CNS Partnership
Meets In Miami

     The latest rumor we should dispel at once is that Tiger Woods would be the keynote speaker at CNS Doral; agent settlement doesn’t seem to be his specialty.
     Now that we’ve got that out of the way and had some respite from the World Cargo Symposium and Vancouver, we are all set for CNS.
     The format has been stable for a number of years – Sunday golf and the main event, the welcome reception.
     Oh, the headliner is “Making Visions a Reality”.
     Not much to elaborate, particularly because I can hardly tell one end of a club from the other, which clearly disqualifies me. Then there are two days of sessions versus three at the WCS; the opening keynote at CNS, by Dr. Andreas Otto of Lufthansa Cargo followed by three sessions dedicated to industry overviews and an airline panel. Nice representative mix of interested parties - forwarders association, TSA.
     The panel has three cargo heads from IATA area 1, 2 and 3 respectively plus other airline cargo executives with a view toward what makes a company successful in these troubled global economic times. It promises to be interesting particularly because some of these airlines operate passenger aircraft which also carry cargo, while others have dedicated freighters as well.

      The questions we asked before Vancouver were: “…How does this all really come together and does anybody have the answer? What can realistically be the meaningful outcome of the Symposium?”. We will try to glean the answers in Miami.
     Day two has a panel format with competing parallel sessions scheduled – Time & Temperature Logistics for Healthcare Products and Securing the Supply Chain (same topic as one of the sessions Monday), while the other track offers – Breaking the Code of Air Cargo Business focusing on business intelligence (isn’t that an oxymoron?) and IATA selling DGR online under the guise of paperless business.
     The program then returns to a single track, first with e-freight and “… getting more of the forwarding and airline community to understand these initiatives and improvements for air cargo”.
     Well, as an industry, we have been at it since 1990 or thereabouts with CCS, Cargo MEDIA which morphed eventually into Cargo 2000 and e-freight for the last couple of years. I wonder if forwarders and airlines evidently didn’t get it in 20 years, what can this session, IATA, CNS and the volcanic ash eruption do to embrace this vision?!
     Next in line is the improvement of the environment! Maybe the panelists will by then have a chart showing how much less emissions were realized between April 15 and 22 by having to cancel nearly 100,000 flights and incurring revenue losses of well over 1 billion dollars. I know, this is an “in” subject and the irreverence is mine alone; just thinking in terms of the real big issues of the day in 2010.
     Following WCS, it seems ground handling made it also into the agenda at CNS with what promises to be a lively discussion about whether cargo is a commodity or an integral part of the value chain and a look at cargo handling. And it is all planned to end by 13:00 and the networking lunch so everyone can gear up for the gala dinner.
     By its own account, CNS “…provides a unique set of business solutions that meet the requirements of the air cargo industry in the USA.” We will be watching with interest and reporting and hope to hear from as many of our readers as possible.  

Agility Lands On U.S. Blacklist

Agility recently agreed to pay the U.S. government $600 million for overcharging the military on supply contracts in the Middle East. Now USA has blacklisted the company altogether.

     The U.S. government has imposed an indefinite ban on Kuwait-based Agility, its Defense and Government Service Division (DFS), and a large number of the logistic provider’s subsidiaries worldwide.
     The black list includes prominent firms like The Public Warehouse Company (PWC), GeoLogistics Americas Inc., LEP Int’l Pty Ltd., Ostram Holdings Ltd., Sea Bridge Container Lines, Natural Freight Ltd. or Tristar Transport, just to name a few.
     All together 120 companies are named in the Washington-published ‘Excluded Parties List System’ (EPLS), nearly fifty of them local entities of Agility like Agility France, Agility Germany or Agility Dubai.
     The other seventy are daughter companies that fulfill special services as exemplified by 1991-founded Taos Industries of Madison, Alabama that provides tailored projects mainly for the military ranging from base operations, transportation, warehousing, and material management.
     “At Camp Arifjan (Middle East), Agility related company Taos is losing a $5 million contract,” ACNFT was told in an e-mail sent by a person close to the case.
     Why these 120 Agility entities or satellites of the Arabian logistics player are excluded from tenders by Washington for an indefinite time are not given in the EPLS filing.
     They are obvious, however.
     Three weeks ago, Agility agreed to pay the U.S. government $600 million to settle a fraud case, a result of overcharging the military on supply contracts in the Middle East, including food, mail and supply for the armed forces as well as civil servants based in Iraq, Jordan and Kuwait.
     Only days later, however, Washington came up with a new indictment accusing Agility and its subsidiaries for overcharging the U.S. Army on a number of multibillion dollars worth of contracts for transporting, storing and delivering food and beverages to American soldiers based in the Middle East.
     Since the U.S. invasion of Iraq 2003, the Public Warehouse Company, GeoLogistics and some more firms that later merged and were bundled in 2006 under the Agility brand became the biggest logistics provider for the U.S. government in the Arabian peninsula, Afghanistan and some other hot spots of international conflicts.
     Washington apparently was intrigued by the ‘ethics’ and ‘values’ Agility proudly proclaims and displays on its website homepage.
     “Agility believes strongly in conducting business with integrity.
     “Building trust with customers and suppliers by doing what is right: keeping our promises, being a good citizen, complying with regulations and laws, and honoring rules of engagement,” the Agility website concludes.
     At Agility’s Hamburg, Germany headquarters nobody wanted to comment on the black listing or on what consequences it might have for the logistics provider’s global business.
     Approached by ACNFT, Agility Europe spokesperson Marina Targa stated: “PWC continues its discussions with the U.S. government with a view to resolving the current legal cases; however there is no guarantee that the parties can reach a mutually agreeable settlement.“
Heiner Siegmund

Lufthansa Numbers Up

     CNS Partnership Update . . . Lufthansa Air Cargo recovers faster from the crisis than originally expected.
     Air Cargo News FlyingTypers spoke to board member Peter Gerber, responsible for finance and personnel who said, “average load factor climbed above 70 percent during the past three months of the year.
     "The demand for our air cargo capacity is currently very strong."
     Gerber did not reveal financial results for Q1 with regard to the upcoming announcement from the Lufthansa group on May 5.
     However, he confirmed that Lufthansa Cargo posted a substantially better result than previously expected
     "Our aim is to return to profitability in 2010," said the manager.
     Last year the carrier reported the biggest deficit in history with losses of roughly 170 million euros.
     Gerber further announced the return of one of a total of four MD-11 freighters this coming Friday that had been sidelined in a California desert last year due to the global financial crisis.
     A second aircraft is scheduled to follow sometime in summer 2010.
     The fate of the last two parked freighters is still under consideration.
     Meantime Andreas Otto, head of sales and marketing, LH Cargo will integrate all freight activities of Austrian Airlines as of July 1.
     An exception will be AUA’s home market Austria where a ‘Austrian Lufthansa Cargo’ named joint venture will be responsible for sales and marketing of air freight.
Heiner Siegmund

Cloud Hangs Over
Volcano Experience

     The frustration seems a bit distant, as fresh flowers decorate tables like they never went away and Europeans by now have recovered from African fruit withdrawal syndrome.
     No more cots in airport waiting areas and we have all moved on quite nicely even our little family, including myself and my wife reuniting after she was stranded in Frankfurt for five days.
     The trains are back to normal, as are the ferries and trucks – lorries for those driving on the other side of the road.
     To the dismay and disappointment of Philadelphia lawyers, it turns out so far no one can sue a volcano.
     But we are getting close – it all depends apparently on how a volcanic eruption is classified in insurance terms, whether it’s “adverse weather” as in wind carrying ash, or a “natural disaster”.
     So some passengers and shippers may get some help, yet as long as aircraft or airports aren’t damaged, airlines will likely not be able to collect for canceled flights.
     Although air travel has become such an every day event that one can argue it’s a commodity, we really notice its vital role when it’s unavailable for four-five days in a row, stranding passengers and cargo worldwide.
     This is beyond debating globalization, the interdependencies in our world and business or personal mobility. Mother Nature sends warmest regards!
     On the surface, the estimated 2 million traveling public seem to have taken the latest unpredictable and unforeseen airline service disruptions well.
     What this episode painfully emphasized, as a very costly reminder, is how vulnerable the airline industry is to elements outside its control.
     Everyone experiences weather, industrial action, mechanical problems and human factors to some extent in every day life. Since 9/11, terrorism has made it into the airline experience with a vengeance.
     There were a few isolated, well-known incidents with volcanic eruptions in the past, but nothing even remotely close to X#$%*!)~jokull!
     I believe Wall Street and exchanges worldwide need to pay attention because now there may be proof of the beginning of a tenuous link of unintended consequences – after a major banking crisis of the magnitude Iceland suffered, follows a volcanic eruption . . .
     The only problem I see is there are few volcanoes near Wall Street, although the London Stock Exchange is only about 3 hours from Iceland!
     Can you imagine the compelling behavioral modification element in banking executives, were this for real?
     I hope I am proven wrong on this, time and again, but, just in case, airline planners, pay heed!!
     With significant mounting losses at the worst possible time – if there ever was a good time for a loss – some airlines are turning to governments for compensation.
     Now this poses an interesting question regarding the entire airline industry vis-à-vis government relationship!
     We want them off our backs when it comes to regulations that impact the airline business, but it seems to be a reflex to turn to government when no one else will cover the loss.
     It also further exposes and underlines the fragmentation of Europe, which can’t find a way to speak with one voice if their lives depended on it, no matter the subject, except the Euro (maybe).
     In North America, my take is that government, for now, pretty much left it to the airlines whether they operated or not during the 5 days of extreme volcanic eruption disruption.
     That’s neither good nor bad; it just highlights the transatlantic difference in mentality and approach.
     The good news is that loss of life and limb have been averted, so it’s only money, oodles of lost revenue due to thousands of daily flight cancellations, spoiled produce and other perishables and mostly, great inconvenience.
     As always, safety prevails, as it is and will always be the fundamental of the airline industry; without it, nothing else matters.
     Some enterprising companies have advertised charter flights and higher rates during this time for finding work-around solutions for what could simply not wait and where money wasn’t necessarily the main or only criteria.
     The lesson, if there is one, is not new – irregular operations have been a major industry headache. Communications and service cannot be overemphasized, only more so during a crisis.
     My personal experience with an unnamed airline during this time has been mixed – the first two days, April 15 and 16, pretty much any and all customer service was suspended. Rebooking over the web didn’t work and resulted in being redirected to call your local reservations office, which needless to say, didn’t answer the phone. A personal visit to the airport yielded the only news that since the head office wasn’t answering the phones, there was nothing they could say.
     All phone calls ended in “due to higher than usual call volume, please call back later”. No one expected miracles, just when or how to rebook when operations resumed, particularly with the outbound flight already completed.
     The only way left to try to communicate was e-mail.
     On April 17, call number 14 was rewarded with a human at the end of the phone, prompt service and a rebooking in minutes. By April 20, the e-mail was also replied to in the standard boilerplate apology cum infomercial.
     Thanks to everyone who shared their cargo experiences during this time.
     We needed to learn something from each other or share a laugh knowingly.
Ted Braun

Correction & Clarifications
      Yesterday’s address box should have said :
     “Calabrese Invented CNS Partnership Conference”.
     Finnair will fly its new MD11 freighter twice weekly from Helsinki Vantaa to Seoul and Hong Kong.

Fête du Cinco de Mayo

     Only In America . . . Conferees at CNS that find themselves in Miami with time on their hands May 5 may want to party in Coconut Grove at the Jaguar Ceviche Spoon Bar and Le Bouchon du Grove that claim that they and some other restaurants are out to celebrate the true meaning of Cinco de Mayo.
     “Fête du Cinco de Mayo” held Wednesday, May 5th from 8pm to 12am in Coconut Grove will include live Mariachi music and festivities at four participating restaurants all of which are located within a short distance from one another.
     France and Mexico fought a battle at the Batalla de Puebla and on the fifth day of May 1862, Napoleon III’s army was defeated by General Ignacio Zaragoza.
     Ever since then Cinco de Mayo has been celebrated in Mexico as a great national day.
     Today the holiday has spread to other USA cities spurred on by population and commercial interests as May 5 continues to be high spot on the Spring calendar.

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