“Just an old sweet song keeps Georgia on my mind,” wrote the great song-writer Hoagy Carmichael.
     Now, with just over a week until The International Air Cargo Association (TIACA) holds its biennial Air Cargo Forum (ACF) in Atlanta, Georgia, the good timing of a mega-industry event cannot be denied as the downturn of 2012 is concluding what, for many, is “that year”—and 2013 looks to be not much better.
     Networking at TIACA will be king no matter what else is on the program, on the trade show floor, where hundreds of booths are going up, or in small gatherings in the bar, where visions get a jolt while looking through the bottom of a rocks glass.
     But however you view the event, this next ACF could be the most important gathering since the first one took place in Luxembourg in 1992, hosted by Bob Arendal and Cargolux, as TIACA was reformed from the old IACA and ACF entered the modern era.
     This past Friday, as folks across the USA lined up in the dark like orphans of the night to buy their iPhone 5, the question amongst air cargo was whether the new electronic device might spread the wealth.
     That result is yet to be felt, but all those people (some in deck chairs) waiting in the dark may shed some light on how big a bump air cargo will get by show time next week.
     As to what happens next, we have been posing the question to top industry executives, and the answers have come fast and furious.
     We ask recently named President of American Airlines Cargo Kenji Hashimoto how he measures the market as October 2010 approaches.
     “Speaking from an AA Cargo viewpoint I have to say I am optimistic.
     “New aircraft with more capacity means we, in cargo, have new and different opportunities.
     “There are still time-sensitive goods out there which can only move on airplanes and there will always been new products which need moving round the world in a time-frame which only air cargo can deliver.
     “And at the same time we can deliver greater efficiency on our part and help draw the industry slowly towards e-freight – in all its various guises – which again increases efficiency.
    
     “Keeping AA Cargo profitable during these times to some extent is driven by the fact that many things are changing at this airline and that's going to have a huge impact on everything we do.
     “I've already cited the new aircraft, but new aircraft with longer legs will inevitably mean new destinations on the horizon and that's always good for widening the customer base and the spread of activity.
      “Obviously the cost structure changes as a result and therefore if you marry everything together the profitability will be impacted in a positive way,” Mr. Hashimoto said.
      “The current market can be read like a book: what before were hints and nudges are now clear text and headlines,” says Oliver Evans, Chief Cargo Officer, SWISS WorldCargo in an exclusive interview with FlyingTypers.
      “The global airfreight market has shrunk by a further 3 percent year-to-date in 2012.

      “There has been a real change in relative power, with vast new pools of consumers in e.g. China, India, but also Africa or other parts of the developing world, and powerful government-airline coalitions are driving the development of new hubs and networks: Middle Eastern airlines grew by 15 percent while most other regional groups shrank. Complacent assumptions such as “the Far Eastern markets will continue their steady growth path without major hiccups” have been proved very wrong: for example, Japanese exports by value shrank by 25 percent this year.
      In short, the world has changed (and will change again).”
     Issa Baluch may know as much about logistics as anybody you ever met.
     Although today he is in Massachusetts teaching at Harvard, once upon a time Issa invented the sea-air business in a little place that you may have heard of lately called Dubai.
     Here the good Professor tells it like it is, answering our question:
     Where Do We Go From Here?
     “The air cargo market is still weak—nothing spectacular happening. We are all caught up in a web of nightmares. Everyone around us talks of bad dreams and that psyche is not comforting . . .
 
     “Money is tight and large corporations are sitting on money.
     “It all goes back to the comfort level. If the credit providers feel comfortable to engage on credit in the market and the corporations are happy to spend money, we could see a turn around in a few years. Otherwise the bad dream continues.
     “This is a phenomenon which prevails across the globe. Thank you globalization!
     In the meantime, my thought is that companies should stay within the realms of their specialty, give controlled credit to their good clients, stay liquid (cash is king), and finally, lose the client when it is absolutely a necessity."


      Karl Ulrich Garnadt, CEO and Chairman Lufthansa Cargo AG.—no less optimistic and in fact quite realistic—expressed his views to FT :
      “The iron rule in the industry is that airlines can operate profitably only when utilization is high—and where that is not possible, we cut back on capacity.
      “For sure, 2012 will be remembered as a rather difficult year.
      “We might see a small peak season at the end of the year, but it is still uncertain how strong it will be.
      On the GSSA and handling side, Joseph Czyzyk, CEO & Founder, Mercury Group, Los Angeles, says:

      “Cost of aircraft plus fuel and operations, multiplied by maximum possible amount of hours flown is the numerator, and market rate is the denominator; if the product equals at least 1.0, it will spell success for an air cargo carrier over the next three years.
      “All others will fail.”
      Bill Boesch, a long time well-respected air cargo man says,

      "In the U.S., some air cargo and combination non-schedule airlines are already in bankruptcy and a few more may be eminent even with the large volumes of military material moving by air into Afghanistan. This large volume of air cargo is expected to shrink and dry up with the U.S.-planned withdrawal from Afghanistan at the end of 2014.
      "Here trucks queue up at Khyber Pass, giving an idea of the volume of goods moved this past summer.

      “To position themselves for the years ahead, many carriers are shredding their older, wide-body freighters and financing new fuel-efficient aircraft in a market that some forecast will not start recovering until at least 2015.
      “Are the airlines planning for this forecasted flat market situation, and if so, how?
      “Will capacity be cut to maintain high prices to cover the high financing costs of the new, fuel-efficient, wide-body freighters and will the older aircraft be grounded?
      “Will new start up air cargo airlines pick up these freighters at a low cost and operate them, which will increase market capacity?
      “If so, will the carriers with deep pockets let the prices fall with the capacity increase, which will have serious consequences on the carriers already operating close to their breakeven profit margin?”
      So what is to be gained during the next week in Atlanta?
      While not critical of the trade show format, we gently suggest tough times need some thoughts geared towards change at this gathering.
      How about holding a First Session titled “Where Do We Go From Here?” just at the opening, featuring a group representing all the transportation disciplines from every part of the world.
      That title, by the way is not meant to be self-serving, but it is also a banner for our month-long exclusive story with the leaders in the global air cargo business.
      Rather, why not take a good idea and make it better by involving everybody in some down-to-earth, basic dialogue as ACF meetings and networking go forward in Atlanta.
      We should find out what is on everybody’s minds as ACF 2012 takes off October 3. Take a half dozen people, put them up on the stage, and ask them what they think. Then involve a room full of people in the dialogue and let the ideas ebb and flow for an hour.
      Our bet is that the collective sense of people in transportation on message and off scripted positions could lift everybody everywhere.
      Someday those voices might be remembered in air cargo folklore as the true start of something different—an air cargo trade show that ditched the canned stuff at the get-go to directly connect to the moment.
      That would truly be “ an old sweet song.”
Geoffrey/Flossie

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