Will JFK International Airport, New York—the airport that pioneered the 747 freighter in 1972, when LH connected FRA with an automated plug-in building at the airport—shut down cargo in favor of the perennially underused Stewart Airport, located 45 miles north of New York? Not such a great idea, says Brandon Fried, executive director, AirForwarders Association.

     Sometimes it is easy, maybe too easy, for policy makers to simply regard airports as passenger hubs, while ignoring their utility and value as important gateways for air freight. Unfortunately, we fear this may have happened in New York, as Governor Andrew Cuomo’s administration begins its work on a much-needed revitalization of LaGuardia and JFK airports.
     Unveiled in the midst of a re-election campaign, it is perhaps understandable that the focus of this plan would be on easing access and boosting convenience for the millions of passengers who use those airports, as well as on the economic value to the city and the region of the tourists who come in from around the world. After all, cargo doesn’t vote.
     However, it was disconcerting to hear reports in the press that the plan would simply “shift” cargo operations from JFK to Stewart Airport, 85 miles away in the Hudson Valley, presumably to somehow ease passenger operations at JFK. Knowing the realities of how air cargo is transported and handled, how could this ever work?
     The short answer is: it can’t work and it won’t work.
     Let’s start with the practical realities. JFK is the world’s largest cargo gateway in terms of the value of the freight handled there. With the airport processing 1.4 billion tons of freight annually, air cargo operations at JFK are a major employer in Queens, associated with 50,000 jobs and paying more than $3 billion in wages.
     Now, add to that the fact that half the cargo going in and out of JFK is being carried in the bellies of passenger planes, while much of the freighter traffic is directed into JFK to access the forwarding operations that are set up around that airport – some 600 forwarder businesses in all. There is no way on God’s green Earth that international passenger flights are going to be diverted in great numbers to Stewart, and the airlines are not going to stand for flying empty cargo holds into JFK, so how otherwise are cargo operations going to be “shifted?” The only answer we can come up with is to systematically truck all cargo that comes into JFK to Stewart or some other outlying facility, require forwarders to process cargo in those places, thereby greatly diminish the speed and efficiency that is at the center of the airlines’ and air forwarders’ value proposition.
     That’s what we would call a non-starter. In addition to reducing the New York gateway’s value as a cargo hub and giving airlines a reason to do some shifting of their own with regard to their U.S. gateways, it would wipe out the close to 600 forwarder businesses operating in the vicinity of the airport. Shippers and airlines will seek refuge by relocating operations to Philadelphia, Newark, Baltimore, Boston or Washington rather than facing the delays of routing cargo 85 miles to another facility. The newer generation planes with generous cargo capacity are already flying to these cities where increasing populations would provide new international gateway opportunities for carriers seeking a JFK alternative. Remember, Newark and Philadelphia have established airline hubs and could be considered viable JFK alternatives in the short term.
     So what shall we do to ensure that air cargo remains a critical element of the city’s airports and will continue to be a linchpin to their success and to the health of the local economy?
     We think involving the forwarders in airport revitalization would be a good start.
     We do believe that the governor's heart is in the right place, and we recognize that there are cargo-related issues at JFK that need to be addressed in any modernization effort in order to maximize efficiency and convenience for all who use the city’s airports, cargo operations included. As one example, we all know that road access to and from the JFK continues to be an issue for airlines, passenger, forwarders and shippers. But we think these things can be worked out, and I am convinced that our forwarder community can offer some excellent ideas for how to move forward and, importantly, can help rally wider industry and public support that will be important to getting the plan off the drawing board and through implementation.
     I am optimistic we can do it. And I look forward to that ribbon-cutting one day in the not-too-distant future where a gleaming new JFK is unveiled, and the freight forwarders are there to cheer it on.
Brandon Fried

Editor's Note: Brandon Fried is executive director of the Airforwarders Association.

     What’s this? Could the upward run on air cargo markets be continuing, and is IATA’s bullish line on the market going to last more than a solitary quarter? Well, yes and no.
     Certainly, the latest signals for air freight are most definitely positive and this is causing some excitement at FlyingTypers after so many fallow years, although we’re perhaps less enthusiastic than respondents to Stifel’s latest air freight index.
     Although the overall October Stifel Logistics Confidence Index compiled by Transport Intelligence slipped 0.4 points to 58.9, the air freight logistics confidence index improved 0.8 points (compared to a month earlier) to reach 56.5.
     “Trade lanes were mixed, with declines noted on the Europe to Asia lane, which fell 0.3 points to 51.3, and the Europe to Asia lane, where a fall of 0.7 index points to 51.3 was noted,” said senior Ti analyst Cathy Roberson. “Meanwhile, the U.S. to Europe lane noted the biggest increase of 3.2 points to 56.3.”
     She said the ‘expected situation’ also improved, increasing 1.2 points to 59.6 with the U.S. to Europe lane again noting the biggest gain, up 3.0 points to 57.7.
     “In the short-term it is likely air freight volumes will remain positive through the end of the year, thanks in part to new electronic product announcements and the upcoming holiday season,” she said.
     The latest volume figures also appear to be singing from the Stifel song sheet.
     September figures from the Association of Asia Pacific Airlines revealed an ongoing pick-up in international trade driven by exports from key Asian manufacturing centers. This saw international demand increase 5.3 percent year-on-year last month when the freight load factor climbed 0.8 percentage points to 64.1 percent after a 4 percent increase in offered capacity.
     Over the first three quarters, AAPA carriers recorded a 5.1 percent increase in air freight demand compared to the same period in 2013.
     Asia’s leading airports are also reporting major gains. Shanghai Pudong International Airport Cargo Terminal achieved year-on-year tonnage growth of 20.31 percent in September and volumes were up 16.55 percent in the first three quarters of 2014. Meanwhile HKIA, the world’s largest international freight airport, saw volumes climb 5.2 percent in September, and over the first nine months volumes were 6.7 percent higher than a year earlier.
     Leading forwarders and express operators are also positive on air freight. Panalpina said its air freight volumes were up 4 percent year-on-year in the first nine months of 2014, while FedEx said it expected to move more than 290 million shipments between Black Friday and Christmas Eve, an 8.8 percent increase in overall year-over-year peak seasonal volume.
     “December 15 is projected to be the busiest day in company history, with a forecasted 22.6 million shipments moving around the world,” said the company.
     Indeed, long-term forecasts—even from the notoriously bearish analysts employed by IATA—are now looking (relatively) positive.
     Driven by strong growth in the Middle East and Africa, in the period 2014-18, IATA expects international freight volumes to expand at a compound annual growth rate of 4.1 percent. The fastest growing international routes will be between the Middle East and Asia, which will expand at 6.2 percent per year.
     “An average of more than 4 percent growth for the next five years would be a marked improvement on the performance of recent years. Since 2011, for example, growth in freight tonnes has averaged just 0.63 percent per year,” said Tony Tyler, IATA’s cautious director general and CEO.
     Not one to pass up a chance to talk down market confidence, however, Tyler also warned of “overall risks to the economic outlook,” which he believes remain on the downside.
     Trade protectionism, geopolitical concerns, volatility of oil prices, competition from rival modes, and flying pigs (ok, we added that last one!) were all factors that could turn air freight’s positives into negatives, according to Tyler, who cautioned that the “air cargo industry certainly cannot afford to be complacent.”
     Hardly likely; thanks, Tony.
Sky King

     FlyingTypers has learned that despite India’s Directorate General of Civil Aviation (DGCA) ban on civilian drones, Amazon India continues to advance its case to implement a Prime Air drone project for package deliveries within the 2.26 kg weight in Mumbai and Bengaluru.
     Banned in the USA, Amazon had hoped to take advantage of lax Indian laws and had been testing drones in India since this past summer.
     The e-commerce giant announced sometime ago that it was pumping $2 billion into the Indian market to strengthen its infrastructure.

It’s About Connectivity

     The Indian government’s moves to connect the furthest corners of the country received a boost with the release of an in depth report, “Civil Aviation - Developing Remote & Regional Connectivity.”
     The report—a result of a strategic association between the Associated Chambers of Commerce and Industry of India (ASSOCHAM), one of the apex trade associations, and Yes Bank, the country’s fourth largest private bank—analyzes the Civil Aviation sector and suggests immediate and long-term objectives.
     According to Rana Kapoor, managing director & CEO, Yes Bank, and president, ASSOCHAM, the aviation sector is set for a huge leap.
     India, the report suggests, could well become the world’s third largest aviation market by 2020.
“Growth could be largely a result of the connectivity to Tier-II and III cities,” Mr. Kapoor said.
     The report outlined “the future roadmap for transforming the Indian skies through a comprehensive development policy over the next 20 years.”
     Meanwhile, the Civil Aviation Ministry has implemented a new and “comprehensive civil aviation policy,” according to officials. The policy includes regional and remote area air connectivity, ground handling and maintenance, and even training.


Investments Earmarked

     Industry gurus believe that investments of around $12 billion (USD) can be expected during the next five-year plan period, which ends in 2017.
     That figure, according to the report, could rise to around $98 billion, which will be required for airport infrastructure development by 2030-31.

Just In Time

     For the air cargo sector, the thrust on connectivity has come at the right time.
     India’s Tier-II and III cities—among these are a number of industrial hubs—have been experiencing growth.
     And with the Prime Minister’s ‘Make in India’ call to the manufacturing industry, the country could witness the creation of new industrial zones.
     This has led air cargo stakeholders to look forward to regional air connectivity. Regional connectivity will also be welcomed by the e-commerce industry.

Drone On

     As mentioned at the top, the drone scheme is but one solution as e-retailers today face problems of delivery as only a few airports are equipped to handle large volumes of express delivery shipments—especially during Diwali, a major gift-giving holiday.
     Emulating the ‘Next Day Delivery’ model started by Amazon India, a number of e-commerce players have started investing in infrastructure, logistics, and warehousing. The total amount that will be spent on warehousing, according to rough estimates, could reach $900 million by 2020.
     Once regional and remote air connectivity is achieved, the report pointed out that “a day may not be too far off when there is an increasing demand of expanding cargo connectivity to small towns through various merry-go-round aircraft using charter airplanes and general aviation.
     Saurabh Srivastava, director, Operations, PwC, said that “e-commerce has a huge potential in the country and its ripple effects will be felt not only by the air cargo sector, but also the manufacturing industry.”
Tirthankar Ghosh