In these uncertain times for air cargo—all across the spectrum, from carriers to airports—the Indira Gandhi International Airport in Delhi has come out with refreshing news. The brand new Delhi Cargo Service Center (DCSC) sent out a clear message to air cargo stakeholders—“Delhi is ready and willing”—even as it opened its doors barely a month ago to start operations.
      The Greenfield Cargo Terminal’s first customer was Hercules Aviation, which approached DCSC to move 150 MT of shipment headed to Kabul. With three freighters spread out over three days, CSC’s warehouse staff and management handled the shipments efficiently enough to receive a pat on the back. Commented Sujeen Paulose, (left) Director-Commercial, Hercules Aviation, “Hercules Aviations has used DCSC Terminal and is proud to give the first loads. DCSC and Hercules will be remembered in history for being partners. The service provided was first class and we are satisfied with the work and quality of staff. We hope the same endeavor will remain.”
      For Radharamanan Panicker, (right) Group CEO, it was another pat on the back that DCSC was doing things right. Sitting in his office on the top floor of the terminal building, Panicker pointed out that the Delhi facility marked the advent of the best-in-class air cargo-handling terminal in a major airport in India.
      “It brings together the best of Indian cultural ethos and efficiency of the best in the world,” he said. As for his colleagues, he noted, “CSC-ians are passionate people and work not only with their mind, but also their heart. That’s what makes us different from others.”
      The soft opening—if one may call it that—with Hercules Aviation could have come earlier. The terminal was supposed to start in July last year, informed Panicker, but it got delayed due to a variety of reasons.
“We got the Customs clearance in February this year and the security clearance in March this year… Technically we are now ready for the airlines to start using DCSC,” he said. Quite a few carriers have approached the Delhi cargo facility, and most have shown their eagerness to start operations.
      As carriers start utilizing the facilities, the Delhi Center will aim to achieve its first year target: handling about 1,50,000 tons of cargo. Together with the second cargo terminal Celebi operates, Delhi airport will possibly be handling the highest tonnage of cargo in the country.
      The focus on Delhi comes at a time when foreign carriers are seriously considering international airports in southern India—Bengaluru and Hyderabad—because of the facilities the two airports provide. Northern India required top-of-the-line air cargo facilities and that is exactly what DCSC is doing.
      “Delhi and North India,” said Tushar Jani, (left) Chairman, Cargo Service Center, “is a very strategic area for the logistics industry and for the country's economy. This area has tremendous potential owing to its huge capacity of disposable income.”
      The presence of a second cargo handler at Delhi airport—the Celebi terminal—came because of the government’s decision that there has to be competition in airport services, which incidentally is part of OMDA (Operation, Management and Development Agreement). As a result, two independent handlers for cargo have come in. While Celebi got the go-ahead for operations of the facility that was there through a tender process, “we were given the option to build a new facility, which is what we have done,” said Panicker. (DCSC operated the perishable cargo terminal at Delhi airport from 2001 to the end of 2009 and handed over the facility to Celebi after it was given the go-ahead to start the Greenfield terminal. During DCSC’s tenure, perishable cargo tonnage went up from 4,500 tons to nearly 26,000 tons.). The airlines have the liberty to choose whichever handler they want on the basis of their demand for quality, efficiency, etc.
      In addition to establishing the cargo facility, “one of the mandates that we had was to create capacity,” Panicker mentioned.
      “We are supposed to create one million tons of capacity. This facility—the one that is ready—will have a capacity of 800,000 tons. The other one that we will build will have a capacity of 400,000 tons.” The total tonnage when the project is complete in 2016-17 will cross a million tons.
      CSC’s joint venture with Delhi International Airport Limited (DIAL), Delhi Cargo Service Center, has been a major breakthrough in the growing cargo industry. DCSC was incorporated in 2009 as a joint venture between CSC (74 percent) and DIAL (26 percent) to provide air cargo handling services at the Indira Gandhi International Airport, Delhi by constructing a Greenfield Cargo Terminal. It was the second such entity to receive a concessionaire agreement for a period of 25 years to provide air cargo handling services. Delhi airport’s concession entitled DCSC to Design, Build, Develop and Operate an integrated Greenfield Terminal at the airport.
      To be built in two phases—1 A and 1 B and 1C—T1 will have a total area of 50,000 square meters while T2 will be spread out over 20,000 square meters. T1 and T2 will have the capacity to handle approximately 1.2 million MT. According to CSC, Phase 1A has a capacity of 75,000 tons for general cargo and 75,000 tons for perishables. In the next phase, 1B, capacity for 250,000 tons of general cargo will be created and when the automated handling system starts operations in 2014, the terminal will have a capacity to handle 650,000 tons.
Incidentally, Celebi has been handling around 500,000 tons of international cargo. Now that DCSC has started operations (it handles export and import as well as domestic cargo) Celebi will handle domestic cargo too and prompt a lot more competition.
      In Phase 1C, space will be created for either transshipment cargo or domestic cargo. In addition, DCSC has the option to utilize a plot of 28,000 square meters for an additional structure should cargo volumes rise. DCSC has plans to invest around $110 million for the two terminal buildings, of which nearly $50.72 million has been spent for 1A and 1B. The company would be spending $36.52 million alone for the handling system.
Come 2016-17, when Delhi will have a capacity to handle two million tons of cargo per annum, will the airport’s handling facilities be at par with airports in the region like Singapore, Dubai, or Hong Kong?
      On what terms, questioned Panicker. “We have to understand that these airports—Singapore, Dubai or Hong Kong—are conceptually different from ours,” he said. Putting his point across, the DCSC CEO said that the cargo flow at these airports was different: the airports dealt in transshipment cargo. “That is as high as 70 percent at these airports, but at Delhi it is negligible,” he said. However, what will set DCSC apart will be its efficiency. A confident Panicker emphasized that the facility was new and with the automation that will be ready for operations in a few months, processes within the terminal building will be faster.
      The CEO also mentioned that in the big international airports of the region, the Customs processing was done outside the airport and not within. “But it is totally different here,” he said, “100 percent of the cargo is Custom processed at the cargo terminal. That not only means more time consumption but also space consumption.” Incidentally, Customs is just one part. There are others like the Drug Controller, the Quarantine department, etc.
      “If you look at the export side, one has to go through 20 different clearances before a shipment is released to the aircraft. There is, therefore, a vast difference between our airport and Singapore, Dubai...” said Panicker.
      The perishables section is among the facilities of which DCSC is especially proud. As a cargo handler, DCSC has wide experience in moving perishable cargo. It once operated such a terminal at Delhi some time ago and that provided the knowledge and expertise to create a facility in the Greenfield terminal. Panicker was forthright: “We have created a fantastic facility for perishables. There is not only a facility for export, but this is the only airport where there is a large facility for import perishables: The cold rooms at Delhi airport will have the capability to hold around 300 tons of cargo at minus 10 or minus 20 degrees. This tonnage can be increased if the situation demands it,” said Panicker. According to projections, Delhi would be able to get a large volume of import cargo now that the facilities exist. In fact, earlier the airlines had put an embargo on such imports because of the lack of dedicated space.
      With its special perishable zone, the airport will try its utmost to attract pharmaceutical exports. The airport handles a large tonnage of pharma and as Panicker put it, “When we were handling the perishable terminal earlier—the one that we handed over to Celebi when we started this facility—in the last year, we handled around 18,000 tons.” DCSC managers realized that a number of pharma companies around Delhi and Chandigarh and from Baddi in Himachal Pradesh were sending their products away from Delhi for flights to Europe or USA. “Now that the facility is there, they will come,” said Panicker, “because it is a costly proposition to go to Mumbai or Hyderabad when Delhi is so much nearer. To top it all, the capacity is here,” he said.
Tirthankar Ghosh

     Intermodal Latin America concluded on April 12 in Sao Paulo, and was once again one of the important transportation shows that nobody seems to know much about.
     By that we mean that much ink (if anybody is printing anymore) and even more attention is paid to trade shows in other places that, in truth, are not as well attended by the diverse and important group of transportation professionals present at Intermodal.
     Something to think about for next April 2013.
     Here we offer an excellent overview of the South American market from American Airlines Business Insights.
     Despite everything else going on at that great legacy flag carrier, American Cargo continues to be the standard of U.S. belly lift airlines and gets a lot of credit for genuine, helpful outreach beyond just the hard sell and the basic information of an air cargo website.
     
     For much of the 20th century, Latin American economies showed little growth and weak demand, particularly when compared against other booming global markets.
     In recent years, however, changing economic policies, globalization, energy discoveries, and myriad other factors have given rise to budding economies boasting robust exports and wealthier middle classes.
     During the most recent global financial crisis, many Latin American markets weathered the economic storm better than other regions in the world. While the International Monetary Fund lowered its 2011 economic growth forecast for Latin America, citing slower demand given tighter macroeconomic policies and weaker global growth, Latin America and Caribbean economies, driven by commodity producers, should expand 4.5 percent this year.
     Brazil—one of the famed BRIC countries—has the sixth largest economy in the world, with a GDP of more than $2.2 trillion, but other Latin America countries are also showing growing demand and exports. By this, Latin America is one of the most promising regions for air cargo.
      The top five trends driving growth and opportunity in Latin America.

Trend One: Political Stability
     Political stability in Latin America is growing. Many people in the region live under an elected, civilian government, which encourages foreign investment and fosters economic growth. Colombia, Chile, and Peru enjoy relatively stable democracies favoring foreign capital and investment. In 2011, Standard & Poor’s upgraded Argentina’s credit rating to a “B” and classified the country as “stable.” And the economic powerhouse, Brazil, which also has a stable political environment, has one of the fastest growing markets in the world, poised to grow stronger with the World Cup in 2014 and the Olympic Games in 2016.
     Not all Latin American countries have found the same level of political stability. Bolivia, Ecuador, and Venezuela can be unstable, with problems found in absent infrastructure and poor rule of the law. Yet, the overall trend for the region is one of increasing stability and opening markets. The kind of statist, populist solutions that probably cost Latin America decades of economic growth in the 20th century are viewed today largely with suspicion, even in the countries where they still hold sway.
     In many places, things that once held business back, such as monetary instability and shortages of even the most basic items, are becoming things of the past.

Trend Two: Economic Institutions Strengthening
     Trade and investment regimes have been liberalized, foreign direct investment has increased, and new export markets have come on stream. The region now attracts around 7 percent of global foreign direct investment and accounts for 6 percent of global exports. These positive signs are evidence that the region’s economic institutions are growing stronger.
     Collaborative efforts such as the Latin American Reserve Fund (FLAR), consisting of Bolivia, Colombia, Costa Rica, Ecuador, Peru, Uruguay, and Venezuela, offer loans or loan guarantees, improve investment conditions in international reserves, and help harmonize exchange rates and monetary and financial policies of member countries. There has also been growth in banking throughout Latin America, driven by a growing middle class, growth in deposits and credit, and greater banking efficiency.
     Brazilian banks lead the pack, holding the top five spots on The Banker’s list of best Latin American banks. Colombian and Peruvian capital markets are developing quickly and (relatively) mature markets, such as Chile, continue to have high growth rates. Yet, persistent inflation in Brazil (which reached a seven-year high of 6.5 percent in 2011, but has eased in the first months of 2012) is limiting tax incentives and stimulus measures for industries struggling through the global economic downturn, leading economic officials to project only about 3 percent growth for the next few years.
     Furthermore, while Latin American and Caribbean banking systems are strengthening, the IMF emphasizes the importance of monitoring financial sector vulnerabilities and strengthening financial sector supervision to contain excessive leverage and avoid boom-bust credit cycles. An IMF report said capital controls could provide temporary relief to strong portfolio investment inflows into commodity-exporting countries.

Trend Three: Growth of the Middle Class
     Latin American countries hold rapidly growing middle classes, driven in part by the commodities boom in the last decade. With 56 million households joining the middle class over the last decade, totaling 51 percent of the major Latin American economies in 2011 (up from 41 percent in 2001) consumers enjoy greater buying power and discretionary spending. This is creating a demand for goods and industries that rely on air cargo to move their products throughout the world.
     Part of the growth in the middle classes can be attributed to demographics—the working age population is now greater than the population of those not able to work, offering families increased income. Access to consumer credit is also fueling a new consumerism, driving demand for technology and myriad consumer products at levels never before seen in the region. The strengthening financial institutions support this. With Latin American banks focusing on products for the consumer market and lending strategies for the retail segment, emerging middle classes now show a greater demand for consumer goods—and the means to pay for it.

Trend Four: Intra-regional Development
     Since 1959, the Inter-American Development Bank (IDB) has been the largest source of development financing for Latin America and the Caribbean. While the bank is owned by 48 states (including some European nations and the United States), only 26 countries are able to receive loans, all of which are in Latin America. Tariffs in the region have fallen from 40 percent in the 1980s to only 10 percent in 2008. Progress in trade facilitation measures has been slow, due in part to not enough funding opportunities and political deadlocks. Nevertheless, with a market of over 550 million people, most of who speak two closely related languages and share a common cultural history, free-trade agreements through regional trade unions like MERCOSUR and CAFTA are making an impact.
     One challenge in fostering intra-regional development is infrastructure spending, which lags behind other middle-income countries such as China. The absence of updated infrastructure hinders productivity and competitiveness of Latin American companies, which slows economic growth overall. A World Bank Economist on Latin America and the Caribbean infrastructure said the region “has now fallen behind for electricity, roads, and fixed telephone lines, with only cellular telephony and access to safe water and sanitation facilities performing comparatively well.”
     This, however, could change in the coming years given the Initiative for the Integration of the Regional Infrastructure of South America (IIRSA), first launched in 2000. The IIRSA, backed by the Corporación Andina de Fomento, the River Plate Basin Financial Development Fund (Fonplata), and the IDB, is a plan to join Latin American economies via transportation, energy, and telecommunications infrastructure development. Integrating regional infrastructure will foster trade and more closely link Latin American countries.

Trend Five: Globalization and International Trade Policies
     No longer mired in economic stagnation, Latin America has strengthened its connections with the global economy. Several countries also have free-trade agreements with the United States and European Union, giving them more access to hundreds of millions of potential customers. Growth in China in particular is opening new markets. In 2009, China replaced the United States as Brazil’s largest trading partner, and while a recent downgrade in China’s expected growth has upset some markets in Latin America, the trend of greater interaction with international markets is boosting Latin American exports and its economies.
     In October 2011, President Obama signed Free Trade Agreements (FTAs) with Panama, Colombia and South Korea. The Latin American agreements will stimulate economic growth in the region, as well as in the United States. The Colombia and Panama FTAs create a nearly uninterrupted free trade zone from Canada to Chile. From a cargo perspective, opening doors and facilitating trade in a wide variety of countries is a good thing for forwarders, carriers and their operations. As an example, between 1985 and 2008, for countries with which the United States holds FTAs, trade grew on average 25.6 percent in the first three years after the FTA was signed.

How American Can Help
     American has serviced customers in nearly every country in Latin America for almost 25 years. Yet, we see this as just the beginning. These economies are growing fast and poised to grow stronger. The new FTAs mean more trade is on the way, and for shippers, forwarders and carriers, this is an opportunity to reach new markets and develop new business.
     While new economic realities and the FTAs make international commerce much easier and more lucrative, operating in Latin America requires expertise in working with customs agencies and understanding the culture of commerce and regulation. This is gained through decades of experience, and it is critical to prosperity in these growing markets. Partnerships between shippers and logistics providers will advance new opportunities and help navigate the pitfalls in this developing region.

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     Here once again we visit on video with my good friend and colleague for thirty some years the great Ronald Edward George (REG) Davies.
     Ron, who sat in the Lindbergh Chair as Curator of Air Transport at the National Air and Space Museum in Washington, D.C. at NASM for 30 years, died in Shaftesbury, England last year on July 30, 2011. He was 90 years old.
     The last opportunity we had to talk was inside his apartment in McLean, Virginia. His good friend Chris Sterling and my wife Sabiha were also there.
     Come to think of it, all through that day from our luncheon right through the cocktail hour that included some crisps and couple of cans of British lager from the Davies fridge, both Chris & Sabiha were at times sidelined whilst Ron and I rattled on.

     Ron was packing his boxes to return to UK to take care of his ailing wife Marjorie.
     I had the feeling that leaving NASM was the last thing he wanted to do, as he was still quite robust and totally engaged in putting the finishing touches on his 25th book for Smithsonian.
     But his love and devotion for his bride of 60 years held sway.
     “Marjorie is my love throughout every experience of my life.
     “It’s time to get home and look after her,” he said quietly.
     It was during that conversation that he gave me an entire personal collection of his most favorite books, some 450 in all.
     Ron’s last words to me were naturally about what he thought was going to happen in future commercial transport.
     “The wide-body ‘jumbo’ jets were twice as big as the Boeing 707 and Douglas DC-8.
     “The same general principal still applies, even though the 500-seat A380 is only half as big again as the Boeing 747.
     “Five airlines are currently operating more than 40 A380s, and this will rise to close to 100 by the end of 2012.
     “By any criterion, this is the beginning of a new generation.
     “The Boeing 787 will be a good replacement for the Boeing 767 or the Airbus A330, and good for domestic routes, but it will not be a major element globally.
     “Statistics show that 75 percent of the world’s international traffic is served by only 25 major airports.
     “This is the market for the next generation.
     “The A380 will meet the traffic demand for this 75 percent, and it has no competitor in the same class.
     “The 787 Dreamliner will be left to cope with the remaining 25 percent.
     “Today, airliners remain in service for 30 years or more.
     “The half-life of the A380 will be at around the year 2020.
     “Already, a French airline has ordered two 820-seat all-economy A380s.
     “There is talk of a stretched A380,” Ron Davies said.
     Just before he went home forever Ron spoke to Air & Space Magazine about his career:
     “I have been able to visit all seven continents, including Antarctica, fly around the world, and cross the Seven Seas many times.
     “Through airline contacts I interviewed pioneers and leaders of the airline industry worldwide.
     “I sank many a beer with chairmen of the U.S. local service industry, sipped cappuccinos with the great Ruben Berta in Brazil, and–possibly my most treasured memory – was invited to take tea with India’s legendary J.R.D. Tata in his suite at the Ashoka Hotel in Delhi in the early 1970s.”
     REG Davies was educated at Shaftesbury Grammar School. He started work in London in 1938 and was in the British Army as a territorial volunteer from 1939 to 1946.
     He spent a year in Iceland, training for mountain and Arctic warfare, and drove his machine-gun carrier on to the beaches of Normandy in 1944.
     After WW II, Ron worked for the Ministry of Civil Aviation, British European Airways, the Bristol Aeroplane Company and de Havilland before moving to the United States in 1968 to lead market research for Douglas Aircraft.
     As mentioned earlier he joined the National Air and Space Museum as the Charles A. Lindbergh Chair in Aerospace History in 1981 and from that platform he changed aviation history forever.
     Davies was a member of three British Royal Societies, the Explorers Club, and others in France and Brazil.
     He also delivered the Wings Club Thirty Seventh “Sight Lecture” (Hindsight, Insight, Foresight) in 2000.
     Worth noting is that past Sight Lectures have been presented by Igor Sikorsky, Werner Von Braun, Grover Loening, CR Smith, Juan Trippe, Richard Jackson, Neil Armstrong,Al Ueltschi, Sanford McDonnell—the list goes on.
     Ron Davies’ last book Airlines of the Jet Age (for the Smithsonian Institution Scholarly Press) was published (July 2011).
     Ron Davies was the greatest and most prolific aviation historian that ever lived.
     His work is impeccable, full of thorough research and beautiful presentation.
     His writings are colorful and rich in detail and humor.
     You can compare his books and years of service in terms of content to the way Joe DiMaggio played baseball, Winston Churchill gave a speech or Elvis sang a song.
     Ron’s 1964 book A History of the World’s Airlines is simply the best on the subject; in importance and as a touchstone for the industry, it mirrors the likes of Darwin’s On the Origin of Species.
     It is a cornerstone of any aviation library and such a work of art that it gives me the chills just to think about it.

     A few months ago we presented Part one of a video interview we conducted in McLean the last time I saw Ron.
     Here is Part Two of our conversation and also for those who missed it, Part One is once again on view.
The series continues later this year so stay tuned.
     And keep ‘em flying, my dear Ron.
Geoffrey

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