Vol. 11 No. 13                                 #INTHEAIREVERYWHERE                                           Thursday February 7, 2013


Board of Directors of the Air Cargo Club Germany—left to right are Bettina Hickler, Erwin Maruhn,
Dr.-Ing. Henry Frye, Stephan Haltmayer and Winfried Hartmann.

ircargo Deutschland (ACD), the age old organized air cargo club based at Frankfurt Airport, will meet in earnest on February 12 at 1600 hours at FRA’s LSG Sky Chefs.
The subject is cargo security, as the looming deadline of March 25, 2013, marks the day that will change the way business is conducted.
     In a world where timing is often everything, the ACD gathering will play against European Union security directives, which demand this final deadline for member states’ shippers to be certified known shippers.
     That also means that in a little over one month from now, air cargo from all other shippers will require exacting and cost-intensive security inspections prior to being allowed onboard aircraft.
     Lufthansa wrote the book on this subject on March 5, 2012, in its 5th Security Conference in Frankfurt.
     We don’t know why ACD is not featuring “Hands on Harald” Zelinski Lufthansa Cargo Chief of Security and Environmental Management at a time that would seem to demand all hands on deck; he knows and understands this subject better than anybody.
     But with an all-star panel that includes some smart and dedicated people, including Marco Jentsch, representative of the LBA (German Federal Aviation Administration) the ACD will certainly leverage what has been said and attempt to move the marble toward greater understanding of what needs to be done.
     In the end, at the very least the meeting should serve to allow a fair handicapping of the odds, whether or not Euro air cargo stakeholders are ready for March 25th.
     Given what is at stake, this ACD gathering affords some urgency and could be the most important meeting of this venerable organization in some years.
Geoffrey




Oliver Evans videoOliver Evans
Chief Cargo Officer
Swiss WorldCargo

Achim Martinka videoAchim Martinka
Vice President The Americas
Lufthansa Cargo

 

epressed air freight rates look set to continue impacting the attractiveness of sea-air shipment solutions from Asia into Europe next year, according to leading providers.
“Customers who are already using sea-air services are likely to continue to do so,” said Alwyn Mendonca, Managing Director of GAC Hong Kong. “Nevertheless, we are not optimistic that sea-air will pick up soon unless the air freight market and the end-to-end airfreight rates grow to the same levels as 2010."

      The sea-air model combines the speed of air with the lower cost of ocean shipping for volumetric cargoes, although forwarders are also now pushing the lower environmental impact of the solution in comparison to direct air.
     Sea-air hubs have been developed where both container shipping and airport hubs are in close proximity, and where the ease of moving between modes is eased by cooperative customs, inspections regimes, and easy access to bonded storage. Key centers on the Asia to Europe route include Dubai, Hong Kong, Kuala Lumpur, Singapore, and Incheon. However, demand for cargo movements from Asia to Europe has fallen across all modes this year and this has been reflected in volumes handled at many of these hubs.
     “Sea-air via Dubai has been pretty slow all year and especially from the key areas of Hong Kong and mainland China,” said Robert Taylor, Assistant General of Manager Modern Freight Company, a sea-air specialist with extensive warehousing and logistics capabilities in Dubai.
     “The biggest issue we are faced with is the excess space available with the airlines as this is keeping the rates very low, hence clients are preferring to book direct air freight over the sea-air model. Unless the carriers start pulling additional capacity from the market we don’t see much improvement in the near term.”
     However, he said that some clients with volumetric cargo still preferred to use Dubai as a hub due to the competiveness of the rates available and the direct connections available by air to major business centers across Europe. “In addition, with the opening of new destinations by the major Middle East carriers to places like South America and Africa we remain positive it will only be a matter of time before the we see volumes rising again,” he added.
     He said volumes could also rise if ocean freight rates rose. “That is a contributing factor, however to what degree I couldn’t say as we are really competing with direct air,” he added.

     Gary Phelps, Director- Air Products at US-based 3PL BDP International, is more optimistic, believing there is ample scope for sea-air volumes to grow next year. “We’re seeing increased activity and we expect more in the future,” he said. “It is also a viable option for the USEC labor dispute.”
     Phelps explained that even though the market trended downwards year-on-year in 2012, air and ocean freight rates from Asia to Europe and the Middle East would increase in 2013, reducing the differential between pure ocean and sea-air for marginal shippers.
     “I think the air and ocean market is at its bottom now and when it comes back up there will be a resurgence in sea-air,” he said.
     “Air rates need to be at a certain level for sea-air to work, but in 2012 both ocean and air rates were depressed. I think sea-air will come back into play for many people in 2013.”
Sky King



angkok Flight Services is investing in cutting edge handling and shipper visibility technology to boost its competitiveness against rivals at Suvarnabhumi Airport and other regional hubs.
The joint venture between Worldwide Flight Services (WFS) and Bangkok Airways recently finished an investment of $6 million to upgrade its cargo terminal. Part of the investment includes a new automated import storage and retrieval planning system for imports that incorporates a new small parcel system. Handheld terminals for imports and export services have also been introduced so shippers can see their cargo being handled in real-time.
     Upgrades to picking software as part of BFS APPS—a portal to BFS Systems and the company’s in-house Intranet—are also helping improve transparency, and BFS is now taking a maximum 25 minutes from receiving an order for collection to delivery to the dock, with an average of 12-13 minutes.
     “The customer can now watch the whole process in real-time,” said Stewart Sinclair, (right) Senior Vice President Asia and Managing Director of BFS.
     “By investing in the development of these in-house products we can maximize the efficiency and effectiveness of equipment and resources to achieve very high levels of service delivery and also to enhance productivity to keep our costs down.
     “All of our systems run in real time, which allows us to report accurately on our KPIs at any time of day.
     “We’re also buying new x-ray machines. The upgrade to dual view to enable scanning from above and the side allows for a wider tunnel, so we will be able to put more freight in at one time, which speeds operations. This will be ready by mid-year.”
     Overall, the new investments will take capacity at the terminal to 500,000 tons per annum.
     “Last year we were at 90 percent capacity so we need the extra room,” said Sinclair. “This will give us another 3-4 years of growth.
     “After that we can squeeze a bit more out of the facility, but we have asked the Airport Authority for adjacent land so we can extend next to our existing facility. We are going through that process now.”
     Last year BFS increased its market share of the cargo ground handling market at Suvarnabhumi to 46 percent, and Sinclair believes more progress can be made.
     He said BFS imports rise 25 percent and exports 8 percent year-on-year during 2012.
     “It ended up being a good a year for us with the 360,000 tons we handled representing an overall year-on-year increase of 12 percent for us.”
     Part of the increase versus 2011 was linked to restocking following the floods, which decimated Thai industry in the second half of 2011. This helped boost imports, a trend that was supplemented by an increase in intra-Asia cargo movements, which also tends to be more heavily import-reliant with the automotive sector, one of Thailand’s key industries, to the fore.
     Sinclair said he was “cautiously optimistic” for 2013.
     “2012 was good, but lots of this was restocking after floods. We expect a more normal year of 5-6 percent organic growth in 2013.
     “We have a good mix of cargo in terms of 49 airlines and carriers and don’t expect a huge change in terms of new entrants, we just expect organic growth across the region.”
     He said feedback from airlines suggested that rates had stabilized and carriers were getting adequate yields.
     “We’re not seeing a massive spike, but we’re not hearing complaints either,” he added.
     “We also have a run–up to Chinese New Year which will boost demand, but this will be countered by a fall-off afterwards.”
      The WFS Group company has also been doing its bit for the local community. On February 8 the third annual BFS Cargo Awards Gala Dinner will be held to raise money for the Foundation for Slum Child Care Under Royal Patronage (FSCC). So far BFS has helped raise $150,000 for the charity, which helps kids under the age of 5 that live in Thai slums.
     “Last year’s donation helped us to buy land needed to build a new daycare facility for the slum community near Suvarnabhumi airport,” said David Ambridge, General Manager for Cargo at BFS.
     “Once built, the children will be given a new chance to grow and mature into healthy, happy citizens in a cleaner and safer environment.”
Sky King

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