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   Vol. 14 No. 13
Tuesday February 10, 2015


Dan Muscatello Airport Target

     

     Described in its simplest terms, the design and construction of an airport are for safe aircraft takeoffs and landings; and in between is Dan Muscatello who has spent more than three decades in the public and private sectors wrestling with all manner of cargo problems and strategies. Over the years, like a planter sowing seeds he has applied his expertise and progressive outlook around the world. His proven talents as a development strategist for “both the business and physical facility planning of an air cargo complex, as well as the integration of an ancillary and logistics support services,” rank high as an authority.
     In my interviews with top-level air cargo executives, it has been a common practice to seek respective designations of the world’s three best cargo-handling airports. When I put the same question to Muscatello, he declined, asserting that to do so was “virtually impossible.” He explained that airport operations are vastly different, especially since “comparable criteria” are not immediately apparent. Also—and this is strikingly significant—the airlines, not the airport, perform the cargo handling, and “their levels of emphasis and performance vary dramatically.”
     In contrast to the above, Muscatello suggested three characteristics that a “good cargo operation” will have and open to airport contribution: (a) physical planning for transfer and/or O & D activity; (b) a rate structure that produces a fair profit for cargo operations and building management; (c) along with off-airport businesses, “strategic integration” of airport cargo operations.

Dan In Delhi and Shanghai

     Within the industry, there is frequent talk about the feasibility of all-cargo airports. What is the current status of this topic?
     In his response, Muscatello pointed out that despite existence of “well-defined” operating characteristics that suggest “potential success,” the criteria are met by extremely few locations for large cargo operations that a freighter airport required. Muscatello called attention to the fact that more carriers are becoming more “strategic” in belly-capacity utilization. He allowed, however, “there will always be exceptions—but not many.” Could he cite one such exception? His answer: “An airport created for an integrator/express carrier.” In his opinion, the opportunities for an all-cargo airport during the next couple of decades are “pretty limited”.
     Asked whether cargo management undergoes change in accordance with an airport’s location, Muscatello labeled it a factor, but not as important as the nature of the operation”. An O & D operation, he said, is influenced by throughput, quite different from a transfer hub whose requirements are wholly incompatible. Equally critical is the nature of the cargo. Where international shipments are concerned, changes can be effected by local customs requirements and police policies. Muscatello offered two keys—one for cargo management, one for airports intent on best practices: For cargo management, flexibility, for airports, ensure that comparisons are “drawn with similar operations”.

Daniel Muscatello and Abu Dhabi

     For a parenthetical comment on airline and forwarder complaints, I turn back the centuries to Horace who observed that something is always lacking to one’s fortune. The overreaching problem is identical for both: cost. Right behind this complaint is another: the condition of facilities and infrastructure.
     Muscatello further noted:
     “Sine 9/11 there has been a lot of pressure on airports to control costs, and while airports try, they face the same escalation in pricing as the constituents they serve. Airports as public entities have to prioritize service and job development in their business goals, while carriers and forwarders are hit by low yields and have to manage to the bottom line. In that regard, they pass through increased costs to their customers. I always found it puzzling that the industry takes exception when the airports do the same.”
     The primacy of airline business is the passenger. Does this fact present a negative impact on cargo facility needs? Said Muscatello: In some instances, “absolutely!” But he quickly cautioned against confusing his answer with an indication of airport neglect. Not unlike other businesses, he went on to point out, airports must prioritize “when and how” to allocate money.
     Running an airport like a private business is not an easy job. It calls for the airport manager’s “sensitivity to the politics and public relations impacts of decisions”.
     Turning to the subject of cargo handling, Muscatello was asked what he believed to be its foremost problem. Speaking from an airport point of view, he held that too many handling firms and up to a proliferation of ground service equipment that results in blocking the apron and creating problems in safety. He added: “I have seen a number of instances where the value of competition for handling business is lost by basing everything on price, resulting in poorer service and higher staff turnover for the handling companies.”
     He emphasized his conviction that performance standards should be developed for handling companies, plus penalties for unsatisfactory service.

Daniel Muscatello and Daughters

     Dan Muscatello, who earned his Master’s in business administration and executive management at Pace University, holds the position of director of cargo and logistics at Landrum & Brown. His broad experience has been translated into development strategies for business and physical facility planning of air cargo complexes. As well as the integration of ancillary and supporting logistics services. His most recent credits include what is described as “the development of the industry’s most comprehensive strategic development plan for JFK,” and analysis of California airports’ cargo capacity and facility utilization.
Jim Larsen and Dan Muscatello     During the period 2000-2004 he was employed by John F. Brown Co. as managing consultant, heading the firm’s air cargo practice. He spent three years (1997-2000) at DAMG Worldwide in charge of market feasibility determinations. Prior to this, Muscatello managed air cargo programs for the Port Authority of New York and New Jersey, described as “the largest air cargo operation in the world.” He is credited with developing one of the industry’s “most comprehensive’ air cargo plans. An item of interest is his management of more than one million square feet of new air cargo facilities at Kennedy, Newark and LaGuardia Airports. On a global basis, his prowess in planning produced in excess of 20 million square feet of cargo facilities. Notably, Muscatello was the first American contracted by a Chinese airport to lend a hand in cargo marketing.
     Do radical differences exist among airlines and forwarders with regard to cargo security? Not much. However, in some instances effectiveness is undercut by their “physical environment”. At some airports, despite airline requests, most of the shipments reach the airport loose, thus contributing an unwelcome burden to the cargo security operation. Prescreened and cleared cargo “make for a better operation”.
     To what extent do air freight forwarders and IATA-approved cargo agents come within the scope of Muscatello’s activities. Quite a bit. Periodically, market assessments are performed all over the world—“critical to a cargo operation that the inputs of the forwarders and cargo agents, as well as customs brokers and government agencies, be factored into the due diligence”. Understanding forwarder/ agent operating requirements and how they can be “best integrated” have gained in importance.
     Put to the question whether airports in a general sense, have kept apace of cargo requirements in the Jet Era, Muscatello replied, “I believe they have.” He went on to say that probably the greatest change has been “the growth in public-private partnerships to develop new cargo facilities”. Today, most airports are placing “increased emphasis on cargo as a job development tool and a revenue source”. This has resulted in some of them more amenable to “sharing risk” on development projects.

Dan Muscatello and wife Joyce

     If the expectations of major aircraft manufacturers are reasonably accurate, we will enter into the supersonic era in about a decade from now. Did Muscatello have any thoughts on this future as it related to cargo? Admitting that he had not given much thought to the topic, he suggested that in the initial stage of supersonic air transportation the emphasis will be on passenger business. Referring to the SST from the standpoint of capacity—the plane is as large as a regional jet—he said that its hold and operating cost, “only high passenger rates could make the financials work”. At least initially, he suspected, the same constraints will hold true when the supersonic airliner is introduced.
     When air cargo management people get together, especially informally, rarely do they miss comparing the cargo-related merits of airports. On the same course, Muscatello was asked to identify the factors that made an airport qualitatively superior to another. Apart from the “basic drives” of cargo, he set forth the following: well-versed staff, knowledgeable in cargo operations and the cost of doing business, and a “willingness” to develop a continuing dialogue with the cargo community (and listening); impartial and broad-minded acceptance of “new approaches” to business, including possible shared risks; and a “realistic perspective” by top airport executives on business goals that are practical and achievable.

Dan Muscatello

     “I think over the past twenty years there has been a very important shift in how carriers and airports look at cargo,” Muscatello declared. Under the powerful thrust of wars, terrorist attacks and economic reversals, the airlines have managed to oversee revenue and cost more closely. Some airports regard cargo and its potential revenue in entirely new ways.
     Consequently, the following question occurs: What can be expected to ensue?—“More productive, efficient and cost-effective levels” by the emerging partnerships.
     As the old adage proclaims, improvement is the law of life, Dan Muscatello took the liberty of applying the law to cargo-related improvement. The keys to continued growth, he maintained, point to cost control and operational efficiency. He underscored the fact that while cargo handling is not within the aiport’s province, cargo development is dependent on airport business and infrastructure for those boxes and containers. He was not without opinion on further improvement at the airport:
     “I believe that, space permitting, airports should consider an integrated on-airport cargo community with tiered pricing for ground rents. This would include higher rents for facilities with ramp access and lower rents for forwarder-type facilities that you might otherwise find off-airport.
     Do Muscatello’s responsibilities take him beyond the airport’s boundaries? The query earned an affirmative answer and the information that he has been involved with the planning of off-airport logistics parks, and on- and off-airport facility integration. The purpose is to assure seamless and secure cargo flows.
     On a final note, Muscatello was asked whether he shared the opinion of certain industry pundits that all-cargo aircraft will haul more than half of the world air freight by the next decade. He reacted negatively, pointing out that the current trend is “contrary” to that. He noted that airlines, especially those with widebodies in their fleets, are taking advantage of belly capacity “to a far greater extent than previously”. He anticipates no change for the next several years. While freighters on certain routes “make sense,” he considers it risky to make a “blanket assumption”. Regardless of Boeing and Airbus forecasts, Muscatello recommended a “tight focus on a balance between capacity and yields—that is, until, and unless, “a growth in freight can help the bottom line, carriers will target as much cargo as they can for passenger aircraft”.
Richard Malkin

Richard Malkin

malkin101@aircargonews.com

 

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Chuckles For February 10, 2015

 

SkyCargo Stems From Valentine's

     ‘Play me Hearts and Flowers,’ as the saying goes but no doubt less than a week from now the order of the day will be romance as an early indicator (along with pitchers and catchers showing up for Spring Training in Baseball) that a new season of romance and hope is tipping off.
     But we wonder what the season of love means to air cargo?
Nabil Sultan Emirates SVP Cargo     Nabil Sultan at Emirates SkyCargo loves everything air cargo, including thinking about it and sharing his thoughts as well.
     Witness the SkyCargo Divisional Senior Vice President as a guiding force, ramping up capabilities and sales for all manner of perishables that now account for an exponentially growing amount of business at the Dubai logistics powerhouse. With that most romantic of holidays wavering like a bright, red beacon at the end of this week, the impact of Valentine’s Day on air cargo should never be underestimated.
     “Valentine’s Day, for all cargo operators, is very important.
     “For Emirates SkyCargo, volumes of flowers, especially the roses we ship everywhere, have shown good growth. So much so that we have ended up operating extra charters during this period,” said Nabil Sultan. With several interconnected markets involved, Valentine's Day becomes a hugely coordinated effort for air cargo, with “Kenya and other flower producing areas” shaking out as the largest, most involved markets in the mix.
     “Large amounts of traffic tend to move to the auction markets in Amsterdam and then on to the all over the world.
     “We do also tend of get a fair amount of direct to market flowers, too.”
     The movement of perishables is never a simple business, but Emirates SkyCargo has been handling delicate, time-sensitive materials from the very beginning.
     “Perishables and cargo requiring temperature control have all been a big part of our business right from the start of the airline.
     “We have invested quite heavily in technology, ranging from ULDs, cool dollies, and special covers to cool/cold storage facilities to ensure the integrity of cool chain throughout the time that the cargo is in custody.
     “We have storage (cool cells) for our ULDs in our PCHS (pallets and container handling system) in addition to huge dedicated floor space for cool/cold storage facility inside our cargo mega terminal.
     “We work with the customer to better understand the requirement for specific commodity and tailor a solution for the same.
     “About 13 percent of our business cargo falls into the temperature sensitive category.
     “At Emirates SkyCargo we have empowered an entire dedicated section that is involved in research and development, working with various experts/equipment manufacturers etc., to help create equipment/processes which will cater to our current and future requirements to support this type of traffic.”
      But with time- and temperature-sensitive cargo, a ‘one size fits all’ model doesn’t apply.
     “Emirates has different solutions for different temperature ranges.
     “We encourage/facilitate the Active Containers like Envirotainer for commodities requiring transportation between 2-8 C, and white covers for 15-25 C range.
     “Cool Dollies on the ground are utilized for highly perishable commodities.
     “The Emirates freighter fleet has four different zones which can be individually set for maintaining different temperatures . . . and many other initiatives are deployed for customizing the tailored processes.”
     There are several markets around the world with an interest in transporting sensitive cargo—pharma for India comes to mind as the most prevalent currently, but Emirates has a keen eye focused on all avenues opened by perishables.
     “India is obviously a large market leading the world market with its pharma industry.
     “India is also a key player in production/export of fruits and vegetables.
     “Africa/Far East/Australia, Latin America all are growing markets for our advanced temperature controlled transportation services.
     “In fact, this is true for every market, including right here in the Gulf and Middle-Eastern region.
     “I expect perishables growth to continue; in size and technologies to 27 percent of SkyCargo business,” said Nabil Sultan.
     Sounds fresh to us.
Geoffrey/Flossie



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