Change When Change Is Needed

MICA(P) 261/07/2012 PPS1220/07/2013(022977)

The Trade Magazine for the Asia-Pacific & Middle East Regions Vol. 29, No. 5, May 2013

Change when change is needed

Swissport keen on Asian expansion Seeds of economic recovery being sown

Freighter Supplement www.payloadasia.com “Our cargo goes where no car goes.”

The incredibly rugged terrain of Papua New

Guinea makes it almost impossible to move cargo

by road. They say that over the last 40 years, this

amazing country has been built using our cargo

aircraft and I’d say that’s about right.

James Tira – Executive Manager, Cargo.

Flying the flag for Papua New Guinea.

www.airniugini.com.pg/cargo FROM THE EDITOR

The Air Cargo Magazine for the Asia-Pacific Region

ISSN 2010-4227 Vol. 29, No. 5, May 2013 Reality check

Group Publisher Wai-Chun Chen Email: [email protected] fter putting this issue together I’ve come to the realisation EDITORIAL Editor-in-Chief that it’s actually a bit of downer issue. It wasn’t really Bob Gill intended to paint a downbeat mood, but really that seems Tel: +65 6521 9763 Email: [email protected] to be the underlying current in some of the pieces from the cover Editor A Donald Urquhart story to the economics pages to the supplement. Tel: +65 6521 9760 Email: [email protected] The issue kicks off with a cover story focusing on the thoughts Online Editor Syed Shah of FedEx Express’ Asia boss, David Cunningham, who delivered an entertaining and Tel: +65 6521 9750 Email: [email protected] indeed thought provoking talk on how the air express and general cargo industry has Contributors Wong Joon San in Hong Kong, Manfred Singh in India, Michael changed over the past three decades that he has been in the industry. Peppered with Mackey in Bangkok and Heiner Siegmund in Germany. interesting factoids, humorous anecdotes and delivered with a Southern charm that 20 Sales & AD ADMIN years in Hong Kong has obliviously failed to dent, he raised some very pertinent issues Account Manager Yullie Tan that the general air cargo sector would do well to heed. Tel: +65 6521 9749 Email: [email protected] The supplement in this issue focuses on freighter aircraft with a focus on discussions Marketing Executive Avery Li Email: [email protected] that came largely out of a recent conference in Hong Kong. While the market downturn Admin Executive is hardly news to anyone, its’ prolonged nature makes some topics inherently more Lim Yann Ming Email: [email protected] interesting than others. Take for example the topic of freighters. Whether newbuilds or Publishing Support Production Manager conversions it’s almost a subject better left for another – hopefully better day. As Cathay’s Pauline Goh Email: [email protected] Nick Rhodes pointed out during the conference, the very idea of preparing a case for Design Manager Honess Ho Email: [email protected] the acquisition of new or even converted freighter capacity to take to an airline board,

Database & Web Manager is inconceivable at this point in time. Getting a return on assets in this environment is Lim Keng Boon Email: [email protected] one tough, if not impossible task. Circulation Executive Of particular focus at the Hong Kong event was the issue of the rising belly capacity Levi Cheng Email: [email protected] in the market thanks to the massive influx of modern widebody aircraft that are in and of Web Operations Executive Franco Nelo M. Sevilleja Email: [email protected] themselves, mini, or in the words of Ram Menen, ‘invisible’ freighters. Is there a future

Web Developer for big freighters, let alone all maindeck players and is the current combination carrier Roger Tan Email: [email protected] cargo model still valid? These were some of the questions thrown at the industry panel FINANCE Finance Manager and highlighted in the supplement. Lim Ai Ling Email: [email protected] And one interesting aspect, the issue of B747-400 P2F conversions was studiously

CEO avoided during the two-day event. But having spoken to various delegates on the sidelines Raymond Wong Email: [email protected] of the event, including one who is involved in a 747 conversion operation, the programme is is pretty much dead as a dodo after the floor pretty much dropped out from under it. On the economic front, two pages of articles discussing the global economic situation and confidence of freight forwarders provide a somewhat contradictory picture of where we are headed. But then again, did anybody really expect anything else, other

Contineo Media Pte Ltd than contradictory? 67 Ubi Avenue 1, #06-06 StarHub Green, North Wing, Singapore 408942 We hope you enjoy the read and don’t worry, it can (probably) only get better. Tel: +65 6521 9777 Fax: +65 6521 9788 Printer: KHL Printing Co Pte Ltd

COVER Payload Asia has been appointed by the 18 member Federation of Asia Pacific Aircargo Associations as MICA(P) 261/07/2012 PPS1220/07/2013(022977) official publication for FAPAA news.

Payload Asia is a controlled circulation publication available The Trade Magazine for the Asia-Pacific & Middle East Regions Vol. 29, No. 5, May 2013 free-of-charge on request to qualified subscribers. Qualified subscribers are buyers and sellers of air cargo/courier/express products and services plus government and trade officials Change when change dealing with airfreight who are based in the Asia-Pacific and is needed Middle East regions. Non-qualified readers can receivePayload on payment of a US$225 annual fee. Asia Facing a serious set of challenges, the general air cargo sector Payload Asia is published monthly by Contineo Media Pte Ltd, 67 Ubi Avenue 1, #06-06 StarHub Green, North Wing, Singapore needs to take a leaf out of FedEx’s playbook and change – and 408942. Material in Payload Asia is copyright and may not that change includes a rebalancing of capacity with less dedicated be reproduced in any form without the written permission Swissport keen on Asian expansion freighter capacity says David Cunningham, FedEx Express president Seeds of economic recovery being sown of the editor. for Asia Pacific. For this and more, please turn to page 26. Freighter Supplement www.payloadasia.com www.payloadasia.com | May 2013 1 GATEWAYS

Consultancy firm Frost & Sullivan predict Indonesia’s transportation and logistics market will grow at a compound annual growth rate (CAGR) of 14.8 per cent for the forecast period 2013 to 2017, on the back of surging economic growth.

indonesia mining sector at around $4.3 billion. He He expects airfreight volume to rise also said that the strong FDI flow into the 19.6 per cent to reach 1.16 million tonnes Frost & Sullivan predict mining industry will continue to boost from 970,000 tonnes in 2012. “There’s the industrial growth and offer business significant potential for air cargo from Indon logistics growth potential to transportation and logistics seasonal perishables, as well as time Frost & Sullivan is forecasting the industries. sensitive and high value components and Indonesian logistics industry to grow equipment,” he added. Gopal also said 14.5 per cent to IDR 1,634 trillion Growth constrained that Soekarno Hatta Airport contributed (US$170 billion) in 2013 as compared to Gopal predicts the transportation and approximately 36.7 per cent of the total an estimated IDR 1,427 trillion a year ago, logistics market in Indonesia to grow at air cargo volume in the country. fuelled by the Government initiatives and a compound annual growth rate (CAGR) development of the logistics industry of 14.8 per cent for the forecast period Outsourcing trends fueled by strong economic growth. 2013 to 2017. “However, underdeveloped Gopal said that there is a higher Frost & Sullivan’s global VP, infrastructure will slow down the growth inclination towards outsourcing a Transportation & Logistics Practice, if the bottleneck persists in the coming variety of value added services in the Gopal R, said that the relocation and years,” he said. Indonesian market. He added that strong flows of capital are also expected The problems of poor connectivity, logistics service providers need to work to drive manufacturing activities in processes and weak infrastructure is toward more value-added services while Indonesia and boost logistics demand. He evident in many price differentials and strengthening the intermediate services. added that external trade for Indonesia transport problems in Indonesia, Gopal He said that logistics end users are also is expected to see a moderate growth said. He added that trade facilitation is moving towards integrated supply chains of 16.7 per cent to reach $446 billion still mainly ‘paper-based systems’, which with professional service providers. He in 2013. increases the cost of logistics in addition added that Indonesia is determined “Import/export forwarding, shipping to reduced efficiency. to become an important player in and airfreight related businesses will ‘The Indonesian logistics market is international trade and markets with benefit from sustainable growth of highly fragmented with abundance of the government focusing particularly external trade activities,” he said. Gopal small- to mid-sized companies in the on six key areas with the objectives of said that the growth of foreign direct market, even the big players are facing ensuring the availability of strategic investment (FDI) is expected to continue stiff competition from these companies,” commodities, promoting low cost in 2013, with an estimated value of $42.7 Gopal said. He added that the fragmented economic activities and strengthening billion. He added that FDI realisation in market pushes smaller logistics service national competitiveness. transport & storage sector reached $ 2.8 providers to go for economic pricing The ASEAN Economic Community billion in 2012, which was the second strategy rather than focusing on service (AEC) in 2015 will amplify the export largest share out of overall FDI, after the quality and breadth of services offered. value to ASEAN countries, but in the

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meantime, logistics service providers in Indonesia should move towards offering specialised logistics solutions for specific industries such as FMCG, construction, service parts and mining as compared to the current basic logistics services with common value-added services. The Indonesia Government should also integrate transportation hubs – seaports, airports, terminals and distribution centers – with the transport network and develop state-of-the art logistics infrastructure for efficient distribution. “Companies should also strengthen its human resources capabilities with professional and experienced logistics personnel along with market expansion,” Batik Air plans to go head-to-head with Indonesian national carrier, Garuda Indonesia on Gopal said. international long-haul routes by tapping some of the five B787-8s on order through parent Lion Air.

2012 was a good year of the company’s operations through using a planned fleet of B737-900(ER)s for Garuda Indonesia the 2011–2015 Quantum Leap Program, sourced from its parent, Lion Airlines. Garuda Indonesia has reported a programme of commitment to The full-service airline intends to start exceptional growth, doubling its becoming a world class airline by 2015. operations from Jakarta Soekarno-Hatta comprehensive income in 2012 compared In 2012 Garuda Indonesia welcomed International (CGK) to Pekanbaru with 2011, from US$72.7 million to 22 new aircraft, consisting of two A330- Sultan Syarif Kasim II (PKU), to be $145.4 million. The Indonesian carrier 200, four B737-800 Next Generation, followed by Batam Hang Nadim (BTH) showed consistent progress across the five Bombardier CRJ-1000 NextGen and and Manado Sam Ratulangi (MDC). board, with an increase of 72.6 per cent eleven A320 for Citilink, raising the total Batik Air also plans to go head-to-head in net profit from $64.2 million in 2011 number of aircraft in operation to 106 with Indonesian national carrier, Garuda aircraft, with an average age of 5.8 years. Indonesia on international long-haul to $110.8 in 2012, while passengers increased by 19.6 per cent with 20.4 routes by tapping some of the five B787- million carried. The carrier also saw an Garuda targets London- 8s on order through parent Lion. increase in the amount of cargo carried, Jakarta ‘kangaroo’ route Investigations ongoing up 22.2 per cent to 280,285 tonnes from Garuda Indonesia aims to challenge last year’s 229,378 tonnes. alternative routes operated by Singapore into Lion Air crash In Australia and the South West Airlines, Qantas and Emirates with a The Lion Air pilot whose aircraft Pacific (SWP) region, Garuda Indonesia’s new London–Jakarta service from 2 crashed into the sea while trying to operations also continued to grow rapidly November. The so-called ‘kangaroo route’ land in Bali has reportedly described with a passenger increase of 20 per cent, from London Gatwick’s redeveloped how he felt it was “dragged” out of while flight frequencies increased by 22 South Terminal, will fly five times a its trajectory and into the water. per cent from 1,537 to 1,877. week with the carrier’s new B777- Investigators are considering whether Commenting on the significant 300ERs, which will fly on to Sydney, a powerful downdraft of wind caused growth in 2012, Bagus Y. Siregar, VP for while streamlined connections from the crash in which all 108 passengers Garuda Indonesia, Australia and SWP Perth and Melbourne will also feed the and crew survived despite the B737-800 said: “We foresee these strong figures Jakarta-London leg. cracking in half on impact. continuing in 2013, especially with the The service from Sydney will be five The aircraft, newly delivered in launch of new services for the whole times a week, while connecting flights February, undershot the tourist island’s region such as our daily service from from Melbourne will leave four times a main airport runway in Denpasar and Melbourne to Denpasar which started week and from Perth five times weekly. belly-flopped in water in mid-April. this month. We are also proud to launch While Singapore Airlines flies from Authorities from Indonesia, the US and a new direct Perth-Jakarta service for Australia to London via Singapore, Boeing are investigating. the first time on 28th June, as well as Qantas has tied up with Emirates to Initial debriefings, witness comments the momentous re-introduction of funnel kangaroo route traffic through and weather reports have focused Brisbane – Denpasar services in August. Dubai. China Southern also aims to attention on the possibility of ‘wind It’s going to be a very exciting year for connect Europe and Australia via shear’ or a downdraft from storm clouds us and these figures show we are making Guanghzou. known as a ‘microburst’. Experts say great progress towards becoming a five such violent and unpredictable gusts are star carrier.” Batik Air set to start rare but can leave even the most modern Garuda Indonesia president & jet helpless if they are stronger than the CEO, Emirsyah Satar explained that ops Jakarta-Pekanbaru plane’s ability to fly out of trouble – with improvement in the company financial Indonesia’s Batik Air is to tentatively the critical moments before landing performance is the result of expansion set to make its maiden flight on 26 April among the most vulnerable.

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per cent over February figures. Freight customer base by securing new engine JAPAN carried in terms of tonne kilometers leasing contracts during the quarter. ANA planning to resume was 610.1 MTK. On capability development, following cargo-only 787 ops in June the completion of ST Aerospace’s ST Aero seals new investment of 35 per cent equity All Nippon Airways is preparing interest in Elbe Flugzeugwerke (EADS to resume B787-8 operations in June, contracts in 1Q EFW), ST Aerospace has commenced albeit, only for cargo operations. Singapore Technologies Engineering the A330P2F engineering development According to Reuters, ANA will Ltd (ST Engineering) has announced phase for the freighter conversion resume cargo-only B787 flights to that its aerospace arm, Singapore programme. Additionally, EADS EFW Germany in a bid to restore public Technologies Aerospace Ltd (ST will serve as ST Aerospace’s European confidence in the aircraft, which has Aerospace) has sealed new contracts MRO centre, bringing convenience and been globally grounded after onboard worth nearly SGP$480 million (US$388 value-added solutions to customers in lithium-ion batteries overheated million) in the first quarter of 2013. The the region, it said. in two Dreamliners in January. All contracts are for airframe, component Nippon currently has seventeen B787- and engine maintenance, as well as Malaysia 8s in its fleet. engineering and development, which will be carried out through its global Malaysian forwarders SINGAPORE maintenance, repair and overhaul (MRO) network. appeal bumiputera rule Singapore Airlines A total of 180 aircraft were The Airfreight Forwarders’ redelivered for airframe maintenance Association of Malaysia (AFAM) has March load factor up and modification work in the first written a letter to Prime Minister Singapore Airlines Cargo saw its load quarter of 2013. This is in addition to Datuk Seri Najib Abdul Razak to ask factor rise 2.2 percentage points to 67.2 the five B757-200 freighters converted for a timeframe in which a rule which per cent in March compared to a year through its MRO network. Besides necessitates forwarding companies ago with SIA saying the cargo load factor airframe redeliveries, ST Aerospace to have a 51 per cent bumiputra was higher for all route regions through processed 15,161 components, 72 equity participation, can be reviewed. capacity management, except for East landing gears and 60 engines for both ‘Bumiputra’, which means ‘son of the Asia where demand did not keep pace commercial and military customers. soil’ is the country’s controversial race- with capacity reductions. By region: East ST Aerospace is stepping up its based affirmative action programme for Asia 55.5 per cent; Americas 67.2 per participation in the engine leasing its majority Malay population which has cent; Europe 84.2 per cent; South West business. Its wholly owned subsidiary, been in place since the 1970s. Pacific 62.9 per cent; and West Asia & ST Aerospace Engines, has injected “We once again request that the Prime Africa 67.2 per cent. Overall capacity additional capital into its 50 per Minister kindly assist us in obtaining was down five per cent in March to 908 cent-owned associate company, Total the necessary information with regards MTK from a year earlier, while total Engines Asset Management, bringing to the time frame needed to review the freight carried was off slightly from last its total share capital contribution to existing policy requirement for a 51 per year at 103.7 (million Kg), but up 76 US$8.21 million. It has also expanded its cent bumiputra equity requirement for

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lhc13063_AZ777PayloadAsia_190x90_20130412.indd 1 16.04.13 16:19 www.payloadasia.com | May 2013 5 GATEWAYS the forwarding industry as we feel that Lepas International (PEN) and Sibu Letter of Intent with current Grand it is only an administrative matter and (SBW) flights also scheduled for 1 June. Star majority shareholder, Sinotrans it should not take that long to resolve,” At present, the Lion Airlines subsidiary Air Transportation Development Co AFAM chairman Walter Culas said in serves Kota Kinabalu International (BKI), (Sinotrans Air) for the transfer of their the letter dated 8 April 2013. Kuching (KCH) using a fleet of two 51 per cent stake. In August 1990, the Royal Malaysian B737-900ERs. Wuhan-based Uni-Top, owner of Customs Department had issued a Uni-Top Airlines, is likely interested directive under the National Economic NEW ZEALAND in securing Grand Star’s Tianjin traffic Policy (NEP) imposing a requirement of rights, as well as adding its parked B747- 51 per cent bumiputra equity share for Air NZ, Virgin Australia to 400F to its current fleet of three older all new and renewed forwarding agent fly Perth–Christchurch B747-200Fs. Sinotrans had originally licences. AFAM has been asking for planned to liquidate Grand Star’s assets a review of the law since 2007. About A twice-weekly flight between in 2012, but then decided otherwise. 3,471 forwarding agents are affected by Christchurch and Perth will revive an the rule. abandoned trans-Tasman route from China Southern launches “We had pointed out in our previous December 2013 until late April 2014. An letters that the forwarding industry is the Air New Zealand B767 will fly the route, 2nd Zhengzhou-US service only business segment that is required to under a codeshare with Virgin Australia, China Southern Airlines’ new meet the 51 per cent bumiputra equity twice a week. Zhengzhou-Chicago service requirement while all other business Air New Zealand CEO Christopher commenced from 10 April. The service, segments need only comply with a 30 Luxon described Perth and Christchurch utilising a B747-400F, is the second per cent bumiputra equity requirement as the two largest trans-Tasman all-cargo route China Southern has as stipulated in the NEP,” the letter said. destinations without a direct alliance launched from Zhengzhou Xinzheng “In fact, some of these requirements have service, although the route was last flown International Airport, coming only further been removed with the recent more than 20 years ago. “This is a great shortly after the debut of Los Angeles- liberalisation of the service sector,” said time to be linking these two destinations. Zhengzhou-Guangzhou freighter route Culas highlighted in the letter. The West Australian economy continues on 5 March. The introduction of two In 2009, the government lifted the to grow at a faster rate than the rest international all-cargo routes within 30 per cent bumiputra equity rule in of Australia and rebuilding activity is two consecutive months indicates 27 services subsectors, including health poised to stimulate travel demand within the improving logistics environment and social services, tourism, transport Christchurch and Canterbury.” of Zhengzhou airport and China services, business services, and computer Air New Zealand and Virgin Australia Southern’s investment in the Zhengzhou and related services. are currently seeking reauthorisation Airport Economic Experimental Zone. for their codeshare, which started in The inaugural flight was mainly Malindo Air to begin int’l February 2011. In separate news, Air New loaded with Apple products, according Zealand is reportedly seeking clearance to China Southern Cargo. The two flights to India for a codeshare with Turkish Airlines. times weekly service is routed Pudong- Malaysia-based Malindo Air is Zhengzhou-Chicago and provides a planning to serve Delhi Indira Gandhi CHINA weekly capacity of over 200 tonnes. International (DEL) and Tiruchirapally Uni-Top eyes grounded Additionally, connected by China (TRZ) as its first international routes with Southern’s trucking and air-to-air daily B737-900 flights set to begin on 1 Grand Star assets network, shipments can be rapidly June from Kuala Lumpur. In addition, Tianjin Binhai International-based distributed to over 10 cities in America the airline plans to bolster its domestic GrandStar Cargo International Airlines is such as New York, Atlanta, Boston and network through the addition of Bintulu set to take on a new majority shareholder 19 South American cities located in (BTU), Johor Bahru Senai International in the form of China-based logistics firm, Chile, Paraguay, and Brazil, the carrier (JHB), Mekoryuk (MYU), Penang Bayan Uni-Top Group. Uni-Top has signed a said. “In recent years, with the relocation of industries and labor force, more and more large enterprises like Foxconn, Zhengzhou Yutong Bus Co., Ltd, Zhengzhou Nissan, Aluminum Corporation of China (CHINALCO) settled in Zhengzhou, substantially stimulating air cargo demand in Zhengzhou,” China Southern Cargo said. The carrier added that it attaches great importance to the air cargo market in Zhengzhou and has been striving to bridge Zhengzhou with overseas markets via Guangzhou. “China Southern has successfully Lion Air subsidiary, Malindo Air is set to begin international services to India’s New Delhi and developed a seamless freighter-belly and Tiruchirapally.

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Korean Air. On 13 March the Czech government approved the sale of the 44 per cent stake. “The new stake bought by Korean Air in Czech Airlines will significantly impact the entire Czech Republic, thanks to tighter ties with the rapidly growing Asian region, increasing awareness from potential Korean and Asian investors, increasing commercial collaboration China Southern Cargo has added a second Zhengzhou-US service as cargo demand grows in the and reinforced tourism between the western Chinese city. Czech Republic and Asian countries,” Prime Minister Petr Nečas said. Korean freight-freighter cargo transfer network. safety, inflight services, flight operations Air said it plans to expand its network In order to provide quality service to and maintenance. through Prague airport by increasing Zhengzhou’s electronics enterprises, Under the agreement, MAI will place its code share flights and improving China Southern has developed tailor its ‘8M’ code on Korean Air’s daily flight its connection schedules with Czech made transfer process in Guangzhou. between Seoul and Yangon. Korean Airlines. The new all-cargo route of China Air plans to expand the codeshare Southern Airlines will undoubtedly agreement on flights operated by MAI. India deliver a more convenient transport AirAsia India on track for channel for Zhengzhou shipments and Korean Air seals deal on bring more choices for the Zhengzhou 44% stake in CSA a September launch enterprises,” it said. Korean Air has completed its AirAsia India is on track for a September acquisition of a 44 per cent stake in launch date provided it completes and TAIWAN fellow SkyTeam alliance member CSA obtains all necessary government checks EVA Air considering Czech Airlines, with an option to buy and approvals, Bo Lingam, AirAsia’s COO, the remainder. Speaking on the occasion, has said. A 49:30:21 joint venture between B787-10 and B777X Cho Yangho, chairman of the Board Malaysia’s AirAsia and Indian companies Taipei-based EVA Air is reportedly of Directors and CEO of Korean Air, Tata Sons and Telstra Tradeplace, AirAsia considering buying the B787-10 and the said he considered CSA, “a trustworthy India plans to initially base two A320-200 B777X with its management waiting for partner with whom we wish to expand aircraft in Chennai and will cater primarily Boeing to reveal more information with into Central and Eastern Europe”. The to India’s Tier-2 and Tier-3 cities. respect to the 787-10 and 777X before first moves within the tie-up include The deal makes AirAsia the first making a decision. It has also said that it the lease of a Korean Air A330-200 foreign carrier to enter into a joint is keen on the B777-F as a replacement to CSA, which will be deployed on its venture with a local Indian company for its ageing cargo fleet of six MD- new two-times a week Prague Vaclav after the civil aviation sector was thrown 11Fs and nine B747-400Fs, but that Havel Ruzyne (PRG)-Seoul Incheon open to overseas investors with a 49 per the current soft global air cargo market International (ICN) route in cooperation cent shareholding cap, by the Indian does not make that a viable proposition with Korean Air from this summer. government in 2012. Meanwhile, AirAsia currently. In line with its plan to cut The Czech government decided Group CEO Tony Fernandes has said to initiate the selection of a strategic costs – fuel costs in particular – EVA AirAsiaX will likely re-enter the Kuala will gradually phase out its fleet of seven partner for the country’s flag carrier Lumpur-Mumbai, Delhi markets soon MD-90s and three B747-400s between in November 2012. Subsequently, 52 with a possible feeder service to the new 2014 and 2016 while simultaneously of the world’s biggest international AirAsia India joint venture. phasing in a fleet of seven brand new carriers were invited to take part in the B777-300ERs and ten more A321-200s. tender procedure with only a single offer submitted by the 1 March deadline, by India venture would tap SOUTH KOREA existing Virgin model Virgin Atlantic president, Richard Korean Air, Myanmar Branson, has revealed that his group Airways sign codeshare is now actively considering launching Korean Air has signed a partnership an Indian subsidiary using the carrier’s and codeshare memorandum of Virgin Australia and Virgin America understanding with Myanmar Airways operations as a model. The move comes International (MAI). Established in after the Indian government revised 1992, Myanmar Airways International legislation permitting foreign airlines to operates seven international routes hold up to 49 per cent equity in Indian with a fleet of one A319-100 and seven carriers except for Air India. Speaking A320-200s. The MOU will enable both (l-r) Yang Ho Cho, Chairman and CEO of the Hanjin to Livemint, Branson said that in light airlines to promote bilateral cooperation Group and Korean Air and Petr Necas, Prime of the recent launch of Virgin Atlantic in all areas including passenger traffic, Minister of the Czech Republic. flights from London Heathrow (LHR)

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to Delhi Indira Gandhi International Rs.1 billion in 2012, against Rs.455.3 customer base globally. In addition, we (DEL) and Mumbai Chhatrapati Shivaji million in 2011. have observed heightened interest in International (BOM), Virgin viewed the Despite the dismal financial e-freight implementation industry-wide Indian market as having great potential, performance of the two state-owned – we are at an important junction for the but would not go the classic LCC route, carriers, the civil aviation sector recorded cargo industry, with the future looking rather offering “a low-cost airline albeit a positive growth as Bandaranaike bright for e-freight adoption,” said Ram with a good quality business class” International Airport (BIA) saw total Menen, Emirates divisional senior VP product. air cargo handling increase by 11 Cargo. per cent y-o-y with seven million “With increased flexibility in the e-AWB Kingfisher takes another passengers (including transit passengers) process as a result of the multilateral stab at getting airborne during 2012, recording a 15 per cent e-AWB agreement, industry players are increase year-on-year. Passenger aircraft finding it easier to enter into the e-AWB India’s Kingfisher Airlines, grounded movements handled by the BIA increased environment and manage processes for more than six months, has begun the to 48,416 aircraft, indicating a y-o-y electronically with their customers. As a process of seeking regulatory approvals growth of 11 per cent. Sri Lanka recently result, we will see increased adoption of to re-launch its operations and has opened its second international airport e-AWB processes for both the Montreal submitted plans to the Directorate in Mattala and expects to serve one and Warsaw Convention Countries over General of Civil Aviation (DGCA) for an million passengers and an annual cargo the coming months and years. infusion of funds and revival of its flights. throughput of 45,000 tonnes. Emirates SkyCargo will continue “We have shared the funding and to remain at the forefront of these traffic plans. The initial funding to restart developments and advise those interested the airline will come from the (core) Middle East in taking the steps to ‘go green’ and adopt Group. We have also requested that our a paperless cargo system,” he added. licence be renewed,” said CEO Sanjay Emirates takes lead in Aggarwal. e-freight adoption Kingfisher’s flying licence was Oman Air looks to start Emirates SkyCargo is the first carrier suspended in October and lapsed in to implement Electronic-Air Waybill new LCC, cargo airline December after the airline was grounded (e-AWB) shipments under the industry’s Oman Air is planning to launch both following a strike by its employees over recently ratified multilateral e-AWB a low-cost carrier and a cargo airline in non-payment of wages. According to standard. “SkyCargo has tirelessly the wake of a massive US$253 million the new plan, Kingfisher would resume worked towards the adoption of loss posted for its 2012 Financial Year. limited operations with five A320 and e-freight with its customers, while also According to Oman Air chairman two turboprop ATR aircraft and gradually ensuring that processes are more widely Darwish bin Ismail Al Balushi, the increase operations until the number of understood and adopted in the industry Omani Government, Oman Air’s sole aircraft reached 20. as a whole,” the carrier said. Since 2011, shareholder, has agreed “in principle” Emirates SkyCargo has put in place to the proposal, with a feasibility study SRI LANKA over 120 bilateral e-AWB agreements now underway. Al Balushi is quoted as with its customers to ensure a smooth saying that while passenger numbers Srilankan, Mihin Lanka transition from paper Air Waybills and revenue in fact rose 21 per cent on losses widen (AWB) to Electronic Air Waybill data 2011 with cargo performing especially well posting a 29 per cent growth, losses SriLankan Airlines and the state-run (FWB). “Following the recent World Cargo accrued mainly due to the Omani national budget carrier Mihin Lanka saw their carrier’s acquisition of new aircraft with losses widening during the year 2012, the Symposium held in Doha, at which the e-AWB multilateral agreement was the carrier expecting to take delivery of recently released Central Bank annual six B787s, 11 B737s and three A330s report showed. SriLankan Airlines ratified, we have received an increased interest in e-AWB adoption from our over next five years. In March Oman reported an operating loss of Rs20.5 Air launched a Block Space Agreement billion (US$ 165.3 million) during the with DHL Express enabling it to utilise year against Rs.19.1 billion operating DHL’s capacity in both directions of loss it incurred in 2011. Despite the total its operation between Muscat and revenue of the airline increasing by 36.1 Dubai, giving it crucial maindeck lift it per cent to Rs.107.4 billion, the operating is otherwise lacking. expenditure rose 30.6 per cent to Rs.128 billion during the year. “Emerging Etihad Cargo expands competition from other international airlines and the volatility of fuel prices network, boosts capacity have adversely affected the profitability Etihad Cargo, the fast growing cargo of SLA (SriLankan Airlines),” the annual division of UAE flag carrier Etihad report noted. During the year, SriLankan Airways, has added Washington D.C. to Airlines acquired a new A320 aircraft Emirates SkyCargo is the first carrier to implement its global cargo network, in addition to and an A330 aircraft. Meanwhile, Mihin Electronic-Air Waybill (e-AWB) shipments under boosting frequency to Hong Kong courtesy Lanka’s losses doubled with the budget the industry’s recently ratified multilateral e-AWB of strategic partner Air Seychelles. The US carrier incurring an operating loss of standard. capital is Etihad Cargo’s fifth destination

www.payloadasia.com | May 2013 9 GATEWAYS

in North America, while Hong Kong capacity offered by Air Seychelles’ Sweden reached more than US$896 is already part of the carrier’s five- new service between Abu Dhabi and million in 2012, an increase of 4.3 destination Greater China cargo network. Hong Kong will strengthen the already per cent from 2011. A major North The news follows the launch of established four-times-a-week Etihad European economy with a strong GDP, passenger services from Abu Dhabi Cargo freighter service between the two Sweden is well known for iconic global to both cities in recent weeks. Etihad cities. At present Etihad Cargo offers brands such as IKEA, Volvo, and fashion Airways started direct daily services to both bellyhold and full freighter capacity clothing brand H&M. This new service is Washington D.C. with A340-500 aircraft to Beijing and Shanghai, bellyhold expected to further stimulate economic on 31 March and Air Seychelles, in which capacity to Chengdu, and a freighter growth with key Swedish trading cities Etihad Airways owns a 40 per cent stake, operation to Guangzhou. across the Far East and Australasia, the initiated services to Hong Kong via Abu Etihad Cargo serves 86 destinations carrier said. Dhabi three times a week with A330-200 internationally and operates a fleet of In addition to passenger operations aircraft on 24 March. two B777F, one B747-400ERF, one B747- Emirates SkyCargo will offer 19 tonnes “Our cargo network continues to 400F, two A330-200F and one A300- of cargo capacity between the two cities. expand and with the addition of bellyhold 600F. Etihad Cargo will take delivery of Popular commodities are expected capacity to Washington D.C. and an three additional freighters in 2013 and to be pharmaceuticals, construction overall increase in cargo capacity to Hong 2014, comprising one B777F and two equipment, electronics, perishable Kong, we believe these new operations A330-200F. food items, textiles, leather goods, will strengthen cargo services both east plants and flowers. The carrier already and west for our customers,” said Kevin Emirates adds daily operates a three-times weekly service to Knight, chief strategy and planning Gothenburg in Sweden and the addition officer at Etihad Airways. Stockholm flights of Stockholm is expected to further Etihad Cargo already offers daily Expanding its presence in Scandinavia, boost the airline’s cargo operations in bellyhold cargo capacity from Chicago Dubai-based airline Emirates has the region. and New York to Abu Dhabi, and three confirmed it will begin operating a times a week from Toronto to Abu Dhabi. daily B777-300ER flight to Stockholm, V-D’s new Sharjah MRO In addition, Etihad Cargo offers a twice- Sweden from 4 September 2013. With weekly freighter service from Houston to strong bilateral trade links already facility begins operations the UAE capital. The additional bellyhold in place, trade between the UAE and Volga-Dnepr Gulf (VD Gulf),

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SPECS: Trim: 210mm (w) x 297mm (h) + (5mm) WHERE TO SEND MATERIALS: WHERE TO SEND PROOF: Payload Asia 1/2 Page, Spread (Horizontal) - Wai Chun Chen at waichun.chen@ Ten Alps Communications Asia Live: 400mm x 135mm, Trim: 420mm x 145mm 67 Ubi Avenue 1, #06-06 StarHub tenslapsasia.com and cc: Matt Weidner, Due to pub: 041713 Bleed: 430mm x 150mm (5mm bleed: 2 side + bottom) Green, North Wing [email protected] +1 310 323 9155 x18 issue: 050113 measured height: 5.5 Wai Chun Chen, Admin Executive GATEWAYS

aircraft of the B747 or Antonov AN-124 type. The facility is equipped with all necessary tools and equipment, as well as modern air conditioning and fire fighting systems to perform safety maintenance services for the various aircraft types up to C-check.

Emirates wants more B777X specs Emirates has asked Boeing for more specifications regarding its proposed B777X variant before placing an order. Currently, Emirates operates 126 The first aircraft for Volga-Dnepr Technics’ new MRO hangar in Sharjah: A Volga-Dnepr AN-124. B777s (both passenger and cargo), but according to airline president, Tim representing Volga-Dnepr Technics in and overhaul services. Following the Clark, should details like “layouts, the Middle East region, has commenced approval, VD Gulf towed the first aircraft seating, galleys, aircraft weight and operations in its new maintenance into the new hangar, an Antonov AN-124 fuel burn” all prove favourable, the Gulf hangar facility in Sharjah. On 8 April ‘Ruslan’ freighter belonging to Volga- carrier would consider an order for Volga-Dnepr Gulf obtained an official Dnepr Airlines. as many as 275 of the advanced type. Operations Approval for the hangar The launching of the new 22,000 While currently in talks with Boeing, facility issued by the Department of square meter hangar complex at Sharjah Emirates doesn’t expect to conclude any Civil Aviation Government of Sharjah, Airport will allow the company to deal before June’s Paris Air Show. Other confirming that VD Gulf has successfully uphold its market position in the UAE, carriers whose interest in the 777X has completed the required hangar safety the group said. The hangar will be able been piqued include Philippine Airlines, procedures and is ready to provide to simultaneously accommodate six Qatar Airways, EVA Air, British Airways aircraft maintenance, component repair narrow-body aircraft or two wide-body and Lufthansa.

www.payloadasia.com | May 2013 11

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Europe & CIS and safer transportation solutions, the and grow profitably again. To that end, carrier said. Other sectors targeted on the we are investing in our route network European airlines seek new service include pharmaceuticals and and making our services even more healthcare products as well as newspapers attractive to customers.” level ETS playing field and general cargo. In March this year, Lufthansa Cargo European carriers are calling for a Meanwhile, Cargolux has also added commenced twice-weekly connections to Guadalajara in Mexico. The cargo level playing field for the EU’s emissions Ouagadougou, the capital of Burkina Faso, carrier has also marginally stepped up trading system (EU ETS tax) after the to its network of African destinations. services to China again in the summer European Parliament voted on 16 April Ouagadougou is the country’s largest city flight schedules after cutting back to support the ‘stop the clock’ proposal with food processing and textiles its main capacity in a difficult market on that for aviation – but only for non intra-EU industries. The first Cargolux flight was route in the past few months. It is now flights. The European Regions Airline operated on 24 April and is followed by operating an additional freighter service Association (ERA) and the International weekly flights. weekly to Shanghai and Hong Kong. Air Carrier’s Association (IACA) want The service is spurred by growing the moratorium to be extended to all demand from markets in France, as well Air Cargo Germany flights departing and arriving at an EU as in Asia and the Americas. Supplies suspends operations airport to prevent discrimination against and equipment for the mining industries European carriers operating intra-EU in Burkina Faso are among the main Frankfurt Hahn-based Air Cargo flights. The ETS moratorium puts the commodities, which rely on airfreight Germany suspended all operations from 18 April with no official reason given by ETS on temporary hold to enable the because the country is landlocked. the cargo airline, but lack of funds is widely International Civil Aviation Organisation Exports from Burkina Faso primarily suspected to have caused the grounding of (ICAO) time to find a global solution to include perishable goods – mainly fresh its fleet of four B747-400ERF/SFs. CEO mitigate emissions. beans and mangoes. Michael Schaecher said in a statement on Lufthansa continues the company website: “The suddenness of Cargolux adds Tripoli, this interruption is beyond our control and Ouagadougou to network cautious capacity cut was neither expected nor foreseen in any Cargolux Airlines Int’l has introduced Lufthansa Cargo carried nearly way. Our shareholders are supporting in a new air cargo service to Tripoli, Libya’s 400,000 tonnes of freight and mail in the any way possible and you can be assured capital and largest city from 16 April, first quarter of the year – a decline of 7.2 that we work around the clock to find sustainable solutions to recommence our followed by weekly services on the route per cent compared with the year-earlier services.” He added the company remains Luxembourg – Tripoli – Johannesburg. level. The cargo carrier did, however, raise its aircraft utilisation through confident operations can be resumed in Cargolux said that with the political cautious capacity management which the next few days. situation in Libya on a stabilising path, saw capacity scaled back by 7.4 per The privately-run German cargo airline demand for airfreight to and from the cent. Sales fell by a smaller 5.9 per cent, commenced operations in mid-2009 North African country is steadily growing, improving load factors by more than connecting Frankfurt-Hahn airport with spurred by an economic development one percentage point to 71.4 per cent. destinations in East and Central Asia. that is driven by the oil and gas industry. In the course of the year, Lufthansa Later, routes to the Middle East, Africa Thanks to its nose-door equipped B747 Cargo is expecting a marked pick-up and both South and North America freighter fleet, Cargolux is well positioned in demand, as chairman and CEO followed. In spring 2012 AirBridgeCargo’s to accommodate a modal shift from sea Karl Ulrich Garnadt emphasised: “We Russian parent Volga-Dnepr stepped to air caused by rising demand for faster intend to utilise market opportunities in as shareholder acquiring 49 per cent of the capital shares. Shortly after ACG announced plans for upping the fleet by taking over two of ABC’s B747-400 freighters, but these expansion plans were shelved before the end of the year due to the ongoing sluggish global market situation and dwindling rates. IAG Cargo relaunches route to Sri Lanka After a 15-year hiatus, IAG recommenced service to Colombo, Sri Lanka from 15 April. Freight operations to Colombo will also resume, via IAG Cargo, and take advantage of the nation’s prolific high-end retail, produce and rubber sectors. IAG will utilise B777s on the thrice-weekly route, which includes a Supplies and equipment for the mining industry in Burkina Faso are driving cargo demand. stopover in the Maldives. The belly-hold

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FREIGHT Forward GATEWAYS capacity will benefit Sri Lankan business by Transaero takes delivery Ryanair and its peers. Lufthansa said last providing global connectivity to the more of first Tu-204 freighter month it might also establish a low-cost than 350 destinations currently served by operation to Asia in response to airlines IAG Cargo, it said. Transaero Airlines has added its first that have exploited the Gulf’s geographical freighter to its fleet, a Tu-204C, the first position to grab a growing share of lucrative Azerbaijan’s AZAL starts of two ex-Aviastar Tupolev Tu-204-100Cs inter-continental transfer traffic. leased from Ilyushin Finance Co. The Low-cost penetration is greatest in Eu- first long hual to Beijing freighters join Transaero’s passenger fleet rope, according to Amadeus. The nations AZAL Azerbaijan Airlines has chosen of 92 aircraft, comprising 22 Boeing 747s, there with the highest proportion of de- Beijing Capital (PEK) as its first longhaul 13 777s, 15 767s, 39 737s and three Tu- parting passengers using discount airlines destination with flights from Baku Heydar 214s. Transaero CEO, Olga Pleshakova has are Spain, on 57 per cent, and the UK, Aliev International (GYD) expected to said that, aside from the favorable financial home country of EasyJet and the location start from 10 May. The Azerbaijani na- terms the airline had been offered by of Ryanair’s biggest base, with 52 per cent. tional airline will operate the flights twice Tupolev, “the addition of Tu-204C aircraft In the long-haul market, Gulf airports in weekly using using its fleet of B767-300s. would allow Transaero to carry out their Dubai, Doha and Abu Dhabi have already Currently, AZAL flies throughout the sub- MRO (Maintenance, Repair & Overhaul) grabbed a 15 per cent share of air traffic region along with destinations in Israel, together with their fleet of three Tu-214s”, from Europe to the Asia-Pacific, according Eastern and Western Europe and Russia. which resumed scheduled flights as of to the report. mid-March. Pleshakova added that “the Air France-KLM in talks freighters will perform mostly domestic IAG increases flights with a large share of operations in London-Seattle capacity to sell Cityjet Russia’s Far East.” Air France-KLM is currently in ne- IAG Cargo announced that due to an increased frequency of British Airways gotiations with “two or three” interested LCCs, Gulf carriers bidders regarding the sell-off of its Irish passenger flights between London and subsidiary, Dublin-based Cityjet. Accord- squeeze Euro carriers Seattle, it will be able to offer customers ad- ing to a report in the Irish Times, two of European network carriers including ditional freight capacity on this route. The the bidders have been identified as ASL Air France-KLM Group and Lufthansa three new flights a week will commence on Aviation Group and Intro Aviation. ASL face a heightened challenge from both 27 October 2013 and will be served by a controls cargo operator Air Contractors, local discount airlines and Gulf operators B777-200, allowing for an increased weight French cargo and charter airline Europe serving routes to Asia, according to analysis of cargo, with additional available capacity Airpost and South African cargo and by Amadeus IT Holding. Low-cost carriers of 108 tonnes per week. ACMI specialist Safair. Intro Aviation owns led by Ryanair lifted their share of Euro- Customers will benefit from increased a majority stake in Austrian regional car- pean traffic four per cent to 38 per cent in access to IAG Cargo’s cargo network, rier InterSky and is also said to be one of 2012, while travel from Europe to Asia via which supports more than 350 destinations the bidders for a stake in Adria Airways. the hubs of Emirates, Qatar Airways and worldwide, the carrier said. At present, CityJet operates an ageing fleet Etihad Airways grew 20 per cent, accord- Seattle is a growth market for IAG of nineteen ARJ-85s, twelve Fokker 50s ing to data from Madrid-based Amadeus’s Cargo, with a strong catchment area that wet-leased from Antwerp-based VLM and global booking system. includes the medium-sized manufacturing two Do328-100s wet-leased from Suckling Air France, Lufthansa and Iberia of bases of Portland and Boise. In 2012, the Airways on routes on behalf of Air France Spain are among former flag-carriers re- London-Seattle route generated 4,660 AF-KLM group and on an own network vamping short-haul operations in an effort tonnes of cargo, including everything from from London City (LCY). to end losses and stave off the advances of aircraft parts and perishable goods, such as ferns and cherries, to consumer goods and e-retail purchases, sent to markets across the world. IAG Cargo operates 55 wide bodied flights per day from the US and Canada, which equates to over 800,000 kilogrammes shipped from the area every day. The carrier also operates three B747-8 freighters per week on the US route. ‘Eccentric’ load proves Ruslan capabilities Ruslan International – the company which manages and markets the combined Antonov An-124 fleets of its shareholders Antonov Airlines and Volga Dnepr Airlines – has arranged the successful movement Transaero Airlines has leased two former Aviastar Tupolev Tu-204-100C freighters as it makes its of a 101-tonne oil platform component first foray into maindeck capacity. The Tu-204C can carry up to 30 tonnes of cargo at a 2,400 km from Bergen (Norway) to Busan (Korea) range and up to 12 tonnes at a 6,750 km range. on an An-124 flight. Some 5,000 kilos

14 PAYLOAD ASIA | May 2013 GATEWAYS of additional equipment, required for members will help us to understand and unloading at destination, were carried on meet their needs better. We have also a separate flight. regrouped activities that have grown The load – comprising a ‘separator’, organically over time with the goal of along with two support frames and other being more intuitive to those we deal with. loading equipment – weighed a total of This will optimise our ability to develop, 114,000 kilogrammes, coming close to the modernise and deliver the global standards giant aircraft’s capacity for the route flown. which are the foundation of aviation- The large dimensions of the piece – 11.59m enabled global connectivity,” said Tony long x 3.92m wide x 6.04m high – exceeded Tyler, IATA’s director general and CEO. the aircraft’s main cabin height of 4.4m, IATA’s regional operations will be so Ruslan International’s load planners consolidated from seven regional structures designed support cradles that enabled Ruslan’s cargo comprising a ‘separator’, along into five. These will be based around the the load to be supported after rotating with two support frames and other loading five hubs (Amman, Beijing, Madrid, Miami equipment weighed a total of 114,000 kg. it 90 degrees. The load’s resultant offset and Singapore) where IATA has already (eccentric) centre of gravity within the been amalgamating activities associated cargo cabin then required special approval organisational restructuring of its main with its industry financial systems. from the aircraft’s designers, Antonov divisions and regional operations to North and South America will be Design Bureau. better address the needs of its 240 consolidated into an Americas region and The An-124 aircraft flew from Bergen member airlines, it said recently. Senior based in Miami while Africa and Middle to Busan via Helsinki, Novosibirsk (Russia) management changes were also announced East North Africa will be combined into and Tianjin (China). The flight was one of a to support the new structure which will one region to be known as Africa and series required for the same project. take effect from 1 July 2013. Middle East. Asia-Pacific, North Asia and A key guiding principle of the Europe will continue to serve members in IATA undertakes major restructuring is the concept of ‘Global those regions as in the current structure Development, Regional Delivery’. “IATA is with regional offices in Singapore, Beijing restructuring changing to deliver even greater value to and Madrid. The International Air Transport its members. Strengthening our regional IATA’s four externally-focused head Warehouses • PRESS MAG • 190 x 135 mm • Remise le 17/08/2012 PGI • BAT Association (IATA) announced an structures where we are closest to our office divisions will be re-organised into

MEMBERS SHARING THE SAME WAREHOUSES SO YOUR CARGO ALWAYS FEELS MORE AT HOME. • More efﬁ ciency from resource sharing. • Simpliﬁ ed transit via one-stop service. • Safer and faster service for your consignments. The cargo people.

ALLI_1208118_Warehouses_190x135.indd 1 17/08/12 11:00 www.payloadasia.com | May 2013 15 GATEWAYS five in order to bring together activities a Declaration of Intent to strengthen co- sharing common stakeholders and focus. operation on technical matters. Under the These are: Airports, Passenger and Cargo terms of the new agreement, ICAO and Services (APCS), a newly created division TIACA will work more closely on air cargo that will combine the association’s main and mail security and facilitation, acceler- activities with respect to airports (including ating the evolution from paper-based to infrastructure development and financing), electronic processes, environmental stew- security, passenger and cargo services. ardship, the liberalisation of market access American Airlines Cargo anticipates pharma It will be led by Thomas Windmuller, for air cargo services, and air cargo safety. products, medical instruments, aircraft and currently senior VP (SVP), Member and ICAO and TIACA have agreed automotive parts to be key commodities carried Government Relations. Other divisions to consult, confer and cooperate on on its B767-300 freighter between Chicago and include: Member and External Relations a continuous basis, over and above Dusseldorf. (MER); Safety and Flight Operations (SFO); attendance at formal meetings. They Financial and Distribution Services (FDS); will keep each other informed of project to be key commodities between the two and Marketing and Commercial Services activities and programmes of work in the countries. DUS Cargo Logistics has been (MACS). areas identified in the Declaration of Intent. appointed as the carrier’s handling agent in Dusseldorf. Americas Boeing slows 747-8 The route is the earliest nonstop flight from Chicago, providing interline American Airlines Cargo production rate connections to the Middle East, as well as Boeing has announced that it will trucking to nearby Belgium, Luxembourg loss improves adjust the production rate for the 747-8 and the Netherlands. Dusseldorf also offers AMR Corp., the parent company of programme from two aircraft to 1.75 connecting opportunities to Moscow, American Airlines, reported a net loss aircraft per month because of lower market Munich and Vienna with oneworld and of US$341 million for the first quarter of demand for large passenger and freighter codeshare partner, airberlin. 2013, a 79.4 per cent improvement from aircraft. Boeing said it will continue to Earlier this month, AA Cargo rolled the net loss of $1.7 billion for first quarter monitor market conditions and their effect out additional new and seasonal service to 2012. Excluding reorganisation and special on production rates moving forward. Europe and Latin America, including a new items worth $349 million, the company’s The company expects long-term average nonstop flight between Dallas/Fort Worth quarterly profit was $8 million, a $256 growth in the air cargo market to resume and Lima, Peru, and returning seasonal million increase year-on-year and AMR’s in 2014. To date, there are 110 orders for service between New York – JFK and first profitable first quarter since 2007. passenger and cargo versions of the 747-8, Rome, Italy, Chicago O’Hare and Rome, Revenue in the first quarter was $6.1 46 of which have been delivered. Italy, and Chicago O’Hare and Dublin, billion, the highest first quarter revenue Ireland. AA Cargo will launch its first-ever in the company’s history and one per Rio Linhas Aéreas retires service to Seoul, South Korea, on 9 May. cent higher on 1.3 per cent less capacity compared to the same period last year. last B767-200F Polar to start non-stop Quarterly cargo revenue was $155 million, Rio Linhas Aéreas has retired its second dropping eight per cent year-on-year. of two B767-200Fs and will now continue Cincinnati-Tokyo service AMR is also currently anticipating a operations with its remaining fleet of seven Polar Air Cargo Worldwide has merger between American Airlines and B727-200Fs. The B767-200F has been confirmed its plans to initiate a daily US Airways, which is expected to be returned to lessor Cargo Aircraft Manage- non-stop B747-400 express freighter completed in the third quarter of 2013. ment while the Brazilian cargo operator service between Tokyo, Japan and awaits the arrival of three former Royal Air Cincinnati, Ohio – the main US hub ICAO, TIACA to Maroc B737-400s that are currently stored for DHL Express. The new service will at both Tampa International (TPA) and complement a daily B747-400 flight from strengthen cooperation Kiev Borispol (KBP) awaiting conversion the Japanese industrial city of Nagoya The International Civil Aviation Organi- into freighters. to Cincinnati, facilitating next-day sation (ICAO) and The International Air deliveries to the US from all major cities Cargo Association (TIACA) have signed New AA Cargo service and industrial areas in Japan. Polar will also double the frequency ORD-DUS of its wide-body freighter connections to Following the recent ‘New American’ Australia from two to four days per week. tie up between their parent group and US The routing of this service, via Japan, Airways, American Airlines Cargo has will allow Polar customers such as DHL begun a nonstop freight service between Express to optimise their intercontinental Chicago O’Hare (ORD) and Dusseldorf, networks and introduce additional capac- Germany (DUS). Flying a B767-300F, the ity both from the US and from key North new service will aim to provide customers Asian markets to Australia. The increase with more shipping options and offers in Polar’s frequencies will be supported Expedite and Expedite TC (Temperature by the introduction of two new B767- (l-r) Boubacar Djibo, director Air Transport Controlled) services. Pharmaceutical 300ERF wide-body aircraft. Bureau of ICAO and Michael Steen, chairman products, medical instruments and Thomas Murphy, executive VP and of TIACA. automotive and aircraft parts are expected COO of Polar Air Cargo Worldwide said:

16 PAYLOAD ASIA | May 2013 GATEWAYS

“In addition to the trans-Pacific trade lanes, is set to start operations from 1 June airline plans to use the acquisition as part we look forward to the continued growth with tentative flights to be offered from of a turnaround plan which will involve of DHL and our other freight forwarder Freetown Lungi International (FNA) to developing Algier Houari Boumediene customers in the intra-Asia region.” London Gatwick (LGW). Once the airline (ALG) into a hub while reorienting the Polar Air Cargo Worldwide’s sister has become viable, operations will then airline’s business model towards its company, Atlas Air, will provide operating spread to encompass domestic and regional previously neglected Africa market. service for the aircraft on the new routes. flights. Formed in 2011 out of a partnership between Nigeria’s Arik Air and the Sierra Avient Aviation New nonstop SFO-CDG Leone government, the new national carrier will rely on Arik to initially provide continues operations for United Cargo it with both aircraft and technical skills. Zimbabwe-based Avient Aviation United Cargo has introduced a new Since 2009, Arik has been Sierra Leone’s is set to continue operations despite daily non-stop service between San ‘designated carrier’ thereby allowing it to its sales arm, Avient Ltd, going into Francisco International Air port (SFO) ply the lucrative Sierra Leone-UK route. bankruptcy administration following and Paris Charles de Gaulle International crippling losses. The new sales wing, Airport (CDG) with B767 aircraft from 26 Air Algérie tenders for to be called AV Cargo Airlines has April. “With this new widebody service, reportedly been given approval to carry we can serve your shipping needs to more 14 pax, 2 cargo aircraft out the business of former Avient Ltd, destinations in Europe than any other Air Algérie has tendered for the by the administrators. AV Cargo Airlines US carrier,” United said. United Cargo is purchase of 14 passenger aircraft – eight has already obtained funding and has offering EXP and GEN freight services in 150-seat, three 250-seat and three 70- secured new aircraft. The first of a addition to PetSafe, UASecure, QuickPak, seat passenger aircraft – and two 13-20 possible three MD-11F aircraft is set to TrustUA and TempControl on its flights tonne-capacity freighters, as part of its fleet enter active service shortly, with a second between San Francisco and Paris. renewal plans. Air Algérie announced in scheduled for delivery in May. Avient, January that, along with the retirement of Zimbabwe’s only registered all-cargo Africa its three ageing B767-300s, it was eyeing operator, specialises in the Europe-Africa Leone Airways to launch a future medium/long haul fleet based on market with scheduled services offered B787-8s, B737-800s and A330-200s. Facing from its hubs in Liège Bierset (LGG) and in June increased competition on its international Dubai International (DXB) to eight west Sierra Leone-based Leone Airways and regional routes, the state-controlled African destinations. CALENDAR

European Air Cargo Supplement

Advertising offices: in July Issue Worldwide Russia Yullie Tan Sergey Stanovkin Tel: +65 6521 9749 Tel: +7 495 7750735 Fax: +65 6521 9788 Fax:+7 495 7750736 Email: [email protected] Email: [email protected]

France South Korea Daniel Solnica Kwangsok Hong Tel: +33 1 4246 9571 Tel: +82 2 466 5595 Fax: +33 1 4246 8508 Fax: +82 2 466 5596 Email: [email protected] Email: [email protected]

Japan United States, Canada Katsuya Watanabe Matt Weidner Tel: +81 90 5321 6881 Tel: +1 610 486 6525 Fax: +81 3 6823 8994 Fax: +1 610 486 6527 The upcoming European Air Cargo Supplement will examine current Email: [email protected] Email: [email protected] issues facing the European industry including the severe impact of the euro crisis and falter economic growth in many of Europe’s economies, how air cargo companies are positioning themselves for growth after 2013 CALENDAR OF EVENTS the prolonged downturn, the impending European emissions trading scheme, the impact of intensified competition from the Gulf carriers, as Jun 4-7 Air Cargo Europe Munich, Germany well as coverage from the Air Cargo Europe event in Munich – both from www.aircargoeurope.com the show floor and the conference sessions. This upcoming supplement

Jun 7-8 Federation of Asia Pacific Aircargo Associations (FAPAA) 40th ECM will examine these issues and other key trends in the industry. For Jakarta, Indonesia editorial participation and contributions please contact the Editor, www.fapaa.org Donald Urquhart at email: [email protected] or call Jun 9-11 The Freight Summit him at +65 6521 9760 (GMT +8). For advertising in July supplement, Shanghai, China please contact Yullie Tan at email: [email protected] or www.thefreightsummit.com call her at +65 6521 9749 (GMT +8). www.payloadasia.com | May 2013 17 LOGISTICS DHL opens Shanghai to-end solution designed around the in response to the multi-channel specific needs of high-fashion retailers purchasing options that customers Fashion excellence centre of a wide range of different products – prefer. The ability to fulfill multi-channel DHL Global Forwarding, the air and from ready-to-wear and leather goods distribution through a single, optimised ocean freight specialist within DHL, is to jewelry and watches, fragrances, network has become critical to retail pioneering a new style of high-fashion cosmetics and accessories. success, said DHL. logistics with the spring launch of its The centre will offer flexible, tailor- ‘Fashion Center of Excellence’ in Jiuting, made logistics solutions that address Work begins on new on the outskirts of Shanghai, China’s the industry’s top concerns of speed, high-fashion capital. At an investment security, and safety. Unique features Toll UK HQ of €4.3 million, the 10,500sqm centre include a ground-floor buffer zone that Toll Global Forwarding will move to is at the heart of a unique integrated can be quickly reconfigured to cope with a brand new UK headquarters building end-to-end approach designed to meet the massive seasonal influxes peculiar to at London Heathrow Airport in October the detailed needs of the high-fashion the high fashion industry. this year after work commenced on the and luxury industry, according to DHL. Value-added services include sorting new site in early April. The new facility – The centre combines DHL’s value- and picking, labeling, stitching and on a secure 2.65 acre compound on the added services and a team dedicated knitting, visual quality control, re- North Feltham Trading Estate, close to to high-fashion and luxury to manage packing, non-merchandise and sales Heathrow’s cargo village – will include the entire fashion supply chain from order management as well as reverse 4,645 sqm of warehousing featuring source origin countries in Europe and logistics. Dedicated experts will design eight truck docks, a cargo handling the US to safe arrival at retailers across and manage solutions for import, safe system, storage for 1,200 pallets and a mainland China. storage and delivery all over China large, multi-zone chiller for perishables. “China’s fashion industry has tripled through DHL’s infrastructure and The site will be accessed by a one-way in market size in the last 10 years,” network capabilities. Last mile services traffic system. said Kelvin Leung, CEO, DHL Global include delivery and unpacking in- The building will also house 1,858 Forwarding Asia Pacific. “In 2012 alone, store by DHL employees who are also sqm of offices on three floors, featuring the luxury goods market grew six per trained to stock shelves and racks. The comfort cooling, solar shading and a cent with Chinese consumers now the entire aforementioned flow is visible on two-storey-high reception area and will number one buyers of luxury goods DHL Global Forwarding’s integrated IT comply with BREEAM ‘Very Good’ and globally responsible for 25 per system. sustainability standards. The new Toll cent of total sales. There is immense Mark Lau, Global Sector Head – base will replace its existing facilities opportunity here for us to support Retail, DHL Global Forwarding said: at nearby River Gardens, Feltham and the logistics needs and challenges of “The high fashion industry’s three at Skyport Drive in Harmondsworth, our customers and in turn, cater to priorities are speed, because of the which it acquired with the purchase of burgeoning consumer demand. This seasonality of their products, security, WT Cargo in 2011. Fashion Center of Excellence is not because of their high value, and safe just a milestone for DHL but a timely handling at all stages because these FedEx Trade Networks response to the growing requirements are goods that are easily spoiled. The for first-rate logistic solutions for the challenge – and opportunity for DHL – expands into Latin America high fashion industry in China.” is providing all three cost-effectively in FedEx Trade Networks, the freight- In establishing the centre, “DHL China where demand is soaring.” forwarding arm of FedEx, has expanded surveyed over a dozen of the world’s Research by McKinsey estimates that its presence in Latin America. Over the leading luxury fashion brands in China China’s luxury goods market will be last several months, the company has and has created a facility with a suite of worth RMB180 billion (€22.5 billion) by opened new offices in Brazil and Mexico. services that we believe exceeds their 2015. As a result of anticipated growth, Though the company has operated in expectations,” said Steve Huang, CEO, DHL Global Forwarding is currently both countries since 2009, it added new DHL Global Forwarding China. “In evaluating the development of DHL locations in Rio de Janeiro, Guadalajara addition to comprising both bonded and Fashion Centers of Excellence elsewhere and Monterrey. non-bonded facilities, the DHL Fashion in China. “FedEx Trade Networks is committed Center of Excellence has state of the Between 2006 and 2011, DHL to delivering reliable supply chain art anti-theft and anti-counterfeiting launched a series of similar Fashion solutions where our customers do security such as anti-pilfer crates, Centers of Excellence in India, Hong business,” Fred Schardt, president and cages, IT and surveillance systems Kong, Pakistan, Sri Lanka, Vietnam, CEO of FedEx Trade Networks, said. and dedicated operations and security Bangladesh and Cambodia to capitalise “Trade volumes continue to increase in management teams. However, it’s worth on increasing fashion and apparel trade Latin America, and our expansion efforts remembering that traditional good flows between Asia Pacific and Europe as provide customers with greater access practices are just as important to avoid well as Asia Pacific and North America. to superior freight forwarding in these damage during handling. So is storage In 2011, DHL Global Forwarding emerging markets.” in a clean, temperature- and humidity- restructured its consumer business FedEx Trade Networks also established controlled and dust free environment.” launching retail as a separate division. strategic alliances with locally-based The 10,500sqm DHL Fashion Center This has become one of the company’s regional service providers to enhance of Excellence is spread over three floors fastest-evolving new business sectors its coverage to 19 countries throughout and will employ over 100 specialist staff. as global retailers and manufacturers Latin America. The company has a The centre will offer customers an end- have redesigned their supply chains new strategic alliance with Portlink

18 PAYLOAD ASIA | May 2013 14 ASIAN DESTINATIONS In summer 2013 - new routes to Hanoi & Xi’an

Read more at finnaircargo.com

Finnair-Cargo_Efficient-air-freight_xian_hanoi_payload_asia_210x297mm.indd 1 4/16/13 3:06 PM LOGISTICS

Logística Multimodal, one of the largest delivering e-commerce supply chain Switzerland-based company also booked freight forwarders in southern Brazil solutions, handling both flat and hanging a European Union antitrust fine of and constitutes the company’s largest garments, accessories and shoes for CHF65 million francs. Revenue rose 5.4 alliance in Latin America. The new many leading fashion brands, as well per cent to 5.09 billion francs. alliance has enabled FedEx to launch new as the transport of different kinds of The company’s air freight business freight forwarding options such as an air products purchased online, offering realised a five per cent increase in volume consolidation service between Mexico full visibility of all orders. CEVA has for the quarter, driven by demand for and Brazil. The new service combines also established competence in reverse Asian exports and a moderate increase customers’ shipments to help streamline logistics management and provides in tonnage in outbound traffic from their supply chain between the Benito efficient and integrated solutions that Europe. Meanwhile, K+N’s contract Juárez International Airport and São deliver progressive cost optimisation and logistics unit’s turnover rose by 2.5 per Paulo-Guarulhos International Airport, constant visibility of all goods within the cent versus the first quarter of 2012. the company said. supply chain, including returns. However, the road and rail logistics sector was negatively impacted by the European Sweden begins price DHL expands cold chain economic situation, as well as adverse fixing investigation accreditation weather conditions. Sweden’s competition authority (SCA) DHL Global Forwarding has has raided 10 logistics companies for expanded its Qualified Envirotainer Air Logistics Handbook suspected price fixing, seizing computers, Provider (QEP) Accreditation to 30 targets fresh grads invoice books, company records and stations in locations as far afield as Germany, France, UK, the US, Egypt, Virgin Group chairman Richard banking documents. The investigation Branson has urged university graduates, follows six months of investigation after Dubai, Japan and China. By adding the QEP Accreditation to its major stations, college students and school leavers to whistleblowers exposed the alleged cartel explore a career in air logistics, calling it action last year. DHL’s network is further integrated with Envirotainer operational requirements – ‘an outstanding industry that needs well educated executives and entrepreneurs CEVA to manage Liu-Jo’s to ensure customers proper shipping of temperature-sensitive life sciences and who will be tomorrow’s leaders and e-commerce activities healthcare products. In the upcoming innovators’. CEVA Logistics has signed a new months, the company plans to add 48 In a written introduction to the five year e-commerce contract with stations to the QEP Training and Quality new ‘Air Logistics Handbook’, aimed at Liu-Jo, a leading Italian company in Program. DHL operates a network promoting the industry to young people fashion apparel, accessories and footwear, of 120 Life Sciences and Healthcare and the educational sector, he states: operating approximately 310 mono brand facilities across the globe. “Air travel has transformed all of our stores and 5,100 multi brand stores “The QEP Accreditation supports our lives and helps us experience different worldwide. cold chain objectives to deliver excellent cultures and make new friends all over Under the terms of the contract, customer service with product integrity the world. However, airlines are not CEVA will provide Liu-Jo with solutions and regulatory compliance in mind. only about passengers. To make them for online sales, such as packaging, gift Our expanded certification network work successfully, you also need to build packaging and the management of covers already over 90 per cent of our a growing and award-winning cargo Liu-Jo returned apparel, bags, shoes current Envirotainer volume, and we will service and at Virgin we’ve done that too. and accessories at CEVA’s warehouse continue to enroll additional stations “Air logistics is a phenomenal industry located in Cortemaggiore, near worldwide to the program, starting and has become even more important Piacenza, Italy. CEVA said it will also with Frankfurt, Germany”, says David not only to the success of airlines but provide highly customised value-added Bang, CEO of LifeConEx, DHL Global also to every consumer and business services, such as the personalisation of Forwarding’s temperature management leader around the world. Before aircraft, products on an individual consumer specialists. products moving between countries basis and also manage transport Envirotainer provides active temper- spent weeks at sea. Today, it takes just activities across Europe. ature-controlled air freight containers hours to move imports and exports from CEVA boasts a solid and deep maintaining product temperatures within one side of the world to another, putting experience in the fashion market and the temperature ranges +2 to +8°C, +15 air logistics at the very heart of world to +25°C and >-20°C in nearly any ambi- trade. Without the flow of goods and ent condition appearing along shipping passengers around the world, our way routes globally. of life and the development of poorer countries’ economies wouldn’t exist. K+N Q1 profit up on air I encourage you to explore the many career opportunities this outstanding freight, contract logistics industry offers.” The Kuehne + Nagel Group (K+N) To be published in May 2013, the 280- today reported its net income in the page Air Logistics Handbook, authored first quarter of 2013 at CHF134 million by Michael Sales who has worked in the CEVA will manage Italian fashion label Liu-Jo’s (US$142 million), jumping 97 per cent air cargo industry for over 20 years, aims e-commerce business including personalisation from CHF67 million in the first three to provide a simple and straightforward of products on an individual consumer basis. months last year. The Schindellegi, guide to the industry.

20 PAYLOAD ASIA | May 2013 YOUR GATE TO RUSSIA ussia intends to boost its relations with APAC countries with the aim to increase their share in RRussia’s foreign trade turnover up to at least 50%. This ambitious goal was announced by the First Deputy Prime Minister Igor Shuvalov not long before the recent APEC summit in Vladivostok. The current APAC share in Russian foreign trade accounts for around 20% and is steadily growing. In 2012, the turnover with China as the main Russian partner in this region reached $87.5 billion showing an increase by 5.1% from 2011, with $100 billion and $200 billion benchmarks set for 2015 and 2020 respectively. The success in achieving this goal will greatly depend on investing into the country’s transport infrastructure and creating additional trade incentives. Hence, the Russian government has promoted solid steps for such development, where the newly established special economic airport zone (SEZ) in Ulyanovsk – a city lying in the center of European Russia and unofficially called the aviation capital of Russia – will play an important role. SEZ is located directly next to Ulyanovsk-Vostochny International Airport. The airport’s 5 km long and 100 m wide runway (one of the world’s longest) was built back in Soviet Union’s time as an alternate landing strip for the “Buran” space shuttle program, the USSR’s answer to its widely known US counterpart. The airport is capable to accept all types of aircraft and serves as the home base for two Russia’s largest air cargo carriers operating unique AN-124 heavy transport aircraft – Volga-Dnepr Airlines and Polet Airlines. However, its capacities far company (RUSSEZ) and the Ulyanovsk Region provide comprehensive exceed current use and create many opportunities for prospective support to investors in implementing their projects. new-comers. The city of Ulyanovsk is situated in the European part of Russia, 850 SEZ is meant to provide ideal conditions for businesses, specifically km east from Moscow, on the air routes connecting South East Asia for distribution centers specializing in goods imported to Russia from and Europe over the Russian territory. other countries. The incentives, among other benefits, include the The city has population of 650,000 people, with 75 million people reduced income tax from 20% (standard rate in Russia) to 2%, as well and many large cities, including Moscow, within the 1,000 km radius. as zero-rate property, transport and land taxes for SEZ residents. Ulyanovsk region is industrially and financially developed and has an Another important advantage is the free customs zone regime. extensive road and rail infrastructure, creating all necessary conditions This means that any goods imported from overseas are exempt from for distribution of goods. customs/excise duties and VAT as long as they stay within SEZ, allowing RUSSEZ invites all manufacturing, trade and logistics companies, large imports without provisioning of funds for customs payments which are interested in delivery of goods to Russia, to explore until the goods are sold in Russia. Moreover, all necessary customs opportunities of a distribution center in SEZ – a project that will include infrastructure will be created in SEZ, including a separate customs office a multimodal cargo terminal, warehouse and exhibition, as well as hotel to serve exclusively SEZ residents, which will significantly accelerate and business center facilities. customs formalities. RUSSEZ also invites aircraft industry manufactures and MRO The SEZ general infrastructure construction, as well as connections providers to establish or expand their presence in Russia through the to all utilities are financed by the government. The SEZ managing special economic zone in Ulyanovsk. Our contacts: 29 40-Let Pobedy Street, Ulyanovsk, 432059, Russia Tel: +7 (8422) 20-70-81 E-mail: [email protected] www.ulsez.com

More about Ulyanovsk The city has many specialized aircraft industry enterprises, including the largest aircraft factory in Russia – Aviastar-SP. Aviastar-SP formerly produced AN-124 heavy transports and now concentrates on TU-204 passenger aircraft and a new modification of the IL-76 freighter. Russia’s United Aircraft Corporation (“OAK”) also selected Ulyanovsk as the site for its composite wing factory for Russia’s prospective MS-21 widebody project. EXPRESS & MAIL

UPS appealing EC’s Command Center at FedEx Custom Marie-Christine Lombard, “did not leave TNT ruling Critical headquarters. This team in a civilised manner”. provides the initial setup with the UPS is appealing the 30 January customer, monitoring during the DHL Express boosts decision of the European Commission to shipment, communications if there are prohibit its acquisition of TNT Express. issues that need addressed and follow- Asia-US, intra-Asia A UPS spokesperson says the company up after the shipments if necessary. The DHL Express is adding wide-body believes the EC’s decision was factually service is currently available within the capacity to new and existing services in and legally erroneous. US and to and from Canada, Puerto Asia. The company said it is introducing “We are challenging the decision Rico and the UK. a new non-stop B747-400 freighter in order to ensure a more accurate service to improve delivery capability assessment of the EU competitive from Tokyo to the Americas, with daily landscape and that no precedent is TNT chairman blames flights between Nagoya and DHL’s hub established by the EC that would limit UPS attitude for fail in Cincinnati. The return flight will mean international growth opportunities,” said TNT Express chairman Antony a two-day delivery service for customers Peggy Gardner, UPS spokesperson. “If Burgmans told shareholders that the in the US, Canada and Latin America the appeal is successful, the prohibition collapse of the UPS takeover was down shipping to Japan. decision would be ‘annulled,’ which to the American company failing to DHL said its aircraft will have a essentially means the prior decision understand the culture of the European capacity of more than 100 tonnes, and could not be used as a basis for future Commission. Burgmans was speaking at will be operated by partner airline Polar decisions by the EC.” Gardner said the the TNT Express annual general meeting Air Cargo Worldwide. Jerry Hsu, the appeal should not be interpreted as a on 11 April to respond to questions about DHL Express Asia Pacific chief executive, renewed interest in TNT Express. why the deal collapsed in January. said the new flight was being introduced Facing shareholders questions as to as trade between Asia and the US was FedEx Custom Critical why management had been so confident predicted to grow 10 per cent a year up launches ShipmentWatch of success before the EU Commission to 2020. “We are improving service and adding capacity between Asia and the FedEx Custom Critical, a subsidiary blocked the €5.2 billion deal in January, US to support the continued two-way of FedEx Corp., has launched a new Burgmans said TNT itself had “no growth we see on the world’s biggest monitoring service called ShipmentWatch control” over the process of seeking trade lane,” said Hsu. which utilises SenseAware devices to regulatory approval, it was all down to Along with an additional wide-bodied track customers’ shipments. The service UPS. “With the benefit of hindsight you aircraft to its global aviation network, includes programming the device to could say that the way the project was run DHL said it has made improvements the customer’s requirements prior to meant it did not have the right result,” to its intra-Asian connections to open the shipment, sending the device to the said Burgmans. up trade lanes between Asia and the shipper and then proactively monitoring The Commission stated in January Americas. The improvements should be the shipment from pickup to delivery. that it did not want the deal to go ahead launched by the end of April 2013. During transit FedEx Custom Critical because of the impact on competition A new wide-bodied freighter flight can monitor location, temperature, light within the European cross-border small will link Taiwan’s capital, Taipei, with exposure, humidity and barometric package delivery market if Europe lost Incheon in Korea and Nagoya, Japan. pressure through the SenseAware device one of the big four integrators. DHL is also set to double the frequency and web-based application and can be The TNT Express chairman said of its wide-bodied freighter connections used on FedEx and non-FedEx shipments. candidly that the lessons his company to Australia, from two to four days per All ShipmentWatch moves are had drawn from the debacle was that week. Routing shipments via Japan, it will monitored by the SecureComm “whenever you’re dealing with Brussels, you must make sure that you’ve be reinforcing its daily US to Australia done your homework very carefully.” connection and adding daily capacity He suggested that the world’s from key North Asian markets into biggest package delivery company Australia, with two additional B767- had not been sufficiently “humble” 300ERF aircraft offering a capacity of in its dealings with EU officials more than 55 tonnes. As with the new in Brussels. “Brussels has a Japan to US flight, the 767-300ERF totally different culture than in aircraft will be operated by Polar Air Washington,” the TNT Express Cargo Worldwide. chairman said. “UPS was fully in charge of everything. From this Brazilian express side of the table we did everything we could to give all the information carriers to merge about the Brussels culture. If you The imminent merger of TWO The SenseAware device includes GPS as well as wish to operate successfully in Aviation and Flex Aero, to form Two- temperature, light exposure, humidity and barometric Brussels, you’ll have to accept Flex, will create the largest express pressure monitoring and automatically turns itself on the Brussels culture.” He also carrier in Brazil, said Flex Aero president and off during aircraft flight. commented that former CEO, Rui Aquino. The new operation expects

22 PAYLOAD ASIA | May 2013 EXPRESS & MAIL to command 60 per cent of the country’s added. Two-Flex will be based at Jundai mail, packets and parcels to more than air cargo market, with 18 aircraft and 11 Airport in São Paulo state. “It operates 200 countries. But it is now introducing bases throughout the country. Flex Aero’s 24 hours a day, and is never closed by inbound solutions for items up to 20kg in operations are stronger in the north of weather,” said Aquino. weight, providing an end-to-end service Brazil, and TWO’s in the center and With Brazil’s two major domestic air that particularly has Australia’s growing south. “Now, I can go from the north of carriers shrinking passenger capacity, e-commerce sector in mind. Brazil to Porto Alegre in the far south. there is a corresponding reduction Retailers will be able to have their Before, I couldn’t offer that,” said Flex in bellyhold space where air express suppliers fix a generic barcode label to Aero president Rui Aquino. packages go and fewer connecting a product and provide DHL Global Mail The joint venture will have 18 Cessna flights, according to Aquino. “At a hub with a manifest file, then DHL will deliver Grand Caravans – nine from each like Brasilia, at day’s end there are a lot the item direct to the consumer’s door. partner – with plans to add 12 more of packages left over that didn’t get sent DHL handles the customs clearance into of the same model by year-end, along on to their destination,” he said. Currency Australia, final mile labeling and manifest, with a pair of ATR twin turboprops, transport for banks is just one activity in and then final mile delivery is provided by raising their current combined average Brazil that depends on express freight Australia Post. annual 7,500 tonnes of cargo carried to services, as well as such critical functions The new service, which offers delivery 10,000 tonnes. “The Grand Caravan was as conveying auto parts. confirmation but not live tracking, will designed to meet FedEx’s need for a low- allow consumers to buy items sourced in cost cargo plane, and our [Caravan] fleet DHL offers cross-border various Asian countries, although initially will already be 10 per cent the size of the service is focusing on Singapore, Federal Express’,” said Aquino, noting that B2C in Australia Hong Kong and China. The company the aircraft is particularly well adapted DHL Global Mail has launched a says its new solution will “significantly” to Brazil, as it can land on unpaved and new cross-border shipping service to reduce the costs of importing items short runways. “The airlines and regional help retailers to source goods from and delivering them to consumers in carriers serve only 130 of Brazil’s more Asia and deliver direct to consumers in Australia. than 5,500 municipalities, and Two-Flex Australia. In the past, the international DHL Global Mail is now planning to will be an alternative to the country’s mail division of Deutsche Post DHL has roll out an inbound solution for the UK current infrastructure problems,” he focused on exporting – shipping business and the US later this year.

www.payloadasia.com | May 2013 23 AIRPORTS & GROUND HANDLING

Strong Q1 growth at potential catchment area is stimulating as prescribed by the Qatari Department Lambert-St. Louis Düsseldorf’s further cargo growth” of Civil Defence. Lambert-St. Louis Airport in the Gatwick criticises Heathrow New cargo handling US mid-west has posted its strongest first-quarter freight throughput since ‘mega-hub’ model JV for South Africa 2011. Volumes surged 3.5 per cent, In its submission to the UK’s Airport With a solid launch customer in year-on-year, in the first three months Commission, Gatwick has claimed that the form of Emirates SkyCargo, in of 2012, with outbound mail recording competing London gateways would trump Johannesburg and Cape Town, Africa a substantial 39.5 per cent, y-o-y jump. a single hub by cutting travel costs and Flight Services (South Africa) Pty, a new Inbound freight and mail also grew, safeguarding connectivity. While Heathrow joint venture partnership between the although more moderately during the first sees a focus on a single large hub as the best world’s largest provider of cargo handling quarter of 2013, rising 2.5 per cent and way to safeguard London’s connectivity, services, Worldwide Flight Services 7.7 per cent, year-on-year, respectively. Gatwick argues most passengers through (WFS), and the South African airline, “We have seen healthy growth in the city start or end their journey there. SA Airlink has taken off. all sectors of our business so far this “IATA figures show that the majority AFS (South Africa) has opened year: domestic and international cargo, (93 per cent) of journeys using London a 3,000 square metre cargo handling and mail,” said David Lancaster, cargo airports are for passengers that either begin warehouse facility at O.R. Tambo development director at Lambert-St. their journey from our airports or fly to International Airport in Johannesburg Louis airport. Although he says it’s them as a final destination,” said Gatwick and a 2,340 square metre freight centre premature to assert whether this growth in a statement. at Cape Town International Airport. trend will continue, Lancaster added, For Gatwick, travellers stand to gain Barry Nassberg, group COO of “there is certainly more optimism among more from competition between gateways Worldwide Flight Services, said: “Africa our community than has existed for some than from a focus on a single hub. Its Flight Services (AFS) is a new brand for time.” vision is to spread capacity so that three our expansion plans in Africa. This is two-runway airports – Gatwick, Heathrow an important and growing market for Düsseldorf welcomes and Stansted – can compete for airlines us and we want to give it a dedicated and customers. Heathrow and Gatwick focus but with the ability to draw on all daily American B767-300 have already clashed on the issue with the expertise and resources of the WFS The northern German airport of Heathrow claiming Korean Air’s decision global network. AFS will enable us to Düsseldorf saw the arrival of the first to drop a Gatwick–Seoul service reveals enter into local partnerships and joint American Airlines daily flight from the problems of running long-haul flights ventures, and to customise services and Chicago O’Hare on 12 April. The from a non-hub airport. tailor resources to the needs of customers B767-300, offers an average of around But Gatwick CEO Stewart Wingate in this dynamic and rapidly growing eight tonnes of belly cargo capacity described a mega-hub solution as market.” on this route. An American Airlines “yesterday’s solution to tomorrow’s The ground handler has been spokesperson noted the huge potential problem.” struggling to put the fiasco at Dube for cargo uplift between the two Gatwick sees recent new routes to Tradeport, the cargo terminal at Durban’s destinations. The flight connects transit Moscow and Indonesia as evidence it flagship King Shaka International Airport passengers and cargo with many other can safeguard London’s connectivity, which opened in May 2010, with state- carriers such as Air Berlin, Emirates, especially for key emerging markets. While of-the-art facilities and government Etihad, Air China and Lufthansa, Heathrow’s slots are full, Gatwick has 25 investment, behind it, as allegations operating at Düsseldorf, the airport per cent spare capacity – mainly outside of corruption between WFS’ franchise said. There is a realistic expectation of business peak hours – opening up long- partner and Dube Tradeport’s CEO increasing cargo traffic on the route, said haul options, said a Gatwick spokesperson. continue to the dog the operation with the spokesman. legal proceedings imminent. DUS Cargo Logistics, the main cargo Qatar’s new airport handler at the airport handling over 30 Q1 volumes up, Hactl airlines, has been appointed to handle the delayed again airline. Thomas Schürmann, manager, Qatar Airways was forced to cancel sees slow recovery marketing and sales, said: “We are very the inaugural flight to Doha Hamad Hong Kong Air Cargo Terminals pleased to welcome American Airlines International that was scheduled to Limited (Hactl) announced its tonnage to this airport. We are established as open on 1 April on very short notice. throughput for the first quarter of 2013 the lower-deck specialist airport – While the national carrier of Qatar had with volumes up 1.6 per cent, year-on- offering more than 180 intercontinental only planned to move cargo and some year. The year kicked off with January destinations worldwide and providing charter flights to the new airport from 1 cargo volumes of 228,140 tonnes and the hub for two of the three big airline April, ten other carriers including low- February saw the monthly tonnage at alliances, the Star Alliance and the cost airlines were scheduled to move to 168,860 tonnes, followed by a rise to One-World. The hub is increasingly the new airport already as part of a soft 246,912 tonnes in March. important for the big forwarders and opening. Cumulative tonnage in the first logistics companies. The airport’s ready The airport’s inauguration, delayed quarter was 643,912 tonnes in total with access to a wide range of lower-deck now for a fourth time, has been export volume reaching 318,004 tonnes capacity, together with an independent hampered by a lack of conformity to and import volume recorded 153,976 trucking network based in a high strict new safety and security standards tonnes. Transhipment volume registered

24 PAYLOAD ASIA | May 2013 AIRPORTS & GROUND HANDLING

171,932 tonnes. across the board, in Heathrow and in doldrums, down 6.3 per cent year-on- “February has always been a regional airports. Maintaining our status year, according to the Airports Council traditional slower month due to the as a global aviation hub is critical to our International (ACI). extended Chinese New Year holiday, international standing and expanding Most of the growth came from Asian Mark Whitehead, chief executive of runway capacity at Heathrow is the most airports with both Hong Kong (HKG) and Hactl, said. After adjusting for the viable way to secure this.” Beijing (PEK) reporting robust increases seasonal factor, the overall first-quarter The call comes on the back of a of 15 and 7.3 per cent respectively. figures were satisfactory. Looking into major survey published by EEF, the However HKG and PEK, in addition to the second quarter, we expect that it will manufacturers’ organisation, showing the many other Asian airports, witnessed a be at best flat compared to 2012 as slow potential threat from the UK’s stretched significant air freight decline in February economic recovery persists.” infrastructure to business competitiveness. 2013 compared with February 2012 as a The survey comes ahead of the publication result of the Chinese New Year taking UK manufacturers back of the government’s transport strategy and place in February 2013, as compared with Spending Review this summer. January 2012 and distorting the statistical Heathrow expansion Salomone added: “Political prevarication comparison. Britain’s manufacturers have called on and policy reversals have left Britain in the This factor, coupled with a high the UK government to give the green light slow lane in developing its infrastructure concentration of international air freight to a third runway at Heathrow Airport. The for decades. The forthcoming transport among Asia-Pacific airports, resulted in a Engineering Employers Federation (EEF) strategy is an opportunity to address this. 6.3 per cent year-on-year decrease in total wants ministers to “take the politics out of Government must reassess its investment air freight and an 11.8 per cent decrease infrastructure” by setting up a wide-ranging priorities, act faster on major issues like in Asia-Pacific air freight. Of all regions, independent infrastructure commission to airport capacity.” only the Middle East posted gains in both take major decisions out of the hands of passenger and freight traffic. government. Global freight down Total passenger and air freight traffic Roger Salomone, EEF’s head of business both grew by nine per cent year-on-year in environment policy, said: “World-class air 6.3% in February: ACI Middle Eastern airports. Dubai (DXB), the links are critical to export-led growth and Global passenger traffic rose 1.8 per region’s key hub, experienced double-digit attracting inward investment. To keep up cent in February, while global air freight growth in passenger and freight traffic with the competition we need investment volumes continued lingering in the at 11.4 and 15.9 per cent respectively.

AHMEDABAD AMSTERDAM ATLANTA PEK AUCKLAND TSN ICN BANGKOK TYO BARCELONA NGO BEIJING KIX BELGRADE BERLIN SHA BOGOTA DEL BRATISLAVA BRUSSELS BUDAPEST CAN CHICAGO AMD HKG COLOGNE HAN COPENHAGEN BOM DELHI DUBAI DUBLIN BKK EAST MIDLANDS FRANKFURT SGN GUANGZHOU HKT HAMBURG HANOI KUL HELSINKI HO CHI MINH CITY SIN HONG KONG HOUSTON Building the largest ISTANBUL JONANNESBURG KUALA LUMPUR LISBON LONDON GSSA network LOS ANGELES LYON MADRID MANCHESTER MARSEILLE across Asia... MIAMI MILAN MUMBAI MUNICH NAGOYA NAIROBI With the most extensive network in Asia, NEW YORK OSAKA PARIS Air Logistics Group can provide professional PHUKET AKL PORTO GSSA services to meet your requirements. SYD PRAGUE PRISTINA RIO DE JANEIRO ROME SAO PAULO With 20 offices across the region, Air Logistics SEOUL SHANGHAI SINGAPORE Group can provide full coverage of all SOFIA STOCKHOLM major gateways through Asia. STUTTGART SYDNEY TALLINN TBILISI TEL AVIV TIANJIN TIRANA To find out more about Air Logistics Group, please visit: TOKYO VALENCIA www.airlogisticsgroup.com VIENNA WARSAW WASHINGTON ZURICH

www.payloadasia.com | May 2013 25 COVER STORY Change when change is needed

Facing a serious set of challenges, the general air cargo sector needs to take a leaf out of FedEx’s playbook and change – and that change includes a rebalancing of capacity with less dedicated freighter capacity says David Cunningham, FedEx Express president for Asia Pacific. By Donald Urquhart in Hong Kong.

he air express veteran who has been with the US giant for over 30 years, 20 of which he has spent in THong Kong, gave his take, at the recent Cargo Facts Asia conference in Hong Kong, on the changing nature of the air cargo industry and what it needs to do to become more sustainable. It is an industry that has become a “tremendous value creator for the globe,” he highlights, noting that it has a global market size of US$78 billion, creates 32 million jobs and generates $3.5 trillion in economic activity. “And of course Asia is at the heart of it, with a 40 per cent share of that market,” he adds. Looking back, Cunningham notes that while some of the core commodities shipped 30 years ago remain, they have David Cunningham fundamentally changed over the decades. Electronics were a key commodity back then, but not quite the same as today – small and medium sized enterprises also dramatically changed, “making our they were big and they were expensive. increasingly reliant on e-commerce, he world a much more difficult world to do The high tech world was driven by says. These companies now represent 36 business in.” Japanese manufacturers with some per cent of the global market, he adds. But it’s not just about what’s going assembly in Southeast Asia. Over the last The air cargo market has changed on in the air that’s having an impact, 15 to 20 years this has shifted to China, in other ways too. It’s now all he cautions. Looking at the larger cargo “which has really been the heart of the about specialisation – healthcare, sector, Cunningham notes that over the manufacturing,” during this time he says. pharmaceuticals, medical devices, luxury period 1994-2004 ocean freight and air For the air cargo and express industry, consumer goods and in the case of FedEx, express have each gained five per cent the value proposition of the day was even the odd panda bear shipment. market share over the period, while about speed, reliability, door-to-door “But what’s intrinsic about this new the general air cargo market share has service and customs clearance. The global environment, is that shipment size is shrunk by 10 per cent. And importantly, economy of the 1970s was fueled by shrinking – it’s getting a lot smaller, both the growth rates of ocean and air express cheap labour, cheap fuel and productivity in terms of consignment and shipment have been in the high single digit rates that the new technologies were creating. size,” something that has been going on while general air cargo has remained “And the best part – capacity couldn’t for the last 15 -20 years and will likely virtually flat, particularly between 2004 keep up with demand. It was a wonderful continue into the future. and 2011. time to be in the air cargo and air express Fuel costs have also altered the air And while a slowdown in the global business,” he says with a grin. cargo landscape with Cunningham economy helps boost the ocean sector, “Today, it’s a different world. We’re noting that as recent as 1999 fuel was it’s more than that, he argues. “The still lifting a lot of electronics and they’re only US$16 a barrel, a far cry from 2008’s ocean industry has gotten a lot more still important, but capacity far exceeds record high of $147 and even today’s efficient and lot more reliable.” While the demand out there.” And another key $80-100. “This has huge implications on the latest generation of aircraft are “great difference: The electronics are now much our business moving forward,” he notes. technology, fabulously reliable and much cheaper, “almost disposable consumer The equipment has also changed more fuel efficient, effectively when you items” he says in reference to new significantly with far more fuel efficient, think about it, that B777 or B747-8 products that come and go regularity, longer range aircraft impacting global compared to the B747 of the 1970s when having shelf lives of only six months in travel and the movement of cargo. They it was first introduced, are about the many cases. also have a lot more belly capacity than a same capacity.” The customer base has changed as B747 or other widebody aircraft of past, Meanwhile, he says, the ocean well: From large global multinational he adds, noting many of them have the industry has dramatically increased companies that produced goods and capacity of a B737 freighter just in the its size and scale with Panamax, New shipped them on a regular basis, to belly. Customs and security issues have Panamax and in the near future the fuel

26 PAYLOAD ASIA | May 2013 COVER STORY efficient, giant Triple E (18,000 twenty express which has been growing and more main deck capacity, your moving foot containers). A New Panamax is 6-7 ultimately will continue to do so. “For that main deck capacity from here to times the capacity of the largest ship of air cargo there’s going to continue to be there, chasing whatever that episodic the 1970s and burns only marginally a relationship between value and total demand is and you’re hoping that’s going more fuel. “It’s a thousand times more distribution cost and that means certain to work out. efficient on a fuel basis – and when you products, at certain times, need to move “I think fundamentally that with the talk about fuel being at rates of $80-100 by air, but again my point is I don’t see miniaturisation, with the long range, large that’s significant, but of course ships don’t the days of past being the days of the belly capacity aircraft and this episodic burn Jet A, they burn bunker fuel which is future in terms of the amount of demand demand there has to be a rebalancing far cheaper.” And to make matters worse, that’s out there.” of capacity.” Passenger carriers can still in 2014 the Panama canal expansion will make money on a go-for basis, he says, open up and when it does these big ships Advice for the industry “but you’ve got to use your marginally will begin operating not only to the US Payload Asia asked Cunningham costed belly space and a limited amount west coast but the east coast as well. what, in his view does the general air of dedicated main deck space relative to “So, the ships are larger and much cargo sector need to do to address this the models that we’ve seen over the past more efficient and of course the ocean smorgasbord of challenges, including ten years or so. industry is also integrated with ground competition from his own sector. “You’ve got to have a lot less dedicated and rail transport and they’ve applied the One problem he notes is that the capacity because when you’ve got all that same technology as we use – tracking and consumer electronic launches every six dedicated capacity you’ve got to fully tracing with all the information visible. months or so, creates “massive episodic burden it – you’ve got the pilots, you’ve It’s all about having the right product, demand,” that traditionally has moved in got maintenance, the crews, you’ve got to at the right time, in the right place, so freighters and “it’s one way traffic, then fly somewhere and if you don’t you’ve got in my view that’s one of the reasons it’s gone. Then what do you do? the ownership cost of it just sitting on the why, beyond just the economy, that the “Many of the flag carriers around ground. And so I think over time there’s ocean industry continues to grow,” says the region over the last 15 to 20 years probably going to be a rebalancing of that Cunningham. have identified the cargo sector as an model in the mixture of cargo capacity “It’s clear looking forward that one of important sector to grow in and then to passenger belly capacity.” the things that’s changed is the economic what they’ve done, is they’ve identified He also sees a continuing role for outlook and with it, the air cargo market. the right point of leverage between the maindeck and specialist carriers, In past 15-20 years we’ve seen strong passenger and cargo operations at about but again feels there’s going to be a single digit growth and even double digit 30-40 per cent of revenue contribution rebalancing. “The macroeconomic issues in some cases. But look at the forecast from cargo. are not going to change and those long of 2.7 per cent for 2013, on the back “But when you move from marginally range, large belly capacity airplanes are of very weak last couple of years. It’s costed belly space and a limited amount just going to keep coming.” a very different growth rate that we’ve of main deck cargo capacity which was historically seen and this has major the old model, to an environment today FedEx not immune implications for the business.” where you’ve got a goal of 30-40 per But as successful as both the air But Cunningham is quick to point cent of your revenue being generated by express sector and FedEx Express has and out that all of this doesn’t mean it’s the cargo, you’ve got a lot more main deck continues to be, neither could escape the end for air cargo and particularly air capacity than you need. You’re flying a lot impact of the global downturn with the

FedEx and its operating units. www.payloadasia.com | May 2013 27 COVER STORY

models, look at the history and say what the future will look like. But when you introduce significant macro economic factors of the magnitude I’m talking about I think you have a significantly different industry than the one we’ve seen in the past and that has significant implications as we go forward.” Having been with FedEx for 30 of the company’s 40 year history, “I’ve seen our world change many times in that period and there is one constant that has made FedEx successful and that is, that we change when markets and the world change – that’s what successful businesses do.” He says this why the company has spent significant time Packages fresh off FedEx Express aircraft move along the conveyor belt at a FedEx sorting hub. and resources building out its freight forwarding capabilities, ocean forwarding division reporting a sharp 13 per cent our network. We built our network businesses, ground businesses in the US, decline in international priority freight so effectively there’s a redundancy in LTL (less than trailer load) business, revenues, while international air freight connectivity built in, so we can take units as well as developing and growing its revenues fell by 17 per cent year-on-year of capacity out and not affect the transit European business including ground during the third quarter. For the first nine time,” he says. FedEx is also moving capabilities there. months of the fiscal year ending May deferred and lower yielding products “I don’t have a crystal ball, but there 2013, these figures were down seven per into other lower costs networks. “We are significant macro economic trends cent and six per cent respectively. are going to use other carriers and belly that are driving our business – long range “What we’ve seen is a reduction in capacity and to some extent main deck aircraft, new ships, higher fuel cost, near- demand for our fastest, highest yielding capacity where it makes sense to do so. and on-shoring, demographic changes products and a growing demand in what Up to the beginning of this year and of course use of technology and we call our deferred product which is the express carrier was operating up use of supply chain management – and 24-48 hours slower, but customers still to 10 wide body flights a day on the I do believe that the vertical segments want the information – the tracking transpacific. “We can scale back that of healthcare, medical devices, pharma, and tracing and the reliability that goes capacity quite a bit without affecting e-commerce are all going to be value with it.” service and we operate three flights drivers in the future.” FedEx has taken the same strategy as between Asia and Europe with basically a “I’m also optimistic about China,” many on the general air cargo side and dozen or so flights a day connecting intra- he says, despite what he identifies that is to reduce capacity. “We’re taking Asia through our hub in Guangzhou.” as a number of problems including capacity down, but in concert with that bureaucratic hurdles, high domestic All change reduction in capacity what we’re not logistics costs and the need to transition doing, is we’re not reducing service and “One of the things that is really easy the economy away from a focus on that’s a function of the way we built to do is to take analytical forecasting exports to domestic consumption. “China has been critical to all of our success and has certainly been critical to our success on a global basis, but it’s one that faces many different challenges in that environment. “I’ve been in the region long enough to know that one of the advantages that the Chinese economy has in terms of being a state-led economy, is the ability to change – to recognise change, drive change and execute change. China has faced many daunting challenges in the past and successfully navigated them, so I’m confident that is going to happen, but that change is going to have to be to transition toward a domestic-led economy and I think it’s going to have to be about improving the software and making it easier to do business for Chinese citizens and effectively the FedEx Express has taken delivery of 23 efficient B777Fs with orders for 20 more. world.”

28 PAYLOAD ASIA | May 2013 PROFILE Swissport keen on Asian expansion

With its formidable presence in more than 85 airports around the world and handling in excess of 3.5 million tonnes of cargo annually, Swissport Cargo Services has a fairly major blank spot on its world map. Although it has cargo operations in Korea and Japan, nowhere else in Asia does the Swiss ground handler have cargo operations and this is something it’s keen to remedy by promoting its high level of service standards. Michael Mackey has the story.

t the moment its only Asian to detail that might be described as operations are Korea and Japan astonishing. This ranges from focusing – in the former it has a base at on warehouse layout and infrastructure ASeoul’s Incheon airport and in Japan since to support new products, or increased November last year it has been offering capacity for services such as Constant cargo services at both Narita and Osaka Climate. airports. New technology, a bit of a Swissport Given the scale of Japan’s economy thing, is also a part of it as it moves and Korea’s role in air cargo and their towards being a paperless company. respective import and exports needs in Among the examples given by the these markets are not inconsequential company as working with smartphones operations, but huge swathes of Asia and i-pads helps to better manage special are without any Swissport presence Ruedi Steiner cargo. Hand held terminals, such as in something the ground services group is Cargospot, also allow immediate access looking to end by building its profile in desire within the customer portfolio to see to AWB data which helps the process the region. Swissport expand in Asia. We continue further. In this it is helped by a number of to raise service levels, safety and quality There is also Shield, a system which different factors: The West to East load throughout the network. Sooner or later, sees all scanned documents move imbalance, whilst still there, is diminishing our service offering will be compelling in through the same system. Upon receipt and the growth of Middle East passenger all markets.” at the destination this allows customers carriers now offer very attractive options Balancing this there is a suggestion in to immediately access lost freight for connectivity with good capacity. the global market of a modal shift from information, POD details and reduces Balancing this, Asia’s growth is undoubted air freight to ocean freight. Swissport is the cost of physically storing documents, but increasingly the talk in the market is of neither worried nor perturbed and might explained Steiner. a modal shift from airfreight to sea freight. best be described as confident. Nor is this company-wide process “Asia is of course very high on the list “The jury is still out and only time likely to remain static. The strategic plan of Swissport priorities,” said Ruedi Steiner, will tell, but just as we see an all-cargo for cargo, according to Steiner, “is very SVP Cargo Asia and Middle East in an carrier undergo difficulties, we see another simple and driven by customer demand. interview with Payload Asia. “It remains Middle East carrier adding brand new Carriers want a one-stop shop to facilitate a region of high growth, high output, and freighter capacity. The market is vey fluid their business ambitions. That includes increasingly, increased consumption. As with capacity, demand, fleets and products cargo, but is not limited to that.” It is for such it needs air freight operations, and constantly changing. example heavily involved in fuelling and therefore air cargo handlers, such as “The integrators also continue to airport logistics. Swissport.” increase market share in certain lanes and As for cargo though details are hard to Open though the company is about its commodities. The global market shows come by but some changes are upcoming. general intentions, like many a business a similar pattern. More people, more “We are looking into a replacement it is not particularly forthcoming about consumption, and more desire to move for Cargospot and have made good specifics, although some countries simply goods quickly. We remain in a growing experience reducing door waiting times cannot be ignored. market overall and I still believe the future for our customers through an own Market entry to China “remains a is bright for air cargo and those of us that developed software which will be deployed priority” said Steiner, adding the company facilitate its benefits.” to other stations,” said Steiner. already handles many Chinese carriers There is also an initiative underway throughout its global network. He goes Attention to detail to identify suitable hardware to measure on to acknowledge the building up of a How it is doing this, is attention physical shipment piece volumes. This is presence in Asia is a time-consuming to ensure that volume information can be process whilst pointing out what some verified upon receipt at its facilities with of the specific problems are. the attendant security and commercial benefits for our customers, added Steiner. Expansion challenges And as for the biggest change of the “Current barriers to entry start with lot, the possible and much-discussed licensing in still duopolistic handling privatisation of Swissport. “I will update environments, but we continue to follow you, as soon as I have news on that,” said up all opportunities and there is a real Steiner. www.payloadasia.com | May 2013 29 IT & EQUIPMENT

Nordisk certified by Schiphol’s position as an integral element India and shipment filing to more than Chinese Aviation Authority of the Netherlands’ multi-modal hub 450 destinations globally, this platform proposition. Longer-term, we hope is helping Indian logistics players Nordisk Aviation Products, a our logistics model will set an example become compliant with global e-freight subsidiary of AAR Corp. has received globally, and contribute to a healthier initiatives. The only e-freight application Chinese technical standard order (CTSO) future for the entire industry.” from India recognised by International approval on several of its products There are sixteen signatories to Air Transport Association (IATA) and through a working arrangement between the covenant: Air Cargo Netherlands, has an in principal global arrangement the Civil Aviation Administration Schiphol Cargo, Cargonaut, Dutch providing connectivity to 114 carriers. of China (CAAC) and the European Customs, EVO (Dutch Shippers’ Council), “We are pleased by the fact that UPLIFT Aviation Safety Agency (EASA). Fenex (Forwarders Association), has seen the fastest adoption compared Nordisk is the first manufacturer from the Port of Amsterdam, the Port of to any of the CCSs worldwide,” said Europe to benefit from the cost-saving Rotterdam, KLM Cargo, the Dutch Amar More, VP Kale Logistics Solutions. collaboration between the Chinese and Ministry of Economic Affairs, Portbase, “With UPLIFT, India is geared up to be European airworthiness authorities since Rijkswaterstaat, Strategic Platform one of the leading nations participating it was adopted in 2010. Accepting each Logistics, TLN (Transport & Logistics, in the global e-cargo movement. This other’s applications for CTSO approval the Netherlands), VRC (Port Shipping platform is revolutionising the way cargo eliminates redundancies in inspections, Agents) and VRTO (Port of Rotterdam information is exchanged by the Indian evaluations and testing, preserving safety Terminal Operators). cargo community. and environmental compatibility. “Industry participants are already “This process is a roadmap of how UPLIFT crosses 1 million realising the benefits of visibility across industry can get the necessary approvals the supply chain, a more predictable from the overseas authority to gain access EDI message mark shipment status and far more secure to its market,” said Markus Görnemann, India’s UPLIFT – Universal Platform cargo movement. India is on the cusp of deputy head of Products Department for Logistics & Integrated Freight a cargo EDI revolution. This platform will at EASA. “The working arrangement Transport – has successfully transmitted form the foundation of India’s National allowed both authorities to define one million EDI messages within a Single Window for electronic transactions minimum requirements, acknowledge short span of two years. Leading Freight which is emerging as a key requirement existing systems on each side and avoid Forwarders, Custom House Agents, from World Trade Organisation. We are duplication of work.” Carriers, airports are utilising this confident that UPLIFT will contribute in platform to realise significant savings in lowering the logistics transaction costs Schiphol partners sign terms of time, money & resources. in India and increasing India’s EXIM UPLIFT is India’s first cargo competitiveness.” info sharing deal community platform and a pioneering Schiphol Cargo, Cargonaut, KLM initiative to connect the Multi-modal SITA helps transform Cargo and Air Cargo Netherlands are Logistics network in India. Promoted and among the signatories to a covenant by co-developed by Kale Logistics Solutions Bogota airport a broad spectrum of Dutch business and Pvt. Ltd in association with the Air Cargo SITA, the global air transport government, to create a revolutionary Agents Association of India (ACAAI), IT and communications specialist, new approach to information exchange UPLIFT is India’s first and only multi has transformed Bogota El Dorado between parties in the logistics chain. modal cargo community system (CCS). Airport (BOG) as part of a US$1 billion The “Neutral Logistics Information Currently UPLIFT is connecting 30 modernisation and expansion project. Platform” (NLIP) is being developed per cent of Indian FF/CHAs electronically SITA is the master systems integrator to give the Dutch logistics sector a with 10 leading carriers (representing for the project, and has provided 15 new competitive advantage in Europe. NLIP over 65 per cent of India’s air freight solutions in collaboration with Johnson will enable all supply chain partners to market) and Indian Customs. With Controls, a building systems expert, for input information once, and then share it 2,500+ users across seven cargo hubs in Operadora Aeroportuaria Internacional throughout the entire chain. Originators (OPAIN), the company that manages of information will control who has the airport. access to it and when. In the first phase of the project, The aim of NLIP is to assist shippers, SITA provided the technology for logistics providers, ports and government the new international terminal (T2), departments to optimise supply chains, which opened in October 2012. Work reduce administration and work more is currently underway to extend the efficiently. terminal, which will also handle domestic Says Schiphol Cargo senior VP Enno flights starting in July 2014. Osinga: “We are very pleased to be a El Dorado International Airport is ranked among the El Dorado International Airport is partner in this exciting and ground- world’s 50 busiest airports in terms of: Passenger Latin America’s largest airport in terms traffic (ranked third in Latin America with 20,427,603 breaking initiative. We strongly support passengers in 2011); cargo traffic (ranked first in of cargo movements and its third largest any move to drive inefficiencies from Latin America (33rd worldwide) with 648,221 tonnes in terms of passenger traffic. In 2012, the the supply chain, and the NLIP’s goals in 2011); and traffic movements (ranked second airport handled nearly 310,000 national exactly match our own. In the short in Latin America (45th worldwide) with 304,330 and international flights and almost 23 term, NLIP will further strengthen aircraft movements in 2011). million passengers.

30 PAYLOAD ASIA | May 2013 Celebrating Excellence in the Air Cargo Industry

Award Categories Editor’s Choice Awards Overall carrier of the year Lifetime achievement award Rising star carrier of the year Personality of the year Combination carrier of the year Marketing award of the year Maindeck/Specialist carrier of the year Media award of the year Airport of the year Ground handler of the year ACMI/Charter operator of the year Global express operator of the year Regional express operator of the year Global logistics provider of the year Regional logistics provider of the year Global freight forwarder of the year Regional freight forwarder of the year IT provider of the year Charter broker of the year GSA/GSSA of the year Corporate social responsibility Award

Date: 17th Oct 2013 Venue: Pan Pacific Singapore Please contact your Payload Asia sales representative for more information: Yullie Tan, Account Manager, Tel: +65 6521 9749 | Email: [email protected] http://awards.payloadasia.com

Gold Sponsor Organiser Supporting Tradeshow Audit Partner Supporting Publication economic outlook Structure of world trade changed in 2012: WTO

he year 2012 was, to put it mildly, not a good year for world trade. In World trade versus GDP growth fact it was quite simply bad, with Tworld trade growing by only two per cent, far below the average figure of six per cent for the last twenty years, according to a report from the World Trade Organisation (WTO). And it represented a major reduction as compared to the 5.2 per cent growth seen in 2011. One of the most remarkable aspects of 2012, according to the WTO report, was the change in the structure of the growth of world trade. It appears that the relationship between world trade and the underlying world gross domestic product (GDP) has changed. Normally, world trade grows at twice the rate of world GDP. Last year, however, the two grew at roughly the same rate. The WTO * * said that it expected a “partial return toward the usual ratio”, although very Growth in volume of world merchandise trade and GDP, 2005-2014. slowly, with world trade still expected to * Figures for 2013 and 2014 are projections. Source: WTO Secretariat. be less than the usual multiple of world GDP growth by 2014. In the nearer term, the WTO is not Union (EU), rather than exports. Imports 2012, attributed to difficulties regarding very optimistic in its predictions for to the EU fell by five per cent in 2012, its trade links with China which resulted world trade growth this year, anticipating not just from the rest of the world, but in an 11 per cent decline in exports an expansion of only 3.3 per cent. The also between EU economies. This fall in during the second half of the year. The organisation is even uncertain about economic activity had a disproportionate US continued to see reasonable export this prediction, pointing to the volatility effect on world trade, both due the size growth for most of the year, while China around the Euro crisis as a continuing of Europe economically, but also due and much of the developing world saw threat. Indeed, it has been the Euro- to the scale of trade between European strong growth – although the declines in currency countries in particular that economies, according to the WTO commodity prices may be a indication of have driven down the rate of growth, due report. harder times ahead for the latter group, to a decline in imports to the European Japan also saw significant volatility in according to the WTO. Forwarders’ volumes continue below expectations

ollowing five consecutive monthly indicates a decline in volumes. Meanwhile, “Following an encouraging start to 2013, it increases, the overall Stifel Logistics In terms of year-on-year comparisons, the appears that confidence has since begun to Confidence Index fell 1.0 index index for air freight was 2.7 points lower waver. After the shut down for the Chinese Fpoints to 51.5 in April. Despite the decline, compared with the same month last year. New Year, the second quarter of the the index remained above the significant In contrast the sea freight index was 1.4 year generally records an improvement 50 mark, denoting expansion, for the third points higher in April 2013 compared in volumes. However, we are yet to see consecutive month. with April 2012. any sign of this increase and as a result However, a look at the present situation Since the Index’s inception over a positivity for the outlook has declined”. reveals that both air and sea freight year ago, the outlook for the next six In this month’s one off question, survey volumes are below those expected relative months has remained very optimistic participants whether they are experiencing to the time of year. with respondents consistently anticipating an increase in greater opportunities within The index for current air freight positive volume growth. Although this domestic markets and intra-regional trade volumes fell 1.2 points to 42.0 for the trend continued in April, with the index compared with inter-continental trade. month of April indicating an even greater at 58.4, it fell 1.3 points which suggests Over half of respondents (52 per cent) decline relative to the volumes expected respondents are perhaps becoming less indicated that they had experienced such for the time of year. Although the index for confident in a market revival taking place a change in opportunities, while 37 per sea freight remained virtually flat at 47.4 in any time soon. cent had not. The remaining 11 per cent April (down 0.1 points from March), it still Lucy Palmer, economist at Ti, explained: were ‘unsure’.

32 PAYLOAD ASIA | May 2013 economic outlook Economic recovery seeds sown: ABN AMRO

ccording to an 18 April ‘Global in the private sector, this means that the China is showing somewhat stronger Macro View’ research report foundations are being set for above-trend dynamics with the bank expecting by ABN AMRO, the makings global growth in 2014, when cyclical GDP growth in the region to remain ofA an economic recovery are becoming tailwinds will convincingly offset fiscal above six per cent in 2013 and 2014. clearer. “The seeds are being sown for headwinds.” But the Eurozone economy China’s first quarter GDP growth was an economic recovery,” the investment will lag behind in this process as domestic somewhat softer than expected, rising bank said, adding that “systemic risks demand suffers from bank deleveraging 7.7 per cent y-o-y, down from 7.9 per to the financial system and the global and rising unemployment, it said. cent in the last quarter of 2012. Industrial economy have declined notably, despite Financial markets will continue to be production, which accounts for 40 per the bailout of Cyprus.” driven by the prospect of stronger growth cent of GDP was the main factor behind Meanwhile, monetary stimulus later this year and in 2014, according to the slowdown. The figures are likely to continues at an aggressive pace with the ABN AMRO, as increasing signs emerge be impacted by the Chinese New Year. balance sheets of the G4 central banks that the US economy is shaking off the We expect a slight pickup of economic having reached US$9 trillion and signals effects of the fiscal drag and growth in activity in the coming months, on the from the US Federal Reserve and evolving emerging markets is firming. back of a modest global recovery and monetary policy at the Bank of Japan stronger credit growth in China in the signal that further easing lies ahead, the Emerging markets first half of the year. ABN AMRO is report said. In addition, private sector On emerging markets the report noted maintaining its forecast of eight per balance sheet repair is advanced in the that once again 2012 saw improvements cent growth. industrialised economies, while domestic in the credit ratings of many emerging For emerging Europe, where demand in the big emerging markets will countries, while those of industrial protracted Eurozone weakness impacted benefit from easing financial conditions, countries deteriorated further. “Despite growth throughout 2012, the report strengthening labour markets and a more favourable economic climate, we expects regional growth to mildly infrastructure investment. expect only a limited number of upgrades accelerate this year gaining further The bank noted however, that among the emerging countries in the momentum in 2014. aggressive fiscal consolidation means coming two years.” And for Sub Sahara Africa, the that the improvement in global economic Asian economies have been showing report describes it as a region on the conditions will not be very significant a mixed picture and there are increasing rise, although “the region is far from an this year. The good news is that 2013 will downside risks for the region, it noted. oasis of peace and calm, it has witnessed likely mark the peak in terms of the pace India’s economy is still failing to pick a growth spurt in the past ten years, not of budget cuts, it added. “Together with up, while South Korea is facing many least driven by China’s insatiable hunger the improvements that are taking place challenges for a swift recovery. for commodities.” E-commerce takes bite out of US retail sales

owever, a look at the present E-commerce logistics solutions are situation revUS retail sales also ramping up to meet this changing tumbled in March ending a consumer buying behaviour. To remain disappointingH first quarter for many competitive, retailers are utilising stores as retailers. March retail sales declined fulfillment options, while same day delivery 0.4 per cent from February, the biggest services continue to expand despite some decline in nine months, according to US reports suggesting consumers are not Commerce department statistics. This interested in such a service, TI said citing follows a 1.0 per cent increase in February While data for the first quarter will not the example of Macy’s plans announced from January and a 0.1 per cent decline be available until sometime in May, the US in February to expand online fulfillment in January from December. Department Commerce department’s fourth quarter from 292 stores to 500 by end of 2013. stores, electronics retailers and sporting e-commerce report published in February Internet giant Google also recently goods outlets all reported lower sales with shows e-commerce sales growing 1.4 per launched its same day delivery service to a number of major retailers including cent from third quarter and 15.6 per cent compete against existing services from Target, Family Dollar and Nordstrom’s from fourth quarter 2011. Ebay, Amazon and Walmart. issuing profit warnings for first quarter. As an overall percentage of total retail While US total retail sales will likely But while brick and mortar sales sales, e-commerce sales constituted 5.4 continue to be sluggish throughout 2013 have been on the decline, e-commerce per cent for the fourth quarter, which as the economy continues to grow at a sales have been moving in the opposite increased from the first quarter 2012 slow pace, e-commerce will likely grab direction as consumers increasingly figure of 4.9 per cent. an increasing percentage of retail sales as compare prices, facilitated by the ease of The trend is expected to continue as consumers look to compare prices, buy using mobile devices such as smartphones retailers continue to invest in multichannel goods 24/7 and learn to demand same and tablets. activities. day delivery services, said TI. www.payloadasia.com | May 2013 33 FREIGHTER Supplement

Economic outlook

FREIGHTER Supplement

Freighters: Going the way of the dinosaurs?

With ongoing global economic lethargy causing continued stagnation in air cargo that you’ve added especially if it’s a markets and new capacity mostly in the form of passenger bellies, continuously daily flight, is a hidden freighter you’ve thrown on that route.” being added, many have questioned the long term viability of freighters. But a recent Indeed as Nick Rhodes, director of industry panel comprised of key executives from all-cargo carriers, combination cargo at Cathay Pacific points out, the new carriers and a freight forwarder, unanimously agreed freighters are here to stay, but passenger aircraft are almost like the old that a market correction – possibly with casualties – is inevitable. Donald Urquhart Combis – “you can get almost 25 tonnes reports from Hong Kong. on a B777 or A350 in the future. You’ve got a huge space, you buy the aircraft and s Robert Kunen, director Hong just based on the supply and demand you’ve got to use the space,” he says. Kong & Southern China for Air situation we find ourselves in.” This type of capacity expansion is France, KLM and Martinair On the demand side he feels the largely unintended and the result of ACargo notes, many legacy carriers – industry is caught in what he describes forward planning four or five years AF-KLM group included – are applying as an ‘innovation gap’. While people earlier Mahjoubian adds. Similarly on “very strict capacity management” now often own multiple cell phones, the freighter side. “You ordered those to cope with the downturn. This computers and flat panel televisions, B747-8Fs five years ago and oh boy, generally means either reducing these consumer electronics have nearly here they come now!” freighter services, or parking them – become disposable items. The question A great deal of this widebody either on the tarmac or in the desert. then he says, “is what’s the next passenger belly capacity is coming “We are reducing our exposure to industry, the next thing that’s going to from the Middle East carriers who have the downturn by focusing more on belly drive air cargo. I don’t see it coming.” made record aircraft orders to support capacity than freighters, because the Also on the demand side the global their surging passenger business. But as bellies are of course a shared cost with economic situation is driving modal Mahjoubian notes, at the end of the day our colleagues on the passenger side, shift, with cargo being pushed out of “it’s still adding cargo capacity.” which is an advantage for us.” traditional air cargo into either the “Hopefully we will see a correction He notes however that not all carriers express sector, or into ocean freight. somewhere,” he says. “Either we’ll are doing this and freighter capacity is “We’re clearly seeing modal shift into see increasing demand because the still being added. “Therefore despite ocean and we’re actually seeing that next thing will happen, or we’ll see a the economic improvements that we accelerate over the last 10 months,” significant amount of capacity removed are expecting over the next year we do he adds. from the market – either a combination believe there will still be over-capacity And crucially, on supply side there carrier deciding freighters are not for in the market,” he adds. is the massive influx of aircraft, them, or an all cargo carrier exiting Speaking from a freight forwarding primarily wide-body freighters with the business.” perspective, Corey Mahjoubian, global such high belly capacity they’ve been Agreeing with this sentiment airfreight director at Toll Global called ‘hidden’ or ‘invisible’ freighters. Cathay’s Rhodes highlights the extreme Forwarding noted that aside from the “When you take an old B747 passenger difficulty in making a return on assets macro-economic factors at work, “we aircraft off a route and you throw on a in the current market. “Something know that it’s going to be a challenge, brand new B777-300ER, the capacity needs to change if we are to continue

34 PAYLOAD ASIA | May 2013 FREIGHTER Supplement

– I am optimistic in the long term that capacity for a combination carrier.” “We will be combination carrier for economies will come back, it’s cyclical But he adds the need is still there the long term, but we are evaluating and air cargo companies will lead the and in the longer term he doesn’t how many freighters we need and rebound,” he affirms. think many combination carriers will whether we want to own them,” he adds. “But, I think there will be a go to the model that Delta and other But while freighters may have a correction. I also think that during carriers like United have adopted, as a secure place in the air cargo industry this sustained downturn there will be belly-only cargo carrier. “It can work going forward, what of the all-cargo casualties. Some capacity will come out but not everybody is in a position to carriers that don’t have the flexibility of the market – it has to happen and have enough belly hold capacity to be and economic advantages of marginal that will be freighters. offering the whole range of products to cost belly capacity. “Combination carriers like Cathay customers. So I think indeed there will For Wolfgang Meier, executive have to look very carefully at the be a new balance, but I don’t think the VP, AirBridgeCargo, operating an number of freighters we operate on top freighters will go away.” all maindeck fleet offers the ability of the passenger bellies. Our projections In agreement, Rhodes highlights to offer more tailored services that are a little more conservative in 2013 the traditional model for combination offer better scheduling for customers. than they were in 2010 [when Cathay carriers. “The priority for a combination “I still do see the need for all-cargo placed it original B777F orders]. “The carrier is you’ve always got to fill the carriers, not just because I represent only option is to park freighters and belly if you can and then you make your one, but I’m 30 years in the business sit it out – it is a tough market in the freighter schedule around that.” and all-cargo carriers design schedules short term, but in the longer term I’m As a combination carrier there is as per customer’s requirements, not more optimistic,” he says. always a role for a freighter, he says. because of the passenger side. We If a carrier decides it needs two or design schedules that fit into the Paradigm shift? three freighters then it needs to ask supply chains of our customers, which For AF-KLM’s Kunen the rising the question whether to use ACMI is the forwarding community. This is tide of belly capacity resulting from because it may be more economical to something that has to have value in the the surging new widebody fleet is use a contract provider, he says. On the future,” he says. “definitely creating less of a need to other hand if it needs 10 or 20 freighters “Different horses for different have freighters in addition to belly then it might be better to own them. courses,” says another maindeck

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www.payloadasia.com | May 2013 35 FREIGHTER Supplement

proponent, Kersti Krepp, VP sales & But Rhodes is not entirely convinced. than by design, and combination marketing Asia Pacific at Polar Air Looking at the different categories he carriers of course will be here in the Cargo. “Very simply there is a different says the integrators are here to stay, future – it’s just a question of how many customer that will use belly, a different particularly with people shopping freighters you need to supplement the customer that needs maindeck. At end online. “ACMI is a very robust model belly. All cargo operators will be more of the day 60 per cent of all cargo rides for people who want to contract more challenging – it’s a question of whether on all-cargo aircraft, so there is a future capacity. The belly only carriers I think they can fill special need like heavy lift for all cargo,” she says. obviously most are here more by default e t c .” B757 feedstock for conversions hits sweetspot just the way it went.” After a long hard winter that’s lasted for a few years, the conversion market for “We’ve got 300 plus aircraft that are Precision Conversions’ niche area of B757-200 passenger to freighter and passenger candidates as we look forward, all that to combi looks finally set to turn. And the timing couldn’t be better – record levels are well within age restrictions and age of feedstock are beginning to flow. By Donald Urquhart. brackets that we’re looking for – low cycle airplanes that are 1992-2004 type of airplanes and so we’ve got a good feedstock base,” he says. “We can easily count a potential 50 or 60 airplane orders without even trying – from the various customers, including replacements and additions and we’re getting inquiries from new customers, so I would say I’m encouraged, but its been a tough few years. “Our biggest concern is we’ve got a ton of feedstock and it looks like its going to meet demand, but the big issue is it will then turn and flip over to not enough The Precision Conversions 757-200PCC Combi configuration incorporates 10 full pallets and slots,” he said adding that Precision has 43 passengers seats (up to 54 passengers with current configuration). been stocking up on conversion kits to ready itself for such a situation, “but ircraft feedstock is increasing by of the times,” he concedes. we think we can meet and respond the minute and you’re going to “But we are getting far more inquiries with enough MRO capacity and kits see seismic levels of airplanes now than we’ve ever gotten. Feedstock until we can get back up to speed and “beingA delivered out of the legacy carriers is now getting abundant and affordable produce what is probably going to be now that the B737-800NGs and 900NGs feedstock has everything to do with the 10 or 11 airplanes a year.” Aside from are being delivered at record levels, so level of interest we get.” Currently there its relationship with TAECO, Precision that’s helping a lot,” said Brian McCarthy are over 100 aircraft on the market also has its main facility – Flightstar VP, marketing and sales at Precision. now – coming out of US legacy carriers Aircraft Services - located in Jacksonville, Currently Precision is finishing like United and others. Precision also Florida and only last month a new up a combi and starting up another received certification for 757-200PCF agreement with Goodyear, Arizona conversion on 20 May, “so not nearly as conversions on winglet equipped aircraft, based AeroTurbine Inc, MRO Facility for many airplanes as I would like to see – which McCarthy says “will open a few conversion and MRO work. we should have three airplanes up right doors for us because only the newest, While it may still be a bit premature now, but we don’t and that’s just a sign youngest aircraft have winglets, that’s to break open the champagne, the difference says McCarthy “is now we’ve got people making inquiries and actually out purchasing aircraft.” He notes the customer base is expanding as well with a new breed of cargo operator that is emerging out of logistics providers, “the guys who have ground components but are taking to the air,” like China’s rising star, Shenzhen-based SF Express. Precision won a contract last year from SF Express for half a dozen passenger- to-freighter conversions of 757-200s to Shenzhen-based SF Express awarded Precision with a contract last year for half a dozen passenger-to- 15-pallet PCF configuration, with all freighter conversions of 757-200s to 15-pallet PCF configuration, with all of the modification work to be of the modification work to be done at done at TAECO’s Xiamen facility. TAECO’s Xiamen facility.

36 PAYLOAD ASIA | May 2013

FREIGHTER Supplement

Pemco to double B737-300 P2Fs

emco World Air Services has Several factors are contributing to said it will likely double its P2F this year’s increase in conversions, freighter conversion of Boeing including low acquisition costs on the 737-300P and -400 aircraft and soon aircraft, high fuel costs and aircraft age will announce a programme for a new restrictions, according to Casey. The 737 variant, according to Kevin Casey, storage and retirement of B737 Classics president of the Tampa, Florida based increased by nearly 25 per cent in conversion and maintenance company. 2012. The company, which underwent Casey says Pemco is also looking for a bankruptcy court-supervised ways to grow its maintenance, repair restructuring in 2012 completed nine and overhaul business, which most likely conversions last year, with Casey saying Kevin Casey will involve expanding its capacity in the company expects to complete 16- Tampa, or the “immediate vicinity.” The 20 this year. A little more than half of full conversions to freighters and the company is discussing that option with the 2013 conversions will be B737-300s rest will be combi-freighters, or quick- the local airport authority and some with about two-thirds of those being change aircraft. state officials, he added. AEI selects fourth conversion centre eronautical Engineers, Inc. plans to hire several hundred trained of 2013. Based on the plans for 2014, (AEI), has announced that it and experienced aircraft technicians in capacity would reach 24 AEI 737SF & has selected Commercial Jet’s the local market within the next few MD80SF conversions per year. A(CJ’s) new 400,000 square-foot facility years. “We are already getting a flow of Meanwhile, AEI also announced at the Dothan Regional Airport (DHN) new orders for our new facility, which that it has been selected by Kahala in Dale County, Alabama as its fourth will be open for business in the 2nd Aviation of Ireland to provide two firm AEI Authorized Conversion Center quarter of this year,” he said. B737-400SF 11 Pallet Configuration (AACC). Commercial Jet’s Alabama Commercial Jet’s Alabama facility conversions, with options for two facility will provide B737-300SF,B737- will initially open three production additional conversions to be started 400SF and MD80SF Passenger to lines capable of converting 12 AEI in May of 2013. The first aircraft, a Freighter Conversions and Maintenance 737SF and MD80SF aircraft annually B737-400 was built in 1991 and will for AEI customers. with the first three B-400’s expected to be converted at one of AEI’s North The Alabama facility joins a growing enter into conversion in the 2nd quarter American Conversion Facilities. Both number of AEI Authorized Conversion B737-400SF conversions are being Centers which include Commercial Jet’s converted on spec and are currently Florida facility based in Miami Florida, available for lease. Flightstar Aircraft Services, Inc. based Mark Thatcher, chief aircraft in Jacksonville Florida and Boeing trader for Kahala said that among the Shanghai Aviation Services based in company’s decision to convert with Shanghai China. AEI was its reputation for quality and “It was critical that we secure customer support and AEI’s B737- another Authorized Conversion Center 400SF having the capability to carry up to keep up with ever increasing market to 10 full height AAA containers, both demand,” said Robert T. Convey, of which “will without a doubt give us VP sales & marketing for AEI. “CJ’s an advantage when marketing our AEI facility in Alabama will benefit from 737-400SF fleet,” he said. CJ’s Miami conversion experience The order by Kahala follows closely and be able to tap into a local work from a similar order for one B737- force that is traditionally strong in 400SF 11 Pallet Configuration Freighter aircraft structures and MRO. After the Conversion from Sideral Air Cargo of completion of the twelve million dollar Brasil. The freighter was flown to back construction renovation, CJ’s Alabama Kenya Airways recently took redelivery of the to Brasil in late March and is now the facility, with its planned six conversion first of two B737-300F P2F conversions from only B737-400SF operating in Brasil. lines will become the largest passenger Aeronautical Engineers Inc. The conversion The aircraft, an ex AirOne high gross of these two aircraft are the first passenger- to freighter conversion facility in the to-freighter conversions done at Boeing weight B737-400 was built in 1991 and world.” Shanghai Aviation Services, a joint venture of underwent freighter modification at John Schildroth, VP and GM for the Boeing, Shanghai Airport Authority and China AEI’s Authorized Conversion Center, Dothan facility, said Commercial Jet Eastern Airlines. Commercial Jet, Inc., located in Miami.

38 PAYLOAD ASIA | May 2013 737 conversions. 0 comparisons.

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So what are we rambling on about? In How cool is that we ask you!?! Essentially essence it is a tie-up between Air France those life vests under the seats in the aircraft and bilum – which in case you don’t know – you would know what we are talking (and neither did we until we Googled it), about if only you had paid attention to the is a traditional string bag made by hand in onboard safety demonstration – have a Papua New Guinea. Wait a minute! Oops, limited life span (about 7-10 years Google wrong Google definition. The other tells us). And rather than destroy them, Bilum is a French company (that clearly Air France turned to bilum to give them had no reservations about appropriating a new lease on life. a traditional cultural reference) that Bilum refers to this as ‘upcycling’, not makes bags and accessories using ‘recycling’ – “transforming redundant This one is for all you ‘green’ recycled materials like heavy outdoor recyclable materials, or products into fashionistas out there. Actually, here advertising banners and car seat belts etc. new objects of a higher value”. Wow, at Belly Ache Central, we love this clever Bilum describes its products as even we are impressed with that bit of PR idea – both for its creativity and its “eco-ethical fashion”… ‘eco’ because it spin! And at €19 for the flat case and €24 environmental friendliness. And it comes involves recycling materials that would for the padded case, we would certainly courtesy of Air France – who could really be otherwise thrown away, burned or agree about the ‘UP’ part of the equation. use a bit of extra income right about now. destroyed in some unpleasant manner But still, we do love the idea and they Air France, we give you a 9 out of 10 on and ‘ethical’ because they are made in are pretty cool – each one nearly unique the Belly Ache respect scale (we’re not special centres around Paris by disabled because they are all cut from the life vests quite sure what it takes to get a 10, but individuals or individuals with social differently. Now after that sales pitch we’ll we suspect it involves complimentary problems in a bid to provide them be watching the post box everyday for our swag, freebies and other bribe-a-licious employment and enable self-sufficiency. own little bit of swag… if ya know what goodies). While certainly great stuff, we have we mean…*wink wink, nudge, nudge!* It must be said, we tend towards the to stop extolling cynical around here, especially in terms the virtues of this of the reams of press releases – some before we get the of them printed on nice bleached white urge to run out paper, inserted into equally nice white and volunteer or envelopes and mailed to us (good job something! FedOops!) – touting the impeccable Basically, bilum green credentials of the particular has created a company in question…but this one collection of travel caught our attention from a slow day in cases made from the office trolling the net. recycled life vests!

Origami airplanes. With Boeing set to announce in the near future the next variants of the popular 777, dubbed for now the 777X, we thought we would share our thoughts so that the clever engineering types up in Seattle can incorporate our feedback into their final decision. Of course possessing advanced aeronautical engineering degrees, as the Belly Achers do, we will try to give a simple explanation of what Boeing is likely planning for the next iteration of the 777. They are going to take the current model 777 and S-T-R-E-T-C-H it! Brilliant aren’t we? But there’s the rub: The plane will naturally need larger wings and these oversized wings will be a problem for existing airport infrastructure. Fear not as those same clever engineering types have come up with a seemingly simple solution – actually they came up with it in 1995 but for some reason never actually implemented it – folding wings! We don’t know about you, but the very idea of a wing that folds in half just doesn’t seem like a great idea – what if it decides to fold up, flap or break off in the middle of a flight (we’re guessing you don’t believe our aeronautical engineering credentials now). And ok… it’s really only 2-3 metres of the wing that folds, but still! And as the keen news hounds that we are, we are proud to The proper way to exit an aircraft bring you an EXCLUSIVE, never seen before, photo of the prototype 777X (it will (and not spill your drink). be a bit bigger than the prototype pictured above however, in order to actually seat more than just the pilot). Remember, you saw it here first!

40 PAYLOAD ASIA | May 2013

Payload Asia.pdf 1 4/17/13 3:42 PM