Vol. 12 No. 76                         THE GLOBAL AIR CARGO PUBLICATION OF RECORD                     Friday August 30, 2013
#INTHEAIREVERYWHERE 
THE AIR CARGO NEWS LEADER  



               “Got to pay your dues if you want to sing the blues,
               “And you know it don’t come easy!”

     The songwriter perfectly described the difficulties of working in so few words.
     We spoke to Jim Bellinder, V.P. Worldwide Cargo Sales, United Airlines Cargo.
     Jim looks ahead as August 2013 moves toward September.
     “It has been a challenging summer for United Cargo.
     “We anticipated a demanding season due to the uncertain economic conditions and ample market capacity, along with the added complexity of our new UC360° system rollout July 1.
     “We weren’t expecting a seamless transition to UC360°—any new system requires a learning curve for both co-workers and customers.
     “Unfortunately, we ran into a 'perfect storm' of technology issues on the first day of the rollout, and new users had to work on troubleshooting and issue resolution right away.
     “These issues also caused a discrepancy between the forwarding information shown in the system and the actual location of some shipments.
     “The key to our sales approach is valuing every piece of freight we get and being immediately available for customer feedback, so our Sales team heard from a lot of customers who were impacted by the initial challenges we faced.
     “While the project team worked to resolve the system and process issues, we stayed connected to these customers personally to ensure we kept their trust and their business.
     “I’m extremely grateful to our customers for their patience and support.
     “We’ve made substantial progress toward permanent solutions to most of the challenges that impacted our customers in the first weeks.

     
     A United 360° IT revamp, based on a system by Mercator, lies at the heart of the United Cargo program.
     “The partnership between Mercator and United created and deployed a UC360° system that is the foundation for the future optimization of United Cargo’s products, processes, and technology.
     “Managing our cargo operations and revenue accounting with the proven, industry-leading SkyChain and RAPID platforms transformed our technology from outdated to next-generation in a single step,” said Robbie Anderson, President United Cargo.

     “We’re not yet perfect in all areas, but we’re maintaining a consistent momentum toward a fully stable system and consistent processes.
     “The promise of that stable system, and bringing our service back to the levels our customers expect and deserve, has us excited about the coming autumn and holiday season.
     “I believe our fundamentals are strong enough to exceed our previous success.
     “When I talk about fundamentals, I mean our network, capacity, products, but more than anything, our people and attitude.
     “Our people are empowered to be creative, collaborative, and willing to find a way to do business and discover a solution that works for our customers."
Geoffrey/Flossie

 

ontainer shipping freight rates have rebounded in recent months as lines have found pricing traction on the East-West trades in anticipation of an improving market during the third quarter. But efforts are still being made to optimize operational costs in a bid to stem losses due to structural overcapacity.
     Spot rates on the Asia-North Europe trade jumped from the lows of less than $600 per TEU in mid-June to $1,360 in late July, according to the Shanghai Containerized Freight Index. Successful General Rate      Increases in July and reports of a lack of space have helped support the increases close to near year-long highs, with substantial additional GRIs forecast for implementation August 1, to offer a further boost for lines.
     Spot rates into the U.S. West Coast are proving more bearish and remain significantly down compared to a year earlier, despite following a mostly upward trajectory since mid-June. Members of the Transpacific Stabilization Agreement grouping of lines are, however, confident of a healthy peak season and have introduced a guideline peak season surcharge of $400 per 40-foot container from Asia to all U.S. destinations in a bid to get rates back on track.
     “It is hard to say at this point what the size and the timing of the peak will be, but lines are expecting a defined peak period and want to be prepared,” said TSA executive administrator Brian Conrad.
     “That means having the necessary vessel and equipment assets in place, the right mix of services, and their costs adequately covered to quickly address contingencies.”
     Yet despite scrapping and idling of vessels and the prospect of a better third quarter on both major trades, global supply still outweighs demand, leaving the financial outlook for most carriers less than optimistic after a year in which red ink has been a mainstay of balance sheets. Throw in all the new Ultra Large Container Vessels (ULCV) due to enter service later in the year and lines are understandably exploring novel methods of managing capacity.

     Most striking is the new P3 alliance announced by Maersk Line, Mediterranean Shipping Co., and CMA CGM. The three carriers hope that by pooling volumes and vessels the new network will prove a financial game-changer by allowing them to optimize ship deployment on major trades and cut fuel costs, while also increasing frequencies on some Asia-Europe, Transpacific, and trans-Atlantic services.
     Under the envisaged system, shippers will be free to book a service with any of the carriers, each of which will continue to offer separate sales, marketing, and customer relations divisions. But once booked, the container will be shipped on one of a pooled fleet of vessels managed by a joint operations center.
     Analysis by SeaIntel Maritime Analysis said the P3 lines would have a significant operating advantage over rivals in the CKYH and G6 alliances because of the larger ships at their disposal.
     "By pooling their assets they will be able to optimize their combined network, and with a more efficient network they would require less services/vessels to service the same markets, as opposed to operating independently," said Alan Murphy COO & Partner, SeaIntel Maritime Analysis.
     "The downside is that they lose a great deal of product differentiation, as the three largest carriers will be offering the same physical product on the three main east-west trades.
     "While they will have the opportunity to bring down unit costs, alliances should not be viewed as a form of consolidation as anti-trust regulation prevents alliance partners from cooperating on pricing, sales, marketing, customer service, etc."
     The carriers hope to start operations in the second quarter of next year but must first win regulatory approval in the U.S., Europe, and China. Most analysts expect this to be forthcoming even though P3 will become the biggest alliance on Asia-Europe and trans-Atlantic trades.
     The upshot for rivals is that the CKYH and G6 alliances face stark choices in the year ahead if they want to be competitive, particularly on the Asia-Europe trades where ULCVs are deployed.
     "If they want to challenge P3, they need to place orders for new ULCVs within the next year; otherwise the P3 alliance will have a significant scale advantage for a long period of time," said SeaIntel.
SkyKing


     Kevin DeMilt is VP and Head of Travel & Logistics for L&T Infotech. FlyingTypers sat down with Kevin and his team in their Alpharetta, Georgia, offices—one of the leading locations for technology-focused businesses.
     Asked about the background of L&T, Kevin put things in perspective:
     “Larsen & Toubro was founded by two Danish engineers in 1938. They came to India as Project Engineers and founded what has now become L&T, a $14 billion leader in Engineering & Construction. It is considered one of India's 'Best Managed Companies' and one of its most recognized brands. Forbes ranked it in its top 10 for innovation. L&T Infotech has its parent company's values and is known for its world-class work ethic and excellence at execution. L&T Infotech are ranked #8 in the overall IT Services in India.      L&T Infotech has achieved this milestone by adhering to a principle of delivering to expectations on a consistent basis. Their success is based on the fact that they are skillful at fostering enduring relationships with some of the most demanding companies in the world.”

What prompted the establishment of L&T Infotech Travel & Logistics in this crowded and competitive marketplace at this point in time?
L&T Infotech is a 100 percent subsidiary of L&T, with 18,000 employees globally and revenues of USD 1.2 billion annually. L&T’s legendary Chief A.M. Naik is driving the overall vision and has been looking at complementary areas for growth, which resulted in bringing in additional leadership to take advantage of the company’s experience and successes and to add industry focus to two new segments—travel and logistics, and media and entertainment. The company has global delivery centers in North America, Europe, Africa, Australia, and Asia, with 6 centers in India. We are proud of having added 211 clients to our portfolio in 2012, including 25 Fortune 500 companies.

What market segments are you targeting in the short, medium, and long term?
The strengths of the company are easily transferable to this industry and include business intelligence (BI), airports, rail, shipping, and port operations. There is deep and broad expertise in ERP systems, application development, especially SAP and Oracle as well as integration services, infrastructure management, and consulting. Established relationships and clients can be shared in the market, using the expertise we gained in projects delivered at major Indian airports and in the Gulf. Specific references include baggage handling systems, communication, flight information and displays, and program management of airport IT and ULD tracking systems.

What are the strengths L&T Infotech Travel & Logistics can bring to this market?
We offer understanding in a specific industry that has gained expertise building, constructing, and maintaining facilities such as airports and ports. No other IT company can deliver that with such a high degree of service excellence. In terms of track record, we are supporting one million users globally and rolled out SAP for Chevron worldwide; that can stand us in good stead.

What are the biggest challenges you see going forward?
Getting the first 2-3 customers to buy into our commitment to this industry and building from there.

What is the greatest misconception about L&T Infotech that you encounter when talking to prospective clients?
We are still largely unknown and companies are unaware of L&T Infotech. What gets us in the door is partly the curiosity factor, partly our respective personal history in the business. We have opened a dialogue with FedEx and Air Canada, for example. Additionally, doing work directly for customers and supporting PROS, where we have engaged 45 people over the last five years. Travel and logistics is a way of life and we enjoy it. There are also 70 people working with the U.S. Bureau of Shipping.

What should FT readers know about you and your team?
The three of us have spent a combined 90 years in the travel and logistics space successfully delivering solutions for clients in this industry. We want to bring the same level of experience to share more about who we are.
     I spent 17 years with Unisys Corporation as a systems engineer, later as managing director of the Solution Architect group for southern U.S., and then in the Transportation, Retail, and Commercial segments developing and implementing strategic systems integration and business initiatives for financial and commercial clients. I served as Division CIO for Nike’s Memphis Apparel and Footwear Distribution business and later joined Mphasis as VP and head of global strategy.
     My team includes Carla Chute, a longtime Sabre, Atraxis, IBS, and Travelport senior business development and account management expert (and formerly Eastern), and Larry Curcuru, a senior director of sales at Travelport and formerly with TWA.

What do you expect to accomplish by year-end 2013?
We want to start ten pilot projects with ten companies, gain three strategic partners, and get one Fortune 500 company to start doing business with L&T Infotech Travel & Logistics. Within 3-4 years, $70 million revenue, achieved through both organic and inorganic growth, is doable, leveraging what the company does for clients today.
Ted Braun

 

o you remember your last trip to the doctor or dentist of your choice? Or sitting idle in the airport lounge while waiting for a delayed flight to be called?
More likely than not, you were browsing through one of the magazines available there, or maybe using a mobile gadget.
Either way, unless you’re Mr. Spock, you probably came across some news that was not your prime focus of interest.
     That means the news or story in question neither concerned what you do for a living, nor did it relate to a private interest of yours. So you were leafing or scrolling through the pages while waiting for your flight or appointment in a more or less absent-minded way.
     Some news German Der SPIEGEL Magazine published a few weeks ago had this kind of limited appeal (unless you happen to be a biologist or entomologist), so it might have been missed.
     But the subject and bottom line hit squarely at air cargo.
     Titled “Where are our enemies lurking, Ms. Luckas?” Der SPIEGEL magazine had interviewed Monique Luckas from the German Leibnitz Centre for Agricultural Research, a subdivision of the German Federal Research Institute for Animal Health.
     In the interview, Ms. Luckas elaborated on new threats to public health and biodiversity caused by certain mostly tropical insect species immigrating into Europe through infested cargoes, mainly wood packagings, or larvae within used tires imported for the purpose of road building.
     It was explained that Germany is commonly populated by 49 different subspecies of mosquitoes, but that in recent years the Asian bush mosquito (Aedes japonicus) was able to survive in an outdoors environment.
     Asian bush mosquitoes and their larvae have been found in watering cans on 29 out of 125 German churchyards in the Cologne – Bonn area.
     Aside from the threats to biodiversity, Ms. Luckas outlined that the Asian bush mosquito could be a carrier of the lethal West Nile Virus and that a number of tropical diseases (such as Malaria) are transmitted by mosquitoes.
     However, she assured the German public that to date, no spreading of any diseases by means of immigrated species had occurred, and that the threats were merely theoretical, although warranting scientific research and investigation.


     Rising to the occasion, Ms. Luckas took the opportunity to ask the German public to send her mosquitoes—and to paraphrase here a bit—“not to kill them by smashing these in the usual straightforward manner, as the remains would be useless, but by capturing the mosquito by means of a marmalade jar and freezing it overnight, allowing the research personnel proper identification of the mosquito in question, its habits and a possible infestation with a communicable disease.”


     Well, the buzzwords that connect cargo are “possible carrier” and “West Nile Virus.”
     No matter whether the West Nile Virus has actually been encountered in live mosquitoes in Germany or not, the entomologists consider its presence likely enough to search for it.
     Since the West Nile Virus is listed in table 3.6.D of the IATA Dangerous Goods Regulations, albeit only in the form of a culture which an insect potentially carrying the virus clearly isn’t, the shipping of such mosquitoes would be subject to the IATA Dangerous Goods requirements and classification as UN 3373, Biological Substance Category B.


     Packing Instruction 650, applicable to UN 3373, subsequently does not mention marmalade jars but a requirement for a triple packaging and some marking requirements.
     One would not necessarily need to reduce the threat scenario to the admittedly unlikely presence of the West Nile Virus in such a mosquito:
     Had a mosquito (whether of the Asian bush mosquito subspecies or other) feasted on a HIV-infected person, the classification requirement as UN 3373, Biological Substance Category B would exist as well, since the IATA Dangerous Goods Regulations (as well as the ICAO Technical Instructions for the Safe Transport of Dangerous Goods by Air) require substances which “are known or reasonably believed to contain infectious substances and which meet the criteria for inclusion in Category A or Category B.      Substances in this group must be assigned to UN 2814, UN 2900 or UN 3373, as appropriate.”
     Likely some biologist will step forward and point out that the likelihood of both such pathogens being present and, by means of some glitch or mishap during transport, endangering the health, life, or wellbeing of any human or animal is minimal.
     That would change matters only marginally, since nevertheless such a mosquito would at least have to be considered a patient specimen.
     The Dangerous Goods Regulations require that “Patient specimens for which there is minimal likelihood that pathogens are present are not subject to these Regulations if the specimen is packed in a packaging which will prevent any leakage and which is marked with the words ‘Exempt human specimen’ or ‘Exempt animal specimen,’ as appropriate.”
     In the aforementioned minimal threat “Exempt Patient Specimen” scenario, the packaging must at least consist of three components:
     A leak-proof primary receptacle; a leak-proof secondary packaging; and an outer packaging of adequate strength for its capacity, mass, and intended use, and with at least one surface having minimum dimensions of 100mm _ 100mm.
     Each contributor of a mosquito specimen is promised an e-mail with information pertinent to the mosquito contributed: which subspecies it is, where it breeds, and what are the best ways to get rid of possible infestations.


     On the “Mosquito Map” developed and published based on these contributions, the scientists involved in this project as well as the German public can identify hotspots of mosquito activity and research the spreading of species not commonly found in Middle Europe.
     However, the shipping locations indicated on the map and the location of the Leibnitz Centre in Muencheberg suggest that at least some of these shipments were made using air mail, which clearly is an issue; first, the shipments made were neither in compliance with the applicable requirements to “exempt human/animal specimen” nor with those applicable to UN 3373, Biological Substance Category B, and second, the German flag carrier Lufthansa refuses to accept UN 3373 both in the form of mail and in the form of cargo by means of operator variations LH-03 and LH-05.
     One might expect more than just blatant ignorance in regard to applicable transport-related regulations from the German Leibnitz Centre for Agricultural Research, a governmental institution tasked with the well-being and health of both animals specifically and the citizens in general.
     “Where Are Our Enemies Lurking,” the aforementioned Der SPIEGEL headline, recalls what Master Commandant Oliver H. Perry said after defeating the British at the Battle of Lake Erie on September 10, 1813:
     “We have met the enemy and they are ours,” Perry said.
     Here we add a caveat to that famous statement, written 150 years later by humorist Walt Kelly:
     “We have met the enemy, and it’s us,” Kelly wrote.
Jens/Geoffrey


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     Inspired by Ella’s reading of the Cole Porter classic, the only YouTube copy of this tune we could find was in a salute to Colin Firth, which is OK, we suppose, but as previously stated our Playlist effort is more about the music.
     Just like the movies about the people we love in air cargo that we began sending out six years ago, to us YouTube simply supplies a vehicle for sharing with our global audience.
     So if you turn down the picture and pump up the volume, that is all right with us, with greatest regards to Colin.
     Where we can, our You Tube Playlist offerings will include lyrics and translations in languages other than English reflecting the interest of our global readership.
     As example, we include some tunes by the great German Chanteuse Greta Keller who delivers the stunning “Somewhere Along The Way” in English.
     But Bee Gees “Love Song” that closes this set features lyrics in Portuguese over some exquisite artwork reminiscent of Edward Hopper.
     The “Do We Love You?” Playlist unfolded whilst thinking about our son Geoffrey’s upcoming fourth wedding anniversary.
     We had not planned to share another musical collection quite so quickly on the heels of last week’s effort, but needed little encouragement to send this one out to you, dear reader, because celebrating young love and summer is what life is all about.
     And some of the tunes included here are from suggestions sent to us by our readers.
     Thanks to everyone who wrote, especially Mike Kelly at United, who suggested “Whispering Jack Smith.”
     After FlyingTypers returns from a short break at end of Summer 2013, we know that the rush of business may limit our ability and space to share Playlists very often.
     But the music is always there and is common among us.
     So tune in wherever you are, on YouTube or Spotify, and of course keep those email letters and suggestions coming in.
Geoffrey


     Will you miss me when the summer is gone?
     As the days dwindle down, we take a break to grab a few of the remaining rays and summer days of 2013, and celebrate Labor Day in America next Monday.
     FlyingTypers returns September 5.
     Headlines at once!


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