Vol. 12 No. 89                       THE GLOBAL AIR CARGO PUBLICATION OF RECORD                  Thursday October 17, 2013
#INTHEAIREVERYWHERE 
THE AIR CARGO NEWS THOUGHT LEADER  


air cargo news for October 8, 2013

o hear what is being said this week in Singapore, the air cargo industry is in danger of being caught with its proverbial trousers down when the EU’s new security regime begins on July 1, 2014.

     The ACC3 regulation requires all carriers transporting goods into the EU from selected non-EU countries to have their operations from those states independently validated to ensure their supply chains are safe.
     Tony Tyler, IATA’s Director General and CEO, told the Air Freight Institute at the World Congress of the International Federation of Freight Forwarders Associations (FIATA) in Singapore this week that airlines, ground handlers, and forwarders should get accredited as quickly as possible.
     “With ACC3 the EU is imposing a considerable burden on airlines and the air cargo supply chain,” he said.
     “All parts of the supply chain will be affected and the timeline is very challenging.”
     Speaking to FlyingTypers on the sidelines of Air Cargo & Logistics Asia, held in parallel to FIATA World Congress, consultant Sundi Aiyer (left) said the EU’s approach to security with the new regulations echoed the scatter gun approach witnessed post 9/11.
     “They are well intended, but it does seem like it hasn’t been thought through from an implementation perspective,” he said. “It’s not clear how this will be executed without supply chains coming to a grinding halt.”
     Sebastian Scholte, (right)CEO of Jan De Rijk, said the European Commission was usually business-sensitive and was hopeful the deadline would be delayed. If it isn’t, ACC3 could result in “less volumes” which “would be disastrous” for the air cargo industry.
     As FlyingTypers has previously pointed out, there are a limited number of accredited, certified ACC3 independent Validators and almost all of them are based in Europe, rather than in the non-EU countries where they are most urgently needed.
     Joost van Doesburg, (left) Air Freight Policy Manager at the European Shippers’ Council, said that European Validators could travel, but said there could still be a lack of capacity available considering all the parties that needed to be accredited globally.
     “We will see next year, but if insufficient progress has not been made then we will call for more time,” he said.
     Tyler urged all parties to collaborate over validation wherever possible.
     “There is only a limited number of validators, so it makes sense for certain markets to coordinate requests to be validated,” he said.
     “This should maximize efficiencies and minimize costs, as well as increase the chances of the industry meeting this very tough deadline.”
     Brian Lovell, (right) CEO of the Australian Federation of International Forwarders Ltd, said the new regulations created problems even for shippers in countries like Australia, which has been classed as safe because cargo could be ruled unsafe once it left the country, depending on how it was carried and handled.
     “The ACC3 relates to last port of call before arrival into EU,” he said.
     “So all cargo departing on an accredited carrier from a 'green country' is approved, but if the carrier is not accredited, nor the airport through which the carrier transits, then all cargo is treated as insecure.”
     With less than nine months to go before the new system goes live, Tyler said those affected should not assume the implementation date would be pushed back.
     “The Commission is saying this is an immovable deadline, but in the words of Mandy Rice-Davis (NB to non-British readers—a former model famed for helping bring down a Conservative government in the 1960s):
     “‘[They] would, wouldn’t they.’
     “We are helping the industry get ready for it, but it is challenging.
     “They have blinked before but it would be wise to assume they will enforce the deadline.
     “My advice is: get ready.”
Sky King



The first thing you notice about FIATA World Congress in Singapore this week is the huge presence of local freight community from Singapore, then the delegates from Asia and the presence of Africans and others.
     FIATA 2013 is a healthy exchange and the diversity speaks for itself.
     In this great City/State, FIATA 2013 delivers a running start to a wider understanding of the single window concept, and why Singapore made it into first position of the Logistics Performance Index.
     Fascinating to many, but simple enough to appreciate, is the need to get rid of barriers and facilitate trade and freedom of the movement of goods.
     Singapore “got it right” and for a few precious days this week, everyone else can study them.
     Still, exciting days ahead.
     But for the time being, the camaraderie and sense of sharing is at a high pitch, as colleagues meet and compare notes.
     FIATA 2013 is what networking is all about!
     Day Two at FIATA started off with Tony Tyler making some ground breaking statements (see article).
     Tyler alluded to the need to keep a dialogue between stakeholders, and that this industry partnership was crucial.
     But to me, the fact that he made reference to the service provider /client relationship between airlines/forwarders was atomic.
     The starting point is always to get the relationship right, and he crafted that very well.
     He went on to say there are challenges, and in his wish list was more coordination to communicate with regulators without loss of time.
     This is urgent.
     Very true words, and downright accurate.
     In the later sessions about safety and security… well, the best way I can describe this is the participants came out wiser. Clearly, the negative impact of excessive safety and security has become a winning ticket for some who embraced this net and did all they could to comply.
     But that compliance between shippers and service providers gained them credibility. This is real.
     And I came out with awareness of the changing threat we have around us, and what this industry could do to be smarter by applying some very basic procedures.
     Not a bad day, by all standards.
Issa Baluch


 

ccording to Charles Kaufmann, Head of Air Freight and Valued-Added Services in the Asia Pacific at DHL Global Forwarding, there are now signs that air freight volumes will peak this quarter on the back of improving consumer confidence in Europe and the U.S.
Speaking to FlyingTypers at his Singapore office as FIATA’s World Congress took place this week, Kaufmann said there was currently excess supply in the market because, led by Middle East carriers, airlines had been adding passenger capacity as demand had increased, making it difficult to keep freighter operations viable because bellyhold options were so competitive and ubiquitous.
     “There’s more and more capacity coming,” he said.
     “As that capacity grows, it gets more difficult to operate freighters commercially for big airlines when you also consider cost issues.”
     DHL Global Forwarding uses a mix of uplift providers in addition to routing some cargo through DHL’s own in-house express and freighter network, which Kaufmann said was still enjoying “very good load factors.”
In terms of demand, he said the intra-Asia market was “still strong” and from a forwarding perspective there was adequate capacity as low cost carriers were offering some belly hold uplift in addition to more traditional wide-body networks.
     Asia-Europe was described by Kaufmann as “a strong trade lane” for DHL, which uses a range of commercial carriers to offer customers flexibility via DHL’s block space arrangements with preferred carriers and its utilization of spot belly hold and freighter capacity on core trunk routes such as Hong Kong to London.
     “From China to Europe, in the first six months the high-tech sector trended downward, but in [late September] volumes started coming back,” he said.
     “What we feel is that there is more appetite from consumers than before with the stabilization of the financial situation.
     “The election in Germany is also over, so volumes are coming back.
     “I think fashion and apparel will become more important into Europe in the future.
     “I also believe that the lead time for these customers is getting shorter and shorter. Major fashion houses like to change very quickly.
     “Today more and more copy brands, so speeding up supply chains helps prevent this.”


     Kaufmann said growing apparel traffic would also be a factor on Transpacific lanes, a positive point as the air cargo sector comes to terms with a structural change in the market as a result of the evolution of the hi-tech and electronic markets.
     “Before, laptops went by air,” he said.
     “Now they are commodities and most go by ocean and some by rail to Europe.
     “Also, lots of new products are smaller.
     “Parts of mobile phones are smaller, everything is smaller, so you need a lot of them to replace laptops or older products in terms of volume.
     “We have to realize this is a fundamental change in the air freight market.
     “In the past it was all about high tech. Fashion and apparel was not as urgent. But now that’s not the case for certain brands, which are going just in time because they are changing products on the shelves very quickly.”


     Kaufmann said the capacity over-supply situation on Transpacific lanes was not as severe as on Asia-Europe lanes.
     “There are not so many airlines there compared to Europe,” he said.
     “We could see about two months ago that capacity was not exactly tight, but it was being used.
     “Volumes were going up and there are not as many freighters now.”
     He said in part this was because of changes in how airlines have adjusted around-the-world services as military movements between the U.S. and the Middle East have removed a key economic crutch for the trade.
     As a result, “capacity on the Transpacific is not growing at the same speed as in Europe, and US consumption is getting better.”
     He added: “We can see from our customers that air freight will be quite positive in October and November. December is always a downturn.”
Sky King



t doesn’t seem to make much sense to publish a book replete with mendacity, yet former Director General of IATA Giovanni Bisignani’s book, Shaking the Skies, is one such read. Leaving the self-congratulatory style aside, it both glosses over and misrepresents facts. Since its publication, various industry insiders, including “Aviation Intelligence Reporter” have mercilessly ripped the book.      Rather than trying to figure out why someone who has enjoyed the limelight for years writes such a book, let’s focus on two specific areas to illustrate matters in a manner that speaks for itself—one, a chapter titled “Assessing the situation,” the other, “Good and bad technology.:”
     Mr. Bisignani took over IATA on May 15, 2002. In “Assessing the situation” he states “Most of IATA’s money came from members’ dues and fees for service.” In fact, that may have been true until 1990, but certainly not in 2002. When yours truly joined IATA in December 1990, Dr. Edward (Eddy) Spry, who had been working for IATA for 20 years, soon thereafter became Managing Director, second-in-command to Director General Gunter Eser. Eddy and his management team started the IATA Registered Suppliers Program to address the very issue Mr. Bisignani cites, namely, weaning the organization off its total dependence on members’ dues and, as a tradeoff, gaining the ability to engage in commercial activities.
     The program grew by leaps and bounds and was expanded to the upscale Industry Associates category, aimed at attracting gold label companies such as Airbus, Boeing, BT, GE, IBM, Unisys, and others. Staff was directly involved in recruiting and servicing these program members, who paid dues for the privilege of attending heretofore closed industry meetings. This provided them with access to airline delegates in a non-sales environment and they also benefited from timely knowledge of upcoming standard developments and changes before they were formally adopted and later published in annual IATA publications. It gave the program members a measurable advantage in their product plans while allowing them to demonstrate commitment to the industry.

     In cargo, IATA started Cargo Week—a series of events around the annual Cargo Services Conference—a precursor to the more recent World Cargo Symposium. The same type of expanded show was established for Passenger Services (now World Passenger Symposium). This facilitated the involvement and participation of non-airline delegates and also non-Registered Suppliers in certain seminars and workshops for pay. The program was in full swing by the time I parted with IATA in January 1997, and had generated sufficient revenues to fund the reduction in airline membership dues, with surpluses channeled back to the members and some funds retained for running IATA internal projects. Regrettably, Eddy Spry ended up having to resign from IATA in 1992 after becoming involved in a court case in the U.S. brought by aviation consulting firm Airline Economics against its former president, Mr. Harold Pareti, alleging misappropriation of funds and other acts.
     While on this subject, in his book, Mr. Bisignani writes that “…support from the IATA management team would be a pipedream. Many of them had ended up at the association having failed to gain promotion at an airline.”
     Eddy Spry was an economist. Stig Kristensen had come from CERN. I had come to IATA from Unisys Corporation.
      This is coming from the man who finds a way to write “I” 7-8 times per page and only seldom credits anyone but himself with ideas, grit, determination, and business acumen. I can’t help but contrast it with words spoken by Tony Charaf, Delta Air Lines Chief Cargo Officer at a recent Atlanta Air Cargo Association meeting: “…there is no ‘I’ in team.”
     How Mr. Bisignani as the CEO of IATA could have gotten this aspect wrong is beyond belief.
     In “Good and bad technology” Mr. Bisignani waxes poetic about how while performing as CEO of Alitalia, a post he assumed in 1989 (to 1994), “…I took a new cargo IT program, not long after launch, called ‘Fast’ that was quickly acquired by all the major cargo airlines” and “…I was the person who had made the Cargo IT Program into such a practical product than that I was the IATA DG.” Besides some really confusing language, here are the rather vastly different facts:
     Not “all the major cargo airlines” acquired FAST, or P04, as it was also called, which ran on an IBM TPF platform. Just a list of Unisys USAS Cargo customers from about that time included Air Canada, Air France, Cathay Pacific, Lufthansa, Northwest, Qantas, and Sabena, just to name a few. Additionally, several airlines had homegrown systems, such as CHAMP at Cargolux.
     But what really takes the cake is this: in October 2008, one of the carriers that had taken the FAST system the furthest by any means, namely Swissair, had former team members holding a farewell party for Carido, the internal name for FAST. The material used for that event included a copy of the original Alitalia/Swissair contract for FAST/Carido… ready for this?
     The agreement had been executed on July 28, 1973—a whopping 16 years before Bisignani materialized at Alitalia! It certainly wasn’t a new cargo IT program. His claim that he played the key role in “making it into such a practical product” is the best illustration of the self-aggrandizement and loose handling of facts throughout his book, and that’s being charitable. An excerpt is shown below:

     It didn’t stop Mr. Bisignani from buttonholing airline executives when he showed up at the 2012 World Passenger Symposium to peddle his book, shamelessly carrying a stack under his arm. He must desperately need the book’s £19.99 list price.
Ted Braun


Get On Board Air Cargo News FlyingTypers
For A Free Subscription
Click Here To Subscribe


If You Missed Any Of The Previous 3 Issues Of FlyingTypers
Click On Image Below To Access

FT100813

FT101113

FT101613