The latest airline financials illustrate just how hard the sector has been hit by weak cargo markets, but new product launches could now be starting to boost demand.
     Following on from positive signals in June, July Purchasing Manager Indexes and export data suggest high-value manufacturing activity in Asia is warming up. “PMIs are stabilized and there are signs that launches by Samsung and Apple are providing some support to electronics production as suppliers stock up,” said HSBC.
     But the picture was mixed, with PMIs across most of South East Asia contracting last month while key exporters such as China, Taiwan, Vietnam, and South Korea—as well as less established players in air freight markets such as Australia, New Zealand, and India—all saw manufacturing expand.
     The upturn in PMI data was also reflected in the latest air traffic figures from Asia. Guangzhou Baiyun Airport reported an 8 percent year-on-year increase in cargo throughput in July while Shenzhen Airport saw an 11 percent surge. Elsewhere, the latest figures were only available for June, but Bangkok Suvarnabhumi International registered a 7 percent increase in freight handles and Singapore’s Changi airport saw a 7.8 percent hike.
     Hong Kong International Airport (HKIA), the world’s leading freight airport, also saw steady growth in July when cargo throughput rose 4.7 percent year-on-year to increase to 380,000 tons. “A robust 15 percent year-on-year growth in transshipments led to respectable growth in cargo volume last month,” read a statement from HKIA. “Traffic to/from key trading regions in North America, Mainland China, and Southeast Asia rose most significantly in July.”
     Singapore Airlines saw a 10.5 percent surge in tonnage in July, while combined Cathay Pacific and Dragonair traffic figures for July 2016 revealed an increase in cargo and mail of 7.1 percent year-on-year as well as a 2.9 percent load factor uptick.
     “Helped by strong perishable exports from the Americas, the overall tonnage for July remained healthy, although revenues continue to be affected by dampened yields,” said Cathay Pacific General Manager Cargo Sales & Marketing Mark Sutch.
     “We saw month-end pick-up and a stronger feed out of our home market and Southeast Asia. Demand to both the Americas and India was strong, while we were able to capture more exports out of mainland China due to a reduction in the overall market capacity. The business environment remains challenging, but we have seen a growth in demand for special products and we will continue to diversify.”
     But despite the more recent improvement in demand, Asia Pacific airlines are desperate also for an upturn in yields in the second half of 2016 if they are to claw back first half losses.
     For example, Cathay Pacific 1H16 net profit tumbled 82 percent year-on-year due to intense competition, adverse currency movements, and weak premium passenger demand.
     “Cargo yield fell 18 percecnt y-o-y to the lowest level in a decade in light of chronic overcapacity and lower fuel surcharges,” added HSBC in an analyst’s note.
     Qantas reported a major gains in underlying profit in the year ending June 30, but Qantas Freight saw underlying EBIT of $64 million, down 44 percent year-on-year.
     “The result reflects difficult global cargo markets and the end of favorable legacy agreements with Australian Air Express, impacting yields,” said the airline.
     On a more upbeat note the carrier added: “The business is well-positioned for the future. New long-term deals with Australia Post and Toll, the country’s two biggest freight customers, are in place in the domestic market. Qantas Freight is also pursuing new opportunities internationally, in particular on triangular Australia-China-U.S. routes.”
     A spokesman for Air France-KLM-Martinair Cargo said recent improvements on lanes out of Asia as well as a number of expected product launches were helping demand. But he said the positive trends had also been influenced by capacity corrections.
     “We are given to understand that the three main Chinese carriers have temporarily suspended some of their freighter operations, particularly those flying between China and the U.S., either on account of fleet maintenance or because of a part shift of capacity to additional passenger frequencies being flown in the summer months to match the peak in passenger demand due to holidays,” he said.
     “Having said that, July and August historically are months when demand to the U.S. peaks as stores across the U.S. start to stock inventory for Thanksgiving and Black Friday.”
     However, he added that inbound demand to Europe from Asia remained flat, a note of caution also supported by Paul Tsui, (left) managing director of forwarding and logistics operator Janel Group and the immediate past chairman of the Hong Kong Association of Freight Forwarding and Logistics and the Federation of Asia Pacific Aircargo Associations.
     “We do not see significant demand out of China, but overall space is a bit tight due to the summer holiday traveling season and the start of the new school terms,” he said. “It’s pretty much the same scenario for Hong Kong and China and although overall space is a bit tight, the price remains the same as before—there are no signs of a rate increase at all.
     “For demand ex-Asia for the rest of the year, it’s not very promising and will remain difficult, but shall pick up by end-September for Christmas season shipping.”
SkyKing

   It’s The People! This is why we love air cargo . . . the faces on these men says it all.
   “It is an honor for KLM Cargo to be allowed to transport this queen of the dinosaurs. Our expert staff has brought Trix over with the utmost care. This specialism distinguishes KLM Cargo from other cargo carriers,” said Executive Vice President of KLM Cargo Marcel de Nooijer (center in photo above).
   KLM Cargo recently moved the boss of a T. Rex, nicknamed Trix.
   The shipment weighed approximately 6,000 kg and was around 13 meters long.
   The skeleton, found in Montana, landed at Amsterdam Airport Schiphol on Wednesday, August 24.
   Trix was moved to the Leiden Museum by truck. The boys celebrated with Heinekens!
   Naturalis Biodiversity Center in Leiden collects, understands, and explores biodiversity for human wellbeing and the future of our planet. The Naturalis collection contains 37 million objects, making it one of the largest collections in the world.

   On Wednesday, December 3rd, 2014, an object at Naturalis revealed a big discovery that became world news. A shell (held here by Frank Wesseling of Naturalis) in the Naturalis fossil shell collection was discovered to have an engraving on it.
   The shell is from half a million years ago and reveals that Homo erectus could make engravings.
   Prior to the shell discovery, it was thought that modern man (Homo sapiens) could do this only 100,000 years ago.
   T-Rex goes on Display at Naturalis on September 10.
   Who knows what the dinosaur remains will reveal . . .
More: http://www.naturalis.nl/en/museum/

     Ask Executive Director of Express Association of America Michael Mullen what stands out in his mind as August rushes toward September and he prepares to attend the first U.S. Air Cargo Industry Affairs Summit (ACIA), and his answer is, in a word, “automated.”
     “A key session at the ACIA Summit for our members will be the discussion of the Automated Commercial Environment (ACE) and how this new system will impact the air cargo global supply chain.
     “With virtually all shipments being processed through ACE as of the end of July, the system can be said to have reached its initial operating capability.
     “Achieving this goal required an enormous amount of work by the government and industry, and this effort should be acknowledged as a great example of a very effective public-private partnership.
     “But, of course, just getting the system up and running was never the overall goal.”

Beyond Expectations

     “What we all expect,” Michael adds, “and what was advertised, is that ACE will result in efficiency enhancements, such as better information management, faster processing, improved risk management, and a more precise reports capability.
     “To see if we are actually experiencing better efficiency, we obviously need some benchmarks against which to measure ACE compared to what came before,” he declares.
     “ACE will provide the technical backbone for the ‘single window’ envisioned since the 1990s as the goal of the International Trade Data System (ITDS).
     “A single window cannot just mean that ACE is a portal feeding data into stovepiped government agency systems that continue to run their own, unique border clearance processes, in parallel with or in series with CBP’s.
     “A real single window should appear to be a seamless process to the trade community user, where we submit the data once and get a single government clearance back almost immediately for the majority of products, which are known to be highly compliant.
     “Achieving this kind of really deep integration is going to require some government agencies to affect true change, reprioritizing people and other resources, and that is usually a painful process.”

Will ACIA Talk To Regulators?

     “Yes!” Michael says emphatically.
     “The kind of issues that need to be addressed, and that will be discussed at the ACIA Summit, include: adoption of a government-wide common approach to risk management, ensuring government agencies are processing shipments at the same time as CBP, reevaluating which agencies need their own personnel on the border as opposed to having CBP discharge their clearance authorities for them, and the creation of a single government trusted trader program.
     “With ACE having reached its initial operating capability, government and industry need to have a focused discussion of the goals that can be achieved with this new system.”

Panel Offers Windows

     “Establishing the ‘single window, as mandated by the President’s Executive Order, will require several government agencies to reevaluate their risk management procedures in order to create a holistic border clearance process that meets the needs of the high speed air cargo environment.
     “This panel will bring together public and private sector leaders to discuss how to fully realize a vision of ACE that will deliver ambitious levels of performance and significantly improved efficiency,” Michael Mullin concludes.

High Hopes

     “Without a doubt, air cargo will be more effective if the industry addresses the government with a unified voice,” declares Cargo Network Services (CNS) President Lionel Van der Walt.
     Lionel masterminded and is spearheading this first ACIA Summit, and takes a practical view of things ahead:
     “We will probably not agree on everything.
     “Let’s face it squarely; there are definitely many areas where cooperation and alignment is possible and very beneficial. And even for those areas where we do not necessarily agree on the approach or potential outcome, bringing industry leaders together to debate and discuss industry concerns is a good thing.
     “My view is that we do not do this often enough and my expectation is that the USACIA Summit will be successful and help to facilitate such discussions going forward on an annual basis.”
     More Information:  http://www.cnsc.net/events/Pages/usacia-2016.aspx
Geoffrey

Vol. 15 No. 65
Want Pop Who You Gonna Call
Any Sign Of A Bailout
Chuckles For August 25, 2016
Vital Views Part 2
Barry Hansen Yesterday & Today