As FlyingTypers reported last year, the U.S. West Coast stand-off between employers and unions, which caused so much disruption, proved a positive boon to air cargo markets, especially on Trans-Pacific lanes. But the U.S. was not the only country to suffer port congestion and shipping delays that prompted modal shifts.
     In Asia, port congestion at Hong Kong and seasonal and weather disruption at ports in Korea, China, and Vietnam all had an impact on air cargo markets. But it was the Philippines where modal shift was most marked. The port of Manila, gateway to the Philippines, suffered a perfect storm of troubles during 2014 and this had immediate benefits for many in the air freight sector, while also having a tangible impact on pricing.
     A trucking ban in Metro Manila between February and September caused chaos, which was then confounded by a surge in imports in the second half. This caused overloaded roads and trucking networks to become even more congested, resulting in a huge build up of empty and laden boxes at the port. Even in the final week of 2014, waiting times for vessels were sometimes as high as 10 days at the port’s main container terminals, while box dwell times fluctuated at 10-18 days. Port delays have now eased, in part due to a seasonal lull in imports, but many fear that any increase in demand could see port delays cause supply chain chaos again.
     Paul Tsui, chairman of the Hong Kong Association of Freight Forwarding and Logistics, said port congestion in Manila was a major factor for Asia supply chain providers for much of 2014 and remained a concern.
     “The current situation is very serious and on top of the port congestion on the U.S. West Coast, it makes the situation worse,” he said. “Air freight rates out of Manila have jumped through the roof, and just before the Chinese New Year until the first week after the holiday almost all carriers were only accepting shipments at premium rates.
     Tsui said for exports to the U.S., shipments currently needed to be tendered two weeks in advance, illustrating “how port issues affect both import and export for Philippines.”
     Another major forwarder based in Manila said it was still possible to charge premiums for shipments to and from the Philippines in the early months of March for air freight. “Backlogs at Manila port have fallen, but there are still delays and for urgent shipments air cargo is the best option,” he added.
     Stephen Ly, formerly managing director, DHL Global Forwarding Philippines and now DHL’s Managing Director for Singapore, said although ocean congestion at Manila had started to clear, many companies including DHL had benefited from the modal shift from ocean to air as shippers sought to avoid port congestion and supply chain delays.
     While DGF has access to the company’s nightly express freighter network services into Hong Kong from the Philippines, for the most part during the worst of the congestion in 2014, commercial bellyhold capacity was used to meet the supply chain needs of clients.
     “But bellyhold capacity was getting full,” explained Ly. “Imagine a 40-ft. container converted to air freight. That’s a lot of volume. So this led to a lot of aircraft charters in Q3 and Q4 of 2014.”
     Ly said port congestion had caused problems both for inbound raw materials, semi-finished goods, and fully processed exports.
     “This led to a record number of freighter charters for the consumer and many manufacturing industries,” he said.
     “We’ve also done five or six charters this year. This was mainly due to public holidays, the papal visit at the start of the year that saw roads closed, and the Chinese New Year holidays.”
SkyKing

     “Air cargo is no longer about handing out rates and schedule flyers,” says Linda Dreiffen, MD Cargo Sales Eastern Division for American Airlines.
     For all of us a better understanding of the shipper’s requirements, the forwarder’s transit needs, and the airline’s capabilities can help lead to positive results.
     Successful collaboration allows everyone to share in customer satisfaction, additional business, and profit.
     “If you think about it, air cargo is really a very resilient industry.
     “There have been wonderful years and some really tough ones.
     “But most importantly, we have been, and always will be, focused on our customers.
     “We are very excited to share all of the great things happening at American.
     “Now that we have completed the integration of our Cargo teams, our network is stronger than ever. We are focused on providing seafood shippers in the Northeast a reliable and innovative airline partner to transport seafood across the world. Working together we can grow and develop new destinations supplying seafood to hotels, restaurants, fish markets and family dinner tables in the U.S., Europe, Latin America, and Asia.”

Seafood Flies Up Front

     “The seafood industry is very important to American and as Seafood Expo took place in Boston, to our Boston facility as well.
      “More than 50 percent of cargo traffic originating in Boston is seafood related.
     “The business has grown over the years as capacity and destinations offer even more opportunities for our shippers.
     “As demand has increased, we have added resources including refrigerated trucks to transport these products to our JFK and PHL gateways to Spain, Italy, France, and now Latin America.
     “Even with the change in the type of aircraft we operate to the West Coast, seafood still remains the number one commodity from Boston to Los Angeles and San Francisco.
     “Perishables have expanded beyond foodstuffs to now include a broader range of commodities.
     “An increase in the manufacture and movement of pharmaceuticals has grown dramatically, for which American Airlines Cargo offers ExpediteTC, a temperature-controlled pharmaceutical program designed to meet IATA standards and Good Distribution Practices.
     “Next American Cargo opens our state of the art Pharmaceutical Facility at Philadelphia Airport.”

Shippers Go Deep

     “Many of our shippers have worked with American Airlines Cargo for a long time.
     “They know we understand the importance of their products and their need for quality and timeliness. Shippers can book their shipments online or with someone who knows their business.
     “Using our Expedite service, they are confident that their shipments will move as booked.
     “We take care to book the most direct route to meet transit time requirements using non-stop flights or routing with refrigerated trucks into the hubs. Shipments can be tracked throughout the entire process ensuring reliability and quality.”
Geoffrey

   Now that the labor slowdown at U.S. West Coast ports is resolved, the opportunity for cargo theft increases, says FreightWatch International.
   “As the massive backlog of cargo begins to release into the supply chain, the frenetic situation will be rife with opportunity for cargo criminals,” FreightWatch wrote in a warning released recently.
   FreightWatch’s focus is on major cargo thefts in the United States that occur within 200 miles of the now open and running Port of Los Angeles, Port of Seattle, and Port of San Francisco.
   With major backlogs after months of work slowdowns and to relieve the crush, transportation is adding people who may not be familiar with the tactics of the underworld.
   “This target-rich environment coupled with the tumultuous situation creates the perfect storm for organized cargo criminals proficient in [a] myriad of identity theft techniques,” FreightWatch said.
   FreightWatch International (FWI) is also out with their Annual Cargo Theft Report for 2014, stating that the risk of cargo theft will increase in 2015 versus 2014.
   “Although the total number of verified incidents decreased by 12 percent, the threat of cargo theft continues to grow in the U.S. due to increased organization and innovation on the part of cargo thieves,” FWI said.
   “This evolution is illustrated by the 36 percent rise in average value [of cargo thefts] which suggests organized thieves offset the lack of access to a high quantity of shipments by targeting higher value merchandise.”
   FWI recorded 794 cargo thefts throughout the U.S. in 2014, with the average value per theft reaching $232,924—a 36 percent increase in value over 2013—which translates into an average of 66 cargo thefts per month, or 2.2 per day.
   FWI noted that the U.S. “still enjoys” a relatively low level of cargo theft-related aggression and criminal sophistication compared to similar countries in Europe.

   Last year the keynote speaker at the Air Forwarder (AfA) Conference in Orlando, Florida, was air cargo great Bill Boesch, who envisioned a future that includes fleets of cargo airships.
   “The next form of transportation moves closer to reality and is accelerating toward going operational,” Mr. Boesch predicted.
   Now the news arrives that the U.S. government is seriously looking at the benefits of developing airship technology.
Rep. Tom Rooney (R-Fla.) and Rep. Brad Sherman (D-Calif.) have launched a cargo airship caucus in the U.S. Congress to encourage airship development for military and civilian use.
   “Recent advances in airship technology are exciting, and the caucus will help illustrate the breadth of benefits enabled by cargo airships’ efficient and infrastructure-independent operations,” said Rep. Rooney and Sherman in a joint statement released earlier this month.
   Rooney and Sherman cited the benefits of airships to carry large cargo payloads over great distances, at a fraction of the cost of fixed-wing aircraft, and accessing remote locations inaccessible for maritime traffic and traditional aircraft as they require less ground infrastructure support.
   “Airships have enormous potential to enable economic development opportunities and accelerate export logistics, expand U.S. capabilities in disaster relief response, and drive down greenhouse gas reductions in aviation,” Rooney and Sherman said in the statement.
   We spoke to Bill Boesch this week and he is still quite animated about considering a future that might include fleets of airships for air cargo.
   “I have long believed that global cargo needs a transportation method faster than sea, but at a much lower cost than air.
   “Air is mainly used when the customer needs a supply chain for their material faster than can be delivered by sea.
   “What would such a transportation vehicle do for world trade?
   “What new opportunities would it create in global logistics?
   “Such an advancement in transportation would be equal to the advancements of container ships, jumbo jets, and FedEx/UPS in advancing world trade.
   “Cargo via airships could be transported across vast areas of ocean and land within days at costs significantly below the cost of fixed wing air.
   “The companies that develop these opportunities and the shippers that utilize them will indeed become global mega industries by transporting goods and materials at a fraction of today’s air costs, but at transit times in many cases close to air.”
   “The U.S. Congress is planning to have their first caucus meeting shortly.
“If you have any comments, contact Jessica Moore in Congressman Rooney’s office (Jessica.Moore@mail.house.gov),” Bill added.

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