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Geoffrey FIATA Fellow
   Vol. 15  No. 65
Thursday August 25, 2016

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Columbus Airport

     The on-again, off-again Britain-to-Amritsar flight route was in the news recently when a crowd-funded new airline, POP (an acronym for People Over Profit), sent out a message that it planned to be the first airline to operate non-stop flights between the UK and the cities of Amritsar and Ahmedabad in the states of Punjab and Gujarat.
      While the news was welcomed by the Indian diaspora in Britain, it was hailed by air cargo stakeholders in Amritsar. With no regular direct international air connectivity, exporters were finding it tough to send out fresh vegetables and fruits and industrial products. As a result, other than perishables, most consignments were being sent to Delhi by road for onward transportation. The lack of air services has also turned the 80-tonne capacity cold rooms idle.
     POP believes that its flights would not only help the under-served ‘visiting friends and relatives’ market, but also boost business and tourism.

Here Comes The Judge

     The carrier hopes to open new trading links between Britain and India and has already started reaching out to air cargo operators. Said Navdip Singh Judge (Nino), Chairman and founding partner of POP: “The vision behind POP is one of making a genuine and positive difference to the communities we plan to serve. We aim to do that by opening up new routes between the UK and India and by providing new opportunities for growing businesses in Punjab and Gujarat to engage in worldwide trade in a way that has previously been impossible for them.”

As Much Profit As Possible

      Mr. Judge said that he had positioned cargo in his business plan “to make as much profit as possible to enhance our profitability and hence donate to good causes” because there was a “huge trade potential between India and UK and offering cargo will facilitate this trade.” He said that he was optimistic about the talks between the UK and Indian governments about a possible preferential or free trade agreement following the Brexit decision. This, he said, “makes us even more confident about the cargo opportunities that POP can look forward to.”
      Other reasons for the POP Chairman's optimism stem from Prime Minister Modi's “Make in India” campaign to boost manufacturing within the country and the new civil aviation policy that has enunciated the government's aim of providing an ecosystem for the harmonized growth of aviation subsectors, including cargo. It is in such an environment that POP will offer opportunities to manufacturers and producers in northern India who will be able to take advantage of the direct 8-hour flights to the UK to send out a whole range of goods, textiles and traditional Indian clothing, and fresh produce like fruits and vegetables.

Interest Running High

      “We have already had very good interest from vendors who want to take advantage of the shorter flight times to cargo perishables like fruits,” Mr. Judge said.
      Looking at the future, POP has plans to tie-up for bonded trucking services to the airport and even link with other carriers. However, that will come in “year two when we hope to fly to Kolkata and Goa three times a week and hopefully other cities once we have researched the demand,” said Judge.

Fabric of Plan Is Exports

     From Ahmedabad, POP hopes to take fabrics, jewelry and gemstones, chemicals, cars, and pharma.
     From Europe, POP’s cargo services will help manufacturers wanting to export to India. The airline’s flights will enable these manufacturers to satisfy the growing demand for products like electronic devices for the growing Indian middle class.

What Infrastructure?

     Undeterred by the infrastructure problems, Judge said that cargo facilities will “develop if there are flights. It is a chicken-and-egg situation.”
     He also mentioned that if the infrastructure was not there, it could be an opportunity for POP to create it.
     Cargo exporters from Amritsar have often sent out appeals to the government in Delhi and the ministry of civil aviation for the resumption of international flights.

Start and Stop Ups

     Over the last ten years, a number of flights by international carriers were started only to be discontinued after a few months.
     Back in 2004, Singapore Airlines had an Amritsar-Singapore thrice-weekly service, but that stopped in 2009. In 2010, one of Air India’s popular flights—in fact, the Amritsar-Birmingham-Toronto flights were the most successful in the national carrier’s history, registering 90 percent occupancy on average—was withdrawn. Two years later, British Midland International discontinued its Amritsar-Almaty-London flight. Even Jet Airways had an Amritsar-London flight for some time.
     Today, of course, there are flights from the city to Turkmenistan, Uzbekistan, Qatar, and Dubai. The air cargo community in the city hopes that with the POP flights, other carriers would be encouraged to start services too.
Tirthankar Ghosh


South African Bailout

   A man looks out over the runway from the main viewing room as South African Airlines’ (SAA) jets prepare to take off from the main runway at OR Thambo International Airport, Johannesburg, South Africa, last week.
   According to the DA party in South Africa, SAA has only ZAR 99 million left of a loan it took out from the South African Government. DA (opposition party) called for the airline to be placed under business rescue.


Chuckles for August 25, 2016

41 Years Of Vital Views   Here in Part II of Vital Views we continue our series of thoughts generated by individuals that have appeared in our pages since we began publishing in 1975.
  Richard Malkin has covered the air cargo business since 1942, and today at 103 years of age he has edited these comments, which will continue through the remainder of 2016.
  Vital Views is offered during a time of change in air cargo. It attempts to reach back into our past and recall outlooks that might help inform us when dealing with the challenges of today.

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George A. ShipmanNew Deal Forwarders . . .The late George A. Shipman (2010, age 73), was a management consultant and air cargo industry veteran (AA Cargo 25 years), with a particular wit and wisdom who for us in 1986 trained the spotlight on the cargo agent.
     “Today the agent is perceived differently than in the past because he is functioning in a different role than before.
     “By definition, the agent is the agent of an air carrier.
     “Traditionally this definition drew a line between agent and consolidator.
     “In the new environment, however, that line has proved to be as formidable as the Maginot Line.
     “Consequently, the carrier who views the air cargo agent in a subordinate and plans his marketing efforts around that assumption, simply is not being realistic. The agent no longer is directing his primary effort toward promoting freight per se, but is functioning as a negotiator for the shipper,” George Shipman declared in 1986.

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Saw Info Tech As Key 20 Years Ago . . . John Radziwill, who headed Radix Group International in 1997, disclosed that “within the orbit of Radix, computer utilization plays an increasingly vital role in maintaining a fluid distribution system on behalf of the exporting and importing community of which air carriage is an essential part.
     “My personal view is that the computer will continue to play an important role in the transportation industry.
     “Essentially, we are becoming a communications/logistics company.”

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Here networking at the 1990 CNS Partnership Conference in Dallas are (L to R) first CNS President Jack Lindsay, second CNS President Anthony (Tony Calabrese), while original CNS Board Members Brian Barrow and Buz Whalen flank American Airlines CEO Robert Crandall.

The Need For Partnerships . . . Brian P. Barrow, Cargo Network Service’s (CNS) board member, stated in a 1991 editorial:
     “As the years wore on and the industry moved out of the piston-engine era and into the jet era and then into the widebody era, the reasons for mutual fault-finding and sniping grew more complex even as the industry expanded, gained in sophistication and started to show real muscle.
     “Still, while all this was building, there was indisputable consciousness on both sides that they were fated partners; they needed each other.
     “If not exactly Damon and Pythias, their interests coincided—at least up to a point,” Mr. Barrow declared.

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Joseph Le LouarnSend Customs Just The Fax . . . In 1990 Joseph Le Louarn, regional director of Customs at Roissy, France, addressing a Manhattan audience of international traders, advised American shippers to his country to “lend speed to the transmission of information concerning the movement in order to free all or part of the shipment as soon as it is unloaded at Paris’ Charles De Gaulle Airport.”
     The official added: “If a consolidator can send by fax a copy of the master or house air waybill along with references which can be agreed upon at the start of the procedure, then there is surely some work we could do together.
     “This is assuming there is a good working relationship among the U.S. consolidator, his representative in Paris, the airline, and customs authority.
     “I am prepared to try anything toward this end.”

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Emerging Forwarder Medium Well Done . . . Roger A. Haack, president, Greene Companies International, Inc. reported in 1985 that “an important new trend is developing in the United States air freight industry—the re-emergence of the medium-size cargo agent as a significant factor in moving goods overseas.”
     Noting satisfactory business conditions for his company until the latter 1970s, there was a turnaround with the advent of deregulation, giving “rise, among other things, to rate wars that enabled very large consolidators to gain control of increasing amounts of freight.”
     Haack cited observers who predicted that the only survivors of deregulations would be the giant multinationals. Nevertheless, he stated:
     “One sign that bodes well for the future of medium-sized forwarders is the general bottoming-out and increasing stabilization of freight rates which has put such companies in an improved competitive position, particularly with those shippers that place a great deal of emphasis on price.”

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David AbneyGrowth Overcomes All Obstacles . . . David Abney chief operating officer – UPS and president, UPS Airlines in 2007, offered these words of change and challenge: “The air cargo industry has seen much change and many challenges in the past year.
     “There are the economic and regulatory pressures, security, and environmental concerns, rising fuel prices and ever-expanding supply chains made efficient with globalization and effective network management.
     “Despite these challenges, the demand for air cargo and express shipments has continued to grow—and is forecasted to keep growing to support global sourcing, production, distribution, and consumption.”

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To Be Continued . . . 

Vital Views Part I, Click Here.


Barry Hansen Yesterday and Today

     Our reasoning behind looking as far back as 50 years ago to see what the leading thinkers of air cargo were saying and doing to build this industry is to offer some balance and perspective as air cargo surges forward in 2016.
     Today we have someone who has been involved in the marketing of freight forwarding, airline cargo, and the trucking business. He is able to talk about that experience yesterday and luckily for us from the perspective of today as well. Barry Hansen was senior vice president of Air Express International in 1977, when he spoke to Richard Malkin and made a critical statement about shippers who tended to look at the air freight budget without examining the tradeoffs. He said:
     “There is no appreciation that air freight is an element of customer service. Take the traffic manager in a staff position. He is often saddled with a restricted and unrealistic budget designed to control the expenditures on air freight. The tradeoff of repeat sales needing competitors’ delivery schedule, and customer satisfaction are seldom brought into focus, Barry said in 1977.”


Update 2016

     Today we discover that Barry Hansen is alive and well, living in Carmel, Indiana, after having moved there some years ago to serve as VP Marketing of Celadon Trucking Services
     Since AEI, Barry has consulted for 8 years, at one time representing Unilever’s forwarding interests in the U.S.
     Barry moved to the airline side during the Bill Boesch era at American, serving AA for a time as MD International Cargo Sales based in London, before returning to the U.S.
     After retiring from Celadon, Barry did some M&A work for Paul Jackson at London-based Triangle Management Services until 2008.
     “I came back to air cargo in 2013 as an advisor to a startup parcel company specializing in niche e-commerce transport,” Barry told FlyingTypers.
     “Of course, I have industry views, always did.”


Recalling 1977

     “As I look at my quote from 1977, I remember Dick (Malkin) always asked about one’s view on TCC, the Total Cost Concept.
     “If today is the era of big data, those were the days of no data.
     “While a rational person could see the validity of the concept, they had no data to back it up.
     “Proving that reducing inventory costs would more than offset increased air cargo costs was beyond the capability of most all companies.
     “But today as compared to 39 years ago?
     “It is obvious that traffic management has become logistics management and that the logistics folks are very involved in customer satisfaction.
     “In the retail universe logistics is critical to the core mission and sustainability of the enterprise and air cargo plays a major role.
     “How successful a company is in e-commerce can be determined by how they manage e-commerce and brick and mortar, either together or separately, whether they reduce their brick and mortar footprint while building up e-commerce, whether they make acquisitions to build e-commerce scale, whether they are purchased by someone seeking to increase e-commerce scale, or whether they hemorrhage cash in an attempt to compete and exit the market.”


The Power Of One

     “It is obvious that one company has established the playing field, forcing a traditional industry to react.
     “They have established in the customer’s mind an expectation of what kind of delivery service level the retailer has to provide to be competitive.
     “While of course the cost of delivery is in the price, the seductive ‘free shipping’ promotion has forced others to follow.
     “To accomplish this, scores of fulfillment facilities are opening to shorten the geographic reach to the end consumer.
     “With hundreds of thousands, sometimes millions of purchasable items on a website, you can’t stock everything everywhere, even with the best of anticipatory inventory practices.
     “This requires the dedicated movement of inventory internally, both by surface and air, to maintain customer expectations.
     “This becomes more important as other continents are involved.
     “That is added to the incredible volume of e-commerce parcels that move by air to meet committed delivery to the consumer. “Unfortunately, for the scheduled passenger carriers, most of this air volume doesn’t move on their services.”


About John Emery Sr.

     “This ‘Vital Views’ in FlyingTypers reminds me of the privilege I had to have lunch with John C. Emery, Sr., one day in 1968.
     “He was widely acknowledged as the air cargo visionary of his day.
     “John Sr. was the finest executive I ever met. He told me we were in the infancy of a dynamic industry, but he had no idea exactly as to where it was leading.
     “He passed away a year later.
     “Three years later Federal Express appeared on the horizon,” Barry Hansen recalled.
Geoffrey/Flossie


Emery Pioneered US Freight Forwarding

     Our conversation with Barry Hansen brings to light mention of John Emery, Sr.
     John Emery, Sr., created the first certified air freight forwarding company in the United States of America.
     John Sr. was an officer in the Naval Air Transport Service and was a peacetime Railway Express manager.
     Emery Air Freight was an idea born of his wartime experiences, and the company enjoyed a dominant presence at the first blooming of modern air cargo.
     John Jr. followed his father’s footsteps, first joining the Naval Service and then joining Emery Air Freight when his service was fulfilled.
     John began his career as a pick-up driver, deflecting the barb that he was born with a silver spoon in his mouth.
     John Jr. served as street salesman, New York sales manager, district manager, regional manager, Vice President of Sales and eventually, Executive Vice President.
     By the time John Jr. hung up his spurs, Emery (today part of UPS) was operating 180 offices with 10,000 employees and had grown from an $80,000,000 company to a company pulling in $1.2 billion dollars worth of revenue.
     John Emery, Jr. was a unique individual. No single executive in modern air cargo history has done more to propel the worldwide organization of air cargo.
     He single-handedly carried IACA (now called TIACA) on his back for 15 years, from the mid-1970s to the late 1980s, when it moved to new affiliation and management.
Geoffrey


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