We caught up with Nick Rhodes, Director for Cargo at Cathay Pacific Airways, prior to this year’s IATA Symposium. He believes that CX and Hong Kong International Airport, the carrier’s hub, will remain an intrinsic part of China’s export apparatus even as production migrates inland. Cathay also plans to bolster capacity on lanes into China’s interior to meet rising demand.
     “Outside of our two key markets, Hong Kong and China, we saw encouraging results from all our other regions globally in 2011.
     “Hong Kong and particularly Shanghai were tough markets in which to trade profitably from April 2011 onwards.
     “On the other hand exports from Europe and America were encouraging as the middle class in Asia continued to grow and spend. Our India business continued to grow for both imports and exports as CX added Bangalore freighters to our already extensive services to Chennai, Mumbai and Delhi,” said Mr. Rhodes.
     According to Rhodes, Cathay Pacific has similar expectations to others in the cargo industry in terms of its fastest growing sectors.
     “Pharma, cold chain and perishables are all sectors in which we expect continued growth due to demographics and the increasing buying power of the middle classes in Asia and China in particular.
     “Increasing income levels are leading to popular demand for better food quality and this is driving increased perishable and cold chain volumes on CX.
     “CX expect to grow in China as export production continues to move to hi-tech clusters throughout inland China. The focus currently is on the 3Cs – CKG (Chongqing), CTU (Chengdu) and CGO (Zhengzhou).
     “However, it will also encompass growing markets such as Wuhan, Changsha, Nanchang and Taiyuan over time. The improved service levels to these cities will also drive increased import volumes from our global network into China.
     “As well as introducing new freighter ports, Dragonair will also continue to upgrade their passenger services to A330, which gives an excellent daily pax belly service for cargo to a growing number of Chinese cities,” said Mr. Rhodes.

     With these planned upgrades and addition to services, CX is looking at higher frequencies throughout its network.
     “We will connect these new hi-tech clusters to our Hong Kong hub and therefore our global network. Our goal over time is to upgrade these services to six times per week or daily so that we can provide a seamless connection to our global network.
     “Cathay Pacific’s aim is to provide an equally good service from CKG and CTU as we provide from PVG.
     “CX services the major cities in the world with both multiple daily pax bellies as well as daily freighters. CX will look to connect CKG and CTU daily into this network.
     “The aim is to provide a consistent, completely reliable connection from Western China to the world,” said Mr. Rhodes.
     With production centers migrating inland, there are bound to be some modal shifts within CX to compensate for the change, but Nick Rhodes assures us all with be handled in much the same way as before.
     “Overall I think high value goods will continue to move air freight and land and sea logistics will be used for the balance—at the margins there may be a small amount of conversion to air freight of delayed orders etc.
     “I believe that the highly efficient Hong Kong hub is the perfect location to hub goods both from the 3Cs and the growing number of other hi-tech production clusters.
     “Imports into Asia are increasing and the former structural imbalance on the key long haul routes to Europe and Transpacific are correcting.
     “Volumes and rates from Europe and America to Asia are increasing and will continue to do so as trade becomes more balanced. The appreciation of the Chinese Yuan is certainly helping this process,” concluded Mr. Rhodes.
SkyKing

     Forgetting their tiff, both IATA and FIATA representatives sat together at the recent KL World Cargo Symposium to display to the 1,000-odd delegates that it was time to move on and meet the challenging times head on.
     The spirit was amply captured by Glyn Hughes, Director, Air Cargo Industry Management, IATA. In a specially convened press meet (there were just a handful of us), Hughes fielded questions about the IATA-FIATA tiff, the IATA’s ‘non-transparent’ moves, GACAG, and more.
     When questioned about GACAG and why the meetings were hush-hush affairs, Hughes said that there was nothing of that sort.
     “It is all about collaboration and you are a partner,” he pointed out. “Selectively,” he emphasized, “you (the media) are the voice of the industry.” Not too long ago, there was a GACAG meeting and it was there that Hughes raised the issue of communication with the press.
     “We talked a lot about that. Everybody in that room (in the GACAG meeting) felt it was absolutely crucial.      What they have asked us is that, in the future, whenever we have a GACAG during an industry event, the doors have to be opened up… we actually tried to open the doors for the press at KL…” Unfortunately, there were no time slots available. He promised that in future events, communication with the media about GACAG would be on schedule.
     On his part, Chris Goater, Manager, Corporate Communications, IATA— who was incidentally, the ‘organizer’ for the press meet, if one may call it that—took pains to point out that GACAG was a comparatively young body and there would be more news as things got moving. It was also pointed out that GACAG had no employees and no money. Everything that was being done was entirely because of the initiatives of individual associations. “Going forward, we would like to emphasize that we are going ahead from a young group, how we engage with each other to moving on to delivering and communicating. We are looking at how we can structure that (communication) going forward,” said Hughes. It would be a priority, promised Hughes.

     One important point that Hughes underlined was that this year the World Cargo Symposium had dropped the ‘IATA’ tag. It is not that the organizers wanted to name the symposium the GACAG Symposium, but simply put across the view that “supply chain success will be achieved by the industry, for the industry.”
     Was it then hard to reach a consensus between the different bodies?
     “No, no and unfortunately, no!” said Hughes. Actually, when somebody said that the symposium would get these constituency groups in one room, there was indeed surprise—what with the issues IATA had with FIATA. But as soon as the groups came in for the first meeting, “everybody came in with exactly the same approach: We have to make this work. It is not about individual components in the supply chain. Each individual component in the supply chain cannot exist without the other components in the chain. When everyone walked into the room, everyone had the same view,” Hughes mentioned. Nobody had to be convinced, he said.
     The same sentiment was seen when the GACAG team met with Commissioner Alan Bersin in Washington late last year. And when he met the team, he and his 25-member team were “speechless.” For the U.S. politician that Commissioner Bersin is, it was a totally changed scenario. Instead of meeting with ten IATA people to explain the airline position, or forwarders or shippers keen to explain their viewpoints, he got a single view.
     “When regulators hear a fragmented grouping, in a way that is music to their ears for they know they can do what they want,” but what Commissioner Bersin got was a unified view. Each component of the supply chain could specify exactly what the problem was and the “reception the GACAG team got was overwhelming,” said Hughes. In turn, Commissioner Bersin told his team that before any proposals were made to the WCO, GACAG would have to be contacted for its views.
     “That, for us, we did not need any more confirmation (that we were doing the right thing).”
     Discussing the IATA-FIATA relations, Hughes said that there had been ups and downs with mutual respect and understanding about each other’s positions.
     “A couple of years ago, the lowest point in the relationship occurred. Since that point, we have continued to rebuild. We had Tony Tyler speak extremely positively about the dialogue that he had with FIATA. He has had three meetings with the President of FIATA (something which the last Director-General had not done—ever). Tony Tyler made a commitment to them and whenever he is in Brussels, he makes it a point to meet the FIATA President.”
     The areas of common interest between the two organizations have been identified and both are working towards these. “We both have an interest in modernizing the cargo agency program...when the agency program was established, the industry was a different one where the freight forwarder was very much an agent of the airline and the relationship was one where ‘I am the carrier and these are the terms and conditions of the goods to be moved.’ That has changed. The airlines realize that their relationship with the freight forwarder is much more as business partners and therefore the program that we have in place from the IATA perspective needs to be modernized. It will have to recognize that a new relationship exists,” said Hughes.
     There is also commonality on the airway bill, which is the very first layer of the wider e-freight objective. It will be a program that will bring benefits to the forwarder and the airline. “We did work with FIATA to establish agreements and we continue to work with them, which will bring more efficiency in the process.”
     Will all this bring in a new world order in air cargo? Only time will tell. However, one thing is certain: we will get to hear more about GACAG and its working—never mind the fact that 83 percent of the 300-odd delegates attending one of the interactive sessions, “Taking charge of change,” which over the last year monitored the progress on the agreed priorities by IATA and the Global Air Cargo Advisory Group (GACAG) did not know about GACAG.
Tirthankar Ghosh

     A chef’s success depends on a great recipe, the right ingredients, and exacting execution. A lot of experience doesn’t hurt either. It matters that everyone should follow the recipe, and in this case the recipe at Delta is simply called the ‘flight plan’. It starts with the corporate version at the top, which, for 2012, has an entry for cargo as a sign of particular recognition. The next level is the Delta Cargo flight plan and its categories: customer service, operations, people, network, and finance, each with clear objectives that directly relate to and support the overall airline goals.
     When I talked to Ray Curtis, Miffy Wiggs, and Myles Nichols in an impromptu hallway conversation it was clear how coordinated their activities have been, fully supportive of the other and the overall mission. Ray is in charge of global sales; Miffy Wiggs heads Marketing, Communications, Distribution Planning and Customer Service and Myles Nichols is Managing Director Global Cargo Operations.
     Customer service is one example where the former call centers are being transformed on a global basis and turned into proactive customer service and support functions. It helps that Miffy and Myles are longtime Delta employees with many years of experience and deep connections at the carrier.
     It seems that the complete awareness and understanding of the flight plan by all the participants at all levels is what makes the working of the entire macrocosm efficient and enables meeting its set goals. According to Ray, it is the people and the communications across the board that is the “secret sauce”!
     This will be the fourth year of the Neel Shah – Ray Curtis duo onboard Delta Cargo and also the fourth, post the DL/NW merger, a mere 60 days after they landed in Atlanta. Looking back, 2009 was a year of integration work for the airline and for cargo. Grounding the NW freighters at the end of that year was another milestone. 2010 saw freight revenues almost double out of Japan without the freighters, demonstrating that significant inroads can be made without them. After all, Delta had the Asia to Latin America market, something NW didn’t offer, with freight flown directly into Honolulu for nonstop, point-to-point flights to various U.S. domestic destinations.
     And invariably, Ray points to the whiteboard and the drawings of the two inverted triangles he always refers to when illustrating his market segmentation philosophy and approach; they bore fruit in 2011, the first full year of implementing their plans, and are essential, marking the year when Delta Cargo delivered its billion dollar baby, a phrase so aptly coined by FlyingTypers. Adjustments were made in the fourth quarter of 2011, taking some capacity out of the transatlantic market, but Delta is outperforming the industry and all the past investments are starting to pay off. And yet all this was accomplished with a relatively compact sales force, which may grow as the targets for 2012 indicate, but that’s a nice problem to have.
     This January Delta Cargo held its major annual sales conference in Atlanta with more than 300 participants, including for the first time attendance by all its GSA (general sales agents), who in the past had a separate event. Ray is confident that the gsa partnerships are serving Delta well. Delta Cargo Headquarter shares the building with the inflight group, and a flight attendant spokesperson made a presentation to the assembled troops in recognition of the significant contribution cargo is making to the carrier. That’s a nice touch.
     I ask Ray what challenges he sees going forward; he tells us that “service execution, executing the Delta offering to the market with speed, effectiveness and reliability” are top priorities.
     “There is potential and possibilities to extend the domestic DASH express product, and capitalize on the use of GPS technology.”
     In the ‘out of the box’ department, Ray and his team are exploring what I would call the next ‘big and bold thing’ that can change the way the air cargo business has run for all these years. At this moment he is not prepared to share the specifics.
     That will have to wait until next time . . .
Ted Braun/Flossie

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RE: IATA CNS Thwarts Freedom Of Press

Geoffrey,
     My memories of IATA are what a cartel it was . . . and still is.
    Oh well.
    Their loss with your not being there but there won't be much to report on beside the golf scores.
    Go watch the Yankees.
    The money will be better spent.
    Keep up the good work.

Jim
James L. Kaplan

Geoffrey,
    It is absolutely amazing that your group would be charged for attending the conference, especially after all the years of great coverage that Air Cargo News FlyingTypers has provided to the industry.
    IATA was always a quasi-goverment run type of organization that rarely listened to anyone (especially if "cargo: was in your title) and the news your group provided at least gave us insiders a complete view what the industry was doing and where they were headed.
    Keep plugging because there are lots of us who support your work for the industry.

Regards,
Walt Atkinson
Walter T. Atkinson, CSCP, CPSM, CPSD, C.P.M.

RE: Farewell To Good Guy Bill

Dear Mr. Arend,

     Thank you for the lovely tribute and "send-off" for my father. My mother was overwhelmed and I'm sure she will contact you directly when she's ready to express her appreciation.
     My father really enjoyed his work and everyone he met along the way. He never seemed interested in receiving accolades, but he would've appreciated this.
     Thanks again and best regards,

Bill Birnbach (Jr)

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