As IATA’s 22nd Annual Cargo Network Services (CNS) Partnership Conference opened yesterday (Monday, May 7), a hopeful crowd was on hand, filling up the entire room at Turnberry Isle Hotel and Resort in Miami. The event is set against the backdrop of continued global economic weakness and uncertainty.
     The opening remarks by Michael Vorwerk stunned the gathering—the CNS President surprised everyone with the news that he was quitting his post to return to Lufthansa (see item).
     Mr. Vorwerk’s remarks were followed by Mick Fountain, (left) CNS advisory board chairman, who summed up 2011 by concluding it had been a productive year—modernizing the agency agreement, starting implementation of a single, integrated CNS database that eliminates mailing paper documents and offers 24/7 access to its participants, and the e-version of the agency handbook.
     The rest of the presentation was the usual ho-hum e-AWB and e-freight creeping progress, with mention of the success between CBP (Customs and Border Protection) and its Canadian counterpart to accept seamless transborder e-freight.
     CASS processing costs, Mr. Fountain noted, were down for a total of more than 5 billion USD in settlements during 2011.
     CNS is happy with itself and so too is the CNS Advisory Board, having grown accustomed to the feeling while executive power and the real board is now entirely and firmly in IATA’s hands.
     Camiel Eurlings, the 38-year-old chairman of Air France/KLM Cargo delivered the keynote speech.
     Eurlings, a veteran politician of 17 years who had previously served as transport minister for the Netherlands, knows how to speechify, and his presentation at CNS was a real humdinger.
     Camiel referenced his erstwhile work as a logistics engineer and listed his first impressions upon returning to the industry—too much paper, too much opportunistic behavior, and the need for long-term commitments and increasing quality.
     He went on to say that “it is a time of change and transition and shaping the future” and therefore “facing our share of challenges we cannot remain in reactive mode.”
     Economic, demographic, environmental, and competitive issues were cited as factors (together with rising fuel and transportations costs in the face of faster growth for emerging economies) that are overtaking the developed world.
     All these impact the air cargo business, presenting challenges and opportunities.
     Mr. Eurlings mentioned alliances and partnerships, both horizontal and vertical, as the means to work together with all the partners in the logistics chain in order to create “together toward tomorrow.”
     The example of his airline using a Martinair freighter to fly flowers directly from China to Kenya, then on to Europe, was an innovative route.
     Another is the joint venture with Delta Cargo as the most integrated cooperation since the 90s, which shows real results.
     SkyTeam Cargo got the nod as the most effective cargo alliance around, with seamless connections, safe, secure, and reliable “logistic chain integrity throughout.”
     Leveraging his former government experience and connections, the TSA and the Netherlands have worked out a security agreement using a risk-based approach with the least possible disruptions to the supply chain.      Getting closer to home, Camiel advocated measures such as forwarders paying for “no show” cargo in order to raise the mutual commitment of the parties and enhance quality control in the supply chain.
     While environmental concerns needed compliance, and experimenting with biofuel showed that it had higher energy performance than kerosene, currently its production costs were five times higher. Global cooperation was therefore needed to develop alternative fuels. The conclusion: there is need to change the industry for the long term through sustainable partnerships.
     Judging by the enthusiastic applause at the end of his remarks, if Camiel's next sentence had been, “I need your vote to serve as CNS President,” this crowd would have elected him in a landslide!

     Talking about oil and fuel, what followed was Charles Schlumberger, principal air transport specialist for the World Bank, who is, as he put it, a lawyer, banker, and aviator instrumental in the logistics business in France (he’s a Swiss) in the early 90’s, prior to joining the World Bank 17 years ago.
     By the way, about one third of the morning opening program attendance had debarked by this time, and they missed a wealth of data and a flurry of charts.
     Mr. Schlumberger (right) noted that freight was indeed in decline with less cargo but more capacity, and saturated markets in North America and Europe with South America faring remarkably well and most of growth taking place in Pacific Asia.
     The Middle East was growing, albeit from a very low base.
     The industry as a whole has not been profitable, with the U.S. alone at a minus 8 billion dollars by now.
     If one is a banker, it is hard to raise money and invest in the airline industry. Safety was mentioned as presenting a global challenge for cargo with “catastrophic effects” in the case of aircraft lost to incidents involving batteries.
     In terms of security, the industry has reached a very high level, but needs to look at the cost of doing business, which cannot get out of hand.
     The remainder of Mr. Schlumberger’s remarks were devoted to oil, examining it from many perspectives and offering sometimes almost too much data, but with much energy and revealing results.
     The volatility in crude oil has been considered the main culprit that may have actually triggered the 2008 financial crisis, as some suspect high oil prices caused the mortgage bubble to burst, with households spending so much more on fuel that there wasn’t sufficient money left to pay the mortgage.
     What is one to do? Hedging on oil prices is expensive and rather short term.
     Data provided showed that for a period of about ten years, up until 2003, there was ample supply, after which it tightened. A 4-5 percent increase in global oil and energy prices causes serious damage and brings the world economy to a crisis—it is simply something the economy cannot handle. While speculation has an effect, it accounts for between 10-15 percent of the price, but it is short term. A comparison of natural gas and oil showed significant lifecycles, with about five years of productivity for a gas well versus fifty years for an oil well.
     Consumption has been rising in China and India and leveling off in the US and in Europe, where it used to account for about 1 percent of GDP and is nearing 5 percent. Per capita consumption in the U.S. is double to that in Europe and China, at 20 percent of the U.S. Supplies have been decreasing historically and a potential crisis may erupt if consumption isn’t curbed or the threshold of USD 4.75 per gallon is reached, which is deemed to trigger “global demand destruction.” The combined consumer and government debt—at four times GDP ratio in the US—are another aggravating factor.
     Although shying away from predictions, Mr. Schlumberger listed a few things in the category of “good news,” such as the potential for the U.S. and Canada to become net exporters if everything works out (who knows?), including shale oil and oil sands.
     For aviation, new, much more fuel-efficient aircraft were needed; although the newest B787 is 20 percent more fuel efficient than an MD11, it isn’t enough on a large, aggregated global scale. Economic recovery and growth in world trade will positively impact air cargo—an industry that is safe and secure.
     Oil and financial challenges remain, the unknown factors being the availability and affordability of energy. The presentation material is available online at: www.worldbank/org/airtransport
     It is worth noting that nobody brought up the fact that Delta Airlines has apparently just bought its own Pennsylvania oil well, as announced in the media last week.
     Unfortunately, the conference room audience dropped to about 60 percent by the time the e-Business panel started, all the way to about 20 percent for the mid afternoon session on the “Sustainability of the Air Cargo Industry,” to fewer than 40 people for the last session of the day “RFID – the Air Canada piece level tracking case study.”
     Whether attendees thought the sessions were uninteresting or they just had something more pressing to do, like network, which is always top agenda at CNS Partnership, is yet to be determined.
     The point can be made (based on attendance) that after a few opening speeches and despite the effort to make them interesting, these sessions appear lost on this crowd and on balance can be described as a waste of time and effort.
     But in the RFID Air Canada case, CNS Partnership conferees missed an opportunity to learn from a real, fully functional, automatic identification project that has gone through all the phases—from pilot to proof of concept.
Ted/Flossie

Tug For Cancer Cure
     Members of the London (UK) Metropolitan Police compete to see which group of 16 people could pull a 150,000-pound Jet Blue A320 100 feet the fastest at JFK International Airport Sunday.
    But it was the “fast frisk" cargo & passenger inspectors of TSA that won the competition in 32-seconds flat.
The event raised money for Joining Against Cancer In Kids (JACK), a UK charity. http://j-a-c-k.org/

     Naples, Florida, is as unlikely a place as you might expect to meet someone who has seen it all and lived to tell about it, but there I was aboard a big dinner cruise boat—the kind that push gamblers out beyond U.S. jurisdiction to play games of chance and are also available to host company events—having a once-in-a-lifetime encounter.
     While everybody else was getting jolly at the open-deck cocktail hour, I was down below in the dining salon checking out the grub. It was there that I noticed a well-dressed gentleman, slight of frame, sitting at a corner table all by himself.
     I am not one to allow for loneliness at a party. It just doesn’t sit well with me. My instinct to engage was only further solidified by the fact that this perfectly nice looking gentleman was black. I must say, I cannot remember the last time I saw a black person at an air cargo event, let alone at a management level meeting or an industry party.
     My instinct to engage goes rather hand in hand with my desire to cut to the chase—a desire that has both expanded my horizons and perhaps at times put me in a pickle. Fortunately, that night was an adventure in the former.
     I walked right up to the gentleman and said:
     “We don’t see too many people of color at air cargo events.”
     His face broke into a broad grin, all smiling eyes, as he looked at me—Mr. American Cheese on White—and munching on a hard roll, laughed out loud and said:
     “I almost didn’t make it here… you know I am still on the TSA terrorist list?”
     “You know,” said his friend and host on the boat ride, Jo Frigger, (in photo left) CEO of EMO Trans, “you’re speaking to Sibusiso Peter-Paul Ngwenya, who spent plenty of time disturbing the peace, blowing up rail lines, and otherwise caused all manner of disruption in South Africa during Apartheid.”
     “I wasn’t easy,” said the 57-year-old Peter Paul.
     “I spent seven years of a fifteen year sentence in jail with Nelson Mandela and was not released from Robben Island until 1991.”
     There I was, riding on a dinner boat off the golden-age coast of white privileged Florida, speaking to a man who gave up part of his life to help millions and secure the freedom for what is now the new South Africa.
     Robben Island was first used as a political prison in the mid 17th century, a place that housed convicts, slaves, and indigenous people who would not adhere to colonial rule. For 30 years (from 1961-1991) it was used as a maximum-security prison for apartheid fighters. It is now a museum where visitors can see the 7-by-9-foot cell that held Nelson Mandela, a room that Mandela wrote about in Long Walk to Freedom: “When I lay down, I could feel the wall with my feet and my head grazed the concrete on the other side.”
     Today Peter Paul’s selfless patriotism to South Africa has developed into several business ventures, including Engen, South African Breweries, and the investment company Makana Trust, where he is a founding trustee and former chairman.
     He later co-founded Makana Investment Corporation, of which he is the current executive chairman.
     Peter-Paul is the treasurer of the Ex-Political Prisoners Committee.
     He is also the chairman of South African Airlink, radio stations Heart 104.9 and Igagasi 99.5, and Sebenza Forwarding and Shipping Consultancy.
     Sebenza Forwarding and its long standing partnership with EMO Trans has brought him this day all the way from the head office in Johannesburg via Dubai to Naples, Florida.
     “You know,” Peter Paul confided, “we have a real challenge with our forwarding business.
     “When Apartheid ended and the balance of business ownership and positions in various companies came to be more racially representative of more than 80 percent of the population, the move was to put people in positions they may have been less than qualified to hold.
     “Consequently, I am here in the USA looking for management-level expertise that is willing and qualified to both work and make a career in South Africa while we build our cargo infrastructure and expand our transportation expertise today and for future generations.
     “Our business in 2012 has not been that good; in fact, we are struggling.
     “But there are lots of opportunities in South Africa,” Peter Paul insisted.
     “Part of our problem is that there are so few trained people.
     “We have lost key people to various factors, including to the competition, so replacement is quite difficult.
     “South Africa is a major trading partner to other African countries, including for example, Zimbabwe and Mozambique.

     “With continued interest in the African market from everywhere else in the world, the talent pool for logistics personnel is greatly challenged for everyone at home.”
     Looking ahead, Peter Paul just put the finishing touches on an autobiography of his life, expected out later this year.
     Here is a man whose life began in poverty and repression, and who has now blossomed into generating business and creating civic greatness in his homeland. His pride and strength were instantly recognizable just in talking to him.
     It is too easy to overlook people like Peter Paul, because they make what they do look so simple.
     We are so glad that didn’t happen on that big party boat in Florida, when the great Peter Paul and his vision of a thousand tomorrows sat undetected, a quiet hero amid a crowd of revelers.
Geoffrey

     This is the week of CNS in Florida, when airlines and forwarders go face to face at meetings with the hope of achieving better understanding and the exchange of ideas.
But to look at CNS sponsorships, it appears as though (with very few exceptions) most of the coffee breaks, dinners, luncheons, and the like are supplied by the airlines.
     Little wonder that most of the “ink” that emerges from the “Partnership Conference” is about the airlines.
     Not a bad proposition, we say; after all, most of the bills around here are paid for with airline advertising.
     So without throwing any stones, we wonder what others in air cargo are thinking about this now.
     Recently we attended a gathering for Swiss WorldCargo where we spoke to three varied and interesting non-airline people, some of whom may be in Miami this week.
     No matter—we will continue to gather these comments at CNS and keep the story going in future issues.

Kim Kan Kombine Anything
     Kim Ekstroem is Senior Vice President of Shipco Transport based in Hoboken, New Jersey.
     Established in 1988, Shipco Transport Inc. is a subsidiary of Scan-Group and has organically grown into one of the world's leading neutral NVOCCs.
     The company operates more than 60 offices worldwide and has over 1,400 employees in 2012.
     “Shipco Transport simply is a 'one-stop' provider of worldwide shipping solutions,” Kim Ekstroem says.
     “In addition, with a sophisticated and unique package of customized e-commerce tools available around the clock, we offer customers seamless access to a global network of offices and dedicated agents.”
     As to how is business doing, Kim tells it like it is:
     “We came out of 2011 in pretty good shape and 2012 has been a bit soft so far, although March picked up and we are confident all in all that 2012 will be a good year.
     “Shipco is a neutral force to support both the airlines and the forwarders.
     “Our coverage in USA and Asia offers more than 200 consolidations per week via 11 gateways.
     “Additionally we provide value added services, including mandated screening at all our gateways, “Kim Ekstroem said.
kekstroem@shipco.com

Good Natured Sam
     Prime Transport Ltd. is a customs broker freight forwarder and trucking company located on 156th Street in Jamaica, New York, just off the main runways of John F. Kennedy International Airport.
     Sam Fischel is CEO of the privately held company; in many ways it mirrors many air cargo businesses around the world—unsung and not much heralded.
     But make no mistake; Sam is the backbone, lifeblood, and true spirit of air cargo.
     We also discovered Sam has a keen view of the transportation business from the ground up, having been employed for a time at Seaboard World Airways, the legendary all-cargo carrier that once was based at JFK.
     “I think the airline experience that was based on the operations side was a definite advantage for my life in freight forwarding, because unlike others in my field, we can operate with some idea of what happens onboard an aircraft,” Sam said.
     “Moving from airline to forwarding, I noticed right away that the export part of the business was identical, but the customs broker side was a whole new world.
     “The assimilation into new business was challenging, because coming from an airline, it was not easy to gain trust as a forwarder.
     “Also, in the USA to understand forwarding is not easy, as we do not offer apprenticeship training as in Europe, where learning the ropes in forwarding is readily available and in fact mandatory.
     “So I moved from Seaboard to work for a decade at a big freight forwarder and did several jobs that eventually led to my Customs Brokers’ license and my own business.
     “Now some twenty years later, after having started in 1993 with two people and having grown to 40 employees at two offices at JFK and MIA, I can say that owning a business in air cargo is plenty of motivation every day of the year.”
sam@prime-transport.com

Benno’s Number 8 Readies Takeoff
     Benno Forster, Head-Air Freight USA & Senior Vice President Panalpina, looks to May 2012 with great anticipation, as the month begins with a grand, new B747-8 freighter to serve Panalpina’s Huntsville Alabama operations serving Asia, Europe, and Latin America.
     “Perhaps the most exciting aspect to us, in addition to the success of the all-cargo operations, is that for the first time the aircraft (ACMI) will show the Panalpina branding on the tube & tail.”
     Panalpina Group, which operates its U.S. airfreight network out of Huntsville, operates 10 scheduled flights per week at Huntsville International Airport from Europe, Mexico, Hong Kong, and Brazil.
     "Huntsville airport is definitely a corner stone of our airfreight product.”
     Panalpina has operated its freighter from Huntsville for the past 22 years.
     It is worth noting that in 2011, Huntsville International Airport set records for its air cargo business, moving more than 206 million pounds of cargo, or 32 percent more than 2010.
     “Our 2011 numbers were 17 percent higher than the previous record year in 2007,” said Rick Tucker, the airport's executive director.
     “Looking ahead,” Mr.Forster said, “we do have some concern, especially after not seeing much of a peak season late last year.

     “But we remain optimistic we will reach our very high gals outlined in our business plan 2011-2014.”
     Benno Forster came to Panalpina after a long and distinguished career at Swissair Cargo.
     He notes that a major difference in working the other side of the table is as a freight forwarder, there is the downward pressure to get things right from the shippers.
     The suggestion that “heaven will protect the freight forwarder,” raises an immediate and hopeful smile from Benno.
     “Swiss has a special place in my heart after spending 25 years with the company.
     “To me, Swiss is still my favorite airline.
     “Swiss Cargo as a belly operator limits the volumes they can handle.
     “In our case, that means when a customer delivers a dozen pallets, we need our own lift or alternative sourcing.
     “But where we want something handled perfectly, on time, and without question (you pay a bit more), they always do a great job.”
benno.forster@panalpina.com
Geoffrey/Flossie

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