Just in case it got lost in translation, or you’re too busy muddling through what has turned out to be a business year of survival, the TSA deadline for 100 percent screening of all passenger flights carrying cargo into USA goes into effect on December 3, 2012—about 120 days from now.
     Sure, it’s been about a half a decade since U.S. politicians passed the law.
     But while much progress has been made, the numbers of bi-lateral security agreements from the more than 200 countries of origin that are shipping into the USA still leave much to be desired.
     The U.S. has an agreement with Canada, EU, and some others, but an alarming number of countries have not agreed on anything. And the limits of how much the U.S. can dictate to other countries have been demonstrated.
     Of course, all-cargo carriers get a pass in all of this and reporting in all cases is left up to the airlines as screening goes to 100 percent. And FedEx and UPS are treated as all cargo, being express carriers. Ironic?
USA General services Administration (GAO) raised an eyebrow to that prospect, delivering an understatement recently that self-reporting is “difficult to verify.”
     So as the days shorten to deadline, despite the conversations, the TSA folks sitting on panels and addressing cargo club meetings, or traveling abroad to build greater “understandings,” the payoff in all of this seems to be leading to the age-old, government ramrod tactic toward change—ready or not, a rule is enacted that will be enforced unless someone can show a reason to change to a new rule.
     The idea seems to be that in an imperfect world, you can just dig a hole and eventually the sides will fall in and everybody will be 100 percent screening. The federal framework has always made it easy for the authorities to go after the airlines, but under ACAS (air cargo advance screening), much more is required from the forwarders and it will be a test to see how far CBP/TSA can/will go to enforce the rule to the letter, particularly when many are foreign entities.
     Maybe air cargo should have pushed for a two-year extension as, say, was granted to the ocean shipping business?
     The view from here is that there will be leaders in the steady move toward better and more thorough air cargo security measures—Lufthansa and American Airlines come to mind, along with some others.
     Also, no one should doubt that after 911 everyone in this business is implementing better-enhanced procedures as soon as possible.
     But right now, most important is: getting more trading partners on the same page with how to do security so that wasteful duplication of effort, or worse, interfaces that just do not work together, are avoided; although certainly not a game, there are far too few chairs for everybody to sit at the table as the clock ticks down to December 3.
     So, for what it is worth, here is an idea:
     What air cargo needs right now is a voice that speaks less about what each company has done about security and more about what the industry should insist be done by government to insure global cooperation between countries. GACAG anyone?
     Let’s just do the math . . .
     There are too many trading partners that are still not on the same page for 100 percent cargo screening for it to work December 3.
Geoffrey

Patrick Murray talks about innovation and building fast-growing Calogi with great enthusiasm and hope.
Murray is no stranger to IT, having been involved with various systems—from British Airways to IATA to Mercator.
But as we learned during a conversation in Dubai recently, Calogi is building change for the world air cargo community from the ground up.
      Amidst a growing number of solutions providers, fast-rising, Dubai-based Calogi is providing a secure Internet service portal “that offers a one-stop platform for a range of air cargo businesses from around the world to negotiate and sell products and services online.”
      2011 was quite the year for Calogi, which completed its goals after 4 years of development and “over 140 man-years of effort,” says Mr. Murray.
      A number of modules were added to Calogi’s growing list of IT solutions, including: A third party logistics module, “which allows 3PL service providers to sell products and services such as dangerous goods packing, warehousing, and transportation to their customers”; c-prime, “a module which allows forwarders and airlines to ‘brand’ Calogi as if it were their own web site”; a change to our message broker to allow traditional SITA type B messages to be sent using email and FTP; an upgrade to the booking engine to allow booking of shipments either through the traditional EDI route or online; a module which allows the GHA to create accounts with forwarders, issue invoices and reconcile the money collections; c-Club, “a loyalty program for the air cargo supply chain business,” which allows any seller of services on the portal to run his own flexible loyalty scheme with any buyers on the portal. The loyalty program can help to “solidify existing relationships, initiate new relationships, and convert one-time customers into repeat business,” (three major airlines are already participating); a courier module “which allows integrators to issue air waybills and courier baggage vouchers.”

     Despite a downturn in DXB traffic, Calogi has increased its membership and transactions by over 28 percent—and 2012 is looking even better with transactions and membership increasing by 15% in the first 6 months.
      Calogi is looking to expand its influence beyond Dubai to offer cost-effective e-freight solutions to others looking for high-value answers.
      “We have already identified our target markets and are working on a penetration strategy. Currently we have 5 distribution partners in different parts of the world and the aim is to have a global network of resellers by next year. If we have got it right, and the indications and feedback from our surveys suggest we have, we could see the number of subscribers and transactions double in the short term,” says Mr. Murray.
      While he remains mum on all the current developments Calogi has to help customers increase their business, there are certain ideas he will share:
      “I am still keen to see an innovative security solution whereby an x-ray image of the shipment, from a trusted source, can be made available, through Calogi, for inspection by Customs at the destination, prior to aircraft loading.
      “The Customs inspection at the destination can then choose to allow the shipment to be accepted for import or not. I think this could resolve a number of issues.”
      The ideal thing would be to “replicate the Dubai business model at other airports,” but Mr. Murray knows       “this may not be possible in the first year.”
      “It’s all going to be about implementing change. We would still like to see a world where air cargo supply chain stakeholders can implement 100 percent e-freight penetration and remove all paper forms, not just those that travel with the freight, such as Airline/ Ground Handling Invoices, Statement of Accounts, Airlines Sales Reports, Agents Sales Reports, Stock Reports, Shippers Letter of Instruction, Charges Correction Advices, the Air Waybill and the House Air waybill,” says Mr. Murray. This will be Calogi’s most difficult task given all the different regulatory hoops that must be jumped through in order for everything to work effectively.
      Lufthansa just sold its interest in TRAXON, which makes us wonder why owning an IT group is a good thing, but Mr. Murray assures us that Calogi is not so much an IT group as it is a “supply chain solutions provider.
      “I am aware that some strategists believe that airlines should focus on their core business of flying passengers, while other are happy to diversify into new businesses to spread the financial risk and increase revenues.
      “We do not believe in staying in a comfort zone and have taken the latter approach.
      “You can only imagine the challenges we faced in the early days as we developed and implemented a new generation community system that increases productivity and addresses the needs of each supply chain stakeholder,” said Mr. Murray.
      Moving the Dubai model elsewhere may seem like a smooth and easy business, but only for those with little knowledge of the initial challenges Calogi faced in Dubai.
      “Less than 30 percent of shipments were processed through automated means. Around 380 forwarders did not have an IT solution.
      “The cargo terminals captured AWB data manually as part of the acceptance process.
      “Dnata staff also spent a large proportion of time handling cash and issuing receipts. 120 full-time staff were manning the export counters and resolving disputes over airline contracts, ad-hoc and rack rates. (The 120 full-time staff cover the seven cargo facilities operated by dnata in DXB and Dubai World Central Airport).
      Of all the issues with implementing an efficient IT system in Dubai, five stood out to be the most egregious.
      “Airlines could only do business with a limited number of large forwarders; the Dubai air cargo industry ran on paper, (with) several documents required to move a shipment from A to B; ad-hoc rate slips were handwritten, (which) often led to disputes (that) took a long time to resolve (and also meant) confidentiality could not be guaranteed, and airline published rates distributed via letter and fax led to late implementation and loss of revenue; air waybill stock was distributed via email and airlines relied on the forwarder or GHA to manage the usage, (which meant) no one knew the status of the shipment until it arrived in the warehouse,” said Mr. Murray.
      In 2009, Calogi implemented their changes in the Dubai community, with many positive results. Small freight forwarders could now do business on a larger scale for less money, with the Calogi system allowing them to “auto-rate and execute master house air waybills, interface with airlines and the GHA, and track shipments on the portal.” Gone were the cash transactions and offline invoicing and payments; with Calogi, each forwarder had a credit account intermediary and could track the status of their accounts in real time.
      “Calogi’s unique ad-hoc air waybill release feature enabled each airline/GSA to do business with all Calogi forwarders in Dubai.
      “The airline made a pool of air waybill stock available to the community and each forwarder had the option to assign an air waybill to a particular job. “Upon execution of the air waybill, the monies were deducted from the forwarders Calogi credit account and credited to the airline,” said Mr. Murray. This system also allowed the airline to do business with the entire Calogi community. Furthermore in the above cases, the airline, being the executing agent, shared a portion of the air waybill fee with the forwarder. This created an additional source of income for the airline and benefited the forwarder in that he paid a reduced air waybill fee. These benefits were a direct result of the Calogi implementation.”
      Where once before an airline or forwarder was left sending and receiving stacks of paper, now most paper documents were digitized, including “Invoices, Statement of Accounts, Airlines Sales Reports, Agents Sales Reports, Stock Reports, Instruction for the Despatch of Goods, Charges Correction Advices, the Air Waybill and the House Air Waybill.”
      Airlines and GSAs now assumed the responsibility of maintaining and publishing rates, with only the airlines and forwarders being privy to those rates, which reduced the number of rate disputes and improved confidentiality.
      The success of Calogi is truly all in the results provided.
      “Dnata was able to reduce the counter staff by 60 percent, redeploying them to much needed areas. This resulted in cost savings to Dnata of nearly one million dollars per year. A real and tangible e-AWB success story.
      “Calogi settled over $9M USD in airline dues in the first month of operation. “The airline also received $9 USD as his share of og the air waybill fee for each air waybill executed from the pool of stock made available to the community. Not only did Calogi create a financially risk free environment, it also created a source of income for airlines.
      “Dubai has the capability to become a 100 percent e-freight station, which will save the local industry millions of dollars.
      “Rate disputes and revenue leakage have almost disappeared.
      “The shipment and flight revenue data are available instantaneously. By having immediate access to this data, airlines can identify the source of revenue shortfalls and develop strategies to address the same,” said Mr. Murray.
      There are many reasons air cargo needs Calogi. By entering data into an online ‘cloud,’ data need only be entered once—it can be reused infinitely and with complete transparency. The absence of paper creates a green solution that is also cost-effective—there are no expensive messaging costs. Calogi is also “the only system that unites the major air cargo supply chain stakeholders on one platform,” said Mr. Murray.
      “We bring a new dimension to the airfreight industry in the form of credit management. Distributing stock to a forwarder is no longer like issuing a blank check.
      “Instead, airlines can decide the amount of financial risk they are willing to take with each forwarder by setting credit limits.
      “We now have a number of contracts signed with 3PL operators who will be offering their products and services to Calogi stakeholders. Once again, they are able to control the amount of credit offered and defer to the Calogi account if they would like to transfer the risk.
      “We offer small airlines, GSAs and forwarders the opportunity to ‘brand’ Calogi as their own web site. Users logging on will be directed to the airlines, GSA’s, or forwarder’s branded version of Calogi.
      “After logging in the users will only be able to access the products and services offered by that specific company,” said Mr. Murray. Calogi is essentially bringing an IT solution to the air cargo community the way eBay brought a marketplace solution to the small seller.
      “For a fraction of the price of building, testing and supporting a web site, smaller companies can harness the rich functionality of Calogi to distribute their products to their customers.
      “We have not forgotten the Ground Handling Agents (GHA) role either. Calogi Forwarders are able to share shipment information with the Cargo Terminal Systems, thus avoiding the need for the GHA staff to rekey data, allowing the forwarder to bypass the terminal counters and proceed directly to the delivery dock with his shipment.
      “Prior to delivering the cargo the forwarder is able to book an off-peak, normal or peak dock slot using Calogi (This feature is also available for import shipments).
      “Each slot type is priced differently to encourage the forwarder to deliver/collect the shipment during periods of low activity (off-peak) to spread the terminal workload and avoid congestion.
      “Furthermore, dnata shares its cost savings with the agent community in the form of preferential (discounted) documentation and cargo handling rates, a benefit which usually outweighs the Calogi cost by far.
      “We will continue to develop Calogi to keep abreast of industry standards and initiatives.
      “We have two philosophies: to continue to support the industry by developing and testing features and make them available on the portal, thus helping our stakeholders to keep their costs down, and to increase our income by increasing the volume of users and transactions, thus keeping the price down.
      “Even an exporter who has one or two shipments a week has found our system extremely cost effective,” said Mr. Murray.
Geoffrey Arend

     When in February of this year, Brazil’s state-run airport operator Infraero finally gave up the ghost and sold its gateway airports—in Brasília, São Paulo (Guarulhos), and Campinas (Viracopos)—to the Brazilian infrastructure group Invepar (Concessionária Aeroporto Internacional de Guarulhos) for R24.5 billion, hope ran high that change would be immediate at the airports that have been described as “nightmarish.”
     So now with the new owners having taken command a few weeks ago and now in the driver’s seat (or cockpit), expectations have come back down to earth regarding any quick turnaround, although promised expansion and modernization projects are at last report about to get underway.
     Antonio Miguel Marques, (right) president of Concessionária Aeroporto Internacional de Guarulhos, delivered the reality check, recently telling reporters:
     “Larger changes will only be felt from January [2013], when we assume full control over operations.”
     The move by Brazil politicians to dump the airports, or at least take them away from Infraero, will not really be assessed as good or bad until 2014, when all of Brazil will be on the half shell as the largest country and economy in South America hosts the 2014 World Cup.
     But the big sports event can already be credited with shaking things up at what can rightfully be described as some of the most crowded gateways anywhere.
     An example is the first of many low-cost cafeteria outlets created at all the Brazilian airport host cities for World Cup 2014, based on the template of one launched last month at airport Afonso Pena in Curitiba, capital of Parana, southern Brazil last month.
     Elsewhere, Concessionária has set the March 2014 deadline for completion of the first phase of improvement work slated for Guarulhos—four months before World Cup begins.
     Among enhancements promised for completion before the big show comes to town is R$2 billion in facilities upgrades, including everything from enhanced parking to new toilets, and also new gates that have the ability to handle A380.
     Further down the road another R$2.4 billion will be spent to build a new terminal at Guarulhos.
     At Viracopos International Airport in Campinas (São Paulo State), work is reportedly well underway to deliver a new airport terminal in time for 2014.
     It appears Brazil is banking on success as it privatizes airports and hopes to expand that action to seaports, and even more airports could open up for similar private investment—including Rio’s Galeão International Airport and Confins International Airport, which serves Belo Horizonte.
     “A change of management at Galeão is absolutely right,” Rio Governor Sergio Cabral said recently, adding that an announcement about that airport’s future would be made “by October.”
     For the record, the number of passengers that have descended upon Brazilian aerial gateways has risen dramatically in just the past six years, as latest figures show a jump from about 35 million in 2004 to 69 million in 2010.
Geoffrey/Flossie

     Didn’t get to go away anywhere this summer?
     Well, lucky for you there is still time.
     Here is an 11-minute free ride aboard a sumptuous Turkish Airways B777-300ER, as we Join “Just Planes” excellent World Air Routes Series in HD as the big jet journeys IST to TYO.
     Unbuckle your seat belt, pour your beverage of choice, get comfortable, go into full screen (YouTube), and enjoy the ride.

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