Vol. 9 No. 93                                            WE COVER THE WORLD                                          Monday August 9, 2010

 

Understanding
Lufthansa Rate Hike

     In an address to forwarding agents, LH Cargo announced a rate increase of 20 percent on average together with an adjustment of security surcharges that will go up from 0.17 euros to 0.20 euros for each flown kilogram. Both prices will come into effect October 1, this year.
     In the letter passed on by agents to Air Cargo News FlyingTypers the carrier’s Executive Board member Andreas Otto justifies the rate hike with the dramatic financial impact caused by the global economic downturn. As a result of the downturn, the carrier faced a loss of 171 million euros in fiscal 2009 and a revenue slump of more than a billion euros.
     The notice further reads: “an unprecedented decline in rates led to yields falling by up to 40 percent.
     “On many of our routes, we are still confronted by rates at a level significantly below that of previous years.”
     Herr Otto reminds his clients that running a cargo airline is a highly capital-intensive business that needs a sustainable healthy structure and commensurate profitability.
     “We have survived but over the past four years, Lufthansa Cargo has had to contend with an average operating margin of not even two percent - a figure well below the average of international companies in the logistics industry,” the manager stresses, asking for understanding and support by shippers and forwarders.
     In a first reaction, Dieter Haltmayer, owner of Frankfurt-based agent QCS-Quick Cargo Service GmbH says the price leap announced by Lufthansa Cargo is basically justified.
     Between mid-2008 and the end of last year both carriers and most forwarders were confronted with heavy losses. Since then the markets improved spurring demand for air transport that currently is outpacing the capacity offered by the airlines. Said Dleter Haltmayer:
     “Given these circumstances and due to the rapidly growing fuel costs it is understandable that carriers are trying to hike their prices.”
     He added, that he’d prefer all-in rates instead of “splitting up the bill to reflect transport rates and surcharges for kerosene plus security.
     “This sort of billing is outdated, the carriers should shelve their awkward pricing system,” says Haltmayer.
Heiner Siegmund

 

Week One Of USA 100% Screening

     It was supposed to be the biggest, if not the most ominous, day in air cargo history.
     What began on August 1 – mandated 100 percent screening of all USA belly cargo – turned out to be about what did not happen.
     So far, at least those who set the wind of screening have not reaped the whirlwind, as was thought might be the case when late last year the predictions of dread and doom were swirling through the minds of all those involved.
     Could it be that air cargo got it right?
     Or maybe the industry was just lucky?
     As August 1 approached, we spoke to a select group of air cargo leaders to find out what they thought would happen.
     Here are some thoughts four days after 100 percent screening began in USA.
     If you are looking for a good barometer of how 100 percent belly cargo screening is doing after one week, look no further. We had a brief conversation with EMO Trans Customized Global Logistics, a mid-sized international freight forwarder and global logistics service provider, and learned a lot about the process and its current effects on the industry.
Joachim Frigger
CEO
EMO Trans     

The company CEO, Jo Frigger, is based in Long Island, New York and oversees operations in air freight and ocean freight services for direct, intermodal, and consolidated cargo for import shipments and export shipments.
     EMO also provides warehousing, distribution, packing, insurance, letters of credit, customs brokerage, and chartering.
     With a mission to stay close to its customer base while providing reliable and professional international freight forwarding and global logistics services, Herr Frigger often speaks up at gatherings such as CNS and has also appeared in Washington on behalf of hundreds of small to medium transportation companies.
     “All my offices have reported that there have been no problems for the first week of mandated screening.
     “We use a variety of processes - from our own screening, to airline, to third party.
     “Surprisingly, there have been no delays at carriers, just extended close-out times.
     “But as we say ‘one swallow does not make a summer’: it's the first week in the slow season.
     “We shall see how it proceeds when business heats up.
     “At this time, airlines take the build up units apart, screen the cargo and put the units back together.
     “We wonder if this can continue with more volume.
     “All cargo aircraft is, of course, preferred space.”


Klaus Holler
Vice President, Cargo the Americas
Lufthansa

     “No reported problems.
     “As we started 100 percent screening July 1st, 2010 (a month earlier), our operations were completely ready for August 1st.
     “Lufthansa has increased our manpower and resources in order to meet this mandate, the additional work load is currently being handled without delays or stoppage of cargo shipments.
     “For those that are still looking for options, we have our Supply Chain Solutions Concept with partners Lufthansa Cargo, Covenant Aviation Security and Smiths Detection.
     “Supply Chain Solutions outreach is still being conducted within the industry for those that may want to explore the benefits of the CCSP program within their own operation or through one of our certified Independent Cargo Screening Facilities.
     “We are committed to continue working with our customers as the mandate continues and future security regulations are imposed.”



Dave Brooks
President
American Airlines Cargo

     “So far so good!
     “Virtually no glitches or delays anywhere, no cargo delayed due to screening.
     “Customers looking for help or further information can go to www.aacargo.com and click on the ‘are you ready?’ tab.”

 

 


Neel Shah
Vice President
Delta Cargo

     “The first few days of the 100 percent screening mandate have presented a few challenges, but overall the operation is running very smoothly and we haven’t seen a drop in volumes as a result of the new fees and requirements.
     “Our strategic partners are, for the most part, CCSP certified so they are tendering 100 percent of the cargo pre-screened.
     “We have had a few transfer shipments from South America that have needed to be broken down and rescreened in the US gateway prior to connecting to a flight to Europe or Asia.
     “The TSA did revoke the ETD amendment for NRT, so we are purchasing another large aperture x-ray machine so our NRT team can effectively screen banded skids without having to break down the skid.
     “This machine should arrive within the next 30 days.
     “Other than that, things are pretty calm and Delta Cargo is meeting the mandate in full.



Doug Britten,
General Manager Cargo
Transportation Security Administration

     “To date, we have not seen any issues at the carriers in the U.S.
     “TSA is in close contact with the wide body carriers at the main U.S. gateways, and they are reporting mostly smooth operations.
     “They had a finger on the pulse in discussions with their forwarders leading up to the date, and have been able to gauge how much pre-screened volume they would be receiving.
     “Many of them invested in additional equipment, such as large aperture x-ray (capable of screening 48 x 48 x 65 skids of homogenous cargo), to ensure the balance of unscreened cargo they receive is screened effectively.
     “We have not heard any complaints from the forwarder or shipping community regarding any issues.
     “I think the carriers did an excellent job of communicating to them in advance all of the necessary information regarding changes in cut-off times, fees, configuration requirements and operational processes.
     “All of that helped ensure everyone was well prepared.
     “So far, we have not seen any issues with the technology or the procedures, as most of that has been in full operation since February 2009, they are just pumping more screened volume through the system.
     “Currently, we are seeing about 10 million pounds per month being uplifted in the US, but with the economy starting to turn upwards a bit, and the usual volume increases in the fourth quarter, we expect that to increase.
     “For anyone who wishes to get additional information on the 100 percent mandate and TSA's approach, as well as information on the Certified Cargo Screening Program (CCSP), the direct link to TSA's website is
http://www.tsa.gov/what_we_do/layers/aircargo/certified_screening.shtm
     “The website also lists all freight forwarders and Independent Cargos Screening Facilities (ICSF) in the U.S. by city and state.”


Jim McKeon
Vice President Cargo
Continental Airlines

     “CO Cargo was well-prepared for the August 1 milestone.
     “Cargo has been moving smoothly and there have been no bottlenecks.
     “Both our new large aperture AT scanners are in place and running at Houston Bush and Newark Liberty cargo facilities. (supplementing advanced screening technology in 75 other stations).
     “We are seeing growing volumes of CCSF-screened cargo and support that traffic by waiving security surcharges.”

 

 


Karen Avestruz
Director of Cargo Security and Compliance
Worldwide Flight Services

     “The forwarders have been pretty well-prepared so far.
     “Since the mandate took effect on a Sunday, the first couple of days were light as far as volume, so there was little effect operationally.
     “Add to that soft volumes for European destinations due to August vacation – I would say the TSA certainly timed this right.
     “We have the opportunity to work with our forwarders and carriers to make sure all processes and procedures are clear before we see the heavier fall and winter volumes.
     “We have not experienced delays so far on origin cargo; however, international transfer cargo has been a bit of an issue. The screening certification required to make the transfer to US passenger flights has not arrived consistently, resulting in re-screening of a few shipments.
     “We continue to work closely with our local shippers and forwarders to educate them regarding the benefits of delivering pre-built and pre-screened cargo to the carrier, making WFS an integral part of the process.
     “Our ability to provide both screening and handling services gives our customers a valuable advantage in tendering cargo to the carriers.”



Kyle Betterton,
Vice President United Cargo,
Managing Director United Airlines

     “Flawless!
     “We have no changes planned, as all went as planned.
     “All the resource, communications, planning and investments paid off and resulted in a very smooth transition to 100% security.
     “However, we still have the busy part of the week ahead of us, so we are not letting our guard down.
     “We continue to have our corporate leadership team deployed at all our hubs to ensure we are meeting our customers’ expectations and if any challenges arise, we are quickly adjusting to ensure we deliver what we have committed to our customers.
     “No cargo has been delayed due to security.
     “There were a couple of customers that were still confused about policy, but quickly recovered to tender their freight according to our acceptance policies.
     “If customers still have questions about 100 percent security, they can go to two places: www.unitedcargo.com or our security hotline 24/7 at 1-800 822 2746.



Brandon Fried
President
Airforwarders Association:

     “The first week of 100 percent screening seems to be somewhat uneventful, but I plan to administer a survey to determine membership reaction.
     “We will share the results with everyone once available.
     “While there may be sporadic issues throughout the country, the lack of delays is not surprising given the amount of preparation in advance put forth by industry and the TSA.
     “This included a number of screening thresholds imposed by the agency before the 100 perccent requirement, aggressive CCSP outreach and the required narrow body screening amendment which took effect over a year and a half ago.
     “Finally, since August is a traditionally slow month for air cargo, we may not begin to see the true impact until sometime in September.
     “If unsure of the requirements of 100 percent screening, folks can contact the TSA or the Airforwarders Association.
     “If I cannot answer the question, our group has a team of highly qualified industry experts who can provide advice.”
Geoffrey Arend/Flossie Arend

 

End Of The Line For Mexicana?

     Mexicana Airlines says that it has stopped ticket sales while it negotiates pay cuts with pilots and flight attendants in a last ditch attempt to avoid bankruptcy.
     "The sale of tickets was suspended Wednesday, but flights continue to operate normally.
     “In some cases, tickets purchased weeks earlier are being transferred to other airlines that are business partners with Mexicana," says AFP.
     Mexicana, which has been in business since 1921, is one of the world’s oldest airlines. The airline has been on the financial rocks for some time now due to slowed tourism and the worldwide financial crisis.
     Right now, the 11th hour attempt by the company has been in trying to persuade the unions that cover crews to accept salary cuts.
     Mexicana has been a member of Oneworld Alliance since 2008 and was purchased in 2005 by Grupo Posadas.
Flossie

 

Mona Lisa Adds Up!


Click To View "Mona"

     Houston-based BQR Advertising and Public Relations and Continental Airlines Cargo, recently teamed up to win a Silver Addy for the thirty-second animated Web ad “Mona Lisa”.
     The ad that ran in Air Cargo News FlyingTypers and elsewhere last year features a mysterious diva decked out in jewels, electronics, furs and haute couture, created to introduce Continental’s new COsecure cargo product. More than 60,000 entrants vie for the Addy’s each year, billed as the toughest competition in advertising.
     Nice going CO Cargo & BQR!
Geoffrey

 

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