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   Vol. 22 No. 19 CNS Special III
Monday June 5, 2023
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Jan Krems


     Several years ago, in the bar room of a Las Vegas hotel where an air cargo industry convention was being held, a lusty debate took on the proportions of a high-decibel shouting match. The subject in shrill dispute: has the air cargo industry achieved a solid state of maturity? The question rocked the barroom.
     The peaked voices raged for perhaps an hour. But then the inevitable thirst for liquid refreshment gradually, one by one, had the effect of dampening the enthusiastic ventilation, with the question about maturity unresolved, forgotten, left for another day.
     Forgotten, but not for long. The question vaulted back to mind when Jan Krems was appointed to the presidency of United Airlines Cargo in 2014.
     Jan Krems’ international crossover from Air France-KLM to the highest rung on the cargo ladder at one of the United States’ great airlines was nothing short of an act of industry maturity—a mirror of events in a globalized marketplace.
     For United’s 63-year old cargo chief, it has been a highly spirited journey of a little more than 35 years, taking him on a zig-zag world route to the present: Amsterdam-Manchester-Madrid-Dubai-Singapore-Amsterdam-Paris-Chicago-Atlanta-Chicago.
     An airline career was the farthest from Jan Krems’ thoughts when he earned his BA degree in economics from Utrecht University, spent the better part of a year with the United Nations Interim Force in Lebanon, and returned to his native Netherlands to earn a post-graduate degree in marketing.
     It was his mother (bless her heart) who directed Jan to a newspaper ad for a management trainee program at KLM.
     “There were many applicants,” he recalled, “and it took six interviews before I was accepted as a KLM management trainee.”
     It is hardly a secret that most airline sales/marketing applicants prefer the passenger side of the business. Krems, however, chose cargo because of experience in the steel industry. He has never had cause to regret his decision.
     Air cargo involves the handling and movement of all manner of boxes, bundles, crates, and containers.
     Does he regard his efforts as a job or profession?
     Krems came down hard on identifying it as a profession, and to further emphasize that point, added: “I even would say it is a way of life.” A way of life? Would he explain this? Krems said:
     “There’s a select group of individuals who dedicated themselves to the industry, and the people you meet and work with in air cargo also become part of your personal life . . . There are certain people who connect with the industry and get hooked on it for life,” Jan said.
     Little could anybody have guessed or expected just how much that single appointment of Jan Krems to the top of United Cargo might have impacted the entire airline itself when the scourge of COVID-19 reared its ugly presence and literally took over much of the actions of the world a few years back.
     But Jan knew his moment was at hand and set about presenting a new deal to United for keeping the planes flying when the passengers no longer could. He employed inventive original programs of carrying cargo at the airline, keeping the revenue stream going.
     Now it is post COVID, and we wonder what’s next for Jan Krems?
     We wonder if Jan, who is now 63, will continue although we are reluctant to ask.
     Did anybody ever ask Rembrandt if he was going to keep painting pictures?
     So we can once again relive this great story of just what can happen when the stars line up and bring someone, an individual of unique capability to a job of monumental importance at just the right time as happened to Jan Krems.
     Not only did he save his airline, he showed other airlines the way.
     We also can send out this update with the man himself as Jan, out on the hustings for now, continues.


FT:   What would you like your customers and potential customers to know right now about United Cargo's commitment to the business?
JK:   United Cargo is committed to every customer relationship we develop. We will be working with our customers closer than ever before. We are more proactive, very agile, we listen well, are very flexible, and humble. There is a lot of competition out there for capacity, and we know that to make a difference, we must work with the customer on solutions that fit their needs.

FT:   How are you dealing with the post-pandemic situation of less cargo capacity, higher rates, and general uncertainty in the marketplace?
JK:   What we have seen in the post-pandemic air freight business is more cargo capacity, lower rates, and a general uncertainty in the marketplace. We must tackle each of those challenges. We know the business and every few years we see a challenging marketplace, so we must be flexible and operate day-to-day.
     We also have to deal with the challenges of being an airline first and dealing with our passenger capacity. We have to balance getting the right cargo on board with the number of passengers which is increasing each season. That's why we need to be so close to our customers to understand what's happening day in and day out and react to the changing marketplace.

FT:   How much impact are challenges on the ground having on United Cargo's business?
JK:   Quality is excellent for United Airlines. United has made so many improvements for the operations and the way we do business during the pandemic, that our challenges on the ground have not been as much of a burden on the business as we have seen with other airlines.

FT:   How important are your partnerships, where are they really benefitting UA Cargo, and any plans to add more?
JK:   Partnerships are important. They provide a great benefit to United Cargo and our customers. We currently have an ideal partnership portfolio, and of course with our joint ventures and agreement with Emirates, our network is the strongest it has ever been.

FT:   Any new products, enhanced tools?
JK:   We are always working with our customers on our product line and enhancing our services. We currently don’t have anything new to announce, but we have teams working on our digital marketplace and hope to launch enhancements to our eCommerce offerings soon.

FT:   Where have you seen growth, which global sector, where are you targeting for the future?
JK:   Where we see the most growth is in eCommerce, the Asia Pacific region, and in the pharmaceutical industry. We are also focused on added-value to our customers. That can be the differentiator when it comes to our customers—we provide a high-level of service and value.

FT:   How important are your freight forwarder partners or do you see a different course/relationship with the traditional forwarder partner?
JK:   This is straightforward—our relationships with freight forward partners are as important as ever. We must work closely, navigate through the changing marketplace, and utilize our network to help customers globally.

FT:   United has always been proactive in the SAF effort. Please talk a little about Cargo’s contribution.
JK:   United announced more investments in SAF production that any other airline. Our Cargo customers represent the largest purchase of our 20 million gallons of SAF in 2023. SAF is here to stay and it is important to the future of United Cargo. Every day we are working to become 100 percent green by 2050.

FT:   Can you say that Cargo has gained a strong voice and position in the boardroom?
JK:   Cargo has always been a very important business unit of United Airlines and that has never changed. During COVID, we further demonstrated the importance of Cargo to the airline. We have always been important to the boardroom, but it truly came to light during the last few years.

FT:   Address your strengths in terms of your customers and your service. Anything else that you might like the industry to know.
JK:   I like to say that we are proactive and humble. We offer a great product with a commitment to quality, but without our customers, we cannot run our business.      It’s a combination of our relationships to customers and our added-value that make a leader in the industry.
GDA


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Laura Pullins, Jimmy Nares, Brandon Fried and Tom Owen


     Laura Pullins, President Cargo Network Services Corp. (CNS) and Head of Cargo The Americas-International Air Transport Association (IATA), thanked the advisory board and said her focus will be on the future of CNS.
     Dimitrios Jimmy Nares, Section Chief Aviation Marketing, Miami Dade Aviation Dept, “Miami is at near capacity and we are currently constructing vertical just like Hong Kong.”
     Brandon Fried, The Constant Forwarder, Executive Director, The Airforwarders Association, declared, “The AFA has found a congressman in NJ to address a bill to help reduce air cargo congestion through U.S. airports.”
     It has been a time coming. Cathay Cargo has been a long-time advocate of CNS.      Here is what Tom Owen, Director, Cathay Cargo, based in Hong Kong, the airline that once upon a time evoked memories of Terry & The Pirates, shared with the CNS audience
     “We kept momentum during the dark days of Covid, keeping pilots flying with turn arounds and flying with double crews. The important thing was to keep the network going.
     “The freighter network was canceled overnight. For five long months we were quiet on long haul markets but we came together. We launched preighters. Kept our planes moving and our pilots active.
     “Speed and creativity were critical. We focused on vaccines and hubbed pharmaceuticals through HKG, expanding temperature and sensitive solutions.
     “We became flexible and aligned cargo operations more with passenger.
     “Focused on acceleration of digitization across commercial accounts and boosted analytics and advanced the digital culture.
     “Transformed our culture to focus on people and encourage their creativity.
     “The Covid crisis presented danger but also an opportunity to bring change and progress.”


Paulos Ashebir Lakew     Paulos Ashebir Lakew is Head of Industry Analysis International Air Transport Association (IATA).
     Right at the gate we get the numbers.
We are all in the room together.
     “Global GDP growth slows to 2.8% in 2023
     “Headline inflation likely peaked in 2022. Pressures on operating costs also peaked in 2022.
     “Labor markets remain tight with unemployment rate at historic lows."
     Well hooray for three of those!
     “Headwinds continue to challenge air cargo demand. Industrywide CTKS are currently 5.3% below 2019 levels.
     “Drivers of cargo demand remain elevated, while CTKS are down from a strong year iun 2021.
     “Growth in CTKS was uneven across regions in 2022. North America and Africa carriers outperformed 2019 CTKS.
     “Cargo demand conserves momentum in 2023. Key market see volumes above or close to pre-crisis level.
     “Global capacity returned to pre-Covid levels in April driven by the restoration of belly-hold capacity.
     “Yields are declining but still higher than pre-Covid levels.
     “Air cargo slowdown to moderate in 2023. Yields to decline but remain above 2019 levels.
     “Capacity to grow further with passenger operations. Industry to recover global passenger traffic in 2024.
     It’s good to be back and get some numbers.
     Then Paulos gave his hitlist of the possible industry key risks: Global Recession, Jet Fuel Price, Trade Wars, Travel Restrictions, Global Inflation Supply-Demand Imbalances, China Recovery, Foreign Exchange, Pandemics, Oil Price Volatility, Blocked Funds, Climate, War in Europe and UNKNOWN UNKNOWNS. Pretty much covers anything and everything!
     The most famous of the phrasers to extoll the virtues of hedging your bet by always including the unknown unknowns was Donald Rumsfeld, who once served as the youngest ever U.S. Secretary of Defense (1975-77 under Gerald Ford) and then just for good measure he came back (2001-2006) and served in President George W. Bush's Cabinet as the oldest.
     “There are known knowns,” Rummie said. “These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don't know. But there are also unknown unknowns. There are things we don't know we don't know.”



Andres Bianchi and Laura Pullins

Some good advice and smart thinking:

Laura Pullins: Network positions have long lead times and customer relationships take a long time and can be destroyed in short times.
Andres Bianchi: We strive to build for the long term that is relevant. Digitization is one of our programs.
LP:   Digital means on an old base? What if that gets thrown away and we’ve invested in a single one?
AB:   One record is something we can build on to make digital progress.
LP:   What about struggles and how do you adjust?
AB:   Investing in design takes a lot of quality time. But getting the right SME into the design can improve time to market.
     If you realize and plan that things will not always work perfectly. That experience process has a lot of touch points:
      1.  Learn to fail.
      2.  Learn from mistakes.
      3.  Change management and must communicate why the need for change.
LP:   Sustainability - what are you working on?
AB:   For sustainability we have to address the issues. Fuel is one of these and the co2 footprint. Plastics are another one of these. We have enabled our teams to come up with ideas. We are working on that effort and funding new ideas, even if 6 out of 10 fail.
LP:   What about people development?
AB:   We are very admired in our home market. Since going private some years ago, we have really brought in a lot of talent and increased female leadership. The new LATAM leaders are cargo people who used to build pallets or drove forklifts. We have brought passenger people to cargo and cargo to passenger to not only spread the talent, but for everyone to have a clearer understanding of our total brand.


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Publisher-Geoffrey Arend • Managing Editor-Flossie Arend • Editor Emeritus-Richard Malkin
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