –Linda Ball since it was founded in 2007. It enjoys –Linda Ball I am Peace of Mind

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Can it really be as easy as ABC? By Roger Turney he Russians certainly have their cigarette pack, if one were available at Dnepr has agreed to take up a couple own way of doing things. Volga- the non fumeur event. of 747-8F white tails Boeing currently Dnepr Group’s apparent intent to Yes, it was genuine, although Boe- has parked-up. T order twenty 747-8Fs on behalf of ing was characteristically coy about It should be noted that ABC is, by no AirBridgeCargo Airlines caught most the details. While other orders pre- means, new to the 747-8F, already op- by surprise. Equally so was the follow- sented by Boeing at the show spoke erating six of the type, taking its first up news of the carrier’s intent to set-up of “announced orders” and “intents to delivery in 2012. It also has a current a U.K. affiliate for its line-haul carrier. purchase,” the Volga-Dnepr deal was fleet of eight 747-400Fs, which it has Which of the two moves is the more described as a “Memorandum of Un- said would be phased out as the newer profound and far-reaching remains derstanding to further Volga-Dnepr’s capacity arrives. But if ABC makes to be seen. The first question, asked fleet expansion.” good on its full commitment to all 20 of the freighters order was, “Is it for The vague wording spoke of a mix 747-8Fs, what will it do with all the ex- real?” News of the order was jointly of direct purchases and leases over tra capacity? released by Boeing and Volga-Dnepr at a seven-year time frame, but did not That question has been answered, the back-end of the last Paris Air Show specify any actual make-up of firm in part at least, although it was never in June. Seasoned observers noted that orders, options and leases, or, for that officially announced by Volga-Dnepr. the order had all the hallmarks of be- matter, a planned delivery schedule. It The carrier has set up a U.K.-based ing hastily drawn-up on the back of a could be that, within the deal, Volga- company called Cargo Logic Manage- Lufthansa, Swiss go (almost) all in with new pricing As forwarders continue to clamor Alexis von Hoensbroech, Lufthansa lines’ control, such as fuel, currency for more simplified and transparent Cargo Board member, product and sales, rates, airport charges and fees,” he “all-in” cargo price structures, Swiss described the new rate system as explained. “The airfreight surcharge WorldCargo and Lufthansa Cargo “uncomplicated” and will be more will be adjusted whenever one of have come up with an unusual an- adaptable to future market changes. “We these external cost factors changes swer to the volatility of external cost have listened to our customers,” he said. significantly and thus will display factors that are out of their control. “The net rate will be considerably more necessary price adjustments in a Effective Oct. 25, both airlines will important, and we will be able to sig- transparent way.” switch to a new pricing model, nificantly reduce special processes, To accommodate customer re- consisting of a net rate, plus an “air- such as negative rates, with the lower quests for price stability for long- freight surcharge,” which will replace airfreight surcharge. That cuts down term contracts, it will be possible in the separate surcharges currently in on complexity and makes us faster.” the future to fix the overall price for place for fuel and security. Oliver Evans, chief cargo officer for the entire term of some contracts, The new surcharge will be “much Swiss, said the new structure will be but it will still be subject to a “risk lower” than the total amount of the even more transparent than an all-in add-on,” the carriers said. For legal current surcharges, the airlines said. rate, which the carrier had reviewed reasons, the current surcharge struc- Also, the net rate will be “re-aligned” extensively before coming up with ture will remain in place only in those – read: raised – so that overall prices the new system. “The new airfreight countries where pricing is subject to of transportation will remain at surcharge reflects the volatility of government regulation, for example current levels. external cost factors beyond the air- Japan and Hong Kong. –Linda Ball

20 SEPTEMBER 2015 ACW 21

ACW 11.08.15 14:14

SEPTEMBER 2015 CW A News Europe

In Asia, Vietnam has been added to added to has been In Asia, Vietnam way in a rela- ABC has come a long flights with two weekly the schedule, Almost unnoticed, out of Hanoi. - been adding frequen ABC has also being it sees as cies to destinations by freighter capacity, underserved Finland and such as Helsinki in Basel in Switzerland. of time. It obvi- tively short period has many new ously believes it still places to go. transports – with the express portfolio from Lufthansa Cargo. lufthansa-cargo.com/express more: out Find Our express promise. express Our urgent most priority your top for speed and Top Express

- its network and strength Expanding Photo: ©Alex Kwanten tion that the huge 747-8F order isn’t as isn’t huge 747-8F order tion that the it seems at first glance.strange as its Mos- routes over ening its existing hub, the carriercow Sheremetyavo and service to Los Angeles has added to existing U.S.increased frequencies Dallas/Fort Worth. hubs in Chicago and to start trans- ABC also said it wants Hong Kong andPacific flights out of Atlanta the likelyShanghai soon, with the U.S. touchdown point in - 150811-34_lhc15004_Express_114x187_20150811.indd 1 ABC, certainly, has been no slouch ABC, certainly, Volga-Dnepr president and founder, president and founder, Volga-Dnepr All of which points to the fact that Documents released by the U.K. CAA “ABC-UK,” or whatever moniker by ways World Cargo, was also based at ways World Stansted Airport. This proximity could Cargo ex- prove useful if BA World tends its concept of leasing main-deck capacity as per its recently expanded block-space agreement with Qatar Airways Cargo, a fact not lost on ABC, which has indicated that it is in the market to take on such contracts. in muscling in on global trade routes with its current freighter network, de- pressed though the market has been. the airline In the first half of this year, reported uplift of 218,000 tonnes – a 17 percent increase over the same pe- and perhaps an indica- riod last year, ment, located at London Stanstedment, located local AOC has applied for a Airport and The soleof AirBridgeCargo. on behalf off- of this new British shareholder subsid- of the group’s shoot is another Volga-Dnepr iaries, Amsterdam-based This is the same vehicle Logistics BV. ill-fated 49 percentused to acquire the in Aprilstake in Air Cargo Germany became insol- 2012, before that carrier vent just a year later. named as directorAlexey Isaikin, was is a strong Isaikin of the new company. well-con- Anglophile and is extremely having previouslynected in the U.K., President Vladi- accompanied Russian mir Putin on a state visit. On Isaikin’s most recent personal visit to London he was awarded a Fellowship to the prestigious Royal Aeronautical Society, its highest accolade. will likely expect that any Volga-Dnepr application for a U.K. AOC would be viewed upon favorably by its civil aviation authority. show that ABC applied in early June for licenses to operate both scheduled and charter services to and from the U.K. The move is similar to that made by Cargolux to acquire an Italian AOC, with which it established Cargolux Ita- lia, albeit with strong resistance from unions. the Luxembourg carrier’s which the British entity will be known, seemingly will have a ready-made source of staffers. The former operation of Global Supply Systems, which operated the now-defunct fleet of three 747-8Fs on behalf of British Air Around the worldAFRICA MIDDLE EAST & Fresh vegetables await export at Jomo Kenyatta International Airport.

Siginon Aviation calls for direct Kenya-U.S. flights By Randy Woods Photo: ©Mike Rosenberg/Flickr ollowing President Obama’s historic said that Kenya should follow the ex- compromises on-time performance, state visit to Kenya in July for the ample of other African countries such as there may be connection delays or F Global Entrepreneurship Summit 2015, as Senegal and South Africa, which missed connections. Multiple handling a cargo carrier from Nairobi took the have secured several nonstop flights to in the hubs exposes the cargo to mis- opportunity to make the case for establish- the U.S. He suggested a Nairobi flight handling which, at times, may reduce ing more direct cargo flights between to either New York City or Washington, or degrade the cargo quality. The cases the United States and Kenya in order to D.C., as being the most feasible. of pilferage are also prone in the con- foster trade between the two nations and “Currently, we’re exporting cargo to nections.” attract more global airfreight business. the U.S. through various connecting To address security concerns U.S. Jared Oswago, the divisional man- flights,” Oswago said. “The multiple regulators may have, Oswago said ager at Kenya-based Siginon Aviation, connections make the trip longer and Siginon Aviation recently launched a

22 SEPTEMBER 2015 ACW new US$10 million air cargo terminal at Nairobi’s Jomo Kenyatta International Qatar Airways Cargo starts 747F charter service Airport, which meets strict global security standards, including cargo screen- Qatar Airways Cargo added a The pressurized cargo cabin of the ing machines on the airport apron and 747-400BDSF heavy cargo aircraft freighter will allow Qatar to carry rigorous safety and security training for to its fleet last month, completing livestock and horses. The cargo hold its staff. The Siginon Aviation terminal its first chartered-service flight from can also maintain a temperature range also placed physical barriers, such as Doha to Hong Kong. The aircraft will from 4° to 30°C for sensitive perish- manned gates and 24/7 CCTV surveil- be used for the charter transport of ables. Other likely cargo will include lance, as well as access control to en- oversized freight, using both belly heavy machinery, oversized equip- sure the warehouses remain “sterile,” freight and maindeck cargo capacity, ment, oil and gas industry machinery, and restricts access to only authorized with 39 ULD positions. and humanitarian aid. –Linda Ball individuals and vehicles. The terminal also has a small cool- chain perishables handling center, comprised of an express corridor that maintains perishable cargo in the speci- fied cool temperatures up to a few minutes prior to loading on to the aircraft. “This is a unique service we offer as most of our competitors would expose the cargo to the unfriendly temperatures while awaiting loading onto the aircraft,” Oswago added. Kenya, he said, mostly imports medical and engineering equipment, industrial products, aircraft engines and chemicals from the U.S., while exports include textiles and perishables, such as flowers and vegetables. ACW Air Djibouti takes flight Just three months after announc- ing the re-boot of Air Djibouti, the carrier relaunched on Aug. 10, carrying six tonnes of cargo from Djibouti to Hargeisa, in a region of Somalia now called Somaliland. Djibouti is located geographically on one of the world’s busiest shipping lanes – at the confluence of the Red Sea and the Gulf of Aden, not far from the Suez Canal – and at the air crossroads for cargo traffic between Asia and Europe. The government of Djibouti wants the country to become a regional hub for forwarding goods arriving at its seaport by air. According to The Telegraph, U.K.- based Cardiff Aviation said Air Djibouti had asked for its support in developing key markets, which Djibouti said were based on the needs of land- locked neighbors, government aid programs and the support of military installations. Djibouti is home to several military bases, including those of the United States, France and Japan. —Linda Ball

ACW SEPTEMBER 2015 23 People&Places PPLThird Parties Airlines Maintenance & MRO Poonam Datta is the Georges Biwer has Bill Huntley has been appointed se- new chief commercial been appointed vice nior manager of regulatory compliance officer at Global Ex- president, EMEA for and safety at PEMCO World Air Ser- press Services. Previ- AirBridgeCargo vices. Huntley has 30 years of avia- ously she was CCO of Airlines. Biwer has tion experience. Most recently he was a regional port and lo- more than 24 years of director of corporate safety for AAR gistics provider. Datta experience in the air Corp., where he oversaw compliance of was also the founder cargo industry. Biwer their MRO businesses. and CEO of Interna- Poonam Datta will focus on grow- Georges Biwer tional Management Consultants, a ing ABC’s scheduled cargo operations leading Dubai-based full-service man- inside and beyond Europe, with ABC Manufacturers agement consultancy. In the past, she going online in the Middle East and the Kurt Kraft has been named vice has worked with Maersk Group, where African continent. president, freighter conversion and modification services at Boeing. He she successfully rose through the Jason Holt has been will have responsibility for all modifi- ranks to become one of the company’s named executive vice cation programs, including avionics, youngest managing directors. president of flight op- flight decks, interiors and freighter Milton French has been promoted erations at Cargolux. conversions. Kraft previously served as to the post of vice president, Africa, at Previously, Holt was director of 787 engineering at Boeing Air Menzies International, follow- head of operational South Carolina and succeeds Dan da ing the retirement of Mike Todd. Pre- strategy, business Silva, who was recently named vice viously, French was general manager, planning and change president of strategic regulatory policy South Africa, at AMI. French has spent Jason Holt at easyJet. Holt will for Boeing Capital Corp. He will report more than 30 years in the freight in- also be on the carrier’s executive com- to Mike Fleming, vice president of dustry, holding a variety of senior posts mittee. Chief pilot Claude Zehren fleet and 787 services for Boeing Com- for leading forwarders. In his new post, will become deputy head of flight op- mercial Aviation Services. French will be responsible for AMI’s erations and will report to Holt. Holt operations in Johannesburg, Cape replaces Marcel Funk, who resigned Yves Le Minor has Town and Durban. earlier this year. been appointed Euro- pean business develop- Alan Williams, previously director at Paul Chase has been ment manager for the Dartford, has become national sales named the new CEO of Tyvek Air Cargo Cover and marketing director for U.K. freight Southern Air Inc. In at DuPont Protec- forwarder Davies Turner & Co., re- his new role, Chase will tion Technologies. sponsible for developing the group’s lo- oversee all aspects of Le Minor will work gistics, overland and ocean freight op- the cargo airline’s busi- alongside his DuPont Yves Le Minor erations. Replacing Williams as director ness, including safety, counterparts in the at Dartford is Edward Stephenson. flight operations, Paul Chase Americas and Asia to identify new A graduate of DT’s apprenticeship systems and techni- business partners in the pharma and program, he was previously one of the cal operations, fleet network, finance, perishables logistics sectors. Tyvek Air company’s business systems analysts maintenance and human resources. Cargo Covers are used for the protec- and has also worked at Davies Turner Since joining Southern Air in 2007, tion of temperature-sensitive products. Air Cargo’s Heathrow HQ. Addition- Chase has held positions of increasing aly, following the retirement of Mike responsibility, including manager of Dean at Davies Turner Birmingham, operations planning, director of sys- Organizations Emily Stephenson becomes direc- tems operations, and most recently, as Nina Brooks has been appointed tor responsible for the Midlands hub. vice president of systems operations. head of security for Airports Council Finally, the board of Davies Turner Air Fred deLeeuw, who has served as International (ACI) World, based Cargo (DTAC) has promoted James Southern Air’s President, will transition in Montreal, Canada. She will oversee Wheatley to sales director. to Worldwide Air Logistics Group, all ACI World activities in relation to Michael Evans has been named pres- Inc., as chief financial officer. security, working with the Internation- ident of Alibaba Group. Formerly of Titus Diu has been appointed general al Civil Aviation Organization (ICAO) Goldman Sachs, Evans has been an manager for China for Cathay Pacific. and the International Air Transport independent director of Alibaba since Diu has worked in cargo as chief oper- Association (IATA) on joint security September 2014, and will now focus ating officer of Air China Cargo since initiatives. Brooks started her aviation on the company’s international growth 2007, first for Cathay, before moving career at Virgin Atlantic Airways, fol- strategies. Evans will continue as a on to its joint-venture cargo airline. lowed by eight years at IATA, where management member of the board and He will also oversee Dragonair’s China she was responsible for many aviation report to Alibaba’s CEO Daniel Zhang. operations. security projects. She also teaches Aviation Security at McGill University.

24 SEPTEMBER 2015 ACW The 21st Annual

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VISIT US AT: CargoFactsSymposium.com FREIGHT 50 THE DEFINITIVE RANKING OF THE WORLD’S TOP 50 CARGO CARRIERS By Randy Woods

26 SEPTEMBER 2015 ACW operating profit, rising more than 17 rier continues to add capacity. ABC’s The data are in. The cargo percent,” the company said. “In the In- Executive President Denis Ilin said its ternational segment, we expect to see main strategy in the face of tough com- divisions have spoken. positive momentum continue in the petition from the European and Middle second half of the year, with operating East carriers is to focus on the niche As expected, there was little drama profits at the high end of our six to 12 markets that others rarely seek, such over which carriers would top this percent range.” as oversize cargo that needs his fleet of year’s Freight 50 list of top global air Other top performers included Hong nose-loading 747-8Fs. cargo carriers. For the second straight Kong-based Cathay Pacific, which “I always try to avoid complaining year, Dubai-based Emirates reigned as rose to the No. 3 position in the inter- about competition,” he said. “Yes, the the champions of scheduled interna- national category, with 1.50 million Mideast carriers are big. You can be tional airfreight tonnage, with 2.29 mil- tonnes carried; Japan’s All Nippon jealous, you can be sorry, but it’s part lion tonnes carried on the main decks Airways, which saw its traffic rise by of today’s world.” of its freighters and in the belly holds 13.7 percent in 2014 to 1.21 million Another rising airline with feet in of its vast passenger fleet (see chart, tonnes, earning it a spot at No. 8 on both the Europe and Asian markets is page 28). For domestic and combined the combined total list; and Qatar Air- Turkish Airlines Cargo. At No. 20 on tonnage, the one-two punch of integra- ways, which increased its total handle the overall list, with 630,000 tonnes tors Federal Express and United Par- by 15.6 percent to 1.16 million tonnes carried in 2014, Turkish posted a 17.1 cel Service took the top spots again. in the No. 10 overall spot. percent rise over the previous year. Fedex, which recently ordered 50 new “The success of Turkish Cargo is an freighters from Boeing, carried 7.13 Fast risers evolutionary phenomenon as opposed million tonnes of total freight in 2014, to a revolutionary event,” states Halit including 5.15 million tonnes of domes- There wasn’t much movement Anlatan, vice president, sales and mar- tic freight, while UPS delivered a total among the dozen or so carriers that keting, for Turkish Cargo. He described of 4.24 million tonnes last year and carry more than a million tonnes of the carrier’s policy as one of “managed 2.81 million tonnes for the domestic cargo per year, but things got a lot growth.” Turkish Airlines, he said, “has market. more interesting in the mid-size operations, where some companies have methodically added new freighters to While there is no single source been quietly sneaking up the ranks. its network as supplementary capac- for accurate cargo traffic data in the ity to ensure our continued ability to world, the World Air Transport Statis- feed our expanding belly network. In tics (WATS) report, published by the essence, we strive for a balance in the International Air Transport Association In essence, we strive entire network as opposed to focusing (IATA), is likely the closest the indus- purely on the trunk lanes served by try has. The main sources for the 59th for a balance in the our freighters.” annual publication of the WATS guide In recent months, Turkish has added were reports compiled by IATA and freighter routes to Chicago, Lahore in the U.S. Department of Transportation, entire network as opposed Pakistan,n an Bahrain, unseasonably and Dakar, hot 90°FSenegal. day as well as statistics provided by more By the inend Seattle, of 2016, pallets Anlatan sat preparedadded, the than 200 airlines, including low-cost to focusing purely on carrier insideplans tothe increase comfortable, its total chilly cargo air carriers. volumeof to Alaska 1 million Air tonnes Cargo’s per recently year. Despite all the above caveats, and Growingexpanded at an even cool-chain faster facilityclip was given that the top 50 airlines carry the trunk lanes served Hong Kongat SeaTac Airlines, Airport. which A breached 737-400 well over 90 percent of total cargo the 300,000-tonnes-per-yearfreighter had arrived earlier mark traffic, the charts provide a reasonably by our freighters... Ofromfor the Anchorage first time toin unload2014, and its bounty:now accurate picture of the air cargo scene freshlyholds the caught second-largest Pacific salmon market straight share at the end of 2014. Using this report as — Halit Anlatan, vice president, sales fromin Hong Alaska’s Kong waters. International Crews hadAirport quickly a springboard, we at Air Cargo World and marketing, Turkish Cargo sent(HKIA). the freshAlthough fish iton grew its way from via a reefersmall- took a deeper dive into the data to truckser base or than connecting Turkish flightsor ABC, to trafficvarious spot trends – such as how the more One of these companies, Russia- seafoodfor HK Airlines, distributors No. around39 on the the Freight country. successful carriers were using based AirBridgeCargo (ABC), has been 50 list, rose by an impressive 38.1 per- innovative strategies to develop so successful at gaining market share Now the floor was readied with cent, compared to the previous year, interline partnerships, share freighter it can hardly be called sneaking any- neatly arranged pallets full of fresh and shows no signs of stopping. space and maximize the utilization of more. ABC, the scheduled-service arm produce, herbs and other grocer- their lift capacity. of the Volga-Dnepr Group, boosted ies The from airline the Lower received 48 for its processing fifth A330 its cargo traffic to 517,000 tonnes last andfreighter immediate earlier storage this year, in the and cool uses- At the top of the heap year, an increase over the previous ers.additional These spaceshipments on other would airlines’ then be loadedflights toon high-demanda morning 737-400 destinations, combi, UPS grew operating profits and year of 21.4 percent. Since then, the informallyas needed, called said the the carrier’s daily “Milk cargo Run” expanded margins across all three pace has not slowed, as ABC reported flight,director, heading Zhang back Jianjun. to Alaska. Annual The cargo segments: U.S. Domestic Package, In- cargo volume up 17 percent to 218,000 flightrevenues, is named he added, for its haveshort increased hops into ternational Package, and Supply Chain tonnes for the first half of 2015. While smallby 29 townspercent, along while the totalway, capacitysuch as and Freight. “The International seg- its 20-freighter order of 747-8Fs at Ketchikan,rose by 25 percent.Wrangell, Petersburg, Ju- ment set a new high in second quarter the Paris Air Show raised eyebrows in July, it’s not hard to see why the car- Continued on page 2028 ACW SEPTEMBER 2015 27 * TOP 50 CARGO CARRIERS BY TONNAGE Continued from page 27 +/- Facing turbulence LAST YEAR’S TONNAGE PREVIOUS % CHANGE FROM At the other end of the scale are the

RANK AIRLINE RANK (000s) YEAR (000s) PREVIOUS YEAR names of the carriers that struggled 1 FEDERAL EXPRESS 1 7,127 47 0.7 last year, many of which continue to face hardship this year. For instance, 2 UNITED PARCEL SERVICE** 2 4,240 154 3.8 Thai Airways, awash in US$5.9 billion 3 EMIRATES 3 2,288 142 6.6 in debt, was forced to sell some of its 4 KOREAN AIR 4 1,519 70 4.8 non-core assets to cover some of the 5 CATHAY PACIFIC AIRWAYS 5 1,498 160 12.0 seven straight quarters of operating 6 CHINA SOUTHERN AIRLINES 8 1,333 155 13.1 losses. As part of its restructuring 7 CHINA AIRLINES 6 1,296 99 8.3 efforts, the Bangkok-based carrier 8 ALL NIPPON AIRWAYS 11 1,205 145 13.7 ended operations of its two 9 AIR CHINA 9 1,171 76 6.9 747-400BCFs in March. 10 QATAR AIRWAYS 13 1,158 156 15.6 Air France-KLM, which had been 11 CHINA EASTERN AIRLINES 7 1,157 -36 -3.0 the perennial top international cargo 12 SINGAPORE AIRLINES 10 1,078 -14 -1.3 carrier until 2013, had a rough 2014, 13 LUFTHANSA 12 974 -29 -2.9 with volumes falling 5.1 percent over the 12-month period to 539,000 14 ASIANA AIRLINES 14 868 -10 -1.1 tonnes. This year, the cargo problems 15 ETIHAD AIRWAYS** 16 854 128 17.6 intensified through the first half of 16 LAN AIRLINES 15 770 -15 -1.9 2015, as freight capacity fell 5.7 per- 17 CARGOLUX 20 728 98 15.6 cent y-o-y and cumulative operating 18 EVA AIR 17 684 -30 -4.2 losses reached €141 million – an in- 19 BRITISH AIRWAYS 18 643 -27 -4.0 crease of €44 million, compared 20 TURKISH AIRLINES 23 630 92 17.1 to 2014. 21 JAPAN AIRLINES 21 625 25 4.2 The effects of Brazil’s sagging 22 THAI AIRWAYS INTERNATIONAL 19 603 -48 -7.4 economy were seen in a 4.9 percent 23 AIR FRANCE 22 539 -29 -5.1 drop in tonnage for TAM Airlines to 24 AIRBRIDGECARGO AIRLINES 27 517 91 21.4 292,000 tonnes carried last year, as 25 DELTA AIR LINES 24 513 -13 -2.5 well as a 36.6 percent plunge in 26 POLAR AIR CARGO 37 513 205 66.6 domestic freight carried by Azul Brazilian Airlines. 27 KLM 26 458 9 2.0 28 UNITED AIRLINES 30 431 36 9.1 Other names of carriers falling on 29 SAUDI ARABIAN AIRLINES 25 427 -27 -5.9 hard times included Saudi Arabian Airlines, which saw its combined 2014 30 NIPPON CARGO AIRLINES 33 413 51 14.1 cargo traffic fall 5.9 percent to 427,000 31 AMERICAN AIRLINES 28 412 11 2.7 tonnes per year, including a loss of 32 GARUDA INDONESIA 34 404 58 16.8 nearly a quarter of its domestic traffic. 33 MALAYSIA AIRLINES 29 403 5 1.3 Also, Virgin Atlantic saw a 1.9 per- 34 ABX AIR† 31 375 3 0.8 cent, y-o-y, drop in traffic, to 206,000 35 QANTAS AIRWAYS** 32 359 -10 -2.7 tonnes, placing it near the bottom of 36 DHL AIR (NL) 350 (NL) (NL) the list, at No. 49. 37 HAINAN AIRLINES** 36 328 17 5.5 38 TNT AIRWAYS 35 301 -11 -3.5 Revenge of the freighter 39 HONG KONG AIRLINES 45 301 83 38.1 As seen in the examples earlier, 40 TAM AIRLINES 38 292 -15 -4.9 freighters have been enjoying a bit of a comeback this year. For the last few 41 MARTINAIR 39 285 -5 -1.7 years, much trade press ink has been 42 AIR CANADA 41 278 22 8.6 spilled about finding ways to free 43 SWISS 42 257 10 4.0 carriers from the shackles of having to 44 SHENZHEN AIRLINES 40 256 -9 -3.4 fill main-deck freighters. But perhaps 45 AIR HONG KONG 43 253 9 3.7 this attitude of freighter-shunning 46 SICHUAN AIRLINES** 44 221 1 0.5 is changing. Take Cargolux, for in- 47 JET AIRWAYS 47 209 3 1.5 stance. Now that the revolving doors 48 AEROLOGIC** 48 208 4 2.0 in the executive offices in Luxembourg 49 VIRGIN ATLANTIC AIRWAYS 46 206 -4 -1.9 have stopped spinning and the perva- sive labor union problems have eased, 50 AIR INDIA (NL) 202 (NL) (NL) the all-freighter carrier is beginning to *As of year end 2014; **IATA estimate; †U.S. Department of Transportation Source: IATA see some solid results.

28 SEPTEMBER 2015 ACW Freight50

Last year, thanks in part to the U.S. Three of these freighters haul West Coast port slowdowns, freight cargo for DHL - but DHL’s volume traffic for Cargolux rose by 15.6 per- can be difficult to calculate as cent to reach 728,000 tonnes, mov- a result of its lease and ing it up three spots to No. 17 on the interline agreements. Freight 50 list. The secret, said Niek van der Weide, Cargolux’s executive vice president, sales and marketing, is to always keep ‘em flying. “We try to maximize the number of hours we are in the sky. There’s a strict curfew for flights leaving Luxembourg, so we always make sure we have no flights just sitting around overnight. Plus, we also tend to fly long-haul routes.” the service to Mumbai to seek lucrative ing a shared, twice-weekly A300-600F pharmaceutical business. service between London-Luton and After adopting its unusual Luxem- Helsinki. bourg-Zhengzhou “dual-hub” strat- Even IAG Cargo, the airline group egy, Cargolux is rolling the dice again perhaps most famous for eschewing So how has this freighter-sharing by adding service to Turkmenbashi, the ownership of freighters, has been strategy been working so far? Last in Turkmenistan, as a stop on its employing main-deck space, albeit in month, IAG Cargo extended its deal flight to China. The newly developed a more collaborative way. A year and a with Qatar “indefinitely,” and expand- Central Asian hub, Van der Wiede half ago, IAG Cargo shed its freighter ed the original agreement to nine said, will help Cargolux increase fleet and focused instead on sharing routes that now include Mainland flights to Kuwait and other parts of limited freighter capacity with other China, Pakistan and Kuwait, among the Middle East. carriers, such as Qatar Airways, with other destinations. IAG Cargo also which it signed a deal to purchase reported an 8.8 percent increase in Cargolux also opened a flight to space on Qatar’s Hong Kong-to- commercial revenue for the second Chennai, India, as part of a recently London-Stansted 777F route. IAG also quarter to €259 million, versus the signed agreement with Oman Air. recently entered into a block space same period last year. Eventually, Cargolux plans to expand agreement with Finnair Cargo, operat- Continued on page 30 We’re fast. We care.

45 minutes

Maastricht Airport’s cargo product gives your supply chain a competitive edge in Europe. To find out how, please contact Mr. Wiel Dohmen, Managing Director at +31(0)43 358 99 99 or by email: [email protected].

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ACW SEPTEMBER 2015 29 TOP 50 CARGO AIRLINES OR AIRLINE GROUPS, Continued from page 29 FREIGHT TONNE KILOMETERS “It’s a matter of matching the right aircraft with the right sales force,” IAG Cargo CEO, Steve Gunning, told Air Cargo CARGO TRAFFIC World. “With our asset-light strategy, our aim is to have a

RANK AIRLINE (OR AIRLINE GROUP) (FTKS 000) more flexible arrangement that allows us to grow or shrink 1 FEDERAL EXPRESS 16,072 our space, depending on the market.” 2 EMIRATES 11,326 Slicing and dicing the numbers 3 UPS AIRLINES 10,923 4 LUFTHANSA 10,897 The alert reader may note that there was no mention 5 CATHAY PACIFIC GROUP 10,044 made of IAG Cargo in the Freight 50 list on page 28. That was no oversight, for as far as IATA is concerned, IAG does 6 AIR FRANCE-KLM 9,817 not exist. IATA reports its data based on individual Air Op- 7 KOREAN AIR 8,254 erator Certificates, regardless of whether the airlines hold- 8 DHL EXPRESS 7,850 ings those certificates are part of a single parent company, 9 CARGOLUX 6,364 or part of an affiliated group. So, in the case of IAG, for ex- 10 SINGAPORE AIRLINES 6,151 ample, there are only individual listings for British Airways 11 QATAR AIRWAYS 6,036 and Iberia (which didn’t crack the top 50). 12 ATLAS AIR 5,916 Another problem with creating these rankings is that with 13 CHINA AIRLINES 5,416 so many carriers interlining with each other and leasing 14 IAG GROUP 5,410 space to express companies and charter brokers, confusion 15 AIR CHINA 5,194 grows as to which companies wield the most power in the 16 CHINA SOUTHERN AIRLINES 5,055 industry. The most glaring of these inconsistencies concerns 17 CHINA EASTERN AIRLINES 4,601 DHL Express. A look at the chart on page 28 will show Polar Air Cargo carrying a respectable 513,000 tonnes of airfreight 18 ETIHAD AIRWAYS 4,304 in 2014, placing Polar right in the middle of the Freight 50 19 LATAM GROUP 4,169 list, at No. 26. But Polar is 49 percent owned by DHL Ex- 20 EVA AIR 4,065 press, and almost all of its cargo is DHL traffic. Meanwhile, 21 ALL NIPPON AIRWAYS 4,031 the word “DHL” appears on the chart only in the form of 22 ASIANA AIRLINES 4,000 DHL Air, far below at No. 36. 23 UNITED AIRLINES 3,630 To help address these problems, we have included the 24 DELTA AIR LINES 3,441 chart at left. Through the assistance of Air Cargo World’s 25 AMERICAN AIRLINES 3,395 sister publication, Cargo Facts, we looked at the IATA data 26 AIRBRIDGECARGO 3,248 list through a different lens, measuring performance in 27 NIPPON CARGO AIRLINES 2,757 freight tonne kilometers (FTKs), grouping some airlines by 28 TURKISH AIRLINES 2,727 the parent companies to which they belong, and doing our 29 THAI AIRWAYS 2,555 best to show DHL in a more realistic way. 30 JAPAN AIRLINES 2,228 Regarding carrier groups, we show: 31 QANTAS AIRWAYS 2,103 • Air France, KLM and Martinair under “Air France-KLM.” 32 MALAYSIA AIRLINES 2,016 • Cathay and Dragonair under “Cathay Pacific Group.” 33 KALITTA AIR 1,933 • British Airways and Iberia under “IAG Group.” 34 AIR CANADA 1,684 35 SAUDI ARABIAN AIRLINES 1,629 • Lufthansa, Swiss, Austrian and Germanwings under 36 VIRGIN ATLANTIC 1,502 “Lufthansa.” 37 TNT AIRWAYS 1,423 • LAN and TAM, as “LATAM Group.” 38 SOUTH AFRICAN AIRWAYS 1,069 But even on this adjusted list, there are many airlines 39 ETHIOPIAN AIRLINES 999 still missing, as not all carriers report their year-end data 40 AIR NEW ZEALAND 997 to IATA. Most of these are probably too small to make the 41 HAINAN AIRLINES 772 Freight 50, but others, such as China’s Yangtze River Ex- 42 JET AIRWAYS 748 press, would certainly make the list, either on their own, or, as in YRE’s case, by moving its parent company, Hainan 43 FINNAIR 699 Group, much higher in the rankings. Other cargo carriers 44 GARUDA INDONESIA 697 missing from the list include Turkey-based MNG Airlines, 45 AIR INDIA 694 China’s SF Express, Azerbaijan’s Silk Way, Sweden-based 46 AEROFLOT RUSSIAN AIRLINES 682 West Atlantic, and Ireland-based ASL group. 47 SAS SCANDINAVIAN AIRLINES 605 Regarding DHL, we have combined the traffic flown by 48 HONG KONG AIRLINES 567 DHL Air, DHL International, ABX Air, AeroLogic, Air Hong 49 EL AL ISRAEL AIRLINES 499 Kong, Polar Air Cargo and Southern Air, and show it in the 50 ALITALIA 480 chart as “DHL Express.” While this puts DHL Express in *Source: IATA, US DOT, Cargo Facts the upper echelon of the Freight 50, where it belongs, it is

30 SEPTEMBER 2015 ACW PERCENTAGE CHANGE IN ANNUAL VOLUME Freight50 (TOP 10 FASTEST GROWING AND CONTRACTING CARRIERS, COMBINED INT’L & DOMESTIC) still far short of its actual airfreight Here are the cargo carriers with the top 10 largest percentage changes – total, said David Harris, editor of positive or negative – for airfreight tonnage carried in 2014, compared to 2013. Cargo Facts. 80% %

% Sunnier skies ahead? 70 +66.6 Even for the top performers on the Freight 50 list, this has been a rela- 60% tively flat summer. IAG’s Gunning said % he is preparing for this situation of 50 % overcapacity and weakening yields to POLAR AIR CARGO

% +38.1 be the “new normal” for the industry. 40 “We have to accept that these are the 30% market conditions that will prevail.” AIRBRIDGECARGO AIRLINES AIRBRIDGECARGO

% %

But others said there is reason to ETIHAD AIRWAYS* TURKISH AIRLINES 20 GARUDA INDONESIA QATAR AIRWAYS QATAR CARGOLUX % NIPPON CARGO AIRLINES % % ALL NIPPON AIRWAYS

believe a decent peak season is around % % % % +38.1

% AIRLINES HONG KONG

the corner – probably not as big as +17.6 10 +17.1 +16.8 +15.6 +15.6 +14.1 2014’s, but still noticeable. +13.7 LUFTHANSA AIRLINES CHINA EASTERN SHENZHEN AIRLINES TNT AIRWAYS BRITISH AIRWAYS AIR EVA AIRLINES TAM AIR FRANCE SAUDI ARABIAN AIRLINES INTERNATIONAL THAI AIRWAYS “We are cautiously optimistic for 0% % % % % % % % %

the rest of 2015,” said Anlatan with % %

% -2.9 -3.0 -3.4 -3.5 -4.0 -10 -4.2 -4.9 Turkish Cargo. “We’re planning to -5.1 -5.9 -7.4

keep going with our stable growth this % change year volume over Year -20% year,” but added that some global and Source: IATA regional issues have the potential to disrupt economic stability in the region. Chinese manufacturing ramps up for the end-of-year re- At UPS, Stuart Lund, vice president, global forwarding, tail season in both Europe and North America.” air capacity and procurement, said capacity is expected At Cargolux, Van der Wiede said he was “optimistic for to tighten in the period from mid-September through the rest of the year,” with an expected rise in demand to late November, as summertime passenger travel ebbs the Middle East. “We’ve had more charters than we’ve ever and belly capacity comes off the market. Also, he said, done before, with extra flights to the U.S. – that’s the “increase in demand for freighter capacity will occur as cherry on top.” ACW

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ACW SEPTEMBER 2015 31 it flew through the air, the buzzing drone looked more like a gigantic insect, hang- ing in the summer breeze, As than the future of airfreight. It made a beeline for its appointed destination, and then suddenly halted, hovering over a designated spot. A tether slowly extended, lowering the craft’s vital cargo – 24 medical pack- RISE OF THE ages – gently to the ground. This seemingly mundane display of already proven drone technology was actually historic. The flight was the first U.S. government-approved use of an unmanned aerial vehicle (UAV) delivering cargo. It took place in July in a remote area of Virginia’s Appalachian Mountains. The drone, manufactured by Australian startup Flirtey, traveled about two miles, making three trips back and forth from Lonesome Pine Airport near the town of Wise, to a temporary medical clinic, which was set up at the Wise County Fairgrounds. The event was an annual free clinic for folks who live in the isolated area. Drones are already common sights in many parts of the world, perform- ing valuable tasks, such as monitoring crops, inspecting bridges and surveying damage resulting from natural disas- ters. Today’s drone technology allows a high level of autonomy. Using GPS sig- nals for navigation and wi-fi for communication, some models require human operators to guide the vehicle manually by remote radio control, using on-board cameras that can act as digital eyes over several miles, depending on battery life. Other, more sophisticated vehicles can follow entirely pre-programmed takeoff, flight, delivery and landing routines without human intervention. However, due to current U.S. Federal Aviation Administration (FAA) regulations, drones in the United States must be operated by a human operator, who cannot let the vehicle leave the “line of sight,” meaning drones cannot yet be allowed to travel beyond the operator’s field of vision. The Flirtey test in Virginia CAN CHANGE THE was a one-time exception to this rule, which allowed the company to test the UAV’s capabilities to operate beyond FACE OF AIR LOGISTICS? this line of sight. Flirtey’s drone, a small hexacopter weighing about 10 pounds, is one example of how drones may someday be By Linda Ball put to use as delivery vehicles in hard- to-reach places — provided that regu-

32 SEPTEMBER 2015 ACW RiseoftheMachines lations change to allow their use. Drone ers, especially in a city as congested the supply chain delivery system as delivery advocates, such as Amazon as Shanghai. He began by building de- soon as possible. “That’s why we part- and DHL, have said it is necessary to livery drones in his dorm room. Then, nered with Matternet and Swiss Post.” be able to operate drones beyond line- as he grew the company, he moved his The Federal Office of Civil Aviation of-sight for them to reach their full po- headquarters to the U.S. in Switzerland has been extremely tential as delivery vehicles. The FAA is Sweeny said Flirtey’s experiments supportive of the Matternet system, working on guidelines for operation of to date are a step in the direction of Guerin said, but he acknowledged that drones, so they can be flown remotely, making drone delivery of retail goods the project still has many more legal many miles away from the operator, routine and inevitable. “We are already hurdles to clear. And, of course, the but the agency said it could take an- conducting drone delivery trials in group working on this project needs other year to finalize the regulations. New Zealand, and it’s only a matter approvals from civil aviation authori- Will the industry ever reach the of time until your readers see Flirteys ties all over Europe, not just Switzer- point where forwarders can add UAVs making deliveries near them,” he said. land. There will be another series of to their arsenal of airfreight options for Flirtey, of course, is not alone in this test flights with the Matternet One their customers? quest. In April, at the CNS Conference drone this year. “There are certainly many different in Orlando, Andreas Raptopoulos, the interesting developments with drones CEO of UAV manufacturer Matternet, Safety concerns and regulations and we are keeping a close eye on this. announced that his company would be Some of the issues that will be We have a team that deals with future working with Swiss WorldCargo and raised during Matternet’s shakedown topics and innovation,” said Sandro postal logistics firm Swiss Post on a period will be about safety — always a Hofer, head of corporate media rela- project to test its latest drone aircraft, number-one priority with aviation proj- tions for logistics firm Panalpina. “For the “Matternet One,” as an automated ects that must share the skies with air- the delivery of some cargo, the use cargo delivery system for small liners. For instance, earlier this year a of self-driving cars may be the better express packages. Lufthansa aircraft with 108 passengers option. The transport with drones can Tests have now been conducted us- on board had a near-miss with a drone make sense, however. We see oppor- ing the Matternet One in California as it approached Warsaw’s Chopin tunities, particularly when you have and Switzerland. Alain Guerin, head of Airport. After the incident, which was to deliver an urgent spare part to a re- marketing with Swiss WorldCargo, said first reported by the Aviation Herald, mote place – for example, to an oil rig. the tests in Switzerland involved the the pilots wondered aloud if the air Here, a production shut-down quickly drone navigating around mountains traffic controllers were taking care of gets very expensive.” and over lakes. The Matternet One their airspace. Then, in July, a drone CEVA’s vice president of global com- is programmed to land only on pre- flew mere meters from an A320 near munications, Kay Hart, acknowledged registered landing pads that Matternet London Heathrow. All told, there that drones are an interesting and will supply to customers. By using this were seven incidents between May evolving topic, but that regulatory is- “home-base” concept, the UAV won’t 2014 and March 2015 in the U.K. alone sues need to be resolved. “The reality get lost and land somewhere else be- involving drones. is that this issue is one of economics,” cause it is programmed to go only from The European Union is working on its she said. “Drones will replace ground base-to-base. own set of rules for drones to prevent vehicles where both economies of During these tests, the UAV carried these events, but the first step needs scale and time compression offer cost- a real payload, but it was small and not to be a single European sky for manned benefits – which improve the overall commercial. “It carried a box about or unmanned aviation, according to supply chain for transportation service the size of a dictionary,” Guerin said. Joost van Doesburg, airfreight policy providers and their customers.” The tests have gone well, but he said manager for the European Shipper’s Hart said that because there are so the manufacturer needs to work on Council. Currently each European many unknown factors that will battery life before the drone can en- country has its own aviation authority, determine the flight of drones, it’s still ter commercial use. He envisions the and the skies above Europe are a jigsaw too early to speculate on what CEVA’s drone carrying pharmaceuticals and puzzle of nationally managed jurisdic- specific interests or intentions will be, other valuable items for first- and last- tions. Van Doesburg said there are but that the company would embrace mile delivery, and said the use of these many international issues to be resolved any opportunity that would benefit small drones should be integrated into Continued on page 34 its customers. Aerial entrepreneurs Matt Sweeny, who founded Flirtey, Drones will replace ground vehicles where both first had the idea for a delivery drone when he was studying abroad on a economies of scale and time compression offer scholarship in China. He envisioned a technology that could allow more environmentally friendly, fast and ef- cost-benefits... ficient delivery for everyday consum- — Kay Hart, vice president of global communications, CEVA Logistics

ACW SEPTEMBER 2015 33 RiseoftheMachines Continued from page 33 A spokesperson for DHL, which test- Germany and the island of Juist in en route to a single European sky, in- ed its own “Parcelcopter” last fall for the North Sea, a distance of about 12 cluding the concerns from various na- pharmaceutical delivery, said the com- kilometers, from September to tional labor unions, but the Council is pany would appreciate an open dia- December 2014. The drone, weighing working toward drafting uniform rules. logue about joint standards to regulate about 11 pounds, can reach a speed of Van Doesburg said the European testing and operation of civil drones. up to 65 kilometers per hour at an Commission wants to facilitate this Such a discussion would include talks altitude of 50 meters above the sea. new unmanned delivery industry and of safety, privacy and data protection, The drone made 40 flights to and from encourage innovation, but it will have ahead of new applications of drones, the island, carrying urgently needed to come up with basic rules. For ex- including the delivery of urgently pharmaceuticals in its waterproof ample, should a UAV be allowed to fly needed goods, such as medicine, to payload compartment. DHL said it near an airport, sporting event or any- remote areas. doesn’t have any current, specific where crowds of people congregate? DHL tested its Parcelcopter in an plans for using the Parcelcopters in experiment that ran between mainland normal delivery options for now, but that the test demonstrated the potential value of using drones. Amazon and the FAA As the various European governments continue to discuss the regulations around UAV use, Van Doesburg at the European Shipper’s Council said the use of drone aircraft is divided into four distinct phases. Currently, he said, THE SHAPE OF AIRSPACE TO COME? aviation has moved well beyond Phase In July, at the NASA-AUVSI (Association where the drones are, it should be sent to I – using small drones for inspections, for Unmanned Vehicle Systems Inter- a central computer system, to which any agriculture and photography, for ex- national) Unmanned Traffic Convention company, including Amazon, would have ample – and entered Phase II, which is 2015, at NASA’s Ames Research Center, access. In addition to Amazon, Google, the military use of drones. The next, several drone systems operators presented Verizon and nine other companies signed and much trickier parts are Phase III, their vision of what the skies would look agreements to work with NASA to partici- the delivery of goods; and Phase IV, like in a world full of approved cargo drones, pate in this program. the transportation of passengers in un- and how these vehicles would be designed Dave Vos, head of Google(x)’s “Project manned aircraft. to avoid collisions and other mishaps. Wing” drone delivery concept, told at- It’s no surprise that e-commerce giant, Amazon, for instance, has proposed di- tendees at a recent conference that the Amazon, is eager to move into Phase viding airspace into finer layers so drones unmanned aircraft industry should take III as soon as possible. The Seattle-based can fly without human interface in their advantage of using cell phones to allow us- retailer has been vocal about its desire own slice of the air. Gur Kimchi, vice presi- ers of drones to file flight plans online and dent of Amazon Prime Air, laid out the have them approved or altered almost im- to use drones for package delivery to company’s vision to create an airspace be- mediately. The flight plan would be sent by its estimated 270 million tech-savvy tween 200 and 400 feet above the ground cell phone to an airspace service provider, customers, and has lobbied the FAA for high-speed drones to operate out of which would analyze whether or not there to drop the line-of-sight requirement, line-of-sight, while smaller, slower drones was a conflict with other vehicles, and then among other rules. In December 2013, would be restricted to flying below 200 either approve the flight or suggest an al- Amazon CEO Jeff Bezos announced feet. A 100-foot airspace between 400 and ternative. on the U.S. television news program 500 feet would be a “no-fly-zone,” which He said all small UAVs would carry an “60 Minutes” that his company was would serve as a buffer between drones inexpensive Automatic Dependent Sur- working on a drone delivery program it and conventional aircraft. veillance-Broadcast (ADS-B) transceiver would call Amazon Prime Air. A database – to be shared with all drone – which Google plans to bring to the market One of the drones Amazon has de- users – would be created, Kimchi contin- – to show its location. Of course, manned veloped weighs less than 55 pounds ued, which would steer UAV’s away from aircraft would always have the right-of-way; and can carry up to a 5-pound payload buildings, towers and high ground. Long- with the ADS-B devices, the drones would – and as much as 90 percent of the range drones would be required to file a know where aircraft are, too, and get out of items Amazon sells weigh less than 5 flight plan, and be connected to the inter- the way. pounds. (See sidebar at left.) net, so they could be tracked and receive Knowing the identity of each aircraft in warnings if they are in danger. airspace is vital to making the system work, The FAA has loosened up some- To avoid midair collisions, the drones Vos said, so when a flight plan is filed, the what. Les Dorr, a spokesman for the must be able to communicate with each airspace service provider would be able to agency, said that, beginning in Sep- other. Also, drones that can fly long dis- identify who owns the aircraft. Air traffic tember 2014, the FAA started grant- tances must be equipped with sensors that controllers wouldn’t need to be notified of ing exemptions for drones under 55 can detect birds and other hazards. Kimchi the small UAV’s flight plan except in the pounds, and has issued more than said as long as there are data showing case of emergency. –Linda Ball 1,000 exemptions since then for uses Continued on page 40

34 SEPTEMBER 2015 ACW Air Cargo World 2015 AD.qxp_Layout 1 8/7/15 11:57 AM Page 1

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Miami Airport Convention Center – Miami, Florida U.S.A. www.aircargoamericas.com • www.seacargoamericas.com he cavernous factory might be the size of several football pitches and hold more than 90,000 workers, but it’s hardly unique. Each year, T the plant produces high-end run- ning shoes for Adidas, Asics and Nike for export around to the world. It is just one of dozens of plants that make more than a million pairs of shoes every month. Just another day inside the awe-in- spiring economic engine that is China, right? Wrong. The factory is located not in China but just outside Ho Chi Minh City in SOUTHEAST Vietnam, China’s upstart neighbor to the south. The company that owns the plant is actually a Taiwanese firm ASIAN E-COMMERCE IS NOT JUST called Pou Chen Group, which is the largest shoe manufacturer in the world. This factory, and many others ABOUT CHINA ANYMORE that produce garments for Western consumers, have recently moved to countries like Vietnam because China has become too rich to find the kind of cheap labor it takes to make affordable clothing. This case of mistaken manufacturing identity can be found in several other nations across Southeast Asia, including Indonesia, Malaysia, Thai- land, the Philippines and others. The e-commerce boom kicked off by China has spilled over its borders and ignited a new online logistics land rush. The movement is starting to have conse- quences. According to a report from the Footwear Distributors and Retailers of America (FDRA), although China increased footwear production volume to 470 million pairs of shoes from 300 By Randy Woods million in 2014, its market share fell by 3 percent. Meanwhile, Vietnam has seen a double-digit rise in market share for two consecutive years, partially due to labor shortages in China. “E-commerce is undoubtedly adding to demand for airfreight, as it has opened up markets across the globe and is one of the fastest growing segments. We expect e-commerce to continue growing strongly in the years to come,” said Morten Damgaard, CEO for the South East Asia region at forwarder Agility Global Integrated Logistics. Although freight forwarders are traditionally not set up to provide e-commerce solutions, they are playing a part in this online revolution, he said, by providing services such as warehousing and

36 SEPTEMBER 2015 ACW SouthbySoutheast contract logistics services in certain Agility’s Damgaard says interest in there will still be demand from these areas. Vietnam is only going to increase for sectors.” While China led the e-commerce the next few years, at least. “Vietnam There is also growing domestic de- charge in Asia – both as a manufactur- has also seen strong growth in its air- mand in Malaysia, a strong manufac- ing center to support Western demand freight market as high-tech manufacturing base in Thailand, and robust and also in the growth of domestic turers and retailers have expanded into economic growth in Philippines, demand – the torch is being carried the country to take advantage of its Damgaard added, all of which “position by Vietnam and other Southeast Asian relatively low-cost production base.” the region well for continued growth.” countries, often at China’s expense. Next in line Samsung may help make the case Perhaps it’s time for China, and the that Indonesia could be the next most rest of the logistics industry, to sit up While Vietnam is getting attention promising market. The world’s largest and take notice. for its manufacturing potential, many cell-phone maker opened a plant there other countries in the area are show- earlier this year capable of producing Leading the charge ing just as much promise, not just as 1.5 million phones per month, using While there are many Southeast sources of inexpensive labor, but as a labor that is less than half as expensive Asian countries emerging as serious lo- consumer block. as it is currently in China, and a large gistics markets, Vietnam is at the tip of consumer base that is more interested the spear. Forty years after American in Samsung’s lower-cost phone – a troops left the war-torn country to its Vietnam, in particular, shrinking demographic in China, with Communist government, Vietnam has its growing middle class. been reborn as one of the fastest-rising has experienced steady If Samsung builds more factories economic powers in the region, ironi- in Indonesia, there will be a greater cally attracting another foreign “inva- economic growth due to demand to ship the most sought-after sion” in the form of manufacturers new releases via air. “As the world and logistics firms. Companies such as clamors for new technology, electronic Converse, Gap, H&M, Lacoste, Reebok, its strategic location and products, such as televisions, laptops, and Zara all have factories there, pro- tablets and smartphones, continue to ducing $20.8 billion in garments and growing population. drive demand in the global air freight $10.2 billion in footwear, boosting the market,” said Castle, of C.H. Robinson. country’s annual export growth by 15.8 —Matt Castle, director of global “Although more expensive than other percent in 2014. airfreight services, C.H. Robinson methods of shipment, airfreight is by And that’s just the apparel industry. far the fastest, and potentially the most Vietnam is not only one of Apple’s fast- “We are seeing growth across the reliable, method of transportation.” est-growing consumer markets in the region, with specifically the Philip- world, it is also becoming one of the pines and Indonesia looking stronger,” The infrastructure barrier Damgaard said. “Based on its demo- leading manufacturing centers. Other But regardless of how much demand high-tech companies like LG, Microsoft graphics, Indonesia has a lot of potential for airfreight growth due to its there is within any particular emerg- and Samsung Electronics have in- ing market, the lack of infrastructure vested billions of dollars in Vietnamese fast-growing middle class consumers and large domestic market.” tends to get in the way. The draw of factories to build smartphones, tablets manufacturing in this region is strong, and various appliances. Agility has a well-established pres- but many logistics firms also must face U.S.-based forwarder and trucking ence in Southeast Asia that has been the reality that much of Southeast firm C.H. Robinson recently opened built up over the years, starting with a Asia, with inadequate roads, rail lines, an office in Ho Chi Minh City – the Singapore operation in 1975. In recent ports and airstrips, is still woefully city through which more than 70 per- years, the forwarder has opened its unprepared for the interest it is now cent of the country’s cargo volume is doors to much more restrictive re- receiving from the global forwarding shipped – to be near the center of the gimes, such as Myanmar, in response and shipping community. action in the region. “Several compa- in demand from customers. “In the last In some ways, Indonesia, with its nies are beginning to explore manu- few years, we have expanded contract vast population and relatively high facturing options throughout South- logistics and domestic distribution wealth, is leading the infrastructure east Asian countries as a result of the capabilities in Indonesia and Malaysia race. However, there are still hardships region’s increasingly affordable and and are constantly assessing the need to overcome because the country is high-quality labor options,” said Matt for additional facilities,” he said. spread out among so many outlying Castle, director of global airfreight Indonesia, he added, “stands out as islands, making it hard to maintain services at C.H. Robinson. “Vietnam, a ‘next-tier’ emerging country,” in flexibility during demand spikes. in particular, has experienced steady terms of its technology, pharma/life sci- “From world-class facilities in economic growth due to its strategic ences, retail, and perishables sectors, Singapore to the challenges faced in location and growing population. Viet- as well as its “huge consumer base” of Cambodia or Indonesia, there is a nam’s total volumes, along the U.S. 250 million people. “While some [Indo- great difference,” Damgaard said. trans-Pacific eastbound trade lane, are nesian] companies have moved parts “The infrastructure is in good shape of their supply chain to ocean freight, second only to China.” Continued on page 38

ACW SEPTEMBER 2015 37 SouthbySoutheast Continued from page 37 in both their local markets and large a dozen Pacific Rim countries and, at with Singapore and Malaysia offering regional markets.” press time, was still being hotly de- best-in-class capabilities, followed, in bated. “There is potential growth op- no particular order, by Thailand, Indo- Global connections portunity in exporting frozen seafood, nesia, Philippines, and Vietnam, while The proximity to hubs such as Hong as well as fresh fruits and vegetables, countries such as Cambodia and Myan- Kong, Taipei, Seoul and Tokyo, how- from Vietnam,” Castle said. mar present challenges.” ever, give the region another selling According to Castle, the TPP, if rati- Another challenge, he said, is the point: access to global markets. fied, would have a huge positive effect complex regulatory environment in Speaking in defense of Hong Kong’s on the Vietnamese economy, since it Southeast Asia. Countries have vastly third runway plan, DHL Express Asia would slash major trade protections different customs regulations, making Pacific CEO Jerry Hsu described how against its exports to the U.S., one of it especially challenging for cross-bor- the express carrier felt the need to ex- Vietnam’s largest trading partners. An- der transportation. “Countries in the pand its air network across Southeast nual seafood shipments to the U.S. are region have made progress in develop- Asia to boost their connectivity and worth US$1.5 billion, or 22 percent of ing the infrastructure required, such as shorten transit times in response to Vietnam’s total seafood exports. ports, airports and roads, but progress the surge in e-commerce traffic. “We “In Southeast Asia, declining air still needs to be made in the ‘softer’ have launched a new intra-Asia flight freight yields and growing competition side of logistics, with bureaucracy still that connects Bangkok, Hanoi and are some of the challenges that freight causing delays and problems.” Hong Kong five times per week and forwarders face,” Damgaard said. “De- Castle calls the infrastructure prob- increased the frequency of a service spite the growth opportunities in Asia, lem “one of the biggest challenges for connecting Penang, Ho Chi Minh City the air cargo industry continues to face freight forwarding in the region today. and Hong Kong from five to six days a tough operating environment due to With the exception of Singapore, most per week, thereby increasing capacity the global economic uncertainty and of the countries within this region on the route by 20 percent,” he said. reduced demand for airfreight.” are only considered secondary ports Vietnamese exports to the United Changing trade patterns are also and feed into a larger hub port, such States are some of the key issues being causing challenges in Southeast as Hong Kong and Taipei. As a result, discussed in the proposed Trans-Pa- Asia, he added. “Where before, most countries such as Vietnam and Indone- cific Partnership (TPP), which would production was for export to the sia are competing for carrier capacity remove trade barriers for more than developed markets, an increasing proportion is now staying within Asia. This means that forwarders also have to provide solutions at a [national] and regional level. Increasing levels of income and the rise of a consum- ing middle-class are driving domestic consumption, and forwarders need to overcome the challenges that come with domestic distribution in countries ASEAN TAKES ON THE BRICS such as Indonesia and the Philippines.” For many decades, the countries in the Association of Southeast Asian Nations (ASEAN) have taken a back seat to the five emerging economies known as the BRICS (Brazil, Russia, India, China Who’ll be next? and South Africa), as the economies in the latter group have skyrocketed to super-power status. In Just as trading patterns can change, logistics, however, the ASEANs are striking back, according to the latest “Emerging Markets Logis- so can labor patterns. Right now, tics Index,” a survey of the opinions of 1,000 supply chain execs, plus a data-driven ranking of 45 economies, released each year by Agility Logistics. Vietnam may seem like the world’s cheap labor capital, but forwarders Now in its sixth year, the rankings are based on each economy’s size, business conditions, infrastructure and other factors relevant to the freight forwarding industry. This year, seven of the would be wise to pay attention to what top 20 economies are located in Asia, and five of them are ASEAN member states. Here are some the workers say. At that very same Pou highlights about how they stacked up: Chen Group factory in Ho Chi Minh • While China is a perennial No. 1, Malaysia came in at No. 2 in “market connectivity,” meaning it City, a massive strike was held last has one of the best infrastructures and transport links among the emerging markets. spring – an action practically unheard • The Philippines rose by three spots over last year to reach No. 4, among countries with GDP of in the tightly controlled country – to below US$300 billion, thanks to an improved standing among supply chain executives surveyed. protest a possible change in plans. • Vietnam jumped two spots to No. 7 among countries with GDP under $300 billion, as strong The strike was resolved peacefully growth in its apparel and high-tech goods spurred higher exports and foreign direct investment. after six days and the workers were • For logistics and supply chain executives in the survey, Indonesia was the highest ranked South- reassured that a new law would not af- east Asian country as a major logistics market, at No. 4. fect their retirement payments. But if • The fastest-growing trade lanes linking emerging Southeast Asia and developed markets in labor unrest spreads to the other mega- 2014 were U.S.-Vietnam (up 42.7 percent by volume); and Cambodia-EU (up 41.9 percent) factories, another “It Country” may be for air cargo. needed to fuel the massive global logis- • Out of the top 10 potential investment markets cited by logistics executives, three are in South- tics engine. And there are only so many east Asia: Vietnam (No. 4), Indonesia (7) and Thailand (10). emerging countries left untapped. ACW

38 SEPTEMBER 2015 ACW

RiseoftheMachines Marketplace Continued from page 34 Van Doesburg pointed out that an such as surveying and commercial aircraft built to be capable of pres- AIR CARGO ATTORNEY photography in a “tightly controlled, surization is up to 30 percent heavier low-risk environment.” He said the than a similar-sized, unpressurized David Cohen, Esq. FAA Reform and Reauthorization Act aircraft, simply because they require of 2012 eliminated the requirement more metal to make them stronger. Over 30 Years of Experience in that an operator of a UAV had to be a With the weight savings of an unpres- Air Cargo & Transportation licensed pilot, if the intended use surized UAV comes a big drop in fuel 35 Park Ave, Suite 16J consumption, and since only about was commercial. He also said a sum- New York, NY 10016 mary exemption can be issued if 10 percent of cargo needs to fly in someone is proposing an operation pressurized aircraft, building unpres- Email:[email protected] similar to, and using the same kind surized drones makes considerable Phone: (212) 217-9527 • Fax: (212) 208-2408 of drone as, an operation that had re- sense. There are other advantages ceived exemption in the past. that come with lighter, unmanned ASSOCIATIONS freighters. David Cohen, Esq. The FAA is now working on final rules for commercial drones, which, Van Doesberg said from the begin- Dorr said, would be in place by the ning, unmanned freighters will be end of this year. About 4,500 public built with a focus on multi-modality. comments have been submitted, he He emphasized that a new, special said. But once the FAA has completed air cargo container would have to The Best Resource on the Road! the rules, there are other agencies, be designed to conform not only The AEMCA is a synergistic group, meaning that the effect of a with the aircraft but also with road, collection of like minds is greater than just one person. We can such as the Department of Transpor- make a difference as we unite for the good of the trucking and tation, that have to review them. He ocean and/or rail modes. But first, cartage industries. expects the process to be completed regulators have to begin updating current legislation. “It should fit in WHY JOIN? within a year. • Stay up on all the latest regulatory and legislative the European framework,” he added, Dorr said the agency will care- changes “but each country will have some au- fully evaluate Amazon’s suggestions. • Receive discounts on many services for your tonomy.” “We’ve accommodated Amazon’s company through the Affinity Program requests, and given them an experi- One example of a big drone is the • Be a part of the industry’s premier trade show mental airworthiness certificate to ATLAS, a blended wing/body design, and conference, AirCargo test a particular type of vehicle.” made from a composite material. • Great network opportunities But he added that Amazon (which The ATLAS, intended specifically did not respond to Air Cargo World for carrying cargo, was designed as The Air and Expedited Motor Carrier Association (AEMCA) a national trade organization that has represented the interests of for this article), the AUVSI, and the part of the aerospace engineering the Air and Expedited Freight Trucking Community for 50 years. AOPA “might have a different view.” bachelor’s curriculum at Delft Univer- sity of Technology. It is designed to To learn more or join the AEMCA visit When asked if the day is going to our website at acw.aemca.org. come when that hot new bestseller fly at very high altitudes, where the Have questions? Amazon is selling might be dropped lift-generating body helps to make it email [email protected] more efficient in terms of fuel con- or onto someone’s deck, Dorr said “it’s call 703.361.5208 changing every week.” He said the sumption and aerodynamics. agency’s number one concern is – There is much red tape to jump FREIGHT SOFTWARE you got it – safety. through before delivery of cargo by large drone is a reality. Van Doesburg Big cargo drones said not to expect a pilotless plane Let’s put aside the little guys flying with cargo in the next 10 years. dropping pharmaceuticals and He said he expects good things for books, for the moment, and look to- small drones, but added that tech- ward a brawnier future for the cargo nology companies will have to push drone. Van Doesburg, of the Euro- harder to make the larger, cargo-car- pean Shippers Council, said there rying UAVs a reality that can compete are prototypes being developed of with today’s piloted planes. drones capable of carrying 10 to 30 That first tether-drop of medical CONSULTING SERVICES tonnes of cargo. The goal of these cargo in Virginia was only the begin- programs is to develop a drone that ning. The possibilities for drones in could fly from China to Europe in 12 cargo delivery are wide open and hours with optimal fuel consump- largely untested. But for customers The Air Freight tion, and which could serve airports with limited road access, UAVs are Consultancy. that freighters or cargo-friendly already proving that there is plenty of Since 1978. widebody passenger aircraft don’t room for this niche to fly. serve now. ACW acmg.aero

40 SEPTEMBER 2015 ACW Events SEPTEMBER 1-3, 2015 SEPT. 29-OCT. 1, 2015 Air Cargo Handling Conference – 11th Annual Cargo Claims and Loss Bangkok, Thailand: The seventh annual Prevention Conference – Montreal, ACH conference will be held at the Shangri- Canada: This event also includes a ULD La Hotel, the first time this event has been regulatory forum, a cargo security and fa- held outside of Europe. Panel discussions, cilitation forum, a cargo XML workshop and workshops and focused presentations will a lithium battery workshop. For more infor- cover the most up-to-date developments mation and to register, visit ems.resrunner. in airport and cargo operations. For more com/iatacargo information, visit evaint.com/our-events/ air-cargo-handling-conference OCTOBER 6-9, 2015 inter airport Europe 2015 – Munich, SEPTEMBER 8-13, 2015 Germany: This event will be held at the FIATA World Congress – Taipei, Tai- Munich Trade Fair Center. A third hall has wan: The congress attracts a wide range been added for an expected 610 exhibitors of freight forwarders and logistics provid- from 42 countries. For more information, ers, with participants coming from more than 40 countries. Expect to see shippers, visit interairport.com/europe customs brokers, warehousing service OCTOBER 13-15, 2015 providers, logistics experts and more. For MRO Europe Conference and Exhibi- Organisers: Mack Brooks Exhibitions Mack Brooks Organisers: more information and registration, visit tion – London, U.K.: Discover the crucial fiata2015.org/Registration issues impacting the MRO industry today SEPTEMBER 9-10, 2015 and network with airlines, maintenance Fly Pharma – London, U.K.: Industry providers, OEMs, suppliers, and key re- experts will address the pharma supply gional players. For more information, visit Celebrating chain’s hot and cold topics in a lively and http://bit.ly/1LQQt6Y motivational manner. For more information, OCTOBER 13-16, 2015 visit flypharmaconference.com better airports 12th Annual Sino-International SEPTEMBER 23-24, 2015 Freight Forwarders Conference th inter airport Europe World Maintenance Symposium – – Qingdao, China: Open to all inde- 20 anniversary – Turnberry Isle, Miami, U.S.: This event pendent freight forwarders from around Excellence for the airport industry brings together IATA’s Maintenance Cost the globe and industry-related compa- Conference with the World Maintenance nies. Co-organized by the China Inter- Symposium for the first time. Innovative national Freight Forwarders and WCA. cost reduction and productivity improve- For more information and registration, ment solutions will be discussed. For more visit http://bit.ly/1dQBT1g information, visit iata.org/events/Pages/ maintenance-symposium.aspx OCTOBER 26-28, 2015 Cargo Facts Symposium - Miami, U.S.: SEPTEMBER 27-30, 2015 The Cargo Facts Symposium is where the 20th International Exhibition for Council of Supply Chain Manage- air cargo aviation community gathers to Airport Equipment, Technology, ment Professionals Conference – network and shape the future of the in- San Diego, U.S.: Over 95 educational Design & Services dustry. Presented by Air Cargo Manage- sessions, 15 continuing education units for SCPro certification holders, network- ment Group, Air Cargo World’s sister ing opportunities and exhibits. For more company, the symposium promises the information, visit: cscmp.org/annual- latest industry information and updates, 6 – 9 October 2015 conference/2015-registration the highest-quality presentations, and ac- Munich Trade Fair, Germany cessible and thought-provoking interactive discussions. For more information, visit http://cargofactssymposium.com www.interairport.com/europe Advertiser’s Index Aeroflot ...... 15 Asian Logistics & Maritime Conference ...... 11 Incheon Airport ...... 39 AEMCA ...... 40 American Airlines Cargo ...... 47 Inter Airport Europe ...... 40 ACMG ...... 40 American Expediting ...... 43 Lufthansa Cargo ...... 21 Aeroports de Paris ...... 31 Ark Systems/Waybill .com ...... 40 Macau International Airport . . . . . 13. Air & SeaCargo Americas ...... 35 Boeing ...... 2 Maastricht Aachen Airport ...... 29 Air Animal ...... 43 CargoFacts Symposium ...... 25 Precision Aircraft Solutions ...... 23 AirBridgeCargo ...... 22 Cargo Systems Inc ...... 43 Singapore Airlines Cargo ...... 9 Air Canada Cargo ...... 7 CH Robinson ...... 19 Swiss Cargo ...... 18 Air Charter Services ...... 48 David Cohen, Esq ...... 40 Transgroup Worldwide Logistics . . . . 42 Air Logistics Group ...... 14 Delta Cargo ...... 17 Turkish Cargo ...... 4 ALG Worldwide Logistics ...... 42 EVAS / VisionSafe ...... 43

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To place an ad in Marketplace, please email [email protected] ACW SEPTEMBER 2015 43 BottomLine Asia-Pacific Carrier Traffic June 2015 & YTD Total Freight Growth by Region, June 2015 & YTD International scheduled services, monthly and YTD, for Asia-Pacific Airlines. % GROWTH YoY in FTK

FTK FATK Freight Load REGION June 2015 YTD (mil.) (mil.) Factor Africa 6.7% 4.8%

y June 2014 5,374 8,141 66.0% Asia / Pacific -0.3% 5.4% hl June 2015 5,348 8,342 64.1% Europe 0.0% -0.6%

Mont YoY % Change -0.5% 2.5% -1.9 points Latin America -1.6% -6.9% Jan.-June 2014 30,636 47,598 64.4% Middle East 15.3% 14.0% Jan.-June 2015 32,121 49,939 64.3% North America -3.3% -0.4% YTD YoY % Change 4.8% 4.9% -0.1 points Industry 1.2% 3.5% Source: Association of Asia Pacific Airlines Source: IATA Source: IATA Source: U.S. Energy Information Administration The softening in air cargo markets extended into the month Airfreight volumes were up just 1.2 percent in June com- of June, AAPA said, with demand in FTKs declining slightly pared to June 2014, with three regions – Asia/Pacific, by 0.5 percent, compared to the same month last year. An- Latin America and North America – all showing y-o-y de- drew Herdman, AAPA’s director general said, “Air cargo declines. Growth for the first six months of 2015 has slowed mand grew by 4.8 percent during the first half of 2015, but to 3.5 percent. The lone bright spots were the Middle the pace of growth has moderated during recent months,” East, with a rise of 15.3 percenet, y-o-y, and Africa, with a since the U.S. West Coast ports slowdown backlogs cleared. 6.7 percent rise. “Airfreight volumes have slowed, which is He added that the outlook for air cargo markets is “uncer- consistent with declines in trade activity, mostly in emerg- tain, with signs of a slowdown in global trade.” ing markets,” IATA said.

125 $4.50 Average Rate s) 120 $4.00 Price Index (rebased May '12=100) 115 $3.50 110 $3.00 105 $2.50

Price Index 100 $2.00 Average Rate 95 $1.50 90 $1.00 85 $0.50

Jun 14 Jul 14 Aug 14 Sep 14 Oct 14 Nov 14 Dec 14 Jan 15 Feb 15 Mar 15 Apr 15 May 15 Jun 15 44 SEPTEMBER 2015 ACW BottomLine BottomLine Jet Fuel - Spot Price, YTD AEA: European Carrier Traffic U.S. Gulf Coast, Kerosene-Type (wholesale price) Monthly year-over-year percent change

$3.00 % 10 Overall Intra-Europe % $2.50 6 2% $2.00 -2%

$1.50 %

U.S. $ Per Gallon -6

$1.00 -10% 5 5 1/14 07/1408/1409/1410/141 12/1401/1502/1503/1504/1 05/1506/1507/1 07/14 08/14 09/14 10/14 11/14 12/14 01/15 02/15 03/15 04/15 05/15 06/15

Source: U.S. Energy Information Administration Source: Association of European Airlines The wholesale per-gallon price for U.S. Gulf Coast, kero- For the month of June 2015, the FTK figures didn’t sene-type jet fuel dropped another 18 cents from June to change much for long-haul and overall freight categories, July, reaching US$1.55. For the last two months, the price with overall FTKs rising slightly, by 0.3 percent over the has declined by 30 cents per gallon. The July figure is the previous June, and long-haul dipping just -0.1 percent, lowest price since January 2015, when the price plunged y-o-y. However, intra-Europe seems to be recovering, to $1.55 per gallon. with the fourth straight month of y-o-y gains, reaching 6.4 percent.

125 $4.50 Average Rate s) 120 $4.00 East-West Air Freight Price Index (June) Price Index (rebased May '12=100) Source: Drewry Sea & Air Shipper Insight Drewry’s East-West Air Freight Price Index fell by another 1.1 points 115 $3.50 in June to reach 88.7, the lowest level ever recorded since the index launched in May 2012. For much of the current period of decline, the eastbound trans-Pacific trade lane has “taken the brunt of pric- 110 $3.00 ing falls,” said Simon Heaney, Drewry’s senior manager, supply chain research. In June, however, all the main east-west lanes have been hit. Airfreight pricing, he added, will only weaken further over the next 105 $2.50 few months, as carriers release more passenger capacity, which will add more unwanted belly cargo capacity.

Price Index 100 $2.00 Average Rate 95 $1.50 90 $1.00 85 $0.50

Jun 14 Jul 14 Aug 14 Sep 14 Oct 14 Nov 14 Dec 14 Jan 15 Feb 15 Mar 15 Apr 15 May 15 Jun 15 ACW SEPTEMBER 2015 45 Forwarders’ Forum Tough lessons from the regulatory trenches by Brandon Fried ---Forwarders are some of the state courts against brokers on grounds that they were toughest business people you negligent in reviewing a carrier’s safety history before hiring will ever meet. They compete them to move a shipper’s load of cargo. in a global marketplace of more Forwarders hire truckers on a transactional basis, and the than 100,000 competitors, in drivers are not on our payrolls. So after vetting a carrier’s which the delivery of just one safety fitness beforehand through a government-sponsored shipment can mean the dif- database fixed to a national hiring safety standard, forward- Brandon Fried is the ference between success and executive director of the U.S. ers and brokers should not be held responsible for negli- Airforwarders Association failure. Customers demand re- gence in that choice of carrier. We hope to see successful lentlessly reliable service, often passage of legislation in the upcoming Highway Bill that at a low price, rendering mistakes costly and the need for results in a nationwide hiring standard for carriers setting accurate industry knowledge essential. specific criteria for choosing a safe motor carrier. If that’s not enough, the brewing “alphabet soup” of regu- As of this writing, lawmakers are facing a tight deadline to lations shows no sign of ending anytime soon and promises pass a bill to fund highways and related road projects. The to make the road ahead even more challenging for even the government spends about US$50 billion per year on trans- toughest competitors. Here are some examples of this. portation projects, but the gas tax — not increased since TSA: Where’s our security program revision? 1993 — only brings in about $34 billion. Short-term fixes For more than a year, industry stakeholders have been have been approved more than 30 times since 2009, but working with the Transportation Security Administration such extensions are useless in multi-year projects, especially (TSA) to reduce complex regulatory requirements that no if officials know the money will run out in five or six months. longer provide a clear security benefit in the age of 100 per- A long-term extension is essential to ensure our country’s cent cargo screening. competitiveness in providing adequate road infrastructure to get freight to and from the ports. Forwarders had hoped to see some relief from these out- dated measures, but recent leadership changes and appar- Lithium Batteries: Where do we go from here? ent discord on air cargo strategy within TSA has stalled the Boeing has issued warnings to all passenger airlines that long-awaited program change. As we enter the traditionally bulk shipments of lithium-ion batteries in their cargo holds busy fall shipping season, forwarders want to see these an- could cause destructive fires. These are the rechargeable ticipated changes now to avoid further market share erosion batteries used in cell phones, laptops and other electronic brought about by unbalanced security policy that has not devices, and they are becoming increasingly important in kept pace with changing times. automobile manufacturing and residential solar energy sup- CBP: The ACAS rulemaking proposal port applications. Supply chains frequently rely on international airlines to support these important markets. Boeing’s Millions of shipments have been scrutinized since the guidance urges airlines to Air Cargo Advanced Screening (ACAS) voluntary pilot refrain from carrying program began through a Customs and Border Protection shipments of the batteries (CBP) and TSA joint initiative that has yet to produce a until safer methods of notice of proposed rulemaking. Since the United States packaging and transport are promised that its program would set the global standard established and implemented. for preloading advanced data targeting, shouldn’t ACAS be moving along faster, so other countries don’t take matters Since forwarders often into their own hands and initiate programs that may not arrange shipments containing correspond with ours? lithium batteries, pursuing an effective solution to this challenge is more important than ever. As CBP rolls out its Export Manifest Voluntary Pilot Industry and government should be working hand-in-hand Program, we look ahead to forwarders not only taking an to encourage the packaging industry to develop an active role in the pilot, but also in providing insight about effective solution that protects shipments against in-flight the challenges and feasibility of providing house air waybill catastrophes. shipment data to CBP well in advance of aircraft loading. However, we need to remember that this participation poses Government oversight is equally as important as protec- a paradigm shift for both forwarders and their airline part- tive packaging is for these ubiquitous power sources. Gov- ners. Previously, the responsibility for submitting this data ernments are clearly responsible for establishing regulations belonged to the carrier, which had up to four days after de- to prevent unsafe shipment of materials on flights, and they parture to perform the task. should — and must — enforce them vigorously. Forwarders already toughened by competitive market conditions now Trucker hiring standards must get even tougher by refusing shipments from custom- Forwarders are watching instances in which personal-injury ers who are intent on breaking the rules, thereby placing the attorneys have brought a number of successful cases in flying public at risk. ACW 46 SEPTEMBER 2015 ACW Departs Gate 10:22 aM

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