James Everett (left) and speaking at podium with from left to right Louise Ladouceur, secretary, Chairman Dick O'Marra and vice chair Urs Wiesendanger.

(Shanghai Exclusive)—As the 25th Annual General Meeting (AGM) and Conference ULD CARE got down to business this week in Shanghai, CHEP’s James Everett (left) presented a prototype mobile application for ULD CARE, with the aim of providing a single, user-friendly global interface, portability, ease of use, real time recording, message error reduction and, as such, a paperless system—things all desired, but lacking in the industry.
     To put it in perspective, there are currently a reported 1.2 billion mobile app users in the world—in China alone, there are 430 million mobile users. Fifteen thousand apps have been developed per week since July 2008. However, once downloaded, one in four mobile apps are never used again.
     Potential functions James demonstrated for the mobile phone app included ‘Bounty Hunter,’ offering a reward for bringing in lost ULDs, perhaps on the basis of a multilateral agreement that would go into the IULDUG centralized database and pay $10 USD per unit. Another was ‘PMC diagram’ for pallet damage limits and UCS ‘Move Me’ (ULD Control Message). Transactions would comply with IATA standards, damage limits and ODLN codes (operational damage limits notice), and direct access to Part 145. James demonstrated several of these pilots on his iPhone. Such an app could generate revenue for the ULD CARE group without any need for the airlines to develop an interface, with the potential to charge transaction fees while solving industry problems. The cost to develop the pilot was $700 USD and the proposal to take it to full development will be put to the board for decision; a complete business case and how to market it will be presented.
     James Everett also showcased the CHEP ULD damage control solution, which uses the IATA ODLN to report ULD damage statistics. Additional codes are used to identify specific damage to a unit and all its parts, and a tablet with the ULD outline records it. Actions are categorized as "repair,” "replacement," or "rework."
     A work order is subsequently generated on the warehouse floor and a photo of the unit taken. The part is then immediately shipped to the location as needed.
     Bob Rogers, (right) VP Industry Affairs for Nordisk Aviation Products and a longtime proponent of ULD management commented that there is potential to develop further applications of these codes to record and report any kind of ULD damage including a functionality that could provide the airlines the ability to automatically block an unserviceable unit from being loaded onto the aircraft, and even present it to the regulatory authorities something he suggested the FAA and other agencies would embrace.
     Elsewhere earlier in the day Richard “Dick” O'Marra, ULD CARE President and chairman of the board, opened the conference and introduced Liu Jia Wei, (left) director CAAC, who delivered the welcome address, which was translated by Li Ruilin, safety & cargo head, China Air Transport Association.
     Mr. Wei was followed by Ian Kentfield, president of AmSafe Bridport, fellow host of this conference.
     Ian (right) encouraged the Chinese delegates and guests to participate in the discussions and noted there were sufficient people on hand to translate to Mandarin, expressing understanding for the difficulties with meetings conducted in another language.
     Urs Wiesendanger, ULD CARE vice chair noted that this was also the first meeting with open and free seating, without segregation of airline and non-airline members and with attendance to separate and joint sessions.
     Forty-one airlines, fifty-three non-airlines, seven industry guests, and thirteen partner program participants are present at this year's conference.
     Louise Ladouceur ULD Care Secretary commented that at the end of 2011 there was $10,000 USD left in the IULDUG budget, which is indicative of the challenges to operate with such limited funding. She went on to say that the IULDUG control system transactions fees would remain unchanged going forward. The subject of updating the value of special units, especially temperature controled ULDs, as compared to other units was mentioned as a reality that requires further attention from the group.
     The new organization was reviewed, with the board consisting of delegates from AA, UA, KL, EY, KZ, and OZ as airline members, and CHEP (James Everett), AmSafe (Andy Davies) and Nordisk (Bob Rogers) as non-airline members.
     Urs explained the migration name change from the IULDUG to ULD CARE, with IULDUG retained as the name of its software control system. New members that joined the group were announced: airlines TAM and SAA and 3 non-airline members—Base Plastics (USA), TRIP & Co., and FireTrace (fire suppression systems). Louise also mentioned her efforts concerning the airport survey presented at the Miami conference and the follow up she attempted with ACI in order to obtain their feedback.
     This turned out to be a more challenging task; however, ACI has subsequently agreed to allocate 20 minutes for a ULD CARE presentation at their future meeting in Cape Town.
     As the day moved into afternoon a major agenda topic was U-MAP, introduced at the 2011 conference, the user group's Master Action Plan, designed to provide a detailed plan itemizing issues, priorities, time lines, status, cost, and implementation, and serve as the basis for quality measurement using KPI (key performance indicators). It is the mechanism to manage the transition of the IULDUG to the ULD CARE group reviewing the organization, IULDUG (multilateral ULD control system), and ULD CARE respectively.
     Louise introduced the web-based IULDUG system, which complements carriers' in-house tracking systems and processes ULD movements in real time—up to 60,000 interline transfer transactions annually.
     The UCR form provides for the insertion of condition codes to denote whether a unit is damaged, serviceable, or unserviceable, together with special codes—HHH loan of an empty unit, XXX transfer of an empty unit (no free day), and ZZZ for a courtesy move. The system tracks the length of time of a transferred unit and the respective actions. System reports include owner and foreign ULD transactions, demurrage receivables, demurrage payables, and pending demurrage payable.
     The reports can be converted into Excel and PDF. A customizable dashboard allows for an easy way to manage a carrier's business in the system. Airports could also enter lost and found ULD data, for which the system would in turn auto-generate a corresponding message.
     A new ULD CARE membership agreement for IULDUG users will be forthcoming. The four key components of CARE are:

      Going forward, the list of further U-MAP "setting up for success" steps will include tracking system upgrades to reflect current technology, a mobile compatible public website, and focus on specialized containers, while involving all the industry stakeholders, from shipper to consignee and everyone in between.
      An important aspect of the ULD Safe presentation was Andy Davies, AmSafe, providing an SAE update and covered a revision to certified lower deck containers, a new fire containment cover, a new regulation for temperature-controlled containers, and a revision concerning interline pallets.
      Next SAE meetings are scheduled for October 8-10 in San Francisco and April 8-10, 2013, in Amsterdam.
      Jonathan Neeld (left) of CSafe LLC spoke about the new TSO (technical standard orders, a minimum performance standard the US FAA issues for specified materials, parts processes, and appliances used on civil aircraft) for temperature-controlled containers under development, by looking first at container types (aircraft temperature-controlled and non-aircraft temperature-controlled containers) and system types (active, stored energy, and ground active).
Ted

     The basic concept of leasing dates back to at least 1800 B.C., when King Hammurabi of Babylon described such a transaction in his Code of Laws, stating that the use, rather than the ownership of equipment is what produces wealth. More recently, airlines have also come to realize that addressing some or all of ULD requirements through leasing provides the advantages of use, productivity, and profits alluded to by King Hammurabi, without the burdens of ownership.
     Airlines that lease cargo equipment initially benefit by not having significant resources invested in equipment. Many companies believe that the resources used to acquire equipment can be better utilized in other areas of the company. Airlines also benefit from having access to a large fleet of various types of equipment for only the time it is actually necessary. This flexibility alleviates the need to plan ahead for all potential equipment requirements. It is therefore possible to address sudden demands for large requirements without having made large speculative investments in advance.
     While leasing often costs less in the short term, purchasing equipment is usually more cost effective if the equipment is needed for a longer period of time. The challenge faced by many airlines, however, is having the necessary equipment available at their stations when and where it is needed. Often, the solution to this common problem is that the airline must move its equipment as cargo between stations to where it is needed, which reduces space for paid freight and adds to fuel costs.
Purchasing equipment makes more sense when equipment is needed within a closed system for the long term, but there are long-term lease options and lease/purchase options that also offer significant benefits. The long term lease/purchase option, generally from one to three years, allows the carrier to spread out its capital expenditure over the term of the lease, providing a low-cost financing alternative to fixed debt, especially in times of decreased purchasing power.
A long-term lease strategy also ensures that the carrier always has new or nearly new equipment, thus reducing maintenance and repair costs. While purchasing is often viewed as a strategic function that can be used to control costs, with the purchase of ULDs the total cost of ownership is a considerable factor. The typical repair bill for a damaged ULD ranges from $100 to $200 per occurrence, and alleviating equipment imbalances between stations can be costly. Long-term leases can be drafted to include maintenance costs, and a one -ay lease provides a cost effective solution to eliminate temporary equipment imbalances.
To help control the equipment during a long-term lease, the lessee may choose to brand the leased equipment with the Airline’s IATA identification code in the same manner as purchased equipment, which allows for the integration of leased equipment into a carrier’s tracking system.
The primary advantage of leasing equipment is that it preserves capital and provides flexibility.
The most obvious advantage of buying equipment is gaining ownership of it. Ownership and tax consequences may make the purchase of equipment appealing, but high outlays up front and increased carrying costs may make this option unviable for all parties.
So, the question exists: To Lease or Purchase? Valid justifications can be made for either option; it is a decision every airline should thoroughly explore.
John Stewart

Ed Note: John is Vice President ACL Airshop.

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