Vol. 9 No. 9                                                              WE COVER THE WORLD                                                 Tuesday January 19, 2010

What Will Happen In 2010?
Part Deux

     Once again the best and brightest in air cargo jump into the breach, go out on a limb and generally share without reservation (or compensation) a bird's eye view of the new year and decade just begun, up front and personal and unvarnished.
     Everybody wants to know what to expect and so this series continues offering you an opportunity to contribute your thoughts around a simple question:
     “What Will Happen in 2010? Write to me geoffrey@aircargonews.com and you will be included.
     Best of all the whole world of air cargo will share your view.

 

Jim McKeon
Vice President Cargo
Continental Airlines


FT:   What is going to happen in 2010?
JM:   Well, as far as 2010, who really knows?
     I ask the question frequently of customers and the best I can get is cautious optimism.
     No one really seems to want to project beyond the first half of the year.
     Can't say I blame them.
     Most everyone holds back because of the employment picture.
     The consensus is growth for first two quarters just because last year's numbers were so bad.
FT:   How successful have your initiatives from 2009 been?
JM:   Our specialty sales initiatives have helped.
     The areas of focus have been COSecure, Climate Secure and of course PetSafe.
     Success has also been realized by working in the old standard arena of the "next ten days" business cycle.
     While we all like to work on those business commitments that are on the long-term horizon, we also have to focus on the here and now and what we can effectively compete for in the upcoming week.
FT:   What can/should everyone in air cargo do to make the industry better?
JM:   While we are concerned about climbing out of the recession we need as an industry to make sure we keep focused on the 100% screening demands of air cargo effective on Aug 3, 2010.The more customers we get enrolled in the CCSP the better off we all will be.”

Dirk Steiger
CEO
Aviainform Consulting GmbH
Frankfurt Germany


FT:   What is going to happen in 2010?
DS:  Even if business continues to normalize we do not expect a full recovery to previously already achieved figures. However, with a decent growth rate of 3% over 2009, European air freight providers will likely have a better business climate throughout 2010.
FT:   How successful have your initiatives from 2009 been?
DS:  Like most of our clients we’ve had to adjust our cost structure radically, which unfortunately included the redundancy of some staff members.
     On the other hand we have been able to sign up some new accounts, which will help us to recover from the 2009 slowdown of sales.
FT:   What are some things you are doing differently than before the financial crises?
DS:  Like other service-driven businesses our largest single cost factor is labour. But as labour legislation is complex in Germany we will continue to turn fixed into variable costs.
     We all need to work much harder than before to earn money. And it doesn’t matter where you are located and which role you fulfil in the air cargo chain.
FT:   What can/should everyone in air cargo do to make the industry better?
DS:  We have to realize that we are not in competition with ocean freight rather than being a different service at different rates and costs.
     Both, air and ocean are complementary to each other! Put reliability as your priority No 1 and be honest to your clients / service partners. Think of what you can do to increase your business while at the same time reduce emission and make the planet greener.

Aleks Popovich:
Senior Vice President for Industry Distribution
and Financial Services.
IATA


FT:   What are your priorities for 2010?
AP:  “1. Protect the air cargo industry’s money.
     Over USD$28 billion of the industry's money flows through our CASS system and we must continue to ensure that this money is protected despite the pressures of the current recession on airlines, agents, and banks. With a CASS default rate of less than 0.02%, the message is that we are sustaining the quality of our CASS operation. During 2010 we expect to have passed the 100 mark in new CASS operations (i.e. exports, imports, domestics), with most of these having been delivered in the last five years.
2. Deliver air cargo supply chain transformation.
     We aim to deliver our e-freight mandate from the IATA Board of Governors by implementing the e-freight standard in a total of 44 countries / locations and 76 airports.
     We also aim to have piloted Secure Freight in Malaysia and extended to other pilot locations.
3. Deliver air cargo supply chain standards.
     A major push during 2009 as part of e-freight, has been implementing standards to eliminate the need for the paper Air WayBill. This work is the result of a strong FIATA - IATA cooperative effort, and the e-AWB has been recently endorsed as an IATA-recommended practice.
     We are currently awaiting U.S. Department of Transportation approval of the e-AWB Model Agreement. During 2010, as part of our e-freight program we aim to promote industry-wide implementation of the e-AWB. We will also continue to extend XML standards to apply to more e-freight documents.
During 2010 we plan to extend our e-freight standard operating process to include Secure Freight.
FT:   New initiatives?
AP:  While we certainly need to focus what is already on our plate, we are also looking for new ways to drive further industry benefit. A potential area of opportunity may be simplifying the business of industry air cargo tariff distribution.
FT:   Please describe agenda and importance of IATA World Cargo Symposium March 8-11 2010 Vancouver March 8-12 ?
AP:  The theme of the fourth IATA World Cargo Symposium will be: "Bounce Back - Rebuild for the Future".
     The agenda will include a plenary focusing on assessing when and how our industry will bounce back, followed by 14 topical tracks covering: Cargo Executive Summit, Economic Outlook, e-freight, Quality (Cargo 2000), Secure Freight, Customs, GHAs, Distribution, Revenue Optimization, Environment, Dangerous Goods, Air Mail, Time and Temperature, and ULD Management.
FT:   Why participate?
AP:  Well it's one cargo event in our industry where commitments are made to improve the state of the air cargo industry, and promises are delivered for reporting at the following year's event. If you want something to happen for the good of the industry - then be there and make your challenge. You could find it on the list of IATA Cargo actions for 2010.
      Scanning the wide range of our topical tracks, you can be sure we have carefully designed the World Cargo Symposium to respond to the needs of "all classes" of air cargo, including shipper, forwarder, carrier, GSA or customs operation with roles from these organizations ranging from executive to operational subject matter.”

Dave Brooks
President
American Airlines Cargo


FT:   What is going to happen in 2010?
DB:  Plenty.
     100% screening on passenger aircraft is probably at the top of the list. And we’ll likely see TSA reaction to the Christmas passenger security incident in the air cargo environment. While August 1, 2010 is the magic date for the 100% threshold, the next important date is August 2, 2010—that’s when the industry will start the deafening drumbeat to eliminate the “known shipper” rule.
     On the commercial side, business is already starting to pick up, but we’re looking at three years to recover trends from prior years.
FT:   How successful have your initiatives from 2009 been?
DB:  I’d give us a B+/A-. Service levels at new heights—our luscious new Expedite TC product successfully launched, gains with our reengineering project Everest, new Customer Service Centers at key gateways—and we proudly saw our own Mark Najarian tapped to run AA’s entire operation at JFK.
FT:   What are some things you are doing differently than before the financial crises?
DB:  Eating more macaroni and cheese.
FT:   What can/should everyone in air cargo do to make the industry better?
DB:  Listen to customers more. Then act on what they tell you.

Barry Hansen
Flying Tigers Line
Air Cargo Consultant (Retired)


I think that the trend will be more global manufacturer direct to consumer shipping, good for the integrators.
Why should an electronics store stock huge numbers of flat screen TV's?
     Take the order and have a time definite delivery to the consumer’s home with installation.
     It is being done now and will expand as a logistics service.
     In the 1970's Flying Tigers ran a study that showed that 75% of what they would transport in five years time hadn't been invented yet.
     Concept is still valid with much condensed time frame.

Jack Lampinski
Cargo Manager- the Americas
Swiss World Cargo

FT:   What is going to happen in 2010?
JL:   Considering the substantial improvement in demand that we have seen during the last quarter of 2009 I think that 2010 holds some promise. How long it takes the industry to get back to the levels of 2007 and early 2008 are anyone’s guess, but we will surely see much better results than last year.
      Cargo security will certainly be a hot topic this year and the potential impact of the TSA directive, mandating 100% screening of belly cargo on international flights in August, may very well be underestimated. The TSA’s allowance of multiple options in the way the current volume of cargo being screened by carriers and handling companies is being measured has not helped the industry. These measuring options have produced commercial inequities between carriers and, in my opinion, have also resulted in less international cargo actually being screened now than was the case prior to the directive. All of this has also created a high level of complacency throughout the logistics chain. It will all come to an end in August when the current loopholes are removed and the playing field is leveled. 100% screening, while an absolute necessity, will clearly result in increased costs and added complexity at every level of the supply chain.
FT:   How successful have your initiatives from 2009 been?
JL:   After falling off a cliff in October of 2008, throughout 2009 we paid a lot of attention to developments in the markets and we continually challenged and reassessed the way we managed our business. We ended up sticking to our core strategy, focusing on special products and on smaller sensitive shipments from customers with high service requirements. We believe that we made the right decision. There was much less volume decline in special products during the crisis than there was with general cargo and consolidation business. The yields in the special products sector also remained close to 2008 levels. While we moved our pricing in reaction to lower demand, early on in 2009 the market rates for consolidation and non-critical general cargo shipments fell below our production costs.
      We walked away from business that no longer made sense and we chose not to enter the war with carriers fighting over loss making traffic. This clearly hurt our load factors but also resulted in lower handling costs.       At Swiss WorldCargo, contribution is king and that is how we measure our success.
      Not really knowing how long the recession was going to last, we also took steps to lower our operating costs, or at least make sure that we kept them in check. In many cases we renegotiated contracts with our suppliers, especially those having a business that is impacted by our volumes. We looked for ways to lower their costs, and ultimately lower our costs, so that we were able to be more competitive in the market.
      In order to prevent layoffs during the downturn, we also took some temporary cost cutting measures on the personnel side.
      In the Americas, we took different actions in different countries depending on local labor laws, and with the clear understanding that the measures we took could not result in lower service levels for our customers.       While this was a little painful for many, it preserved jobs, showed solidarity within the company and played a small part in ensuring the profitability of SWISS.
      While the passenger side of our business was not as heavily impacted as the cargo side, SWISS also took measures to reduced costs during the crisis. In many gateways, daily flights were reduced by one or two frequencies a week. As with most belly carriers, oftentimes the needs of the passenger department are not in line with those of cargo. Nonetheless, our customers that required daily uplift were very understanding and, in near all cases, they adjusted production to match our schedule. Most of the reduced frequencies have now been restored and SWISS has also recently announced that on June 2nd we will start a new service from Zurich to San Francisco.
      All of the above initiatives seem to have paid off, as market intelligence indicates that although far from our expectations when originally planning the 2009 budget, SWISS and Swiss WorldCargo, enjoy much better results than the majority of our competitors.
FT:   What are some things you are doing differently than before the financial crises?
JL:   Not really knowing exactly how much the business will rebound during 2010, more than doing things differently, we are doing things with a higher degree of urgency and intensity.
      We try to be creative by providing products with service levels and reliability that cannot be matched by our competitors. An example is a recently introduced 60 minute tail-to-tail transfer option in Zurich for our express product.
      Throughout all divisions of SWISS we have adapted the Japanese Kaizen philosophy for improvement.       During 2009 we held several one week cargo related workshops attended by a cross section of our employees from all over the world, as well as staff from our vendors and other members of the Lufthansa Cargo Group.
      In 2010, several additional workshops are planned.
      While this requires additional expense, we have found that, without exception, the exercises have produced cost savings as well as improved service to our customers.
      We are currently sending members of our management team along with key specialists within our organization to observe and analyze processes in gateways across our network. The objective of the visits is to identify best practices, improve efficiencies, streamline processes, and standardize organizational setups to whatever extent that may be possible.
      The above said, we realize that to remain successful we have to continue to keep getting better at everything we do, but at a much faster pace than in the past.
FT:   What can/should everyone in air cargo do to make the industry better?
JL:   Regulatory agencies need to confer more with user groups and industry experts before implementing programs and rules that make little sense, are impossible to enforce, produce inequities between organizations and do not deliver the intended results. Although I am quite critical, I also believe that we are finally seeing some progress in this area.
      Shippers need to understand that forwarders have to be paid a reasonable amount for their value added services. Forwarders need to understand that continually pressuring carriers to transport goods at or below costs is not a sustainable long-term practice. It will produce more failures, more industry consolidation, fewer choices and much higher prices. At least those are the results that would be expected in a normal industry, and I admit that the airline business is far from normal. There seems to be no end to start-ups that can somehow find investors, buy an airplane and fly it to New York.
      Carriers have to become more conscious of their costs and price their services accordingly (that’s a polite way of saying that).
      I guess that if the majority of carriers were following this practice, the airline business wouldn’t have lost ten or eleven billion dollars in 2009. Let’s hope that improved conditions expected during 2010 will bring a little pricing sensibility to the market. I’ll keep my fingers crossed but won’t bet on it!

Gordon Feller
Resident Thinker
Air Cargo News FlyingTypers


Air Cargo will see a further concentration of freight flows on a limited number of cargo gateways in 2010.
     The share of Top 30 airports in regard to worldwide handling volume of air freight, accounting for over 50% in the past years, will further increase.
     The consolidation trend has been intensified by the recent recession.
     Declining demand and yield forced carriers to optimize and adjust their networks in regard to capacity and costs.
     Reducing off-HUB capacities where load factors are lower is first choice for cutbacks as they are less important for a functional network.
     Their discontinuation will hurt operation only marginally, but may reduce costs significantly.
     A further bundling of freight flows will generate economies of density and scale yielding lower cost per unit.
     Due to decreasing off-HUB operation and an increasing bundling of cargo flows even more freight will be channeled through cargo gateways of both, air carriers and freight forwarders.
     With respect to oil prices, in the first half of 2010 a range between USD$70 and USD$100 is expected.
     In the mid-term, increasing scarcity due to deterioration of inventories and the absence of regular supply adjustment with increasing capacity utilization by OPEC countries may lead to oil prices from USD$80 to USD$120 in the second half of 2010 while Fuel Surcharges are likely to rise in lockstep with increasing oil prices.
     And while shippers are becoming “more green” the industry in common should not forget to work on solid solutions of how to reduce their own emissions.
     This challenge will take huge financial commitments (to invest into new equipment, etc.) that require, on the other hand, solid and decent earnings.

Kyle Betterton
VP Cargo
United Airlines


FT:   What is going to happen in 2010?
KB:   We believe we have survived the worst of the global economic recession and expect slow but steady growth in air freight in 2010 in line with IATA’s projections. United Cargo’s total freight miles increased over 19% in the fourth quarter of 2009 compared to a decline of nearly 11% in the third quarter. This volume spike also allowed a welcome improvement in yields after a very challenging period. Some of this was seasonal traffic, of course, but we still believe it represents the first signs of a fundamental recovery.
FT:   How successful have your initiatives from 2009 been?
KB:   United Cargo continues to invest in our customers despite the challenging economic environment.
     One of the most successful investments in our customers is our new Temp Control service.
     After a rigorous 18-month pilot, United Cargo launched Temp Control worldwide in July 2009. United quickly became an industry leader in temperature-controlled shipping due to our 100% operational execution, the strength of our network and widebody capacity, and our best-in-class 24/7 customer service.
In 2010, we are expanding Temp Control to more cities and more customers around the world.
     Another investment we made in our customers was the deployment of our enhanced Issue Resolution Process. Issue resolution is improved through teamwork between a dedicated team focusing 24/7 solely on solving customer issues and “issue owners” in station locations. Customers receive more timely proactive alerts when issues arise, issues are resolved more quickly and customers are updated more frequently with clear definitions of next steps. Using a number of new reports and analytical tools, United Cargo examines every issue to learn why the issue happened and how to prevent a recurrence. To help fill in the revenue gap caused by the global economic downturn, we executed a series of initiatives to improve our share of the U.S. domestic mail market. These proved very successful and United is now #1 among all U.S. passenger carriers in domestic mail market share.
FT:   What are some things you are doing differently than before the financial crises?
KB:   United led the industry in rationalizing capacity with reduced demand in response to the global economic recession. Like many in the industry, we focused on cost containment efforts to allow us to remain viable in the marketplace. Several initiatives to reduce costs and improve profitability were implemented, and we believe these efforts will continue to pay dividends as the industry recovers.
     Also, the crisis underscored the importance of something, which has always been our focus – engaging with and listening to our customers to ensure we are providing the service and the quality they need.
FT:   What can/should everyone in air cargo do to make the industry better?
KB:   First, everyone involved in air cargo must realize the great value and absolute necessity of working together to improve the quality and efficiency of our industry.
     We all recognize that human and economic resources are limited, and when the industry is in “crisis mode” it’s easy to lose focus on initiatives that have a longer-term payoff. Now that the worst is behind us, collaborative projects such as e-freight, Cargo 2000 and efforts to modernize and streamline technology deserve the participation and support of all. These strategies will allow air cargo to emerge even stronger as the global economy recovers.
     Also, our industry faces a huge operational challenge in the execution of the 100% screening mandate in August 2010. We believe that distributing the security requirement across air carriers, forwarders and shippers through the TSA Certified Cargo Screening Program is the best way to meet this formidable challenge. As volumes continue to increase, maximum participation and support of the CCSP is crucial to our industry’s ability to meet the 100% mandate without a negative impact on service.

Lisa Schoppa
President
Animal Transport Association

FT:   What is going to happen in 2010?
LS:   The ATA hired a new management firm last year and we have some great plans already underway.
     The Drohan Management Group in Reston, VA is overseeing our day-to-day duties and their in-house graphics and technology teams have already made a huge impact on us.
     We’ve just launched our “new look / logo” (December) to our membership group and we’re currently working on a new website design.
     Our newly renovated site will also have a new address, which will be much easier to remember!
     The new site (www.animaltransportationassociation.com) will launch by the end of February 2010 and should be much more user-friendly.
     It will also be freshly updated and will include several new pieces of information.
     The ATA’s mission is to “improve the welfare of animals in transport” and we do that through our members’ and industry’s research, education and training.
     Our Annual Conference is scheduled in Fort Lauderdale, Florida this year from May 9 -12 at the Marriott Harbor Beach Hotel.
     The venue is absolutely gorgeous (16 private acres of beachfront, beautiful grounds, and a $25 million USD renovation was just completed) and we have a great group of speakers lined up in 3 separate track sessions based on species.
     The ATA Annual Conference moves around the world each year, so we’re in the USA this year but have already confirmed early May 2011 in Brussels and 2012 (April/May time frame) we are scheduled to hold our conference in Shanghai.
     ATA’s Education Committee has several webinars planned for the year. The next one is coming up in March 2010 and will focus on “Fitness for Transport”. Experts will present valuable information to participants in knowing what signs to watch for in being fit for transport. This webinar is free to participate in and attendees will have the opportunity to apply for membership to the ATA and the first year’s dues will be waived. But you must participate in the webinar! Watch our website (current site is http://www.aata-animaltransport.org/) for registration details.
     In conjunction with our new website launch, our Education Committee is also working with experts in every mode of transport and all species on “Best Practices” guides for transporting animals.
     These guides will be available to members only at our new website along with other industry white papers, research studies, etc. We are really working to provide great benefits to our members this year. And I think that our members will be very pleased with our progress! We hope that more of our industry will join us and support our worldwide goal of safe and humane transport of all animals. ATA will continue to make an impact in the world of animal transport as we reach out more and more to industries such as Zoological and Exotics (zoo animals, birds, etc.), Equine (race horses, polo ponies, breed stock, slaughter horses, etc.) along with Livestock (includes cattle, sheep, swine, poultry, etc.), Laboratory/Research animals (mice, rabbits, primates, etc.) Companion Animals (dogs and cats) as well as Fish, Reptiles, Mammals, etc.
FT:   How successful have your initiatives from 2009 been?
LS:   We set some rather large goals for ourselves in 2009 and when the global recession hit, we were a bit nervous about accomplishing those goals. However, we can look back now and see how successful our year has been. Our normal conference schedule is to hold a “North American” conference followed by a “European” location and every third year we try to go to some location in the world where we know that animal transport is important and where we think we can reach new members, new speakers, etc. And 2009 was just such a year. We planned for Sydney, Australia (about 3 years in advance) for May 2009. And after the recession hit, we were hoping to break even on conference exhibits because we knew that attracting our American and European members down under could be a challenge because of the expense. After it was all completed in May 2009, we had a very good attendance and had a profitable conference. Our Australian members did a great job of pulling together wonderful speakers and presenters and the venue was gorgeous. Our Awards Dinner was held at the Sydney Opera House on the harbor, which was only a few blocks walking distance from our hotel.
     Additionally, the organization has continued to grow and evolve and we changed management companies.
     We were very impressed with the Drohan Management Group in Reston, Virginia and the transition to them in August 2009 couldn’t have gone better. We were prepared for upsets, mistakes and little disasters but nothing like that happened. It was absolutely seamless. And now we are poised to grow with them and make vast improvements in our professional image. The new look/logo and new website are just the tips of the iceberg.
FT:   What are some things you are doing differently than before the financial crises?
LS:   Our Board of Directors meetings have evolved to 3 per year (from 4) and we are allowing them to participate via webinar in 2 of the 3 (only 1 meeting per year must be in person).
     Travel expense and time away from the workplace is a limited resource at many companies, so we are being respectful of their first priorities. Additionally, the Board has relooked at the annual operating budget and we’re working to ensure that we are good stewards of our member’s monies. We have made some cutbacks to ensure that we can remain solvent for many years. This Association nearly went broke a few years ago, and several past Board members and Past Presidents literally pulled money out of their own pockets to pay the expenses. We feel a huge obligation to these men and women to keep the finances in order and to ensure that our members will continue to have a voice in the years to come! Our Treasurer, Chris Santarelli from Mersant International in NYC is a wonderful asset to our group and is doing a fantastic job ensuring our Board understands where every penny is coming from and where it’s being spent, so we can make wise decisions!
     We’ve been able to negotiate for an excellent rate for our Annual Conference hotel. That Marriott Harbor Beach hotel normally has rates that run from $310 - $550 USD per night has agreed to our rate of $184 per night. It’s a luxurious resort and spa destination. The surrounding area has a lot to offer but honestly, you won’t need to leave the hotel property! This is the right year to attend our conference!
FT:   What can/should everyone in air cargo do to make the industry better?
LS:   There are some very serious concerns in the animal transport industry right now.
First and foremost, IATA’s Live Animal Committee (LAPB) is putting more of a focus on the transport of laboratory and research animals at the request of the OIE.
     Because of the fear of animal activism around the world, many airlines have banned the transport of animals. And this has put a huge burden on the industry and the inability to move these animals between institutions for continued research or just to ensure viable breeding stock/colonies. These animals are necessary in cancer research, finding cures for other diseases such as H1N1, diabetes, etc., and they play an important role in animal health research too. Curing or preventing animal diseases is essential to many of the world’s poor and emerging countries that struggle to raise food for their citizens.
     As a people, we need to use animal models only when absolutely necessary and we need to ensure they are treated humanely and safely. In transport, it is much safer and humane to place an animal on a 4-hour cross-country flight than to drive the animals over the road for days because of an airline embargo. Or to continue to increase the cost of researching new drugs by forcing pharmaceutical companies to charter aircraft around the world to move a few animals because the scheduled carriers have embargoed them.      Research shows that an overwhelming majority of the American population is in favor of using animals ethically as research subjects and only a small militant fragment of our society has caused such embargoes.
Airlines must realize that their decisions to “stay neutral” is not actually being realized. Their decisions ‘not to participate’ are detrimental to the welfare of these animals and eventually to people around the world.
     Food supplies in poor nations depend on the advances being made in Veterinarian medicine and research, and populations around the world are dependent on research to help prevent and stop pandemics such as the H1N1 flu, bird flu, etc.
     Additionally, employing good and humane practices is vital to improving animal transport. Employee training programs should be part of every company’s daily routine and there are plenty of companies who have experience in these programs.
     A good example in the world is ATA member, LiveCorp Australia. They developed, paid for and implemented training for the longshoremen that work the docks in the Middle East who unload their large ships full of sheep and other livestock.
     They knew this was a vital and the weakest link to the safe movement of their animals, so they took on the mission to improve this area. All of us should look for ways to improve the logistics chain. In addition to being fast, the logistics chain has to be safe and humane when animals are involved. ATA members around the world are working hard to ensure this is the case every time.

James Fernandez
Vice President, Sales and Marketing
CHAMP Cargosystems


FT:   What is going to happen in 2010?
JF:   Caution and uncertainty will remain throughout 2010 and tight corporate governance will continue to be the mitigation.
     The impact of upward adjustments in interest rates on consumer spending will have a greater impact on consumer price sensitivity and hence the air cargo market in particular.
     If yields cannot be raised and trade lane sensitivity continues to be volatile it is likely that there will be further airline/cargo operator consolidation.
     I believe 2010 will be a year of greater consumer austerity than 2009.
FT:   How successful have your initiatives from 2009 been?
JF:   The investment in Cargospot has demonstrated the cost efficiencies available to our customers through the use of a proven new generation cargosystem.
     In particular, being able to access management information in a more useable and timely manner is critical to our customers’ ability to make more effective commercial decisions.
     CHAMP Cargosystems maintained tight commercial disciplines throughout and through both its community centric commercial model and globally distributed customer base.
     As such, CHAMP is in a good position to weather the commercial storm and continue to invest in its products and services.
     CHAMP has extended our self-service capabilities and electronic data exchange services to allow our customers to further refine their business processes and reduce cost.
     Finnair is a great example of an organization adapting itself to the challenging economic conditions by improving its own processes and consolidating its suppliers to reduce cost.
     CHAMP now has a portfolio that spans the end-to-end cargo cycle, allowing our customers and their partners to improve processes while saving costs.
     The CHAMP portfolio allows partners to use the same platform to share information more accurately, faster and at a more detailed level than ever before.
FT:   What are some things you are doing differently than before the financial crises?
JF:   We have introduced further commercial governance to track performance against target and continue to look at mechanisms for improving both efficiency and effectiveness. 2009 was particularly critical in growing organically our own off-shore development capability, allowing us to continue to develop our products more cost effectively. Fortunately CHAMP is dedicated to the air cargo market and as such remains focused on a long-term development and community partnership strategy. At times of crisis a clear vision, strategy and execution is critical.
FT:   What can/should everyone in air cargo do to make the industry better?
JF:   Less talk and more focused action is required. Having clarity of vision, a pragmatic approach to execution of strategy and a solid understanding of how and where to realize benefits is essential.
Decision making should be quick and decisive, based on good data and clarity of purpose and competitive advantage.
     Decisions should also recognize that we are an interdependent community and as such need to fight the crisis with an understanding of the air freight "food chain". There should also be recognition that greater commonality in core processes will be of wider benefit to the industry being able to interoperate at greater cost efficiency.

D.J. Ghosh
President
American Friendship World Air Cargo Corporation

FT:   FT:What is going to happen in 2010?
DJG:   The economy will definitely recover, and a lot of the growth will be fuelled by the economies of China, India and Brazil.
FT:   How successful have your initiatives from 2009 been?
DJG:   Since we are gradually attempting to build our framework for a world class cargo airline according to our research and the industry’s best practices, our initiatives will be successful in the very long term.
     We will patiently build our business case and display it for the world to see on our website at www.american-friendship.com.
FT:   What are some things you are doing differently than before the
financial crises?
DJG:    We are definitely operating more conservatively, keeping debt, overheads, and staffing levels very low; outsourcing as much as possible, and concentrating on our core competencies. We continue to spend significant sums, sourcing the globe for the best ideas, technologies and industry practices.
FT:   What can/should everyone in air cargo do to make the industry better?
DJG:   Everybody in the industry should train themselves to adopt a very long term outlook for the air cargo industry, if there is to be any permanent change in the way we do business.
     The “VERY LONG TERM” outlook should start with the very large shippers, who should provide the logistics suppliers with very long term contracts to give them the stability to both innovate as well as create new platforms for cost reduction.
     The biggest problem with this industry is that everybody operates on short term contracts, which fosters a “paycheck to paycheck” mentality.


Udo Preissner
Frankfurt Hahn Airport


Ralf Auslaender
leisure Cargo

Guy Fox, MBA, LCB
President & CEO
Guy Fox & Associates
President Los Angeles Air Cargo Association


In the year 2009, everyone was trying to see where the dynamics were taking them and in most cases it has been a reaction, as things happen, but that has always been the case in air cargo.
     It has indeed been a tough year with lack of business and lay offs, but it is also an opportunity to make strategic plans for the future.
     We have seen reduced capacity in all modes of transportation, which has led to consolidation of services.
     Most of the freighters for air cargo are sitting in a desert environment waiting for something to happen, but the curve seems to be just starting up and perhaps some will come back into service?
     Consumers have not yet come back to grips in buying, as they do not have the disposable income they once enjoyed. Now it is hand to mouth and just buying the essentials.
     Inventories have been depleted and the big chain stores are using the container ships as their warehouses while in transit and doing immediate distribution on arrival.
     In the past, where a big chain store had an item that was coming sea freight and the manufacturer was late, and because they had an ad breaking, they would switch to air cargo, but in today's environment, they give a rain check.
     The recovery is indeed taking place and consumers will indeed start their buying process again and we need to be prepared.
     Airlines have reduced capacity and are only taking belly loads.
     They are contracting out the space and the contractors are selling for double the price.
     There are alliances, but that may not be the answer going forward in certain respects.
     I would suggest that in the future, 2010 and forward, that the airlines need to have a "Freighter Service" where all airlines could pool their freight for a single load.
     I would call the venture "White Freighter" with no logo so that all of the airlines could use their own air waybills and customer service, but they would all consolidate their freight on a single aircraft.
     The airlines could collect their own freight and delivery to the "Carrier" and then pick up their own freight at destination.
     If you think about it, it is a viable alternative and cost saving device.
     This way you would also not have the backlog that was experienced in Asia this past Christmas as the "carrier" could add capacity.
     Perhaps another thing to think about, and people think I am crazy, but . . . since the airlines in the United States have gone to narrow bodied aircraft and the cargo space is limited, they have switched to trucking for the most part across the USA, so what about "Lighter than Air Vehicles"?
     Say a 400-foot dirigible with a ridged frame, lifting gas of helium, gyrostabilizers, aluminum clad hull, with "bomb bay" doors that would take approx 30 air cargo containers into the infrastructure of the vehicle.
     Take 2 days to go coast-to-coast, fuel efficient, and gets the 60mph trucks off of the road.
     I know it is a wild idea, but so was FedEx.
     The Lighter than Air Vehicles were a part of my MBA Thesis and the "experts" told me I was wrong, but I still believe in the concept.”

Geoffrey


What Will Happen In 2010 Continues

So Long John Boyd

     John Boyd passed away on Jan 12, 2010.
     Johnny was the first President of the Los Angeles Air Cargo Association (LAACA) in 1965 and worked in Air Cargo Sales for American Air Lines.
     His friend Guy Fox remembers:
     “He was a pioneer in the transition of air cargo between prop-driven aircraft and jet-powered aircraft.
     “He also was a founder of the Los Angeles Air Cargo Association along with John Sina (retired from Lufthansa) and Regis Kramer (International Customs Service).
     Being President of the LAACA was and is a big thing.
     “LAACA had their election for President in a back room behind the bar in the old Hyatt Hotel on the corner of Aviation Blvd and Century Blvd (not there any longer), and all of us, young and up and coming people sat out at the bar and waited for the puff of smoke to see who the next President was, (just like being elected Pope).”
     Johnny Boyd set the standard for being the President of the LAACA.
     Ernie Schimmer was also in on the mix as well, behind the scenes, but making things happen.
     Ernie, it should be mentioned still attends LAACA meetings.
     Happy landings to you, dear Johnny Boyd.
     You will not be forgotten in the hangars and runways and cargo business at LAX that will forever whisper your name. (Geoffrey)

 

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