How do you successfully blend these mentalities: KLM customer focus, Air France processes and Martinair flexibility? Jan Krems, Vice President the Americas thinks he has the answer – integration, and clearly rejoicing in it. It is easy to underestimate the magnitude and scope of these efforts or what it takes to manage this air cargo business worth $800 million per annum, half of it derived from the biggest market, the U.S., but which spans six markets.
     They six markets vary not only in size but in product mix, growth potential and how each in turn is served. It’s a fascinatingly complex weave, stage managed from the Americas head offices in Atlanta by a mix of nationalities with Jan Krems at the top, a driven dynamo who believes “we know what we are doing” in face of the fact that every day is a new experience which presents challenges to the team.

     The structure that has been implemented consists of six regions each headed by a regional director – the U.S., headed by Alain Pagés in Atlanta, the Southern “cone” managed by Pier Luigi Vigada in Buenos Aires that includes Argentina, Brazil, Chile, Paraguay and Uruguay, Canada headed by Lori Burrell in Toronto, Central America & Caribbean with Patricia Paulhiac in Panama also including Puerto Rico and Venezuela, the Andean countries managed by Eric Maurox serving the Ecuador and Colombia flower market with 6-7 freighter aircraft per week and last but not least, Mexico with Maria Arana in charge.
     The distance has been shortened significantly not only by means of modern communications tools but also with having a revenue manager in the Atlanta head office corresponding with the regions. This may sound like an overly complex matrix organization but it controls a varied cargo and aircraft mix with 55% lower deck and 45% main deck and B747 and B777 aircraft in addition to passenger aircraft and the 16-17 KL combis and MP MD11.
      Jan Krems firmly believes that this organization is well positioned to match and provide the best solution to each market and respective customers based on the strength and experience the three merged carriers bring to the table.
     It is the constant task of adjusting, tweaking and fine-tuning – one example are the 25 freighters, which were in the air in 2009, versus the 15 currently operating. To make the Rubik’s cube more complicated, there are also the physical aircraft compatibility issues, certainly not unique to this airline, yet having to account for the differences in contour when trans-loading and load planning, given the B777 requirement for compressible cargo in the front of the cabin, which doesn’t affect the B747.
     This cornucopia of offerings is paralleled by an equally diverse set of business tools – 35% of the customers are served as contract customers, another 35% are over the counter and the remaining 35% are ad hoc shipments. Size and lift combined with market and customer specific solutions have its privileges. Contracts by definition are long-term, often flight-specific and can be product-based to fit in the lower deck or the main deck.
     Experimenting is an everyday event in everything – take the office layout, with all the offices along the windowed side of the building having been refitted with glass partitions instead of the regular drywall to allow natural light to spill throughout the office. And if one thinks egalitarian, well, we are shown a storage area lined with filing cabinets on wheels labeled with their owner’s name, which belong to team members away from the office. You guessed it, there are no permanent “this is my office,” you get what is free on the day. Some love it, others less so.
     There is just the quiet hum of computers, monitors and some phone conversations with the obligatory five clocks for the time zones mounted prominently in the center of the room. And you can just feel the throbbing pulse of this addictive airline cargo business.
     Jan and his family started their global journey some years ago in Singapore where his boys, now 13 and 11, were born, moving back to the Netherlands, then Paris and eventually hitting American shores in Chicago, where they spent four years before landing in Atlanta a year ago. He travels about two weeks every month throughout his area of responsibility.
     We asked Jan what surprised him the most since assuming this position?
     He responds that he has been surprised but gratified by the flexibility of his people to make it work, their willingness to relocate, adapt and move into new areas of the world.
     As for his outlook on 2012, Jan says, “I am a positive person and remain cautiously optimistic after the recent economic upheaval.”
     “I try to maintain a balance in my life. I am into sports, golf and paddle, or platform tennis, which I enjoy very much. I was invited to play in the nationals in Chicago this year but unfortunately couldn’t make it. There are several former professional tennis players who have taken up this sport. I am interested in and follow all sports.
     "Weekends are dedicated to the family and I spend as much time as possible with my boys. We also like to eat out, preferably Indian and Japanese food; the Atlanta establishments have turned out to be a pleasant surprise."
Ted Braun

Changi Ramping Up
The Value Chain

     Changi International Airport may be struggling to cope with higher costs than its regional rivals, but the Singapore AirCargo Agents Association is confident that the city-state’s renowned forward planning will see it emerge smelling, quite literally, of flowers.
     So said Chairman Steven JK Lee when Air Cargo News popped into his city centre office recently. Enthusing about the strategic vision – some would call it state-led entrepreneurialism - which has long since defined Singapore, Lee was confident the ground Changi has conceded to regional rivals could be regained or, at least, that new markets could be tapped higher up the value chain.
     The figures are not encouraging: in 2004 Changi handled 1.78m tonnes, but last year that total was still stalled at just 1.81m tonnes. In the same period Hong Kong International Airport increased cargo volumes by 1.54m tonnes to over 4m tonnes. Yet despite the stagnant growth, by tonnage Singapore was still the 11th largest cargo airport in the world last year, and the fifth largest in Asia after Hong Kong, Shanghai, Incheon and Tokyo.

     Lee cited the bullish Singapore Dollar and high overheads, as well as the general movement of manufacturing away from Singapore’s traditional South East Asian hinterland in favour of cheaper production areas or more enticing domestic markets, as he explained why Changi’s growth has been barely perceptible when compared to traditional competitor hubs.
     “Some regular shippers have downgraded their output here and moved it to China and India or elsewhere which has reduced the output of exports,” he said.
     “There has also been a reduction in capacity here as well, and airlines have changed their approach to increase yield or switched capacity into China, which has driven up prices at Singapore in comparison to regional rivals.
     “This means attracting transhipment cargo is more difficult because we’re being priced out of some markets. Cargo from Vietnam, Cambodia, Malaysia and Indonesia used to come here but now more goes direct. For example there is now freighter capacity straight into Hanoi.
     “The Singapore economy is so strong that it’s expensive to do business here.
     “For Singapore to react is a great challenge because of the high inflation rate and strong Singapore dollar.”
     But react it will, he insisted. Through the first seven months of this year tonnage rose by 3.0% compared to a year earlier to total 1.07m tonnes – not a huge gain, but progress, considering many regional rivals have lost tonnage this year.
     Lee pointed to the sparkling new Coolport facility, which opened at Changi last year and is designed to become a redistribution centre for perishables in Asia as one cause for optimism. Perishables accounted for approximately 10% of Changi’s throughput in 2010 and this is expected to rise still further in the future.      Apart from fresh food and pharma, cut flowers is set to become a major part of the premium cargo mix that Changi is now targeting. Some 18,000 tonnes of flowers were handled in 2010 and more are forecast this year as Singapore markets itself as the world’s leading orchid exporting nation.
      “Coolport is a trade growth initiative,” said Lee. “We want to be a transhipment hub for perishables. For food, pharma, perishables from Australia that are flown for distribution across the region; flowers that arrive from places like Chile and Kunming etc.
     “This is about pre-empting business opportunities.”
     The start of cargo terminal operations at Changi in June by U.S.-based Aircraft Service International Group, which joined Sats and Dnata to become Singapore’s third cargo handling option, was another major boost for Changi.
     And Lee insisted the split of the airport operator Changi Airport Group from the Civil Aviation Authority of Singapore in 2009 was another example of airport administrators thinking ahead. “There is now more focus on the infrastructure and commercial promotion of the airport which will eventually be in alignment with promoting Singapore as a cargo hub,” he added.
     He concluded: “The logistics landscape in the region has changed with cross-border trucking now possible.      This has increased competition between airports. But Singapore has always been a strategic location and that will continue.
     “The strength of Changi is that it always moves forward - it’s more proactive than other airports and that’s why it’s the model for airports in the region. Changi always aims to be the best.”
SkyKing

FT090711