Air cargo demand has been strong so far in 2017 and the medium-term outlook is positive, not least as e-commerce services open up new opportunities, according to Ingo-Alexander Rahn, Global Head of Air Freight at DHL Global Forwarding.
      He told FlyingTypers that so far this year, thanks to a “good performing world economy and growing consumer demand in China,” DHL was seeing strong demand for air freight.
      “Further, in light of the capacity shortage within ocean freight, customers are partly shifting to air to transport goods,” he added.

Power Surges

      However, surges in regional demand alongside ample supply have led to highly volatile air freight rates, albeit rates that are generally trending upwards.
      “Overall, within the last months, air freight rates have tended to rise,” he said. “As long as global trade—especially between Europe and China—is showing good growth and capacity in ocean freight is still short, we are expecting the trend will continue. This creates some challenges for forwarders in the short-term but in the mid-term the trends are positive.
      “An additional upward rate contributor is the oil and, respectively, jet fuel price development, which we have all witnessed for several months now.”

Risks Notwithstanding

      Asked where he sees potential risks to current positivity, Rahn was instead upbeat. “We have seen an upward demand trend over the past nine months and have no reason to believe that this development will come to an end soon,” he said. “A well-performing world economy and in particular strongly rising consumer confidence suggest that air freight growth will remain.”

Minute-By-Minute

      “This is also proven by rather strong demand in the month of April. In this constellation the likelihood of falling rates is minute.
      “As usual, the transpacific outbound Asia will be strong as well as the trading between Asia and Europe in both directions.”
      The growth of e-commerce demand is also affecting how forwarders package and sell air services, and creating new opportunities.
      “E-commerce is a very important growth engine for air cargo demand and it will pick up momentum,” he said. “E-Commerce requires a different offering and solution design as it is designed around B2C demand. In this respect, it does not affect ‘traditional’ air freight services, which will remain the backbone of our forwarding business.”

E-Commerce Positioned

      “E-commerce solutions are structured to serve the door-to-door demand for the B2C segment, which means offering excellent shipment visibility at piece level, and well-orchestrated pick-up and delivery capabilities for small shipments. As Deutsche Post DHL Group, we are well positioned to serve such demand.
      “E-commerce certainly has the potential to become a substantial part of the air freight forwarding business.”
      TIACA recently made the point that the air freight industry’s failure to adopt e-freight common standards and technology was reducing supply chain transparency. In fact, TIACA went as far as to suggest the air freight sector, despite offering a premium service, was adapting slower than ocean freight.  Accepting TIACA’s point on a general level, Ingo-Alexander Rahn said DHL was doing its utmost to make its air freight products paper-free.
      “This is a complex topic,” he said. “The purpose of e-freight is to make air freight services paperless, meaning all required documentation is provided in an electronic format. The standards are defined and widely aligned between airlines and forwarders.”
      When it comes to electronic booking capabilities for DHL customers, he said the company was now fully equipped with a range of solutions depending on the size and needs of the customer.
      “Here we have host-to-host connections, booking capabilities via dedicated DHL tools as well as web-based capabilities,” he said.

More Transparency Needed

      He said other supply chain stakeholders could also do more to increase transparency and efficiency through the supply chain.
      “Most airlines are e-freight capable and so are we,” he added. “The missing piece to achieve greater penetration of e-freight is paperless customs clearance and a wider willingness to move away from the need for original documents.”

Keys & Global Rollout

      “The key is to get all involved parties, including shipper, consignees, and customs authorities, to agree to a paperless workflow. While technically the solution is there, the capability to replace paper documents by soft copies is not yet achieved. As such the air cargo industry has some work to do.
      “We as DHL are ready as we have nearly completed the global rollout of an electronic document management system that enables us to automatically receive, file, store, access, and distribute electronic documents.”
SkyKing

      India’s logistics sector has been waiting since 2006 for the Goods and Services Tax (GST).
      Now, the biggest hurdles—mostly from the states—have been overcome and the country would institute one single, uniform tax policy starting in July of this year.

Some Taxing Questions

      While transporters have been looking forward to GST, freight forwarders have been asking whether GST will lower costs for the air cargo sector.
      Trucking majors like Spoton in the road express business, whose Managing Director Abhik Mitra once headed TNT in India, are looking forward to GST.

Mitra Measures Revolution

      In a conversation with FlyingTypers, Mitra said:
      “GST will bring about a change—a revolution in road transport statistics.”
      He mentioned that there would be “a fundamental change where crossing borders of states is not a deterrent or does not take away from the predictability (of delivery) of your shipments.”
      Giving the example of the U.S. and Europe, Mitra pointed out that “you move state borders as if they don’t exist.
      “But here in India, the state borders exist and the state borders create their own separate challenges of taxes.”

Agility Predicts GSA Game Changer

      Agility’s recent Emerging Markets Logistics Index predicts that India has the most potential to grow as a logistics market.
      The Agility Index, based on a survey of supply chain and logistics professionals, mentioned that GST would be a game-changer and India would be the leading emerging market destination for foreign investment over the coming five years.

Ah, But For Air Cargo

      GST, however, will be a different ball game for the air cargo industry.
      Carriers have been enjoying a number of exemptions on imports and so the GST could bring in its own list of complications. One of these is the decision to keep aviation turbine fuel from the GST levy and that will, according to experts, lead to increased costs.
      More important is the tax that will be paid for export cargo.

Voice of Forwarders

      According to India freight forwarders we spoke to, the place of manufacture or supply has been divided into two categories: Business to Business and Business to Consumer.
      “For Business to Business, the place of manufacture/supply would be the location of the factory or business while for Business to Consumer supplies, the place of supply would possibly be the airport or warehouse where the goods are handed over for transportation,” a forwarder confided. Simply put, this means that cargo for export would have to pay the GST tax; earlier, a service tax was being paid.
      Those managing links in the supply chain are optimistic about GST.
      The apex body of the express services in the country, the Express Council of India (ECI), believes that GST would really help the economy in general and the logistics industry in particular to shake off the inefficiencies and lower transaction costs.

GST & Express Council Of India

      Commenting about GST’s effects in a national daily, Vijay Kumar, COO of Express Industry Council of India, said, “For GST to be a game changer in the express delivery sector (and the logistics industry) it is critical that the importance of this industry be recognized by the government while framing the legislation, which can translate India into an efficient logistics hub.”

In From The Cold

      A number of forwarders that ACNFT spoke to said GST would help in the long-term. They said that with the government nod for Foreign Direct Investment (FDI) in retail, the country would see more cold chain storage facilities coming up.
      Consensus is with GST coming in, there would be a number of companies that will set up large cold chain facilities in major locations that would help grow the pharma and other industries dealing with perishable goods.

Need For Speed

      The Federation of Freight Forwarders’ Associations in India (FFFAI) believes that GST “will not only speed up the movement of freight but also in turn increase the volumes both on the domestic front as well as the international front.
      However, FFAI also said that freight forwarders should be exempted from the service tax (later it would be the GST) that they are subject to now.
      “This will make India exports really competitive,” FFAI said.
Tirthankar Ghosh

   There are awards, and then there is how awards are accepted.
   Here Prakash Karki of World Freight International (WFI) displays the celebration spirit we like after recently being named “2nd best cargo agent by Nepal Airlines for 2017”at Soaltee Crown Plaza in Kathmandu.
   “Look out, number one,” Prakash’s body language predicts as he steps into the number two position.
   Pat thyself on thy back, is our reply.
   Congratulations to our Nepal friends receiving this excellent recognition, proving WFI reliability and quality.
Geoffrey

Vol. 16 No. 46
The Trump Effect Pt. 5: Who Will Pilot The Airline Business
Chuckles for May 17, 2017
Awards Leave Some At A Loss
Emirates Group Posts Profits