Vol. 11 No. 16                                 #INTHEAIREVERYWHERE                                           Thursday February 14, 2013





nce upon a time he led Delta Cargo.
Then Tony Charaf moved onwards and upwards, continuing his stellar career at Delta Airlines until mid-2012, when he returned once again to the top post in air cargo.
     By any estimate, Mr. Charaf has picked up the baton; there is no looking back.
     Sure, business has been tough, but Tony is quick to tell us that everything is in focus as he innovates Delta’s “Billion Dollar Baby” by putting cargo up where it belongs at the airline.


     “Overall we are pleased with our 2012 performance, despite the challenges we and the rest of the industry faced with regard to yield pressure created by decreasing volumes and excess capacity. In 2012 we generated just under $1 billion in revenue and we expect to modestly increase this in 2013.
     “Delta is running a great airline and operational reliability is essential, not only to our passengers but to our cargo customers as well.
     “The working partnership between Delta Cargo and our Airport Customer Service colleagues, who are responsible for loading and unloading cargo from the aircraft, continues to solidify, which allows for a better-coordinated effort. We made solid gains in our business in 2012, however our work is not done, and we will continue to be highly focused on operational excellence that will enable Delta Cargo to be a stronger competitor within the industry.”


     “It is the people.
     “In the six months that I have been back with Delta Cargo, it has been my privilege to work with an amazing group of people across the division, from the leadership team to our frontline folks, all of whom are extremely dedicated to the success of Delta Cargo and our company.
     “I have had the opportunity to meet and spend time with our folks all over the world, and I have been so impressed with their commitment to taking care of our customers and each other.
     “The incredible Delta Culture, which makes the “Delta Difference,” is very much embodied by our folks. February 14 is our profit sharing day.
     “Profit sharing is our way of thanking the Delta team for all of their efforts in taking great care of our customers, running an excellent operation, and generating top tier financial results.
     “Paul Jacobsen, Delta’s CFO, has told our folks that this is the best check he writes all year.”


     “In 2012 Delta Cargo also made solid inroads related to the e-freight aspect of the business.
     “As measured by IATA, we are an industry leader when it comes to e-Air Waybill adoption.
     “We have consistently partnered with U.S. Customs and Border Patrol on our e-freight initiatives, and last November Delta Cargo marked an historic milestone as we executed the first eAWB for international shipments from our Atlanta operation.
     “The electronic aspect is essential for the cargo industry, and Delta Cargo will continue to champion this effort within Delta and throughout the industry.
     “At the end of the year we also launched a new independent deltacargo.com website that has improved design & navigation, refreshed content, and enhanced shipment tracking. We have met with several of our customers to get their feedback and will continue to do this as we make preparations for our next phase, which will expand the functionality such as booking and customer log-ins for individualized performance reporting. The next phase will be launched in the third quarter of 2013.”

 

 

Two for Air Cargo . . . Tony Charaf, Senior Vice President & Chief Cargo Officer, and Ray Curtis, VP Cargo Sales, are pictured at The International Air Cargo Association Air Cargo Forum last October 2-4 in Atlanta, Georgia.
The duo have toured the system for the past few months and are now moving Delta Cargo to its next chapter.

 


     “We continue to see a shift from air to ocean transport. This is driven by the need to reduce costs throughout the supply chain. Along those lines we also see transit times being extended to gain cost efficiencies.
     “For example: we are now seeing 5-7 day transit as being acceptable on traffic that previously had a 2-4 day transit timeframe.
     “While the rise in fuel prices is forcing some customers to look for more cost-effective methods for transporting their shipments, air cargo remains the shipping mode of choice when time is of the essence or special handling is required.
     “Air cargo will continue to play a vital role in the global economy.
     “There are still high levels of inventory, and as we know many economies in the world continue to struggle to gain momentum, which is impacting business and consumer consumption.”


     “We have to be realistic about the challenges facing the industry, notably the global economies that are still sluggish, including Europe and the U.S., and the negative effects on demand. Nevertheless, we are cautiously optimistic that 2013 will see improving conditions globally, and we hope the second half of the year will present more favorable market conditions.”


     “For 2013 we will continue to have a laser focus on operational reliability and making it easier for our customers to do business with us.
     “We know these are essential to our success.
     “As mentioned, our strengths lies in our people, a great leadership team, and a solid plan going forward.
     “We will continue to spotlight our Atlanta hub, which is our largest and will help us drive systemwide improvement.
     “Metrics are our mantra this year; we will measure our performance in every area and adjust our processes when and where necessary.
     “We will expand the investments we have made in technology, such as developing our deltacargo.com website, and we will continue our efforts to standardize our processes for a more consistent operation. Additionally, we have to listen to our customers and provide the products and services they demand.
     “We will do this via surveys and face-to-face dialogue to get feedback on how we’re doing and how we can do even better.”


     “A key focus we have for this year is to build our premium product portfolio, and we are committed to making the investments necessary to ensure that we have the infrastructure to support the unique needs for transporting these products.
     “This includes pharmaceuticals and perishables such as fruits and vegetables, and enhancing DASH, our small packages express product.
     “And we know that we must serve our customers well when they entrust these high-value shipments to our care, so we will develop the processes and provide our folks the tools that they need to deliver operational excellence.”


     “We really need to see a much greater industry focus and collaboration on e-freight, removing paper from the business. This will have so many positive effects, not only reducing costs, but also improving the accuracy of data and creating faster, more efficient processing. Cargo customers should enjoy the same convenience and ease of use that above-wing airline passengers experience today.”


     “Ongoing cooperation, and more importantly collaboration, by organizations such as IATA, TIACA, and some others is essential to address issues that are critically important to all of us in the industry, such as increasing the development of technology and expanding paperless cargo processing.
     “The cargo industry lags behind the passenger side in terms of documentation and the need for large amounts of paperwork.
     “These industry groups can also support a stronger working relationship between the cargo carriers and the various government regulatory agencies in areas of vital common interest, such as security in the supply chain.”
Geoffrey






The ACD Security Panel—left to right, Thomas Ritter, Senior Manager Logistics for Fujitsu Semiconductor Europe; Marco Jentsch, Leader of LBA Department S3; Bianca Bazant, Managing Director of LFS; Wolfgang Plantholt; Patrik Tschirch, Managing Director LUG and Jan Bender, Head of Foreign Trade Compliance Air & Sea Logistics for Dachser.

t was not bad for a mature air cargo club that will celebrate its 50th anniversary in October: upwards of 120 people attended this February meeting, nearly double the average showing and a representative mix across the industry in terms of both disciplines and age groups. The selection of the topic, coming just six weeks ahead of the European Union directive deadline, seems to have caught people’s attention, whether they are looking for reassurance or belated clarification.
     The format for the event was a panel moderated by Wolfgang Plantholt, a longtime industry insider and independent publicist, and four panelists who represent the regulatory body: a shipper, a cargo handling company, a freight global forwarder, and a cargo security screening service provider. Starting things off, Thomas Ritter, senior manager logistics for Fujitsu Semiconductor Europe shared his experience with the certification program from initial contacts with the LBA (Luftfahrtbundesamt, the German equivalent of the FAA) in 2011 throughout 2012, by which time his company had certified four trainers and successfully passed the mandatory audit. Some of Fujitsu’s largest customers are from the automobile industry and given the high value aspect of these semiconductors, Fujitsu already had a high level of security measures. Mr. Ritter said, “our costs of becoming certified registered shippers were relatively low” given that a solid relevant infrastructure was in place. His was company number 284 on the list of certified registered shippers in Germany.
     From the forwarder perspective, Jan Bender, head of foreign trade compliance air & sea logistics for Dachser remarked that big firms were mostly proactive in obtaining certification, while some looked at balancing security and economics and left it for later, which is always a challenge. Mr. Bender went on to say that “we all share the same responsibility when it comes to security.”
     Bianca Bazant is the managing director of LFS, an air cargo security firm—the equivalent of the U.S. TSA’s Certified Cargo Screening Facilities (CCSF) operating at FRA, HAM, and STR airports. At FRA, LFS has 30 HI-SCAN 180180-2is X-ray cargo inspection machines with tunnel dimensions of 1800 mm (71”) width and 1800 mm (71”) height, capable of screening pallets, and LD-3. 2,000 tons have been processed using integrated processes since installation.

Wolf-Dietrich von Helldorff, President of the Air Cargo Club Deutschland welcomed the attendees and introduced the Certified Shipper Panel.

     As newly minted managing director for LUG, an independent cargo handling company that has been in business for more than 40 years, Patrik Tschirch takes over for an old friend, Wolfgang Korte, who is retiring next month. His expectation is that “an initial wave” will occur at the startup of the new regime. The screening procedures implemented are nearly entirely x-ray based and currently explosive detection canine teams are a small component of the security processes.
     Marco Jentsch is Leader of LBA Department S3, air carrier security programs; he gave a brief overview saying that 1,072 individual locations throughout Germany were certified, 400 applications were being processed at this time, and on site audits conducted by the department were ongoing, all geared up to meet the March 25 deadline. The date actually prompted some back-and-forth as April 29 has also been bandied around as a possible deadline, creating some uncertainty. Mr. Jentsch explained that this was a European Union matter and that March 25 remained the official date. As on previous occasions, national interpretations of EU mandates continue to be an irritant that most professionals have learned to live with, shrugging it off with “it’s the bureaucracy.”
      Furthermore, Mr. Jentsch remarked, “the use of canines is not seen as a decisive factor.” Again, this is rather different from the DHS/TSA multilayered approach.
     Topics from the audience ranged from temperature-controlled cargo shipped in specialized ULDs larger than the maximum size of the certified screening equipment, to products such as film, organic material, and foods that spoil if exposed to x-ray. Art from museums presented another set of challenges. The consensus was to encourage moving the screening up the supply chain and carry it out at the source as a certified registered shipper to avoid “last mile” airport screening and its potential impact.
     The cost of the certification program was raised because it is the legislature—the Bundestag (national German parliament)—and not the LBA as administrator, which sets the applicable fees, and these have not yet been decided. The German elections scheduled for Q4 2013 will play a role and it is conceivable that any relevant rulemaking will be handed down after the election. The pricing comprises the certification process with additional costs for training and audit; these vary by the scope of work subject to the size of the respective enterprise. Herr Ritter of Fujitsu indicated their audit had two inspectors working for four hours and that, in his experience, dealing with LBA “is not that terrible.” While speculation was rife with figures as high as EUR 50,000, Herr Jentsch stated realistic fees were likely to be in the range of EUR 1,500 – 5,000, albeit possibly retroactively. An ongoing concern has been the strain on resources and recruitment of additional staff from former military and federal rail taking a “learning by doing” approach. Currently, there are 34 staff working on certification; there is an audit scheduled per quarter.
     Additional questions concerned whether the Certified Cargo Screening facilities was a “gold-digger” opportunity, with Ms. Bazant stating that the equipment and training were expensive, but screening is a business like any other and LFS must invest.
     Startup concerns brought some generalized anxiety to the fore, with the fear of trucks backed up into the Autobahn. Operational experience would have to determine which weekdays and time of the day would be problematic; scheduling is expected to be a key factor going forward. Whether cargo will be segregated by certified shipper and unscreened, it still remains to be seen how the airport will handle it, and Mr. Tschirch said in his view “a fast lane for certified cargo will be subject to experience.”
     Air cargo from certified shippers is estimated at 355,900 tons, or between 15-20 percent of the total.      Expectations were that air cargo would become more expensive and slower depending on other factors, such as the uninterrupted custody chain from certified shipper to airport, whether to use a seal for a truck, and, according to Mr. Bender, whether there was “close dialogue between shipper and forwarder to ferret out bad actors.”
     Again, varying European procedures caused some cynicism. UK procedures and processes were judged to be the strongest in Europe. Harmonization is the responsibility of the EU Commission and remains a challenge.
      Watch this space post March 25, 2013!
Ted Braun


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RE: FlyingTypers

Hi Geoffrey,

     This is the type of column that makes Flying Typers such a gem.
A few words on the AA takeover, a brief visit to HKIA, a little WWII
nostalgia, and a great Chinese New Year story with a guided tour of
Flushing.
     Your advice to get out and meet the locals is so worthwhile and it will
always be "the grist for your memory's mill".
     Thank you so much for all your good work.
     Have a lovely day,

Garner
W. Garner McNett, Jr.
President
Cargo Data Management Corp.

 


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