Thailand Air Cargo Smacked By Monsoon Floods

     Flooding from those record monsoons in Thailand is now expected to continue into November, but the impact on the air cargo sector is already apparent.
     Bangkok’s Suvarnabhumi International Airport, built on swampland, has had its flood defenses reinforced in recent weeks to protect the world’s 20th largest airport (by air cargo tonnage) from the worst monsoons Thailand has seen in five decades.
     Last week most flights were still operating on schedule, but access to large swathes of Thailand was restricted for trucks and volumes were significantly down on expectations, according to operators.
     Over 350 people have been killed since July while some 700,000 homes have been destroyed or severely damaged. The floods have hit the north, north-east and central regions of Thailand particularly hard, and the impact on major industrial areas has seen some 14,000 factories forced closed. With seven suburbs already flooded on Friday, officials told Bangkok residents, about 12 million of them, that evacuation was their best option.

     “The economic impact of the flooding is expected to be sizeable, given that all economic sectors, ranging from agriculture to industry to services, have been affected,” said a spokesperson for IHS Global Insight.
     The analyst has downgraded its forecast for Thai economic growth to around 2.5 percent compared with the 3.7 percent anticipated in September. Thailand’s Commerce Ministry now expects national exports to be down to 13 percent year-on-year in quarter four as a result of the flooding, while the World Bank has predicted that flood damage will cut 2 percent off the country’s GDP in 2011.
     Air cargo demand related to the automotive and electronics sectors is expected to suffer most severely.      Thailand is the largest automaker in South East Asia and plant closures are having a widespread impact. Japanese manufacturers, who dominate the business in Thailand, warned that output was now down by some 6,000 units a day. Thai vehicle production this year is forecast to be 150,000 units lower than anticipated in 2011 at 1.65 million units.
     Toyota has been forced to suspend some production at plants in Japan because of the lack of parts available from Thailand.
     “Apart from the impact at the local level, the floods are likely to have a harmful effect on the supply chains of automakers in other countries since Thailand is one of the biggest manufacturing hubs in South-East Asia for a number of suppliers,” said the IHS spokesperson.
     Global hard disk drive shortages are also looming due to Thailand’s status as the world’s second largest producer after China. Western Digital, which has suspended all production at facilities in Thailand where it produces 60 percent of its drives, warned that supplies could remain tight into 2012.
     Last week logistics giant GAC said that, although major transport gateways were still open, conditions were expected to deteriorate. “The situation is critical and we anticipate huge volumes of water from the north of the city to affect Bangkok soon,” said Mark Delaney, (left) Managing Director, GAC Thailand.
     “Should that happen, it is likely that the ports and airport would suspend operations and that will significantly affect the commercial activities of the entire country.”
     He said GAC had already seen a major drop in cargo volume from customers located in inundated areas in the north of the city. “Customers to the south-east of Bangkok are still operating, though production has been affected by suppliers in flooded areas,” he added.
     “Unfortunately, we believe that the worst is yet to come. The authorities are working hard to protect Bangkok. However, there is no doubt that the effect of the floods will be felt throughout Thailand for months to come. Only after the flood waters have subsided will we know the real impact.
     However, for air freight operators at least, the rebuilding could deliver a spike in demand, helping redress recent losses as manufacturers airlift in urgently needed production parts once flood waters recede.
     “A lot of parts manufacturers are flooded, but still quite a few assembly factories are open so we may get a rush of airfreight shipments of parts into BKK to support the assembly plants as the spares are underwater,” said Stewart Sinclair, (right) Senior Vice President Asia and Managing Director of ground handler Bangkok Flight Services, part of the Worldwide Flight Services (WFS) group.
     “Specifically this would relate to automotive and hard drives, as Thailand is a regional manufacturing base for both.
     “Exports will drop off in the short term because of the plant closures.
     “It all depends how quickly they can get production up and running after the floods recede.”
Sky King

RE:  FRA Night Ban Takes Hold

     Lufthansa Cargo had to cancel only two flights to China.
     Also we had planned 10 flights per night from October 30 but (moving ahead) we will not operate a single night flight from Frankfurt.

Best regards,
Michael
michael.goentgens@dlh.de

RE: Why Go To Air Cargo Americas?

Geoffrey,

     I hope you (everyone) in Miami next week at Air Cargo Americas will join us for the Thursday morning (0900) session “Improving Efficiencies and Security in the Logistics Chain: Shipper’s View” (Joint Air & Sea session) (East Hall) that I will be moderating.
     Great questions from the audience during this 90-minute encounter are critical to success!
     Not sure if the venue has been “fixed up” – I have been there maybe twice a year since 2009 and have not seen any improvements. Miami/South Florida has so many other great venues that would be much more representative of the quality of this event and the true colors of what we can offer here in beautiful South Florida…..
     Look forward meeting up with everyone.

Best regards,
Albert Saphir
ABS CONSULTING
albert@abs-consulting.net

PS: Both my wife and I enjoy watching the show “Body of Proof”

(Editors Note: Albert is a good guy. Smart and timely, this top of the morning Thursday 0900 session is a must-to-attend at ACA, as 2011 spins into 2012.)

RE: China Cargo Spirits St. Louis

Dear Geoffrey,

     I'm a reader of FlyingTypers, and business journalist in St. Louis (where I've been writing about our fledgling efforts to launch an air freight route with Shanghai, which you've run pieces on occasionally).
     Sounds like the flight here is cancelled for the second week in a row, apparently because of weak demand.
     I've been trying to determine if this demand problem is just here for St. Louis, or for China-U.S. cargo flights generally.
     I saw a piece you ran last week about weaker-than-hoped for, late-season demand for Chinese exports and freight flights.
     Thanks for any help.

Tim Logan
Business Writer
St. Louis Post-Dispatch
Blog: www.stltoday.com/buildingblocks

Hello Tim,

     Thanks for writing.
     Journalist to journalist, I am running your letter and address in the hope that one or more of our global readers will write to you with more information.
     My take, now that Aerotropolis has been redubbed the “Missouri Export Act” with $60 million in tax credits for companies that facilitate exports, is that the China/St. Louis cargo connection left as it stands today will continue as long as there is a subsidy, and after that the flights will migrate to Chicago where all the long haul air cargo infrastructure and flights currently live.
     As to the demand equation—while it is true that there has been a general softening of what used to be a demand avalanche pre-Christmas ex-China (and a ticket for air cargo to almost print its own money)—the real market traffic impact will be felt in 2012, when, if most forecasts are correct, air cargo will have to adjust to tighter demand.
     All of that said: wouldn’t it be nice if a 2011-12 Spirit of St. Louis could hitch its star to air cargo and make this dream that we hear so much about a reality?

Best greetings,
Geoffrey

Remembering Robi Wagner

      Robert G. Wagner, a real gentleman and a great friend passed away recently in Zurich, Switzerland after a long illness. Robi was general manager, marketing cargo and mail at Swissair and VP Cargo during the hay days of the Global Alliance comprising of Swissair, Singapore International Airlines and Delta Air Lines which started in 1991.
      Robi Wagner was a member of the IATA Cargo Committee and Chairman of Cargo MEDIA, the precursor to Cargo 2000, working closely with industry legends — Geoff Bridges and Lew Llewellyn of British Airways, Jacques Ancher at KLM, Huang Cheng Eng at Singapore Airlines, Traude Frigge at Austrian Airlines and John Hartnett at Aer Lingus, among others.
      In particular, I remember Robi’s presentation at the 1992 Air Cargo Forum in Luxembourg. After retiring from Swissair, Robi was a senior consultant for Atraxis, the Swissair (SAir) Group IT company and a partner and executive consultant in TOS Transportation Services together with Theo Schmid, the former IATA HR director and chief of personnel at Swissair.
      Robi was a very attentive and active listener, effective communicator and one quickly came to rely on his advice and vast experience.
      Robi studied at the University of St. Gallen, the largest faculty for business administration within Switzerland, Germany and Austria. He would glide seamlessly from Swiss-German to English, French, Italian and Spanish and back to German with great ease. He was probably the only Swiss around to have mastered Hungarian in deference to Marietta, born in Budapest and his wife of many years – quite a feat.
      Robi and Marietta traveled extensively during his active duty with Swissair, including a stint at the U.S. head office in Melville on Long Island and also thereafter, visiting and spending time with his friends around the world and always being wonderful company. He will be sorely missed.
Ted Braun

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