Airline Pharma Products Report Are Carriers Delivering the Goods?

QUALITY AND BEST PRACTICE IN AIR LOGISTICS OPERATIONS

Forwarder focus: Panalpina Lucas Kuehner on the ‘controlled’ network

Handling focus: CPSL Airline interview: Jan Krems Kelvin Ko on third-party growth United on the road to quality Airline pharma products report Are carriers delivering the goods?

World Cargo Symposium report CNS conference report Shippers tear into air freight Cyber-crime: the hidden threat

6800(5WWW.CAASINT.COM 41 FREIGHTERS ARE IN THE HOUSE

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VISIT US AT AIR CARGO EUROPE 2015 / STAND #343 QUALITY AND BEST PRACTICE IN AIR LOGISTICS OPERATIONS PARVEEN RAJA The customer’s Forwarder focus: Panalpina Lucas Kuehner on the Publisher ‘controlled’ network Handling focus: CPSL Airline interview: Jan Krems Kelvin Ko on third-party growth United on the road to quality [email protected] Airline pharma products report Are carriers delivering the goods?

World Cargo Symposium report CNS conference report Shippers tear into air freight Cyber-crime: the hidden threat 6800(5WWW.CAASINT.COM perspective SIMON LANGSTON ue to popular demand, CAAS has increased the level of Business Development Manager input from freight forwarders in the magazine – everyone [email protected] wants to hear what their customers are thinking, after PAM LATTY all. This issue features an in-depth interview with Lucas US Sales Director Kuehner, head of air freight at Panalpina (pages 16- [email protected] D22), in which he outlines the company’s latest thinking – particularly in regard to its ‘controlled’ air freight network and the extent to which BHAVI ATUL the tight control it provides over the air logistics chain is valued by Conference Coordinator its customers. Enough to expand the network, he says. But also very

[email protected] interesting is his thinking on engaging more with air cargo handlers, EDITOR’S NOTE to see where processes can be streamlined and improved. The SHOBHANA PATEL ususal absence of a direct contractual relationship between freight Head of Finance forwarders and handlers is often seen as a stumbling block in terms ﬁ [email protected] of improving the air logistics chain, and applying lessons learned from Panalpina’s ‘controlled’ network could bring valuable insights. CHARLOTTE WILLIS Input from forwarders is also to the fore in the ‘Airline pharma Events Administrator products report· SDJHV WKH ÀUVW RI LWV NLQG WR H[DPLQH WKH [email protected] solutions on offer from carriers and the extent to which they meet the needs of end customers. SHELDON PINK End customers also had their say during this year’s World Cargo Creative Director [email protected] Symposium in Shanghai, and the ‘WCS report’ on pages 34-38 replays the highlights of that debate between shippers and members of the air cargo sector. Shippers may be frustrated at the slow pace of change in air cargo, although this is not entirely new in itself – and their frustrations are shared by many in the sector. Nevertheless, speakers at the WCS – and cargo owners responding to IATA’s 2015 Shipper Survey – provided Address changes and subscription both a long list and a shortlist of proposed improvements, and IATA has orders to: [email protected] promised to review progress at the next WCS. ISSN 2054-8958 Elsewhere, the GSA/GSSA report (pages 28-32) explores the role of VDOHVDJHQWVLQWKHTXDOLW\DQGHIÀFLHQF\RIDQDLUOLQH·VFDUJRRIIHULQJ EDITORIAL CONTRIBUTORS and asks whether possible concerns among GSAs about losing control Martin Roebuck, Mike Bryant and Michael Webber of the booking process may be delaying efforts to modernise and digitalise the sector. There seems to be no clear evidence that it is PUBLISHED QUARTERLY BY currently, although it is a phenomenon worth keeping an eye on. EVA International Media Ltd And something else worth keeping an eye on is cyber crime, an issue Boswell Cottage, 19 South End discussed at the recent CNS Partnership Conference, as recorded in Croydon, London, CR0 1BE, UK our CNS Conference report on pages 44-48. Some of the trends and Tel: + 44 (0) 20 8253 4000 incidents discussed are astonishing – for example, that most companies Fax: + 44 (0)20 8603 7369 are unaware of a breach until hackers have been inside their system for Website: www.evaint.com six to nine months! And one speaker makes this sobering observation: There are two types of companies – those that have been hacked, and PRINTED BY those that don’t think they have. Time for a check-up, perhaps….Q Headley Brothers The Invicta Press, Lower Queens Road Ashford, Kent, TN24 8HH, UK

DISTRIBUTED BY Asendia WILL WATERS EVA INTERNATIONAL MEDIA LTD PUBLISHERS & EVENTS SPECIALISTS Editor [email protected] Issue 9 © 2015 | www.caasint.com & [email protected] Content may not be reproduced in any format without written permission from EVA International Media Ltd

6XPPHU CARGO AIRPORTS AIRLINE SERVICES 1 4

4 AIRLINE PHARMA PRODUCTS REPORT: Highly productive Are carriers delivering as promised? Mike Bryant asks their customers

16 FORWARDER FOCUS: Panalpina maintaining control Lucas Kuehner explains the recent changes to the forwarder’s ‘controlled’ air freight network

24 AIRLINE INTERVIEW: United Cargo Jan Krems outlines the carrier’s strategic and operational priorities

28 GSA/GSSA FOCUS: Flexible working Is the use of GSAs affecting quality, efﬁ ciency, and digitalization? asks John McCurry

34 WORLD CARGO SYMPOSIUM REPORT: ‘Slow and unresponsive’ Shippers in Shanghai have their say, and air freight attempts to respond

40 HANDLING FOCUS: Cathay Pacifi c Services Limited Kelvin Ko discusses the challenge of ﬁ lling a 2.6 million tonne cargo mega terminal

44 CNS REPORT: Cyber-security; Attracting new blood: #Aircargoissexy Keri Forsythe-Stephens reports from the 25th CNS Partnership Conference in Orlando, Florida

2 CARGO AIRPORTS AIRLINE SERVICES 6XPPHU www.bahrainairport.com Highly productive As airline hen a new cargo remains at a steady temperature during its handling facility care. Numerous airlines now offer their own temperature- opens at an airport, specialised pharma transport service, which controlled there is inevitably each boast their own capabilities to maintain a period of overca- the necessary environmental conditions. ‘products’ or Wpacity until volumes, hopefully, grow and These include active and passive cooling ‘solutions’ multiply, begin to catch up with the new capacity or temperature-control techniques, ranging available. But adding a new facility that from specialised active containers with full can they guarantee alone has a capacity of 2.6 million tonnes environmental monitoring to insulated boxes the integrity of – more capacity than most airports have in and insulated pallet covers, while some AIRLINE PHARMA AIRLINE PHARMA total – would seem to be an extraordinary aircraft – particularly newer types such as PRODUCTS REPORT pharma shipments? challenge. However, Hong Kong is not most the B787 and B747-8F – offer temperature Mike Bryant asks airports, and with the local government selection in their cargo compartments to recently giving the go-ahead for a third run- varying degrees. And on the subject of vary- their customers way, the world’s busiest international cargo ing degrees, the temperature bands offered DLUSRUWDQGLWVKRPHFDUULHU&DWKD\3DFLÀF by the various airline pharma and cool-chain could now be seen as preparing sensibly services and products also differ, although for the future. Even if those preparations there is some alignment among those that cost Cathay HK$5.9 billion. have developed their products in coopera- PRODUCT UPDATE Growth in demand from the pharmaceu- tion and consultation with their customers. WLFDO VHFWRU KDV EHHQ RQH RI WKH GHÀQLQJ AMERICAN AIRLINES CARGO trends within the air cargo business in recent Fit for purpose? Product outline: American’s ExpediteTC° Active Solution employs advanced, years, going some way towards compensat- But do these airline pharma and cool-chain temperature-controlled containers to ing for declines in other commodity types products provide the service that the indus- actively regulate temperature levels. The Passive side of our solution protects that had previously been shipped by air. try needs? Some within the air cargo sector pre-packaged shipments that require But with modal competitors to air working observe that there may be a wealth of airline additional control during transport. Cold packs or dry ice used in packaging hard to win this business and with increas- temperature-controlled ‘solutions’, but only are aided by our expert handling and ing amounts of regulation from global au- a little more than a handful are genuinely temperature-controlled environments along the cold chain. thorities, the industry is under pressure to do worthy of the title and can honestly guar- In both cases, key features include more to meet the ever-more rigorous custom- antee the integrity of a pharma shipment Highest Boarding Priority, 100% Money er demands regarding the integrity of their throughout its time with the carrier. Phil Back Guarantee, High Visibility Monitor- ing, 24/7 Resource Desk, Detailed pharma goods. And if these expectations are Abbate, global vice president for pharma- Checklist/Control Record for each not met, air cargo risks losing the opportunity ceutical & healthcare at US forwarder and shipment, Structured Contingency Plan- ning, Active Container Management presented by the huge pharmaceutical logis- logistics group UTi, estimates the number at (ACM) areas for container plug-in, and Re-icing & Battery Maintenance (Active tics market, which IATA estimates is worth a only around half a dozen. t2 units). We have also implemented staggering US$60 billion a year. “There are still numerous temperature an Extensive Worldwide Cold Chain Training Program. Our vast network However, transporting such time- and incursions involved with many pharma ship- capability is coupled with the robust temperature-sensitive cargo requires a ments,” he points out. But he adds that and reliable processes built into Expe- diteTC°, which are designed to protect complex supply chain that is reliable and there is a built-in paradox here: To ensure delicate healthcare shipments. This is that can be monitored in real-time through- there are no temperature deviations, carri- complemented by the recent roll-out of the ExpediteTC° processes across the out. IATA CEO Tony Tyler describes it as “a ers must invest heavily, but he suggests that American Airlines’ extended network twin-track challenge. In addition to their pharmaceutical companies are now afraid to following our merger with US Airways. ExpediteTC° is currently available in 157 usual expectations for reliability and speed, charge the sort of high prices for many types cities across 45 countries. customers need adequate facilities and of pharma product that might be expected; Improvements in the last 12 months: handling procedures that guarantee a con- thus there are not the margins available for We continue to invest in our ExpediteTC° program in terms of process evaluation, stant temperature range, and the absolute the carriers to pass on their own potentially program features, and infrastructure – integrity of the package.” high costs. including implementation of Controlled Room Temperature (CRT +15°C to Key to maintaining the integrity of delicate This isn’t the case for all pharma types, +25°C) facilities in key stations across our network, the most recent of which is at pharma cargo throughout its movement of course. Vaccines and the biotechnologies our cargo facility at LHR. We were one along the entire supply chain are the ef- generally move under tightly controlled cool- forts of carriers to ensure the consignment chain conditions because of the premium

4 CARGO AIRPORTS AIRLINE SERVICES 6XPPHU AIRLINE PHARMA PRODUCTS REPORT

prices charged throughout the supply chain. While the variation between the various RIWKHYHU\ÀUVWDLUFDUULHUVWRLPSOH But many pharma shipments that perhaps products makes direct and sweeping com- ment annual recurrent training, globally, should be moved under controlled 15-25 SDULVRQVGLIÀFXOWDQGFRPSOH[VRPHRIWKH for all our employees responsible for temperature-controlled shipments and degree conditions are now being trans- forwarders that CAAS has spoken with for this extends to our ground-handling ported as little better than general cargo, this article highlight carriers including Luf- partners. We are currently working on new training tools this year to ensure the Abbate observes. thansa Cargo, British Airways, Air France- very best cold chain understanding for And even the handful of airlines that can KLM and United as among those that they our employees. Plans for this year: In April we opened a offer a reliable pharma shipping service, still regard as offering a particularly trustworthy dedicated, state of the art, Pharmaceu- have to be “managed” on a lane-by-lane ba- pharma shipment product. tical & Healthcare Handling Facility at Philadelphia International Airport (PHL). sis. “Collaboration is the key in order to miti- David Mallinson, air product manager 7KHIDFLOLW\KDVVLJQLÀFDQWFDSDFLW\IRU gate the risks,” Abbate adds. at Kerry Logistics, comments: “Generally Controlled Room Temperature (CRT: +15°C to +25°C) as well as a refriger- PHARMA PRODUCT CAPABILITIES MATRIX ated cold room (COL: +2°C to +8°C). AIRLINE AA CARGO AA CARGO There is an dedicated active container management (ACM) area with plug-in Active Solution Passive Solution stations for up to 30 equivalent RKN Temperature bands covered -20°C to +20°C +2°C to +8°C, +15 to electronic-type units and the facility has +25°C an independent power backup system, as well as advanced monitoring and Number of countries available 45 (Combined Active/ 45 (Combined Active/ proactive alarming systems. Passive) Passive) Number of stations available 148 157 CATHAY PACIFIC CARGO Container types available Envirotainer t2 N/A Product outline: We offer four service RKN, t2 RAP, Csafe levels: Active Pharma using Envirotainer RKN, Envirotainer t2 container; e1(pending), Heat & Cooling Pharma using Envi- Pharmaport 360 rontainer e1/e2, CSafe RKN, Opticooler IATA Chapter 17 TCR (healthcare) compliant Yes Yes RKN/RAP; Passive Pharma for 2-8c passive packaging; Room temperature GDP compliant Yes Yes Pharma for 2-25c passive packaging. Controlled Room Temperature (eg +15°C to N/A Yes :HKDYH3KDUPD/,)7TXDOLÀHG +25°C) stations within our network. They can Refrigerated (eg +2°C to +8°C ) N/A Yes handle all four service levels we offer to market. Frozen (Below 0°C) N/A Yes - limited Improvements in the last 12 months: Our Deep Frozen (-10°C or Below) N/A Yes - limited product is quite mature. In the past year, Highest Boarding Priority Yes Yes we approved wireless sensors that can 100% Flown as Booked Guarantee Yes Yes be used on CX aircraft for temperature measurement. We also approved Complete Shipment Tracking Online Yes Yes Pharma Port 360 on board CX aircraft Proactive consignment communications Yes Yes last year. (SMS/email) Plans for this year: We continue to Arrival pre-alerts Yes Yes improve our Pharma LIFT product. We will be enhancing our ‘train the trainer’ Temperature-controlled aircraft holds Yes Yes programme on Pharma LIFT operation. Number of temperature-controlled facilities All (combination All (combination We are also looking into CEIV and GDP in network of CRT, COL and of CRT, COL and FHUWLÀFDWLRQ:HMXVWDGGHG2SWLFRROHUDV environmental areas environmental areas one of our solutions to market this year. for product protection) for product protection) Cool dollies at some stations (please specify) No No CHINA AIRLINES Product outline: Variation pharma 1: 90-minute availabilty for collection at arrival Yes Yes Medical, pharmaceutical product, airport ÀQHFKHPLFDOVDQGELRWHFKQRORJ\WKDW IATA ‘Time and Temperature Sensitive Label’ No - shipper label No - shipper label need to be kept in active temperature- applied controlled container between -20ºC to +20ºC (-4ºF to +68ºF). Variation Pharma Own labelling applied Yes - ExpediteTC° Yes - ExpediteTC° 2: Medical, pharmaceutical products, 24/7 Specialized Resource Desk Yes Yes ÀQHFKHPLFDOVDQGELRWHFKQRORJ\ Detailed Checklist/Control Record for each Yes Yes that need to be kept in +2ºC to +8ºC Shipment (+35ºF to +46ºF). Variation Pharma 3: Provide controlled room temperature Structured Contingency Planning Yes Yes (+2ºC~+25ºC) storage when neces- Extensive Worldwide Cold Chain Training Yes Yes sary and normal & standard handling Programme procedures. Container Lease Programme Yes Yes Variation fresh 1: Any perishable cargo requiring active temperature-controlled Container Repositioning Yes Yes air cargo containers during transporta- Re-icing & Battery Changes as Needed Yes Yes tion to ensure quality. Variation Fresh 2: QEP Accredited: Number of stations 62 N/A Provide temperature-controlled storage QEP Accredited: Number of countries 24 N/A

6XPPHU CARGO AIRPORTS AIRLINE SERVICES AIRLINE PHARMA PRODUCTS REPORT

warns, some other carriers have a limited for temperature-sensitive products in VSHDNLQJFDUULHUVHLWKHUSURÀFLHQWO\HQJDJH the warehouse and during transporta- in the carriage of pharmaceuticals, or they offering in real terms, while nevertheless still tion. Variation Fresh 3: Provide controlled don’t. The carriers that are aligned correctly trying to convince clients that their product room temperature (+2ºC~+25ºC) storage when necessary and normal & standard generally offer a service from the point of is fully functional. “Where these carriers handling procedures. cargo acceptance and can offer a service let themselves down is by coming into the Recent improvements:6LQFHMRLQ- ing Skyteam Cargo in Oct 2012, CI and an audit trail right the way through the market without correctly trained staff, with- started following the standard opera- process to arrival and collection of the goods out any practical knowledge or partners at tion procedure from Skyteam Cargo Alliance. Since Feb 2013, China Airlines at the point of destination.” destination who are capable of offering the has cooperated with Envirotainer to in- Market leader carriers in this space, he service, which is every bit as critical at origin troduce air freight services for high-value pharmaceutical products that need notes, have fully trained and experienced as it is at destination,” he remarks. strict temperature control. In April 2014, staff in all locations and have invested heav- Naomi Attali-Landman, director com- China Airlines (CI) was accreditated DVD¶4XDOLÀHG(QYLURWDLQHU3URYLGHU· ily in cool-chain technology. But, Mallinson mercial development for logistics services 4(3 DZDUGHGWRÀYHJOREDOVWDWLRQV Taipei, Tokyo, San Francisco, Frankfurt, PHARMA PRODUCT CAPABILITIES MATRIX and Amsterdam. Cool chain services AIRLINE CATHAY PACIFIC CATHAY PACIFIC are now available in most stations across Asia, Europe and the US. Active Solution Passive Solution Planned upgrades: Once Civil Aeronaut- Temperature bands covered Below -20c, -20c to 2-8c, 2-25c, 15-25c ics Administration approved, CI is to -10c, 2-8c, 2-25c, provide electronic cargo monitoring 15-25c devices, which allow customer monitor- Number of countries available 34 34 ing of the environmental condition and Number of stations available 64 64 position of their cargo in real time, online. Container types available RKNt2,RAPt2, RKNe1, N/A ETIHAD CARGO RKNe2 Opticooler Product outline: We launched our RKN,Opticooler RAP, branded Pharmaceutical product Pharma Port 360 TEMP-CHECK in March, featuring: Active IATA Chapter 17 TCR (healthcare) compliant Yes Yes containers – offering the leasing of temperature controlled unit load devices; GDP compliant Air freight related Air freight related Pre-cooled thermo blanket protection Controlled Room Temperature (eg +15°C to Yes Yes – to and from the aircraft to the cool +25°C) facility; Prioritised ground handling and loading – a maximum of 30 minutes to Refrigerated (eg +2°C to +8°C ) Yes Yes the cool facility; Highest priority uplift; Frozen (Below 0°C) Yes No o Temperature controlled storage (2-8 C / Deep Frozen (-10°C or Below) Yes 15-25oC); Dedicated pharma customer service team; Temperature controlled Highest Boarding Priority Yes Yes cargo hold in aircraft, with captains 100% Flown as Booked Guarantee No No QRWLÀHGSUHÁLJKW7UDLQHGDQGH[SHUL- ence pharma ground handling; Special Complete Shipment Tracking Online Yes No handing service-pharma oversight from Proactive consignment communications Internal Internal special products operations manager (SMS/email) TEMP-CHECK destinations include: San Arrival pre-alerts Internal Internal Francisco, Chicago O’Hare, New York JFK, Toronto, Sao Paulo, Dublin, Man- Temperature-controlled aircraft holds Freighter only Freighter only chester, London Heathrow, Paris Charles Number of temperature-controlled facilities 53 53 De Gaulle, Amsterdam, Brussels, Frank- in network furt, Dusseldorf, Milan Malpensa, Rome Cool dollies at some stations (please specify) Hong Kong Hong Kong Fiumicino, Zurich, Geneva, Mumbai, Hyderabad, Bengaluru, Delhi, Incheon, 90-minute availabilty for collection at arrival Most airports Most airports Singapore, Melbourne, Sydney, Brisbane, airport Manila, Jakarta, Bangkok, Shanghai, IATA ‘Time and Temperature Sensitive Label’ Yes Yes Ho Chi Minh City, Tokyo Narita, Kuala applied Lumpur and Johannesburg. Own labelling applied No No Recent improvements: We have made a substantial investment in renovating 24/7 Specialized Resource Desk Yes Yes two cool rooms with full temperature Detailed Checklist/Control Record for each Yes Yes monitoring at the Abu Dhabi Airport Shipment hub to allow for 200sqm 2-8 degree Structured Contingency Planning Yes Yes and 200 pallet 15-25 degree dedicated storage for pharmaceuticals. Ten active Extensive Worldwide Cold Chain Training Yes Yes container racks and electric sockets Programme have been installed to recharge active Container Lease Programme Yes Yes containers. A dedicated product operations manager and Special Handing Container Repositioning Yes Yes Service-Pharma (SHS-P) team has been Re-icing & Battery Changes as Needed Yes Yes put in place to monitor all pharma ship- QEP Accredited: Number of stations ments through the hub. 44 QEP Accredited: Number of countries 44

6 CARGO AIRPORTS AIRLINE SERVICES 6XPPHU AIRLINE PHARMA PRODUCTS REPORT

provider IJS Global, comments: “There is premium rate - for example, that it must be Planned upgrades: Work is about to no doubt that over recent years the number secure. The goods may be insured but that commence on an existing building of airlines that offer a pharma service has doesn’t compensate for the problems that which will give additional capacity for the cargo business, as well as another increased considerably. Investments have theft, loss, or damage to pharma goods is dedicated pharma facility, which will see us through until the completion of our been made in equipment, procedures, qual- going to mean for the end customer, nor new cargo mega-terminal at Abu Dhabi LW\ V\VWHPV DQG FHUWLÀFDWLRQ SURJUDPPHV the risks potentially that drugs can end up Airport. We have been working with a new supplier of high density thermo-blan- The challenge, however, remains in offering a in the wrong hands, become ineffective, or kets to redesign a blanket to perfectly suit fully temperature-controlled solution, includ- dangerous, forwarders say, with some of the our needs, especially given the external ing the time on tarmac and within the airline responsibility here lying with the carriers, WHPSHUDWXUHDQGKDQGOLQJHIÀFLHQFLHV Q4 should see the launch of a new warehouses at both origin and destination.” and some elsewhere. system to have live temperature track- So, what exactly do customers require ing on all pharma shipments, allowing SUHGHÀQHGWHPSHUDWXUHVHWSRLQWV from such a service? Attali-Landman says Collaboration enabling handling to react immediately shipping healthcare or pharmaceutical prod- Airlines certainly can’t do it all themselves, should any rise in temperature occur. ucts is unlike moving general cargo. “It re- even with the best possible temperature- IAG CARGO Product outline: IAG Cargo’s Constant quires a different mindset: it’s not about the controlled services in their armoury. As well Climate dedicated service for time-and- pallet, it’s about the patient,” she says. as working closely with ground handlers and temperature-sensitive pharmaceuticals, ensures temperature sensitive shipments While maintaining the temperature integ- airport authorities, co-operation with their maintain a stable internal temperature rity of the product is obviously one of the key customers is vital, forwarders say. For exam- regardless of changes in the ambient temperature. This solution supports elements, forwarders say there are many ple, forwarders suggest that when things do WHPSHUDWXUHVIURPÜ&WRÜ&DQG others considerations to be borne in mind go wrong and a pharma shipment is com- thereby protects the integrity and quality if air freight pharma shipping is to justify a promised, the carrier frequently argues that

6XPPHU CARGO AIRPORTS AIRLINE SERVICES 7 AIRLINE PHARMA PRODUCTS REPORT

WKHDJHQWSURYLGHGLQVXIÀFLHQWRUZURQJLQ- ÁLJKW +HQFH WKH QHHG IRU VWDWHRIWKHDUW of pharmaceutical products – for delivery in a pure, potent and stable formation about the consignment, or about facilities like the one opened at the end of condition for safe administration to the requirements to ensure its integrity on last year by IJS at Frankfurt airport, where a patients. The dedicated vertical team responsible for the global development its journey through the supply chain. The VLJQLÀFDQWDPRXQWRIWKHEXVLQHVVZLWKLQWKH and delivery of Constant Climate are shipper’s role here can also be fundamen- facility is specialist pharma and time-critical based at London Heathrow and Madrid and bring many years of experience tal, and bringing the shipper and the carrier WUDIÀFVKHVD\V from both the pharmaceutical industry together to discuss a given pharma ship- For many logistics service providers, their and air cargo specialist products industry. This combination of skills provides a ment’s requirements can often be a useful pharma offering relies on network reach greater understanding and knowledge to shippers and freight forwarders alike. step, one forwarder suggests. DQG WKHLU HIÀFLHQF\ LQ PRYLQJ WHPSHUDWXUH Recent improvements: In 2014, IAG Cargo Attali-Landman argues that forwarders sensitive cargo through the air freight supply EHFDPHWKHZRUOG·VÀUVWFDUJRFDUULHU and handlers both play a vital role in look- chain. Agility, for instance, has developed to be awarded a GDP (Good Distribu- WLRQ3UDFWLFH FHUWLÀFDWLRQE\DQDWLRQDO ing after pharma air cargo’s integrity on the internal accountability and expertise in government health agency. This achieve- ground. Typically, it is their on-airport facilities three interlocking areas of responsibility: ment is widely recognised as meeting the diamond standard for pharmaceutical that will be required to keep the shipment at operational, commercial, and technical, says transport. In addition, the UK’s Medicines a constant temperature before or after the the company’s vice president for global life and Healthcare Products Regulatory Agency granted IAG Cargo Wholesale PHARMA PRODUCT CAPABILITIES MATRIX Distribution Authorisation (WDA) for AIRLINE CHINA AIRLINES CHINA AIRLINES medicines intended for both human and veterinary use. The award was granted Active Solution Passive Solution in recognition of pharmaceutical supply Temperature bands covered chain excellence at our Heathrow hub. Number of countries available 20 27 In the past year we have grown our Constant Climate network to more than Number of stations available 47 93 100 stations, one of the most extensive Container types available RAPt2, RKNt2,RKNe1, All network offerings on the market. Each RAPe2 station provides customers with a IATA Chapter 17 TCR (healthcare) compliant Yes Yes quality assured service delivered by a dedicated team of specialists trained GDP compliant in Good Distribution Practice guidelines Controlled Room Temperature (eg +15°C to Yes Yes and IATA Chapter 17 regulations. The +25°C) ODWHVWVWDWLRQWRMRLQRXUQHWZRUNZDV Bordeaux, which followed hot on the Refrigerated (eg +2°C to +8°C ) Yes Yes heels of new stations in key locations Frozen (Below 0°C) Yes Yes across the world, including Nairobi, Hong Kong, Shanghai and Osaka. Deep Frozen (-10°C or Below) Yes Planned upgrades: IAG Cargo will contin- Highest Boarding Priority Yes Yes ue to execute its global investment pro- 100% Flown as Booked Guarantee Yes Yes gramme in its Constant Climate product. Complete Shipment Tracking Online Yes Yes This includes developing our dedicated Constant Climate team. In the past few Proactive consignment communications Yes Yes months we have expanded our vertical (SMS/email) team with the appointment of a Global Arrival pre-alerts Yes Yes Logistics Executive to manage our growing active container leasing business. Temperature-controlled aircraft holds Yes Yes We have also appointed a Regulatory Number of temperature-controlled facilities 47 93 Compliance Executive to support the in network Global Quality Assurance Manager and Cool dollies at some stations (please specify) HQVXUHFRPSOLDQFHWRUHÁHFWWKHLQFUHDV- ing regulatory environment. 90-minute availabilty for collection at arrival Yes Yes We have also recently improved our airport communication process, allowing cus- IATA ‘Time and Temperature Sensitive Label’ Yes Yes tomers to monitor the status of their ship- applied ments and worked with our suppliers to Own labelling applied ensure climate control systems were built LQWRRXUODWHVWÁHHWLQYHVWPHQWVLQFOXGLQJ 24/7 Specialized Resource Desk Not 24/7 Not 24/7 B787 and A380 aircraft. We also have Detailed Checklist/Control Record for each Yes in place a robust quality management Shipment System for excellence in GDP handling. Structured Contingency Planning Yes Yes We anticipate building on the exceptional training programme we Extensive Worldwide Cold Chain Training Yes Yes have put in place with our partners Programme ([HOVLXV7KLVSLRQHHULQJFHUWLÀHGWUDLQLQJ Container Lease Programme Yes workshop in Good Distribution Practices Container Repositioning Yes combines classroom training in the cor- rect handling of temperature sensitive Re-icing & Battery Changes as Needed Yes Yes pharmaceutical products with a ‘live’ QEP Accredited: Number of stations 5 visit to an airport airside area. QEP Accredited: Number of countries 5

8 CARGO AIRPORTS AIRLINE SERVICES 6XPPHU Origin Content FRA CARGO

Remarks WE Fraport Cargo Services HANDLE www.fraport-cargo.de WITH CARE

MEDICAL A thorough examination PRACTISE of your cargo and parcels is one of the first things we do. Are your goods well prepared for the upcoming flight? If not, we find the perfect prescription for a safe and healthy journey.

AS PRESCIBED The prescribed climate for medicines is between 15 and 25 °C. Other temperature-sensitive goods must be stored between 2 and 8 °C. These types of freight are handled using strict cold chain logistics. Our temperature-controlled storage halls cover 500 and 315 square meters. AIRLINE PHARMA PRODUCTS REPORT

sciences, Leif Kronkvist. This “three pillar” enabling pharmaceutical manufacturers to approach means monitoring and managing UHGXFHFRVWVWKURXJKEHWWHUHIÀFLHQF\ LAN CARGO Product outline: The LAN Cargo Pharma all processes and suppliers for pharma air Product is a highly specialized solu- freight, he says. Preferred partners tion designed for the transportation of goods that need temperature control. Kronkvist says life science customers Those sorts of pharma business leaders are The product was designed consider- need “operational leaders” who can build important throughout the supply chain, and ing industry recommended practice, such as IATA PCR/Chapter 17 and GDP and maintain operational service excellence, forwarders have their own preferred airline recommendations. develop standard operating procedures partners. IJS Global says it has turned to LAN Cargo’s Passive Pharma com- (SOPs), manage suppliers and measure per- carriers that are willing and able to offer a mitment is based on a detailed SLA that contains the following features: formance against key performance indica- TXDOLW\VHUYLFHDVZHOODVWKRVHWKDWDUHÁH[- Procedures to ensure time spent out tors (KPIs). They also need strong “commer- ible enough to accommodate the require- of controlled temperature rooms is minimized; Use of thermal blankets to cial leaders” who can determine customer ments of the forwarder’s customers. Audits minimize temperature exposure; Use of requirements and act as a bridge between ensure that the product offering meets re- thermographs to monitor internal processes; Proactive communication with the customer and operations, he argues. quirements and that IJS remains up-to-date customers in the event of an incident; Finally, they need “technical leaders” who on developments at the relevant airlines. On-going process improvement program; KPIs; Specially trained personnel aggressively monitor the industry and regula- These audits of the airline – and airport Since we our introduced pharma tory landscape, communicate changes, over- – are conducted at regular intervals, often product, six months ago, it’s been very successfully in our European operation. see training and maintain high standards. in conjunction with its healthcare clients, The product is currently implemented in Ideally, he says, these three types of lead- $WWDOL/DQGPDQVD\V7KHÀUVWDXGLWLVPRVW our main European gateways (Amster- dam, Basel and Frankfurt) and will be ers act as partners and support each other, OLNHO\WRWDNHSODFHEHIRUHWKHÀUVWVKLSPHQW LPSURYLQJ WKH ÁRZ RI JRRGV DQG GDWD DQG is booked to ensure processes are clear and

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CARGO AIRPORTS AIRLINE SERVICES 6XPPHU AIRLINE PHARMA PRODUCTS REPORT

can be logged into an SOP. Ongoing perfor- of medicinal products. Like IJS, it has imple- rolled out in North America and South mance monitoring of airlines continues by mented pharma SOPs covering KPIs, which America during Q2 2015 (MIA, JFK, means of a set of KPI reports that are shared are monitored within its Pharma Compe- ORD, GRU, EZE. Recent improvements: We have put by IJS with its customers. In the case of any tence Center (PCC) and performance issues together a centralized team to develop unforeseen issues, a Corrective and Preven- followed up according to GDP guidelines. and continuously improve our pharma offering to the market. This has enabled tative Action (CAPA) is raised with the airline. us to achieve things like: Implemented “We want to understand what has hap- Ground control new SOP and SLA for Passive Pharma; Acquired thermographs and thermal pened, how it happened and how we can Forwarders agree that, if the most likely blankets; Improved cooler facilities; prevent this issue from happening in the fu- time for cool-chain air cargo to suffer tem- Partner with Envirotainer to offer direct container lease ture. This preventative action is then closely perature incursions is on the ramp, next Planned upgrades: This year LAN PRQLWRUHG IRU D SUHGHÀQHG SHULRG RI WLPH most likely is within freight warehouses. All Cargo will continue to implement a Passive Pharma product in the main until we are absolutely certain the issue has of Panalpina’s preferred carriers must also gateways of our network. Additionally, been solved,” Attali-Landman observes. be GDP-compliant, both in the air and on LAN Cargo will implement an Active Pharma product based on a detailed Such procedures are fairly typical for the the ground. And what happens on the ramp SLA featuring: Procedures to ensure big cargo agents. As part of Agility’s “three pil- is vital, according to Andreas Sahli, global containers optimum performance; Re- placement of batteries/dry ice or plug lar” approach, the forwarder’s technical lead head of Panalpina’s healthcare industry in to proper electrical outlets; Proactive on pharma manages service supplier evalu- vertical – the performance of many ground communication with customers in the event of an incident; On-going process ation and approves preferred carriers accord- handlers is much more of a concern to him improvement program; KPIs; Option to ing to the requirements of Good Distribution than that of the airlines. lease container directly from LAN Cargo; Specially trained personnel. Practice (GDP), the guidelines offered by the He says most pharma production is still European Commission on the distribution centred in Europe and the US - about 70%

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6XPPHU CARGO AIRPORTS AIRLINE SERVICES AIRLINE PHARMA PRODUCTS REPORT

- and it is from here that most healthcare great in locations that are naturally very H[SRUWV DUH ÁRZQ %XW WKH ÀQDO GHVWLQDWLRQ hot – the Middle East, for example – while LUFTHANSA CARGO can be pretty much anywhere in the world, some of the locations that are now handling Product outline: Cool/td targets the needs of the Life Science and Health Care indus- and Panalpina has no less than 35 stations it ever-larger pharma volumes are not always try for reliable airport-to-airport transport of temperature-sensitive goods. Under the regards as Good Distribution Practice-com- known for the quality of their handling. For- umbrella of the Cool/td services, Lufthan- SOLDQWDOWKRXJKRQO\DKDQGIXODUHRIÀFLDOO\ warders point to many locations in India – sa Cargo provides a range of additional processes, infrastructure, information and FHUWLÀHGDVVXFK Hyderabad is mentioned by one – and some trained personnel to enable and docu- The risks can obviously be particularly locations China, for instance. Having its own ment that temperature-sensitive cargo is protected from unwanted temperature excursions wherever possible during air PHARMA PRODUCT CAPABILITIES MATRIX cargo transport. AIRLINE EMIRATES EMIRATES Variants - Cool/td offers with the follow- Active Solution Passive Solution ing variants a wide spectrum of options for air transport of almost any type and Temperature bands covered -20°C to +20°C (-18°C); (+2°C to volume of temperature-sensitive cargo: (Provided by +8°C); (+15°C to Cool/td-Passive - transport in special- Envirotainer, Csafe +25°C) ized thermal and insulated packaging and DoKaSch) solutions; Cool/td-Active - transport in Number of countries available 79 81 VSHFLÀFDOO\GHVLJQHGFRROFRQWDLQHUV Cool/td & DGR - transport of tempera- Number of stations available 129 144 ture-sensitive Dangerous Goods either in thermal passive packaging (Cool/ td-Passive & DGR) solutions or in cool- Container types available RKN/RAP t2, RKNe1, RKE (White containers (Cool/td-Active & DGR) RAP e2 Container) Features - Minimal tarmac exposure IATA Chapter 17 TCR (healthcare) compliant Yes Yes times and storage in protected, GDP compliant In progress In progress temperature-controlled surroundings where available; Shipments travel in Controlled Room Temperature (eg +15°C to +25°C) Yes Yes temperature-controlled cargo compart- Refrigerated (eg +2°C to +8°C ) Yes Yes ments wherever possible, depending on the aircraft type; Special containers Frozen (Below 0°C) Yes Yes with active temperature control (Cool/ Deep Frozen (-10°C or Below) Yes Yes td-Active); Uninterrupted recording Highest Boarding Priority Yes Yes of temperature data for Opticooler and Unicooler; Documentation of the 100% Flown as Booked Guarantee Yes Yes transport chain. Facts & Figures:HÁ\WKUHHIUHLJKWHUV Complete Shipment Tracking Online Yes Yes worth of pharma tonnage per day, or Proactive consignment communications (SMS/ Yes Yes about 1,800 m3 in volume; The amount email) of insulin we transport supplies 1.3 million diabetic patients per day; The tablets Arrival pre-alerts Yes Yes ZHÁ\HDFKZHHNFRXOGIRUPDOLQH longer than the Great Wall of China. Temperature-controlled aircraft holds Yes Yes Recent improvements: Introduction of C-Safe Containers, and new pricing Number of temperature-controlled facilities in 129 129 scheme based on a ‘pay for what network you use’ with no minimum lease and QRGHPXUUDJHIHHV*'3FHUWLÀFDWLRQ Cool dollies at some stations (please specify) Dubai Dubai for Lufthansa Cargo Cool Center in 90-minute availabilty for collection at arrival airport Depends on local Depends on local Frankfurt infrastructure infrastructure Upgrade plans: One goal will be to set up IATA ‘Time and Temperature Sensitive Label’ Yes Yes a new product line that will cater for cus- applied tomers with loose/single shipments, with a focus on fast and transparent processes, Own labelling applied Yes Yes not only on temperature control. Second goal will be to set up a new product line 24/7 Specialized Resource Desk yes yes especially for customers with BUP/ULD units and a special need for temperature- Detailed Checklist/Control Record for each Yes Yes controlled storage and handling. Shipment UNITED CARGO Structured Contingency Planning Yes Yes Product outline Extensive Worldwide Cold Chain Training Yes Yes TempControl is United Cargo’s premium Programme service for healthcare and pharmaceutical products, and a wide range of other commodities that require strict Container Lease Programme Yes NA temperature controls and monitoring Container Repositioning Yes NA GXULQJWUDQVSRUW8QLWHG&DUJRÀUVWLQWUR- Re-icing & Battery Changes as Needed Yes Yes duced TempControl in 2009. Following QEP Accredited: Number of stations 68 NA QEP Accredited: Number of countries 42 NA

CARGO AIRPORTS AIRLINE SERVICES 6XPPHU AIRLINE PHARMA PRODUCTS REPORT

“controlled” air freight network (see Forward- pharma handling facilities and processes. the United-Continental merger in 2011, er focus article on page XX) of course also %UXVVHOV,QWHUQDWLRQDO$LUSRUWWKHÀUVW,$7$ TempControl was combined with the allows Panalpina on certain key lanes to con- FHUWLÀHG¶&HQWHURI([FHOOHQFHIRU,QGHSHQG- best features of Continental’s Clima- teSecure product to create a leading trol the time spent by pharma consignments ent Validators (CEIV) Pharma’ community in integrated product for commodities re- on the tarmac, as well as to closely monitor Europe, is one such, another is Basel. Away quiring temperature-controlled transport. TempControl uses temperature-con- its status within the handling facility. from Europe, Singapore Changi and Shang- trolled storage facilities on the ground Airports, too, have their role to play, and hai are among the big cargo gateways that and specially-trained staff to monitor shipment movement from the facility to many of them are now investing heavily in KDYH DOVR VHHQ ÀW WR LQYHVW ODUJH VXPV LQ the aircraft. Dedicated personnel ensure VKLSPHQWVDUHGHOLYHUHGSODQHVLGHMXVW LQWLPHIRUÁLJKWGHSDUWXUHPLQLPL]LQJ exposure. At arrival, shipments are expe- ETIHAD ETIHAD LAN CARGO LAN CARGO dited off the plane to safe, temperature- Active Solution Passive Solution Active Solution Passive Solution controlled storage at the warehouse. 2-25 (celsius) 2-8 & 15-25 Within container 2-8, 15-25, 2-25 Physical battery checks, battery limits (celsius) changes, re-icing, power supplies and corrective actions are taken on shipments as required. United Cargo is continuously focused on expanding 23 (+ others risk 23 (+ others risk 5 countries 7 countries our global TempControl network, and assessed) assessed) we recently reached the milestone of 34 (+ others risk 34 (+ others risk 7 stations 10 stations FHUWLÀHGORFDWLRQVZRUOGZLGH7KUHH assessed) assessed) additional locations are in the approval Envirotainer, CSafe, N/A Envirotainer and n/a process, with two more planned. Va-q-tec Csafe Temperature-controlled unit load devices accepted by United include Yes Yes Yes Yes the CSafe RKN, Envirotainer RKN e1, Yes Yes Yes Yes Envirotainer RKN t2 and Envirotainer RAP Yes Yes Yes Yes t2. Additional containers and services offered include the Pelican BioThermal Active containers Yes Yes Yes 120hr Reusable Shipper, PharmaPort 360, N/A N/A No No Q-Products & Services and va-Q-tainer Euro, US and XL. N/A N/A No No Recent improvements: We’re growing Yes Yes Yes Yes our TempControl business in a variety of Yes Yes Yes, but no Yes, but no ways: expanding our network, offer- moneyback moneyback ing new product options, making new containers available and enhancing the AWB tracking AWB tracking Yes Yes HIÀFLHQF\RIRXURSHUDWLRQDOSURFHVVHV Planning to deploy Planning to deploy Yes. Email or call if Yes. Email or call if and our customer service. United was in 2015 in 2015 exceptions exceptions WKHÀUVW86FDUULHUWRDQQRXQFHWKH Planning to deploy Planning to deploy No No Envirotainer RKN e1 temperature control in 2015 in 2015 container would be available for use by our customers. The US Federal Aviation All wide body Almost all aircraft Yes - depend on Yes - depend on Administration (FAA) approved the aircraft aircraft aircraft RKN e1 in July 2014, and United Cargo No need 34 100+ (own and third 100+ (own and third announced our approval effective parties) parties) October 1. On November 2, following additional collaboration between Envi- N/A N/A No No rotainer and United’s Engineering group, Where Customs Where Customs No No ZHÁHZWKH5.1HIRUWKHÀUVWWLPH permits permits Planned upgrades: In addition to plans N/A Yes, shipper applies Yes, if needed Yes, if needed to further expand our TempControl network, United Cargo will continue to UHÀQHWKHSURGXFW·VTXDOLW\KDQGOLQJ N/A Yes No. We use IATA No. We use IATA and features. Our TempControl Sales labels labels Team keeps in close contact with our Yes Yes Customer Care Customer Care customers, which allows us to base team team our product development on their Yes No Yes, at each critical Yes, at each critical needs. The features available with our point point TempControl products are tailored to RXUFXVWRPHUV·QHHGV6SHFLÀFGHWDLOV Yes Yes Yes Yes are available through consultation with Yes Yes Yes - at Yes - at United Cargo Sales professionals. implemented implemented gateways gateways QATAR AIRWAYS CARGO Product outline: QR Pharma was Yes N/A Yes N/A launched in January 2014, offering both Yes N/A Available if needed N/A active and passive solutions. The active solution provides temperature-controlled Yes N/A Yes N/A containers designed to maintain a N/A N/A No No constant temperature throughout the N/A N/A No No

6XPPHU CARGO AIRPORTS AIRLINE SERVICES AIRLINE PHARMA PRODUCTS REPORT

pharma handling, forwarders observe. believes that, thanks at last in part to the cur- entire transport chain, while the passive solution keeps the product within a Together, the performance of the airport au- rent industry focus on the pharmaceutical GHÀQHGWHPSHUDWXUHEDQG453KDUPD thorities and the handlers is key, Sahli insists. industry, new or redesigned airports often is now available in 53 destinations and we have received overwhelmingly Even the most conscientious of carriers are take this into considerations. positive feedback from our clients. In at last partially in the hands of their handlers Either way, Agility’s Kronkvist points out, September 2014, we expanded the pharma network for loose cargo. Since DQGWKHDLUSRUWVWRZKLFKWKH\Á\KHVD\VDQG there is really no complete solution for keep- the launch until April 1, 2015, we have hence Panalpina performs extensive route ing cargo cool from origin to destination ÁRZQPLOOLRQNLORVRISKDUPDFHXWLFDO shipments successfully. assessments that incorporate risk analyses without using passive or active packaging. Recent improvements: The transition of the airports and handlers involved in any The demand for real-time monitoring of to Hamad International Airport (HIA) commenced in December, 2013, with potential new pharma lane before deciding temperature deviations is certainly becom- full operations transferring in May 2014. whether to open such a route. ing more and more apparent, and will be a The new state-of-the-art cargo facility incorporates Automated Systems; 11 The infrastructure of various hub airports major challenge to implement. However, a wide-body aircraft standing bays; 42 is also a concern for IJS. But Attali-Landman whole new high-tech industry seems to now loading docks; 31 landside truck-loading facilities; advanced scanning technology to ensure safety and security of the PHARMA PRODUCT CAPABILITIES MATRIX facility, its staff and cargo. AIRLINE LUFTHANSA LUFTHANSA There is a dedicated cold room Active Solution Passive Solution for pharmaceutical shipments. The Temperature bands covered -20 / 2to8 / 15to25 -20 / 2to8 / 15to25 main features include: Use of reefer vehicles on the ramp that collect and Number of countries available ca. 100 ca. 100 deliver directly to and from the aircraft Number of stations available ca. 170 ca. 280 totally eliminating ramp exposure. Temperature-controlled handling and Container types available Envirotainer N/A storage at the HIA Cargo Terminal in e-series/t-series/ Uni- the appropriate temperature zones; Opticooler/ Csafe 64 temperature-controlled cells for IATA Chapter 17 TCR (healthcare) compliant Yes Yes units requiring precise temperature; Fastest airline transfer at Doha through GDP compliant Yes - for an airline Yes - for an airline its Quick Ramp Transfer (QRT) solution; Controlled Room Temperature (eg +15°C to +25°C) Yes Yes Only carrier in the Middle East to offer Refrigerated (eg +2°C to +8°C ) Yes Yes refrigerated or ‘reefer’ truck services for ramp transfers. Frozen (Below 0°C) Yes Yes Speed and temperature play a Deep Frozen (-10°C or Below) Yes Yes crucial role in the transport of these Highest Boarding Priority Yes Yes products and we make sure that they are handled expertly throughout 100% Flown as Booked Guarantee No No WKHLUMRXUQH\:HDGKHUHWRWKH,$7$ Complete Shipment Tracking Online Yes Yes regulations for the carriage of pharmaceuticals. Qatar Airways Cargo uses Proactive consignment communications (SMS/ Yes Yes special containers in collaboration with email) Envirotainer and CSafe. We are always Arrival pre-alerts Yes Yes working closely with our customers to Temperature-controlled aircraft holds Yes Yes look at ways that we can improve the product and services offered to them. Number of temperature-controlled facilities in N/A N/A network AIR FRANCE-KLM CARGO Cool dollies at some stations (please specify) Yes: FRA Yes: FRA Product outline: For Air France-KLM- Martinair Cargo, the biggest markets are in order of priority Europe, Americas, Asia 90-minute availabilty for collection at arrival airport Yes Yes 3DFLÀFDQG$IULFD¶3KDUPD&RQWURO· IATA ‘Time and Temperature Sensitive Label’ By Shipper By shipper (2°C-25°C) is still the largest product applied category. The second largest product category is ‘Pharma Active’ (active Own labelling applied No No containers), which keeps showing 24/7 Specialized Resource Desk Yes Yes a steep growth. The fastest-growing Detailed Checklist/Control Record for each Yes Yes product category is ‘Pharma Control’ Shipment (15°C-25°C) and we expect this trend to continue for the coming years. Structured Contingency Planning Yes Yes A large number of airports/stations Extensive Worldwide Cold Chain Training Yes Yes on our network are now equipped to Programme handle pharma. In addition, we use Container Lease Programme Yes Yes the latest technology and equipment, including ‘Envirotainer’, ‘C-Safe’, and Container Repositioning Yes Yes ‘Va-Q-tec’ containers, according to our Re-icing & Battery Changes as Needed Yes Yes customers’ needs and requests to help in achieving the transport of pharma QEP Accredited: Number of stations 5 more to come in N/A products under good conditions. near future QEP Accredited: Number of countries 4 more to come in N/A near future

CARGO AIRPORTS AIRLINE SERVICES 6XPPHU AIRLINE PHARMA PRODUCTS REPORT

be springing up to serve that need. With more and more national Customs Recent improvements: Air France-KLM- Bringing together the various links in authorities now starting to include require- 0DUWLQDLU&DUJRZDVRQHRIWKHÀUVWFDU- the cool chain is one of the big success ments for temperature control records for riers to launch a 15°C-25°C solution (in 2013). Almost a third of the 300 stations stories of the IATA CEIV programme, UTi’s pharma shipments as part of their clear- within our Pharma Network are open for Abbate believes, and he is hopeful that the ance procedures, there is growing pressure this ‘Pharma Control’ product, and we are continuing investments to enlarge initiative is one step down the road towards for further quality throughout the entire cool the number of stations even further. bringing together all the pharma stakehold- chain – and the ability to demonstrate that The pharmaceutical industry in Egypt has been steadily growing for the past ers together. One issue he would like to see via an end-to-end audit trail. And to help ÀYH\HDUVZLWKDQHVWLPDWHGYDOXHIRUH- addressed is the creation of an accepted customers select from the various air cargo cast at $8 billion in 2015. To cope with both this growth and natural conditions and standardised rate structure for pharma pharma products, some kind of standardi- of average temperatures above 30°C types – including identifying which types of zation of the various services or levels of for more than 6 months a year, we have invested in revamping the cool facilities pharma shipments move under what level support offered would seem a potentially at Cairo airport. A 124 m3 room is now of controlled conditions. helpful additional step. QQQ available to accommodate pharmaceutical products between 15°C and 25°C. On top of this, the capacity of the 2°C-8°C cold room has been doubled QATAR QATAR AIR FRANCE-KLM AIR FRANCE-KLM to a total of 420m3 to cope with large pharmaceutical shipments. Active Solution Passive Solution Active Solution Passive Solution Closer to home, we recently invested COL/CRT Yes Yes in our central cargo hub Paris-Charles Multiple Multiple de Gaulle. Our G1XL warehouse can 53 53 Multiple Multiple now offer three additional cool rooms for pharmaceutical loose shipments to RAPT2/RAPE2/RKNE1/ 3 types 3 types be kept between 2°C and 8°C. This is in RKNT2/CSAFERKN addition of the current state-of-the-art cool room capable of storing up to Yes Yes Yes Yes 1130 m3 of loose pharmaceutical shipments and close to 90 aircraft pallets, all Yes Yes Yes Yes under 24/7 surveillance and monitoring. Yes Yes Yes Yes Planned improvements: To stay at the Yes Yes Yes Yes forefront of the pharmaceutical/life science industry takes strong commitment Yes No Yes Yes to continuous innovation by listening Yes No Yes Yes to customer needs, to keep building on our successful legacy of shipping Yes Yes Yes Yes pharmaceuticals for more than 20 years No No Yes Yes and to boldly chart a new path when it Yes Yes Yes Yes makes sense. Yes Yes Yes Yes To stay abreast, we have initi- ated informal discussion platforms to exchange views with pharmaceutical Yes Yes Yes Yes shippers on what matters most. The Yes Yes Yes Yes most recent conference, ‘GDP Practice in the Aviation Industry’, was co-organ- 53 53 Yes Yes ized with Amsterdam Airport Schiphol and the Dutch Association of Research Reefer vehicles at Reefer vehicles at Yes Yes Quality Assurance. hub hub This conference led to two main Yes Yes takeaways: 1. To improve supply chain quality and thereby product integrity Yes Yes Yes of the pharmaceutical goods we need to enhance partnership communica- Yes Yes tion between shippers, forwarders and Yes Yes Yes Yes airlines. Transparency and collaboration is key to further improve the supply Yes Yes Yes Yes chain quality. 2. Decisions on how exactly GDP should be implemented Yes Yes Yes Yes in an airline and the air cargo industry need to be done based on a risk-based Yes Yes Yes Yes approach, where the product integrity of the transported goods should always Yes Yes Yes be the goal. Q Yes Yes Yes Yes Yes Yes Multiple Multiple

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6XPPHU CARGO AIRPORTS AIRLINE SERVICES FORWARDER FOCUS:

16 PANALPINA

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involvement thanmostforwarders in the suchasAtlasriers Air, andwithadeeper “wet lease”(ACMI) agreementswithcar- needs –includingvialong-term or charter 6XPPHU explains therecentchangestoforwarder’s P Panalpina’s headofairfreight,LucasKuehner, handling andoperations–alongside a moretraditionalnetwork ‘controlled’ airfreightnetwork,inwhichit keeps atightgriponcapacity,handling, quality, andexceptionmanagementfor work for someofitscapacity “controlled” airfreightnet- forwarders, operatinga exception amongairfreight analpina is somethingofan using third-party com- using third-party mercial carrier uplift. mercial carrieruplift. The “controlled” air freightnetwork also includes riers otherriers than withcar-charters whole andpart- around 15%ofitsshipments 200 scheduled charters peryear,200 scheduledcharters inorder ing ofonethefreighters withmorethan panding itsairfreightnetwork by replac- air freight.Indeed,Panalpina says itisex- so, insistsLucas Kuehner, globalhead of ment to itscontrolled network. Butnot be takingastep backfrom thecommit- to onesuggeststhattheforwarder may to Panalpina from two full-timeaircraft of wet-leased freighters provided by Atlas number oflevels. rangement withAtlas isnoteworthy ona DU SDUWQHUVKLS LWV VLJQLÀFDQWO\ DGMXVW WR the Swissforwarder’s decisionthisyear the backboneofnetwork, andso withAtlas Airhasformedthe partnership is available for customers’ shipments,but Atlas –notably Cargolux–to ensurespace On the surface, reducingthenumber On thesurface, FORWARDER FOCUS: PANALPINA

to add Brazil’s Viracopos (VCP) airport to with the cargo streams of our customers.” $WODVQHWZRUNWRÁ\WKH¶EDFNKDXO·OHJDQG the programme. This additional service down into Brazil they do whatever they need to do with the Kuehner comments: “We are not re- would not have been feasible in the old aircraft and operate northbound through ally changing our approach there; we are setup with Atlas, says Kuehner. “With the South America back into the US.” reinforcing our focus on this controlled air ROG SURJUDPPH ZH ZHUH Á\LQJ DURXQG +H VD\V WKH DQQXDO FKDUWHU ÁLJKWV freight network, and we plan to keep it – WKHZRUOGZLWKWKH²DQGZHMXVWGLGQ·W within the new programme is basically but also expand it into the future – hence have enough hours to get the plane down WDNHQXSE\WKHVHWZRÁLJKWVDZHHNIURP the ‘Brazil Wings’ service.” into VCP during that round trip. So, that Hong Kong to Huntsville (HSV), and two was one of the constraints. And so we ÁLJKWVDZHHNIURP+69IHHGLQJGRZQLQWR Why now? HDUQHGWKLVÁH[LELOLW\DQGZHFDQQRZUH VCP. “And the service connects, so we are He continues: “We obviously analyse our ally bring the aircraft where the custom- able to offer a transit time of less than 40 setup fairly continuously, from the com- ers are demanding it; where our custom- hours from Asia down to Brazil, which is a mercial airline side – which continues to be ers have cargo.” PDMRUEHQHÀWLQWKDWPDUNHW%XWREYLRXVO\ 85% of our business – and our ‘controlled’ Panalpina continues to operate with we are also able to serve our customers in network, which is about 15%, and there we the –8 on the transatlantic, “but the other the Midwest United States down into VCP, had an opportunity with our partner Atlas SURJUDPPH ZLWK WKH ² LV WKDW ZH Á\ or Hong Kong into the US.” to change the setup so that we better meet from Hong Kong twice a week into the Kuehner says that, although he can’t go customer requirements: in that we keep US, and then from the US down into Vira- into details, the contract with Atlas, is scal- one wet-leased –8 on the contract and we copos (VCP) twice a week - and then we able or expandable, and Panalpina is look- VZDSWKHRWKHUDLUFUDIWLQWRDPRUHÁH[LEOH basically end the programme there from a ing at other parts of the world for oppor- setup that allows us to align our capacity Panalpina perspective, give it back into the WXQLWLHVZKHUHLWVFXVWRPHUVZRXOGEHQHÀW

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6XPPHU CARGO AIRPORTS AIRLINE SERVICES 17 FORWARDER FOCUS: PANALPINA

from this kind of ‘controlled’ capacity. “We are not really Premium “One market that we have been looking This level of premium service naturally DW LV WKH WUDQVSDFLÀF IURP DQRWKHU RULJLQ changing our approach; attracts a premium. “Yes, but not in the into the US, and with an opportunity to con- we are reinforcing our VHQVH WKDW ZH FKDUJH D KLJKHU UDWH MXVW nect further into that schedule down into because…” he explains. “But the service Brazil, for example – or through another focus on this controlled that we provide and the sense of schedule gateway into Latin America. And then there air freight network, and integrity and uplift guarantee, we must are other opportunities – which might be make sure we get an adequate rate for more in the future – on the Far East east- we plan to keep it” that, because otherwise if we have to go bound, meaning Europe over to Asia. We out on the ad hoc market, there is a risk currently have a service there between aspect there. And on the other side of the Luxembourg and Shanghai, the ‘Panda scale, for special cargo - for example tem- Star’, but we think there are also oppor- perature-controlled cargo or dangerous tunities into other markets in the northern being able to interfere with cargo at these goods, where we again ensure the integ- Asia region. So those are two that we are hubs that we operate, either ourselves or rity of the cargo and the chain of custody VSHFLÀFDOO\ORRNLQJDWµ we set the standards and processes for the control - that is another aspect where also He says there is also a ‘long list’ of other ground handling procedures. we control the processes ourselves, and potential places in the world, but where it “And also we control the schedule of the so we are able to set high standards and GRHVQ·WKDYHÀUPSODQV\HW´$QGWKHNH\ aircraft so that we can ensure uplift – and ensure them throughout the supply chain. is really to line up the customer require- also, even more importantly, we decide That would be another aspect where the PHQWVZLWKWKHVSHFLÀFFDSDELOLWLHVRIWKLV ZKDW ÁLHV ZKHQ UDWKHU WKDQ OHDYLQJ WKDW customer sees value and is willing to then QHWZRUNZKLFKLVRIFRXUVHQRWMXVWDERXW this decision up to an airline – which, es- pay us a fair share for that.” EHLQJDEOHWRÁ\DSODQH²EHFDXVHWKLVLV pecially in congested markets, is an issue Kuehner says the main driver behind the ZKDWDLUOLQHVFDQGRMXVWDVZHOOµKHVD\V for our customers sometimes, because new arrangement with Atlas is “the greater “But it is the end-to-end offering, including shipments get split over many services. ÁH[LELOLW\WKDWZHJHWZLWKWKHQHZVHWXSµ the SOPs and standards that we can pro- Those are some of the aspects that we can Although, of course, there is a different vide on the ground – even feeding into the guarantee with a high level of quality and cost structure that comes with that, the gateways with our own trucking networks; consistency to our prime accounts.” change was not principally about making

18 CARGO AIRPORTS AIRLINE SERVICES 6XPPHU FORWARDER FOCUS: PANALPINA

cost savings by switching to a lower-cost RQWKHJURXQGDQGQRWMXVWLQWKHDLUDQG “And we train the people and so on aircraft. “But what I personally like in the there nothing changes in terms of how and so forth. If we take a temperature- setup is that we have two different air- we handle the cargo, how we control the controlled shipment, we pick it up from a craft – one the most modern one, the –8, freight, how we can intervene if the cargo PDMRUSKDUPDFHXWLFDODFFRXQWHJLQ(X which is a fantastic aircraft, especially for doesn’t feel comfortable. And that, I think, rope, it goes on our own controlled reefer high fuel prices, and the other one is the LVWKHDPD]LQJEHQHÀWWKDWZHDUHDEOHWR truck to Luxembourg. So from the time we second-newest aircraft, the 400, which is H[SDQGLQWR/DWLQ$PHULFDVSHFLÀFDOO\%UD pick it up, the chain of custody starts until YHU\ JRRG EXW ZKHUH ZH EHQHÀW WR VRPH zil, which is not an easy market to go to - we hand it over at destination. We don’t extent from lower fuel prices right now. And and which, especially from the US, we have have to hand over to an external ground depending on where the fuel price goes, an opportunity now to serve out of an air- handling agent or an external airline, or ZHEHQHÀWLILWJRHVXSRQRQHHQGDQGZH port (HSV) that has no issues of congestion have all these other touch points – for EHQHÀWLILWJRHVGRZQRQWKHRWKHUHQGµ on the ground.” That means not have to example in Luxembourg, the distance deal with a limited number of truck doors between the truck dock and the aircraft Unique service proposition at a “super busy” cargo handling terminal loading area is around 100 metres. That .XHKQHULVFRQÀGHQWWKDWWKHFKDQJHVLQQR and delays getting to the ramp. airport is focused on cargo, and the same way undermine the USP of the controlled in Huntsville, for example. network. “I think the question is really in Handling control “And because we have visibility of the the eyes of the customer: would there be This ability to exert control over handling cargo that is in transit, and in the hub, the DQ\UHGXFWLRQLQLQWHJULW\RUÁH[LELOLW\RIWKH and intervene on the ground is something warehouse, if the temperature logger that network? We talked about this a lot inter- Kuehner says Panalpina is able to achieve we have in the cargo shows a deviation nally, and we believe that there is really no in Luxembourg, Huntsville, Stansted in the or any kind of other issue, we can literally negative impact to our clients. We are able 8. DQG 0H[LFR ERWK *XDGDODMDUD DQG VHQGVRPHRQHGRZQWRWKHZDUHKRXVHÁRRU to provide a service early in the week or a Mexico City, “and also now, to some extent, to check on the cargo and see what’s go- weekend service or a midweek service out in VCP. In these key hubs, we work with a LQJRQ7KDWLVDQDELOLW\WKDW\RXMXVWGRQ·W of Asia, which is what we had before out of subcontractor to actually handle the cargo, have at the big airline hubs like Frankfurt, Hong Kong - and now same day out of the but all of the SOPs and all of the work proce- Heathrow, or JFK,” Kuehner says. US into VCP. And where we are able to offer dures, all of the processes - even a system Panalpina’s ‘African Star’ service also VRPHÁH[LELOLW\LVWKHWUDQVDWODQWLFZKHUH ZKHUHZHFRPPXQLFDWHEHWZHHQWKHRIÀFH provides ‘controlled’ access to some we are not changing the metal. DQGWKHJURXQGÁRRULQWKHZDUHKRXVHLV of Africa’s more exotic destinations, in “And the key USP of this product is really basically Panalpina copyright material. which it charters an MD-11 freighter from

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6XPPHU CARGO AIRPORTS AIRLINE SERVICES 19 FORWARDER FOCUS: PANALPINA

“There are no air waybills, there is no an electronic air waybill (e-AWB). “In our controlled airfreight network, we operate document pouch, there is no manifest - our planes completely paperlessly,” says even for customers into the US” Kuehner. “So there are no air waybills, there is no document pouch, there is no manifest - even for customers into the US, for example. And if it is possible within our (WKLRSLDQ $LUOLQHV HYHU\ 6XQGD\ WKDW ÁLHV something for the future.” own controlled airfreight network, what from Luxembourg to Pointe-Noire (PNR) in One way that the company has been able should stop us on the commercial side?” the Republic of Congo. “There we take pos- to retain and demonstrate some additional He says this digitalisation has helped to session of the cargo, we unload the aero- control of quality and processes – at least speed up the process and is also a way of plane and we take it off the airport into one for pharmaceutical and life sciences cargo improving quality. of our transit warehouse facilities a couple ² KDV EHHQ YLD *'3 FHUWLÀFDWLRQ ZKLFK But he agrees that in most cases, ex- of hundred metres away,” says Kuehner. Panalpina has at Schiphol, for example. tended air freight transit times occur be- From there, cargo can also be transferred But it wants to go further. “Today’s tradi- cause the freight forwarder is either hold- via a ‘Panalpina-operated’ cargo ship to tional model is the freight forwarder picks ing on to cargo to consolidate it or leaving customers in the oil and gas industry along up freight from the customer and brings it it at the cargo handler’s warehouse before the West African coast and by a designated to his depot or transit warehouse, puts it coming to pick it up trucking service to Cabinda in Angola. back on a truck to truck it to the airport; at “It is certainly not in the air, so it is on “It is not easy to get customers to the air- the airport we consolidate cargo, then we the ground,” admits Kuehner. “I think part ports sometimes because they are little off hand it over to the ground handling agent, of it is, of course, that the different entities the beaten track, but when they do come and then the ground handling agent puts are trying to save money, and so they con- and see how we babysit and take care of it on the aeroplane,” Kuehner observes. solidate. The business of a consolidator their cargo, the value is immediately appar- “First of all, the transit time there is not LV WR FRQVROLGDWH FDUJR %\ GHÀQLWLRQ ZH ent,” he adds. fast enough; I think there are some inef- would have to save or hold some cargo or ÀFLHQFLHVLQWKHVWHSVWKDWZHDUHORRNLQJ optimise it with some other cargo. Amsterdam comparison at – in how the traditional freight forwarder “But I think the bigger part is really the 7KLV OHYHO RI FRQWURO LV VLJQLÀFDQWO\ GLIIHU- handles the cargo – and I think that what different entities and the different touch HQWWRZKDWLWFDQDFKLHYHDWPDMRUKXEV we would like to do is to explore ways to points - the connections at the airport - even compared with its setup at Amster- VHW XS SURFHVVHV WKDW DUH PRUH HIÀFLHQW with the ground handling agents, with the dam Schiphol airport, where Panalpina is by hopefully also eliminating some of the truckers, with the depots - that need to be one of a handful of forwarders that has a steps in between. pushed through. I think it’s probably a com- warehouse with airside access. “So, at the ´$QGZHEHOLHYHWKDWLIZHÀQGDZD\WR bination, and we are interested to take the facility there, we handle the cargo up to cooperate closely with the ground han- LQHIÀFLHQFLHVWKHSURFHVVRUWKHSLHFHV ready for carriage. But then, like everybody dling agent at a local site, there are ways out of the equation that are not adding any else, we have to hand it over to a ground WRÀQGV\QHUJLHVDQGVSHHGXSWKHWUDQVLW value to the shipper in the process.” handling agent that has been appointed by processes, which is exactly what custom- But in the meantime, the limitations of an airline, and from that moment onwards ers are demanding when they contract the standard general air cargo product we are not in possession of the cargo any- DLUIUHLJKW E\ GHÀQLWLRQ WKH\ ZDQW D IDVW only underline the value that premium PRUHDQGLW·VPXFKPRUHGLIÀFXOWWRLQWHU- DQGUHOLDEOHSURGXFWµ7KLVÀWVZLWK,$7$·V guaranteed or express products offer. So, vene and to monitor,” Kuehner says. initiative to reduce transit times by 48 could Panalpina perhaps do more to in- This lack of control applies to almost all hours, from there current level of “six point crease awareness about its own unique airports, although the company is looking something days”, observes Kuehner. “So controlled-network product? at ways to address that. Kuehner explains: ZHQHHGWRÀQGDZD\WRUHGXFHWKHWUDQVLW “I think it is well known by insiders in “It is one of the aspects that we also have time as an industry, and this would be one the industry, but in the wider marketing strategic plans for with the expansion of of the avenues we would want to explore. perspective there are many more oppor- our controlled airfreight network, to work Because we have proved that it is possible tunities,” Kuehner agrees. “Certainly the more closely with handling agents – also in our controlled network.” customers that we are able to show this on the commercial side – because there One element of that achievement, to on a day-to-day basis understand the LVREYLRXVO\DEHQHÀWEHFDXVHZHGRWKDW which is also related to IATA, is also more value, and they are our best advocates in in our controlled network. But that is really automation, for example via moving to the industry to promote this further.”

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Relaunch making sure that we put the services in While Kuehner would like this side of Indeed, the company is considering a re- SODFHZKHUHZHFDQRIIHUDQDFWXDOEHQHÀW the company’s business to grow further, launch or rebrand of the service. “We took to the customers. Otherwise we would not he says it will remain a niche part of the out the word ‘own’ out of ‘own-controlled net- be able to afford this. Around 85% of our overall market. And that is one of the work’, so it is now the ‘controlled network’, business is on the commercial side, where reasons he believes no one else is offer- because we have a higher level of control we work with our key airline partners, ing it. “I don’t see this model being one on the ground as well as in the air and with where there is no reason for us and really that is going to be copied. We are looking the schedule. But we are contemplating to QRDGGLWLRQDOEHQHÀWIRUWKHVKLSSHURUWKH WRH[SDQGEXWWKHVKDUHWKDWLVÁRZQE\ also re-launch it on the branding side,” says customer if we operating our own aircraft.” the commercial carriers is always going to Kuehner. Currently, the focus has been on EHVLJQLÀFDQWO\ODUJHUWKDQWKLVFRQWUROOHG the change in the network structure, and es- Integrated model part, even in Panalpina.” pecially with the new service down to Brazil. For the time being, Kuehner says there is +HVD\VPDQ\RIWKHRWKHUPDMRUIRUZDUG And all of the capacity within the controlled no equivalent product offered by other for- ers have tried to offer similar products, but QHWZRUNLVDOUHDG\SUHWW\ZHOOÀOOHG warders - or even the integrators. “In the none with any great success. “I think there “Yes – otherwise we would not operate integrator world, it is being provided for is a lot of attention to this network among the network, because you can imagine that parcels but not for heavy freight. So it is a the competition. But we have been doing LWLVDFRVWO\SURSRVLWLRQWRÁ\DHURSODQHVµ bit of an integrated model that we operate this for a very long time: this year will be the says Kuehner. “So we are very diligent in in the freight forwarder world.” 25th anniversary of the Dixie Jet transatlantic service,” Kuehner observes. “We have a history with this; we have the expertise; we have a network and the wider airfreight “We are looking to expand, but setups that have been geared around this. So I think it comes back to a lot of things WKHVKDUHWKDWLVÁRZQE\WKH OLNHFXOWXUHDQGVWUDWHJ\DQGWKLVLVQRWMXVW commercial carriers is always going something that I see a freight forwarder set up from one day to the other. I think there is WREHVLJQLÀFDQWO\ODUJHUWKDQWKLV much more to it.” QQQ controlled part”

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24 UNITED CARGO

CARGO AIRPORTS Completely and operationalpriorities now that‘UA’and‘CO’ Jan Krems,presidentof United Cargo,outlines the carrier’sstrategic have become‘we’

AIRLINE SERVICES

6XPPHU UNITED outcome ofany merger, ischangingpeoples’minds.Managementcan Whattakesprocesses themosttime,andiskey istheeasypart. to the dle oftheAirFrance/KLM merger:changingstandards, policiesand process goingforward? What lessonshave beenlearnedsofar, andhow doyou seethe interest andownership inenhancingquality andcustomer satisfaction. gagement –to ensureourfreightfacility team take members personal en- prove partner Theprioritynow customer isboostingservice service. therearealwayscourse adjustmentsmadeatindividualstationsto im- and throughout 2014. Thisprocess isessentiallycomplete, thoughof ZLGHZDUHKRXVHVZDVDVLJQLÀFDQWFKDOOHQJHLQWKHODVWKDOIRI handling ‘underoneroof’?Whereareyou withthisprocess? intermsofgettingcargooperations/ What hasbeenthestrategy the business. on whatismorelikely to leadto immediate and/orlong-term successfor originally ‘CO’or‘UA’. Allourjudgmentsanddecisionshave beenbased to eithercarrier, itnolongermatters whetheraprocess orproject was network withoneairwaybill inDecember2012. booking,tracking, products,ers, policiesandrates into oneintegrated One’: whenContinentalCargoandUnited Cargomergedalltheircustom- been theprioritiesandchallenges? operations? How have you managedthisprocess,andwhathave hasthemergerhadintermsofcargohandlingand What effect Merger update viable istoearncustomer preferenceby The most important lessonisoneIlearnedfrom beinginthemid- The mostimportant atmany world- partners The transitionofUnited Cargo’sservice Since Icameinto themergedUnited CargoinJuly2014 withoutties It hasnow beentwo-and-a-half years sincewhatwas called‘CargoDay “The bestwaytoremainconsistently being easytodobusiness with” AIRLINE INTERVIEW: UNITED CARGO

provide direction and foster the right at- a highly reliable contributor to our cus- containers available, and enhancing our mosphere, but the new shared business tomers’ success. customer service. culture is forged by the employees of the We’ve also recently launched an innova- two merged companies as they work to- $UHWKHUHDQ\VSHFLÀFWDUJHWVZLWKLQ WLYH VHUYLFH WKDW GRHVQ·W KDYH DQ RIÀFLDO gether every day. The merger isn’t a suc- that you can mention? name yet. But we are already transporting cess until employees stop thinking of ‘us’ Once we gain that customer preference, shipments using this service – shipments and ‘them’, and start thinking of ‘we’. the best way to reduce the impact of any we would not have carried using our normal future negative economic cycles is to grow or even our interline processes. This service Strategic priorities our added-value products and business. expands the destinations we can serve and What are your strategic priorities for Achieving a considerable increase in our the types of freight we can carry. It allows us this year? value-added business – TempControl, to serve customers we’ve had to turn away Given our role within the United en- EXP Express, QuickPak, UASecure for high in the past, and it maximizes our cargo ca- terprise, our essential strategic prior- YDOXHHWF²LVRQHRIRXUVSHFLÀFWDUJHWV pacity and optimizes our network. ity is the same every year: to maximize for 2015. the value of United’s cargo capacity. We A key value-added product is Temp- What are you doing in order to achieve recognize the air cargo business will be Control – our service for pharmaceu- those aims? impacted by global economic cycles and ticals and other commodities needing Another strategic priority this year is the a number of other factors we cannot con- temperature-sensitive transport. We’re rollout of the new United Cargo brand. Our trol. The best way to remain consistently enhancing our TempControl business in a new brand identity corresponds with the viable is to earn customer preference by number of ways: expanding our network, United’s revitalized ‘Friendly Skies’ cam- being easy to do business with and being offering new product options, making new paign. When we describe United Cargo as

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6XPPHU CARGO AIRPORTS AIRLINE SERVICES AIRLINE INTERVIEW: UNITED CARGO

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Quality initiatives and e-freight Are you working on any quality improvement initiatives this year, for example within Cargo 2000? If so, which? And what are you hoping to At United Cargo, our view of this achieve? What progress have you made towards improving these measures in year’s market is generally positive the last 12 months? We are addressing quality improvement Our target for 2015 is to exceed IATA’s goal improvements in customer relationships in several different areas this year. We of 45% e-AWB penetration on valid trade and delivery of quality and value have also have established a target for improving lanes by the end of the year. We are pres- played a major role in the increase. our success in the C2K key NFD metric: ently on track to exceed that percentage. QRWLÀFDWLRQ WR WKH FXVWRPHU WKDW ERWK What do you expect will be the freight and documents are on-hand at What more can be done to encourage main challenges and issues affecting destination within the time committed to e-AWB penetration in the US market? the market this year? And in the the customer. Are you working on any initiatives to medium term? United Cargo admittedly struggled in encourage uptake/participation in the The fundamental question is: will the con- WKLVDUHDGXULQJWKHODVWKDOIRIDQG wider market? tinuing expansion in the global economy be WKHÀUVWKDOIRI%\IRFXVLQJRQERWK 7KH ÀUVW VWHS IRU DQ\ FDUULHU LV WR HQ strong enough to offset the long-term issues operational improvements and increased sure their principal stations are ready to that have suppressed yields and growth in messaging compliance, we made a steady accept and process the e-AWB. We have air cargo? Overcapacity and modal shift month-over-month improvement in NFD accomplished that, and our largest e-AWB continue to be dominant adverse factors. throughout the latter half of the 2014. volumes are on those lanes where the Our goal is to maintain a leading position greatest number of customers support What are you planning to do in order DPRQJ86ÁDJFDUULHUVLQ the process. Since customers’ level of e- to meet those challenges and address AWB interest and expertise varies, we’re those issues? What is your status in terms of engaging customers wherever they are The port strike caused a welcome re- e-freight? and we’re ready to do whatever is neces- versal in the air-to-ocean trend of recent United Cargo is a strong supporter of sary to support their adoption and/or ex- years. The challenge for our industry, and IATA’s plan to establish the e-AWB as a pansion of the process. IRU RXU WHDP VSHFLÀFDOO\ LV UHWDLQLQJ DV necessary precursor to full e-freight. We much of this business as possible when achieved IATA’s stretch goal of 22% e- Market and industry issues the backlogs clear and ocean transport AWB penetration on valid trade lanes by What are your expectations for this returns to normal. WKH HQG RI 7KLV ZDV D VLJQLÀFDQW year, in terms of the market and your With regard to market share, the for- accomplishment, because our progress position within the market? mula is basic and never varies: you need was delayed as we rolled out completely At United Cargo, our view of this year’s to be better than your competition in the QHZ FDUJR WHFKQRORJ\ LQ 2QFH market is generally positive – although areas that mean the most to customers. the technology to support e-AWB was in we do not expect all regions and lanes to This means offering the products and place, United’s penetration rose from experience gains from the upturn in the services they want, providing creative so- less than 1% in January 2014 to over business cycle. Through March, United lutions to new opportunities, and keeping 22% by year’s end. Cargo’s volumes are up a very healthy your commitments and delivering on your \HDURYHU\HDU :H UHFRJQL]H WKDW promises. To make this happen, it takes What e-freight targets do you have for the West Coast port strike impacted the focus of the entire team advancing this year? Are you on track to achieve these numbers, and that we’re comparing toward a goal everyone believes in. That’s those? against a less-than-stellar 2014. But our what we’re building at United Cargo. QQQ

26 CARGO AIRPORTS AIRLINE SERVICES 6XPPHU eAWB ready

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© 2015 CHAMP Forwarding Systems S.A. Flexible GSA/GSSA FOCUS working What effect SAs are a key part of all of the international locations that they the air freight market, serve. Local expertise and contacts favors does the use of but while the outsourc- GSAs in many cases, carriers acknowledge. ing of general sales and The extent to which carriers are able GSAs and GSSAs services has formed an to maintain consistent quality standards have on quality, importantG part of the development of the when using GSAs depends on how they sector, what does their use mean for qual- monitor the GSA’s performance. Achim HIÀFLHQF\DQG LW\HIÀFLHQF\DQGWKHPRGHUQLVDWLRQRIDLU Martinka, Atlanta-based vice president, digitalisation within freight, particularly as the sector struggles the Americas for Lufthansa Cargo, says to make progress with digitalization and Lufthansa Cargo measures GSAs by the air freight? asks e-freight? Technology professionals have same key performance indicators and the expressed concerns that GSAs’ fears about same targets as its own regular stations. John McCurry losing control of the sales and bookings pro- The carrier uses weekly reviews and moni- cess – or slowness to embrace and invest toring to ensure that deviation manage- in new technology – may be holding back ment is performed in the same manner as much-needed digitalisation of air freight, in its own stations. EXWDUHWKHVHFRQFHUQVMXVWLÀHG" CAAS asked a range of airlines around Less control the world about the extent to which using “In an outsourced environment a vendor a GSA or GSSA affects their quality, per- typically has less control over the op- IRUPDQFH DQG HIÀFLHQF\ OHYHOV DQG WKH erations at the GSA site,” Martinka says. responses were about as mixed as the “Hence, Lufthansa Cargo has its own sys- strategies regarding their use among the tem to measure quality and performance various carriers. If it is possible to make a levels of a GSA. Communication and a long- generalization, all things being equal, most term cooperation are the key elements of of the leading airlines prefer to handle the a successful management of the station. majority of their cargo-related sales and To maintain a high quality level, Lufthansa services operations in-house, often for rea- Cargo uses a check and balance system to sons of perceived quality. And where they monitor GSA performance.” are used, the primary reason cited is the Functions performed by GSAs for Luf- advantage of having variable costs versus thansa depend on whether the GSA has À[HGFRVWV been established with a country or non- But all things are not equal, and in prac- country function. Martinka says country tice, the majority of air cargo carriers use a GSAs represent Lufthansa Cargo fully in mixed approach, with in-house staff often the respective country. Typical contractual Martinka: A vendor typically has less control over the operations at the GSA site used within the airline’s home market, and tasks include active sales, customer con- with GSAs often contracted for some or tracts, sales bookings, charter requests,

28 CARGO AIRPORTS AIRLINE SERVICES 6XPPHU GSA/GSSA FOCUS

claims, irregularities, marketing, account- force and other parts being outsourced to He says long-term relationships with ing and bookkeeping, liaising with authori- the GSA,” he says. “In this case the GSA GSAs enable the airline to establish trust ties and CASS, taxation, and legal affairs, model also complements Lufthansa Car- and a presence in markets, while experi- for example. go’s sales team.” enced GSAs provide thorough knowledge “In countries with an existing Lufthansa Martinka says using an internal organiza- of local markets and individual national infrastructure, be it Deutsche Lufthansa tion or outsourcing for sales activities is a regulations, Martinka says. And he doesn’t and or Lufthansa Cargo, the GSA usually strategic decision and must be determined believe that the use of GSAs has any effect performs mainly active sales and bookings on a case-by-case basis, taking into account on the move to e-freight by cargo airlines. and has a non-country function, Martinka WKHWULDQJOHRIFRVWYHUVXVÁH[LELOLW\YHUVXV “National regulations and customs rules says. “All other activities are performed by control of the operation. He adds that es- play a more important role in this context the existing Deutsche Lufthansa or Luf- tablishment of a GSA arrangement may be than a GSA or non-GSA set-up,” Martinka thansa Cargo organization.” considered a risk mitigation factor, helping VD\V ´6RPH FRXQWU\VSHFLÀF V\VWHP UH- the carrier to cope better with market volatil- TXLUHPHQWVDUHGLIÀFXOWWROLIWUHJDUGOHVVRI Hybrid model ity and the high cost of market entry. whether they are handled by the Lufthansa Lufthansa Cargo opts to establish so- “Locations where Deutsche Lufthansa is Cargo organization or by the GSA. The GSA called “country GSAs” in countries where already established are easier to enter for set-up has no impact on the development it has no presence, with the GSA then Lufthansa Cargo, since the basic legal and of e-freight.” representing the carrier and handling all accounting structures of the Lufthansa functions. “Large markets may have a hy- Group are already in place, enabling us Southwest contrast brid model with parts of the country being WREHQHÀWIURPRXUFRRSHUDWLRQZLWKLQWKH In contrast, US low-cost carrier Southwest looked after by the Lufthansa Cargo sales Lufthansa Group,” he says. Airlines hasn’t used GSAs in more than a

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6XPPHU CARGO AIRPORTS AIRLINE SERVICES 29 GSA/GSSA FOCUS

quarter century. After outsourcing cargo GSAs around the world. He says use of GSAs sales in its early years, the Dallas-based has to make commercial sense and that carrier converted its sales organization to GSAs can provide invaluable local knowl- an all-Southwest employee operation in edge in some locations. And in markets the late 1980s. The strategy seems to have WKDWDUHRIÁLQHRURSHUDWHPLQLPDOVFKHG been successful, as the carrier it is a con- ules with less throughput, the more com- sistent winner of cargo industry awards. mon option is generally a GSA. But that practice is about to change, says He also believes the use of a GSA has Wally Deveraux, Southwest’s senior direc- no affect on the move to e-freight, as auto- tor of cargo and charters. As Southwest mated functions within the airline’s system has gradually absorbed the acquisition of to handle e-AWB or e-freight are applied AirTran, international routes were added, Hitchings: The use of a wherever necessary, Hitchings explains. including carrying cargo to and from those GSA has no affect on the 'LIIHUHQW DJDLQ &DWKD\ 3DFLÀF KDQGOHV destinations. As a result, Southwest will most of its cargo sales in-house with just begin using LDJ Transport Logistics as its move to e-freight a few exceptions. Cargo director James GSA in San Juan, Puerto Rico, this spring. Woodrow says he believes that is the best “They know the market very well and they way to ensure consistent quality with sales can sell on our behalf,” Deveraux says. “It and operations. offers a variable cost model without the complexities of putting employees in an network is predominantly domestic, it has The right people international market.” D QXPEHU RI ÁLJKWV WR DQG IURP GHVWLQD ´&DWKD\ 3DFLÀF &DUJR LV ORRNLQJ WR SUR How many GSA stations will Southwest tions in Canada and Mexico. vide a high quality premium service and add? Deveraux says that remains to be But neighbouring Air Canada uses GSAs therefore train our own staff to provide determined and depends on the markets for cargo sales in many of its markets that service,” Woodrow says. “For Cathay VHUYHG DQG WKH QXPEHU RI ÁLJKWV 6RXWK outside of Canada. Tim Hitchings, Air Can- 3DFLÀF &DUJR LW·V DERXW KDYLQJ WKH ULJKW west’s international cargo expansion fo- ada’s cargo sales and interline manager SODQHV DQ HIÀFLHQW DQG ZHOOORFDWHG KXE cuses on Latin America. The carrier’s inter- for the UK, Ireland, Middle East and India, and importantly, the right people.” He says national destinations also include Mexico says the GSAs the airline uses perform a the few exceptions are for off-line origin City, Cancun, Mexico, Montego Bay, Ja- complete set of services. He says if GSA and destination points in markets such as PDLFDDQG$UXED,WLVDGGLQJÁLJKWVWR6DQ personnel are properly trained and provid- South and Central America. Jose, Costa Rica, Puerto Vallarta, Mexico ed access to all the online tools necessary, He believes using GSAs is potentially a and Belize City, Belize this year. they are as effective as a dedicated carrier hindrance when it comes to e-freight imple- He says Southwest may consider moving reservation center operated by the airline. mentation. “It certainly helps that we have beyond just sales, using GSSAs to provide “Some are contracted to provide just our own staff when it comes to driving for- a wider range of services on international sales activity, calling on customers in a ward e-AWB and e-freight,” Woodrow says. routes in the future where it makes sense, VSHFLÀF WHUULWRU\µ +LWFKLQJV VD\V ´2WKHUV Cathay’s e-AWB penetration levels are eas- although there are no current plans to use are sole representatives, auctioning opera- ily the highest of any Asian carrier and one either in the US. tional services such as front-end computer of the highest of all carriers worldwide. Elsewhere in North America, Alaska Air- and warehouse functions, weight and bal- While Cathay rarely uses GSAs, there are lines is another cargo carrier that prefers ance entries to ULD build, plus all the res- some major cargo carriers who elect not to to keep sales functions in-house, accord- ervation and sales activities.” use GSAs or GSSAs at all. One of those is ing to Betsy Bacon, managing director of Hitchings says Air Canada uses several Air France/KLM/Martinair. “Since we can Alaska Air Cargo. Although the carrier’s GRWKLQJVE\RXUVHOYHVLQWKHÀHOGRIVDOHV we prefer to continue doing so,” says cargo

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US SLOW TO ADOPT GSA BUSINESS MODEL The US air cargo industry remains a slow adopter of the GSA or GSSA business model, with most US-based carriers preferring to handles these duties in-house, at least domestically. Jens Tubbesing is CEO of Dallas-based Airline Network Services, a GSSA that operates only in the US and Canada, but as a former KHDGRI,$7$·V86ERG\&DUJR1HWZRUN6HUYLFHV &16 KHRIIHUVDEURDGSHUVSHFWLYHRIWKHDLUIUHLJKWVHFWRU+HVD\VLW·VGLIÀFXOWWR make a general statement about outsourcing, but there continues to be a gradual trend toward use of GSSAs in the US. He says RXWVRXUFLQJKDVWKHDGYDQWDJHRIRIIHULQJYDULDEOHFRVWVUDWKHUWKDQÀ[HGQRWLQJWKDWWKLUGSDUW\VHUYLFHSURYLGHUVJHQHUDOO\KDYHDQ incentive to be successful. ´$LUOLQHVDUHDVNLQJWKHLUSDUWQHUVIRUVLJQLÀFDQWO\PRUHFRPPLWPHQWDQGLQYROYHPHQWµKHREVHUYHV´$ORWKDVWRGRZLWKSHUIRU mance, and performance answers most of these questions. There’s not a general trend, but more of a question of how people want WRVWUXFWXUHWKHLUEXVLQHVVµ 7XEEHVLQJVD\VDLUOLQHVDUHVLJQLÀFDQWO\IDVWHULQVWDUWLQJRUHQGLQJURXWHVWKDQLQWKHSDVW7KLVLVDQLQFHQ WLYHIRUDLUOLQHVWRXVH*66$VEHFDXVHLWHOLPLQDWHVWKHQHHGWRKLUHÀUHRUOD\RIISHRSOH´$LUOLQHSDUWQHUV RQWKHJURXQGDUHTXLFNDJLOHKDYHORFDOPDUNHWNQRZOHGJHDQGXQGHUVWDQGWKHSURGXFWµKHDGGV Tubbesing doesn’t believe that the use of GSSAs has any effect one way or another on an airline’s implementation of the e-AWB and says Airline Network Services works mostly through the technology platforms of its clients. “My personal opinion is that it (electronic air freight) is a way overblown topic. I think it’s overblown in the sense that you are seeing some airlines today aggressively pushing forward because it makes sense in boosting productivity and reducing costs and that’s great. There are others that don’t see it that way and they are not ready for it and that’s great. In the end, it is more a business issue and the market will determine how it plays out. The same thing is true on the forwarder side. Some are embracing it and oth- HUVDUHYHKHPHQWO\DJDLQVWLWµ Airline Network Services currently serves 15 airports in the US and Canada. Tubbesing says that is a suf- ÀFLHQWQXPEHURIRIÀFHVEXWKHDQWLFLSDWHVJURZWKZLWKLQWKRVHORFDWLRQV´

32 CARGO AIRPORTS AIRLINE SERVICES 6XPPHU SERVICES +LJKYDOXHSURGXFWVUHTXLUHȴUVWFODVVWUHDWPHQW$OKDSURYLGHVD FRPSUHKHQVLYHUDQJHRIHQKDQFHGKDQGOLQJVHUYLFHVIRUKLJKWHFKFDUJR IDVKLRQSURGXFWVKHDOWKFDUHVKLSPHQWVDQGOX[XU\FDUV

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SYMPOSIUM REPORT ‘Unresponsive Shippers at the IATA World Cargo and too slow’ Symposium (WCS) in

Shanghai criticised ir cargo remains too slow, itself to be more responsive to customers’ air freight for failing unresponsive, and lack- needs – particularly the need for visibility ing in visibility, according throughout the transport chain. “We are to provide the speed to shipper representatives more connected and have implemented and visibility they speaking at the IATA World tools that allow us to be more connected ACargo Symposium (WCS) in Shanghai. to the [surface] transport process,” he expect. But air freight Some of their views were, in part, also said. “But in air transport, we are more mounted a partial UHÁHFWHGLQDQHZ,$7$6KLSSHU6XUYH\XQ disconnected; the information sharing is veiled at the event, although the average not there.” defence and IATA’s satisfaction rating expressed by the more Alex Xu, associate supply chain director Shipper Survey gave than 300 shippers responding to the 2015 for Lilly Suzhou Pharmaceutical Co., also survey was somewhat higher than the rat- complained about a lack of proactive infor- the sector a relatively ings given by the three panellists offering mation from the air cargo chain, claiming positive rating, their forthright opinions on the WCS stage. that he often only found out about devia- Robert Mellin, head of distribution logis- tions when the shipment arrived or when reports Will Waters WLFVIRUWHOHFRPPXQLFDWLRQVÀUP(ULFVVRQ he actively asked for information. “We gave air freight a satisfaction rating of just don’t know what is happening during the RXWRIVD\LQJWKDWDOWKRXJK(ULFVVRQ shipment; everything goes blank,” he said. spent almost US$200 million a year on air Xu gave air freight a rating of “6 or 7”, freight, it only did so where it had to - in saying that two years ago he would have order to avert delays that were unaccepta- rated it at 8 out of 10. He said air freight ble to its customers. He said air freight was 10 times the price of surface transport, but not 10 times as fast. “We are keen to have a better service, “We don’t know what is but we have not seen much happening in air freight – apart from the e-air waybill, happening during the but that has not really been moving for- shipment; everything ward,” he claimed. Mellin said that surface Hughes: Very important feedback WUDQVSRUW SDUWLFXODUO\ LQ (XURSH KDG LQ goes blank” the meantime made progress and shown Alex Xu

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ing the number of passengers they could carry. “Nevertheless, the use of the second runway enabled us to keep disruption to a minimum. Without it, the airport would have closed with all flights cancelled until the aircraft was safely removed from the main runway,” the spokesman pointed out. SALVAGING Elsewhere, at Nairobi’s busy Jomo Kenyatta Internation- al Airport (JKIA), the same week saw an aircraft crash-land when its landing gear failed during its approach from Wajir to the Kenyan capital. Reports said that the incident resulted LEGACIES in flights being diverted to Mombasa while the Fokker 50 tur- boprop was removed from the runway, which was reopened later the same day. According to the International Civil Aviation Organization (ICAO): “Recovery operations will differ from state to state and from facility to facility, depending on local resources, planning and priorities.” ICAO’s provisions pertain to the investigation and protection of wreckage in general rather than its recovery. Aircraft Forwarder focus: accident and incident investigation is covered by Annex 13 to the Chicago Convention on International Civil Aviation. Para- Panalpina graph 3.2 of Annex 13 states: “The State of Occurrence shall take all reasonable measures to protect the evidence and to Lucas Kuehner on the maintain safe custody of the aircraft and its contents for such While air transport is subject to stringent safety regulations, there are still a period as may be necessary for the purposes of an investiga- ‘controlled’ network occasions when things can go wrong. Sometimes an air accident is tion. Protection of evidence shall include the preservation, by photographic or other means of any evidence which might be minor; sometimes, sadly not. Either way, there are lessons to be learnt removed, effaced, lost or destroyed. Safe custody shall include protection against further damage, access by unauthorised n early January, a Saab 340 operated by Loganair veered obvious safety reasons, it was not possible to use the main persons, pilfering and deterioration.“ Handling focus: CPSL Airline interview: Jan Krems off the runway while taking off for Glasgow from Storno- runway until the aircraft could be removed. It was neces- It is further noted that, “Protection of flight recorder evi- Kelvin Ko on third-party growth United on the road to quality way Airport on the Isle of Lewis in Scotland. It is thought sary to leave the aircraft in situ until AAIB officials carried dence requires that the recovery and handling of the recorder that the aircraft was caught in a strong crosswind, al- out a full investigation. and its recordings be assigned only to qualified personnel.” thoughI at the time of writing an official investigation by the “Fortunately, we were able to quickly resume flights us- Paragraph 5.6 of the Annex states: “The investigator-in- UK’s Air Accident Investigation Branch was still under way. ing Stornoway Airport’s secondary cross runway. A combi- charge shall have unhampered access to the wreckage and all A spokesman from airport operator Highlands and Is- nation of factors, including weather, fuel capacity and air- relevant material, including flight recorders and ATS records, lands Airports Limited (HIAL) noted: “There was some dis- craft weight meant that for safety purposes airlines were and shall have unrestricted control over it to ensure that a de- ruption on the day itself and over the weekend because, for required to impose payload restrictions, effectively reduc- tailed examination can be made without delay by authorised Continued on page 2 Airline pharma Christopher R. King products report founder of Cruzach, Inc Are carriers delivering the goods? Special Reports: The EVAA Future of Business Aviation Conference and Exhibition highlights U Engines U Paints U EVAA’s MEBA Beach Party G OLDHOFER + SCHOPF = PERFORMANCE² Company Profi les: James Raisbeck, CEO Raisbeck Engineering U John Wade, executive VP Gogo Business Aviation TWO EXPERTS, ONE GOAL: www.ags-airlinegroundservices.com Shawn Vick, Chairman, Global Jet Capital UÊMarc Foulkrod, Chairman & CEO Avjet PERFECT PERFORMANCE AT THE AIRPORT World Cargo Symposium report CNS conference report Shippers tear into air freight Cyber-crime: the hidden threat WWW.SCHOPF-GSE.COM WWW.GOLDHOFER.DE MERGERS AND SAFE GROUND CONSIDERING WORLDWIDE DIRECTORY ACQUISITIONS HANDLING: AVIATION OF GROUND SERVICE 6800(5WWW.CAASINT.COM

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had not got worse per se, but what had Welsh: Shippers say changed was that pharma’s regulatory requirements had increased and the air air freight has gaps in freight sector had not responded well its visibility chain and is enough to the new demands. Pharma shippers like Lilly wanted not not fast enough to justify just better information about the ship- its costs ment’s progress, but also for someone to intervene proactively if the shipment, for example, suffered a temperature deviation. Although pharma companies like his Of the 336 shippers responding to the were currently facing cost pressures as 2015 IATA Shipper Survey, the 94% that products move out of patent protections, shipped some products by air gave air he said they would be “willing to share the cargo a rating averaging 7.08 on a scale SDLQ DQG WKH EHQHÀWVµ RI LQYHVWPHQWV LQ of zero to ten, with ten representing ‘very order to improve service quality, accepting VDWLVÀHG·DQGDVFRUHRI]HURUHSUHVHQWLQJ higher pricing for a better service. ¶YHU\XQVDWLVÀHG·$URXQGZHUHVDLGWR Chris Welsh, secretary general of the EH¶YHU\XQVDWLVÀHG·ZKLFKZDVDFDXVHIRU Global Shippers’ Forum, said that after concern, said Tom Windmuller, IATA SVP for consulting with member companies, he Airports, Passenger, Cargo and Security. would give air freight a rating of just 6 out That was around US$4 billion of air cargo QRW Á\LQJ DV ERRNHG RIÁRDGV WRR PXFK of 10. While some only used air freight as spend where the customer is unhappy and repetitive data entry; long lead times com- a “distressed purchase” when they had where the business is, therefore, under pared to cost; replies to enquiries taking to, he said it was the customers that were threat, he observed. days; and a lack of ability to control the air dependent on air freight as a distribution -RRVW YDQ 'RHVEXUJ DLU IUHLJKW SROLF\ freight process themselves. channel – such as companies in the hi- PDQDJHUDWWKH(XURSHDQ6KLSSHUV·&RXQ- Mellin called for the creation “in the tech or pharma sectors – that were most FLOFODLPHGWKDWWKHUDWLQJÁDWWHUHG next 12 months, of a big data hub, where frustrated that “it just can’t get its act to- air cargo, “because the survey referred everyone is connected, and we have faster gether quickly enough”, complaining that to shipments by air, which includes the execution and accuracy, and the lead time it had gaps in its visibility chain and was integrators. And they are very happy with goes down by 40%”. He said the sharing simply not fast enough to justify its costs. the service provided by the integrators,” of accurate information would generate he said. performance improvements, arguing that it Respondents said the top three reasons wasn’t necessarily a case of needing to pay they used air freight were time or speed more for better services. “I don’t see this (90%); customer requirements (40%); and transformation and innovation as driving reliability (30%). Asked ‘What is wrong cost up, but down,” he said. with air freight?’, they listed a variety of Chris Welsh, secretary general of the complaints, including that it was “too Global Shippers’ Forum, said he had pub- FRPSOH[µ ´LQHIÀFLHQWµ DQG ´ODFNLQJ LQ lished a paper in 1995 saying that the transparency, quality, and real-time infor- VFRSHIRU(',ZLWKLQDLUIUHLJKWZDVOLPLWHG mation”. Others complained about cargo “due to the lack of integration and the absence of anyone to lead the process”, ob- serving that it took until 2010 to for such a structure to be put in place. He said there Mellin: Better sharing of had still been little progress since then, but offered to “give it another go” by help- accurate information will ing to lead modernisation initiatives from generate performance WKH(&RPPHUFH7DVN)RUFHVHWXSE\WKH improvements, driving multidisciplinary body GACAG (Global Air Cargo Advisory Group). “If there is a willing cost down, not up commitment by the industry, I am prepared

6XPPHU CARGO AIRPORTS AIRLINE SERVICES 37 ACA-SCA-2015 Eva Intl. MEdia AD.qxp_Layout 1 4/23/15 10:08 PM Page 1

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WRSXWWKHHIIRUWLQWRWKH(&RPPHUFH7DVN days cited by Mellin. Questioned by Mellin, Force and would like to invite Robert to join she acknowledged that this was airport- that,” Welsh offered. to-airport rather than door-to-door transit “But I think we need to give it a new time, and Mellin responded that 24-hour focus. We have technology people within transit times were not his experience of the that, but maybe we need people to come typical airport-to-airport experience. from the outside to look at how information However, another delegate questioned can, for example, be stored in the Cloud Mellin on whether he had ever engaged DQG ÀQG ZD\V WR LPSURYH WKLQJVµ %XW KH in tripartite discussions, including both his said the task force had to be “a coalition freight forwarding and airline suppliers, of the willing; people that are really willing about issues such as transit times, visibil- to get there”. ity and his logistics needs, and whether he Asked for one single action to improve had visited airport cargo facilities in order the performance of air freight for shippers, to get a better understanding of the vari- Welsh said: “I want progress on e-com- ous processes and stages involved. Mellin merce, as I think that will deal with a lot of DGPLWWHGWKDWKHKDGRQO\ÀQDOO\SDUWLFLSDW- the frustrations. So I want a timed project ed in such a visit the previous week, and ZLWKLQWKH(&RPPHUFH7DVN)RUFHDW*$- said forwarders had not encouraged – and CAG to blitz that, and come out of that with even resisted – tripartite discussions. a clear case study that shows the industry “I think we have been isolated by the ‘That is how you do it’, so that the industry Xu: Pharma’s regulatory 3PLs; they have not been happy for us to has got something that it can implement.” requirements have have access [to carriers],” he said. “The IATA’s global head of cargo, Glyn 3PLs don’t like us to know too much, be- Hughes, responded: “We are going to cap- increased and the air cause information is power. So, we are talk- ture all of that very important feedback freight sector has not ing about placing the information where we and play it back next year [at the 2016 responded well enough to can all see it. But things have to change.” WCS], to look at not just did we listen, but Ben Radstaak, managing director of what did we do?” the new demands Amsterdam-based association Air Cargo However, at a later workshop session Netherlands, later observed that if a ship- on shippers’ needs, several air freight ex- SHU H[SHULHQFHG VLJQLÀFDQW DQG UHSHDWHG ecutives defended the sector following the whether they had requested proactive GLIÀFXOWLHV ZLWK WKH DLU ORJLVWLFV VHUYLFHV criticisms by Mellin and his fellow shipper alerts or exceptions updates, while some they were receiving, generally it was a sign representatives, arguing that suboptimal customers did not request any information that they needed to use a different freight visibility, communications, and transit at all about their shipments’ progress. forwarder. But in Mellin’s defence, the times apparently experienced by some car- Mellin responded that if he had to pay (6&·VYDQ'RHVEXUJVDLG(ULFVVRQDOUHDG\ go owners most likely represented a failure the higher rates required for express and XVHGÀYHRUVL[IUHLJKWIRUZDUGHUV by the shipper to adequately engage with higher-level services, the cost of using air And on the question of whether some their air logistics suppliers. freight would become unsustainable and shippers were unrealistic in terms of the Responding in particular to the highly take up even more than the 71% of his levels of service they expected in return FULWLFDOSUHVHQWDWLRQE\0HOOLQ'%6FKHQ- US$260 million distribution budget that it for the price that air freight charged, van ker’s director of air freight security stand- did currently, making it unaffordable. He 'RHVEXUJ SRLQWHG RXW WKDW VKLSSHUV ZHUH ardisation, Lothar Moehle, pointed out argued that with air freight already costing willing to pay even higher prices for the that freight forwarders generally offered 10 times more than surface transport, fast services of integrators where they needed different levels of service according to transit times and shipment visibility should H[SUHVV WLPHGHÀQLWH VHUYLFHV REVHUYLQJ their customers’ needs, ranging from pre- come as standard. that he had never experienced shippers PLXP H[SUHVV DQG WLPHGHÀQLWH VHUYLFHV A Swiss delegate within the working complaining about the cost or value-for- to deferred consolidation-based services. group responded that she had checked money provided by those integrator ser- He said different levels of communication her company’s transit time performance vices. This demonstrated that they were were also provided to customers about and it was typically around 24 hours for willing to accept higher prices for genuinely the shipment’s progress depending on long-haul shipments, rather than the 10 premium services, he argued. QQQ

6XPPHU CARGO AIRPORTS AIRLINE SERVICES 39 Third-party ambitions

Will Waters talks hen a new cargo because this is new, and so we are obviously handling facility trying to get business from the market.” with Kelvin Ko, opens at an airport, He believes the signs are positive. Indeed, CEO of Cathay there is inevitably Hong Kong International Airport had a record- a period of overca- breaking year in 2014. “When new terminals 3DFLÀF6HUYLFHV Wpacity until volumes, hopefully, grow and come into operation, there can obviously be Limited, about begin to catch up with the new capacity overcapacity for a period of time, when you available. But adding a new facility that bring a few million tonnes into the market,” the challenges alone has a capacity of 2.6 million tonnes observes Ko. “But the investment decision is of adding a 2.6 – more capacity than most airports have in for the long-term, and we still think it is healthy, total – would seem to be an extraordinary especially as we see cargo picking up.” million tonne mega challenge. However, Hong Kong is not most The terminal has been fully operational WHUPLQDOWRWKH airports, and with the local government since the end of 2013, and Ko says the tran- recently giving the go-ahead for a third sition of Cathay from neighbouring Hactl was ZRUOG·VODUJHVW runway, the world’s busiest international “very smooth”, as was the start of handling cargo airport and its home carrier Cathay IRU(YD´,Q-DQXDU\RXUÀUVWPRQWKRIRSHUD HANDLING FOCUS: CATHAY HANDLING FOCUS: CATHAY

PACIFIC SERVICES LIMITED FDUJRDLUSRUW 3DFLÀF FRXOG QRZ EH VHHQ DV SUHSDULQJ WLRQVIRU(YDZHVDWLVÀHGDOORIWKHLU.3,VDQG sensibly for the future. Even if those prepa- they have given us a very high rating in terms rations cost Cathay HK$5.9 billion. of performance,” Ko reports. ,QGHHG &DWKD\ 3DFLÀF &DUJR 7HUPLQDO &3&7 KDVKDUGO\VDWLGOHVLQFHRSHQLQJLQ Service performance 2013, handling 1.45 million tonnes of cargo Ko says performance for Cathay has also LQ LWV ÀUVW IXOO \HDU RI RSHUDWLRQV 2I been good, with some noticeable improve- course, most of this tonnage has come from ments in key performance measures – as WKH FDUJR EXVLQHVVHV RI WKH &DWKD\ 3DFLÀF KDGEHHQRQHRIWKHDLPVLQFUHDWLQJ&3&7 JURXS$LU+RQJ.RQJ&DWKD\3DFLÀF$LUZD\V – particularly on imports. itself, and Dragonair – with a small contribu- “We have been doing quite well in terms tion from third-party carriers AirAsia, Thai of service. We come from an airline back- AirAsia, and Royal Brunei Airlines. But late ground, so we do understand the concerns ODVW\HDUWKHJURXS·V&DWKD\3DFLÀF6HUYLFHV – for example, not to upset the whole supply /LPLWHG &36/ VXEVLGLDU\ZKLFKZDVWDVNHG chain just for the sake of pennies. The cost with designing, building and operating the of handling obviously is important, but more terminal under a 20-year franchise from the important is that you provide a good service Airport Authority, also secured a contract to to the customer. And Cathy is considered a KDQGOHLWVÀUVWPDMRUWKLUGSDUW\FDUJRFXV premium carrier.” WRPHUDW&3&77DLZDQ·V(YD$LU For import shipments going into Hong &36/&(2.HOYLQ.REHOLHYHVWKH(YDZLQ Kong, including breaking them down, Ko sends a strong signal to the market that says cargo is now ready for collection three the organisation is willing and able to han- KRXUVDIWHUÁLJKWDUULYDOIRUDSDVVHQJHUÁLJKW dle any of the world’s major cargo carriers. DQGÀYHKRXUVIRUDIUHLJKWHU²´ZKLFKFRXOG “At the very beginning, lots of people maybe obviously be 100 tonnes, and which is an got the impression that we are here to han- improvement from previous terminals. Obvi- dle the Cathay group only, but obviously this ously, some customers are extremely happy is not quite true. The situation in Hong Kong about that because they can get the ship- is that we are one of the three common ments sooner and they can send it over to cargo terminals and we have to China or they can sort it and then deliver the open our business and our same day. So that has been very welcome in terminal for any business, terms of the import side.” basically. And we are in For exports, handling times are similar to the situation where Cathay’s previous handler. “On the export

.R,PSURYHPHQWVRQWKHLPSRUWVLGH we still have capacity side, to be honest Hactl was doing very well,

40 CARGO AIRPORTS AIRLINE SERVICES 6XPPHU and we are maintaining the same standard – and maybe a little bit more reliable, but I wouldn’t say it was too much difference,” VD\V.R´%XWWKHWUXFNZDLWLQJWLPHVKDYHEHHQVLJQLÀFDQWO\LP proved. So in the past the truck came in and had to wait some time before it can get in the terminal, but we seldom see people waiting – they can just go straight to the terminal, because we have more capacity.” Transshipments are particularly important for Hong Kong and Cathay. “As a hub it is very important you get minimum connection times, to make your product as competitive as possible against RWKHUKXEVRUFDUULHUV$QGIRURXUVKDUHKROGHU&DWKD\3DFLÀFRE viously this is their hub, and so in our design, we set aside certain facilities so that we can do transshipments with the minimum connection time reduced to 5 hours – and if they have made some pre arrangement we can actually do up to 3 hours. This is for shipments that require breakdown and build up; otherwise, tail-to-tail in one hour is standard.”

Third-party handling +DYLQJ EHGGHG LQ DQG ÀQHWXQHG LWV RSHUDWLRQV IRU &DWKD\ WKH focus has now turned to attracting additional customers, and Ko EHOLHYHVWKHDGGLWLRQRI&3&7KDVDGGHGWRWKH´KHDOWK\FRPSHWL tion in the market”. Some had feared that the adding so much new FDSDFLW\ZRXOGSXWVLJQLÀFDQWGRZQZDUGSUHVVXUHRQSULFLQJEXW not so, it appears. “We can’t discuss too much on the details of pricing, but there KDVEHHQGLIÀFXOW\LQ+RQJ.RQJJHWWLQJ/DERXUIRUH[DPSOHVR, would not expect to see too much opportunity to lower prices in a VLJQLÀFDQWZD\EHFDXVHWKHFRVWRIRSHUDWLQJLVDFWXDOO\LQFUHDV ing,” says Ko. “Also, we have put in investments of HK$5.9 billion, and someone has to pay for that.” In fact, there have been some adjustments on the upward side, observers say. “I think we are competing more on service,” says Ko. “There has to be value for money and you have to be reasonable in how you deal with things, but, everything being equal, we would try to com- pete on service.”

Individualisation Although LCCs such as Air Asia have only limited cargo volumes, WKHLUUHTXLUHPHQWVKDYHEHHQDJRRGRSSRUWXQLW\IRU&36/WRGHP RQVWUDWHLWVÁH[LELOLW\DQGDELOLW\WRDGDSWDQGWDLORULWVVHUYLFHVWR particular customers and customer segments. “We are working with a relatively small customer base, and so 3rd Cool Chain - Pharma Event that enables us to tailor to the individual airlines’ requirements,” 1st - 2nd October 2015 - Basel says Ko. “For example, Air Asia is a low-cost carrier, and so they turn around the aircraft in 25 minutes, and so their needs and pri- To attend, speak at or sponsor the event please contact: orities for cargo are different from some other airlines. Their priority Parveen Raja on [email protected] is to get on-time departure of the plane, even sometimes at the or call +44 (0) 208 253 4000 US Representative - Pam Latty H[SHQVHRIWKHFDUJRZKHUHWKH\ZLOOKROGWKDWIRUWKHQH[WÁLJKWIRU [email protected] or call +1 770 517 3952 example. So operationally, we need to get everything ready so that www.coolchain.org | www.evaint.com cargo loading won’t be a bottleneck. We need to make everything

6XPPHU CARGO AIRPORTS AIRLINE SERVICES HANDLING FOCUS: CATHAY PACIFIC SERVICES LIMITED

$OOGDWDFROOHFWHGWKURXJKEDUFRGHVFDQQLQJLQWKH IDFLOLW\LVIHGWRWKHLQWHJUDWHG7HUPLQDO&RQWURO&HQWUH

available in the right priority, so it can eas- Cathay’s partners won’t be a situation where we, for example, ily be handled. And if they need to make a One area with potential is attracting carri- leave it out on the ramp for two hours before decision to cut some cargo, they know which ers that have interline or partnerships with we process it because we are too busy. I am cargo should go and which to hold, and so we Cathay “where it is sometimes easier to co- SURPLVLQJ WKUHH KRXUV WR ÀQLVK SURFHVVLQJ can transfer that to the next aircraft.” locate in one terminal; it facilitates a lot of so I can’t afford to do that.” Eva Air also has some distinctive needs. cooperation, and operationally there will be a He says it is transshipments where the “With Eva Air, they have some shipments that ORWRIEHQHÀWµREVHUYHV.R%XWKHVWUHVVHV challenge often comes for handlers, both in are express – mainly driven by e-commerce WKDW&3&7RSHUDWHVTXLWHLQGHSHQGHQWO\IURP terms of security and temperature deviation from China through Taiwan and sometimes &DWKD\ 3DFLÀF &DUJR ´EHFDXVH ZH KDYH WR – for example, if a shipment has a four-hour beyond, for example to the US. For that, we maintain independence”. Some airlines were wait and does not require processing. “I think set aside dedicated space and additional x- concerned about independence and sharing most airports there would put it on the ramp, ray machines, that kind of thing. Even with a of information, but it is independent in that but we will put it under shelter, within our fa- brand-new terminal, we can make an adjust- sense – I have my obligations and have to be cilities and under the cover of CCTV.” ment on the design to suit their requirements. responsible to my customer. I can’t take cus- He says that when people talk about the “So that is the mentality. It is more dif- tomer information and pass it on to Cathay.” challenges of temperature deviation for per- ÀFXOW LI ZH GR HQG XS ZLWK ORWV RI GLIIHUHQW ishable shipments, usually they are talking customers, but for particular customers we Security about transshipments at the hub, on a tail-to- can tailor things. So that is how we are trying Security is another area where he believes tail basis. “That could be three or four hours, WRFRPSHWHLQWKHPDUNHWRXUVHUYLFHVDUH &3&7KDVPXFKWRRIIHU´6HFXULW\LVYHU\LP but if that is Dubai, if they don’t put it into a more tailored to the changing requirements, portant at Hong Kong – and obviously in the temperature-controlled environment, three or and so far it has been quite successful.” wider air freight industry, where companies four hours is a long time at 45°C. And in Hong like Samsung and Apple ship high-value, at- .RQJLW·VDVLPLODUVLWXDWLRQLILWLVUDLQLQJWZR Third-party imperative tractive shipments – and there are some de- or three hours is a very long time.” So how important is it to win third-party sign features in our terminal. First of all, our 6HFXULW\FRQVLGHUDWLRQVDOVRSOD\DVLJQLÀ business? “There has been a lot of capital staging area is within our footprint. In many cant part in Hong Kong’s competitive advan- investment in the terminal – HK$5.9 billion SDUWVRIWKHZRUOG\RXZLOOÀQGWKDWSHRSOH tage over airports in mainland China – along – and so obviously the shareholders are leave some shipments at the ramp, at the with a certain quality gap and customs chal- looking for a payback and return. We have parking bay. But we basically have the stag- lenges in some jurisdictions. But the south- a capital-intensive situation, so the more ing area within our cover. Firstly, that gives ern Chinese airports are making progress in business we get, the easier it is to pay weather protection; but it is also under CCTV terms of handling standards. back. So it was always in the business plan coverage – and we have more than 1,000 ´,ZRXOGVD\WKH\DUHGHÀQLWHO\LPSURYLQJµ that we will do third-party, and obviously cameras; high-resolution, HD cameras so says Ko. “We believe Hong Kong last year still the more the market is growing, everything you can zoom in.” maintained the number one position in the will be much easier. The market has been world in terms of our cargo throughput, and tough in the last few years, but it is now Just-in-time philosophy that has broken the record period set in 2010. coming back a little bit. Obviously we don’t This meets operational as well as security A lot of people say that one day will be over- know what will happen in the remainder needs. “First of all we are trying to do a just- taken by mainland China, but my view is that, of 2015, but the starting few months of in-time concept, so we don’t usually stage LI\RXWDNHIRUH[DPSOH/RQGRQ\RX·OOÀQGWKDW 2015 have been reasonably good. So it is shipments outside for longer than neces- even though it is perhaps not the best airport important to get third-party business; that sary,” explains Ko. “And for inbound, we in the world, it is still growing and people still is what the terminal is designed for, and we process immediately - otherwise it would not Á\WKHUH²MXVWEHFDXVHLWKDVDYHU\JRRGQHW do believe we can add to that.” be to meet our service standards. So there work and frequencies and connectivity. If you

CARGO AIRPORTS AIRLINE SERVICES 6XPPHU HANDLING FOCUS: CATHAY PACIFIC SERVICES LIMITED

have more, more will come – unless you really do more; you can’t do enough,” he says. “X- Proactivity on security stand still. Otherwise, just because you have raying 100% of cargo is not 100% safe; the .RFRQWLQXHV´0\KRSHLVIRUWKHLQGXVWU\DVD more network, connectivity, frequency, capac- Yemen incident showed that. So, from an in- whole to take this approach, but in Hong Kong LW\SHRSOHZLOOÁ\LQWRLWEHFDXVH\RXFDQJHW dustry perspective, we should be doing more lots of people wait for the regulators and then more business. So critical mass is very impor- on a proactive basis – exceeding the mini- only do something if they will be out of busi- tant, and Hong Kong does have advantages in mum standards. We all know that we can ness otherwise. If more people try to be more terms of its network.” keep lobbying, but if one incident happens…” proactive and improve security, then maybe But whether it can retain that is an impor- :LWK WKLV LQ PLQG &36/ KDV LPSOHPHQW- we can retain the status longer and be more tant question, Ko acknowledges. ed the security management system ISO competitive in the market. Then we still have a “One of the threats that we are facing 28,000, a standard for the logistics industry. distance from other airports in China.” is around security. Hong Kong has been ´:HDUHWKHÀUVWLQ+RQJ.RQJWRJHWWKHFHU- .R FRQFOXGHV ´,W LV D IDFW WKDW &KLQD LV YHU\HIÀFLHQWSDUWLFXODUO\LI\RXGRDORWRI WLÀFDWLRQ$JDLQZHKDYHWDNHQWKHLQLWLDWLYH getting more developed, and if they have consolidations. Having a green status, the and the reason is because we have state- capacity then customers don’t need to go ‘regulated agent’ regime works. That means of-the-art facilities, hardware, and the latest to Hong Kong. It is happening and we can’t that we don’t have to x-ray everything, un- technologies. But it is the people that make ignore that. For example, a lot of air cargo OLNH&KLQD3HRSOHZRQGHUZKHWKHUWKDWZLOO the difference. shipments will go direct to Zhengzhou. It’s change one day.” “So we need to constantly review our risk not an issue to me, as rather a lot of people Ko believes the air freight sector in Hong levels and do things proactively. If there are don’t have full charters, and so they want to Kong needs to think carefully about this is- risks there, we try to do things in advance, go somewhere like Hong Kong where we pro- sue, rather than waiting for change to be DQGWKLVLVWKHVSLULWRI,62DQGZH vide a lot of connectivity, and good service. forced upon it. “With security, you can always ÀQGLWLVLQOLQHZLWKRXUEHOLHIVµ We still have a role to play.” QQQ

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6XPPHU CARGO AIRPORTS AIRLINE SERVICES 43 Nearly 600 members of the air cargo community descended upon sunny Orlando, Florida in late April for the 25th CNS Partnership Conference. The three-day event at the Rosen Shingle Creek Resort brought together leading shippers, carriers and freight forwarders from around the globe. Keri Forsythe-Stephens reports on the highlights for CAAS.

Air freight vulnerable to cyber attacks CNS REPORT

“There are two types hether cargo compa- Bishoff echoed Francy statements, com- nies know it or not, menting that freight businesses are targeted of companies, those they’re targets for for a unique reason: They move valuable that have been security breaches, goods, which is of particular interest to hack- hacked and those that according to Faye ers. “The disruption of the aviation industry WFrancy, executive director of the Aviation In- has multibillion-dollar-a-day impacts,” Bishoff don’t think they’ve formation Sharing & Analysis Center (A-ISAC) said. “And in the world we live in, there are been hacked” and leader of Boeing’s Cyber Security team, people who can make money on the stock as she attempted to shed light on the very market by disrupting your services.” Hackers Faye Francy real threats of cyber attacks affecting mem- may also want to know the cost companies bers of the air freight community. place on certain transactions. “There are two types of companies,” she told CNS attendees. “Those that have been SME potential vulnerability hacked and those that don’t think they’ve Mills said that hackers especially prey upon been hacked.” The amount of sinister activity entities with sloppy security systems – and that’s looming behind the scenes is stagger- small-and-medium-sized businesses may ing, she said. “I would recommend that all of ÀWWKHELOO´7KHUHDUHDORWRIRSSRUWXQLVWLF you take this very seriously,” Francy added. hackers out there,” he said. “Your informa- Francy was part of a panel moderated by tion is extremely valuable – and they know Matthew Eggers, senior director of national that as well.” Drug cartels comprise some security and emergency preparedness at the of the top offenders of cybercrimes, Mills US Chamber of Commerce. Its other mem- revealed. Beating the “bad guys” at their bers were US Customs and Border Protection game requires freight companies to bring &%3 2IÀFHRI,QIRUPDWLRQ7HFKQRORJ\DFWLQJ cyber-security to the forefront, he said, and executive director Tom Mills, and Hewlett- understand their vulnerability to an attack. 3DFNDUG +3 FOLHQW VHFXULW\ RIÀFHU RI ,QIRU It’s a challenge, Bishoff acquiesced, but mation Risk Management, Dallas Bishoff. it’s highly necessary. “I’m glad to be here,”

44 CARGO AIRPORTS AIRLINE SERVICES 6XPPHU A better tomorrow begins today

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he told CNS attendees, “because out of all the industries I have to watch out for, aviation ATTRACTING NEW BLOOD: #AIRCARGOISSEXY is my favorite.” Cargo businesses and freight airlines need In the CNS panel he moderated, Robert Kennedy, vice president of consulting services at Aviation Strategies International, joked that he’s on a joint mission with CNS to be particularly cognizant of advanced President Warren Jones to hashtag #Aircargoissexy. He was being facetious, of course, persistent threats (APTs), Francy said. Such EXW.HQQHG\EHOLHYHVWKDWWKHDLUIUHLJKWVHFWRUFRXOGEHQHÀWIURPDPDMRULPDJH threats occur when hackers take their time RYHUKDXO´,KDGWKHJRRGIRUWXQHRIKDYLQJSHRSOHZHOFRPHPHWRWKHDLUFDUJRÀHOG DQG,GLGÀQGLWVH[\DIHZ\HDUVEDFNµ.HQQHG\VDLG´%XWLWZDVQRWE\GHVLJQ6R before staging an attack. “They’re in your KRZGRZHPDNHLWDGHVLUDEOHFDUHHUSDWK"µ network for a while, and they’re persistent,” CNS executives want to know the same thing, and they feel the sector is not cur- she said. “What happens is that when they’re rently doing enough. The panel, which included Russell McCaffery, dean of transportation programmes at Florida’s Broward College; Jupiter Airline Services Manager ready, they take advantage of the data to ei- Rula Fakhouri; Tim Strauss, Hawaiian Airline’s vice president of cargo; and Ian Morgan, ther disrupt your operations or actually take Qatar Airways’ vice president of cargo for the Americas, posed the following question down your [business].” at the beginning of the session: “Do you think the big bureaucratic organizations are GRLQJPRUHWKDQMXVWUDLVLQJÁDJVWKDWHGXFDWLRQLVNH\WRDWWUDFWLQJDQHQKDQFHG Unfortunately, most companies are una- grade of executives into transportation?” An overwhelming majority of the audience ware of the breach until the hackers have polled said no. been inside of their system for six to nine “We’d like to turn that around,” McCaffrey said, “and we think there are a lot of ways to turn it around.” Education is key, he said. Even so, McCaffrey acknowledged months. “It’s pretty stunning that companies that education is often a tough sell in a healthy economy. When times are tough, don’t even recognize that someone’s in their SHRSOHÁRFNWRVFKRROZKHQWKHHFRQRP\LPSURYHVSHRSOHUXVKWRÀQGMREV´2XU network until it’s too late,” Francy said during industries are inversely related – regrettably – so while there’s always talk about the need for workforce succession planning, we’re seeing fewer and fewer students the CNS panel. because people are jumping back into the workforce,” McCaffrey said. This trend When they do identify the breach, it’s of- OHDGVWRDQLQÁX[RIDLUIUHLJKWSURIHVVLRQDOVZLWKRXWEDFKHORU·VRUHYHQDVVRFLDWH·V degrees. “And that’s probably okay for the time being, because you just need folks to WHQEHFDXVHWKHKDFNHUVKDYHLQÁLFWHGJUHDW help out with the industry,” McCaffrey conceded. Still, he encouraged employers to pain upon them, Bishoff added. “They’ve ei- eliminate barriers to education for employees and create an environment conducive ther embarrassed you, damaged your repu- to learning. tation, damaged your business relationships Like McCaffrey, Morgan advocates education as a means to professional success, but he advised CNS attendees to look beyond a potential employee’s RUGDPDJHG\RXUÀQDQFLDOVµ credentials. “There is so much talent out there that we’re not allowed to develop Hacking, Bishoff said, is a well-oiled ma- EHFDXVHRIWKHUHTXLUHPHQWVWRHQWHUWKHÀHOGVXFKDVDEDFKHORU·VGHJUHHµKH said. Instead of viewing education as something that only takes place in a class- chine. Despite the “lone-wolf” perception room, Morgan recommends taking a broader approach. What the industry needs, surrounding hackers, a number of these indi- he said, is a programme that amalgamates work experience with life experience. YLGXDOVKDYHH[WHQVLYHVXSSRUWDQGÀQDQFLDO ´$ORWRISHRSOHMRLQWKLVÀHOG>ULJKWRXWRIKLJKVFKRRO@DVHQWU\OHYHOZRUNHUVµ0RU gan said. “But the cream rises quickly to the top.” Those with bright futures in air cargo backing. Some are funded by nation-states; FRXOGREWDLQFHUWLÀFDWLRQVYLD&16DQGWKHLUORFDOFROOHJHWKDWZRXOGEHUHFRJQL]HG others have ties to organized crime or terror- industry-wide, he hypothesized. Such a scenario would allow industry executives to ist groups. Regardless of their benefactors, GHYHORSULVLQJWDOHQW²ZKLFK0RUJDQVDLG´ZHGHÀQLWHO\QHHGµ continued on p48 these hackers pay their mortgages by steal- ing companies’ data, Bishoff remarked. And they have very detailed instructions security protocols. As part of the analysis, So how can the air freight sector combat about what to do once they’re inside of a she spoke with the supplier management security breeches? The US Chamber of Com- business’ network. “These people have team about their processes. “When I asked merce’s Matthew Eggers said a good place playbooks when they see your data,” Bish- what they were doing with cyber, they looked to start is the National Institute of Standards off said, “and it basically tells them to turn at me like I had three heads,” she said. and Technology’s (NIST) framework. The to page 26.” It’s a fully automated, expe- The team soon realized the error of their framework, which is a collection of industry- dited process, he explained. “Hackers can ways, however. Shortly after the conversa- GULYHQ JOREDO VWDQGDUGV LQFOXGHV ÀYH HOH be inside of your network and all over you tion, one of Boeing’s 10,000 suppliers pro- ments: identifying, protecting, detecting, in 90 seconds,” he said. “That’s the cur- vided the team with virus-infected software. responding and recovering from threats. rent statistic.” What’s terrifying, Francy said, is that the US “It’s all about resiliency for our industry,” military acquired the same materials from Francy added. “We believe that the [perpetra- No company immune the supplier. “That should stop everybody tors] are already inside of our networks. So, No companies are immune to cyber-security because that means they [the hackers] are knowing that, how can we become resilient issues, Francy added, not even Boeing. She in,” Francy said. “We have to look at this from DJDLQVW WKDW"µ 7KH ÀYH HOHPHQWV DUH WKHQ UHYHDOHGWKDWVKHZDVWDVNHGÀYH\HDUVDJR a holistic supply chain cycle and ask what it assessed at multiple layers and assigned a with analyzing the aircraft manufacturer’s means for our industry and business.” grade from one to four. Boeing, for instance,

6XPPHU CARGO AIRPORTS AIRLINE SERVICES 47 CNS REPORT

Despite the ‘lone-wolf’ perception surrounding hackers, a number of these individuals have Rosen Shingle Creek Resort, host to H[WHQVLYHVXSSRUWDQGÀQDQFLDOEDFNLQJ the 25th CNS Partnership Conference Dallas Bishoff

LGHQWLÀHGDQXPEHURIVHFXULW\JDSVZKLFK basically use the same tactics, techniques talking to each other,” Francy said. served as a catalyst for the company’s new and procedures against the different In addition to joining the A-ISAC, cargo research and development activities. victims they’re pursuing,” Francy said. In SURIHVVLRQDOVVKRXOGFUHDWHVHFXULW\SURÀOHV Despite such advancements, Bishoff fact, they target carriers, freight forward- %LVKRIIVDLG6XFKSURÀOHVZKLFKDGKHUHWR encouraged CNS attendees to avoid fear- ers and shippers the same way they target industry standards, highlight security con- based security protocols. Instead of ap- banks, she revealed. “So while we’re op- cerns that can impair a system’s operating proaching security as “some scary thing out erating in the aviation-critical infrastruc- environment. They also go a long way in pre- there”, it’s important to tie it to a company’s WXUHÀQDQFLDOVHUYLFHVLVYHU\UHOHYDQWWR venting cyber attacks that result from plug- business objectives, he said. For instance, XVEHFDXVHZHDOOKDYHÀQDQFLDOWUDQVDF ging into an unsecure network, such as that all companies want to keep customers’ tions,” Francy said. By acquiring data from of a customer. happy, and security breaches undoubtedly other companies and industries, mem- “There’s an old saying that you in- lead to unhappy clients. bers of the A-ISAC can reduce their risk of herit the evils on the other side of the He mentioned one of Hewlett-Packard’s a security breach, she explained. “We’re network,” Bishoff said. “So you have to clients who had to inform their customers doing what the bad guys are doing – we’re watch out.” QQQ that their data was severely compromised. “That was very uncomfortable and an objec- continued from p47 tive most businesses want to avoid,” Bishoff QUICK RESPONSE TRAINING (QRT) GRANT said. The NIST framework, however, enables CNS is currently spearheading a similar initiative via its Quick Response Training (QRT) grant, which is offered in conjunction with the International Air Transportation As- freight professions to evaluate the impor- sociation (IATA) and McCaffrey’s employer, Broward College. The $500,000 QRT grant tance of their intellectual property without enables cargo professionals in Florida to attend more than 25 courses at the IATA Training Center in Miami for free. Subjects range from cargo security to warehousing having to obtain a degree in cyber-security. operations to specialty cargo handling and the courses are open to any full-time FDUJRHPSOR\HHDWDIRUSURÀW)ORULGDEXVLQHVV Thwarting attacks McCaffery believes that the QRT has the potential to be a game-changer in the Another way to thwart potential attacks airfreight sector. “What we’re doing is working with the industry to provide you with the type of employees you need,” he told CNS attendees. Employers consistently be- is to join the A-ISAC, Francy said. The Na- moan the challenges of retaining entry-level workers, such as warehousing profession- tional Council of ISACs, which is backed als and transport planners. “It’s very costly for employers to hire at that level because the turnover is so high,” McCaffrey said. by the US Department of Homeland Secu- +H·VKRSHIXOWKDW%URZDUG&ROOHJH·VJUDQWVWRGHYHORSFHUWLÀFDWLRQVIRUHQWU\ rity, strives to boost the cyber-security of level positions will combat this trend, however. “Maybe you don’t necessarily critical North American infrastructures, QHHGD>SHUVRQZLWKD@EDFKHORU·VRUDVVRFLDWH·VGHJUHHEXWKDYLQJDOLWWOHELWRI and Francy said the A-ISAC has done just education within our industry and having a piece of paper that an employee can hold and you, as employers, can see, may make you a little more likely to hire that that by educating carriers and aviation person,” McCaffrey said. professionals about the importance of Jupiter Airline Services’ Rula Fakhouri said that freight professionals would be “fool- secure networks. LVKµWRQRWWDNHDGYDQWDJHRIWKHRSSRUWXQLWLHV&16LVSURYLGLQJ,$7$FHUWLÀFDWLRQLV like the “Good Housekeeping Seal of Approval,” Fakhouri said, and having joint CNS/ “The A-ISAC has brought all competitors IATA endorsement is something airfreight employees should embrace wholeheartedly. into the same room to share information She told CNS attendees that the QRT grant also has the power to level the playing about what they’re seeing,” she told at- ÀHOGLQWKHDLUFDUJRLQGXVWU\6RIDURQO\&DOLIRUQLDDQG)ORULGDKDYHEHQHÀWWHGIURP the program, but Fakhouri revealed that CNS is likely eyeing other states to partner tendees of the CNS panel. Not competi- with, as well. WLYH NQRZOHGJH VKH FODULÀHG EXW ZKDW·V Morgan similarly praised CNS’ strides to elevate the level of professionalism in the air going on in their networks and how they’re freight sector via the QRT, stating that “we can turn things around if we collaborate as an industry”. So, #Aircargoissexy may never trend on Twitter, but perhaps it could being attacked. become the industry’s new catchphrase. Q “We’re doing that because these guys

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