Vol. 11 No. 99                                                                                                           Wednesday October 10, 2012

 

FACES AT FIATA

 

     Patrick Murray, Head of Calogi Worldwide Cargo Distribution, is spending all this week in Los Angeles at the big FIATA Annual Conference (Stand 56), “visiting a potential client base of 750 people, many from developing countries which are still looking to join the IT future.” He talks about innovation and building fast-growing Calogi with great enthusiasm and hope.
     Murray is no stranger to IT, having been involved with various systems from British Airways to IATA to Mercator.
     But as we learned in conversation, Calogi is transforming IT building to a level of high-art for the world air cargo community.
     Amidst a growing number of IT companies, fast-rising, Dubai-based Calogi is providing a secure Internet service portal “that offers a one-stop platform for a range of air cargo businesses from around the world to negotiate and sell products and services online.”
     “We are also thinking that a new flavor of stakeholder may come into the business: the virtual freight forwarder.
     “This could be a company that buys in all services, such as warehousing, packing, transportation, etc. and all he is responsible for is the AWB execution and the financial arrangements.
     “With very few overheads, the profit margin of such an operator could be very high.
     “Want to know about the rise of the virtual freight forwarder?
     “We have actually made this a reality in Dubai.
     “A forwarder can subscribe to Calogi and buy services such as packing, insurance, warehousing, transportation, customs clearance, and even manpower services through the portal.
     “All he needs to do is use Calogi to execute the air waybill and house air waybill and pay the related charges.
     “He can do this from anywhere that offers a reliable Internet connection.
     “One of the jewels in our crown is our online credit management engine.
     “Airlines or GSAs who wish to achieve a higher yield with controlled financial risk exposure can do so, by offering credit to a larger portion of the market.
     “We fully expect this to help our penetration in many major markets.
     “We will also do our best to support the various security initiatives.
     “We plan to develop the electronic security declaration within the next year and once again, this feature will be available to all of our subscribers.
     “We are also building a framework to allow for the identification of the known shipper.
     “Finally, we have an excellent and committed team who are as passionate about the product as I am.
     “This has an incredible impact on the productivity and motivation.
     “As a result, we are able to keep our costs very low.
     “I could not ask for more.”
     We asked Patrick to take a moment and share his take on 2012 and what lies ahead.
     “It really depends on where your major markets are.
     “The number of growing austerity measures being introduced in Europe, and the slowdown in the US economy is having a huge impact.
     “As we in the industry are all too aware, whenever there is a negative trend in a countries’ economy, the air industry, passenger, and cargo are amongst the first casualties.
     “I also understand that cargo yields are being depressed, an all-to-familiar story, possibly as a result of increased competition from other modes, but a contributing factor has to be because airlines have given much of the buying power to the large consolidators.
     “Fuel prices are also not really helping the cause, although I believe that many airlines are now focusing on increasing their automation and distribution tools to compensate for high fuel costs.
     “I think that wide-scale adoption of the e-AWB is a step in the right direction, but if it is to be successful the rate of implementation needs to accelerate.
     “There also needs to be incentives for the forwarder to adopt the e-AWB.
     “Cargo security remains a hot topic and while we all want to feel safe when we are flying, we have to be careful that we do not throw the baby out with the bathwater and make the industry more complex than it already is.

   It’s a trade show…It’s an iPad.
   Here Mae S. Chu of Global Logistics Shipping wins the first Calogi iPad Draw at FIATA Los Angeles Tuesday.
   Next draw is at 1600 hours Wednesday.
   Winner must be present at draw.
   Pictured with Mae are Calogi’s Patrick Murray (left) and Sachin Chorge (right) sales manager Calogi Products.

     “e-Commerce in the air cargo supply chain is another area that is currently underexploited.
     “Everyone wants to move to an e-commerce environment, but it appears that taking (and investing in) the first step is the barrier.
     “As a result our industry is still fragmented, steeped in paper, and bearing a significant amount of costs due to current manual processes.
     “I believe that many systems providers need to re-evaluate their place in the supply chain.
     “There needs to be greater collaboration between the providers to turn messaging platforms into trading platforms and yes, this will take investment.
     “Looking ahead, I believe that we will continue to see the number of airlines reduce as more consolidations take place.
     “This will be driven by the passenger business, but will have economies of scale for cargo.
     “I think we will also see the same in the forwarder business; expansion by acquisition is a cost-effective means of quickly gaining access to new markets.
     “Many businesses now have programs to attract SME customers, recognizing that these consumers still represent a large portion of the market.
     “I think that some airlines and GSAs will recognize this and will look at how they can do business with this group of stakeholders by allowing them access to their stock and controlling the financial risk.
     “This move will help to increase yields.
     “Many airlines and forwarders will also look at various ways in which they can distribute their products through the usage of cost-effective e-commerce solutions.
     “There will be a push by some to remove many of the outdated manual processes that still beleaguer our industry.
     “Over the next few years, this push could be the difference between having a profitable and non-profitable cargo organization.
     “The solution providers will meanwhile be under pressure to control their costs and to ensure that they offer the best value for money.
     “E-commerce platform suppliers now need to view themselves as business partners to the industry stakeholders.
     “Cargo Security is slightly more tricky to foresee.
     “I believe that there will be pressure on various governments to recognize each other’s known shipper programs and we should see more bilateral recognition over the next few years.
     “The airline will continue to be held responsible for reporting details of a shipment—data that can only be supplied by the shipper.
     “Once again, this comes down to de-fragmentizing our industry and ensuring the requisite data is available upon demand to those that need it.
     “So it is up to the solution providers to work closely together to ensure seamless integration.
     “Ask how we keep CALOGI profitable during these times and the answer is that we have simple edicts:
     “Keep it cost effective and charge what the market will bear.
     “Make money by increasing volumes, rather than prices.
     “Listen to your customers, develop it once, and make it available to the community.
     “As part of our international roll out, we are developing additional features for each community.
     “These can subsequently be re-used by our existing subscribers at no extra cost.
     “Given the expansion in our home market, we expect to see some growth here, but our focus is on the international markets.
     “I mentioned earlier that solutions providers need to view themselves as business partners rather than suppliers and this is where we want to position ourselves.
     “We have devised a program whereby we will absorb some of the costs if a customer is willing to partner with us to expand our network.
     “For instance, if an airline or GSA is willing to support our worldwide roll out by subscribing to a branded version of the portal, we will offer free messaging for shipments executed through the portal.
     “It’s a real win-win situation and a great bonus for SMEs who wish to have a web presence, global reach, and a great deal.
     “We fully support the e-AWB and it comes as part of the package. We have several companies who are particularly interested in this feature and we anticipate that it will help boost our penetration.
     “We even have an e-AWB solution for the ground handling companies."
Geoffrey/Flossie

 

     The show must go on and by gosh, it did! The airline-centric world came together for its ritualistic, self-celebratory event that takes place every two years. The over-the-top closing ceremony actually had representatives of the last ten Air Cargo Forum hosts, including the present ones, passing a symbolic torch along, Olympic-style, in chronological order. All is well at TIACA, 2014 is all set for Seoul Incheon, and 2016 is scheduled for Paris.
     Some attendees commented to FlyingTypers that the exhibition was perhaps one-third smaller than in 2010 in Amsterdam. There were the majestic, posh stands, which reflected where the money is these days—Emirates, Saudi, Qatar, and Turkish strategically flanked by Boeing and Airbus respectively. Also the long established majors including the Lufthansa Cargo Group, Skyteam Cargo, Cargolux, and some of the top airports—Atlanta Hartsfield-Jackson International, Aeroports de Paris, Brussels and Liège, Hong Kong, Munich, and Canada’s gateway airports as well as several others. On the handling side, Fraport, LUG, Swissport, and WFS were represented with the IT-systems stand of CHAMP, Descartes, IBS, Calogi and Mercator. Notable absentees included the likes of Unisys and a commensurate presence of Chinese aviation businesses (with the exception of Hangzhou airport) and Latin American TAM, for example.
     And air cargo received due respect judging by the keynote address from none other than the U.S. Secretary of Transportation, Ray LaHood, Atlanta Mayor Kasim Reed, the airline CEO’s, and the CEVA CEO with CNN moderator Ali Velshi. TSA and CBP were also well represented. A good number of airline cargo heads were at the show: Air Canada, American, Atlas, Delta, Emirates, Lufthansa Cargo, Qatar, Saudi, and Swiss. Missing big time were the forwarders, and by Wednesday afternoon, the exhibitors began talking to each other to pass time, and mobile phones got a workout.
Did the show deliver?
     The event format with half a day for sessions and two and a half days of exhibition certainly lent itself to ample networking opportunities; therefore, as a high-level networking event, it met that standard. The exhibition hall layout was conducive to and provided plenty of room for people to sit down and pow-wow as much as necessary. The prime location of the Georgia World Congress Center in midtown Atlanta and the sweet spot surroundings by CNN Center, Philips Arena, Georgia Dome, the Aquarium, and the World of Coca Cola, with easy MARTA public transport and numerous hotels, restaurants, and bars didn’t leave much to be desired. The organizers did well.
     As far as fresh ideas, that was overrated, as was the co-location with the Council for Supply Chain Management, which proved to be more of a physical proximity of exhibition areas A and B respectively than any real interaction or tangible benefit. Cross-access was limited to the exhibitions, yet the one CSCMP session FlyingTypers attended was more stimulating than anything we heard at TIACA.
     The tantalizing presence of shippers and forwarders next door, so close yet so far, must be labeled as a truly missed opportunity of some magnitude. This was echoed by several exhibitors as well, as clearly the value proposition and business opportunities were impacted by their absence.
What came out of the sessions?
     Security, e-freight, and technology are all worthwhile issues that are part of the mosaic that is air cargo. Maybe hoping for or expecting anything revolutionary is unrealistic, despite the fact that the ongoing global economic downturn would, under any other circumstances, be an irresistible driver for the industry to come up with a new business model in preparation for the future. Whether it is resignation or weariness, there has been a paucity of new thinking being expressed. One can only hope that some renewal will come along by the time TIACA gets ready for Seoul.
Was Atlanta worthwhile?
     That depends on whom you ask; the five-figure cost for the larger exhibition stands combined with the mostly company-sponsored coffee, lunch, and dinner likely worked just fine for TIACA. Not so much for the exhibitors. If the yardstick to measure which companies are doing well and by how much is a display of confidence and presence at this prestigious event, then that’s one way to look at it. Another is the ability to talk to members of the industry while they are all under one roof.
Ted Braun

 

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