Dateline Bangkok—Is the third time the charm? The air cargo industry better hope so as IATA’s World Cargo Symposium (WCS) meets this week in Bangkok, Thailand.  Actually this is the third WCS, the first in 2007 was held in Mexico City and the second in 2008 this time last year in Rome.
      But right now in 2009 those earlier meetings seem more than a long time ago in a world turned upside down by tidal waves of change and not a small amount of future uncertainty.
      The individual in the middle of WCS Aleks Popovich, IATA head of Global Cargo, sums up the task at hand, up close and personal.

ACNFT:   Aleks, describe why WCS is especially important this year?
AP:  We aim to intensify the dialogue with the customer as emphasized during our Rome WCS held in 2008 and, further to find ways of battling the current world financial crisis.
     Everywhere as commodity sales—as example car sales—drop, buying power fades. The question we raised before meeting in Bangkok is what additional steps can we take to further improve the supply chain for the automotive and other industries?
     To find out we interviewed many customers asking them what their top three criteria are to choose air cargo for transporting their goods.
     Talking to the customer is vital because only by exactly defining needs can we provide tailor-made solutions.
     Here is the feedback:
     A top criterion amongst eighty one percent of responders was for more speed as most urgent and important.
     But 69 percent of responders opted for reduction of costs with 41 percent ranking higher reliability and better on-time performance as most important.
     Security in our survey was prioritized by 8 percent while environmental efforts was recognized as important by 5 percent of all participants.
ACNFT:  One surprising result of those customer interviews is the comparatively low ranking of green topics related to the air freight industry.
     How can your organization emphasize this vital issue to make it more popular?
AP:  There is a wide array of different steps ranging from getting rid of old freighters that pollute the atmosphere to implementing new technologies and building an efficient ground infrastructure. This we can recommend to airlines and airports.
     Taking the global view at IATA we strongly reject a patchwork of different taxes or laws like the emission trading schemes Brussels intends to implement in Europe.
     Instead we support a harmonized strategy stretching beyond national boundaries and markets.
ACNFT:  After charting the customer’s desires how does IATA react to better support the industry and simplify processes?
AP:  Well, there are a number of tracks we intend to deepen during WCS to better the supply chain.
     One opportunity for not only speeding up processes but also avoiding costs at the same time is our e-freight program.
     Split by shipper, forwarder and airline, e-freight could result in 4.9 billion U.S. dollars total annual cost savings since up to 38 documents that accompany air freight shipments normally can be eliminated.
     Consequently, this issue is one of our key objectives to push forward in close coordination with agents and cargo airlines.
     A further major topic on our agenda is Cargo 2000 that will halve the links along the supply chain from something like 40 down to approximately 20. Presently, one million shipments per month operate according to Cargo 2000 standards.
     That’s a major target we already have achieved.
     But we aim at more to further improve the daily performance, speed up transports and enhance security.
ACNFT:  Coming back to e-freight and the first WCS held at Mexico City in 2007: IATA promised to introduce e-freight in six locations.
     How far have you gone since then? Have the promises been kept?
AP:  Quite far.
     e-freight has grown to 18 locations worldwide with more to follow, step by step.
     Things are accelerating daily in our efforts to bring focus to simplifying process in air cargo.
     As example CASS that started in 1979 is now operated at 85 locations worldwide, but 45 percent of the locations have delivered since WCS Mexico was held just two years ago.
     The more CASS, the more savings are possible.
     It’s as easy as that.
     Presently, CASS manages an amount of 23 billion dollars.
     We as IATA have to take steps to protect that money at banks.
     During the last 13 months, 35 airlines have gone bust, which is alarming by any standards or historical context. Looking ahead, there are still some white spots on the CASS map.
     We not only aim at the big markets like China but target the smaller nations as well.
     As example Lithuania, French Polynesia and Estonia are locations where we established CASS last year.
     However, there still remain some areas on the globe that challenge us in bringing CASS into practical usage such as the sub-Sahara region in Africa, Russia and parts of South America.
ACNFT:  What are the most important tracks this week in Bangkok?
AP:  The aforementioned e-freight targets, revenue optimization, quality improvements, innovations and the understanding of route costs from the customer’s point of view are our main Bangkok tracks.
     Out of these tracks a list of actions will be the result.
     Their outcome will be reported at the WCS in 2010 that will be held in the Americas. Exactly where that will be we intend to announce at the Bangkok Symposium.
ACNFT:  You moved from an airline (BA) to become IATA’s Global Head of Cargo. How did this affect your visions and perspectives?
AP:  My vision was not to deliver change to only one company but to an entire industry.
     That’s a particular challenge that attracted and still attracts me.
     Ever since I’ve been working in a multi cultural environment that enriches me and broadens my perspective. So if you asked me if I’d take this step again my answer would be yes.
ACNFT:  Now that Michael Vorwerk has been named President of Cargo Network Services (CNS) in USA, what’s next?
AP:  Michael, we believe has great credibility for all supply chain participants.
ACNFT:  How would you describe the main projects he’ll have to push forward?
AP:  By the end of 2008 we launched CASS together with United Airlines and forwarding agent Lynden in domestic USA. This year we want to get more participants to join, because the more players, the more volumes, the more savings. CASS is one of the great strengths of CNS, generally speaking. Therefore, we’ve got to carry this project further.
     As example, e-freight in USA was implemented at O’Hare and JFK last year.
     Now in 2009 we are inviting other U.S airports to join because carriers such as Asiana and Korean indicate that they are very eager to have this capability at their North American destinations.
     To round it up: CNS is one of the few big assets IATA has in cargo.
     Its major focus is still the USA but with the global spreading of Cargo 2000, Miami-based CNS is taking over more and more responsibilities worldwide. This importance of CNS and much more will be demonstrated at our panels and meetings all this week in Bangkok.”

So it begins. IATA World Cargo Symposium this week could be remembered as among the most important air cargo meetings in recent memory by providing an unvarnished reality check for people in every part of air cargo to plug into what’s important right now and what’s next when the ongoing world financial nightmare finally makes its run to daylight.
Heiner Siegmund

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Crisis Shakeout Will Strengthen Cargo

     2009 is the Charles Darwin memorial year. Now, in analogy to the great British naturalist’s groundbreaking findings he presented 150 years ago in his “Origin of Species” the basics of his evolutionary theory are seemingly being favored by a number of leading air freight managers, too.
     One such ‘Darwin supporter’ is Lufthansa Cargo’s CEO Carsten Spohr who predicts that the present economic crisis will accelerate the consolidation of the carriers with the fittest and smartest surviving.
     This they will achieve due to their professional yield and capacity management combined with great market as well as operational flexibility.
     Providers however, like the many undercapitalized airlines, the ones with old and inefficient aircraft, and probably some of the dinosaurs in air freight too, will most likely die out. “This crisis will separate the men from the boys” he predicts for the capacity providers.
      According to Spohr, Lufthansa Cargo clearly belongs to the first category. After having left the valley the cargo crane will be an even stronger market actor, he predicts. Why and by what means his company will master the crisis to preserve or take industry leadership in a number of fields he shared with Air Cargo News FlyingTypers ­ just before departing for IATA’s World Cargo Symposium in Bangkok.
     Here are Spohr’s essentials:
     Leadership in quality: to safeguard quality throughout the crisis will be of utmost importance. Despite the crisis, carriers now have to prove their quality promise. He stresses that customers must be shown that they can count on present and future reliability of financially strong partners. Leadership from Spohr’s point of view also means creating partnerships. Not only between forwarder and airline - but in creating cooperations like Lufthansa Cargo has done in creating the Lufthansa Cargo Group. “This group offers customers a unique dense worldwide network and creates valuable synergies for both customers and group participants,” says Spohr.
     Looking at the agenda for 2009, Spohr is working to successfully navigating Lufthansa Cargo through turbulent airspace. Lufthansa Cargo has established a program to safeguard the earnings. It contains a number of strategic and operational elements that can be put into practice whenever needed. Main element of safeguarding the positive cash flow is a flexible capacity policy. Accordingly, Lufthansa Cargo has returned three freighters to lessor World Airways due to plummeting cargo volumes. Furthermore Lufthansa Cargo Group reduced capacity in its own fleet by approximately 20 percent.
      Next topic on the agenda for safeguarding earnings was bringing down costs. One area is reduced work hours for ground personnel in Germany. Affected are 2,600 staff members that have to work 20 percent less time for the months to come. Consequently, expenditures for personnel have been cut without putting any of the existing 4,600 jobs at stake.
      “I would rather work for less time and have less income in my pocket than losing my job completely,” commented one of Lufthansa Cargo’s ground handlers. The cost-cutting programme also includes cuts of the manager’s personal salaries together with an 80 percent cap of expenditures for all departments within LH Cargo.
      Finally, the carrier has decided to concentrate on highly important projects and freeze some of the less urgent plans. According to Lufthansa Cargo’s head of communication, Nils Haupt, the planned demolition of the existing and the building of a new state-of-the-art Air Cargo Center at their home-base Rhein-Main Airport is one of the projects that’s been laid in the drawer, meanwhile. “We postponed the modernization of some of our ground infrastructure because of a pending night flight curfew that might be imposed here at Frankfurt. If so it would substantially threaten our operational abilities,” Haupt argues. Therefore, the project will remain on the waiting list until further notice.
     But for Spohr crisis times are opportunity times: “Crisis means risk ­ but also chance. So we are intensively looking at market opportunities. One example is the start of our MD-11 operation from Milan to the U.S. And I am sure there are more opportunities to come.”
     Carsten Spohr is well known for straight talk preferring to acknowledge the cargo industry’s shortcomings. “We trail other businesses that are more innovative, professionalized and technologically advanced, like the major logistics players.” As tools for optimizing the supply chain he emphasizes the enormous importance of both Cargo 2000 and e-freight. IATA is providing the common platform for quality parameters but it’s the cargo carriers in close link with forwarders and shippers that have to push them ahead.
Heiner Siegmund

Gathering Challenges Turbulessence

     There is activity of immense importance to the future of air cargo, a veritable giant leap from the ordinary that will take place in Bangkok, Thailand this week as IATA hosts its Third World Cargo Symposium (WCS) titled “Focus On The Customer-Delivering in Turbulent Times”.
     But when those thematic buzz-words were created, it is doubtful that anybody imagined that hyper-turbulence, financial and otherwise would be an ongoing worldwide phenomenon of 2009.
     Maybe WCS ‘09 might have titled the gathering “Dealing With Turbulessence or as our friend Mike Simon the old PR pro at Emirates put it “Turbulessons” as tough times sink in as an every day reality that may continue much longer than anyone had expected or thought air cargo could stand when all of this began about six months ago.
     But however you view it, that large sucking noise you have been hearing since October 2008 is the world financial meltdown that is a real game changer bringing even more meaning to getting the process of air cargo right.
     The industry can count itself lucky that IATA Cargo is meeting right now just as a large segment of the air cargo business is wondering just what the hell has hit them amidst declining business and increased expense especially in the security application.
     Value for money is what moves IATA Cargo forward into a vacuum created by widespread uncertainty as industry stakeholders in ever expanding numbers hungry for information about what happens next and also best industry practices seem to be everywhere and all at once.
     The IATA World Cargo Symposium held annually for the past two years, first in Mexico City and last year in Rome and this week in Bangkok (March 2-5), eschews everything else, for meaningful air cargo industry best practices sessions and three days of top level networking amongst 800 or so most important air cargo people in the world.
     If there ever was a time for the right people to bubble up in air cargo when most needed, it’s now.
     Aleks Popovich, IATA Head of Cargo seems to take all of this one day at a time.
     For a couple of years now since Aleks Popovich took over as IATA Head of Cargo the man has been saying that our industry has got to change drastically to embrace the world business environment.
     Slowly with determination, extreme dedication and purpose, that vision is coming into focus.
     Now as world events continue to unfold challenging every part of transportation as never before, IATA Cargo has been moving to an even wider venue by pressing home the proposition of change, further emphasizing e-business and other initiatives, offering the promise of vital new opportunities for the air cargo industry.
     “Since we recognize that the world is fast becoming a single market, the industry needs to focus on bringing global solutions to every facet of air cargo.
     “The IATA Cargo E-Freight initiative, and push for global harmonized security standards plus continued implementation of Cargo 2000 are top priorities, Mr. Popovich insists."
     Looking at Cargo 2000 and other aspects of the IATA itiative for air cargo it is clear that Aleks Popovich has a vision for air cargo and somehow he has been able to marshal the big and at times cumbersome bureaucratic organization IATA into pointing to a heading in the direction of real change for the industry.
     Aleks has a heavy lift to be sure.
     He deserves and in fact it is in our own self-interest to support that effort.
     So we will listen intently to the first day self-imposed report card Aleks brings on progress and promises kept since IATA Cargo met last year in Rome.
     We will also make some plans to attend Cargo Network Services (CNS) Annual Partnership Conference May 3-5, 2009 and meet new CNS President Michael Vorwerk at La Costa Resort and Spa Carlsbad, CA. where undoubtedly many of the WCS topics will get even further discussion.
Geoffrey

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Suvarnbhumi Is Gold To Bangkok

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Pictured in Thailand (from left to right: Khun Kasem Jaliyawatwong, Director Harpers Freight Int'l Air Cargo Ltd. (TAFA Chairman), Ajay Pande, Manager - Cargo Agency Policy, IATA and Khun Voratat Tantimongkolsuk, Deputy Director CTI Logistics Co. Ltd. (TAFA Secretary). Thailand air cargo volume was down by almost half in January and 23% percent in the fourth quarter of last year as the deepening global financial crisis continued to sting exports. Thai Airfreight Forwarders Association (TAFA), said that total outbound cargo was 107,249 tons in the last three months of last year, compared with 140,074 same time a year earlier. "The January figures were worse than what we expected with outbound volume falling by almost 50% from a year earlier. This is partly because some shipments have been switched to marine services," Kasem Jaliyawatwong, TAFA President told Bangkok Post www.tafathai.org . . . Discovering Markets… Emirates feels good in linking California's Silicon Valley with Bangalore, via Dubai. IT continues great guns across several India southern states driving demand for connections with San Francisco where Emirates started service in December . . . UPS has expanded its early morning delivery in USA to about 3,000 new zip codes meaning more areas served by 8:30 am or about 80% of the country . . . China Eastern Airlines shareholders okayed a plan to raise 7 billion yuan (US$1.02 billion) in a stock sale, following the announcement of a similar, 1-billion-yuan cash injection proposed for Shanghai Airlines. The move is seen as a way for the two Shanghai-based carriers to merge. Big effort underway in China to lift airlines that are hurting . . .

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Thanks to Emirates Airline for providing us transportation to IATA World Cargo Symposium 2009

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