“Air Freight Is My Life“
     That, in English, is the title of a book currently in print, which will first be presented to a broader public in Frankfurt, Germany this week.
     The special occasion is the one hundredth anniversary of the first cargo flight in Germany.
      On August 19th, 2011, a small aircraft chartered by publisher Berliner Morgenpost departed from the city’s then Johannesthal airport to carry a load of fresh newspapers to Frankfurt/Oder in the eastern parts of Germany. It was the choice of shipping by air that resulted in the prints arriving one hour earlier than the papers that were sent by train. Ever since these early days, speed advantage has been a major driver for air freight.
     The beginning of the cargo era is just one chapter in the fascinating 208-page book in which the author, Professor Rainer Gries, a Heidelberg-born and Vienna-based scholar, illustrates a kaleidoscopic history of the German air cargo indsutry.
     FlyingTypers had the chance to take a quick look at the writing and interview the author.

FT:   How is air freight ‘your’ life and how does this story unfold in your book?
RG:  Cargo is a people business: that was our focus. The range spans from the flying personnel to the indispensable ground staff, like loadmasters or handling agents. We further feature security experts, managers, forwarding agents and other members of the ‘cargo family’ to let readers share their extraordinary spirit and enable a glimpse into their daily doings. The title we selected is a guideline for the contents.
     The 15-month-long Berlin Airlift by the Western Allies is a major highlight, summarized and illustrated on 18 pages. There it says:
     “The allied air bridge for supplying the Berliners with food, coal, construction material and other goods was an early culminating point of the Cold War. It was an unprecedented relief effort submitted by cargo flights to preserve the life of an entire city.”
FT:   Why did you dedicate so many pages to this event?
RG:  The air lift stands symbolically for two things: Firstly, it was an extraordinarily important event in world history. There hasn’t been a commensurable occurrence like it before or after. Secondly, the air lift was, literally speaking, the cradle of the German Federal Republic. Historians have never examined this specific aspect before. It was the spirit of these air lifts, bridging the three allied sectors in the western parts of Germany with Soviet-trapped Berlin, that ultimately gave birth to Western Germany as a nation. We got to stand together, show guts, and not allow the Russians get through with their blockade—this was the common feeling and paved the way for the nation’s founding in 1949. The collective experience felt in those days lasted and became a kind of Scotch tape between the U.S. and German cargo operations on North Atlantic routes, leading to a very special and extremely close relation between the protagonists that lasted for decades.

FT:   To enable the air bridge, Berlin’s Tegel airport had to be built. According to your investigation, the entire project took only ninety days. Today, it needs roughly twenty years to plan and realize a single runway, be it in Frankfurt or Munich. Why do you think that is?
RG:  Berlin was extremely endangered in those days, so there was no alternative to constructing a new airport. Consequently, every single individual supported this step. Then there were the Western Allies that pushed things ahead by decrees without the requirement of passing a bill through parliament.
     Today we are situated in a completely different environment, with people strongly advocating their individual rights. Trying to turn the clock back or applauding authoritarian systems like China enforcing 150 new airport projects seems not to be the most prosperous approach in democratic societies. Instead, we have to strengthen the common dialogue and convince people that new or modernized infrastructure is the prerequisite for maintaining or improving the standards of life. Without communication there will be no solutions accepted by the public. This, by the way, is one major essence of the book.
FT:    On pages 118-119 it reads: “It first happened 19 April 1972: The biggest ever lifted load in the history of commercial aviation left Frankfurt on board of a Jumbo en route to New York. On board of Lufthansa’s Boeing B747 freighter were shipments weighing 73,344 kilograms. … The Jumbos not only revolutionized the passenger business but also catapulted the development of air freight into a new dimension.” Was the utilization of the B747 freighters undisputed in those days?
RG:  Not at all, because quite a number of cargo people raised their voices warning that the aircraft might be too big, which would result in losses if they were not sufficiently filled up with shipments. According to them, the financial hazards would be incalculable.
     In reality, the B747F was the first aircraft that enabled mass transports, which led to the quantitative growth of cargo. The following variants proved to be door openers for quality transports of all kinds of sensitive products.
FT:   What attention do you pay in your book to pressing topics like security issues, e-freight, and environmental challenges?
RG:   We’ve touched them, but didn’t dive very deeply into those chapters. My colleagues and students were mainly concerned with highlighting the early esprit de corps of the cargo people, which is preserved and shown by the spirit of many of today’s actors.
Heiner Siegmund

     An event we look forward to each year is the annual Lufthansa Charter Agency Summer Party in Germany.
Besides the event itself, a major highlight has always been the oft-extravagant and unusual choices of venue.      For example, one of the past locations was a lovely 1920’s petting zoo in Darmstadt, right down the road from Frankfurt.
     This past weekend, Reto Hunziker, Managing Director, welcomed customers and Lufthansa Charter employees to a grand family outing in the 12-century Schloss Alsbach Castle, located in Alsbach near Seeheim, Germany.
     Knocking around the zoo transformed into knocking around the castle, but the feeling was the same – a grand time filled with food, fun and merry entertainment was had by all.
     What separated this affair from all the others were the children.
     By count, fully a third or more of the attendees were kids, and their laughter and joy was heard just like the late summer cicadas, a mixture of voices and buzzing that created a din that rose and fell on the breeze all afternoon.
 
(Left to right)—Heide Enfield, Reto Hunziker and Christian Fink.

    “We try and make this a relaxed, entertaining family day for all,” said Heide Enfield, Head of Marketing and PR, Lufthansa Charter, and the one person responsible for making this party happen for about half a dozen years now.
     This year was a special one, as Lufthansa Charter celebrated its 10th Anniversary.
     In a magnanimous turn, Mr. Hunziker welcomed his immediate predecessor, Christian Fink, saying:
     “Christian, the founder of Lufthansa Charter, built a great company over many years that continues to grow today.”
     “The idea is to create memories of this wonderful, soft time of year when everyone should be with family and friends,” Heide Enfield noted.
     The Alsbach Castle, its century-old ramparts left to natural aging, was alive this past Saturday with clever lighting enhancements created by Niklas Gehnich, (left) which included a cool blue that bathed the outer walls to deep orange hues enhancing the inside courtyard.
     The dramatic lighting effects served as a backdrop to the sumptuous buffet of meat, fish, fowl and other delights prepared in a giant wood stove in the castle courtyard amidst jugglers, musicians, a blacksmith and the occasional cannon burst.
     “Alsbach Castle is an historic and welcoming venue, and its thoroughly professional staff and entertainers worked out well all around,” Heide Enfield smiled.
     Ashok Ved, (Ved's Logistic Solutions), who traveled from Dubai into the heart of Germany with his wife Mansi, daughter Avni and son, Nisarg, spoke of a delightful afternoon in the middle of a busy summer.
     Mr. Ved is involved as a leading specialist in charters into Iraq and Afghanistan; he marveled at the care and attention paid to his family.
     “We feel quite welcome and heartened at our reception in Germany and amongst everyone here in this beautiful, relaxed venue this afternoon.
     “It is especially wonderful to have the opportunity to share some quality family time with business colleagues.”
     Mr. Ved’s reaction was typical of family and friends at this event, who over the years have marked each      Lufthansa Charter family gathering as an eagerly anticipated touchstone in the yearly calendar.
     Walter Bachmayr, who at one time was situate at leisure Cargo but today works for a niche company IQS Spedition and Logistik that specializes in automobile transport around the world, gathered up his teenage daughter and young son with plastic daggers and rubber swords at the ready and spent the afternoon racing up and down the ancient castle’s 80 foot stone tower.
     Having some fun with your kids and colleagues was the order of the day, and that also created some interesting situations.

Walter Bachmayr

Family Affair—Heiner Siegmund FlyingTypers European Bureau Chief and son Karsten.

     For example, Walter’s son was speaking German to Andrew Morch’s (Lufthansa Cargo Charter’s man in Chicago) sons, but language, we noted, was no barrier, as they seemed to understand perfectly what the other was saying.
     For a second we thought, too bad everything in life is not this simple, but after watching the children play all day and the friends and family congregate, we were thankful for this time we are given every year to celebrate one another.
     “What a great day, especially for the youngsters,” Walter said.
     “It was a great day all around,” Reto Hunziker declared as the party ended at midnight.
Geoffrey/Flossie

     Nearly everybody in transportation wants a piece of the action that is taking place in China and India right now.
     But what do bankers think?
     Here is an update on both of these markets just released by Deutsche Bank Research.
     China and India have experienced robust growth over the past decade, spurred by different drivers.
Growth has averaged over 10 percent in China and nearly 7.5 percent in India since 2000. The services sector grew in both China and India as a share of GDP and this growth mainly came at the expense of the agriculture sector.
     The WTO agreement had a significant impact on China’s investment, the share of which in GDP growth went from 22 percent in 2000 to over 50 percent by the end of the decade. India’s growth, on the other hand, has primarily been driven by consumption.
     Investment, though increasing, still lags behind China’s.
     Fiscal accounts and inflation have deteriorated over the past 1-2 years.
     Both countries put in place large stimulus packages during the global financial crisis, which were effective in preventing a sharp decline in economic growth.
     Stimulus has started to be withdrawn, but nevertheless fiscal accounts remain in worse shape than before the crisis. This is a concern particularly in India, given high levels of fiscal deficit and public debt. Despite recent tightening, monetary policy remains loose, which, together with increases in commodity prices, has led to strong inflationary pressures in both economies.
     Banking sectors remain in good shape, as conservative regulation has shielded them from the fallout of the financial crisis. Given the relatively closed nature of domestic financial markets, the abundance of local savings and stringent regulation on leverage, China and India did not experience a boom-and-bust cycle in capital inflows during the global crisis.
     Over the medium term, a favorable GDP growth outlook and low penetration of financial instruments herald bright prospects for local capital markets.
     Living standards for the population have improved dramatically, less so the environment for business.
The increase in GDP per capita and the reduction in poverty have been staggering, although income inequality has increased. The business-operating environment has also improved, but further income inequality has increased.
     The business-operating environment has also improved, but further progress is needed in a number of areas.
Infrastructure and environmental issues have gained prominence and there is more to come.
     Both countries’ 5-year development plans place substantial emphasis on infrastructure development.
     The energy sector (including nuclear energy) is also developing quickly given increasing domestic demand.
     China has made the environmental upgrading of old coal plants a priority, and the market for renewable energy in India has been growing at 25 percent per year.
A Tale Of Two Growth Models
     China has outpaced India.
     China has consistently grown at a faster rate than India during 2000-2010, resulting in a widening gap in both nominal and per-capita GDP.
     Although investment has been increasing in both economies over the past decade, it is a significantly stronger driver of growth in China than in India.
     In China, investment began to overtake consumption’s contribution to growth after the country’s accession to the WTO in 2001. Given China’s large population and vast physical size, the investment “takeoff” stage has several more years to run, moving now from coastal areas to inland provinces.
     Both countries are seeking to diversify the structure of their economies.
     In China, investment will remain strong for several years, but the government is seeking to increase the share of consumption once again.
     In India, ongoing liberalization in foreign investment restrictions and strong growth prospects should help Gradual Shift Towards Service Sector
     The share of industry in relation to GDP has remained largely stable in both countries, while the services sector has grown at the expense of the agricultural sector.
     This trend highlights the importance of improving agricultural productivity to ensure long-term food security and moderate spikes in food inflation.
     Both China and India significantly increased public spending during the crisis to support growth, and that is only being withdrawn slowly.
     India’s high spending on subsidies is keeping the deficit at a more concerning level while China’s deficit has been moderate, partially because of better revenue efficiency (i.e., revenues have grown at least as fast as GDP).
     Expansionary monetary policies have fuelled inflation.
     India’s inflation has been consistently higher than China’s, but China’s inflation cycle is more volatile.
     Over the past year or so, inflation has become a serious problem for both countries due to excess liquidity, upward global commodity price pressures, and high demand for private property.
     Food price inflation is particularly high, and it risks spilling over into core inflation, and driving up inflation expectations.
     Both countries have witnessed very strong money supply and credit growth over recent years, causing intermittent concerns about asset bubbles and excess liquidity.
Population Drives Economic Growth
     In both China and India, the population has grown significantly over the past decade.
     But India’s population growth (16 percent) vs. China’s (5 percent) makes it likely that India will replace China as the world’s most populous country in the next 15 years.
     Both China and India benefit from a large youth population.
     The challenge lies in ensuring that the youth are absorbed into the workforce and that labor force participation continues to grow. In India, this is a greater challenge given that its population is even younger than China’s.
     By the same token, a younger population gives India an edge over China with respect to labor force availability in the future. China’s aging population is going to restrict long-term growth prospects as the working population is expected to already peak over the next five years.
     Another task for India is to ensure that female labor force participation (which has remained nearly stagnant over the past decade) begins to climb.
Doing Business In China And India
     Changes in governance have been a mixed bag over the past decade.
     Despite strong growth, governance has not necessarily improved across-the-board over the past decade.
     While government effectiveness and regulatory quality in China and India are now higher, there have been mixed results on corruption, security, and contract enforcement.
     Moreover, in both economies, political stability has taken a hit.
     Regarding voice and accountability, India has improved while China has deteriorated, widening the gap between the two countries, which can be attributed to the nature of their political systems.
     Business environment remains onerous in India, but there have been significant strides in protecting investors and creating access to capital.
     India remains a notoriously difficult business environment (ranking 135 out of 185 countries in terms of ease of doing business), but the country outshines China in some areas; for example, it does far better in terms of access to financing and protecting investors.
     Nevertheless, further improvement in removing administrative hurdles is needed not only to attract foreign investment but also to enable local businesses to thrive.
     All things considered, China remains a more attractive business environment not only compared to India, but also to Brazil and Russia.

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