Vol. 11 No. 39                                                                                                                         Wednesday April 25, 2012

 

     Once upon a time, the term “crossing the T” was a naval term used back in the days of the battleships (The Battle of Jutland in WWI comes to mind, when the English Navy applied such a hurt on the German Navy it never again came out of port during the conflict). The term was illustrative of a tactical attack formation—an enemy would position a ship’s broadside directly in front of their foe’s bow, essentially forming the top of a ‘T’ and facilitating the use of all their broadside guns, leaving their foe with use of their bow guns only.
     In 21st century language, it has come to mean something else entirely, now people say things like “We are crossing the T here,” or “Let’s cross the T and get this done.”
     The latest in the rush to ‘Cross the T’ in 2012 is the upcoming USA-held CNS Partnership Conference, running May 6-8, 2012, at Turnberry Isle in Miami, Florida.
     Whether or not this year’s edition crosses its ‘T’ according to the former or latter definition is yet to be seen, but if the past has set precedence, expect a bit of both, because CNS gatherings of forwarders, airlines, and other industry stakeholders are never dull.
     In fact, CNS is usually the best place to find a real mix of airline and forwarders in the kind of numbers that allow for some decent sessions and absolutely outstanding networking.
     Here, Michael Vorwerk, CNS President, talks about what lies in store for 2012 CNS Partnership Conferees.
     “Once again we are at a new and refreshing venue conducive to networking and providing state of the art conference facilities.
     “The Turnberry Isle Miami is sure to create a memorable experience and surpass expectations.
     “Our goal this year is to bring attention to the air cargo industry’s need to present a united front to better handle challenges like quality improvement, e-commerce, security, the environment and more, hence our theme ‘Together Towards Tomorrow’.
     “We will have a new format this year as well, with two half-day plenary sessions instead of one long day of sessions.
     “Lastly, we will have two very stimulating panels on e-commerce and security featuring high-level speakers.
     “This is the 22nd annual CNS Partnership Conference and it still continues to be one of the best air cargo events in our industry.
     “We provide an excellent opportunity for busy executives to gather in one location, not only to discuss the latest development and challenges in our industry, but also to network, share ideas, and celebrate a sense of community and joint endeavor. This year we have worked very hard to bring exciting topics and brilliant speakers and we are expecting a record number of attendees. You cannot afford not to attend!” said Mr. Vorwerk.
     We’d have to agree on all counts, if we are referring to the necessity and importance of CNS. The event does pose an excellent opportunity for networking, learning, community, and shared ideas. However, we must politely disagree with the statement that one “cannot afford not to attend.” Unfortunately, the astronomical admittance cost of attending the current incarnation of CNS has prevented a number of former attendees from joining in the meeting, at a loss (we believe) to the event and other attendees. The fact of the matter is, with more people than not, you cannot afford to attend!
     The rising cost of CNS itself is not the only difference between last year’s meeting and the upcoming May meeting, as assured by Mr. Vorwerk. There are many positive trends on the horizon and much was learned from last year’s gathering.
     “In alignment with our parent, IATA, CNS continues efforts to drive efficiencies within the CASS operation for both our member carriers and forwarders.
     “CASS-USA finished a record year for 2011, clearing over $5 Billion for participating carriers.
     “We’re having increased participation with partner associations (Air forwarders Association, TIACA, FIATA, WCO, GACAG, etc.), and there has been acceptance of Cargo 2000 as the industry standard for quality measurement.”
     The CNS agenda 2012 includes stronger focus on the e-freight program and, of course, cargo security.
     “The e-freight program is absolutely essential to air cargo’s long-term competitiveness.
     “IATA’s goal is 100 percent coverage by 2015. We exceeded the 2011 target of 10 percent penetration on enabled trade lands, reaching 11.1 percent.
     “While freight forwarders are driving the broader e-freight agenda in the same timeframe, IATA will be focused on the e-air waybill (e-AWB) (15 percent penetration in 2012 and 100 percent by 2014.)
     “Cargo security must also be at the top of the agenda for everyone in the air cargo supply chain. Many call the 2010 Yemen printer cartridge incident the air cargo industry’s 9/11 in terms of changes being brought to the business.
     “IATA/CNS supports a multi-layered approach to security. Progress is being made on data provision. IATA/CNS is working with stakeholders and regulators to harmonize risk-assessment measures in compliance with the World Customs Organization SAFE standards.
     “[We wish to] work closer with partners, carriers, and forwarders to offer new solutions and help improve processes and provide online access to various manuals and handbooks for easier customer access,” said Mr. Vorwerk.
     Change is clearly coming, and everyone will need to be on board in order for the best to be accomplished—a fact of which Michael Vorwerk is all too aware.
     “There is support for change in air cargo, although there is still opportunity for more involvement in order to speed up change.
     “IATA’s E-freight has expanded and companies are becoming serious about implementation. CBP is slowly increasing the number of available ports accepting e-freight into the U.S., currently at 61.
     “More airlines and forwarders are beginning to participate. Inbound e-freight shipments have increased by more than 350 percent in shipments for January to December 2011, and outbound e-freight shipment by over 40 percent.
     “More companies are seeing the benefits from Cargo 2000 (improved quality, streamlined air cargo processes, cost efficiencies). Membership is steadily increasing and those who are already members are becoming more involved.
     “The formation of GACAG comprising IATA, FIATA, TIACA and GSF is a big sign and will definitely support change within our industry. This group has and will play a critical role in uniting our industry and dealing with worldwide regulatory authorities.
     “Innovation within our industry is ongoing, from new freighters, biofuel developments, RFID & GPS Tracking, e-AWB, advanced shipping containers, etc.
     “The best days for air cargo are still ahead, not only in the U.S. but worldwide. Slowly but surely economies are getting better.
     “The awareness of air cargo’s importance is increasing and air cargo will always be needed. This coupled with increased support and cooperation from regulatory authorities, increased industry collaboration, new technologies, advanced security solutions, improved quality, etc. The industry can and will progress.
     “CNS’s goal is to deliver value to the air cargo industry, and our affiliation with IATA makes us unique. Becoming a CNS member provides the opportunity for our organization and our members to accomplish this.
     “Membership also provides recognition within our industry, simplified trade processes, enhanced business relationships, and access to CASS-USA, which provides for rapid and high-quality/efficient financial transactions between airlines and forwarders,” said Mr. Vorwerk.
     We wonder if there were any other industry suited to a man like Michael Vorwerk and are quickly assured he will not be going anywhere.
     “Once an air cargo man, always an air cargo man—I like very much what I do!
     “I admire all people with passion—not talking too much about it—but people who put their passion into action and tangible results,” said Mr. Vorwerk.
Geoffrey Arend/Flossie

 

     Top of the morning as you approach the top of the world, which holds no more mystery than any other location when it comes to air cargo market drivers.
     Just ask Morten Lihme, ATC Aviation Managing Director, Nordic Region.
     “The market is currently seeing high pressure on rate levels in combination with low demand and overcapacity.
     “The strong buying power of the customers forces the individual airline and GSA to maximize resources into delivering excellent customer service in combination with rates that meets market demands.
     “That is a challenge that calls for very close dialogue between customers, suppliers, principals and GSAs.
     “In a world that increasingly is moving toward core competencies in all manner of business, ATC Aviation Services are experts on heavy and special cargo services to Asia, Middle East and Africa.
     “By offering our customers solutions on either Gabon Airlines or Air Cargo Germany, we transport everything from windmills, engines, cars and machines, to fresh salmon and Aunt Olga`s oversized luggage.
     “With our recent addition of Tampa Cargo, we are very pleased to have the ability to offer our customers solutions to South America as well.
     “Our products and services are positioned primarily within the adhoc market, as we as mentioned offer transports for heavy and special cargo.
     “Key success factors for both customers and ATC are fast and professional replies covering everything from a competitive rate to acceptable transit times and focus on any specific needs in the transport chain.
     “In short, we always strive to deliver reliable and fast information and keep in close contact with our customers and suppliers.
     “Others may say this, but ATC does it.
     “Our focuses on employee motivation, diversity and job satisfaction are all part of our strategy to deliver excellent customer service.
     “For example, here in Denmark the demands of fast, reliable replies with very attractive rates are met by our competent and dedicated operations and service staff.
     “So we also have a proactive and analytical approach to sales, where we based our approach to our customers on our market Intel and statistics.
     “Job one here is to make sure all parties are on the same page long before the cargo is shipped.
     “From this interaction, we offer business proposals tailored to the specific customer.
     “It is a grave misunderstanding that the sales manager should do all the talking - sit back and listen to what the customer is actually telling to you!”
     Morten Lihme has been in the airline industry since 2001 and in air cargo since 2004.
     Although he is Danish, Morten’s air cargo career started in Norway, where he had moved to live with his girlfriend.
     That story career has a happy result in 2011, as Morten is situated with the girl and the job of his dreams, back home in Denmark.
     “In 2006, we moved to Denmark. In February 2011 I was brought on as Managing Director for ATC Aviation Services.
     “The chance to build up and develop a branch almost from scratch was something I found very attractive.
     “I got the job and it has been a fantastic (and sometimes rough) ride ever since.
     “The great feature at ATC is the ability to develop business and market strategies together with the organization, customers and suppliers.
     “ATC Aviation’s Services gives me that opportunity so there is never a dull moment plus growth opportunities are very promising.”
     Time away from ATC is, of course, spent with the girl of his dreams and, as it happens, two additional dreamboats: two girls, ages 4 years and 6 months.
     Morten is also involved in furthering his education as he studies Organization and Business Strategy at The Copenhagen Business School.
     The rest of his time off is split between golf (winter rukese at play in Denmark right now), riding though the woods on his mountain bike or a Sunday afternoon in PARKEN, watching a soccer game with his favorite team, FC Copenhagen.
     “But time with my family is the most precious thing,” Morten Lihme smiles.
     Morten spent almost 6 years as noncommissioned officer in The Royal Guards, has a Market Economist degree from Norwegian Business School, and as mentioned earlier is currently finalizing his HD degree in Organization and Business Strategy at Copenhagen Business School.
     Looking ahead in 2012, Morten is excited about the addition of Etihad to his portfolio. Lihme is convinced that “strategic partnerships are key and should be pursued by both shipper and consignee.
     “Willingness to change infrastructure to meet customer demands and offer flexible solutions are also important aspects and key success factors.
     “The Danish market is very demanding, but also very interesting, with commodities and transport needs that vary from pharma to shipping spares in transit, heavy machinery, relief goods to Africa, textiles to India, live pigs to Asia and Sand shipments to Dubai; you name it.”
Geoffrey/Flossie

 

     We caught up with Alvin Tay, Vice President Sales & Marketing at China Cargo Airlines, which recently celebrated its first anniversary. CK is a joint venture between China Eastern Air Holding Company (51 percent), China Ocean Shipping Group (17 percent), EVA Air (16 percent), and Singapore Airlines Cargo (16 percent). CK markets China Eastern’s bellyhold capacity and operates 19 freighters, offering services within China, around Asia, and to Europe and the U.S. supported by an extensive trucking network.
     CK is the offspring of multiple consolidation deals with a diverse ownership, and has such has paid special attention to knitting itself together into a unified company.
     “One of the key focal points last year was the reorganization and consolidation of three carriers into new China Cargo.
     “Since the signing of the joint venture agreement in December 2010, we worked fast to merge the original China Cargo Airlines, Great Wall Airlines, and Shanghai Airlines Cargo into the new China Cargo Airlines.
     “The new carrier took off successfully on June 1st, 2011. Since then, we have made adjustments to the aircraft deployed on some routings and also streamlined schedule and network.


     “China Cargo designs its network and schedule based on its own requirements. For our majority shareholder, China Eastern Airlines, we market the bellyhold capacity of the passenger flights. With more than 340 passenger aircrafts operating domestic and international routings, they offer us extensive connections and reach.”
     “With the other shareholders, it is normal airline to airline relationships such as interline and block space agreements. We will possibly consider codeshare flights in the future, where possible. We are also looking at operational and safety training opportunities,” said Mr. Tay.
     Freight and export markets on China lanes wavered greatly, the result of softened economies and natural disasters, all of which had an effect on China cargo.
     “Airfreight exports out of China were certainly soft in 2010—we saw the demand weakening since the last quarter of 2010.
     “Uncertainties in both the U.S. and especially European economies severely affected demand. The earthquake and tsunami in Japan last year and that flooding in Thailand also added to the woes.
     “On the other hand, we did see stronger inbound traffic from both USA and Europe. It is likely to be part of the results of a stronger Yuan and increased demand within China.
     “Having said that, overall exports and imports were both growing in 2010. Based on Chinese customs data from January to October 2011, both exports and imports showed growth every month, compared to the same period in 2010. However, imports were growing at a faster pace compared to exports every month over that ten-month period.
     “In terms of airfreight figures, throughput at Shanghai’s Pudong airport saw fluctuations from January to October 2011. Some months, exports showed growth over 2010 while imports declined; other months, it was the other way around. Overall, we saw strengthening of imports.
     “Intra Asia was been fairly stable with the exceptions to disruptions brought about by the disaster in Japan and flood in Thailand. Flooding was still impacting exports out of Japan,” said Mr. Tay.
     In 2011, there was a lot of additional capacity entering the China market, and CK handled it in stride.
     “Rates on almost all lanes suffered in 2011, especially long haul to the States and Europe. To state that it was a very challenging year is an understatement. Domestic rates were also under pressure as usual. Besides competition from other carriers, we also faced keen competition from trucking companies.
     “We expect the first half of 2012 to be fairly soft with recovery in the second half of 2012. Recently released PMIs showed contraction. November’s PMI for China was the lowest in 3 years. Fuel cost will remain a challenging issue for cargo carriers.
     “There will continue to be huge influx of freighter and bellyhold capacity. More airlines will receive their B747-8s and B777Fs and there will be delivery of more wide-bodied passenger aircrafts. However, with the difficult economic environment and high fuel prices, we expect some of the older freighters to be phased out.
     “While economic and market situations are beyond our control, China Cargo Airlines do believe that we will see the benefits of our consolidation in 2012. While the pressure on P&L is still great, the merged company will stabilize and be on track to realize synergy,” said Mr. Tay.
     Looking further ahead, Mr. Tay discussed the possibility of new services to the interior and West of China.
     “We are interested in developments in western cities of China. CK has started regular flights from Chongqing back to Shanghai.
     “We will also start regular service to Chengdu, possibly providing a direct link to Europe. Presently these two cities are served with MD11 freighters. Another city, Zhengzhou (CGO), is also of interest to us. For both Chengdu and Chongqing, we are looking at increasing frequency to these destinations next year—most likely five times a week or even on a daily basis,” said Mr. Tay.
     With this expected growth, there are surely plans to invest further in the CK fleet, a point Mr. Tay confirmed.
     “Following the merger of three cargo carriers, we have a very varied fleet of 19 aircraft comprising of five B744F, six B777F, three MD11F, three A300F and two B757F. “Over the next few years, we shall renew and expand the fleet. The plan is to have 22 large freighters consisting of B777F and B744F by 2015. We will phase out the older aircrafts progressively. With regard to small freighters, we are currently keeping our options opened. It will be standardized to a single aircraft type. We will most likely make a decision in 2012 whether they will be new freighters or passenger-to-cargo conversion,” said Mr. Tay.
     To keep the company flourishing, it is incredibly important to boost the service in all areas of CK’s business, and Mr. Tay assures us that CK is looking ahead to stay on top.
     “Besides investing in capacity, we are also investing to improve our service quality. We started self-handling since early September 2011 with our own cargo terminal.
     “On December 1, 2011, we also commenced ramp operations of all our cargo flights. A permanent cargo terminal is in the final design stage and we expect it will be operational by middle of 2013. It will be located at western cargo area of Pudong and have a handling capability of 800,000 tons.
     “China Cargo is also investing in new IT systems and platform to enhance our ability to deliver better service,” concluded Mr. Tay.
SkyKing

 

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