Vol. 9 No. 122                                                  WE COVER THE WORLD                                  Wednesday November 10, 2010

 

EU Fines Carriers In Price Fix

     The European Commission In Brussels has fined eleven cargo airlines €799,445,000 million Euros for building a global cartel.
     Carriers affected are Air Canada, Air France-KLM, British Airways, Cathay Pacific, Cargolux, Japan Airlines, LAN Airlines, Martinair, Scandinavian Airlines, Singapore Airlines, and Qantas.
     Brussels claims the collective manipulation of kerosene and security surcharges by the mentioned carriers between 1999 and 2006 "without conceding any discounts“.
     "It is deplorable that so many major airlines coordinated their pricing to the detriment of European businesses and European consumers," stated Spainish-born EU Commissioner Joaquín Almunia (right).
     The fines are no surprise. They were actually expected a year ago at which time the airlines had claimed an inability to pay the fines due to the heavy losses incurred during the global economic crises.
     Air France-KLM topped the hit list, having been fined €310 million, followed by British Airways (104 mio. euros), Cargolux (79.9 mio. euros), Singapore Airlines (74.8 mio. euros), and SAS (70.2 mio. euros).
     Interestingly charges against eleven other freight carriers were dropped for lack of evidence.
     Lufthansa and Swiss received full immunity under the Commission Leniency Program as they were the first to provide “valuable information” regarding the cartel
     “This competition distorting price fixing would have continued if we had not stepped in,” Almunia said. The carriers now have two months to file an appeal in the European Court of Justice.
     The EU Commission’s fines fall short of penalties imposed by the U.S. on eighteen cargo carriers for price fixing amounting to 1.15 billion euros (1.6 billion dollars). The U.S. DOJ also filed individual criminal charges against fourteen leading cargo managers, with four so far, serving jail sentences. Brussels, on the other hand refrained from pursuing a similar course.
Heiner Siegmund

 

Christian Returns

     Christian Fink, a FlyingTypers favorite who was last featured here as MD at Lufthansa Charter, is back as one of two MDs of handling Counts. The other MD is Michael Müller-Engel.
     handling counts GmbH is a wholly-owned Lufthansa Cargo subsidiary.
     It was formed in 2008 following wage negotiations and the final arbitration recommendation. Today, handling counts employs about 300 handling staff at the Lufthansa Cargo Center in Frankfurt (build-up and break-down), the Frankfurt Animal Lounge and in the Lufthansa Cargo Service Center.
     Sometimes, you look into the face of somebody you meet or interview and see what you want.
     Christian Fink is easy to talk to and completely open and gracious, but there is something else.
     Beneath all the conversation and good feelings, there is a steely determination; a cut off that allows very little patience for nonsense.
     Before he landed upon the air cargo scene, Christian Fink learned to practice law, receiving his license in Germany.
     But Christian Fink wanted to know more.
     He studied and worked in several places and actually was employed in Washington, D.C. as an assistant to Minnesota Senator David Duerenberger, who fought for universal health care for Americans before getting caught up in an expense account scandal and losing his seat in 1995.
     As Christian told us in 2008:
     “I did all types of things, including carrying messages and documents in and out of offices inside the U.S. Capitol.
     “Before that, I worked for a law firm in a small town in Minnesota.
     “I knew European law, but wanted to learn the American ways of jurisprudence.
     “At first I would just sit in the court room and listen.
     “After a while, the judges got to know me and enlisted my opinion on some cases.
     “Before long, I was writing up cases at the law firm myself.”
     Christian immersed himself completely, often spending hours on end with the inmates, locked up in jail cells while taking depositions upon which he crafted his cases.
     Later, the humble actions around the powerful, and the pro-bono hours in a small USA town would form a strong part of his experience while moving up the ladder after he joined Lufthansa as general counsel.
     In that critical position, Christian was involved in almost every adventure the carrier got into, including WOW.
     He formed and helped to build Lufthansa Charter, serving the company until just a year ago, when he departed, but now he reemerges as a driving force at handling counts next week on Monday, November 15.
     A new adventure for a truly great guy.
     It's nice to know Christian's back.
Geoffrey

 


At TIACA Amsterdam

Up Close & Personal

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Cargo Security In The Fog Of Battle

     As expected, a serious, successful attempt to ship a potent PETN bomb, cleverly and ingeniously built into a printer toner cartridge, rattled the nerves and brought much attention (not all helpful) to the challenge of round-the-clock cargo security.
     As the reports come in, it turns out a last minute tip from Saudi security was what saved the day; otherwise, the device was virtually undetectable by currently deployed security screening methods. Really good security is priceless; industrialized security measures are not. You still need a human to put two and two together – common sense is not a common computer application.
     Congress and the TSA have dealt with cargo carried on passenger aircraft; contrary to various domestic and international press reports, it is at 100% levels in the U.S. and it works. What is clear to the air cargo industry may not be totally as clear-cut to the public at large. As usual the media, with its penchant of breathless reporting, is no help. Quite the contrary – it adds much confusion and wrong information to the issue.
     There are distinct and well-defined channels used by the forwarder/airline community that cater to commercial shippers. Government has had “known shipper” in place for this type of cargo for years. The recent regime for cargo on passenger aircraft has resulted in a host of new and technologically advanced measures, rolling the responsibility all the way back to the shipper in some cases. The “heavy freight,” which over the years has become somewhat more uniform, needs special screening methods and technology because of its size and weight.
     There are all-cargo airlines as well as combination carriers that operate all-cargo aircraft; the cargo they and the integrators are transporting is not affected by the same rules and restrictions which apply to cargo carried on passenger aircraft.
     The much-ballyhooed integrators provide logistics services to commercial customers, albeit as a closed loop, whereby these companies act as a single source logistics provider and an unbroken chain of custody. The FedEx, UPS, DHL and TNT of the world operate all-cargo aircraft.
     The difference is that the integrators’ main business is retail, i.e., individuals and companies shipping envelopes and small packages. In this case, the security measures are of a totally different dimension, as they don’t involve purely commercial accounts but instead persons who may have never shipped anything before and may not ship again. It is impractical and impossible to throw a blanket security regime for these types of shipments. Security is driven by the policies and procedures of each integrator and the country in which they operate. The processing of envelopes and small packages at major, specialized hub facilities – Memphis, Subic Bay, Dubai, Stansted, Frankfurt; Louisville, Cologne, Shanghai, Shenzhen; Bahrain, Leipzig, Cincinnati or Liege, Singapore – lends itself for unique, highly mechanized sorting and screening.
     Not all cargo is alike – the 21st century terrorist masterminds seem to have realized that cargo on passenger aircraft has become a much more challenging and therefore hostile environment, although human-borne explosive devices are still being tried. The commercial cargo chain of custody has held up well, therefore it is really no surprise that the envelope and small package shipped by an individual, non-commercial shipper has now had its global premiere as a newly devised means of delivering a smart and lethal explosive device – thankfully, unsuccessfully.
     It is encouraging that so far, resolve has won and political correctness has lost, as Germany, France and Britain have banned outright all cargo from Yemen and, in the case of Germany, all passengers as well. I guess the U.S. is not quite there yet for whatever reason. What about China, India and Russia? It is this type of action that stands the best chance to drive a wedge between terrorists and a host (witting or unwitting) country, which stands to suffer the consequences of restrictions on its freedom of transportation and market access. In my view, this is a far more effective response than yet again spending billions on technology and security regimes, which, once in place, are essentially obsolete, with terrorists quickly moving on to the next experiment while we play catch up. Not to mention wreaking havoc on the global supply chain.
     Much more needs to be done; much more of the most critical and time sensitive work will continue in the shadowy world of espionage.
     In a parallel vein, Forbes reported in September that a Chinese botnet sells point-and-click cyber-attacks, with anywhere from 2,000 to 10,000 new machines per day becoming infected with the malware. Law enforcement if the U.S. is fully aware of the threat. E-freight, anyone?
Ted Braun

 

 


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