Some Numbers Raise More
Questions Than Answers

     A recent report that appeared in Air Cargo News FlyingTypers August 5, quoted IATA Director General and CEO Giovanni Bisignani who noted a drop in air cargo traffic and subsequent projected losses.
     Mr. Bisignani looking at the broader airline business described the situation as a crisis.
     Surely things are not good as the cost of fuel has deflated bottom line numbers that were soaring just one year ago.
     But with respect to air cargo there are other views about what is happening right now.
     Recently global logistics provider Aramex announced a 23% increase in revenue for the second quarter of 2008, over the same period in 2007.
     From the same region another report: “Maximus Air Cargo, the Abu Dhabi based heavy-lifter has more than tripled its turnover during the first four months of 2008 compared to 2007.”
     Also in Air Cargo News FlyingTypers last week: “KL/AF said that total cargo business revenues in the first quarter of this year ended June 30 were at 762 million Euro (US$1.18 billion), up 10.5 percent compared with the same period last year. “The airline group said revenues from the transportation of cargo were 717 million, up 11.6 percent versus the same period a year ago.
     “KL/AF cargo traffic handled in first quarter rose by 1.5 percent."
     So it goes with statistics.
     Some are up while others are down.
     What should air cargo at large make of all this?
     Is the industry up or down as 2008 continues to unfold?
     Should we salt away our resources or go full-blown into continued market development?
     Who is wrong and who is right and more importantly, what are the immediate conclusions that can be drawn for business planning purposes?
     Maybe the first question in all of this should be:
     What sources are being used to compile the next breathtaking stunning success story or flop?
     In my view, based on the examples above, although well thought out and based on actual traffic, none addresses the truly meaningful measure for a business, the profit.
     Tonnage as a measuring tool is passé.
     Only government compiled statistics record tonnage.
     Tonnage numbers have their best audience in annual reports.
     Revenue gets a little closer to the issue but doesn’t tell the whole story.
     It also depends on the nature of the business as we delve a little deeper into the examples quoted here.
     Aramex touts itself a “Global Logistics Provider,” implying multimodality and with that claim we note a lack in their figures of specific air cargo relevant data.
     Maximus Air Cargo is an all-cargo airline, so their numbers are more interesting.
     KL/AF is a combination carrier. It has a cargo division, but to the best of my knowledge, it’s not a distinct legal entity which makes it harder to measure, slice and dice to differentiate between cargo carried on its all cargo aircraft and cargo moved on passenger planes, each with a rather different cost basis.
     So apparently there is no simple answer as to how are we in air cargo doing, only more questions.
     Is a meaningful matrix one that is purely origin/destination based as opposed to systemwide?
     Is it taking a global customer and looking at the totality of the business it generates for the airline and whether it is profitable overall, with ups and downs in various markets?
     Or is the cost basis in each case, for a “global logistics provider,” a Middle East based all-cargo airline and a major combination carrier operating world-wide just not equal to compare?
     It remains elusive as now you see it, now you don’t!
     Man has a fascination with numbers, rankings and statistics.
     To ferret out “the magic answer,” keep polishing the crystal ball and spinning the Rubik’s Cube or just roll the dice and keep humping the freight.
      You decide.
Ted

India Gloom Misses Cochin

     “The encircling gloom.” That is how a senior aviation industry expert described the present India transportation scenario.
     But as Air Cargo News FlyingTypers reported sometime ago that the gloomy scenario has not deterred a few of the air cargo startups from going ahead with their plans.
     One of the little known moves is by the first Greenfield private airport in the country, Cochin International Airport Ltd. (CIAL), to start an international cargo airline to be called Air Kerala.
     The carrier would in the initial stages ply between Kerala's airports and destinations in the Middle East.
     Owned by the government of Kerala, CIAL was established with 74 percent of the cost raised from around 10,000 Non-Resident Indian shareholders from 30 countries.
     The airport's success led the Kerala government to plan on floating its own airline.
     Of course, there have been offers from a large number of non-resident Keralites to take a stake in the airline.
     In fact, CIAL has started preliminary consultations with a number of domestic and international carriers to join hands. Though it could not be confirmed, the CIAL management has apparently approached Air India to convert old passenger planes to freighters.
     Managing Director of Cochin International Airport Limited (CIAL) Shri S Bharath is so enthusiastic that he said if the ministry of civil aviation gave permission to fly to Gulf destinations, "we will immediately start the services." At some point of time, he also mentioned, the airline could introduce passenger services to the Middle East.
     A few words about CIAL.
     The airport was the first one to have been established in the PPP model (Public Private Partnership). The airport started its international cargo operations in October 1999 and CIAL took over the cargo custodian functions from Air India from December 1, 2000. There is an international cargo warehouse spread out over an area of 6000 sq. metres, which is equipped to handle all types of export and import cargo.
     The air cargo project will supplement the airport's recent move to set up a building for perishable cargo.
     To be built at a cost of $14.8 million, the place would the "only one of its kind attached to any airport in the country," according to Mr. Bharath.
     When it is completed in 2009, the MD informed, air cargo Cochin will be able to store perishable food items and vegetables for more that a week.
     With this center and freighter service, CIAL would be able to export and import vegetables, fruits, flowers, fish and meat products.
     The airport expects the perishable commodities figure to go up to 24,070 tons by 2015.
     According to last figures (2005-06) available, the exports totaled 9,270 tons.
     While most other airports are afraid that running costs will mount, CIAL remains unfazed. It has set out for a slew of major expansion. On paper, there will be 18 different projects, which include an IT park, an aviation academy, a maintenance and hangar unit, star hotels and an 18-hole golf course.
     For its part, Boeing has gone on record to mention that it would help set up the new Air Kerala.
     Dr. Dinesh Keskar, Senior Vice-President (Sales), Boeing, who was in Cochin sometime ago, mentioned that his company would only be pleased to associate with the Air Kerala venture and support it by conducting studies and also providing advice.
     CIAL's move to set up a perishable cargo center has also started attracting attention. Captain G R Gopinath (of the erstwhile Air Deccan and presently Deccan Cargo fame) has held talks with CIAL to set up a joint venture for dedicated cargo facilities across the country.
     These cargo facilities across the nation will service the hubs to be set up at Nagpur and Hyderabad.
Tirthankar Ghosh

Logistics Network Goes Global

     Early in the day if the need arises to write to Roy Stapleton, founder of Global Logistics Network, I type in the address Rstapleton@go2gin.com and laugh realizing that his actual address is RStapleton@go2gln.com and it is too early in the day for cocktails anyway.
     But Roy laughs about that one too.
     After almost 30 years in the industry spanning both the airline and freight forwarding sectors, with such companies as DHL/AEI UK & USA, BAX Global USA, GeoLogistics USA and Singapore Airlines Cargo UK, New Jersey USA-based Roy Stapleton wanted a change and a new challenge.
     He also wanted to bring some good to air cargo.
     So in 2002, he founded the "Global Logistics Network" (GLN).
     Roy puts it this way:
     “Although at the time, there were probably around 20 freight forwarding organizations, I was convinced of the need for a forwarding group driven by someone who knew the industry at a high level of expertise, and was willing to share and build for a better business climate.”
     Roy also says that his vision “was and continues to be for a quality driven network rather than a quantity driven one.
     “GLN has grown to be 233 members in 359 cities with 630 member offices in 120 countries.
     “Annual revenues of GLN members exceed US$2 billion.
     “My view is that GLN is a natural home for many local and independent freight forwarders.
     “GLN members develop new business relationships with other tried and trusted GLN members.
     “We reach out so that GLN membership can take advantage of our long experience in the industry.”
     But we wonder aside from the expected what else does GLN offer?
     “GLN has been able to develop products within GLN that are of value to our members.
     “GLN has an annual conference that is focused exclusively on business development between members.
     “GLN offers an Amber Alert and Accounts Receivable Insurance Funds to ensure the integrity of payments between members and of late, GLN has forged alliances with several leading air and ocean carriers.
     “GLN's upcoming conference in Bangkok (October 5-9, 2008) promises to be a record breaking event.
     “This sixth edition of the yearly global membership meeting will include a Carriers’ Day dedicated to interaction between carriers and GLN members to discuss matters of mutual interest.”
     But we also wonder with growing numbers of organizations and trade shows, where does GLN go from here?
     “We conduct a quality network with excellent camaraderie and communication between members. At GLN we make it our business to insure that everybody knows what to expect.
     “Also despite the recent business slowdown GLN has suffered no loss of membership either. In fact as indication of the challenges of doing business in transportation today and our reputation, GLN has grown annually since inception.
     “There is no lack of quality companies seeking to join GLN.
     “Although new members normally come from referrals, after extensive research just this month newly-formed Crane Worldwide based in Houston, Texas opted to become a member of GLN.
     “We believe that this decision by the Crane Worldwide management team reflects their desire to work with a professional quality network," says Roy Stapleton who celebrated 40 years in the logistics industry July 1st.
Geoffrey

Jelger Knows His Bananas

     A good rule of thumb when talking about perishables is to dialogue with someone who knows something about bananas.
     If there is one perishables that almost everyone recognizes and has an opinion about condition before buying, it’s that large or small bunch of bananas in the local store or vegetable and fruit stand.
     Jelger de Vriend has extensive experience in the fresh produce world. From the banana farms of Latin America to the European retail shelves.
     He held several positions in Chiquita Brands, Albert Heijn and Royal Ahold covering areas from agricultural production to retail merchandising.
     In 2007 he set up Innovative Fresh, a company for the fresh produce world.
     Innovative Fresh builds strategic innovation partnerships with leading retailers, the best growers, the most advanced logistical service providers, and with the most admired research groups and seed companies.
     Talking innovation from “seed to shelf”. Jelger firmly believes that it is time to think about the customer,
     “Innovative Fresh drives innovation with the customer in mind,” he says “innovation that adds value across the cool chain.”
     “I have a passion for produce!
     “For without passion there is no progress!
     “Perishables are like any other product group, but with two distinct characteristics, variable quality and variable production.
     “That is why seed companies and traders make large profits, and why it is important to spread production areas.
     In Netherlands these two characteristics are why we have a flower auction that determines the pricing mechanism.
     “In the perishables business building, “relationships” (“trust”) is important.
     “But in order for the growing of better relationships across the cool chain, both the perishables shipper and the transportation business must translate fundamental knowledge into practical concepts.
     “The perishables industry needs to develop systems for real time shelf life monitoring while both the industry and transportation create transparent and collaborative cool chains.
     What this means is that across the board we need to change our quality culture.
jdevriend@passion4produce.com