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   Vol. 14  No. 66
Monday August 17, 2015


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A MidSummer Lithium Dream
     Much has been written of issues pertaining to the (air) transport of Lithium batteries, most recently after ICCAIA (the industry association representing the major aircraft manufacturers such as Boeing, Airbus, and Bombardier) and IFALPA (the International Federation of Airline Pilots) teamed up and sent out a warning that the transport of Lithium batteries, at least in bulk, is a risk via shipping procedures on present aircraft and cannot been controlled.
     On July 17th, 2015, Boeing published a guidance document that continues to create not just ripples but waves of tsunamic proportions within the airline business.
     In this guidance document, Boeing said flatly “(…) recently concluded testing by the International Coordinating Council of Aerospace Industries Association (ICCAIA), with Boeing’s participation, has determined that a fire involving one or more packages of lithium ion batteries packed and transported in accordance with the Dangerous Goods Technical Instructions could create hazards that the aircraft fire protection features are not able to adequately protect against.”
     Subsequently, Boeing suggest that the airline industry take the following actions: “(…)

          1)  Appropriate packaging and shipping requirements be established to safely ship lithium ion batteries as cargo on aircraft.
          2)  High density packages of lithium ion batteries and cells (such as defined by UN3480) not be transported as cargo on passenger aircraft until such time where safer methods of transport are established.
          3)  Appropriate packaging and shipping requirements be established to more safely ship lithium metal and lithium ion batteries as cargo on freighter aircraft.”

     Boeing “recommends operators not carry lithium ion batteries as cargo on passenger aircraft until safer methods of packaging and transport are established and implemented.”
     The conclusions and eventual call for action were jointly prepared by ICCAIA and IFALPA and made for a much-discussed working paper at the ICAO Dangerous Goods Panel Meeting earlier this year; the aforementioned quotes came from this working paper, as FT had already reported:


Unwinding Boondoggle

     Although the ICCAIA/IFALPA paper got caught in a formalistic and bureaucratic boondoggle, it will be rewritten and presented in advance and in time for the 25th meeting of the ICAO DGP this fall.
     In the meantime, more and more airlines take unilateral action and file so-called “variations“ in the ICAO Technical Instructions for the Safe Transport of Dangerous Goods by Air and the IATA      Dangerous Goods Regulations; either outlawing the transport of Lithium Batteries altogether or in part.
     A number of carriers have elected to embargo these commodities, but have not filed variations despite being IATA carriers, which in some cases leave shippers at a loss while bearing costs for rejections almost impossible to avoid.
     Usually shippers have no way of knowing the deviations of individual carriers (e.g. requirements above and beyond the requirements contained in the IATA DGR) that have not been filed in the IATA DGR or ICAO TI.
     It’s possible the forwarder tasked with expediting the shipment may inform the shipper accordingly that using airline XY is not an option, but this still leaves shippers at odds to understand why.
     PRBA and NEMA, the industry associations for the battery manufacturers never fail to point out the difference between non-compliant shippers and compliant ones, insisting that the incidents and accidents relating to the transport of Lithium batteries involved shipments which were either undeclared altogether or at least not prepared as required by the regulations.


Enter PRBA & NEMA

     Although PRBA and NEMA have traditionally downplayed the risks associated with the air transport of Lithium batteries in the past and vociferously defended questionable privileges such as the exemption from the training requirements for shippers of so-called “excepted” Lithium cells and batteries (Lithium-metal cells with 1g Lithium or less, Lithium metal batteries with 2g Lithium or less, Lithium-Ion cells with 20 Wh or less, or Lithium-Ion Batteries with 100 Wh or less), they do have a noteworthy point.
     While one might argue that PRBA and NEMA have in the past done little to differentiate compliant shippers from non-compliant ones and have not taken a proactive role in going after those who willingly or unwillingly ignore the regulations, one must concede that for the time being there is some risk of a regulatory overkill since a great part of todays all-day technology is reliant on Lithium battery technology.
     The latter, however, is causing a problem that seemingly has not been noticed by ICAO or IATA and does not seem to be on the radar of regulators; nevertheless, this issue may cause greater burdens to manufacturers and distributors of electronic gadgets than any change the regulations have undergone in the past or may undergo in the time to come.


Professor Gadget

     While gadgets and devices such as remote control units, flashlights, etc. typically contain AAA, AA, or other standard type batteries which could be shipped without batteries at all, a considerable percentage of electronic devices incorporate batteries in a form that makes them almost impossible to remove for transport—for example, Lithium cells and batteries on computer mainboards or measuring instruments.
     While these gadgets and devices do not present a problem by themselves, the issue at hand is that the manufacturers and distributors often have no way of knowing which particular cell or battery is installed in a particular gadget or device.
     Let us assume the computer manufacturer XYZ is equipping his desktop computer systems with BIOS-backup batteries of the common CR2032 type.
     Although most end users are not aware of the fact, even a desktop system must incorporate a small battery or else all system settings (such as date and time) would be “forgotten” whenever the system is disconnected from AC power.
     Typically, such batteries are purchased from multiple vendors and installed using the FIFO warehousing principle (First In First Out). Very few manufacturers however have felt the necessity to record whether a CR2032 button cell of the manufacturer XYZ or the manufacturer ABC has been installed in the device with the serial 12345.
     The ICAO TI and the IATA DGR require that “each cell or battery is of the type proved to meet the requirements of each test of the UN Manual of Tests and Criteria, Part III, subsection 38.3. (…) Cell and battery types only meeting the requirements of the UN Manual of Tests and Criteria, Revision 3, are no longer valid.”
     While some manufacturers such as Lenovo have simply issued a global certificate of conformity assuring end-users and distributors of their equipment alike that “batteries and the cells contained in them have been tested and meet the requirements of the UN Manual of Tests and Criteria, Part III, subsection 38.3, Revision 3, Amendment 1 or any subsequent revision and amendment applicable at the date of the type testing,” others so far still communicate to buyers of their equipment that “the batteries and cells installed in our equipment are exempt from all transport regulations and are not considered dangerous goods.”
     Possibly, since some devices and gadgets have a long shelf life, it may even prove impossible to find out which battery or cell had been installed therein and some vendors or manufacturers of batteries may no longer exist, making the required determination that a cell or battery contained in a device or gadget to be shipped virtually impossible.
Jens


Chuckles For August 17, 2015

 

ECS Accentuates India

     Paris-headquartered ECS Group Chairman and CEO Bertrand Schmoll loves the Indian market.
     “It is one of the best in the world,” he exclaimed as ACNFT caught up with him during his recent visit to Delhi.
     It turns out the CEO of the GSSA makes quarterly trips to India and has witnessed the changes taking place in infrastructure at both big and small airports around the country.


Hands On Bertrand


     “You have all the tools to become the key market in the world,” Bertrand Schmoll said.
     “Here is an influential population that is increasing.
     “But only a small part of that population is flying today,” he said.
     That is what he is optimistic about, because the numbers are surely going to go up in the future.
Add to that the number of low-cost carriers that are developing.
     “The country is changing… the number of aircraft is rising and that is good for cargo,” proclaims Mr. Schmoll.


Deal With Air Asia

     Upbeat about the tie-up with AirAsia India, Mr. Schmoll mentioned that ECS was “very happy with the partnership.
     “AirAsia is a growing airline. They have five aircraft that will increase to eight. They are seeing growth in terms of passengers.
     “As we continue our partnership on a long-term basis, they will benefit since cargo adds additional revenues.
     “It is a perfect partnership for us,” the CEO said.
     It was around this time last year that AirAsia India appointed Global Air Cargo India (with Rajendra Dubey as Country Manager), part of the ECS Group, to manage its cargo sales.
     At that time, Mittu Chandilya, CEO AirAsia India, said that the carrier had “left it to experts to handle cargo while we will concentrate on the passenger side, which we know better.”
     AirAsia India is one of the few low-cost carriers to have its total cargo operations managed by the ECS Group.
     The GSSA has been able to deliver according to AirAsia India’s expectations because the business model followed is custom made where, for example, the fast turnaround times at airports have been factored.
     The carrier demands no delays due to loading and unloading of cargo.
     Today, the tie-up with AirAsia India has provided the global GSSA the opportunity to offer services to its clients—ECS handles Saudia, Tiger Airways, and even Etihad—around the subcontinent.
     For instance, currently Saudia in the U.S. can move cargo to Indian airports served by AirAsia India.
It is the same with cargo from India.
     The other airlines ECS serves from India with global GSSA agreements are Brussels Airlines, Ukraine International Airlines, and Camair.
     To serve AirAsia India and its other clients—“We are always looking for other carriers,” Schmoll said—ECS has set up its own offices.
     “Now we have more than 120 employees operating from 19 cities in India,” he said. The CEO, however, was quick to point out that the number of offices or employees was “not significant when compared with the size of the country.”
     Even so, Mr. Schmoll considered “India to be one of the best successes of the group and we did not buy anything.
     “We created everything from scratch and I think after 3-4 years this development (19 offices and 120+ staff) is an achievement,” he said.


ECS Growth Patterns

     ECS Group’s expansion in India, despite the region’s inherent infrastructural woes, is not surprising.
According to recent air cargo figures, GSSAs have taken a major share of the market: more than 20 percent of worldwide revenues were generated through sales under GSSA agreements.
     ACNFT asked Mr. Schmoll for the reasons behind this growth.
     “It was important,” he said, “to maintain high standards of service.
     “Airlines want more dedicated services today.
     “They want more commitments from our side.
     “The thinking in many carriers underwent a change: cargo,” said Schmoll, “is more important for them than in the past.
     “Therefore, they are expecting more from us—they are expecting more ideas from us not only about how to increase tonnage, but also yields.”
     “These carriers not only want GSSAs to sell point-to-point cargo, but also to a larger network or destinations with better yields—in short everything that can increase their revenues,” Mr. Schmoll declared.
     “As for ECS: We have proved that we are able to bring solutions to airlines and ideas that increase their revenues.
     “We are well positioned to answer to these new challenges,” emphasized the CEO.
Tirthankar Ghosh


Adrien Thominet About ECS Global

Is Korean Air Reeling In The Years?

A host of external factors have battered the Korean economy this year.
     The MERS virus caused widespread panic and the loss of a more than 30 lives, which has had a dampening effect on domestic demand, consumer confidence, and tourism.
     Moreover, exporters—especially in the critical electronics sector—have been faced with a weaker Japanese Yen and poor demand from Europe.
     This saw the current government downgrade its GDP growth forecast for 2015 to 3.1 percent from 3.8 percent previously.
     So as the national carrier, Korean Air has had plenty on its plate thus far this year.


Upbeat About Air Cargo

     However, the carrier is remarkably upbeat about its freight operations.
     According to Korean Air Cargo executives, rather than looking at negatives, it has instead been focusing on targeting niche markets, concentrating on the Trans-Pacific lanes where it faces less competition from Middle Eastern rivals than in Europe, and ensuring its fleet is as economical as possible.
     A spokesperson told FlyingTypers that the carrier had seen a gradual improvement in its freight performance last year as the global macroeconomic situation improved, but the carrier was still seeking “growth in quality” to counteract excess capacity and the pressure this was putting on yields.
     “An additional five B747-8F and four B777Fs were introduced last year and continuous investment in a fuel-efficient fleet is set to continue,” said the spokesperson.


B777s To The Rescue

     “Our B777F fleet is an eco-friendly fleet with remarkable fuel efficiency that is expected to fulfill regulatory compliance and sustainability regarding EU’s carbon emission trading and similar movements elsewhere in the market.
     “This proactive strategy will help increase fleet operation hours by introducing more B777Fs into network planning.”


Out With the Old?


     Although Korean Air Cargo was reluctant to discuss its plans for its older freighters, the carrier did say it planned to expand its network by seeking out under-explored markets, as illustrated by its recent launch of a new direct service from Vietnam to Europe and the strengthening of its Central/South American network via an enhanced interline service agreement with regional carriers.
The emphasis on Trans-Pacific markets will also remain a strategic feature. Out of 1.5 million tons of demand handled by Korean Air in 2014, North America and European routes comprise 40 percent and 23 percent respectively, a ratio that further diverged in the first quarter of this year when the respective market shares of North America and Europe were 42 percent and 20 percent.
     “As Middle East carriers approach the Far East-Europe market via aggressive pricing, rate competition in the lanes has become excessive considering the sluggish signals of the European economy,” said the spokesperson.


USA Major Driver

     “In contrast, U.S. economic recovery has gained its momentum, which has resulted in an increase in demand for capacity.
     “Looking at tonnage results from the first quarter, both ex-Korea and transit increased by 6 percent. In terms of freight ton kilometers by route, the Americas showed the biggest leap by +25 percent while other lanes such as Oceania (+21 percent) and Japan (+18 percent) showed promising growth.”
     KR’s Cargo division now generates almost a quarter of Korean Air’s sales profit, said the spokesperson.
     “According to IATA forecasts, in 2015 global air cargo will grow around 4.5 percent with global recovery helped by momentum from the U.S. market.”
     To make the most of this growth and offset risk in its home market, Korean Air is now seeking “collaborative relationships” with major shippers and global forwarders. The operator is also looking to niche markets including cold chain, e-commerce, and fresh gourmet verticals and solutions to further generate sales.
     “We’ve also had a boost in recent months due to maritime congestion in U.S. West Coast ports,” said the spokesperson. “Auto parts and consumer perishables temporarily turned to air logistics demand. This resulted in a drastic increase in performance compared to last year’s figures.”
SkyKing



ZeroG
Everything Means More Than Zero . . . Airbus A300 ZERO-G hangs by a hook as a crane places the big bird gently into position at Cologne-Bonn Airport earlier this month where it will become a tourist attraction.
ZERO-G was used until 2014 by the German National Aeronautics and Space research center 'DLR' to test zero gravity.

 

Julian Keeling and Shura Bary

RE:  Master In His Own Write

Dear Geoffrey,

   You were blessed with one smart, beautiful, and loving wife and four children who are mirrors of their parents. Geoffrey II has enjoyed great success and so he should. He is very talented.
   Shura never sought fame or fortune. He just loved his craft. Even with his own two sons he spoke so humbly about his work. Both remarked to me over the weekend, “We had no idea our dad was so highly regarded!” However, I am sure his family will feel so proud that Shura will be remembered by your gesture as the great journalist he was for years to come.
   I think Shura and I in many ways were “joined at the hip” because our chats always started at the outer boundaries of airfreight and quite often from a contrarian point of view. Over the years as we saw airfreight companies replace airfreight with logistics in their names, we used to chuckle to ourselves—do the customers see any improvements in service?
   We thought JIT was more a costly pipedream than a reality. We always believed outsourcing would do a complete 180 degrees. We thought if airfreight companies concentrated on the meat and potatoes way of doing business, we all might be making more money today. Customers have forwarders on the run, and the rule of thumb is, the more that is done for nothing, the better the customer likes it. Kilo millionaires now abound!
   I shall truly miss our weekly musings. Politically, we were both left of center and I think it helped us remain grounded. It is far easier on the soul to root for and care about the underdog.
   Today airfreight is only left with Fred Smith. All those heads of companies, e.g. John C. Emery Jr., John Robinson, Gunter Rohrmann, Joe Berg, Larry Rodberg, Roger McFarlane, Peter Rose et al are all gone. They were all strong, passionate personalities and great leaders. Today by comparison, we are left with a parade of faceless people hidden inside their bunkers!

Best regards,
Julian

 

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