INTERNATIONAL EDITION OCTOBER 2013 Top 50 Cargo Airports Our Global Coverage Scan here to watch the ACS corporate video Your Cargo Air Cargo Charter Broker of the Year 2013 With a global network of 17 offices strategically placed around the world, Air Charter Service is able to obtain local market knowledge whilst utilising global procurement capabilities. Our global presence in the charter market is unique. We are fluent in over 42 languages worldwide, with the capability to provide an exceptional global service. www.aircharterservice.com NORTH AMERICA | SOUTH AMERICA | EUROPE | CIS | AFRICA | MIDDLE EAST | N.AMERICA | S.AMERICA | EUROPE | CIS | MIDDLE EAST | AFRICA | ASIA October 2013 Volume 16, Number 9 EDITOR John W. McCurry [email protected] • (678) 775-3567 ASSOCIATE EDITOR contents Adina Solomon [email protected] • (678)-775-3568 SPECIAL CORRESPONDENT Martin Roebuck Patents CONTRIBUTING EDITORS Forwarders’ problems start with a letter Roger Turney, Ian Putzger, Karen Thuermer 22 CONTRIBUTING PHOTOGRAPHER Rob Finlayson COLUMNIST Southeast Asia Brandon Fried Forwarders ferret out growth PRODUCTION DIRECTOR 24 Ed Calahan CIRCULATION MANAGER Nicola Mitcham Airport Growth [email protected] The chicken or the egg question ART DIRECTOR 26 CENTRAL COMMUNICATIONS GROUP [email protected] PUBLISHER Top 50 Airports Steve Prince Airports see cargo barely budge [email protected] 30 ASSISTANT TO PUBLISHER Susan Addy [email protected] • (770) 642-9170 DISPLAY ADVERTISING TRAFFIC COORDINATOR WORLD NEWS Cindy Fehland [email protected] 6 Europe AIR CARGO WORLD HEADQUARTERS 1080 Holcomb Bridge Rd., Roswell Summit 10 Middle East/Africa Building 200, Suite 255, Roswell, GA 30076 (770) 642-9170 • Fax: (770) 642-9982 14 Asia WORLDWIDE SALES U.S. Sales Japan 18 Americas Associate Publisher Mr. Mikio Tsuchiya Pam Latty +81-45-891-1852 (678) 775-3565 mikio.tsuchiya@ [email protected] worldmedia.jp Europe, Thailand United Kingdom, Ms. Anchana Nararidh DEPARTMENTS Middle East David Collison +66-26-412-6938 4 Editorial 39 Drewry Report 46 Forwarders’ Forum +44 192-381-7731 [email protected] [email protected] Taiwan 37 Legal Ledger 42 Classifieds Hong Kong, Ms. Paula Liu Malaysia, +88-62-2377-9108 38 Bottom Line 44 People Singapore [email protected] Joseph Yap +65-6-337-6996 Korea [email protected] Mr.?? 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For more information visit our website at POSTMASTER and subscriber services: Call or write to Air Cargo World, 3025 Highland Parkway Suite 200, Downers Grove, IL 60515; www.aircargoworld.com telephone 866-624-4457. ACW OCTOBER 2013 3 editorial The cargo forecast season What lies ahead for airfreight for the fourth quarter of 2013 and beyond? Some in the in- dustry have been pointing to the final three months as having the potential to launch a turn- around in the industry. Others are still waiting for optimism to kick in. It’s unclear whether a strong finish to 2013 will be a harbinger of a better 2014. This is the season of cargo forecasts. The industry’s major plane builders, Boeing and Airbus, will soon release their cargo and freighter forecasts. Stay tuned for Air Cargo World’s annual forecast, which will be published in our November issue. Shawn McWhorter is among air cargo executives who have confidence in a strong finish to 2013. McWhorter, president of Nippon Cargo Airlines Americas, gave us an advance sum- mary of remarks he was to make at the Traffic Club of Chicago. Managing volatility is paramount for the industry, he says. There are some key realities that the industry needs to face. John W. McCurry “It’s a complicated process to move airfreight,” McWhorter says. “And the fact is that it’s Editor getting more complicated, not less because of additional requirements for safety and securi- ty. Demand is volatile and unpredictable. Month-to-month and period-to-period projections cause instability in the whole supply chain.” McWhorter says the industry must come to grips with some myths about how it works with shippers purchasing what they need for each shipment. “It’s a myth that airfreight can be purchased as a commodity,” he says. “There’s a difference between shipping freight on passenger and cargo airlines. I look at it this way: I don’t buy all my groceries from one grocery story. I buy commodity items from a big box store, but pro- duce from the farmer’s market, which is more expensive.” McWhorter is also bullish about the future of freighters. He takes issue with one industry consultant who says passenger belly capacity will replace most freighters. “Basically, freighters have carried 60 percent of airfreight over the last several years,” Mc- Whorter says. “We will continue to need freighters.” McWhorter also doesn’t believe there is a substantial modal shift from airfreight to ocean- freight. He says the reality is it’s two different products. He notes that some marginal airfreight cargo is being carried via oceanfreight, but that will return to airfreight when rates go down. So what is the solution? McWhorter says shippers need to take a longer-term view than just submitting 90-day RFPs. He says that is not an effective way to buy airfreight and in the short term causes instability. “The financial risk has to be shared,” McWhorter says. “Some forwarders are willing to buy large blocks of capacity so they can get a stable rate. Some insisted on getting market spots month-to-month. This lack of willingness to take risk is causing instability.” He believes there is a lot of airfreight strength in the U.S. and Asia. Demand is strong com- ing out of Asia with new technology products. “A lot of carriers have reduced capacity, and that will tighten the market,” McWhorter says. “We have put additional capacity out there. We are already sold out for the year and will have a good peak season, both out of Asia and exports from the U.S. as well.” So what’s the outlook from airfreight forwarders? Here’s how Brandon Fried, executive director of the Airforwarders Association, sees it: “While volumes hit bottom and we’re now seeing glimmers of modest growth, recent carrier rate actions coupled with the higher costs associated with new regulatory initiatives risk derailing these tepid gains.” 4 OCTOBER 2013 ACW 27937 CAG F1 Air Cargo World_P_OK.ai 1 03/09/2013 13:17 EUROPwoE r ld ASIAn e w MIDDLsE EAST AFRICA AMERICAS Magdeburg Airport expanding cargo facilities agdeburg Cochstedt Interna- tional Airport, in Germany’s MSaxony Anhalt region, has begun construction of a 9,000-sq.-m. (96,930-sq.-ft.) air-side cargo ware- housing facility, including a state-of-the art 2,250-sq.-m. (24,232-sq.-ft.) perish- ables center. Phase one of the project is sched- Through Lufthansa Cargo’s joint venture with DHL Express to create AeroLogic, the uled for opening during the fourth carrier now has regular weekend access to AeroLogic’s fleet of B777 freighters. quarter of 2013 and will complement Magdeburg’s existing airport facili- ties which include a 3,100 x 45 me- ter runway and a fully unrestricted 24 hour operating license. Magdeburg is Charter and scheduled formally registered on the EU KCRAD database as a known consignor. cargo carriers pair up he impending arrival of its its two oldest MD-11Fs will be pen- first B777F heralds a new sioned off when the airline receives freighter era for Lufthansa its two early B777F arrivals. Cargo. But it also confronts It raises the question as to whether Tthe German carrier with something of LH Cargo has flipped the coin and a dilemma. decided to degrade its freighter fleet Magdeburg Cochstedt International The first aircraft out of an order for on a one-for-one basis as each new Airport is building a cargo warehouse. five B777Fs is due to touch down at B777F is embedded.