Regulatory changes effective January 1st, 2015 may find automotive shippers unprepared. The roads in North America as well as Western Europe have never been safer than now. In Germany, the number of traffic-related deaths peaked in 1970 with 19,193 casualties, steadily declining to 3,340 in 2013.
     This, despite the number of vehicles which is steadily on the rise. Commercial traffic and especially commercial transit truck traffic has more than quadrupled since then.
     While in 1950 the total number of cars in operation worldwide totaled about 53 million, in Germany alone 61.5 million vehicles were registered in January 2014.

Safety in Numbers

      Based on the numbers, the steady decline of traffic-related casualties may come as a surprise, in particular in Germany, as it does not have a general speed limit on its prized Autobahnen.
     Experts agree that the comparatively low number of traffic-related tragedies is largely owed to steep improvements in safety technology, slowly making way because of features available at whopping premiums on luxury class automobiles to today’s law-mandated standard features in compact and sub-compact cars.

Standard Equipment

     These days, one will not find vehicles available for commercial sale in North America or Europe without air bag systems, seat belt pretensioners, and anti-lock braking systems, together with other safety-related features.

Exploding Technologies

      Largely unbeknownst to the general public, however, is the air bag and seat belt pretensioner technology that has undergone considerable improvement, with developments having changed what is actually shipped in the way of spare parts and assemblies.
     By and large, what the layman might consider an “airbag” or a “seat belt pretensioner” is rarely shipped assembled. Instead, components containing quite minuscule amounts of explosive material are shipped, and that has prompted the move toward regulatory changes on the UN level.
     In a nutshell, the small explosive charges contained in seat belt pretensioners and airbags produce the amount of gas required to fill the cushioning air bag in a fraction of a second after impact, or tighten the seat belts immediately before such impact, triggered by the braking forces.

New Rules For 2015

      The definitions in the UN Model regulations 18th edition, effective as of January 1st, 2015 state:
          (a) Explosive substance is a solid or liquid substance, which is in itself capable by chemical reaction of producing gas at such a temperature and pressure and such a speed as to cause damage to the surroundings.
          (b) Pyrotechnic substances are included even when they do not evolve gas.
          (c) Pyrotechnic substance is a substance or mixture of substances designed to produce an effect by heat, light, sound, gas or smoke or a combination of these as the result of non-detonative self-sustaining exothermic chemical reactions.
     Presently, most airbags and seat belt pretensioners are shipped either as UN 0503, Air bag modules or Air bag inflators or Seat-belt-pretensioners when assigned to Class 1, explosives or as UN 3268 with identical proper shipping names when assigned to Class 9.
     The difference between shipping as an explosive in Class 1 (which with few exceptions requires transport on all-cargo aircraft and is subject to additional requirements) and class 9 is basically the packaging.
     Where such explosive articles are packaged in a way that any ignition or explosion of the device is limited to the package itself, it may be shipped in class 9.
     This requires the explosive article or device to be confined in a steel cage and pass the so-called “UN bonfire test.”
     While most substances and devices may be classified by the shipper himself, who ultimately bears the sole responsibility for the correctness of such classification and the packaging, labeling, marking, and documentation resulting thereof; articles and substances in Class 1 require a governmental classification document.
     Since explosive articles in class 9 are really articles in class 1 whose hazards have been mitigated by a particular packaging, both these articles and their UN-bonfire tested packagings require governmental authorization.

What Changes

     With the 18th edition of the UN Model Regulations, the proper shipping names Air bag modules, Air bag inflators, and Seat-belt-pretensioners will be phased out.
     These articles will then have to be assigned either to UN 0431, Articles, pyrotechnic, for technical purposes in divisions 1.4.G and 1.4.S; UN 0503, Safety devices, pyrotechnic in division 1.4.G or UN 3268, Safety devices, electrically initiated in class 9 where the UN bonfire test requirements have been met.
     In the maritime shipping mode, shippers have a grace period of 12 months to implement regulatory changes and in the European road transport mode they still have six months.

No Grace Period for Air Cargo

      The air mode, however, governed by the ICAO Technical Instructions and the IATA Dangerous Goods Regulations, requires full compliance without a grace period effective January 1st, unless the regulations expressly grant such exceptional grace period, which, as far as it is known now, has not been planned.

Time Is Running Out

      Since these articles and devices require a governmental classification document and it is up to each national competent authority to decide whether they just provide an updated document to holders of such classification documents or require formal application by each holder to re-classify these articles and devices in accordance with the requirements mandated by the 18th edition of the UN Model regulations, at least for the air mode the time allotted to shippers for implementing these regulatory changes into their shipping process is starting to run out.
     Because both the UN number and the proper shipping name indicated on the “Shipper’s declaration for dangerous goods” must in practice match the information on the classification document issued by the national competent authority, this could create serious problems for some shippers—and actually also for consumers.
     What to do?
     Shippers, distributors, and manufacturers of such devices should consult with their national competent authority about what their take will be.
     Some may take the pragmatic approach and argue that since neither the UN-number nor the packaging requirements or the hazard potential has changed, existing certifications remain valid.
     Others may choose a more formal approach and require reissuance of certification documents, saying that any mismatch between the transport document and the competent authority certification is not permissible, no matter the reason.
      It remains to be seen whether manufacturers and distributors will burden themselves with the hassles and costs associated with the reclassification of older devices commonly found in older and outdated conveyances for which commercial demand may be low and not warrant the initial reclassification process.
     Probably, in this case simple advice is good advice: talk to the Dangerous Goods professional of the airline of your choice beforehand, or if they do not have a DG specialist in their local office, call the ground handling provider doing the DG handling for this airline. Usually, they’re more involved in what local regulatory requirements mean in the context of DG shipping and would prefer assisting you in avoiding issues rather than holding your cargo.
Jens

     During my 50 years in the air cargo logistics industry I have learned one thing: the air cargo industry is like one of those super rubber balls that defy the laws of physics. When it falls, it bounces up higher than it was before. And those downturns follow Darwin’s theory of survival of the fittest. The best run companies survive and help to restore an even stronger industry.
     As we all know, the air cargo and passenger markets have been a challenge in the last few years, even though the conflicts in Iraq and Afghanistan have produced record amounts of air cargo. I can easily argue that these conflicts were a boom to strengthen the air cargo industry and they were also partly responsible for the lower commercial air cargo and passenger revenues.
     So why am I mentioning the air passenger business in an air cargo article? It is because the one thing that is crystal clear to me is that the air cargo market is demanding lower rates, high quality, and a customer friendly system to monitor the movement of their cargo. And in many cases the lowest rate is considered the best value, and that is the belly space of the large passenger aircraft. This will put considerable strain on freighter profitability of the non-integrators and in turn the systems with the lowest cost will rule the day.
     As the passenger carriers expand and invest in their highly profitable cargo business, there will be more available cargo lift in the passenger fleet bellies with improved, customer friendly, quality measuring systems rendering freighters to be used primarily in the niche markets of unusable size cargo and destinations. When I was at American Airlines I proved that 14 lbs. of cargo equaled the profitability of one passenger, so more cargo on the passenger aircraft will give higher profits to the carriers that invest in cargo, and that is the name of the game.
     Today I think the economics of the airline industry are starting to stabilize. The industry is now growing at a relatively healthy pace and is strong enough with the consolidations to respond to fluctuations in the economy. I believe the future will see a reasonably healthy commercial airline industry that acts as a contributor to the global economy in a way that is helpful.
     What will be the driving force that will determine market leaders? In the past it was the added volume that pure large freighters gave to the carriers, and the airlines with the most freighter lift had the largest market share. But, I believe those days are over, and available large passenger aircraft belly capacity and systems that manage quality will rule the day.
     Where does that leave the forwarders? The airlines and the forwarders in many cases had a love/hate relationship. Many airlines needed the forwarders who consolidated shipments for them, thereby lowering their handling and billing costs, and the forwarders had professional global sales forces and systems that promoted strong customer loyalty. But the airlines had continuous pressure put on them by the forwarders to lower rates, as the forwarder marketplace is also highly competitive.
     Are forwarders still necessary with airlines having developed a system to deal directly with the shippers? Just look at what automated ticketing and bookings systems did to the travel agents’ business: will there be a similar result with the forwarders in the air cargo business?
     What should the forwarders do to maintain their position in the air cargo business? Just like in the airline industry, there has been consolidation in their highly competitive market, so we now see global mega forwarders. And, the integrators have taught us that a reliable, total, end-to-end logistics system is the key to success. It is also true that it would be difficult for the forwarders to become airlines even though a few have tried. The bilateral, the certificates, and the cost of flying aircraft would be an extremely difficult challenge for them. Airlines have also tried to become forwarders and that has mostly failed. I would not waste my time attempting things that failed. I would look at a strong partnership between a single forwarder and a single airline. I would create a holding company that would buy the total belly capacity of the airline and have the forwarder be the sales force, with the cargo handler thereby reducing the airlines’ costs. Airlines are already outsourcing many former airline employee functions. Would it work? I think so.
     Now there is one area that I still need to mention: low-cost air freighters competing in the market that need faster timing than ocean and land transportation can provide, but which cannot afford the cost of moving their material on aircraft. That is where the new technology in airships are going, and I see them succeeding if they can actually develop such a transportation vehicle that can reliably operate long distances over weather patterns and get the government authorities and the route rights to operate.
     I know that my thinking will cause controversy, but that is healthy for our industry.
Bill Boesch

About Bill
     Bill Boesch is one of the greatest of all the big-time, global air cargo executives.
     He has done it all, working in various top management positions in the air cargo industry. He began in 1965 at the scheduled all-cargo carrier Seaboard World Airlines, then moved on to Emery Worldwide in 1975 as Senior Vice President and General Manager, and eventually Executive Vice President. After Emery he became Pan American World Airways’ Senior Vice President of Cargo. After Pan Am Bill went to work for Bob Crandall as American Airlines’ Vice-President of Cargo.
Bill became President and CEO of the Cargo Division in 1991 and Chairman of the Cargo Division in 1996.
     Bill retired from AA in 1996, but was unable to sit still for long, moving back into the fray in 2004 as CEO of DHL/DP Global Mail.
     In 2004 The War in Iraq was on going and the military truck transportation was taking very high hit-rates (as high as 30 percent)
     Realizing that long streams of truck convoys were constantly needed to supply troops, but that the roads traveled were hostile, Bill took thousands of soldiers out of the driver’s seat: without an armed escort at his side, Bill went into the towns and villages and negotiated with local Sheiks and other community leaders to hire local labor to drive the trucks.
     In one fell swoop, Bill took the troops out of harm’s way, provided jobs in areas where local unemployment was running above 80 percent, and delivered the goods on time.
Geoffrey

     The 3rd Maritime Logistics Training Course, held October 15-16, 2014, in South Florida is not to be missed!
     “This workshop will again provide great insights into international logistics in a small group setting (maximum of 25 attendees) to allow for active discussions and Q&A between all participants,” said old cargo pro and teacher extraordinaire, “Professor” Albert Saphir.
     The event location is the Doubletree Hotel in Sunrise, Florida.
     Sunrise is only 20 minutes from Fort Lauderdale Airport and 45 minutes from Miami International Airport, but the reason to be there is what you will learn and takeaway from a 2-day intensive about international transportation and logistics, with a heavier focus on maritime/ocean transportation.
     “The focus is to provide a complete overview and solid facts for entry level individuals, others moving into a new area of responsibility, and of course sales people needing to learn more about the industry and key aspects of regulations,” Albert assures. “Of course, our event is also a good refresher for those not involved in all areas of international transportation.
     “Our previous two courses in February and May were sold out, with 50 percent of participants coming from importers/exporters. 50 percent of all attendees came from outside of Florida, and the overall balance between beginners and advanced was about 50/50.”
     Book fast, as we’re sure this will sell out quickly.
     Registration cost is $750, which also includes breakfast and lunch both days and extensive handout materials and books.
     “We offer a discounted rate for 5+ registrations of $700 (single course and/or future courses),      available offline and by payment with check.
“We also offer a special discount for U.S. Government/Military/Veterans – please contact me for details!” Albert said.
     FlyingTypers learned that Saphir better training course has now been accredited by three national associations for:
          • 12.5 CE credits by the NCBFAA/NEI for CCS and CES participants
        • 12 CEH credits by ISM
          • 12 CEU credits by CSCMP for SCPro participants
Contact: Albert Saphir at albert@abs-consulting.net or (954) 218-5285

     As landlords, airport operators are sometimes faced with tenants not paying the rent on time for offices and warehouses, just like in the outside world and maybe even on the street where you live.
     The financial challenges in this unpredictable business world of 2014 impact airlines and handling agents, airport concessionaires, and other on-field related businesses.
     That can at times translate into lost income as companies go bust, and rents as well as costs must be written off, either in part or entirely.
     In Germany FRAPORT currently faces a non-paying tenant of a special kind, according to a report published in the German weekly DER SPIEGEL.
     The German Federal Police (Bundespolizei) effective September 1st, has served notice that it has stopped paying rents and leases as well as authorizing expenditures for travel because of a “budget freeze,” according to the vice president of the Bundespolizei.
     While eviction of the German Bundespolizei by FRAPORT is rather unlikely, questions remain as to why the Federal Republic of Germany, always the first to lecture other states on issues of policy and orderly budgeting, seems unable to finance crucial law enforcement costs even in times of record-high tax revenues?
     We wonder—will FRAPORT send in the bookkeeper and the airport lawyer to enforce evicting the non-rent paying cops at the airport?
     In any case, 2015 will be the first year in 24 years that Germany will have a balanced budget.
     So maybe after that happens, things will get sorted and the political gamesmanship will end?
Jens

RE:  Floored TIACA Clips Its Wings

Mr. Geoffrey,

   I have been following your newsletters and coverage of TIACA's ACF 2014. I would like to share one opinion of mine about ACF 2014.
   You are right to doubt success of ACF 2014. The issue is not about location, but more about date. The date of October 7-9 is wrong, because they did not consider the Islamic holiday (Kurban Bayram¦ in Turkish or Eid al-Adha). The holiday falls between October 4th and 7th. The exhibition organizer missed this issue; otherwise why would they schedule the exhibition for this week considering that the fastest growing airlines are in the Middle East, including Turkish Airlines. This would be like putting on an exhibition right after Christmas week. I believe ACF 2014 organizers should be more culturally aware and attentive about holiday dates. This holiday and the time I will be spending with my family is the reason why they will miss my participation in ACF 2014.

Best regards,
Ahmet Izer

RE:  Where Green Cargo Takes Hold

Dear Geoffrey,

   Thank you for carrying dnata story in your (Vol. 13 No. 74 ) recent edition . dnata had gone through a rebranding initiative a few years ago with changes in color schemes, letter fonts, cases (as in dnata with lowercase starting with lowercase “d”).
   The airside picture of dnata terminal at the Dubai Airport Free Zone doesn’t represent the current logo /brand, hope you may source it from our Corporate Communications.
   Many thanks.

Sageer

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