FT060517

#INTHEAIREVERYWHERE

Vol. 16 No. 51	Monday June 5, 2017

Jim Bellinder, United Cargo’s Vice President Cargo Sales Americas, and a large contingent from United Cargo, deliver a clear and consistent message to the air cargo supply chain contributors and customers gathered this week in Orlando for AirCargo 2017:
“While United Cargo is pleased,” Jim says, “to be the leading belly cargo carrier in volumes and revenues, and grateful to our customers for the trust that makes this happen, that doesn’t mean we’re taking this position or our customers for granted.”

Leading The Way

“The reverse is true: we’re focused more than ever on expanding and upgrading our service.
“We’re proud of our commercial expertise, quality processes, routes, and capacity, but this week at Air Cargo Orlando we’re asking our customers: ‘What else do you need from us?’ and ‘What can we do to be a more valuable partner in your success?’”

Face To Face Connections

“The theme of this year’s AirCargo Conference is ‘Creating Cargo Connections,’ which is a perfect explanation for why United is here in large numbers at Booth 301.”

It's The People

      “We still believe in the importance of face-to-face interactions.
      “We think United Cargo’s people are the best around, so we want potential partners to get to know them personally.
      “‘People like to do business with people they like and trust’ might sound like a cliché, but as I read somewhere, ‘Usually, a cliché is a cliché because it’s true.’”

Nice Mix Light & Lively

“A plus this week is that representatives of all the major types of supply chain stakeholders—forwarders, couriers, surface transport providers, airports, and airlines—are gathered in one place just as summer 2017 takes off.”

Collaboration Is Key

      “I believe the key innovations that can move our industry forward will only be realized through collaboration, so this is a great opportunity to share ideas and ‘dream big’ about what we can accomplish together.
      “From United’s perspective, it’s gratifying that the expansion in world trade is generating growth in global volumes, and we’re winning a healthy share of this business.
      “We’re also seeing great customer support for our increased domestic widebody flying: two daily 777s between Boston and San Francisco, increased widebody frequencies from Newark to SFO and LAX, and other additions.”

Room To Grow

“But we also know we’re flying a lot of cargo capacity empty, particularly on our U.S. domestic narrowbody flights.
“This is the type of business opportunity we’re eager to address with our supply chain colleagues in Orlando.”

Attitude Not Altitude

      “One thing I’ve noticed among the industry associates assembling this week is the upbeat and positive mood.
      “It’s a great setting, of course, but another reason for the good feelings is that the industry growth in the last half of 2016 has carried forward into 2017.
      “With every passing month, it seems like we may sustain this positive trend for the longer term.”

Business Is Booming

      “Specific to United, our cargo volumes are up more than 20 percent year-over-year through April, and our first-quarter revenues were 13 percent higher than Q1 of 2016.
      “I’m proud and appreciative of the efforts of our Cargo Sales team worldwide, but I’ve been in the business long enough to know that service means everything to our customers.
      “All of us never forget the importance of our customers and business partners.
      “In fact during my cargo career, I’ve never had the pleasure of working for a carrier who provided the level of quality service United is providing now.”

Mark Albrecht, Angel Ramirez and Mike Oslansky

Everybody’s Angel – At The Mike

“Global Cargo Operations VP Angel Ramirez, Director of U.S. Operations Mike Oslansky, Director of International Operations Mark Albrecht, and their teams, along with our first-rate handling and trucking partners (many of whom are here with us in Orlando) are delivering the type of consistent results that make the Sales Teams’ job easier by keeping our customers happy.”

Fishing Around For Happy

      “Speaking of being happy, the atmosphere and attitude in Orlando this week reminds me of a famous parable I first heard when I saw a picture of a smiling fish above a colleague’s desk in our China Sales office.
      “When I asked for the story behind the image, she told me that a boy and a girl were crossing a bridge when the boy looked down and said, ‘Look how happy those fish are swimming in the river!’ The girl asked him, ‘How do you know the fish are happy, since you are not a fish?’
      The boy answered, ‘You are not me, so how do you know I don’t know that the fish are happy?’
      “In some versions of the story, it’s two philosophers crossing the river, and the debate goes on about what it means to ‘know’ something and what it means to be happy.
      Strangely enough, ‘happiness’ has become a hot topic lately.”

Where Seconds Matter

      “I went into a bookstore recently and asked for a book on the subject, and they led me to an entire section with several shelves of books—all with brightly-colored covers and each with a different perspective on what ‘happiness’ means and how to achieve it.
      “But I prefer the clear and elegant lesson my Chinese teammate took from the Happy Fish parable.
      “She said simply:
      “Don’t you know that fish have only a three-second memory?’ (This was before researchers disproved that.) ‘Plus, they never stop moving, but they can’t swim backwards or look behind them.
      “That’s why fish are happy.’
      “Researchers have also proven that happy people are more successful.
      “So that’s why the happiness advice I give and follow is to leave the mistakes and regrets of the past behind you, forgive others and yourself, and always keep moving forward!” Bodacious Jim assures.
Geoffrey

     Various sources suggest pricing has been sliding through May but demand indicators are strong for the rest of the year and rates seem likely to rebound this summer.
      Drewry’s East-West Airfreight Price Index, a weighted average of all-in airfreight “buy rates” forwarders pay to airlines for standard deferred airport-to-airport airfreight services on 21 major East-West routes for cargoes above 1,000 kg, rose to 88.3 in April which equates to an average rate of $2.86 per kg. This compares to 86.7 in March and just 81.8 in April 2016.
      “Led by higher rates out of Asia to North America, Drewry’s East-West Airfreight Price Index increased by 1.7 percent month-on-month in April,” said the analyst. “The index is now about 8 percent above where it stood in the same month last year, reflective of strong demand seen in the sector.”
      A number of forwarders FlyingTypers contacted reported pricing on major lanes out of Asia had subsided during May. Drewry also anticipates a similar trend in its next set of figures. “Drewry expects to see a seasonal dip in airfreight rates in May, followed by a rebound in June,” said the analyst.
      Certainly, demand indicators in Asia are almost entirely positive. The WTO now forecasts global trade growth of 2.4 percent for this year, up from 1.3 percent in 2016, although the upper end of its forecast could see trade expanding by over 3 percent during 2017.
      The Association of Asia Pacific Airlines said that on the back of strong international demand, business conditions continued to improve across Asian economies, in turn lending support to international trade activity. This helped underpin further growth in air cargo volumes in April, with demand in freight ton kilometer terms registering a 9.0 percent year-on-year surge. With offered capacity up only 2.8 percent over the period, the average international freight load factor increased by 3.7 percentage points to reach 65.1 percent.
      AAPA said Asian airlines had recorded a 9.5 percent increase in air cargo demand in the first four months of the year “supported by a pick-up in export orders across the region’s economies.” With business and consumer confidence indicators positive, the AAPA, which is traditionally cautious with its forecasts, is now expecting continued growth in cargo markets in the coming months.
     The AAPA’s confidence was also borne out by the latest survey results for a new APAC Forwarding Index being produced by Mike King & Associates and Logistics Trends & Insights LLC. (The full index will be published in the coming months and the May report is available to FlyingTypers’ subscribers for free here. The third monthly APAC Forwarding Index survey is also now open here.)
      52.3 percent of May APAC Forwarding Index survey respondents indicated air freight volumes were higher in May than in April, while the APAC-Europe air freight lane continued to thrive with 77.8 percent of respondents reporting higher volumes in May compared to a month earlier.
      “The Europe to APAC lane is another area of growth,” added Index analyst Cathy Roberson. “In our April survey just 54.5 percent noted higher M-o-M volumes on the lane. In May the figure climbed to 66.7 percent as respondents noted that improving economic conditions were boosting volumes.”
      On the APAC-North America lane, 57.1 percent of respondents indicated higher volumes in May than April. 28.6 percent of respondents noted higher M-o-M volumes on the North America-APAC lane in May, and two thirds of respondents reported higher M-o-M volumes on APAC-Emerging Market lanes.
      Volume figures for Asia’s leading load hubs and key carriers have also been positive. Executives at Seoul’s Incheon Airport are now expecting volumes to expand by 10 percent this year after a bright start to the year. HKIA saw volumes expand 8.9 percent in April compared to a year earlier, with exports up 14 percent in the month. Over the first four months of 2017 HKIA’s volumes were 10.9 percent year-on-year.
      At Singapore’s Changi airport volumes rose 4.4 percent year-on-year in April. After a decade of malaise in terms of cargo growth, Changi handled more than 2m tons of cargo in the 12 months ending April 2017, a record for the South East Asian hub and representative of 7 percent growth over the period. At Shanghai in China, ground handler PACTL saw volumes rise 9.6 percent in April and by 11.3 percent over the first four months of 2017, while China Southern Airlines saw its international cargo volumes increase by 16.8 percent in April and volumes were up 15 percent over the first four months of the year.
      Cathay Pacific also recorded a major year-on-year increase in cargo in April when volumes rose 10.7 percent. Mark Sutch, GM for Cargo Sales & Marketing, said demand from Hong Kong and key Asian markets to North America, Europe, and India remained buoyant, prompting the carrier to boost capacity in expectation of rising demand later in the year. “Strong e-Commerce traffic as well as capacity reduction in the market boosted Intra-Asia movement,” he added. “Yield has continued its upward trend.”
      Such is the market upturn, Cathay announced an agreement with Atlas Air Worldwide to wet-lease two Boeing 747-8 Freighters to supplement capacity. “This will enable us to provide our customers with increased options and services from June, when most market indicators are suggesting a solid year for air cargo,” said Sutch.
      Indeed, the outlook for airfreight is positive at least through the summer months, according to the May survey for the APAC Forwarding Index. Across all APAC air freight lanes, over half of respondents expect higher volumes in August than now, with optimism strongest on the APAC-North America lane where 71.43 percent of respondents predict higher volumes over the period, not least because they are expecting to benefit from key electronic product launches.
      APAC-Emerging Market and APAC-Europe volumes are also expected to see short-term expansion with 66 percent and 55.6 percent, respectively, of respondents forecasting higher volumes three months from now on the lanes.
      “The likelihood of air freight volumes falling in the coming months is remote, with just 9 percent of respondents expecting lower overall air freight volumes three months from now,” added Roberson.
SkyKing

PumpingTraffic

International Air Cargo Association (IACAC) Chicago is an old line club that has well served the “City of the Broad Shoulders” since 1955.

It was forty years ago today—these guys taught air cargo how to play . . . Sometimes we like to forget just how long ACN has been reporting (is that part of getting older?), but then every once in a while a picture like this one falls out of the file. This photograph was taken in 1977 when The International Air Cargo Association of Chicago (IACAC) held a golf outing. We think this photo defines for all time, not only the golf outing but also the values of friendship and cooperation in air cargo. So here once again, stepping up to the first tee are: (left to right), Joe Monaghan Sr., cargo sales rep Delta; George Stark, Qantas cargo sales manager; Herb Weidmann, cargo sales manager, Delta; Mel Brockman, regional sales manager, Pandair Freight; and Neil Vincent, cargo manager Flying Tigers. Anybody know where these people are, let us know at geoffrey@aircargonews.com, and we will pass it along.

A highlight of the IACAC calendar occurs August 15, when the group hosts it’ annual Charity Golf Outing that dates back to the club’s start up and is one of the oldest continued traditions in the air cargo business.

Jane Sorensen and Scott Case
    IACAC’s President Scott Case, pictured with Chicago Brokers & Forwarders Association (CCBFA) President Jane Sorensen, declared:
    “We are in an all-out push this month to get attendees and sponsors for the IACAC Annual Golf Outing held August 15 at the Bridges of Poplar Creek in Hoffman Estates.
    “Shotgun start will be at 08:00.
    “Cost is $125.00/single golfer and $400.00/foursome.
    “Golfers receive a continental breakfast, eighteen holes of play, cart rental, and lunch afterwards.
    “But everybody is welcome just to join us for lunch, and the cost is $35.00.”
    “We’ve got some great early-on commitments from organizations for hole sponsors and raffle prizes.
    “The IACAC Golf Outing raises money for our Annual Scholarships.
    “Attend, donate, and spend profligately—you’ll help out a member’s child who could use money for college,” Scott declared.
    More: http://www.iacac.com/

Steve Langhart Steve Langhart is now Director of Cargo Sales at Southwest Airlines.
At Southwest since 2008, Langhart has served as manager of ramp and operations and cargo customer service manager at Houston’s Hobby Airport, and senior manager of cargo customer experience.

    In terms of first quarter performance from Airport Council International (ACI):
    “Improvements in business confidence, economic outlook, and global trade have helped revive airfreight volumes,” ACI said.
    “Overall freight volumes increased 8.3 percent Y-o-Y above Q1of 2017 and 10.9 percent for March 2017.
    The March bump was “strongest in Africa (+15.6 percent versus 2016) and the Middle East (+15.5 percent), followed by Europe (+13.7 percent) and Asia Pacific (+13.0 percent).
    “North America rose 5.9 percent for March 2017 Y-o-Y and Latin America-Caribbean rose 4.7 percent,” ACI said.

RE: Who Will Pilot The Airline Business

     Having just been at the IATA IGHC where we had a plenary session on safety in the ground handling industry (summary here), I think a major focus has to be on the horrific staff turnover numbers in this industry.
      Menzies just published their figures and I am led to understand that the numbers are not “outliers” by any means; indeed, they could even be on the lower side of average.
Bob Rogers       Given that the average turnover for all industries in the U.S. is about 16 percent these (Menzies) numbers are horrific.
      I say to people: next time you sit on a plane and listen to the safety briefing, remember your plane was just loaded by the lowest bidder using minimum wage employees—probably on split shifts if it’s permitted—who have only been on the job a few weeks.
      When airlines outsourced the “dirty work” of ground and cargo handling they got what they wanted—lower costs—but they should have been careful about what they wished for, as the result is an unsustainable and unsafe situation.
      It’s all very well for airports to talk about expansion plans, but if the expanded operations continue to rely on minimum wage employees working on a job we would all agree is highly undesirable (unless you are a plane enthusiast), then this is a house built on sand.
      The truth is that there has been zero change to the technology that loads wide body aircraft since the first Pan Am flight to London in 1971.
      Furthermore, airlines have no incentive to push Boeing and Airbus to change the way planes are loaded when they get the savings they want through super aggressive ground handling biddings.
      Food for thought.
Bob Rogers
Vice President, ULD CARE

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