January, 2010 Volumeco 13 Number 1 Ntents

INTERNATIONAL EDITION

JANUARY 2010

Drug Money Boom Forecasting North America? New Leadership Series Make Plans to Attend Air Cargo World’s Air Cargo Excellence Awards 2010

Join us for the launch of this exciting new event. Held alongside the IATA World Cargo Symposium, the evening will provide valuable networking opportunities, whilst celebrating the very best in air cargo services. Tuesday March 9, 7.00pm

Venue: Sheraton Vancouver Wall Centre, Vancouver, BC.

To attend, or for further information, please contact Lesley Morris [email protected]

For sponsorship opportunities, please contact Steve Prince, Publisher, Air Cargo World at [email protected] or call +1-770-642-9170.

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cargo January, 2010 Volumeco 13 Number 1 ntents

EDITOR Simon Keeble [email protected] • (704) 237-3317 ASSOCIATE EDITOR North America Trish Williams [email protected]• (301) 312-6810 18 Can You Believe A Forecast? CONTRIBUTING EDITORS Roger Turney, Ian Putzger CONTRIBUTORS Phil Hastings, Peter Conway Pharmaceuticals COLUMNISTS Gabriel Weisskopf, Brandon Fried 28 Airlines Get A Gold Rush PRODUCTION DIRECTOR Ed Calahan [email protected] CIRCULATION MANAGER Leadership Nicola Stewart [email protected] 34 Inspiring Aspiring Entrepreneurs ART DIRECTOR CENTRAL COMMUNICATIONS GROUP [email protected] PUBLISHER Steve Prince [email protected] ASSISTANT TO PUBLISHER Susan Addy [email protected] • (770) 642-9170 WORLD NEWS DISPLAY ADVERTISING TRAFFIC COORDINATOR Linda Noga [email protected] 4 Europe AIR CARGO WORLD HEADQUARTERS 1080 Holcomb Bridge Rd., Roswell Summit 8 Middle East Building 200, Suite 255, Roswell, GA 30076 (770) 642-9170 • Fax: (770) 642-9982 12 Asia WORLDWIDE SALES

U.S. Sales Thailand Associate Publisher Chower Narula 15 Americas Pam Latty [email protected] (678) 775-3565 +66-2-641-26938 [email protected] Taiwan 18 Europe, United Kingdom, Ye Chang Middle East [email protected] David Collison +886 2-2378-2471 +44 192-381-7731 [email protected] Australia, New Zealand Fergus Maclagan Hong Kong, Malaysia, [email protected] Singapore +61-2-9460-4560 Joseph Yap DEPARTMENTS +65-6-337-6996 Korea [email protected] Mr. Jung-Won Suh +82-2785-8222 2 Editorial 37 Opinion 40 Bottom Line Japan [email protected] Masami Shimazaki [email protected] 3 Viewpoint 38 People/Events +81-42-372-2769 ?? CUSTOMER SERVICE OR TO SUBSCRIBE: (866)624-4457

Air Cargo World (ISSN 1933-1614) is published monthly by UBM Aviation. Editorial and production offices are at 1270 National Press Building, Washington, DC, 20045. Telephone: (202) 355-1172. Air Cargo World is a registered trademark of UBM Avia- tion©2010. Periodicals postage paid at Downers Grove, IL and at additional mailing offices. Subscription rates: 1 year, $58; 2 year $92; outside USA surface mail/1 year $78; 2 year $132; outside US air mail/1 year $118; 2 year $212. Single copies $10. Express Delivery Guide, Carrier Guide, Freight Forwarder Directory and Airport Directory single copies $14.95 domestic; $21.95 overseas. Microfilm copies are available from University Microfilms, 300 North Zeeb Road, Ann Arbor, MI 48106. Opinions expressed by authors and contributors are not necessarily those of the editors or publisher. Articles may not be reproduced in whole or part without the express written permission of the publisher. Air Cargo World is not responsible for unsolicited manuscripts, photographs or artwork. Please enclose a self-addressed envelope to guarantee that materials will be POSTMASTER: Send address change to: returned. Authorization to photocopy items for internal or personal use is granted by Air Cargo World, provided the base fee of $3 per page is Air Cargo World paid directly to Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, and provided the number of copies is less than 100. For 3025 Highland Pky Ste 200 authorization, contact CCC at (508) 750-8400. The Transactional Reporting Service fee code is: 0745-5100/96/$3.00. For those seeking 100 or Downers Grove, IL 60515 more copies, please contact the magazine directly. POSTMASTER and subscriber services: Call or write to Air Cargo World, 3025 Highland Parkway Suite 200, Downers Grove, IL 60515; telephone For more information visit our website at 866-624-4457. www.aircargoworld.com ACW JANUARY 2010 1 editorial Go East

s the air cargo industry starts to wonder more about the future than the present, it might take note of recent data from the U.S. Depart- ment of Labor (DOL). A Between 2008 and 2018, the U.S. manufacturing sector will lose 431,000 people in semiconductors, printing, car parts and clothing. During the same period the U.S. health care industry will add more than two million to its payrolls. So that might be a straw in the wind for forwarder, airline or integrator with pharmaceutical or medical supply customers. Not so great if you’re shipping U.S.-made car parts or semiconductors. However the health care industry is an economic cost rather than net benefit. Or to put it another way, if Americans were healthier, then there would be more Simon Keeble money to spend on something else. Assuming it wasn’t on another war, it could [email protected] be education — which in turn might lead to more higher-paying jobs. But looking at the Labor Department’s table of the 30 occupations with the largest employment growth to 2018, apart from post-secondary teaching that requires a PhD and physicians who need an MD, just about everybody else can apparently learn on the job. Seems education in these occupations is not a huge prerequisite. So who is going to pay for the increase in the health care industry payroll? Some of them will have to be the more than 1.5 million educated Americans added to the computer systems and professional business service sectors by 2018. The Department says U.S. employment is forecast to increase by 15.3 million or 10.1 percent in the next eight years. Assuming companies don’t re-hire the millions that have been laid off since 2007, the government numbers suggest it will take until 2018 to create the same amount of jobs that have been lost in the past 18 months. For the U.S. transport sector, employment growth is forecast to be less than one percent per year to 2018 — hardly an indicator of re-hiring due to economic expansion. So will the additions to the health care and professional services payrolls be enough to drive a resurgence of consumer-led U.S. economic growth? All the signs point to 2013 before the air cargo industry is back to where it was in 2007. However that’s a global figure. Without a big economic bounce-back, Americans are likely to save, not spend, money in the near future. So look to FedEx, UPS, DP/DHL, TNT, Lufthansa et al to expand within Asia, India, Latin America and the CIS sphere of influence in the next eight years. Despite what British Airways says about alliances, North America is not the future for air cargo.

2 JANUARY 2010 ACW viewpoint

We Can Start Looking Up

ccording to IATA airfreight volumes last year to manage their supply chain effectively and to preserve fell 13 percent overall compared to 2008. cash. So with some recovery of demand airfreight is the Cargolux however has been able to perform first to benefit. Awell given the market conditions and subse- We have seen demand, especially ex-Asia, rising in the quently saw its market share rise. Also our load last couple of months, resulting in a backlog in the market, factors have remained relatively stable. but also other regions have experienced the “traditional” Driven by the focus on customer needs throughout the high season. For the moment we are still able to cope with organization and adapting to market changes we have been this demand with our current and some leased capacity for able to maintain a high level of reliability and flexibility. short-term charter demand. Our flights are quite full and Our modern fuel-efficient fleet still enables our daily aircraft utilization is approaching 16 us to be to be cost-effective. In this increas- block-hours. ingly commoditized industry it is important Finally, we saw that in the last two months to be able to compete on a cost basis. capacity declined more than demand. If this Even without the economic crisis our in- trend will continue, the overall absolute over- dustry is already facing many challenges. We capacity will be reduced but it still may be a are bound by regulations. It is very difficult long time until we end up with similar market to get access to all markets, and moreover equilibrium as before the crisis. obtaining traffic rights can be a long and diffi- Currently Asia is the most balanced market cult process. Governments are also imposing since the demand/supply is almost the same security regulations. Even though the fact as in December 2008, caused mainly by in- that all cargo in passenger bellies will have to creasing demand and aggressive capacity cuts be checked in the U.S. will put pure freight- by some carriers. Africa and Latin America ers in some kind of an advantage. remain the most unbalanced markets because We have no influence over our biggest cost Ulrich Ogiermann capacity has not been taken out to match the element, which is fuel. And if we want to ac- reduced demand to date. Since yield is a require a fuel-efficient aircraft at favorable terms, we have to sult of demand and supply, we hope that capacity will con- deal with a duopoly of aircraft manufacturers: Boeing and tinue to be cut. Airbus, of which only Boeing makes large freighters. This This year, emerging economies and low inventories will obviously puts the airlines in an unfavorable negotiation drive growth while more unemployment, high oil prices position. (inflation danger) and potential protectionism might still But not only on the supply side are we facing challenges. spoil the recovery. Overall the outlook is looking a lot bet- We also see an increasing concentration of forwarders, ter and hopefully we can start looking up again instead of which results in a stronger buying power of our customer down. ACW base. On top of that the airlines experience more negative Ulrich Ogiermann began his career with Lufthansa opinion regarding the environment. Even though only re- in 1989. Following a stint managing the Americas, he sponsible for two percent of all CO2 emissions, the airline was appointed general manager Cargo Southern Af- industry is attacked more than other industries because it rica, based in Johannesburg. After moving to Cargolux, is politically very visible. We agree that something has to be he became senior vice president Sales & Marketing in done, but the EU emissions trading scheme is not the an- 1998. He was appointed president & CEO of the airline swer. A worldwide scheme would be much more effective. in 1992. Ogiermann is a member of the Cargo Commit- We are seeing now the start of some small recovery. The tee of IATA and vice-chairman of the Board of Gover- inventory levels were simply too low. Shippers will most nors of TIACA. He holds a Ph.D. on the economics of the likely continue to maintain very low levels of stock in order service industry from Goethe-University, Frankfurt.

ACW JANUARY 2010 3 EUROPEworld ASIAnews MIDDLE EAST AFRICA AMERICAS

Post Services Sad Ending To Commit To 20% Latest Avient Chapter Carbon Cut

he International Post Corporation (IPC), which represents the world’s Tleading post operators, says its members will collectively reduce their carbon emissions by 20 percent by 2020, based on 2008 levels. Currently the operators emit 8.36 million tonnes of CO2. The target set will reduce that total to 6.69 million tonnes. Jean-Paul Bailly, chairman of the IPC and CEO of Groupe La Poste, said, “This is a momentous occasion, not just for us in the postal industry but for business as a whole. As the first services sector to unite on a global scale to tackle its industry’s global carbon footprint, we’re demonstrat- ing what can be done when organizations work together.” Bailly made his comments at the launch t was to have been the turning even been raised in the British Parlia- of the first IPC Sustainability report. Some of the page and the opening of ment about its nefarious activities on 20 postal operators, representing 80 per- a new chapter for British based the African Continent. cent of global mail volumes, participated. Icargo carrier Avient Aviation. But somehow its founder ex-Brit- But just days after receiving its ish army officer Andrew Smith has The postal services that contributed first MD-11 freighter in November, steered the Zimbabwean airline onto to the report represent Ireland, Australia, the aircraft crashed on take-off from a more commercial footing. Today the Canada Post, Portugal, Spain, Germany, Shanghai Pudong airport. Three crew carrier is, rather bizarrely, run from France, Greece, Finland, Belgium, Hungary, members were killed in the accident Smith’s home in England’s rural Wilt- New Zealand, Norway, Denmark, Sweden, and a further four seriously injured. shire, with his wife Samantha taking Luxembourg, United Kingdom, Switzer- This latest incident marks a further on the role of commercial director. land, the Netherlands and the United episode in the colorful and somewhat Its fleet of three DC-10Fs have un- States. chequered career of an airline that til recently been used largely to main Yvo de Boer, Executive Secretary of the appears to court controversy and a disparate network of scheduled and United Nations Framework Convention on conflict at every turn. Its chameleon- ad hoc services from Europe to points Climate Change (UNFCCC), commented, like existence has allowed it to oper- in West and Central Africa. The air- “I welcome this global commitment by an ate in a variety of markets in differing craft have also been made available entire service sector as an example of the modes, with no one exactly certain for additional charter work, currently vision and leadership required at all levels of its raison d’etre. But for all that it representing 40 percent of the air- to effectively combat climate change, and I remains to be held in strong regard by line’s business. encourage the postal sector to continue to leading charter brokers. But it would seem Avient has still set an example.” Its British anchor point belies the not quite shaken off its inglorious past The International Post Corporation fact that its aircraft are in fact regis- as an African carrier apparently will- (IPC) is a cooperative association of tered in the African state of Zimbabwe. ing to handle dubious cargoes. 24 members in Europe, North America Its early incarnation in that country is A report published last year by the and the Asia-Pacific region employing littered with well chronicled rumors Stockholm International Peace Re- nearly 2.4 million people managing over of gun-running, diamond smuggling search Institute (Sipri) claimed that 100,000 facilities and 600,000 transport and of even operating, “behind enemy air cargo carriers operating in some ACW vehicles. lines” in local conflicts. Questions have African countries were engaged in

4 JANUARY 2010 ACW AMERICAS AFRICA MIDDLE EAST ASIA EUROPE

the illegal arms trade, despite also be- started a weekly service from Europe The airline at the time described ing employed by the EU, NATO, UN to Baghdad in co-operation with local the new service as a trial operation agencies or NGOs. Avient was one of partner, Iraqi Wings. and ceased operating the flights the names that came to the fore in At the time Andrew Smith, who shortly after. the report entitled, Air Transport and characterized the operation as essen- It was the following month that Destabilizing Commodity Flows that tially a wet lease arrangement with Avient, made its moonlight departure maintained that in some cases, air Iraqi Wings, was optimistic that the from what had been its European cargo companies were delivering both operation would quickly expand. operational base at Vatry airport in aid and weapons to the same conflict “We are getting keen interest in the France. It transferred its entire op- zones. It said these airlines were also service, so I think it will soon grow to eration to Liege airport in Belgium. A transporting a range of other conflict- two or three times a week.” legal battle quickly ensued with Vatry sensitive goods such as cocaine and Two weeks later Avient’s flights claiming that Avient owed the airport diamonds. were suspended, part of the fall-out over $1.5 million in handling charges, Avient was quick to respond to the from the exclusive deal engineered maintaining that pressure to pay its charges. by Iraqi Airways and United Emirates outstanding bills forced the airline to “All references and inferences at- based RUS Aviation, which effective- depart without warning. tached to Avient in this report are ly provided monopoly control of the Andrew Smith paints a different factually incorrect,” maintained An- Iraqi air cargo market. story saying the airline will be coun- drew Smith. “These insinuations are Undaunted, Avient switched its at- ter-claiming for sub-standard service. insidious and without foundation and tention to the Far East and in August “The airport refused to deal with us proof.” it launched scheduled service be- to resolve the issues we had. We are Avient has more recently attempt- tween Hong Kong, Sharjah and Lagos, honorable people and have not run ed to venture further afield. with onward connections, using the away, all suppliers and any debts will Last summer it decided to become same aircraft, to a number of destina- be paid.“ involved in the Iraq market when it tions in West and Central Africa. According to Simon Clarke chief

ACW JANUARY 2010 5 EUROPE ASIA MIDDLE EAST AFRICA AMERICAS

be a very flexible and reli- Jet at its Miami facilities. able airline to work with.” It was immediately pressed into Another unnamed broker service by the airline to provide lift appeared to be more famil- for a series of pre-Christmas charters iar with Avient’s manage- from Asia to Europe, one of which ment style. it was operating when it crashed on “Make no mistake about take-off at Pudong airport. it, Andrew Smith is a very Speaking prior to the accident, Si- astute businessman and will mon Clarke said that the airline in- work every situation to his tended to take delivery of second MD- advantage. He has proved a 11F from the same source early in the past master at disputing in- New Year, with a third aircraft joining voices and handling charges, the fleet later in the year. which has proved an effec- “The increase in range and payload operating officer at Avient, the airline tive method of buying time capability with the MD-11F will cer- has quickly settled in at its new base and maintaining revenue flow for his tainly mean us putting very strong in Belgium. airline.” focus on the Asia market with the re- “There is a world of difference to It was against this background that start of scheduled services to Hong the attitude and service levels we are Avient in early November suddenly Kong in the first or second quarter.“ getting at Liege compared to what we announced that it was acquiring its Clarke added that the airline would had to work with a Vatry.” first MD-11F capacity. not be rushing to dispose of its DC- The spate with Vatry over unpaid The aircraft, previously operated 10F fleet. bills has flagged up cautionary signs with VarigLog, would be flown un- “It is not the end of the story for with some charter brokers, but they der a dry leasing agreement with Sky them just yet. They remain a good air- seem content to continue to do busi- Holding. After a period in storage at craft for charter work.” ness with the airline. Miami International airport, it had Already worthy of a best-seller nov- Said one UK based broker: “We still been prepared and freshly liveried for el, the Avient tale seems set for a few use Avient, because they continue to its return to service by Commercial more installments yet. ACW In The News... sale of a 33.7 percent shareholding in Cargolux of the year,” added Schulte. China Southern will by the liquidator of SAirlines — part of the SAir replace the 747-400F in the fi rst quarter of 2010 The Volga-Dnepr Group is lobbying Russian Group that collapsed following the grounding of with the introduction of a 777 freighter. It has six President Dmitry Medvedev to back the production Swissair in 2002...AF-KL Cargo has signed its on order…The Lufthansa Cargo Corporate of an upgraded AN-124 capable of carrying 150 fi rst CO2 offset agreement with four South-Africa- Works Council staged a two-hour work stop- tonnes 2,500 miles non-stop. The airline group based agents specializing in perishable exports. page at Frankfurt airport last month to protest the says it wants 20 upgraded AN-124s for delivery Aviator Airfreight, Grindrod PCA, Morgan threatened ban on night fl ights. “An outright ban between 2011 and 2020 and a further 20 from Cargo and Sky Services agreed to offset at least on night fl ights poses a risk to many thousands of 2021 to 2027…Air Cargo Germany, the 747- 50 percent of the CO2 emitted in shipping fruit jobs” said Council leader Willi Rörig. Lufthansa 400 freighter operator based at Frankfurt-Hahn in November and December 2009. Contributions Cargo chairman Carsten Spohr added that logis- airport, is reported to have obtained scheduled from the four agents will be invested in projects tics is the second biggest industry in Hesse — the traffi c rights to serve Shanghai and Hong Kong that create wind, water or solar energy with a Gold state where Frankfurt is located. “It is entirely obvi- four and three times a week respectively via Dubai Standard certifi cate. The Gold Standard Foun- ous that an absolute ban on night-fl ight operations or Almaty…Frankfurt-Hahn airport reports a dation is a Geneva-based non-profi t organization would not only massively weaken the Rhine-Main new traffi c record for November with 21,660 that registers CO2 emissions projects and certifi es region but also serious damage Germany’s posi- tonnes fl own…Cargoitalia says it made the list their carbon credits for sale on both compliance tion generally as an export engine.”…Air China of Top Ten airlines carrying cargo from Italy within and voluntary offset markets…As China South- has selected CHAMP’s Cargospot Revenue Ac- the fi rst four weeks of scheduled operations. The ern Airlines began 747-400F services between counting to improve its cargo business. Gao Lihua, airline claims a 20 percent market share from Italy Shanghai and Frankfurt in December, Fraport AG General Manager, Accounting and Settlement De- to Hong Kong, and 14 percent from Italy to New says air cargo traffi c rose 7.0 percent in November partment, Air China, said: “By selecting CHAMP York JFK. According to Italian CASS statistics for compared to the same month in 2008.Frankfurt and its Cargospot Revenue Accounting product, October 2009, Cargoitalia had a 3.2 percent share says it handled some 1.7 million tonnes of air- Air China has acquired a revenue accounting of the country’s air export market…Luxair, Lux- freight for the fi rst 11 months of 2009, down 12.8 system that will provide timely and accurate sales embourg’s regional airline in which Lufthansa AG percent year-on-year. “This is also very good when and revenue information, enabling us to further has a 13 percent stake, is now Cargolux’s major- you consider that we were experiencing declines reduce our costs, increase yield and ensure com- ity shareholder. The restructuring move follows the in airfreight of up to 30 percent at the beginning pliance.” ACW

6 JANUARY 2010 ACW Project1 6/17/08 12:27 PM Page 1 MIDDLEworld EAST news AFRICA AMERICAS EUROPE ASIA

Advance Wants “ The Crisis Is Not Advanced AN-124 Going to Affect Us”

olga-Dnepr, which currently operates 10 AN-124-100 aircraft, says Vworldwide demand for outsize cargo airplanes has grown 30 percent a year since 2004. Between 2007 and 2008, the market rose from $768 million to $1.1 billion. Citing a study from aviation consulting company SH&E, the airline group says there will be a requirement for 70 AN-124-type airplanes by 2030. Jawad Kamel, CEO of Istanbul-based project forwarder Advance International Transport, said this growing market will be lost to ocean freight if Russia and the Ukraine don’t upgrade the AN-124. “We have come to rely completely on its gigan- tic capacity. My company alone handled and chartered more than 100 AN-124 and AN-225 flights in a three-month peak period after the end of war in Iraq.” “A replacement for the AN-124 will ational day for the United that Dubai World’s need to restructure be required by 2025 or serious maindeck Arab Emirates on Dec. 1, and sell off assets will make financing capacity beyond the B747F or any Airbus marking the 38th anniver- more difficult for other local entities, freighter capacity will vanish. Items which Nsary of the union of seven but government-owned airline Emir- fly now will no longer be flown.” emirates into one federa- ates, which remains profitable with Kamel said the ocean option should not tion, had a more political edge to it secure lines of credit, appears to have be ignored. “Many ports welcome heavy than usual following Dubai’s admis- avoided direct fallout. lift consignments while many airports shun sion that it is debt to the tune of more Emirates’ revenue in the six months them. Getting access to a quayside or in than $80 billion. to September was down 13.5 percent and out of a port is often much easier than It may be a modest sum compared at Dhs 19.8 billion ($5.4 billion), re- getting airside on anything other than a with the figures run up by some west- flecting lower passenger and cargo dedicated freight airport. ern economies in the last two years, yields, but it made a profit of Dhs 752 “As long as we educate our clients but the development spooked the fi- million ($205 million) and expects to about the slower surface speeds at sea, nancial community. improve on this in the second half. then most will able to factor in the longer The request for a debt standstill The carrier raised more than $1.1 lead time to their building schedules,” he by Dubai World, an umbrella entity billion through Citibank and Doric As- added. with interests ranging from prop- set Finance to finance six more A380 Kamel, who began his company 40 erty development to ports and free aircraft. The first two were due to ar- years ago in Britain, called on Russia and zones, raised wider questions about rive in December, and are being de- the Ukraine to open up a new produc- the strength of the Dubai economy. ployed on routes to Seoul and Paris tion line for the AN-124. “The economies The government, seen implicitly as respectively. Four more A380s will of scale might be difficult, especially for a guarantor for Dubai World’s bor- follow this year, part of a firm order aircraft with such low volume production rowings, was unwilling or unable to for 53 of the type in addition to five as heavy lift maindeck capacity. However, step in, while oil-rich Abu Dhabi, the the carrier already operates. without this investment in time and wealthiest and most powerful of the Emirates president Tim Clark said: money now, in less than two decades we emirates, has shown only a limited ap- “Emirates remains in a secure finan- could see the heavy lift airfreight sector petite to get involved. cial position despite the global finan- grounded.” ACW Analysts have expressed concern cial crisis. We have never encoun-

8 JANUARY 2010 ACW ASIA EUROPE AMERICAS AFRICA MIDDLE EAST

tered difficulties in obtaining finance the last month we have seen an im- have been shifting capacity to the for our aircraft acquisition program, provement in yield and we think it’s Gulf since 2008 in the search for vol- with both international and regional sustainable. ume and margin — services that will banks comfortable with our financial “Dubai has got more bad press than now suffer if expatriate construction stability. We continue with our rig- it deserves. The crisis is not going to workers return home from Dubai or orous fleet and network expansion affect us, nor the air cargo industry in multinationals pull out office staff. plans.” Dubai. This has gone from a regional The passenger trend into October The squeeze on Emirates’ home to a world hub and we’re a transconti- remained positive as Dubai Interna- hub poses particular questions for nental business.” tional Airport’s traffic rose 11.7 per- its highly successful SkyCargo arm, Airlines from outside the region cent, the fifth consecutive month of however. Can Dubai retain both its local appeal as an airfreight origin and destination, and its key trans- shipment role connecting Asia’s manufacturing workshops with consum- ers in the West? Ready for China!

Ram Menen

Around 35 percent of Emirates cargo flies maindeck on eight freighters, six B747s and two B777s. But the new freighter delivery schedule has been “readjusted”, admits Ram Me- nen, divisional senior VP for cargo. Meet the world’s largest growth market at a single “We have no clue how long this location. And take part at the industry’s most im- [downturn] will last,” he says. Two portant exhibition in China. See you in Shanghai! more B777 freighters are now due to www.transportlogistic-china.com join the cargo fleet by 2012, with five www.aircargochina.com B747-8s arriving between 2013 and

2015. Organizers: Munich Trade Fairs International Group, Munich Trade Fairs (Shanghai) Co., Ltd. Half-year freight tonnage showed Trade Fair Management: Munich Trade Fairs (Shanghai) Co.,Ltd. “1 or 2 percent” volume growth, Me- Information: A-Z Group Ltd | Tel: +44 (0)1737 645777 | [email protected] Hotline (+49 89) 9 49-1 14 98 | Fax (+49 89) 9 49-1 14 99 nen says. Yield was hard hit, “but in

ACW JANUARY 2010 9 MIDDLE EAST AFRICA AMERICAS EUROPE ASIA

method it once was. It’s a planned tool now for garments and electronic goods.” Sea-air depends for its success, however, on fast airport turnaround for products going straight to the re- tail shelf, and on efficient warehous- ing for short-term stockholding or value-added work. Both aspects could be under threat. Some believe the system will be less slick when Dubai has two international airports. Jebel Ali is now nearing completion and scheduled to open in mid-2010, but Emirates plans to stay at Dubai International. Investors in the Jebel Ali Free Zone will also be concerned that this double-digit growth, taking the year- and Abu Dhabi sit on half the world’s profitable Dubai World enterprise to-date increase up to 8.3 percent. oil and gas and can afford, with oil was downgraded to junk status in De- After nine months of modest cargo at anywhere above $40 a barrel, to cember by rating agency Standard & growth, the airport registered a dou- continue ploughing trillions of dollars Poor’s. The free zone, home to most ble-digit increase in freight traffic for into infrastructure. They all want to of Dubai’s large logistics facilities, is the first time in over a year with a be “the next Dubai”, although Menen estimated to underpin a quarter of 17.7 percent surge in October. Ten- claims they lack the connections and Dubai’s economy. month volumes for Dubai Airports capacity to do so. Despite the clouds on the horizon, Cargo were up 2.2 percent at 1.55 He believes, for one, that Dubai’s Menen remains upbeat on Emirates’ million tonnes. much vaunted sea-air freight model cargo prospects. “January will set the This upturn may go into short- still stands up. “We’re expecting to scene for 2010. I think there will be term reverse as Dubai’s grandiose see more of it, because air capacity a strong comeback and we will defi- construction projects come to a halt. from the Far East is currently at such nitely go over 1.4 million tonnes for Neighbouring Saudi Arabia, Qatar a premium. Sea-air is not the default the full year.” ACW

In The News... understand aviation and the carbon emissions build on attracting key players in the express and IATA and the AEA made the case in Copenhagen targets put forth by IATA are too vague. As a perishable market sectors where we can offer last month that their members are committed to result, Qatar plans to adopt a unilateral solution. tailor-made services.” Neville Karai director of assume increasing environmental Separately, in an interview with the Heavyweight Air Express added, “Our fi rst month responsibilities. “We are the only BBC, Al-Baker said he would cancel performance surpassed all our expectations and global industry coming to Copenha- the airline’s order for 30 B787s if we look to continue to build on this success into gen with a strong track record and Boeing did not meet an agreed 2010.” Wataniya Airways began fl ying A320 a commitment to cut our emissions delivery schedule of four 787s by aircraft in January 2009 to Amman, Bahrain, in half by 2050. These goals clearly the end of 2011 and the balance Beirut, Cairo, Damascus, Dubai, Sharm El Sheikh show that the aviation industry of the order by 2015.”If this is the and Jeddah. ACW is even ahead of its regulators in its approach way they treat customers as they tried to do to climate change,” said Giovanni Bisignani, with us but were not successful, they will IATA’s director general and CEO. AEA secretary not only lose us but others as well,” he said. general Ulrich Schulte-Strathaus added, “There Boeing completed the fi rst fl ight of the 787 must be an end to the imposition on aviation in mid-December 2009. The company has of actual or proposed taxes and levies with a orders for 840 aircraft from 55 customers… nominally environmental purpose.” However Qa- Kuwait-based Wataniya Airways launched tar Airways CEO Akbar Al Baker was reported cargo operations in November 2009. Finlay as saying he didn’t expect anything to come McArthur, network cargo manager said the from the conference regarding aviation because company has signed a GSSA agreement with politicians discussing carbon emissions do not Heavyweight Air Express. “We intend to

10 JANUARY 2010 ACW IATA World Cargo Symposium 2010

Bounce Back: Rebuild for the Future! 8-11 March 2010 Vancouver, Canada

Join us to get air cargo moving in the right direction

The IATA World Cargo Symposium is the Don’t miss your chance to inﬂuence an action- unique global cargo event renowned for moving packed industry agenda designed to meet the industry from talk to action. This year’s our shared business challenges. Register conference will focus on what it will take to today and be there to make a difference! bounce back from recession to build a successful future for the entire air cargo supply chain. www.iata.org/wcs2010 worldASIA MIDDLEnews EAST AFRICA AMERICAS EUROPE ADB Calls Shifting China Alliances For “Climate- Resilient” Transport

peaking at the UN climate conference in Copenhagen last month, SAsia Development Bank (ADB) President Haruhiko Kuroda said there was an urgent need to establish a low- carbon, “climate-resilient” transport sector. Within the climate change agenda, a redirection of the transport sector’s development was highlighted as crucial. largest and fastest growing sources of greenhouse gas emissions, accounting for 23 percent of global carbon dioxide hina’s air cargo carrier arena, where the decline in outbound emissions. scene seems to be on the yields has added to their difficulties “No global solution can be found to verge of a tectonic shift, as in generating backlogs to their home the climate change challenge without Cairlines and stakeholders market. The civil aviation authority is real progress in the transport sector are changing alliances. clearly concerned. It recently imple- — especially in Asia,” said Mr. Kuroda. Question marks over the future of mented a series of measures to help “Annual transport-related carbon diox- Grandstar Cargo International Air- Chinese cargo carriers, which includ- ide emissions in Asia are estimated to lines multiplied in the wake of reports ed subsidies as well as encourage- double between 2006 and 2030, from 1 that majority stakeholder Sinotrans is ment of mergers and consolidation. billion to 2.3 billion tonnes.” heading for the exit. The future of Grandstar is but Delegates said that many countries The state-owned logistics giant is one element on the Chinese aviation have begun to adopt clean fuel technolo- allegedly looking to divest itself of its scene that is fostering feverish spec- gies, but the increase in demand for cars stake in the Tianjin-based all-cargo ulation these days. and other fossil-burning vehicles are out- venture, which was launched in 2008 Some reports have linked the pos- weighing the gains at this point. The ADP with shareholders Korean Air (25 sible departure of Sinotrans from the says the transport sector faces a major percent), Hana Capital (13 percent) Grandstar venture to alleged plans at challenge to find alternatives to fossil and Shinhan Capital (11 percent). the logistics behemoth to get closer fuels that can both reduce greenhouse Neither Sinotrans nor the other with China Eastern Airlines. How- gas emissions and also help to ensure venture partners have commented on ever, one air cargo executive with the energy security of developing Asian the matter, but Grandstar, which took close ties to the three large nation- countries. longer than planned to get out of the al carriers expressed doubts about The Asia and Pacific region is ex- starting blocks, has not been able to such a move. Any alignment between pected to suffer significantly from the produce black figures and failed to the two companies would likely re- effects of climate change such as rising meet the expectations of Sinotrans main confined to particular sectors, sea levels and extreme weather events. management, according to sources like the Shanghai-Hong Kong route, This could seriously undermine the eco- in China. In a recent report to inves- where the cooperation was developed nomic potential of the region according tors, Sinotrans reported a $9 million at the local level, he argued. to the bank. loss on its investment for the third China Eastern has its hands full “There is therefore an urgent need quarter. with the merger with smaller rival for the countries of developing Asia to According to a senior executive of Shanghai Airlines, having obtained elevate this need within their national a large carrier operating in China, the final approval for the marriage from development agendas,” added Mr. Chinese airlines have been hit hard the authorities on Dec. 1. Their merg- Kuroda. ACW by the downturn, and their pain has er has raised question marks for EVA been most acute in the international Air, which has cooperated with both

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and is running a joint venture cargo operation with Shanghai Airlines. The Taiwanese carrier has down- played the relevance of the impend- ing merger. “Shanghai Airlines and China have partnered on passenger business. The relationship does not include Shanghai Airlines Cargo In- ternational operations. EVA did not invest in Shanghai Air but in Shanghai Airlines Cargo, and the joint cargo operations have not been affected,” commented K.W. Nieh, group executive officer in charge of public relations at EVA parent Evergreen Group. Some pundits are not sure that the tion that the Beijing-based airline is that the joint venture cargo airline merger will be limited to the passen- moving towards a full takeover of the with Cathay Pacific will be based at ger side. China Eastern’s involvement smaller carrier, in which it already Shanghai’s Pudong airport. Accord- in the main deck market has been at holds a 25 percent stake. Besides ing to sources close to both carriers, arm’s length, through the China Car- boosting Air China’s presence in the the joint venture should be ready for go Airlines joint venture with ship- south of the country, this would also takeoff towards the end of the first ping firm COSCO, but there have raise questions for Jade Cargo Inter- quarter, at the latest before July. been sporadic reports that the parent national, in which Shenzhen Airlines Rivals China Cargo Airlines and airline has not been too impressed is the majority stakeholder. China Southern are also stepping up with the cargo offshoot’s results and Jade itself pointedly followed the their all-cargo activities out of Shang- threatened to take it back in-house. central government’s “go west” call hai. China Cargo Airlines launched Rumors are also swirling around by striking a strategic agreement with twice-weekly MD-11F flights from the other cargo axis involving car- the Chengdu municipality to develop Pudong to Luxemburg in the fall. riers from both sides of the Taiwan an air cargo hub for western China China Southern, which has shelved Straits, suggesting that management at the airport. The carrier has an- its alliance plans with Air France- at Hainan Airlines, whose cargo sub- nounced a new 747-400ERF service KLM in response to the downturn, sidiary Yangtze River Express has from Chengdu to Vienna and Amster- is deploying two 747 freighters in worked together with China Airlines, dam, returning to the Chinese city via the Shanghai market. One is to serve have begun to question the efficacy Dubai. Chicago, the other goes to Frankfurt of the partnership. Elsewhere the battle for China’s via Urumqi. The Guangdong-based In the Pearl River Delta the ap- premier gateway is intensifying. Air airline recently took delivery of two pointment of a vice president from China, which mounted freighter B777 freighters. Two more, which Air China into a senior role at Shen- flights from Shanghai to Vienna and were due earlier on, are still parked zhen Airlines has fuelled specula- Milan in September, has announced as we head into 2010. ACW

week with half provided by foreign UPS Gets Greater Access to Japan airlines including Singapore Airines, Lufthansa, Korean Air, Air France- fter five rounds of negotia- with the exception of Tokyo’s Nari- KLM and Air Canada. The agreement tions, the U.S. and Japan have ta and Haneda airports that remain notes that all flights can only oper- Asigned an “Open Skies” agree- slot-restricted. And unlike London ate between 2200 and 0700 local time ment that will allow UPS unrestrict- Heathrow the slots can’t be bought with the exception of selected Asia ed capacity and pricing access in or sold. destinations. competition with FedEx. Currently, U.S. carriers’ overall share of slots The agreement also includes an an- FedEx enjoys a greater entrée to the at Narita is expected to drop from ti-trust provision that will allow ailing Japanese market following its acqui- 28 percent to 25 percent once the Japan Airlines to choose between the sition of Flying Tiger Line in 1989. Japanese government increases the U.S. partners in rival airline groups The new agreement will provide number of slots from March 2010. — American or Delta. In December, for unlimited flights and destina- From October 2010, Haneda will the oneworld alliance offered JAL up tions between the U.S. and Japan have 40 international services a to $1.8 billion in incentives to stay

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within the group as the future of its ner Nippon Cargo Airlines, which is transportation and trade partner, has significant government subsidies re- owned by NYK. been a long-standing U.S. goal and is mains in doubt. The choice between Commenting on the new agree- good news for air travelers and busi- Delta and American could also have ment, U.S. Secretary of Transporta- nesses on both sides of the Pacific.” an impact on JAL’s future relation- tion Ray LaHood said, “Achieving No date has been announced for ship with its cargo joint venture part- open skies with Japan, a major U.S. the start of the new agreement. ACW China to Be Electric By 2030 Says Report report last month by the services, a new transport infrastruc- level as it takes the lead in new low- Stockholm Environment In- ture and re-forestation will all make carbon products and sectors predicts A stitute (SEI) and the Chinese China more competitive at the global the SEI. ACW Economists 50 Forum (CE50) says China can cut its carbon emissions to 10 percent of 2005 levels by 2050 India Freight Industry Booming with a shift to renewable energy that angalore, India-based consult- per annum — on transport and lo- includes electric powered vehicles. ing company Novonous says gistics. Novonous says this compares The report suggests a “massive” BIndia’s overall freight industry to an average 8-10 percent in other move away from gasoline-dependent is expected to grow at 10 percent developing countries. vehicles to the electrification of road per annum to 2014. The Indian government has allo- transport. The airfreight sector is set to ex- cated $500 billion in infrastructure The transition is forecast to follow pand by 8.5 percent per year for spending between 2007 and 2012. a gradual path through hybrids and the next five years due to rising ACW plug-in hybrids to fully electric begin- competitive pressures ning in 2015, ramp up after 2030 and from cargo operators culminate in 2050 with 90 per cent of among India’s immedi- all road passenger-kilometers pow- ate neighbors and main ered by electrical vehicles. trading partners. The study assumes a similar but India spends 15-20 “much less dramatic” transition in percent of its $1.22 freight transport for both air and trillion gross domestic ocean with a complete replacement product — currently of China’s coal-fired rail system by growing at 7 percent electricity in 2030. The CE50 forum says China’s tran- IATA Says Asia Airlines Recovering Fastest sition to a low-carbon economy is necessary because the country’s coal- iovanni Bisignani, IATA’s director general and CEO, says that since the based energy policy has resulted in Gbeginning of the decade, airlines have lost a total of $49.1 billion and environmental degradation on a huge are set to lose a further $5.6 billion in 2010. scale. “The health of the population IATA is forecasting a seven percent growth in cargo next year to 37.7 mil- and access to fresh water and unpol- lion tonnes carried, up from a five percent forecast last September, following luted land now necessitate a move an overall 13 percent decline in 2009. Cargo yields are expected to improve by away from coal as the primary energy 0.9 percent in 2010. source of China,” adds the SEI. The industry group says cargo demand is rising faster than world trade The CE50 adds that China cannot as depleted inventories are rebuilt. However, total rely on rapidly rising exports as the freight volumes in 2010 will remain 10 percent be- main driver of growth now that it is low the 41.8 million tonne peak in 2007. the world’s largest exporter and the With Europe and North America airlines fore- second largest economy in the world. cast to lose billions in total next year, IATA says The report concludes that China’s the Asia-Pacific carriers will only drop a collective next phase in its modernization fits $700 million. “Compared to losses of $3.4 billion in with the “greening” of the country. 2009, this region is showing the most dramatic improvement. This is driven Investments in new low-carbon en- by a recovery in some of the region’s economies. For example, China’s GDP is ergy sources, R&D and education, forecast to grow by 9.0 percent in 2010,” said Bisignani. ACW

14 JANUARY 2010 ACW AFRICA AMERICAS AFRICA MIDDLE MIDDLE EUROPE EAST EAST ASIA ASIA ASIA world MIDDLE EUROPE EUROPE EAST news AMERICAS AMERICAS AFRICA TSA Fills Stricter Screening Cargo Void Deadline ‘Firm,’ d Kelly, general manger Cargo at the Transportation Security EAdministration (TSA) died un- TSA Ofﬁ cials Say expectedly on Dec. 4 reportedly from Legionnaire’s disease. The TSA named Kim Costner Moore, currently assistant op U.S. government of- general manager, Air Cargo Programs as ficials emphasized lastast the acting head in place of Kelly. month that the Augustust Brandon Fried, executive director of Tdeadline for stricterter the U.S. Airforwarders Association paid screening of cargogo tribute to the former TSA cargo chief: transported on passenger air-ir- “I first met Ed Kelly three years ago craft in the United Status is near TSA headquarters in Washington. firm, warning that delays atat After hearing that I represented the major U.S. gateways loom if airfreight forwarders, he rolled his eyes, more shippers are not certi-i- turned to a couple of new colleagues fied under the Certified Cargoo and said the airfreight forwarding busi- Screening Program (CCSP). ness was about to see a radical change Transportation Securityy under his watch. Administration Assistant Ad-- “Ed’s prediction was spot on, and ministrator John Sammonn the forwarding industry should be told a Dec. 14 forum on airr eternally grateful that his knowledge cargo security in Washington of the industry guided TSA’s policies in that “August 2010 is a fixed this turbulent time. He had served as date” yet 100 percent piece the comptroller of the former Emery level screening remains “an Airfreight and understood our business industry challenge.” and its challenges. The session at the Ron- “Like everyone who knew Ed, I was ald Reagan Building, which always impressed by his knowledge of featured representives from UU.S.S put it,i “Not“N enoughh the industry, but even more amazed by agencies including the TSA, Depart- unique commodity high volume ship- the sheer force of his larger than life ment of Commerce, Department of pers have a plan.” personality. I always made sure to eat Homeland Security and numerous As a result, the major gateways a good breakfast before working with industry stakeholders, was designed where widebody passenger aircraft Ed, as he was smart, clever, blunt and to promote greater awareness of the transporting cargo could face sig- had more energy than anyone I had requirement to screen 100 percent of nificant delays and bottlenecks are, ever met. cargo on passenger flights and boost Boston’s Logan International Airport, “I often wondered why Ed left a participation in TSA’s CCSP program. New York’s JFK International, Phila- seemingly comfortable retirement to Sammon and other TSA officials delphia, Newark’s Liberty Internation- jump into the TSA regulatory pressure stressed that the agency believes al, Dulles, Atlanta, Orlando, Miami, cooker. He explained his decision to more high volume/unique commod- Seattle, San Francisco, Los Angeles, join came from the death of a cousin ity shippers must participate in the Dallas Fort Worth, Chicago’s O’Hare, who perished on 9/11 at the World program. “The time to act is now,” Denver, Houston, Detroit, San Juan Trade Center. He knew his experience he said during a power point presen- and Honolulu International Airport, could be useful and took the job know- tation on the 100 percent screening TSA officials said. ing that he could make a difference deadline that blared “229 days and Shippers currently in the voluntary in keeping our nation safe. What he counting.” CCSP program include high-tech, may not have known was that in the According to TSA officials, ship- pharmaceuticals, fresh produce/per- process, he made a difference in the per cargo reaching gateways at the ishables and museums, according to lives of those who worked with him as skid level poses a particular screen- TSA officials. Said Sammon: “The well.” ACW ing challenge. As one TSA official museum people have jumped on this

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program. We need to make clear to no TSA-certified technology capable challenging. “It will be more like 300 other folks that it’s in their best inter- of screening large airfreight skids and percent to go” and will likely be “a est to get into the program.” pallets. big deal” at places like Chicago, Los CCSP benefits shippers because Most shippers who have joined Angeles, Miami and San Francisco, it enables cargo to be screened be- the program to date have not had to Fried said. fore individual cartons are secured invest in screening technology but Industry participants used the to shipping pallets with banding or rather have been able to incorporate opportunity to urge TSA officials shrink-wrap. This is important be- the TSA approved physical search to speed up their evaluation of new cause TSA-certified screening meth- screening process into their parking/ technologies to support the screening ods available to forwarders and air- shipping process, TSA officials said. of all cargo transported on passenger lines restrict the size of cargo that While freight forwarders, indepen- planes, noting that current equip- can be screened and there is dentden screening facilities ment is inadequate for processing andan many shippers have palletized air cargo. TSA-approved alralready become certified methods of screening include x-ray, uundern the program, TSA explosives trace detection, explo- ofofficials said, not nearly sives detection systems, explosives enenough companies in- detection canine teams and physical clcluding manufactur- inspection along with verification of eers have embraced the the description of the cargo on the pprogram. shipping manifest. Brandon Fried, ex- Industry officials also pressed TSA eecutive director of the officials for expanded use of explo- AAirforwarders Associa- sives detection canine teams. James tion and one of a host May, president of the Air Transport of participants on a Association, urged TSA officials “to panel at the session, the extent they can to deploy more told the gathering dogs” or to consider making the ca- that achieving the nine teams available particularly at deadline to screen 50 high-cargo impact times. percent of all cargo Sammon applauded the efforts of “was low-hanging key industry groups in embracing the fruit” and meeting CCSP program and urged them to the requirements to continue to reach out to others that screen 100 percent “need to get over their apathy.” He of all cargo will be added, “it’ll be a rude awakening if we substantially more don’t get more people signed up.” ACW

In The News... Nigeria, Kazakhstan and Saudi Arabia in a bid that forwarders have raised in the past. I am to strengthen and expand its global Compliance hopeful that this report and its recommenda- Panalpina has begun settlement negotiations process. A settlement with the DOJ is not expect- tions will enhance security throughout the chain with the U.S. Department of Justice (DOJ) followed for “several months.”…Responding to a U.S. of custody for cargo transportation.”...FedEx ing its alleged violations of the U.S. Foreign Cor- Department of Homeland Security (DHS) Chairman Fred Smith wants the U.S. to encour- rupt Practices Act (FCPA) in Nigeria. In February inspector general’s report on air cargo, the U.S. age investment tax offsets and reduce corporate 2007, the DOJ was reported to be investigating Airforwarders Association says many of the income tax rates in order to grow the economy a case involving a Houston, Texas-based oil and issues raised in the report stem from a lack of “and put Americans back to work.” Speaking at gas company — now owned by GE — that communication. The inspector general said the a recent White House forum for stimulating the bribes had been paid “through a major interna- Transportation Security Administration (TSA) current jobless economic recovery, Smith said tional freight forwarding and Customs-clearance found over 2,640 security violations between U.S. corporate income tax at 35 percent was company to employees of the Nigerian Customs Oct. 2007 and June 2008. Of that number, 1,655 second only to Japan among the G8. “If we must service.” In response, Panalpina announced in were due to a lack of training and veriﬁ cation, pay 35 cents of every dollar we make in cor- 2008 that it had sold its domestic operations in according to the report. Brandon Fried, executive porate income taxes while foreign competitors Nigeria to local investors. The company, in “full director of the AfA said, “While the ﬁ ndings in pay lower (often much lower) amounts, there is cooperation” with the DOJ, has since conducted the DHS inspector general report are concerning no question but that our competitors will have “in depth reviews” of operational activities in to our members, these issues are the very ones more earnings to invest in new capital projects

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and jobs,” he said. Smith cited University of Connecticut Economics Professor Arthur Wright, who has recommended the Obama administration allow fi rms to expense all investment outlays because it encourages corporate investment. “Even without counting the benefi ts of new jobs to the economy, this is a relatively inexpensive option for the U.S. Treasury because the only cost to the government is the time value of money,” Smith added... FedEx Corp. says it will increase the standard list rates for FedEx Ground and FedEx Home Delivery by an average of 4.9 percent on Jan. 4. This follows a previous announcement that it would increase FedEx Express rates by an average 5.9 percent for U.S. domestic and U.S. export services at the same time…Two U.S. aviation consultants painted a bleak picture a partner at Gerchick-Murphy Associates. sure we get it right. There are a lot of negative for the fi ve major U.S. carriers still in business in Their remarks came as a senior Department consequences if we get it wrong.” American, the absence of international alliances that will of Transportation aviation offi cial at the British Airways and Iberia want U.S. govern- allow them to grow their global networks. These same Dec. 3 forum refused to say when the U.S. ment antitrust immunity to form a transatlantic carriers are trying to expand their networks government plans to rule on American Air- alliance. The carriers have been under growing but attracting service outside an alliance “has lines’ request to form an alliance with British pressure following U.S. approval of a similar become harder” and premium traffi c “has dried Airways and Spain’s Iberia. American, which is request this summer by Continental Airlines up,” Robert Hazel, a partner with Oliver Wy- pinning its hopes on intra-alliance competition to join United Airlines in the Star Alliance… man, told an aviation session in Washington last and global partnerships to help it survive, had Aviation investment advisors Seabury Group month. Patrick V. Murphy, whose fi rm conducted expected a decision by Oct. 31. U.S. offi cials are has acquired Minneapolis-based Organizational an international alliances study that was funded “very aware” of that deadline and “unfortu- Concepts International (OCI) to provide human by United Airlines, told the session sponsored nately we missed it,” said Christa Fornarotto, capital solutions for its clients. New York-based by the Airports Council International-North DOT deputy assistant secretary for aviation and Seabury claims to have managed seven of the 10 America that to some extent, alliances “are international affairs. But government offi cials are largest airline restructurings and raised over $30 the network carriers’ future.” The former U.S. working “as quickly as possible” on the request. billion of capital fi nancing, including $952 mil- Department of Transportation offi cial is now She added, “It’s a process and we want to make lion for Air Canada in September 2009. ACW

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Ashgabat

ACW JANUARY 2010 17 Forecasting: “Neither Dark Art Nor Infallible Science” featurefocus NorthAmerica

As North America faces an uncertain economic future this year, most forecasters have been humbled by the economic crisis — leading many to be skeptical about the reliability of forecasting. Seabury Cargo Advisory, the cargo consulting arm of the Seabury Group, sees four ways to improve the value of air freight projections and explains what they tell us about industry growth in 2010 and beyond.

t’s hard to remember when things were as bad in the air cargo industry as they were in 2009. Although at the time of writing we’re experiencing a big pick-up in air exports from Asia, the industry details still make for grim reading. The industry has seen its worst period in decades. International freight tonne kilometers (FTKs) in 2009 were down by about 14 percent year over year. International available tonne kilometers (ATKs) declined by about 7 Ipercent in the same period, putting serious pressure on load factors. Moreover, net airfreight yields plummeted by 18 percent in the first half of 2009 compared to the same period in 2008. Dismal though those numbers are, they might be tolerable if they were predictable. But volatility is the only thing that comes with any certainty these days. Forecasting in recent history has been extremely difficult; the steepness of the declines in air cargo took us and most of the industry by surprise. Just as few foresaw the extent to which the global economy would retreat, few have reliable insights into how soon and how strongly it will recover. The overall business climate remains as fickle as the British weather.

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The new 777F and the 747-8F make for an unbeatable combination. Already the most capable and flexible freighters in the industry, together they fulfill virtually any large payload (from 100-135 tonnes), range and market requirement. Add to that industry-leading efficiency and you’ve got the biggest advantage of all—the highest profit potential combination in the business. featurefocus NorthAmerica

That raises a thorny question — one that challenges 1. IT IS POSSIBLE TO FORECAST AIR CARGO business orthodoxy but which nags many managers dur- TRENDS ing times like these. The question: What good is forecast- Before we go any further, let us restate the obvious: ing anyway? Cynicism is understandable: As new and There is not, and never has been, a way to forecast with often detailed forecasts pour in on a weekly basis, one complete certainty. However, that is no basis for losing could be forgiven for thinking that effort applied to formal faith in forecasting per se. Nor does it excuse the actions forecasting is effort that could be better expended on op- of some air cargo firms that Seabury has learned have erational priorities. more or less stopped making forecasts — at least the fore- However, we believe the question needs to change. Rather than doubting the value of forecasting as a business practice, it is important to know how a more reliable forecast can be created. Our stance is based in part on the tough questions we have been asking ourselves: How feasible is it to forecast the airfreight market in highly volatile market conditions? What approach can be used to anticipate the timing and intensity of sudden declines? How can industry players recognize outdated forecasts as underlying economic conditions change — and react ac- cordingly? This article shares some of the lessons that we have casts that address the short term. Those firms are essen- learned about air cargo forecasting. In Seabury’s experi- tially trying to hit their targets with their eyes tightly shut. ence, forecasting is neither dark art nor infallible science; As shown in Exhibit 1, by using just two variables — it is simply a tool in one’s toolkit, with all of the limitations one relating to global industrial production and one deal- thus implied. Here are four insights that can help air cargo ing with credit conditions — it’s possible to reconstruct professionals use forecasting in appropriate ways to make a model that is able to forecast growth trends in global better decisions. air trade with a fair degree of accuracy. Although there is no certainty that this relationship will hold, it is likely, given the length of historical fit and the validity of the economic indicators used, that this model will result in a rea- sonable estimation of global air cargo growth rates. Such models are very effective in stable economic en- vironments or when accurate forecasts of the underlying economic variables are available. However, during the turbulent last four quarters, projections of those funda- mentals have been very volatile. Just one recent instance: the widely respected Econo-

22 JANUARY 2010 ACW mist Intelligence Unit (EIU) changed its estimates for 2009 global GDP several times, going from a positive 4 percent in July 2008 to as low as negative 2 percent in April 2009 (Exhibit 2). Such drastic shifts in GDP and other economic indicators can have a serious impact on a derivative air cargo forecast. So how can the airfreight industry make sense of such variability? Two complimentary methods seem to be appropriate: scenario forecasting — recognizing the volatility and prepar- ing a set of forecasts based on different scenarios for recession and recovery — and leading indicators (discussed more in the next section). With the first approach, the forecast that best fits with the recession and the unfold- ing recovery scenario can be quickly identified. And leading indicators can be tracked to identify the turning points in the business But there have always been other ways to tell that things cycle so more realistic projections of when the fortunes of are changing. By looking at signals such as OECD’s Com- the air cargo sector will turn can be made. posite Leading Indicator (CLI) in 2008’s third quarter, it was possible to spot an imminent decline in the air cargo 2. TURBULENT TIMES CALL FOR LEADING market (Exhibit 3). Those who arm themselves with the INDICATORS right leading indicators for their businesses have a pow- In the preceding section, we’ve acknowledged that the erful way to make their forecasts more reliable and thus econometric forecast we described is compromised when useful. the economy is volatile; without solid economic forecasts, But what exactly are leading indicators? By definition, that model would not have captured the dramatic drop in they reveal changes in the direction of growth before the air cargo demand in the fourth quarter of 2008, let alone its market’s growth direction changes; they are used to fore- prolongation far into 2009. cast turning points or new phases of the business cycle. Exhibit 4 defines five often- used leading indicators that can help point ahead to the turning points in air cargo movement. So which of these indicators should be tracked? Which are really most predictive? Seabury recently tested each of the five for its correlation with U.S. airfreight exports and imports (Exhibit 5). The vertical axis charts each indicator’s level of predictability, with 1 being an optimum value. The periods circled on the horizontal axis show the number of months over which the indicator leads air cargo growth. The results of our tests show that one of the industry’s most touted leading indicators — the

ACW JANUARY 2010 23 featurefocus NorthAmerica

trends; they are less suitable for predicting how severe a de- crease or increase in long-term growth rates will be. So leading indicators should be used together with scenario forecasting outputs to enable better clarity and usability.

3. AIR CARGO GROWTH DOES NOT EQUAL TWO-TIMES GDP GROWTH Many who track the macroeconomic factors affecting air cargo demand use GDP growth as a preferred metric. In fact, it’s often argued that there is a very close link — that, on average, growth in air cargo traffic outpaces GDP growth by a factor of two — the “2x” relationship. There is no debate about the validity of GDP as a fair indicator of world trade. It is a good measure of economic activity, and economic activity does stimulate trade, and trade ulti- inventory-to-sales (I/S) ratio — proves not to be a good mately influences the fortunes of the air cargo sector. How- tell-tale for airfreight after all. In fact, it shows that for U.S. ever, another macroeconomic indicator, global industrial air imports, the I/S ratio is the least effective of the indicators tested. Indicators such as CLI and PMI are far better predic- tors, leading airfreight by an average of four months, each with a correlation coefficient (R2) of about 0.7. (The example shown in Exhibit 5 applies only to the U.S.; the signifi- cance of each leading indicator might differ for other regions. It is advisable to conduct additional research when using leading indicators as predic- tors for other regions.) The upshot: Although air cargo growth is commonly thought of as a leading indicator for other industries, other indicators lead the air cargo industry. Leading indicators should be closely tracked to project short-term changes in

24 JANUARY 2010 ACW production, has a higher correla- vious decade.) At this point, we tion (R2) as well as a more di- know of nothing that will either rect and closer relationship raise or lower this figure in with growth in air cargo the near future. However, trade. Industrial produc- if the ratio does remain tion is more closely relat- around unity, it would in- ed to the trade of physi- dicate dampened future cal goods, while GDP growth for the air cargo includes services such industry. Given that long- as banking, insurance, term GDP growth is fore- and business services, casted at around 4 per- whose demand patterns cent, the FTK/GDP ratio do not directly affect air will need to significantly trade. As expected, the increase for air cargo fore- correlation of industrial casts of 5.5 percent and up production with airfreight to become a reality. growth is also stronger at 88 Here’s what this analysis tells percent — that is, 88 percent of us: It is advisable to look at indi- the variance in air cargo growth can cators other than GDP — indicators be explained by industrial production — such as global industrial production that versus 79 percent for GDP growth. have a higher predictive value and show a more Not only is the correlation between GDP and air trade stable relationship with FTK growth. It also makes sense growth suboptimal, but the ratio between the two variables to question the value of using time series that stretch far has changed markedly over time. Although FTKs have in- back into the past; that practice only makes sense if the deed grown twice as fast as GDP has done over the last 40 relationship between variables remains stable. years on average — spurred by Just In Time management and globalization, which resulted in Asia’s booming manu- 4. CORRELATION ISN’T EVERYTHING facturing industries — the term “average” does not mean Having a high correlation is a necessary condition for “normal” as judged by the ten-year rolling average of the forecasting, but it’s no guarantee of success. Yet it’s quite ratio between them (Exhibit 6). common to gauge the validity of new data by asking how The pitfalls of using averages and generalizations be- closely it correlates with certain benchmarks. It’s neces- come apparent when studying the recent past. Exhibit 6 sary to kill the myth that 98 percent correlation, say, is reveals that from the start of the 1990s, the FTK/GDP ratio automatically “better” than 92 percent correlation. has been gradually falling to the current ‘1’ ratio. (Each The point is well made with an unusual example. As it year’s ratio number refers to a “look back” over the pre- happens, growth in air trade has an almost perfect correlation with the count of certain species of birds that spend the winter in Minnesota. As seen in Exhibit 7, there is a perfect fit between actual air trade growth and the number of these birds over time. Yet no right-thinking person will assume that air trade can be forecasted by studying the forecasted population strength of groups of birds. The lesson is this: Instead of yield- ing to the temptation of plowing through a

ACW JANUARY 2010 25 featurefocus NorthAmerica

series of economic indicators in a model and performing The modest economic growth is specifically reflected in regression analyses to pick the best correlating variables, the air trade growth rates of the transatlantic trade lanes. one should pay close attention to the factors that truly will With westbound annual growth of 1 percent and eastbound influence air trade and formulate an appropriate economic expansion of 3 percent through 2013, the transatlantic model with the right kinds of interrelationships. trade lanes are mature. The bright spot is trade growth with countries outside Western Europe; eastbound freight to TOWARD MODEST RECOVERY IN 2010-2013 Central Europe and Russia will annually expand by around Seabury has put these and other insights into practice 10 percent; westbound trade from Central Europe and the to project how the airfreight sector will fare over the next Balkans will grow by more than 4 percent. four years. Our updated forecast shows that air cargo The eastbound transpacific trade lane is expected to is set to grow at an average annual rate of 4.9 percent show modest average growth of 5-6 percent in the next through 2013 — a sharp contrast to the 7 percent seen four years, spurred by a strong Asian manufacturing base. from 2002 to 2007. The overall economic outlook seems to With an expected growth rate of 8 percent annually, China support this view: Whereas world GDP growth averaged will remain the main driver for growth to the U.S., contrib- 3.6 percent from 2002 to 2007, EIU’s forecast for the next uting roughly 80 percent of overall incremental tonnes. The four years is down to 2.7 percent (real GDP growth, mar- westbound routes across the Pacific — led by industrial ket exchange rates). goods and machinery — have much smaller volumes. Their This year, 2010, will look positively robust compared to forecasted growth is no more than 6 percent — at least a 2009’s record negative growth; global air trade is expected percentage point lower than the 2002-2007 CAGR. While to increase by 5.0 percent. Growth in 2011 will be tem- trade to China will grow with a firm 12 percent, the lanes pered by a forecasted deceleration of the U.S. economy, to particularly Japan, Taiwan and Australia are expected to dropping back to 3.8 percent before picking up again in show lackluster growth. 2012 and 2013, each with approximately 5.5 percent year- Elsewhere, pockets of above average growth can be seen on-year increases. Air cargo volumes won’t return to pre- in flows between the U.S. and the Middle East/South Asia recession (2007) levels until 2013. Exhibit 8 shows how the (MESA), Latin America, and Africa. For the four years major air trade flows are expected to develop over the next through 2013 — excluding the effects of the 2009 drop — four years. U.S.-to-MESA trade is set to grow at 8 percent a year, with Let’s look at the three main economic regions in more U.S.-to-Africa trade expanding by 9 percent annually. At detail. the same time, flows from the U.S. to Latin America will be United States: The EIU forecasts modest overall GDP strong with a 6 percent growth, with U.S.-to-Brazil cargo growth of 2.5 percent in 2010. Economic growth is expect- racing ahead at 9 percent a year. American imports from ed to fall back to 1.3 percent next year — partly the result these regions are also robust through 2013, expanding at of tightening of monetary policy — before recovering to 5 percent a year from MESA and 3 percent and 4 percent about 2.0 percent for the following two years. respectively from Africa and Latin America.

26 JANUARY 2010 ACW Europe: The Western European and the Transition growth for Japan to 8.4 percent for China. economies were particularly hard hit by the financial crisis Intra Asia’s air trade growth for the next four years will and the large decline in external demand. The EIU fore- mimic 2002-2007’s average annual growth of 6 percent. casts 1.4 percent annual average GDP growth for Western Both imports and exports will continue to be driven largely Europe and a stronger recovery for the Transition econ- by China, albeit more slowly than before. Other countries omies — 3.4 percent annually between 2009 and 2013. such as Korea, Taiwan and Thailand will increasingly drive This disparity in the level of economic recuperation is also exports within the region. clearly visible in the future air cargo growth levels of these China’s annual air export growth for 2009-2013 will equal two regions. 8 percent — a huge drop-off caused largely by reduced air Air trade from Asia to Europe will grow at just 4 percent shipments of high-tech products. Imports into China will annually — a dip from 2005-2007 average growth and less reach 10 percent — again, a significant fall-off from the than a third of the expansion rates seen between 2000 and pre-recession years. 2005. Nevertheless, westbound freight from Asia to Central Japan’s air exports appear to have matured; Seabury Europe and Russia will perform well and expand by around sees annual growth rates of 5 percent over the next four 9 percent annually. Meanwhile, routes from Europe to Asia years. The highest growth of 7 percent will be for air cargo Pacific — with industrial goods and machinery as primary to other Asian countries — mainly based on solid growth shipments — are also forecasted to grow at 4 percent. Spe- in shipments of high tech and machinery parts. Japan’s air cifically, Seabury projects that German exports to Asia Pa- cargo exports to Europe and the U.S. will grow at a 2-3 per- cific, the route’s largest trade lane contributing 30 percent cent average. Imports into Japan are set to grow by more of the overall traffic, will expand at 4-5 percent year on than 3 percent — an acceleration that is mainly attributable year from 2009 to 2013. Eastbound trade from Central Eu- to increased exports from the U.S. rope and the Balkans will grow more than 8 percent a year. Growth in air cargo volumes from Europe to MESA is set 2010 to grow by 4 percent a year from 2009 to 2013 — well be- Over the next year, “alertness” will be the watchword for low 2002-2007’s annual average. The slower-growth pattern all players in the airfreight industry. Even with recovery in is also visible in air trade from the Middle East to Europe: global trade volumes on the horizon, global capacity will Seabury expects no more than 5 percent year-on-year in- also be on the rise. Factors such as the current offset in uti- creases — less than half the 2002-2007 rates of growth. lization and load factors, as well as the return to service of Asia: This region experienced a relatively short down- aircraft and the deliveries of brand-new wide body freight- turn. Nevertheless, North East Asia saw large declines in ers will continue to put pressure on the demand/supply its largest air export categories — high-tech and machinery relationship. parts — more than 20 and 30 percent respectively for the In such a volatile environment, tomorrow’s top perform- first three quarters of 2009. Within Asia, 2009’s econom- ers will be the ones that embrace forecasting as a valuable ic performance differed significantly between countries. instrument to making sound business decisions. ACW Whereas China enjoyed positive GDP growth of around 8 percent, Japan saw GDP plummet by about 6 percent. Damini Dave is a vice president with Seabury The EIU recognizes disparate recovery scenarios for the Aviation & Aerospace/Seabury Cargo Advisory. For region between now and 2013, ranging from 1 percent GDP more information: [email protected]

ACW JANUARY 2010 27 Is There In Rush For Pharma?

irlines around the globe are jumping prehensive healthcare reform in the U.S., as well as legisla- on the cold chain bandwagon to chase tive or regulatory actions in other countries, the magni- a complex niche with dazzling growth tude of the H1N1 pandemic and the timing and extent of prospects: shipments of temperature- the global economic recovery, according to IMS. sensitive pharmaceutical products. Healthcare companies that produce life enhancing and A As newcomers and established in- life saving products that can be worth tens of millions per dustry players vie for roles in a global shipment require reliable temperature control that can be market with surging demand for pharmaceuticals, airlines, monitored closely throughout the supply chain. A break- forwarders and container manufacturers are all trumpet- down in the far-flung delivery process can lead to lost ing a wide array of new products and services. revenue or worse, irreplaceable products that are deemed Forecasts for the flow of trade in pharmaceuticals are worthless. eye-popping with the global market value expected to Air Canada, American Airlines, British Airways World exceed $975 billion by 2013. Norwalk, Conn.-based IMS Cargo, Nippon Cargo Airlines and United Airlines an- Health has forecast a global growth of 4 percent to 6 per- nounced cold chain initiatives in recent months that are cent in 2010, swelling to more than $825 billion. tied to the lucrative healthcare segment. In its latest forecast, issued last October, IMS adjusted This activity mirrors other airfreight cold chain indus- its expectations upward by one percentage point for five- try developments at a recent cold chain distribution con- year pharma growth partly due to stronger than expected ference in Philadelphia focusing on pharmaceuticals. At demand in 2009. Those market dynamics apparently have that event, several airlines touted their latest cold chain not been lost on an airfreight industry reeling from the offerings and two U.S. companies unveiled plans for a worst global economic and trade blow in decades. temperature-controlled cargo ULD they plan to lease for The IMS analysis takes into account such factors as the 20 percent less than competitors’ containers. impact of the global economic downturn and the rising Officials at Continental Airlines, which bills itself the influence of healthcare access and funding. Other events first U.S. airline to implement a structured cold chain pro- that may occur in 2010 that could also have a long-term gram more than five years ago, claim the Houston-based effect on the market include the potential passage of com- carrier is several steps ahead of the competition and plan featurefocus Cool Chain Pharmaceuticals

to stay that way. ments and then using our process use on U.S. flag carriers, Mohr adds. Mark Mohr, Continental’s manager framework to assist manufacturers Continental also sees further of product development and special- and forwarders in creating a prod- growth opportunities stemming from ty sales, says: “Other carriers have uct specific SOP (standard operat- its new Houston to Frankfurt route finally figured out what Continental ing procedure) that is attainable and and its receipt of two new Boeing and a select group of other carriers sustainable.” 777-200s in 2010. The opening of the have known for some time. And that Continental, the first airline to have new perishables center in Houston is there are a lot of high-yield oppor- stations accredited under Envirotain- should also be a factor contributing tunities out there.” er’s Qualified Envirotainer Provider to future growth, Mohr says. Adds Mohr: “It’s good to see the quality management program, saw its Dominant European players in the newcomers moving away from the yields in the pharma sector hold up cold chain arena include Air France- general cargo ‘just put freight on the throughout 2009 despite the econom- KLM, Swiss World Cargo and Luf- plane’ mindset.” ic downturn, according to Mohr. thansa Cargo, who carved out a role Continental has partnered with the Although 2009 volumes in the for themselves in the pharmaceutical market’s leading container supplier, pharma segment are shaping up to business some time ago. Other play- Sweden’s Environtainer, as its pro- be slightly lower than 2008 volumes, ers include Emirates Sky Cargo and vider of passive ULDs and with U.S.- the revenue declines seen with this Scandinavian Airlines. based CSafe Acu Temp as provider of type of cargo “are nowhere near the “Swiss is a niche carrier and we are active ULDs, according to Mohr. declines the industry has seen in hard playing an important role in the grow- The carrier’s ClimateSecure tem- freight volumes,” Mohr says. ing healthcare segment,” says Gérard perature-controlled service “is not a For 2010, the carrier expects Gobat, product manager Swiss °Cel- one-size-fits-all concept,” Mohr says. growth due to the acceptance of the sius and Swiss Valuables. “We’re very much focused on under- CSafe AcuTemp active RKN, the only Swiss’ major markets for pharma- standing product handling require- active ULD that is FAA approved for ceutical shipments are Switzerland,

ACW JANUARY 2010 29 SERVICE TO THE NTH DEGREE. LATITUDE, LONGITUDE, FAHRENHEIT OR CELSIUS.

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AACargo.com featurefocus Cool Chain:Pharmaceuticals

where there is a robust pharmaceuti- ers. As an airline, it is important not according to a Datamonitor forecast cal base, and neighboring countries to have too many interfaces that are cited by DHL. such as Germany and Austria as well involved. And we are a lean organiza- According to DHL, the move to as the United States and Japan. tion in general,” Gabot adds. bolster its cold chain logistics ca- Swiss, which has also targeted oth- Swiss Celsius, the carrier’s special pabilities is in line with anticipated er care-intensive markets involving product for temperature controlled industry growth and increasingly the transport of valuables and value- shipments, specifically targets the sophisticated needs of Asia Pacific added services, is not alone in eyeing pharmaceutical industry but can also customers. emerging markets for temperature- be used for any commodity that re- At the time, Steve Huang, man- controlled pharmaceutical shipments quires strict adherence to a specified aging director of DHL Global For- including China, India and South temperature range, he says. warding China, commented: “This is America. Forwarders devoting more time another step that DHL is taking to But unlike some other airlines and and energy to cultivate commerce deliver quality and efficiency in cold integrators that are looking to cater with the pharmaceutical sector in- chain logistics to meet the increas- to this sector, Swiss does not deal di- clude Deutsche Post’s DHL Global ingly complex needs of pharmaceuti- rectly with pharmaceutical compa- Forwarding, and logistics giants Kue- cal companies, chemicals laboratories nies, Gabot says. hne + Nagel and Panalpina. and manufacturers.” “Our customer is the forwarding In June, DHL Global Forwarding Huang added, “We are optimistic industry,” he says, and consequently launched with fanfare its first Life that this sector will continue to offer the niche carrier’s goal is to “build Science and Healthcare Competence promising growth.” up relationships” with key partners: Center located within a new 2,000 The life science and healthcare airlines, forwarders, suppliers, and square foot temperature control industry has been surging in recent container manufacturers, to meet the warehouse at Shanghai’s Pudong In- years with China emerging as a mar- requirements of the booming phar- ternational Airport. ket with the greatest growth poten- maceutical industry. China, ranked ninth in the world’s tial. Indeed, the Asia Pacific phar- “It’s important to have close rela- pharmaceutical market in terms of maceutical market generated total tionships so that you can react fast market size, is expected to contin- revenues of $118.3 billion in 2008, on any deviations and on implement- ue its double-digit growth in future up from $91.6 billion in 2004, a coming new ideas and talking to custom- years and leap to sixth place by 2011, pound annual growth rate (CAGR) of

32 JANUARY 2010 ACW 6.6 percent. peratures as extreme as -30 to +49 China’s pharmaceutical market degrees Celsius. grew the fastest with a CAGR of 21.1 In addition, the containers elimi- percent during the 2004-2008 period. nate the cost and environmental And that trend will continue with the challenges associated with dry ice, government’s plans to provide im- refrigerated trucking and internal proved healthcare access to its grow- packaging, company officials say. ing population. Brian Kohr, general manager of One U.S.-based container pro- CSafe, notes that the Acutemp RKN vider that made strides in 2009 and has consistently demonstrated its Reedy notes that the airline is poised for growth in the sector is ability to maintain a customer-de- launched its temperature-controlled CSafe, headquartered near Dayton, sired payload setting resulting in no service after a pilot “involving a se- Ohio. CSafe is a joint venture be- recorded product loss in 2008. lect number of customer and 10 tween AmSafe Inc. and AcuTemp This type of reliability is para- lanes” and notes with satisfaction Thermal Systems, with locations in mount to pharma and biotech com- that “we’re still doing business with Washington State and Ohio. panies “that can have $48 million those guys.” CSafe announced in May that its dollars of product in our container at There “are additional require- flagship product, the AcuTemp RKN one time,” says Kohr. ments” for the pharmaceutical and air cargo container, is the only com- Addressing the future airfreight healthcare business and that is some- pressor driven air cargo container market growth potential, Kohr notes thing Reedy asserts will play to Amer- with approvals from both the Euro- that the cold chain pharmaceutical ican’s advantage. pean Aviation Safety Agency (EASA) sector is currently the fastest grow- IMS underscores in its latest analy- and the U.S. Federal Aviation Admin- ing market segment of air cargo and sis that additional factors that could istration (FAA). the highest margin area other than affect the growth of the pharmaceuti- In November, CSafe became the the transport of live animals. cal industry include shifts in regula- first container manufacturer to incor- Approximately 70 percent of phar- tory standards from current levels. porate the new IATA label for time maceutical products in clinical trials Airlines and airfreight industry play- and temperature-sensitive healthcare are temperature-sensitive. What’s ers must stay abreast of these devel- products on its containers. more, the market has been growing opments as well as the more stringent The new Time and Temperature at 6 percent to 12 percent “and all security rules that are set to take ef- Sensitive label is part of IATA’s 10th the studies we see show that’s not go- fect in coming years. Edition Perishable Cargo Regula- ing to change,” he adds. Says American’s Reedy: “We are tions Manual set to take effect in July “When you are looking at high playing an active role with the Trans- 2010. value life-saving or life-enhancing portation Security Administration and “As the volume of temperature- products they are using high-end so- are taking steps to ensure we are pre- sensitive shipments continues to lutions,” says Kohr. pared for changes that are coming. grow in the pharmaceutical and American Airlines, which officially We need to work with the forward- biotechnology sectors, we felt that launched its first comprehensive so- ers and shippers to make sure that early adoption of the new IATA speci- lution for the temperature-controlled we are ready. This is a big topic for fied label is a positive step in clearly arena in September, has been “very all air cargo and there’s some unique identifying the contents for priority pleased” with its reception and the aspects related to the pharmaceutical handling,” Oliver Bootz, CSafe’s vice feedback it has received from its cus- industry.” president of business development, tomers, says Joe Reedy, vice presi- While most carriers with cold chain said at the time. dent of cargo sales. offerings focus on the high margin Taking a leadership role in adopt- At this point, the carrier is working pharmaceutical market, there are ing the new regulation for healthcare solely with Envirotainer as its part- good volumes to be found elsewhere cargo “reinforces our commitment ner but the Dallas-based carrier will in the temperature-management to the cold chain from both perfor- continue to evaluate its temperature- space. mance and handling perspectives,” controlled service offerings as it goes Continental’s Mohr says other ar- Bootz said. forward. eas with potential include the trans- CSafe’s containers have cooling “Our plan is to use the benefit of port of aircraft composites and non- and heating capabilities and can the strength of our network and ser- pharma products including frozen sustain consistent temperatures be- vices to the temperature controlled lemon pulp for beverage production tween +4 and +25 degrees Celsius industry and over time that can take and frozen samples for fast food res- while being exposed to ambient tem- different forms,” Reedy said. taurants. ACW

ACW JANUARY 2010 33 “I’ve always hated companies who don’t develop youngsters”

o describe Jim Armour, who heads structured. I have ended up with a lot of bosses in Aramex up UK operations for global logis- and there is a corporate way of doing things, but it’s not tics solutions provider Aramex, as rigid. Aramex is not enforcing a model, and this lets us be a maverick would be something of an un- creative. If they had wanted a regimented person, they derstatement. Let’s be clear right from the wouldn’t have hired me,” Armour says. outset, the career freight forwarder has a “Once you’ve agreed your P&L, there is room to do passion for the business, is a firm believer your own thing. After all, the local people on the ground in people development and inspires envi- have the best view of the market. I feel we can surprise able loyalty in those who work under him. Aramex.” Yet Armour used to think nothing of As a youngster, Armour flirted briefly with banking poaching talented individuals from the competition, and and did some door-to-door selling before joining Thomas once launched a coup against his own senior management Meadows, the leading independent UK freight forwarder — practices one hopes for his own sake, older and wiser at of its day, as a trainee salesman. 61, he now discourages. “They were one of the few companies taking people Armour came to Aramex, which is steadily building a in off the high street,” he says. “I was 21 when I started presence in Europe in airfreight, ocean freight, road ser- there. They moved you around different departments in- vices and supply chain management, when the group ac- cluding airfreight, which was a relatively new business.” quired TwoWay Logistics in Ireland in mid-2006. He works Head office was in Colnbrook (Heathrow) but Armour closely with Tommy Kelly, TwoWay’s founder, who as CEO worked in the Manchester office, which alone employed for Europe is responsible for Aramex operations in the 50 people. The UK had more export traffic in those days, UK, Ireland and the Netherlands. from the likes of textile producers in Bradford and pottery After spending several years running his own small com- manufacturers in Stoke, but Meadows did not pay well. panies, Armour has not had to fit into a corporate culture “People tended to move on after a year or two,” Armour in the way he does now. But he talks the talk enthusiasti- says. He joined Thomson Yellow Pages and sold “little and cally. “You can see why people would dive through walls often, probably working too hard but making my targets. I for [Aramex founder and CEO] Fadi Ghandour. As soon as did it textbook fashion, the way they showed me.” he acquired TwoWay and outlined his vision, I wanted to The phone directory company took him out of direct go out and get the company tattoo. sales after eight months and taught him to be a telesales “I fell in with TwoWay because I felt it was not over- trainer. “I found my forte was in sales training rather than leadershipseries Inspiration

“You’re teaching people how to do their real job, not how to do Origami.”

selling, and it was a rewarding job. though they had got into logistics and “It was an old-school, paternalis- “You pass on the skill sets you transport, it was essentially a sunset tic group and was in decline. Benair have, the bits you know. But it was packaging business.” was a small airfreight division, with not about training ‘mini-me’s.’ It was Dewer built a significant brokerage six offices and 150 people. I turned more a question of looking at people’s operation by buying out all the larg- it round and opened a Hong Kong personality traits and working out est brokers, paving the way for Liv- office but after a couple of years I what they were and were not capable ingston to become a top-five North recommended them to sell it. of. Five promotions later I was na- American customs broker. “Benair was in the low-end per- tional training manager.” In the UK, Armour’s philosophy ishables business, a sector that has Armour returned to the freight was “to steal the best people from grown a lot more sophisticated in the business with ICB but, despite his others,” he freely admits. “It was a years since,” Armour says. “We sold short spell at Meadows, was ill-pre- parochial business in those days and the business on, I got a substantial pared for airfreight. “I went in there you could have separate offices just a payoff and took three years out to knowing nothing except how to cut few miles apart. You’d find the num- travel.” an air waybill. I’d only ever done con- ber two, who wasn’t going anywhere, He claims three of the biggest solidations and had never spoken to and poach them. names in airfreight approached him an airline.” “I was in my early 30s now, and when it became known that he was It proved no handicap, as there having a ball. But the fun went out of looking to getting back into the busi- was a lot of UK-Europe airfreight to it when we acquired a similar sized ness. “But I had never fancied the go for in those days. Armour handled company to ourselves. With hind- big corporate environment where up to 150 jobs a month and recalls: sight that was a mistake. We lost the you can’t go in and use what you’ve “My commission was far more than driving spirit and it slowed us down. learned to change things. WTA was my salary.” We didn’t think enough about the a smaller company where I thought I After moving through a series of chemistry. could have an impact.” sales management positions in pro- “At every level we had taken on WTA, a trailer and deep-sea busi- gressively larger units, he was asked kids and started them up, two in an ness with airfreight as a mere by- by ICB’s Canadian owner to move to office. Now we were inheriting an ex- product, had been running for 90 London and look after a wholesale isting branch office structure. For the years and employed just 12 people. program to other freight forward- first time I was not working with peo- The Sommer brothers, grandsons of ers. It was a short-term project but ple I had brought in and nurtured. the founder, were looking for an op- was enough to show Armour that the “If people are willing, that’s OK. erations manager. business was “in a terrible state.” I’m not so happy working with people A year later, Charles Sommer — He says: “I lined up a couple of oth- who aren’t very good. You’ve got to the second boss Armour credits as a er guys and organised a coup, on the keep them, because they’re the good- major force in shaping his subsequent basis that if we didn’t get the right will of a business, but some of my line career — decided what the com- management, we were all out of a job. guys were losing enthusiasm. pany really needed was a managing I took over; backed by them as import “Six of us raised funds to buy out director. Armour was putting more manager and airfreight manager, and Livingston — either all of it or the UK emphasis on airfreight and says: “We the three of us ran the business for and Far East business. But that didn’t looked for a name change to reflect two years. We expanded from three go through, and then I got an offer this and to our surprise found World offices to eight. When ICB was sold from Edmund Vestey.” Cargo was available.” to Livingston, I was made managing The Vestey family had built a for- He stayed on for 11 years, adopting director.” tune in the meat trade. Early be- the UK government-backed Investors Armour’s boss in Livingston, Don lievers in vertical integration, they in People (IIP) standard, building a Dewer, was “inspirational — one owned interests from cattle ranches reputation for training up its people, of two great bosses I had who I re- and meat processing plants in Argen- and picking up a number of trade ally respected,” he says. “They were tina and Australia to the Blue Star awards. engineers in wood and had learned shipping line and the Dewhurst chain “I’ve always hated companies who how to package knock-down cars. Al- of butchers in the UK. don’t develop youngsters, or where

ACW JANUARY 2010 35 leadershipseries Inspiration

managers walk down the office and make sure everyone shares your don’t know who they’re talking to,” management ethos, is to keep Jim Armour – the biography Armour says. them aware of what’s really going A WTA employee who won the on in the business.” 1969-71 Thomas Meadows Various positions in a leading Young Freight Forwarder award from Aramex puts people through UK freight forwarder the British International Freight As- its own university and invests sociation now has a senior role in heavily in customer service train- Aramex. “Seven or eight other people ing. A larger business with mul- 1971-76 Thomson Yellow Pages who followed me into my next role at tiple products can slot people in Rose to become national train- TwoWay are now also here,” he adds. where they fit best, and Armour ing manager of the telephone Some training tools have little believes most UK personnel are directory service point “if you’re just going through “in the holes they should be.” An the motions to get a certificate on the accountant has risen to become 1976-86 ICB Freight Services/ wall,” Armour says. He is not a fan station manager at the company’s Livingston of the classroom environment, and Colnbrook headquarters, creating Started in a sales management much prefers on-the-job coaching or two other promotions beneath role at the small Canadian mentoring. him. An export supervisor’s move forwarder, later bought by “You can spend time boring people to sales has opened up a team Livingston International, the in training sessions, as you can in leader’s position. Canadian public company. Pro- management meetings. I wouldn’t use Succession planning is not al- moted to managing director in a big external training agency that ways so easy in a smaller compa- 1978. Built the business from two offices and 40 staff into a wants you to mix with people from ny, he acknowledges. “Part of life Top 10 IATA forwarder with 26 other industries. A lot of the time, is to train people and let them offices in the UK and operations people are just not interested. move on, as sometimes you have in the Far East and Asia. Lived “IIP is a marvellous tool. It helps to. If someone wants to make in Canada and ran Livingston’s you to developing training plans and a big leap in his or her life and Canadian and US operations for job descriptions. You’re teaching they’re ready to do so but they two years people how to do their real job, not want to earn fifty percent more, how to do Origami. It can show office you can’t always deal with that. 1986-91 Joined Benair Freight at the juniors and cleaners how they fit into Conversely, not everyone has the invitation of the Vestey family your organisation. I want a driver to hunger to be a manager. But you and turned around an ailing go home and say, I work for a great do have a collective responsibil- business before selling it on company. And I want them to feed ity to grow the business.” that enthusiasm back to us, too.” A useful incentive at one time One measure of World Cargo’s suc- under UK accounting rules was 1991-94 Took a three-year sabbatical cess was profit per head, but one that a company could pay em- with his wife “to take her to all the places I had simply passed senses that Armour found his low rate ployees up to 10 percent of its an- through in the previous 15 of staff turnover more meaningful. nual profits tax-free. What would years” “This industry has never attract- Armour recommend in today’s ed people with a good education. If hostile trading environment for a you’re bringing people with an aver- small, struggling forwarder? 1994-2005 Re-entered the industry with age education to a clerical job and Aramex offers key personnel WTA Airfreight, a subsidiary of if you haven’t got the buying power stock options right down to op- Sommer Holdings. Appointed of the big guys, what can you offer? erating level and this can work at managing director in 1996. You’ve got to make them mini-entre- all levels of business, he insists. Company name charged to World Cargo preneurs, give them ownership, pro- “Give those you value fifty per- vide the training to enable them to cent of your business. You’re giv- compete,” he says. ing 12 or 20 people something to 2005-09 Joined Vanguard Freight Sys- “We empowered people to nego- fight for, and they’re not going to tems (owned by TwoWay Logis- tiate with carriers, so they felt like quit. tics) as UK MD. The business stakeholders in the business. In a “You must keep the passion. It’s was purchased by Aramex in medium-sized company this can give too easy to say there’s a recession 2006. Appointed country man- people a buzz — they can see what on. If you’re going to fail, you’re ager Aramex UK in April 2009 success is. They talk about ‘we’ rath- all going down together, but that and now responsible for all UK business er than ‘they.’ Your task in return, to would be the case anyway.” ACW

36 JANUARY 2010 ACW opinion

Dr. Gabriel Weisskopf is the CEO of Switzerland-based Softair AG. He is an expert on cargo industry requirements for IT and software solutions. Change is Inevitable — Except from a Vending Machine

he air cargo industry, as with anything re- year-old wunderkind is suddenly centre stage. lated to an airplane, is instantly associated Do we invest enough attention in learning a new with the myth of advanced technology. skill, often well beyond a three-day familiarization? T We recognize the major benefits IT can Being risk-averse by nature, we often view the status bring to everyone in the transportation chain quo as the safest course of (in)action. How much ef- and happily fly to all parts of the globe to enthusiasti- fort do we invest in making people aware that stand- cally discuss and promote electronic trade, e-freight, ing still will often prove a far riskier choice? RFID or satellite-based shipment tracking. We all prefer to adhere to the status quo and focus However a realistic look at the gap between on people that are identified with it. A little savvy di- thought, talk and execution paints a very sobering plomacy in how and when we communicate with our picture. peers, management or staff can avoid a lot of subse- Who would believe that IATA released its Cargo- quent heartache. People may often feel overloaded IMP automation report 50 years ago yet we haven’t and overwhelmed by change and while we are quick completed implementing Cargo-IMP messaging? That to criticize and list endless shortcomings of others, we find arcane, 40 year-old technologies at the core how good are we at praising, recognizing progress of our IT systems and we have to resort to electronic and giving credit when it is due? somersaults to make them communicate? Healthy skepticism towards change is certainly We are quick to blame this glacial progress on the laudable. It is also a wonderful opportunity for hid- complexity of the business, the interdependence or den agendas and for re-positioning on the corporate independence of the participants, or no money. But totem pole. But it is not only the potential for a per- whatever the reason, it is no excuse for inertia. ceived loss in status that frightens us. It is the real The major cause for our poor performance lies in or perceived threat to our notion of our own posi- our failing to recognize that mankind is not logical tion that represents a deeply rooted fear for many but “psycho”-logical. Resistance to change, or more people. accurately our failure to recognize the human as- If we acknowledge the fact that change always has pects of change, is at the heart of the problem. a cost and a benefit not only for the organization as Our first mistake is to assume that our minds a whole but to the individuals affected, we would be live on the same planet as we do whether we’re in able to confront it at a much earlier point in time. Duluth, Delhi or Düsseldorf. In fact, the collective Difficult and sometimes painful decisions should Mind resides on a distant, but virtual planet, called lead us to “grab the bull by the horns” rather than Comfort Zone. Change means leaving this planet and practice management by hope - and wait for issues overcoming the considerable pull of “mental gravity.” to resolve themselves. We must accept that change This often requires considerably more energy and will invariably lead to some people wanting or having courage than would a physical journey to Mars. to leave the organization and that this may be for the Change may well mean that the long-revered top good of all. expert in our office, who is the Grand Master of all So is the inability to change a technical or human cryptic system commands and processes, becomes challenge? Cargo-IMP — or merely Cargo Manager? as obsolete as a cuckoo clock repairman while the 23 ACW

ACW JANUARY 2010 37 peopleevents

AIRLINES to that, he spent four years at APL, an added, “We are pleased that as an in- Singapore Airlines appointed Dr. international liner, distribution and lo- dustry, we have been recognized once William Fung Kwok Lun to its Board gistics company and subsidiary of Nep- again as an integral piece of the nation’s as an independent director. Fung is tune Orient Lines Group, where he transportation infrastructure, and we Group Managing Director of Li & Fung was president of the Asia/Middle East look forward to putting more Americans Limited, a multinational group of com- region and then executive vice presi- to work, while at the same time making panies headquartered in Hong Kong. He dent for global marketing, sales and needed safety, security and congestion has extensive knowledge of the Asia- customer support. relief improvements at airports across Pacific region and the fast-growing Chi- the country.” nese market in particular. In addition AIRPORTS to his appointment as an independent, John Martin, the executive director THIRD PARTY LOGISTICS non-executive director, he will be a of the San Francisco International Penske Logistics, a wholly owned member of the Board Audit Committee. Airport, has taken on an added respon- subsidiary of Penske Truck Leasing, Southern Air Holdings Inc. an- sibility as president of the California has elevated several executives. Jim nounced the appointment of Daniel J. Airport Council. The new organiza- Erdman, most recently senior vice McHugh as chief executive officer, ef- tion, formed by the 30 commercial air- president of the Asia-Pacific Region, fective Jan. 1. McHugh succeeds James ports throughout the state, was created has been named senior vice president K. Neff, the company’s founder and in the wake of the economic downturn – global products. In this new posi- CEO, who is retiring but plans to remain and state officials’ realization that the tion, Erdman will develop and imple- a board member. McHugh has extensive air travel industry plays an important ment the company’s product offerings knowledge of the air role in California’s transportation and and optimize the transit of domestic cargo industry, hav- economic future. The council aims to and international freight through cus- ing served as the boost travel to and from California. tomer supply chains. He will be based former CEO of DHL in Dearborn, Mich. Amy Ilyes has been Express Asia Pa- ASSOCIATIONS appointed senior vice president – cus- cific. Prior to join- Airports Council International- tomer experience. In this capacity, she ing DHL Asia Pacific, North America President Greg Prin- will be responsible for the global de- McHUGH McHugh invested cipato praised the inclusion of the $500 ployment and ongoing development of in and worked with million for the Airport Improvement customer service. Ilyes has been a key Vietnam Partners LLC, where he Program (AIP) in the $75 billion jobs member of Penske’s engineering and evaluated investment opportunities in bill announced in mid-December by technology group for the past 22 years, the logistics and shipping sectors. Prior House Democratic Majority Lead- most recently serving as vice president- er Steny Hoyer. ACI-NA lobbied the logistics engineering. She will be based DOM AdADVERTISER Box INDEX Obama Administration and key mem- in Beachwood, Ohio. Also, Angela Yang bers of the House for the inclusion of has been named managing director for American Airlines Cargo...... 30-31 funding for AIP as part of the second the Asia-Pacific Region. She will head jobs bill. “The House Transportation the company’s Asia-Pacific operations Boeing...... 20-21 and Infrastructure Committee has held and will continue working from Shang- a series of hearings on the American hai. Yang joined Penske’s Asia-Pacific Recovery and Reinvestment Act operations in 2007 as operations direc- Continental Cargo...... CV4 (ARRA) which included $1.1 billion for tor. Prior to that, she held senior roles airports. At these hearings, time and with Deloitte and Capgemini. Coyne Aviation ...... 17 time again, airports were singled out for Gilles Darriau has been named de- praise for their efficient and expeditious velopment manager at SNC-Lavalin IATA...... 11 use of this funding on 355 projects. Air- Airports. Jean Claude Pingat, exports have proven they are not only jobs ecutive vice president of SNC-Lavalin creators, but serve as economic engines Group Inc. and president of SNC-La- Incheon...... CV3 for their local communities as well,” valin S.A.S. in Europe, said that Dar- Principato said. The ACI-NA president riau brings significant airport develop- Kenya Airways ...... 5

Messe Munchen GMBH ...... 9

Singapore Airlines ...... 7

38 JANUARY 2010 ACW events at [email protected]. MARCH 23-25 JANUARY 26-28 Kuala Lumpur: The International ment expertise to the Amsterdam: Cool Chain Europe Cargo & Logistics Conference 2010 operation particularly 2010 Conference, which will be held at the Prince Hotel will provide par- in the area of manage- at the Hotel Okura, will provide the lat- ticipants with valuable insights from ment, maintenance and est information, best practices and so- experts across various logistic indus- lutions for monitoring and controlling marketing. He will also tries. Learn from their experience and temperatures of biopharma products share opinions on how to overcome assist in the marketing and clinical supplies. For more informa- challenges of the global economic re- DARRIAU and operations of the tion, visit www.coolchaineurope.com. cession. Topics to be covered include SNC-Lavalin Airports the potential of international logistic network in Europe (Vatry, Tarbes- FEBRUARY 17-20 hubs; overcoming the issue of cargo Lourdes-Pyrenees, Chalons-sur-Saone, Dubai: The 2nd Annual Airport Se- capacity and market demand; analyz- Vannes, Cherbourg and Malta). Darriau curity Middle East 2010 will gather ex- ing the prospect of domestic markets; perts to address the unique challenges previously held positions as manager, grasping the strategies of effective facing the region. Presentations at the crisis management; ways of reducing aeronautical activities at the Orleans Grand Millennium Dubai will reveal the cost and sustaining competitive pric- airport and managing supervisor of latest updates, strategies and solutions ing; methods to enhance container and the airport at Angers as well as head to enhance airport security manage- intermodal facilities, and understand- of the Airport Department at Keolis ment strategies and intelligence. Ses- ing the key factors of successful supply Airport. sions will cover effective ways to bridge chain management. For more informa- Sunteck Transport Group, a non- communication and collaboration gaps tion, visit, www.evolution-asia.com. between airports, airlines, governmen- asset based provider of transportation tal authorities and law enforcement; APRIL 20-21 services, has named Chris Castellaw how the General Authority of Civil Beijing: The 7th China Air Cargo vice president of LTL operations and Aviation (GACA) in KSA implemented Summit 2010 will focus on key devel- sales. Castellaw, who has more than 15 their new air cargo security model; the opments in air cargo during the past years of experience in transportation International Air Traffic Association year in a bid to contribute to the re- operations, procurement and consult- (IATA)’s five pillared new security and covery of the industry. This event is ing, will be based in Jacksonville, Fla. In facilitation strategy and what you need also an important platform to explore to do to get there. For more informa- the development of China’s air cargo his new role, Castellaw will be respon- tion, visit www.airportsecurityme.com. industry. Though the financial crisis sible for developing and executing a caused enormous losses in the air car- full-service, less-than-truckload offering MARCH 8-11 go industry the air transport business to expand the company’s portfolio of Vancouver: The 2010 IATA World is getting back on its growth track. In services provided through its network Cargo Symposium “Bounce Back: Re- particular, the Chinese air cargo indus- of agent offices. build The Future” will focus on what it try is taking on a quicker recovery mo- will take for the air cargo supply chain UPS Freight announced that vet- mentum compared with that of Europe to bounce back from the current global and America. For more information, eran Canadian transportation specialist recession and steps it can take to build visit http://www.aircargosummit.org/ or Allan Robison joined the company as its future. The event will be held at the email: [email protected]. a vice president of sales and will lead Westin Bayshore. For more informa- UPS Freight’s Canadian sales efforts. tion, visit www.iata.org/events. JUNE 15-16 Robison had served as president of Can- Brussels: The Air Cargo Handling MARCH 9 ada’s largest trucking company, Reimer Conference “Providing Quality & Re- Vancouver: The Air Cargo Excel- taining The Margin” will address how Express, until his retirement in 2008. lence Awards evening is a celebration to succeed in building volumes and Commenting on the appointment UPS to recognize excellence in the air car- relationships in challenging market Freight President Jack Holmes said, go industry. Held on site and in con- conditions. The event will be held at “Few people have a better understand- junction with the IATA World Cargo the Crown Plaza Brussels Airport. For ing of the trucking industry as it relates Symposium in Vancouver, BC, the re- more information, visit www.evaint.com to Canada and the needs of the Canadi- sults of Air Cargo World’s annual ACE or e-mail [email protected]. an shopper. His addition to our team is a Survey will be announced and awards will be presented to those airlines and NOVEMBER 2-4 tremendous asset to both UPS and our airports that have achieved a level of Amsterdam: The International Air customers.” In other news, UPS Freight excellence as determined by their re- Cargo Association’s Air Cargo Forum announced a significant expansion spective customer market groups. Reg- and Exposition will bring together all of pickup and delivery hours for cus- istration for the ACE Awards evening segments of the industry in one place tomers served through the company’s can be made through the IATA World at one time. This biennial event, which London, Ontario, facility. UPS Freight’s Cargo Symposium registration site at attracts thousands of senior executives Holmes said the added service hours http://ww.iata.org/ events/wcs10/index. and hundreds of exhibitors from across htm. For more information or to in- the globe, will be hosted by Amster- demonstrates the company’s deep com- quire about sponsorship opportunities dam Airport Schiphol. For more infor- mitment “to customers on both sides of contact Steve Prince, Air Cargo World, mation, visit www.tiaca.org. ACW the Canada-U.S. border.” ACW

ACW JANUARY 2010 39 bottomline

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

Overall 0 Asia-Paciﬁc -15 -5 Domestic International -10 -20 -15

-25 -20 -25

-30 -30 12/08 1/09 2/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/09 12/08 1/09 2/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/09

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

CARRYING ASIA SHARING MARKETS Monthly year-over-year percent change in capacity, in International air cargo year-to-date change for available tonne kilometers, and traffic, in freight tonne OctoberMonth 20092008 vs. MonthOctober 2010 2009 kilometers, of Asia-Pacific airlines. -10 Middle East North America -15 Europe

Asia/Paciﬁc -20 Capacity Trafﬁc Latin America

-25 Africa

Total -30 12/08 1/09 2/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/09 -20 -15 -10 -5 0 Source: Association of Asia Pacific Airlines Source: IATA

CARRYING INTERNATIONAL SEMI CONDUCTORS Monthly year-over-year percent change in total scheduled Worldwide monthly year-over-year percent change international freight traffic and capacity worldwide in sales of semiconductors and month-to-month in freight tonne-kilometers and available tonne-kilometers. percent change. 0 10 5 -5 0 -5 -10 -10 Capacity -15 M-O-M -15 Trafﬁc -20 Y-O-Y -20 -25 -30 -25 -35 12/08 1/09 2/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/09 12/08 1/09 2/09 3/09 4/09 5/09 6/09 7/09 8/09 9/09 10/09

Source: IATA Source: Semiconductor Industry Association

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