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   Vol. 14 No. 1 
Monday January 5, 2015

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Up Up And Away

     Global air cargo demand now seems certain to soar well into 2015, and analysts believe Asian carriers and handlers are best placed to prosper.
     “Volumes have stayed strong throughout all of 2014 and we see no reason for this not to continue into the New Year,” said Stewart Sinclair, managing director of Suvarnabhumi Airport ground handler Bangkok Flight Services. “There have been some additional charters related to the west Coast congestion, but in general we have seen continued strong volumes throughout the year.”
     A new report from HSBC forecasts that air cargo demand will provide a major boost to Asian carriers next year. “We forecast a significantly better 2015 for Asian airlines,” said HSBC. “We expect a pick-up in underlying demand, boosted by the impact of lower fuel surcharges, to comfortably absorb new capacity during this upswing. We believe the best-positioned routes will be intercontinental and intra-Asia Pacific trunk.”
     HSBC said U.S. west coast port congestion had caused some shift back from sea to air. With congestion expected to continue “well into 2015,” this would see a strong start to the year for air cargo.
     “As only 2 percent of cargoes go via air and 98 percent by sea, only a modest diversion from sea can be quite supportive of air freight,” said the report. “While there is always very little visibility in air cargo, the chronic nature of the U.S. west coast port congestion is providing more prolonged support for air freight volumes. Port delays are creating uncertainty and this means there is an increasing tendency to ship a portion of popular products via air to ensure inventory levels can be managed.
     “Our discussions with liners and industry participants suggest congestion will take time to resolve and implies a continued migration from container trade to airfreight in 1Q15.”
     HSBC’s analysis is supported by the latest bellwether air cargo figures from Asia. Cathay Pacific, usually a good indicator of performance by Asian airlines’ freight departments, reported a 12 percent year-on-year increase in cargo handled in November, and volumes were up 11.9 percent over the first 11 months of the year.
     HKIA also became the first airport to ever handle 400,000 tons in a month during November 2014. Hactl, one of the hub’s leading handlers, said it had broken both daily, weekly, and monthly records in November due to growing U.S. west coast port congestion, traditional traffic peaks related to Thanksgiving and Christmas, and the launch of new mobile products.
Julia Yan     Julia Yan, general manager, Strategic Planning & Development of Airport Authority Hong Kong, predicted that cargo demand would continue to grow through December. “We expect across-the-board growth in traffic volume to continue as we approach the end of the year,” she added.
     HSBC said that air cargo markets were now settling down after growing by about 2x global GDP growth from 1979-99, before slowing over the last decade due partly to a loss of market share from air to sea. “As the relationship between economic growth and air cargo volumes has changed there is less visibility on demand,” said the report. “We believe air cargo volumes will now grow at about 1x GDP growth. As we expect the key source markets for the Asian airlines to grow GDP by 4.4 percent in 2015 (estimate), this implies freight volume growth of 4-5 percent.”
     However, Cathy Roberson, a senior analyst at Transport Intelligence, was more cautious on air freight demand in 2015 than many of her peers. She predicted Q1 would start strong for airfreight and for integrators thanks to inventory replenishment and holiday returns. “Demand should then level off once the Chinese New Year passes and possibly be subdued due to a cautious economic environment through mid-late second quarter,” she added.
     “Integrators will probably continue to see good demand particularly due to e-commerce and will look to build out capabilities to enhance services to meet this growing trend.”
SkyKing


Way To Go Dick Tracy

     In 1930 writer and cartoonist Chester Gould imagined a world in which a hero detective named Dick Tracy communicated via a two-way wrist radio, which later became a wrist TV. It is not uncommon to find our future written by our past, as most science fiction scholars will contend that the best science fiction predicts the course of the future.
     With that in mind, the Apple Smart Watch should be coming out during the first quarter of 2015.
     The gold vision justified, we in air cargo can only cheer:
     “Way to go, Dick Tracy!”
Apple watch     We’re swiftly being driven into the Dick Tracy era of wearable computing and communication—that is, just as soon as Apple overcomes the challenge of a woefully short battery life, as well as some other wrinkles.
     In our industry, one can’t help but imagine the coming hoopla that new Apple products inspire, the intense marketing and excitement, as well as the legions of copycats and wannabes that will be lining up to grab attention with similar products.
     So thumbs up for air cargo and a wearable computer, which, among other uses, will most certainly place emphasis on products and services that cater to the health and fitness market.
     Athletes, seniors, and the health conscious around the world will jump at the opportunity to tap their wrist as often as needed to diagnose their vital health signs.
     We have no doubt air cargo will get a nice bump from high tech innovation in the marketplace.
     Right now while air cargo can look ahead to ever brightening skies, it should also look back to a year ago, when everybody from IATA to folks reading tea leaves predicted a flat year, and possibly many more lackluster business years ahead.
     It turns out we might need more science fiction writers in air cargo, as that prediction has mostly proven untrue—the price of oil and therefore kero has dropped significantly; a prolonged west coast port slowdown in the U.S., the world's largest economy, continues; and new products (especially in pharma and electronics, and in other high-tech, air freightable commodities) are driving both excitement and predictions for a more productive new year ahead.
     “You betcha’, Dick Tracy!”
Geoffrey


Chuckles For January 5, 2014

 

 


   Air France-KLM follows last year’s introduction of lightweight pallet nets with the introduction of lightweight pallets.
   Constructed of aluminum, the pallet is as strong as the current pallet, but weighs 17 kg less. (Current standard pallet weighs 100 kg, while the new lightweight pallet is 83 kg)
   AF/KL/MP notes that eventually all pallet stock in their inventory will be replaced by lightweight aluminum pallets.

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Flying IndiGo

     Even as carriers continue to flounder in India—the latest, according to aviation pundits, to go the Kingfisher way will be the low-cost SpiceJet—there is one airline that is thinking out of the box to be productive. The carrier is India’s largest—534 daily flights connecting to 37 destinations, including 5 international destinations—and is the only one that has made profits when most of the others have been swimming in the red. For the financial year that ended on March 31, 2014, India’s top five domestic airlines recorded combined losses of Rs 9,737 crore ($1.62 bn). Even IndiGo’s profits went down by 60 percent to Rs 317 crore ($53 mn).
     In an innovative move, the carrier has decided to lessen the weight of around 70 of its present 100 single-aisle Airbus 320 planes by installing lighter aircraft seats (the last of the 100 aircraft will be with the airline by the end of the year). The move will not only enable the carrier to cut down on fuel costs by Rs 30-40 crores ($5-6.50 mn) annually but, most importantly, bring down the operating empty weight (OEW) of the aircraft by 700 kg that will be used by its cargo division, CarGo. Today, the airline carries more than 12,000 tons as belly cargo per month.
     Replacing the Weber 5600 seats with the thinner and lighter seats—known as the Sicma Dragonfly, weighing 7.5 kg and almost four kg lighter than the 5600 seats—from Zodiac Aerospace of France will offer IndiGo fliers a couple of inches of legroom, though they could be uncomfortable for some.      According to Partner and India Head of Aerospace and Defence, KPMG, Amber Dubey, the 700 kg reduction in weight would bring in an “enhancement of belly cargo carrying capacity, which is a perpetual revenue source.” In fact, it would bring in a whopping Rs 200 crore ($34 mn) of additional annual revenue.
     In October this year, IndiGo ordered 250 A320neo aircraft worth $25.7 billion at list prices. The new aircraft would create capacity for IndiGo CarGo.
     Stay Tuned
Tirthankar Ghosh


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A Christmas Story
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A Christmas Playlist
Wishes For The Season

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