China’s rising appetite for consumer products is now bringing more balance to East-West air freight lanes.
     At least, that is how Michael D. Hansen, Managing Director of DSV Air & Sea Ltd, views the evolution of China’s economy and the impact its burgeoning middle class is having on domestic consumption rates.
     Hansen told FlyingTypers that a number of factors, including the internal migration of manufacturing centers as OEMs seek out lower land and labor costs and access to fast growing tier 2 and 3 cities, was changing the nature of air freight flows to and from China.
     “A few years ago the ratio for air was about 4 kilos out of China for every kilo coming in,” he said.      “Today our air import volumes are greater than export volumes.
     “These import volumes reflect a mix of automotive/industrial components, retail cargo, wines, and luxury cars.”
     This about-face is being prompted by China’s shift away from a dependency on export manufacturing and towards domestic consumption, as it develops a more self-sustaining economy, he said.
     “This, equally, has an influence on 3PLs like DSV, where the previous focus on export ocean/air is becoming more balanced with inbound activities, and involvement in domestic transport and distribution.”
     At DSV the investment to actively pursue these expanding opportunities in China has been a long-term process—the Denmark-based company already covers many of the main airports in China and employs over 1,000 people across China and Hong Kong in 34 locations, including Western China, where it boasts representation in Chongqing, Wuhan, and Chengdu. DSV China is also active in warehousing and logistics, and now has a presence in domestic transportation where the relevant licenses have been secured.
     “With large scale hi-tech and automotive investments moving into areas like Chongqing, Wuhan, and Chengdu in Western China, airlines have followed by opening up direct routes,” he said.
     “Primarily this has been to cater for outbound volumes. Import retail is still mainly going into Shanghai and Beijing, where the relevant infrastructure is in place for domestic distribution.”
     The DSV Group is headquartered in Denmark but has offices in more than 70 countries. Of its 22,000 employees, 6,300 work in the DSV Air & Sea division, which handled 259,000 tons of airfreight in 2013. Although volumes in 2013 were in line with 2012, the company was encouraged by 7 percent growth in Q4 2013.
     “We expect to carry increased volumes of both imports and exports into Asia, especially China, in 2014,” said Hansen.
     DSV purchased Columbia-based Airmar Cargo last year to boost its presence in Latin America, a region the firm has identified as one with high potential. The company also acquired SBS Worldwide in 2013, greatly strengthening its presence in the UK-North America market and putting it into the top five airfreight forwarders on the trade lane and one of the top ten air freight forwarders in the UK overall.
     “We expect to attract more business and more customers for any trade lane out of the UK as we have the volumes to provide highly competitive pricing as well as the expertise to offer top class customer service,” he said.
     “DSV Air & Sea has a specialist team for handling projects and out of gauge cargo and has also recently introduced its global temperature-controlled service to the UK market under the name DSV Fresh. Express and courier shipments are handled by DSV Xpress.
     “In the UK, our aim at the start of 2013 was to restructure our UK air management team, operations, and processes so we are better prepared for growth, business retention, customer service, and improved carrier relations.
     “We realized we needed to raise our profile in the airfreight sector as DSV has traditionally been regarded primarily as a European hauler or a Far East ocean import specialist. The acquisition of SBS Worldwide in September 2013 has greatly strengthened our presence in the North Atlantic airfreight market.
     “Also in 2013 we raised the bar on our service levels, reduced the number of carriers we were working with, and focused on improving our offering to always be flexible enough to meet customer needs and respond quickly to changing market conditions.
     “In my opinion, and having spoken to a lot of airline people during 2013, there is a tendency around LHR to say ‘Well that’s the way it is.’ At DSV we will challenge ‘the way it is’ in order to better deliver to our customers and shareholders.”
     Hansen said DSV was now also actively targeting perishables markets, both in the UK and beyond.      “We expect our new UK perishables product, DSV Fresh, to surpass expectations,” he explained.      “While it may be new to us, across the DSV Group—both internationally and in the other divisions in the UK— we have a wide range of experience and expertise in handling temperature controlled products. We have also recruited specialist personnel to run DSV Fresh.
     “We have already secured significant contracts to carry salmon from the Faroe Islands, Scotland, Iceland, and Norway, primarily to Asia and the US, and expect to carry one million kilos of fish per month by the end of the year.”
      And Hansen said DSV’s XPress product continued to be a key driver of the business. “With the combined SBS Worldwide courier volumes and additional post room management expertise we now have within the business, it will become an ever more important part of our portfolio,” he said.
SkyKing

The Virtual Airport Celebrates Itself
(Exclusive Berlin)—“People of this world, look upon this place and realize that you may not and cannot extradite this city.”

   These words were spoken by Ernst Reuter, the first governing Mayor of West Berlin, at the Republic Square in front of the Reichstag on September 9th, 1948.
   The Reuter speech, although lesser known today, electrified Germans and also the editors of Time Magazine, which featured Mayor Reuter on its cover with the simple words: “Herr Berlin.”
   It was Reuter who convinced the three western WW II allies—the US, Great Britain, and France—to establish the so-called “Berlin Airbridge” after the Soviet Union and its Eastern German puppet state had blocked all surface connections in and out of “western” Berlin.
   So began an unprecedented initiative, the daily needs of more than two million West-Berlin citizens were airlifted into Tempelhof airport.
   Berlin Airlift, as we all know, moved coal to coke, from toilet paper to potatoes—the “raisin bombers” (Rosinenbomber) played an important part in making the German citizens realize that integrating postwar Germany into the Western alliance and rebuilding a nation in accordance with the American nation model was the best option. (Angela Merkel, pictured here with Rosinenbomber Gail Halvorsen at ILA last year, would likely call this decision “without alternative,” which is indeed a favorite term of the current German chancellor, but political decisions are never without alternative. Alternating political options and opinions is what characterizes a democracy, and Reuter and his compatriots at that time had well understood this fact.)
   The ongoing droning of aircraft engines was present 24/7, and the Berliners appreciated it.
   The Berlin Airlift was not seen as noise, but as a strong commitment of the western allies, and mainly the U.S., who shouldered the largest part of this operation; this might best illustrate how times have changed as the big air show ILA takes place.

Ready When You Are But BBI Vexes

   We think the German air transport website says it best: The ILA Berlin (German acronym for the Internationale Luftfahrt – Ausstellung), internationally known as the Berlin Airshow, “demonstrates that air transport in Germany is not only about discussing noise emissions, but attracts in excess of 200,000 visitors.”
   The last ILA was held in Berlin from September 11th to September 16th, 2012, and had been pushed back by three months in the anticipated opening of BER.
   Now, two years later, the German capital airport still has not fully opened.
   Many of BBIs underlying issues have not even been identified or resolved, so the question is whether all this unfinished business will cast a long dark shadow over this event.
   As you read this in mid-May 2014, the new Berlin-Brandenburg Airport (BBI) has not yet been able to announce a full opening date, but costs have exploded from 1.7 billion Euros (2.33 billion US$) to well over 5 billion Euros (6.85 billion US$).
   Now latest reports figure BBI may eventually cost in excess of 8 billion Euros (10.96 billion US$).
Berlin Mayor Wowereit, also chairman of BER Airport’s supervisory board, has come under fire amidst claims of misinforming the public while the Budget Office for the state of Berlin-Brandenburg has accused Wowereit and other shareholder representatives of “lack of oversight.”

Up Close & Personal At ILA Berlin

   So what is the 2014 Berlin Airshow all about?
   Of course there are a multitude of air transport related meetings between the various stakeholders.
   These stakeholders will also take the opportunity to wave their flags; Emirates sends a brand-new A 380; a Volga-Dnepr AN124 freighter is on display as well as MSN004; and a new Airbus A350, displaying the colors of the A350 launch customer Qatar Airways.
   In total, ILA Berlin 2014 includes 252 different aircraft types, but while the ILA is certainly an important event for the German aviation industry it lacks the reputation and importance of similar events, such the air shows in Farnborough or Le Bourget.
   In some part the acceptance and support for ILA Berlin may be owed to the ambivalent approach the Germans have toward their air transports system and its infrastructure.
   “Noise terror” and “waste of public funds which should better be distributed in improving rail systems and bicycle lanes” are the comments that most often make the headlines here.
   And although FRAPORT has managed to make FRA the number one air cargo hub in Europe, surpassing competitors SPL and CDG and making FRA Germany’s largest employer, such news is nothing more than an oft repeated footnote in German air transport-related publications.
   While the ILA moves in closed circles (open to the various delegates from air transport related businesses only from May 20th to May 22nd), May 23rd to May 25th belong to the public.

On A Wing & A Prayer

   ILA 2014 moves into full swing at a cost of 22 Euros per person per day for the public to attend.
   The air show does not come cheap, and it is questionable whether ILA will attract much more attention than the usual suspects.
   But suspend disbelief a bit and join hands for a celebration of aviation in Germany; it’s always a big story and occasionally inspiring, with the potential (if the weather cooperates) to be a lot of fun.
   Down on the ground ILA Berlin probably illustrates the “yes, but” approach Germans have towards their air transport system.
   Everyone wants to fly far and for less, and everyone expects that spare parts for that shiny new Japanese compact car as well as January strawberries are readily available. While Dutch, French, or Hong Kong Chinese citizens beam with pride about their air transport hubs and their importance for the national economy, Germans tend to complain that there is too much noise in the barbecue yard.
   But can we shelve all of that for the next week?
   Everybody who loves aviation here hopes for a wellspring of aerobatics, wing walkers, walk-throughs, and a couple days in the sun for better & wurst!
   Off we go!
Jens

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