#INTHEAIREVERYWHERE 
THE AIR CARGO NEWS THOUGHT LEADER  

---

hen word came that Daniel Fernandez, long time stalwart Secretary General, suddenly and without any warning departed from his post at The International Air Cargo Association (TIACA) on August 2, it should have set off some alarm bells that something drastic was afoot with that organization.
After all, Daniel had been an integral and vital element in the development of TIACA from a mostly well meaning, albeit disorganized trade group in November 1999 to its current stance of fattened coffers, and an ongoing steamroller of industry trade shows in different international gateway cities every two years.


     Fernandez is not talking, but it is commonly believed that TIACA (to put it bluntly) screwed a very nice, well-liked, and decent guy.
     The word is that not only was Daniel summarily relieved of command, but he was also replaced by an ex-U.S. government employee of the U.S. Transport Security Administration (TSA), Doug Brittin.
     Brittin seems like a nice enough guy, at least; he’s been out on the rubber chicken circuit for the past half dozen years talking up mandated security deadlines in simple, understated tones.
     Brittin apparently got upped from government to the private sector after taking the heat of delivering mandates to air cargo, utilizing the very effective ‘fist in a velvet glove’ technique.
     How Brittin, apparently with no background for operating a large international air cargo industry trade group, fits into TIACA remains to be seen.
     For certain, TIACA desperately needs continuation of the organizational and money-making skills that Fernandez delivered, and which made the group rich at trade shows and events during the past dozen or so years.
     The current shutdown of the U.S. government over politics and money issues underscores dramatically the notion that often government success may not necessarily be suitable training for delivering a private sector business enterprise, let alone a vital, mandated trade group such as TIACA.
     Reaction to all of this is coming in from several quarters.
     Michael Webber, a well-respected aviation and airport expert who, among other things, stood up and stopped the St. Louis Lambert Field Aerotropolis scheme a few years back, definitely has a few things to say.
     Here he wonders why Daniel Fernandez was so unceremoniously thrown under the bus by TIACA.
     "I was the head of marketing for the Aviation Department in Kansas City and a Trustee of TIACA when Daniel's predecessor Garth Davies was at the helm as TIACA Secretary General.
     “I remember thinking at the time that for as much as we were paying for that distinction, TIACA seemed like a needlessly clubby organization.
     "Garth reminded me of that Dana Carvey maître d’ character from Saturday Night Live who delighted in consigning would-be patrons to various areas of the lobby based on their perceived importance.      "Comparatively speaking, Daniel flattened the hierarchy and specifically brought airports up to something approaching parity with other members of the association—a sea change from when they were expected to be seen and not heard.
     “One of my successors in KC (Gary Bartek) eventually became the TIACA chairman.
     “One can only wonder that if by treating everyone as equals, Daniel didn't ruffle the feathers of anyone who expected to be treated as something more special?
     “I'm not even a member of TIACA anymore, but I respect the organization and appreciate the opportunity to participate in their events and don't question their authority to make changes they deem necessary.
     “If there were an opening for the Secretary General position, I would think Doug Brittin was a great hire by every measure.
     “Having observed excruciating cuts throughout, our industry is perhaps more accustomed to unpleasant decisions than most, although most of those cuts fell sharpest below the organizational levels of the executives.
     “Perhaps for the rest of us, there's simply an expectation that if peoples’ lives must be so disrupted, it should be done in as decent and dignified a manner as reasonable.
     “To remain effective, trade associations have to rely heavily on the good will of their industries. If I'm out of step with the times, so be it, but I'd like to think that a thoroughly decent guy would be treated with the same dignity with which he served.”

     Sources say Fernandez may be forced into some kind of legal action just to get TIACA to honor its commitments to its ousted former Secretary General.


     If the Fernandez scenario were not enough, now comes word that the great Issa Baluch has quit his position on TIACA’s Board and is “very unhappy with the direction the organization is taking in 2013.”
     We reached Issa just as he was disembarking an airplane in Dubai earlier this week.
     Always outspoken, Issa lays it on the line, saying:
     “I am a firm believer in change and am open to change in any organization, but it must be change that benefits the entire organization, not just a select few.
     “The reason for my resignation actually relates to what I just said about change.
     “In the last few years, TIACA’s traditional culture was broken by a few in that group who recruited a vice chairman from outside the members of the board.
     “The rationale presented was that the current chairman preferred a vice chairman that he personally knew well and who he could be sure would carry out the chairman’s agenda.
     “This became the most important objective in electing officers.
     “Current board members were not considered for office because they were not personal friends of the chairman.
     “This cycle has repeated through the last three elections of officers.
     “Only with the last one of these three was any effort made to stop the practice, but it is too little too late.
     “A cosmetic change in the bylaws was made but the door to external nomination is still wide open.
     “TIACA’s long tradition of collaboration, open debate, and consensus building has been replaced with a private sector, top down control of that association.
     “I have had some 30 years of experience serving on the board of various trade associations.
     “One volunteers for these positions to advance and serve the interests of a particular industry as a whole, rather than for narrow self-interest and private agendas. So care should be taken as to those who are given office to insure that the organization’s culture and broad objectives continue.
     “Sadly, TIACA’s leadership during the past few years has continued the focus on their own narrow interests rather than the interests of the membership as a whole.
     “The assets of the many, earned over many years, are now appropriated to fund the agenda of the few.”


     “The biggest part of TIACA’s membership and area of growth are the SMEs, but board and officer recruitment efforts have focused solely on large multinationals to the exclusion of everyone else.
     “In my mind, it is crucial that the board be representative of the entire industry and TIACA’s wide membership, as it has traditionally been.
     “TIACA’s diversity is what gave it its unique role and credibility as the true representative of the air cargo industry.
     “I remained on the board to advocate this view until the point that I found I could no longer prevail against this current tide of large corporate interests and lack of diversity,” Issa Baluch said.
Geoffrey

     2013 has seen a return to a more traditional ocean shipping peak season, but growing volumes have done little to boost returns for shipping lines or improve pricing stability for shippers.
     The World Container Index, an East-West trade lane composite, illustrates the problem carriers have faced.
     It rose from just $1,500 per 40 ft. container (FEU) in late June to $2,100 per FEU in mid-August, as liner General Rate Increases and Peak Season Surcharges helped boost returns.
     But despite a fresh slew of new GRIs, since then it has collapsed once more, and by early October was determinedly heading back down below $1,600.
     The Shanghai Containerized Freight Index recorded a similar rates resurgence in July, but by October the gains had been lost and rates had fallen far below those recorded a year earlier.
      The summer surge was evidence of rising volumes as retailers built up inventories in time for the holiday season, but the swing in rates also had other causes.
     Much of the gains realized by carriers in the Asia to Northern Europe market, for example, came from July 1 GRIs of up to $1,000 per TEU.
     Liner success in spot markets with this hike was aided by shippers taking fright during July as the August 1st deadline for the introduction of a new 6 percent Value Added Tax on transport services originating in China loomed into view, and was due to be implemented on the same day as a raft of new GRIs.
     The result on Asia-Europe services was utilization rates pushing 100 percent at key load ports in China during July. Yet with some 25 ships over 10,000 TEU delivered this year, the ongoing issue of excess supply saw carriers struggle to hang onto these earlier gains despite healthy volumes and signs of returning customer confidence in Europe. “Asia to North Europe spot rates have fallen in 33 of the 39 weeks so far this year,” noted Drewry.
     The Transpacific trade also bumped during July, but the bounce in spot rates was minimal given that July saw the highest monthly volume of imports since 2007. What has been clear in the U.S. is that volumes did peak this summer and this will continue through October, signaling a return to the traditional peak season strategy by shippers.
     But the introduction of tonnage from Asia-Europe services and a scrap for market share did little for the bottom lines’ of shipping lines.
     Drewry’s Container Freight Rates Index for Hong Kong-Los Angeles was down $1,886/40ft by September 18th, close to a 2013 low and a long way short of the $2,700/40ft mark recorded in September 2012.
     According to the Global Port Tracker report produced by the National Retail Federation and Hackett Associates, U.S. container ports will see a 9.1 percent increase in volumes in October compare to a year earlier, as retailers restock inventories prior to the holiday season, even though the government shutdown has disrupted import patterns due to customs workers being put on furlough.
     “With the holidays nearly here, retailers are making sure their shelves are well-stocked,” said Jonathan Gold, (right) NRF Vice President for Supply Chain and Customs Policy.
     “Cargo is continuing to move through the ports, but the government shutdown has left some agencies short-handed, so NRF will monitor the situation closely as the holidays approach.”
     Indeed, the NRF is predicting that holiday sales will grow 3.9 percent in 2013 over last year to total $602.1 billion, a trend that has boosted peak season volumes over August-October.
     “The 4.42 million cargo containers expected for those months combined is a 5.9 percent increase over last year and accounts for 25.6 percent of all retail imports for the entire year,” said the Port Tracker report.
Sky King

FT100413