At the start of July the air freight industry was hoping the introduction of new container weighing regulations for ocean transport would provide a demand boost. As previously reported in FlyingTypers, the new rules from the International Maritime Organization (IMO) for VGM (verified gross mass) compliance make it compulsory for shippers and their proxies to verify the weight of containers before the box can be loaded onboard a vessel.
    As Panalpina’s Global Head of Air Freight Lucas Kuehner told FlyingTypers recently, given that it only takes 23 TEU to fill a B747-8F and every single container loaded for export by sea worldwide as of July 1 is now subject to the new rules, it will not take a great deal of supply chain disruption to high-value box shipments to see air freight demand spike.
    Given the state of current markets, any respite will be much welcomed.
    But according to early returns, both VGM and the new Safety of Life At Sea (SOLAS) rules that went into effect last Friday, July 1 (so far at least), have not caused much disruption at shipping centers in Europe and elsewhere. Stay tuned on that front.
    Indeed, such is the imbalance between capacity and demand growth that Drewry’s latest East-West Air Freight Price Index fell to its lowest level this May since it was launched in May 2012.
    The index—a weighted average of all-in airfreight “buy rates” paid by forwarders to airlines for standard deferred airport-to-airport airfreight services on 21 major East-West routes for cargoes above 1,000 kg—lost 1.3 points in May, falling to 79.1 and eroding the incremental gains made over the previous two months.
    The May reading corresponded to an average rate of $2.57 per kg on the trades covered, down from a 12-month high of $3.24 in October last year.

Softly As She Goes

    Freight volumes for May from the Association of Asia Pacific Airlines (AAPA) reflected the soft market out of key manufacturing hubs in the Far East. Tonnage was down 0.7 percent year-on-year in May measured in freight ton kilometers. By contrast, offered freight capacity increased by 2.0 percent. This mismatch produced a 1.6 percentage-point drop in the average international freight load factor, which fell to 61.3 percent for the month.
    “International air cargo demand remained soft, with year-to-date demand registering a 3.9 percent decline compared to the same period a year ago, reflecting the weak trading conditions in the global economy,” commented Andrew Herdman, AAPA Director General.
This followed something of a mixed bag in April. Airports Council International reported “largely stagnant” across the Asia-Pacific, which posted a marginal monthly year-on-year increase of 1.3 percent. “The top 3 airfreight hubs in Asia-Pacific all reported mild increase from last year: Hong Kong (HKG) +1.2 percent, Shanghai (PVG) +0.6 percent, Incheon (ICN) +1.2 percent,” said ACI.

Tony Tyler's Luck

    The International Air Transport Association (IATA) released global air freight data showing that demand measured in freight ton kilometers (FTKs) slowed in May with growth falling to 0.9 percent year-on-year.
    “Yields remained pressured as freight capacity measured in available freight ton kilometers (AFTKs) increased by 4.9 percent year-on-year,” IATA said.
    “Freight demand flatlined in May across all regions with the exception of Europe and the Middle East.
    “These regions recorded growth in air cargo volumes of 4.5 percent and 3.2 percent respectively in May, compared to the same period last year.”
    IATA points to broad weakness in world trade volumes, which have largely tracked sideways since the end of 2014, accounting for about 80 percent of air freight’s sluggish performance.
    “Global trade has basically moved sideways since the end of 2014, taking air cargo with it.
    “Hopes for a stronger 2016 are fading as economic and political uncertainty increases.
    “Air cargo is vital to the global economy.
    “But the business environment is extremely difficult and there are few signs of any immediate relief,” said Tony Tyler, IATA’s Director General and CEO.
    IATA has lowered its growth forecast for air freight demand in 2016 to 2.1 percent from 3 percent.
    “It’s a landslide,” said Lufthansa Cargo CEO Peter Gerber (right).
    “With prices falling so quickly, we have to cut costs.”
    Lufthansa Cargo says it is looking at dealing with customers directly, bypassing the freight forwarders that contribute about 95 percent of its business.
    “There’s no reason why the industry can’t operate a profitable, re-sized cargo business to address the more limited growth in markets, but that takes time to achieve,” IATA economist Brian Pearce said.

Asia Down, Sub-Continent Up

    Forward indicators are also bearish. HSBC’s latest analysis of purchasing managers’ indexes in Asia found that “China is softening again, global new export orders continue to contract, and new orders in Asia aren’t improving.”
    Most worryingly, new export orders in June saw declines in China, Japan, and Malaysia, although orders in India, Korea, Taiwan, and Vietnam rose slightly. “For the region as a whole, [new export orders] continue to contract,” said HSBC, adding that in China the manufacturing sector was still shedding workers.
    With the export outlook from Asia poor and little in the way of major new product launches expected to boost demand on key lanes in the coming months, much then depends on modal shift from ocean to air as a result of the new SOLAS ocean container weighing regulations.
    Unfortunately, Drewry’s take on the market at present is less than upbeat. “We did a survey of shippers for Container Insight Weekly a few weeks ago on the likely related modal shift and the results suggested minimal modal transfer will take place,” Simon Heaney, (right) Drewry’s Senior Manager, Supply Chain Research, told FlyingTypers.
    Drewry Sea & Air Shipper Insight concluded: “Drewry expects airfreight pricing to remain under pressure through the Northern Hemisphere summer season as more passenger aircraft are brought into service to support the peak tourist season, releasing more bellyhold capacity.”
Sky King

Flowering Endeavors

     The founder of Esmeralda Farms, Peter Ullrich was a pioneer in the flower business, touching thousands of lives around the world with his unparalleled passion.
      He began during the early 1970s by distributing flowers in the Miami area, making several trips to the airport cargo area (MIAD) in Miami in his tiny MG, which he loaded up with boxes of flowers for distribution to local business.
      Today Esmeralda is a big company with operations both in Miami and the Netherlands. It is dedicated to the sales, marketing, and distribution of flowers and only sells flowers grown by its own operated farms in Colombia, Ecuador, and Peru.
      Peter Ullrich was born in Bad Wildungen, Germany, in 1942, and moved to the United States in 1962.
      Peter was one of the first growers to establish a presence in Latin America, and foresee the possibilities of its favorable climate in which he could grow flowers on a year-round basis.
For over 35 years he was involved in the international floral industry growing, importing, and marketing flowers. Herr Ullrich was a pioneer in developing and adopting cutting-edge technologies that not only assist in building better business in the floral industry, but also create cleaner and safer working environments for his employees.
     But it was his desire to control flower movement that put Peter Ullrich into the air cargo business. He had the good sense (and perhaps luck) to get involved with “Gentleman” Bill Spohrer, who set up the Ullrich-funded Challenge Air Cargo.

After Challenge, Bill and Lynn Wilson Spohrer (a noted hotel designer) “retired” to an area of northern Florida called “the panhandle,” where they lovingly restored three Victorian mansions into the Coombs House Inn. The inn continues today as a landmark luxury bed and breakfast.

      With its dynamic leadership under Bill Spohrer, Challenge was a not only a great cargo carrier but also dominating industry force for good. Challenge gave back to the business with actions that included the start up sponsorship of the Air Cargo Americas trade show. It also lent major support to TIACA’s 1992 trade show comeback in Luxembourg.
      Challenge Air Cargo had grown into a powerful niche player and a genuine Miami original. It built a huge (at the time) 100,000-square foot handling facility on what had been a part of the notorious Miami International Airport on the 36th Street side, then referred to as “Corrosion Corner”(for the dozens of old piston engine cargo aircraft parked there and the colorful people who operated them).
      “It’s really a giant reefer masquerading as a cargo terminal,” Peter told me when the building was dedicated.
      Peter leaves behind his beloved wife, Clarisse Ullrich of Amelia Island, Florida; son Peter F. Ullrich Jr. and his wife, Shannon of Austin, Texas; son Stephen Ullrich and his wife, Rafaela of Miami, FL; daughter Monica Ullrich and her husband, Kim of Miami Beach, FL; brother Alex Ullrich and his wife, Ida of Costa Rica; four grandchildren, Natasha, Yasmina, Alex, and Max, as well as several nieces and nephews. Mr. Ullrich will be laid to rest at a later date on the grounds of Esmeralda Farms.
      Happy landings always, dear Peter.
Geoffrey

     Thomas Egenolf has an interesting area of responsibility as director of Italy, Malta, UK, and Ireland for Lufthansa Cargo.
  He found a perfectly spirited bottle of Spumante to celebrate designating an MD-11F ‘Buongiorno Italy’ at Milano Malpensa Airport last week.
  Egenolf is seen here conducting the ceremony while a violinist in a red dress was striking just the right note. Egelnof declared:
  “The greeting ‘Buongiorno Italy’ is an homage to the close link between Lufthansa Cargo and Italy.
  “We are proud of being so well positioned in this important and highly competitive market, with over 250 passenger and two freighter flights per week.”

Geoffrey

     More than 10,000 aircraft and a half million flight enthusiasts will turn Wittman Regional Airport—a place you may have never heard of—into action central from July 25-31, when it transforms into the busiest airfield in the world for the EAA’s annual AirVenture Oshkosh.
     The weeklong event is thrilling and provides some genuine, knee-slapping summer fun. Oshkosh draws visitors from more than 80 countries, many of whom fly in, of course.
     In addition to daily air shows, the event also includes learning centers for children and aircraft enthusiasts; aircraft of nearly every size, shape, and era; nightly activities, like a “fly-in” theater, concerts, and fireworks; and admission to the EAA AirVenture Museum and flight experiences.
     More info., click here
     For us, the big deal this year is once again to get up close and touch the giant Martin Mars.
Martin Mars is dubbed the “World’s Largest Flying Water Bomber.”
     Today there are two Mars aircraft in operation: “Hawaii” and the “Philippines.” They are lovingly cared for and in heavy use fighting fires, scooping up 7,200 gallons of water from lakes and waterways and then dousing blazes all across the western United States and Canada.
     The aircraft also carry huge amounts of fire fighting foam and gel.
     Built by Glenn Martin at Middle River, Maryland, and used as bombers during WWII by U.S. Navy Mars, they established airlift, endurance, and safety records that still stand today.
     Known affectionately as “The Big Four” for their size and engine number, Martin Mars really hit the sweet spot for those seeking an old time airplane fix. It’s thrilling to know they are up in the air doing good in 2016.
     Once upon a time back in 1946, these big beauties sat bobbing in the water out behind the Marine Air Terminal at LaGuardia Airport. Back then they were in U.S. Navy service alongside Boeing B314s and Sikorsky VS 44As—all three can be considered the most outstanding flying boats ever built.
     Today the B314s are all gone, and only one lone VS 44A remains restored and is at least “museum worthy;” it sits on display at the New England Air Museum at Bradley Field Hartford. But it’s truly remarkable that not one, but two Martin Mars giant flying boats are still airborne, soaring deeper into the lore and legend of aviation history.
     Not to be missed!
Geoffrey

Vol 15. No. 51
The Forgotten Man
SmartKargo South Of The Border Down Mexico Way
Chuckles For July 5, 2016
Who Is In The Picture
Does New Panama Canal Work?
Family Time