Vol. 10 No. 77                       THE GLOBAL AIR CARGO PUBLICATION OF RECORD SINCE 2001              Monday August 8, 2011

Jo Frigger
Chairman and CEO
 EMO Trans

     Was in our head office in Freeport, New York as the terrible events of 911 unfolded on global television.
     I thought at that time that the attack would change our world.
    Today the air cargo business as direct result of that day is more complicated.
     New laws and regulations after 9/11 have led to new additional internal security structures as well as our own screening of cargo.
     Right now the air cargo industry can be viewed as having done a lot and continuing to improve security.
     It would benefit all I think if international governments could better coordinate their effort to create a more uniform multi level approach to security.
     What is needed is less confusion interpreting rules and regulations all around.

     In some quarters, capacity sharing partnerships between HKIA and airports in southern China have been advanced as an alternative to HKIA moving forward with plans to build a third runway. Cathay Pacific has been rather outspoken on the issue, pointing out quite reasonably that Shenzhen and Hong Kong have separate governments, border controls and administrative systems. They also have different currencies, immigration requirements and air services agreements, not to mention leading operators and stakeholders.
     “Even if the challenges outlined above could somehow be resolved, there’s no reason to think that the other PRD airport hubs would surrender their runway capacity to Hong Kong. All of the PRD airports are in competition and this is good for passengers and other users,” said Cathay in one statement.
     As HKIA weighs up its expansion options, the truth of the matter is that competition between Hong Kong and its Mainland rivals is fierce now and will intensify in the coming decade.
     As previously reported here, the Pearl River Delta region of southern China produces over 25 percent of the country’s exports and is responsible for more than 10 percent of national industrial output. Over the last decade HKIA has retained its dominance of air cargo uplift from the region, a dominance that helped it become the world’s leading cargo airport in 2010. But its cross-border rivals of Guangzhou (CAN) and Shenzhen (SZX) are making inroads.
     CAN saw volumes rise almost 20 percent in 2010 to 1.14m metric tons, helping the airport retain its status as the 21st largest cargo airport globally, according to figures from Airports Council International. Shenzhen, meanwhile, is now the 24th largest and one of the fastest growing cargo airports in the world, handling some 809,363 tons in 2010, a year-on-year gain of 33.6 percent.
     Both airports have ambitious plans to expand by building additional runways and already boast the presence of major hubs operated by leading carriers – UPS at SZX and FedEx at CAN. The two logistics majors have been highly vocal about the service benefits that have been possible since the hubs were established. Both airports are now also improving service levels, supported by strong investment in hinterland infrastructure from regional and federal authorities.
     Alwyn Mendonca, (left) Managing Director for South China and Hong Kong at GAC, said these efforts are now bearing fruit. In the past, 90 percent of GAC’s airfreight cargo was handled at HKIA because it was the most cost-effective option, especially since GAC builds its own units in Hong Kong.
      “However,” he added, “we are gradually seeing more cargo moving directly through Guangzhou and Shenzhen as customs in Southern China becomes more efficient. For every shipment, we carefully evaluate all options to find the best, and most cost-effective, way to get the cargo to its final destination.
     “There has been considerable improvement in customs services at both CAN and SZX in the past few years. Paperless export declarations are now a reality for some general cargo, depending on the commodity, and it is now possible to complete the process within a day.”
     Christian Hein, Vice President for air freight Product Management in the Asia Pacific at Schenker, said improved customs services were seeing more cargo directed to CAN and SZX, a trend he predicted would accelerate.
     “There are more domestic and international carriers calling into these two airports now and they offer good connections overall,” he added.
     “There are increasingly more customers requesting us to operate directly out of these two airports due mainly to their proximity to manufacturing operations, and to a certain extent, an increasingly influential and sizeable consumer market.
     “Though the fuel surcharge level is higher than Hong Kong, the overall freight rate all-in is still competitive.”
     Robert Timmerman, (right) Area Manager Greater China at Panalpina, said that although airfreight rates were attractive from mainland airports, add-on fuel and security surcharges ultimately aligned pricing with HKIA.      “The fact is that the carrier portfolio in both Shenzhen—mainly served by Jade Airlines to date, and Guangzhou, which sees a diversified portfolio going forward, combined with the expanding China Southern fleet including Boeing 777 freighters—will allow us to provide direct lift from and to Mainland China to support the growth.
     “Hong Kong, however, will retain its strengths in view of the local trading solutions available and successfully conducted for years.
     “A dilemma going forward related to airlifting through Mainland airports are the restrictions related to second customs’ bond transfer. This cannot be conducted at present. If the Logistics Provider could build Aircraft ULDs themselves this would substantially increase control and thus reduce exposure on damages.”
     Andy Weber, (left) President of Kuehne + Nagel Asia Pacific, said CAN and SZX still lacked sufficient route coverage, flight frequency and airport cargo handling options, but had a speed advantage over HKIA in terms of accessing factories in the PRD because of overland transit times.
     “Buyers increasingly demand high-speed delivery of products or components, and the time lost can constitute a competitive constraint,” he explained.
     “This would suggest that Hong Kong’s future as a key air-cargo hub will heavily depend on its capability in providing speedy intermodal transports by land, sea or air between Hong Kong International Airport and the factories in South China.”
     The final word on competition between HKIA and southern Mainland China rivals goes to Hein: “An additional runway [at HKIA] would definitely enhance competitiveness. Nevertheless, the competition between HKIA and other South China regional airports is keen and will remain so for years to come.”
Sky King


     According to a press release dated July 20, ICAO and FIATA have entered into a new agreement for dangerous goods training for air freight. This follows on the heels of the decision made this last spring to separate from the IATA training programs in order for forwarders to pursue their own plans independently.
It will be interesting to see how IATA reacts, because in principle, beyond the fundamental change in the relationship with FIATA, this stands to hurt IATA where it matters—in the pocketbook—with fewer manuals and CD sales to the forwarder community down the road.
     Furthermore, the said press release also mentions that ICAO and FIATA “are looking at extending their partnership to include air cargo security and to establish a related programme for freight forwarders in the near future.” This clearly points to another step in distancing the two formerly closely related organizations, IATA and FIATA, with the latter striving to gain equal footing in the industry and in its representation and relationship with global bodies such as ICAO. While this need not necessarily be a complete loss for IATA, it is the result of many years of being tone deaf, self-centered and not keeping in tune with the times. Will more distance make for better airline/forwarder relationships?
     It is also a reflection of the fact that forwarders are multimodal, and therefore implementing and supporting separate regimens for each mode of transportation while IATA concerned only with air freight has been something the forwarders have long chafed under. The much-publicized e-freight is unfortunately affected by the same issue, which is the air specific infrastructure requirements, alongside road and sea freight, the latter two already being paperless to a large extent. Like the definition of “is,” paperless could be a ubiquitous PDF file rather than having to support the entire suite of e-freight documents, many of which are shipper generated.
     Maybe biting off smaller pieces could get the industry further, faster if IATA, for example, restricted itself to the documents that airlines, ground handlers and forwarders need in their interchange, rather than the whole enchilada, which is ideal, but its realization certainly isn’t setting any speed records or wholesale adoption by all the participants.
     One has to wonder how these things emerge and evolve over time. Was e-freight in its inception something for which the airlines had been clamoring, and for which IATA, as the airline trade association, saw itself taking up the battle cry? Or was the tail wagging the dog, so to speak, and IATA came up with a cause celebre and got the airlines onboard, primarily because it was seen as being of real value on the passenger side and thus, as is frequently the case, it must also be good for cargo?
     It is instructive to look at the IATA position in 2005 (e-freight Conference on November 1, 2005, G. Bisignani speech) and as documented on its web site presently:

Annual savings $1.2 billion

Now $4.9 billion

39 X 747 of paper to be eliminated

Now 80

38 different documents

Now 30

10 million dollar budget

Now ??

140 person team

Now ??

Will engage 265 airlines

Now 31

Will engage 15,000 forwarders

Now 1,391

Archive 95% paper free by 2010

Now 10% by 2011

     This is not to say that anyone is in favor of continuing to carry a thick document pouch stapled to each air waybill. One option would be for forwarders to ship these documents via courier/express carriers and thus pay for them and/or charge the cost back to the shipper. This would accomplish the goal of not filling up entire 747s over time with these kinds of papers, which the airlines carry for free, and it would no longer waste expensive fuel and valuable trees. Not to mention the dreaded carbon footprint!
     The contents of said pouches have been fought over and debated for decades, jealously guarded by the forwarders, who suspected the airlines desire to take a peek at forwarders’ customers and thereby threaten their livelihood.
     Granted, the pouches may well contain many shipper-generated documents that neither the forwarder nor the airlines have any need or use for. And yes, there are third party technology solutions to transmit such documents electronically, but these tend to be standalone solutions that are not integrated in the forwarders’, airlines’, or the ground handlers’ systems, and they would require the old double entry by one or more entities. So what has e-freight really solved and who stands to benefit in the end?
Ted Braun


RE: REG (Ron) Davies—Pathfinder To Aviation History

Dear Geoffrey

     So saddened to hear of the passing of Ron Davies, he was a close friend for many years from the late 80's and we worked (he provided the history and I the grunt work on a Save The Comet project at ORD ( involving Naked City Indiana, Redmond Aviation, Mexican, Western Air, BA, ORD CDA and De Haviland / BAE . . . all a story unto itself) .
     Ron and I were 'volunteer' technical advisers on a PBS documentary 'The World’s First Jet Liner, and I had the pleasure of hosting him in my family home in Nairn, Scotland and connections to RAF Kinloss
(then all things Nimrod aka Comet). Ron provided the history, I handled the clap boards.
     Ron was an inspiration to me and I was privileged to be his guest at RAES Hatfield in The UK for the 40th anniversary of the Comet in 1989. Such a gathering of post WW II aviation greats left me in awe.
     I have a fine collection of Ron's books with personal inscriptions that I have always cherished and they will now be treasured with his passing.

B rgds
Ross Jacobs
VP Business Dev.
Alliance Ground Int’l

RE:  Air Cargo Took Off Above The Himalayas

Geoffrey:

     Congratulations on further "clearing the air" relative Flying Typers vs Flying Tigers. It was an honor to work with those that supported and represented CNAC, AVG and hence The Flying Tiger Line.
     Loved that "Bellowing Giant", the C46 Commando during my rampserviceman years with Tigers. I always look forward to reading AirCargoNews keeping abreast of Air Cargo after 39 years with Flying Tigers and 5 years with FedEx during the Golden Years of Air Cargo development.

Paul A. Stokes
Sr. VP Pacific Division Flying Tiger Line
VP North Pacific FedEx

 

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     Airlines dealing with customer beefs are nothing new.
     But now a growing number of people all over the world have decided that the best way to be heard is to pen a song and put it on YouTube.
     At least that's the conclusion country singer Dale Watson came to after Australian carrier Tiger Airways lost his luggage, which included a box of CDs that he had paid more than £300 in excess baggage fees to transport.
     Watson wrote a song called “We Don't Careways.”
     The Watson song follows Canadian musician Dave Carroll, who took on mighty United Airlines when the carrier stowed his guitar below deck and returned it broken in half to Dave.
     When Carroll went on YouTube he received more than 10 million hits for his song, which quickly drew the attention of UA.
     In Dale Watson’s case, the result was the same.
     Within hours of his song going live, Tiger Airways refunded the excess baggage fee and paid £1,300 in compensation.

 

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