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5

EU clears HNA’s Swissport deal

60 SEcoNdS witHjim bUtlEr

AirfrEigHtforwArdErSvigilANt

A Slow YEArbUt Still ASUccESS

growtHworldwidEfor AcS

The weekly newspaper for air cargo professionals

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THE European Commission has cleared the acquisition of Swissport by China’s HNA Group as part of a 2.7 billion Swiss francs ($2.8 billion) deal.

On Thursday 18 November, the Com-mission explains the proposed acquisition would not raise competition concerns be-cause the companies’ activities do not overlap each other.

The deal is expected to help the Swiss cargo handler broaden its reach into Eu-rope and enter new markets.

The Commission also said the merger would not be able to shut out competing suppliers of ground handling or cargo han-dling services because HNA Group only had a “limited share of the demand for such services”.

HNA Group is the owner of China’s Hainan Airlines, and will Zurich-based Swissport from European private equity firm PAI Partners.

Speculation has been rife that International Airlines Group (IAG) was set to add to its growing portfolio, but the rumours have been quashed that any discussions have taken place over any takeovers or stakes.Finnair has refuted rumours it was in talks with IAG over the group taking it over. The Nordic carrier released a press statement to comment on the market speculation and a newspaper report in Finland in which it says “no ownership negotiations are ongoing”.The statement continues: “Finnair notes that there has been speculation in the media today regarding a potential bid for Finnair by British Airways or IAG. Finnair is not active, and is not aware of its shareholders being active, in any such negotiations.”

IAG has also denied any discussions have taken place with Finnair, which is 56 per cent owned by the state. The online edition of Finland’s business daily Kauppalehti claimed that talks had advanced.Also denying any takeover or dis-cussions with IAG was the LATAM Airlines Group.The Chilean carrier explains in a statement: “In regards to recent media reports, LATAM Air-lines Group clarifies that it is not in discussions with International Airlines Group (IAG) about the possibility of their joining LATAM Airlines Group.”Both companies are members of the oneworld alliance and have codeshare agreements for

connectivity purposes.IAG tells Air Cargo Week: “We have said in many opportunities that we have joint ventures with LATAM in the routes to Peru and Ecuador and we will look to strengthen our commercial rela-tionship with them going forward.”Speculation comes after IAG chief executive Willie Walsh said in October the group is “in the market for more acquisitions”.

fines for three Indian carriers over fuel surcharges

Indian carriers penalised by the Competition Commis-sion of India (CCI) for their roles in an air cargo price-fix-ing cartel on fuel surcharges

(FSC) are set to fight the decisions.On Tuesday 17 November, the

CCI fined Jet Airways, IndiGo Air-lines and SpiceJet a total of $39 million for engaging in “concerted action in fixing and revising FSC for transporting cargo”.

Air India and GoAir were also part of the CCI’s investigation, but no fines were imposed on the two carriers.

Fines of Indian Rupees (Rs) 151.69 crores ($23 million), Rs. 63.74 crores and Rs. 42.48 crores, were dished out to Jet Airways, IndiGo and SpiceJet, respectively.

The CCI says in a press release on its website the carriers “impugned conduct in contravention of the provisions of section three of the Competition Act, 2002”.

The CCI did not fine Air India as says the airline’s conduct was “not found to be parallel with other airlines”.

No penalty was imposed on GoAir as the CCI says it gave its cargo bellyhold space to third party vendors with no control on any part of commercial and eco-nomic aspects of cargo operations done by vendors, including impo-sition of FSC.

The CCI began the antitrust investigation against the five air-lines in 2013 after a complaint was lodged by the Express Industry Council of India, representatives of express courier and freight companies.

The Council complained, as said activities undertaken by Jet Air-ways, IndiGo, SpiceJet, Air India, and GoAir were in contravention of the Competition Act, 2002, which deals with anti-competitive agreements.

In explaining the decision, the

CCI says the airlines: “Acted in parallel in collusion in fixing FSC rates and such conduct resulted in indirectly determining the rates of air cargo transport and were in contravention of the provisions of section three of the Competition Act 2002.”

The CCI explains the decision: “While imposing penalties, the CCI notes that such conduct in the air cargo industry undermines eco-nomic development of the country and ultimately acts to the detri-ment of end consumers.

“However, considering the precarious financial position of airlines, the penalty was imposed by the commission at one per cent

of their average turnover of the last three financial years.”

All three airlines are set to con-test the fines and a Jet Airways spokesperson tells Air Cargo Week (ACW): “Jet Airways believes that it is not in contravention of the pro-visions of the Competition Act and shall pursue all available legal steps to defend its position.”

Similarly, a statement from IndiGo to ACW reads: “The com-pany is studying the CCI order and will take legal steps to challenge the order in the appropriate forum.

“The company has been legally advised that it is not in contra-vention of the provisions of the Competition Act, 2002.”

finnair and lAtAm deny speculation of takeovers

Volume: 18 Issue: 46 23 November 2015

NEWSWEEK

T echnology is the key for the air cargo industry to grow in the view of the International Air Cargo Association’s (TIACA) chairman Sanjiv Edward (pictured).

Speaking to Air Cargo Week at the Air Cargo Americas conference in Miami from 4-6 November, which marked nearly six months since he took on the role, he says: “I believe technology is the key for our industry to maintain its competitive edge. We really need to embrace technology with open arms. We use the fastest mode of transport available, but lose that advantage on the ground.

“That can rarely happen if we have seam-less information flow across the supply chain and is where we can cut down the time we lose on the ground and where air cargo can be more prominent and take its true position. I think technology can make

that happen.”Since taking the role, Edward’s focus has

been on ensuring air cargo maintains its competitive edge and making it the “pre-ferred choice of customers”.

There has been other areas TIACA is working on: “We have been working on advocacy, networking and knowledge. The priorities have been to strengthen these. We have done well on education and knowledge and had very success-ful development programmes. These are about developing leaders of tomorrow. TIACA is making sure we are plan-ning and equipping the next generation,” Edward says.

He says TIACA is focusing on listening to its members about what they think the industry needs, while network-

ing is a vital area. Edward says TIACA’s Air Cargo Forum conference in Paris this Octo-ber will feature cargo link meetings for the first time, which has been well received. “We are uniquely positioned to enable peo-ple across the spectrum to meet with each other and network,” he says.

As for 2016, Edward says: “I think yes there are challenges, but the positive thing is there is a growing awareness we need

to adapt, change and embrace tech-nology. We are on the right track

and as long as we do we will con-tinue to grow. Even today the conditions are tough, but there has been a marginal increase and profitability is holding on. Times are tough, but if we

are willing to adapt and change with the times we can maintain

our position.”

2 ACW 23 novemBeR 2015

Adapt, change and embrace technology

LEIPZIG/HALLE AIRPORT continues to see its freight vol-umes surge and in October, growth was driven by the express freight market.

The airport handled 88,336 tonnes in the month, which is a 10.1 per cent rise on the same month last year and the gateway explains it is a new monthly record for October.

“The growth is particularly due to express freight, for which Leipzig/Halle is one of the most important handling centres in Europe,” the German airport explains.

For the first 10 months of the year, freight volumes have grown by 8.6 per cent reaching 812,060 tonnes.

Leipzig/Halle Airport is ranked as the fifth busiest air-freight hub by volumes in Europe and handled more than 910,700 tonnes of cargo in 2014.

ANA set to do more P2F conversions

ALL NIPPON AIRWAYS (ANA) could convert more passenger aircraft into freighters in the years ahead, reports claim.

The Japanese carrier is reported as saying the strategy will help it keep costs low while it grows its cargo business during the market slowdown.

ANA could be set to convert existing Boeing 767 passenger aircraft into freighters. Eight of the 11, 767 cargo aircraft it operates were once used in the passenger market and re-ports claim it may up this to 13 by converting more. It has 40, 767s, which are being phased out in favour of the new Boeing 787. Conversions would give ANA better value for money than buying new freighters such as a Boeing 777 Freighter.

ANA is the only Japanese carrier operating freighters after Japanese Airlines ditched its fleet in October 2010. Re-ports claim ANA wants to make the most of a cargo hub in the southern Japanese island of Okinawa, located close to other Asian countries, enabling it quick access to many key markets.In the last 12 months, ANA has signed cooperation agree-ments with United Airlines and Lufthansa on cargo between Japan and the US and Europe.

Tonnage on the up at Leipzig

NEWSWEEK

3ACW 23 NOVEMBER 2015

T he financial performance of the air-line industry has “remained solid” with initial results for the third quarter (Q3) showing large profit improvements in major regions,

according to the International Air Transport Association (IATA).

The association gave details in its Airlines Financial Monitor for September-October, where it sampled the finances of 23 carriers.

IATA explains: “Airline financial performance has been improving overall so far this year. An initial sample of 23 airlines shows the industry financial performance improved significantly on the year ago period in Q3 2015.

“The increase was driven by North Ameri-can airlines, where consolidation and lower fuel costs have resulted in a significant boost to profitability. Airlines in Asia Pacific and Europe were up on a year ago, supported by cost-cutting measures and easing fuel cost pressure.”

The carriers sampled saw a combined net post-tax profit of $13.7 billion in Q3, more than double the $6.1 billon in Q3 2014. Eight North American airlines saw a net post-tax profit of $8.8 billion, up on the $2.7 billion in Q3 last year. Six in Asia Pacific saw a profit of $984 mil-lion, up from $786 million. In Europe, the seven sampled had a $3.8 billion profit, up on $2.6 bil-lion. Two airlines in Latin America saw a profit of $21 million, up on a $33 million loss.

IATA says freight load factors remain at low levels not seen since mid-2009 at 43.6 per cent so far this year, but capacity continues to impact

carriers and it went up in September compared to August, expanding by 0.6 per cent.

“Looking over the past several months, the trend in AFTK (capacity) growth has been strongly positive for much of 2015, in contrast to developments in demand volumes,” IATA explains.

Volumes were up in September compared to August after months of decline. “The improve-ment was narrowly based driven mostly by European airlines and the demand backdrop remains fragile due to weakness in emerging markets,” IATA says.

Airline industry performance solid, IATA says

VOLGA-DNEPR AIRLINES has landed its first freighter landing on to an ice airfield in Antarctica (pictured above) and moved a sat-ellite to Kazakhstan (pictured right).The IL-76D-90VD service touched down at the Novolazarevskaya Antarctic Research Station on 13 November. Volga-Dnepr says it will open up significant opportunities to sup-port exploration projects on the continent.The carrier says flight checks were performed to incorporate amendments to the IL-76D-90VD’s Airplane Flight Manual (AFM) for ice

airfield operations. After the amendment of its AFM, it will be approved to operate to Ant-arctica airfields.Exploration of the Arctic and Antarctic re-gions is currently underway, and Volga-Dnepr has started implementing a major project for Antarctic Logistics Centre International.Last week, Volga-Dnepr transported a Türk-sat 4B communications satellite and special transport container to Kazakhstan from Japan on an Antonov An-124 Freighter.

Volga-Dnepr makes maiden Antarctica landing

WorlDNewsUK air cargo services provider HAE has acquired Groupair in South Africa, a neutral consolidator providing air, sea, road and courier services. HAE is also now the general sales agent for Blue Air in Ireland.

FORMER chief cargo officer at Swiss In-ternational Air Lines, Oliver Evans, has been appointed head of global business development for drone firm Matternet.

THE US Federal Aviation Administra-tion (FAA) is proposing a $68,000 civil penalty against Unical Aviation for al-legedly violating hazardous materials regulations on a FedEx flight. The FAA alleges on 21 July 2015, Unical know-ingly offered undeclared hazardous material shipments for transport by FedEx to Lenexa.

Cool centre early next year for PACTlSHANGHAI PUDONG INTERNATIONAL AIR-PORT CARGO TERMINAL (PACTL) is to open a new eco-friendly cool centre spanning 3,500 square metres early next year.

The Chinese cargo handling firm says op-erations started recently after the authorities had approved all the necessary licences. The facility is due to go into full operation at the start of 2016.

PACTL says the cool centre has different climate zones that support continuous cool chains in line with international standards.

The facility has been designed for the safe, efficient and transparent handling of up to 100,000 tonnes of temperature-sensitive air cargo per annum.

“Our new cooling facility will enable us to keep meeting the requirements of our airline customers, which are increasingly offering and developing their hi-tech perishable and pharmaceutical services,” says PACTL vice president, Lutz Grzegorz. “So far, the trial op-erations have run as smoothly as expected,” Grzegorz adds.

“As all the cooling cells are working in a stable manner, we’re now about to install roller beds and open a tractor channel to connect the cool center with the apron. As we’re making use of eco-friendly cooling technology, we’re also contributing to the climate footprint of the air cargo industry,” Grzegorz explains.

NEWSWEEK

4 ACW 23 novemBeR 2015

FREIGHTERS have a secure future in the air cargo industry despite the rise of bellyhold capacity, according to Atlas Air Worldwide’s (AAW) executive vice-president and chief com-mercial officer, Michael Steen (pictured).

Speaking to Air Cargo Week at the Air Cargo Americas conference in Miami from 4-6 No-vember, he says the US freighter aircraft lessor has a positive outlook for all-cargo aircraft.

Steen says: “There are lots of headlines of the death of freighters, and the business going south, but this is not true. The global econo-my is growing and airfreight represents 35 per cent of the value and that will continue.

“There is also the expansion of e-commerce, which is all airfreight. It is massive with the likes of Alibaba in China and Amazon in the US. If you look at what is happening in e-com-merce and the electronic capabilities we have, it is very much going to play to airfreight and freighters as well, as that is how integrators are investing.”

Globally he says according to International Air Transport Asso-ciation (IATA) figures, freighters carry 60 per cent of freight, with 40 per cent on bellyhold: “I would argue it is changing and going above 60 per cent, as in IATA’s numbers we dont have integrators. I

argue it will stay for a longer period of time. Freighters serve markets where the freighter is needed and it is not an either or, and is cer-tainly not as dire as people think.”

He is positive about the future: “Global trade is growing and everyone is saying airfreight is under pressure, this is not necessarily true as globally airfreight is growing.” He points to the good performance of the express segment which is growing very fast and is a market AAW is very active in.

Steen feels AAW’s extensive network and global coverage are a competitive advan-tage: “We are very active in general airfreight market across the world and last year served 124 countries and 430 destinations and that global footprint is unprecedented in the world. Combined with we serve the growing market segments it has helped us grow.”

The industry’s main challenge Steen feels is making sure new growing markets

brought on by different buying be-haviours are served.AAW has the world’s largest freighter fleet and this month it took delivery of its 67th freighter.“We are quite confident about our future and I am confident

about the future of airfreight too,” Steen concludes.

Boeing forecasts that Latin America (Latam) will need 3,020 new aircraft valued at $350 billion over the next 20 years – more than doubling the present

fleet.The US aircraft manufacturer gave no mention

on exactly how many freighters will be needed over the next two decades in the forecast.

Boeing Commercial Airplanes vice president for sales in Latin America, Africa and the Carib-bean, Van Rex Gallard says: “The economies of Latin America and the Caribbean will grow faster than the rest of the world over the long term. This economic growth, coupled with ris-ing incomes and new airline business models that give more people access to travel, is caus-ing passenger traffic in the region to grow by six per cent per year – well above the global rate. To accommodate that growth, we forecast that the region’s fleet will more than double.”

Boeing says of the 3,020 new aircraft needed, 83 per cent will be single-aisle aircraft spurred by intense regional traffic growth, while the widebody fleet will require 340 new aircraft as regional carriers continue to compete more strongly on routes traditionally dominated by foreign operators.

Boeing notes the average aircraft age in the region’s fleet has been reduced from more than 15 years to less than 10 years since 2005, giving Latin America and the Caribbean a younger fleet than the world average.

DHL profit pulled down by forwarding

DEUTSCHE POST DHL GROUP has seen operating profit plunge in the third quarter (Q3) of 2015, largely due to issues with its global forwarding and freight business.

The German logistics giant saw earnings before interest and tax (EBIT) fall 70.9 per cent to 197 million euros, compared to the 677 million euros it posted in Q3 in 2014.

Revenue rose in Q3 to 14.4 billion euros, an increase of three per cent on Q3 in 2014, but consolidated net profit in Q3 fell nearly 90 per cent to 49 million euros from 468 million euros in Q3 last year.

DHL’s results were impacted by a 345 million euro write-off from the company de-

ciding to scrap an unsuccessful IT revamp at its DHL Global Forwarding arm.

DHL Express remained the strongest di-vision with revenue rising 6.9 per cent to 3.3 billion euros. The global forwarding and freight division’s EBIT fell to a loss of 337 million euros from a profit 71 million euros in Q3 2014 and revenue fell by over 27 per cent to 3.59 billion euros.The Group’s chief executive officer, Frank Appel says DHL is working to position each of business division “optimally” to achieve the long-term targets projected in Strategy 2020. “We expect the benefits will begin to materialise already in 2016,” Appel adds.

Latam will need 3,020 aircraft, Boeing says

Strong industry future for freighters

Justin Burns, ACW: How has AA Cargo been performing?Butler: Currency changes in Latin America and Europe have had a visible impact on the ability to import, which impacts our results in those markets, as well as other up-line origins. But, the last quarter has shown encouraging signs with the relatively stronger dollar contributing to improved results in freight destined for the US. For us, the perishables season has gotten off to a great start and we’re optimistic it will continue through the end of the year.The cold chain industry has grown tremendously and we see an even greater need from pharmaceutical customers.

Justin Burns, ACW: Where are you seeing strong demand?Butler: South American fish, fruit and flowers are in demand worldwide, a demand that is often seasonal and frequently requires special care. E-commerce is growing, most certainly within the

domestic US. We are working on new ways to deliver for customers that operate in this space.

Justin Burns, ACW: Does American see opportunities in Cuba?Butler: This year, American and Envoy will operate nearly 1,100 charter flights to the island. We’re working to reduce barriers that exist and hope to have more positive news in the future. We are ready to offer scheduled services and will push cargo opportunities as soon as trade laws allow.

Justin Burns, ACW: What are the benefits of the merger with US Airways?Butler: One of the great things is we were able to bring together two complementary networks, which means we can fly shipments to more locations than ever. We now have a significantly bigger European network with more than 300 weekly departures between Europe and the US, and more served via

truck. We can now more effectively reach our 55 cargo destinations in Latin America.

Justin Burns, ACW: What is your view on US Open Skies?Butler: For the most part, the US Open Skies policy has successfully opened global aviation markets and created significant benefits for US airlines, consumers and the economy. In recent years, the governments of the United Arab Emirates and Qatar have turned Open Skies on its head by actively distorting the market in favour of their state-owned carriers. Over the past decade, these governments have provided more than $42 billion in subsidies and other unfair benefits to Emirates Airline, Etihad Airways and Qatar Airways, in order to grow their economies by diverting international passenger traffic to their Gulf hubs. This strips market share and jobs from US and third-country carriers.

Justin Burns, ACW: What are your biggest industry challenges?Butler: The industry has felt the effects of economic uncertainties and exchange rate fluctuations throughout the world. This is a global matter, but specifically in Latin America, currency changes in Brazil, Argentina, and other countries are impacting manufacturing and investment, which contributes to lowered demand and economic instability in other parts of the world. I’m hopeful we will begin to see some stabilisation soon but, for

now, we will have to see how quickly these economies can support manufacturing and trade again. The slow pace of innovation is reason for concern. To be successful long

term, air cargo must recognise the potential to significantly improve the end product we are delivering to shippers. We need to recognise the potential for disruptive technologies to impact our industry and innovate to continue the evolution of product offerings.

Justin Burns, ACW: Where will the industry be in 10 years?Butler: We will see significant amounts of capacity, which we will use to develop more high value, quick delivery specialty products across the board. We should see great enhancements in technology built around shipment

visibility and other areas to deliver a faster, more tailored product to shippers.Our future is not certain and is directly tied to an ability to innovate. If we choose to stand still and conduct business as usual, we open the door for those who will innovate for us. We must focus on more efficient technologies and automated systems that improve process flows, increase the accuracy of data transformation and minimise, if not eliminate, paper trails we leave behind.We need to accelerate e-freight initiatives. It will take time to adopt these new modernised practices. I am confident we’ll make huge strides in the years to come.

5ACW 23 NOVEMbEr 2015

American Airlines (AA) Cargo is one of the leading freight carriers around the globe and has put great emphasis on investing in its cargo business, such as the recent opening of a dedicated pharmaceutical facility in Philadelphia.Air Cargo Week got some thoughts about the industry from the airline’s cargo president.

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ACW 23 NOVEMBER 2015 6

T his year’s Air Cargo Americas con-ference and exhibition took place in Miami (US) from November 4-6 and saw more than 6,000 delegates from across the globe attending.

Taking place at the Miami Airport Convention Centre, opening speeches included by World Trade Centre Miami’s chairman Lenny Feld-man and Miami International Airport director and chief executive officer, Emilio Gonzalez.

The first session Trade Trends in The Amer-icas, saw a focus by a panel of four on what markets in the Americas region are showing strong growth for airfreight operators, but also centred on negative trends affecting the region.

Discussions revealed the negative impact that the Panama Canal is having on the airfreight industry, but also highlighted the opportunities on offer in the Americas.

Among the panelists were DHL Global

Forwarding’s chief executive officer for the Americas, Mathieu Floreani who feels oppor-tunities for growth in the region exist mainly in Mexico and Colombia, which are both booming.

Floreani tells delegates despite the economic woes in Brazil and Argentina, there is still growth in Latin America (Latam), especially in perishables such as cherries from Argentina and

Chile, while e-commerce con-tinues to grow and presents major prospects.

He adds DHL looks to “get away from the major trends” and looks for opportunities in local markets and in other untapped sectors.

Copa Airlines senior direc-tor for cargo, Jaime Alvarez Price explains to delegates he sees opportunities at present mainly in Colombia, where the

pharma market is proving especially buoyant.But he also feels that the economic situation

in South America is “not good” which is affecting the Panamanian carrier and adds that the Carib-bean is performing well while how Cuba will grow in the future is still unknown.

Alvarez Price also notes the Panama Canal

had boosted the seafreight industry, but not air-freight and is having a negative impact on Copa. He says airfreight will continue to lose share to ocean, and with the canal being widened it will mean more ocean liners will be passing through.

“What we have seen is more and more of the airfreight is being transported by sea,” Alvarez Price says. “There are more ships coming into the port more frequently than before,” he adds.

Alvazez Price adds the number of trade bar-riers for trade in Latam and regional trading blocs had also evolved, which were both having a downward effect on the airfreight industry.

Panelists also discussed how the slowdown in China is negatively impacting air cargo along with the poor performing oil industry, which was proving a challenge. Regional political instability in some countries such as Argentina, and Venezuela were also said to be affecting air-freight markets for the worse in Latam.

Americas region struggling but there are opportunitiesAIR CARGO AMERICAS REVIEW

AIR cargo operators are facing difficulties in transporting pharmaceuticals into cer-tain regions across the globe due to the lack of infrastructure geared towards han-dling products, delegates heard at Air Cargo Americas in Miami (US) from 4-6 November in the session Perishables Trade Trends.

Panelists in the session say they face is-sues shipping pharma into under-developed countries and regions like Africa and areas of South America where the infrastructure is not in place to handle shipments.

The International Air Transport Asso-ciation’s (IATA) project lead for its Center of Excellence for Independent Validators (CEIV) in Pharmaceutical Logistics initiative, Ronald Schaefer says this is why the asso-ciation’s CEIV programme is so important.

“There are a couple of regions where the standards are not up to par. Some of the regions are aware of their problems such as South America. But at the end of the day, we cannot expect others to lift standards if we do not lift ours,” Schaefer explains.

On a positive note he explains airfreight is now winning back pharma business after losing the trust of shippers, who found the shipping standards were inadequate, the supply chain was highly complex and too

much money was lost to damaged goods.Schaefer says in the year 2000 airfreight

had a 17 per cent market share, but by 2013 this fell to 10 per cent with much of it lost to seafreight.

American Airlines (AA) Cargo’s cold chain strategy manager, Tom Grubb says AA is seeing tremendous growth in pharma busi-ness as it has invested in facilities to handle pharma: “Demand for these services con-tinues to grow. It is one of the areas of air cargo that is going through the roof.”

Grubb notes the increasing medicinal complexities in products and the pharma supply chain have lead to the need for spe-cialist services. Grubb adds AA is looking at how it can further diversify its product offer-ing in the pharma market.

“We are looking at the relationship be-tween forwarders and shippers and the carrier. Most important to the development of these programmes is the collaboration and meeting with customers to develop the programmes,” Grubb says.

According to IATA, global pharma logis-tics spending reached $8.5 billion in 2014 and this is expected to rise, driven by an increase in the movement of vacinnes, spe-cialist drugs and bio-tech pharma.

LAN Cargo vice president of cargo op-erations and continues improvement, Julia Diaz Remyi says his carrier is also picking up more pharma cargo, but is also moving a rising amount of fruit such as berries and cherries from Chile to the US, and fish, while perishables vary greatly in seasonality.

Latin America was said to be a key market for US perishable imports and Miami itself receives tonnes of fish, fruit, and even as-paragus every day from the south.

Pharma cargo going ‘through the roof’

F reight forwarders in the US are remaining vigilant to the threat of a terrorist attack, according to Airforwarders Association (AfA) executive director, Brandon Fried (pictured).

Speaking to delegates on day two of the Air Cargo Americas conference in Miami (US), from 4-6 November in the session Reducing Supply Chain Risk, Fried says: “Freight forward-ers are the front line protectors for air cargo security against terrorism and we are the last guardians of the gate.

“From a freight forwarders perspective security has been extremely costly for us, it is a very expensive undertaking. We (freight forwarders) are in a constant state of vigilance.”

Fried says freight forwarders are concerned about the new reg-ulations set to come into the air cargo industry and of the need for a standardisation across the supply chain in regions.

In the US, the ongoing Air Cargo Advanced Screening (ACAS) programme, is focusing on pre-loading advanced data targeting before departure for shipments coming to the US, while other countries are looking at different cargo screening models.

There is also an export pilot programme taking place in the US that may result in forwarders having to take an active part in

submitting house airway bill data to the government before flight departure. “We want to have consistency in these regulations. It is very dangerous to have different regulations as is where the bad guys exploit the loop holes,” Fried explains.

Fried aired concerns over a lack of cooperation between agen-cies implementing the new US air cargo security regulations. He says he is worried about the ACAS scheme because of the interac-tion required between the US Transport Security Administration

(TSA) and Customs and Border Protection (CBP). “CBP will do an assessment piece on you but TSA will be responsible for carrying out a screening – they will be the ones to say do or don’t load it should that occur. How that interaction between CBP and TSA occurs is still not completely settled,” Fried says.

He tells delegates incidents like the crash of the Metrojet Air-bus A321 on 2 November in Egypt “keeps him up at night” and the possibility a bomb has been placed in a cargo hold. Fried adds it is adding operating difficulties to the industry: “Airlines are adding more caution and preventing cargo being flown on air-craft and that is scary.”

He says the AfA always says 100 per cent screening does not guarantee 100 per cent safety while the industry has to have ACAS. “We believe in the multi-risk layered approach. Knowing who sent the box as well what is in the box.”

In the same session, the International Air Transport Asso-ciation’s head of airport, passenger, cargo and security in the Americas, Filipe Pereira dos Reis says the most important factors to the reduce risk of terrorist attacks and to be secure are the standardisation of regulations and processes and information sharing across the entire supply chain.

Airfreight forwarders vigilant to threat of terrorist attack

7ACW 23 NOVEMbER 2015

AIR CARGO AMERICAS REVIEW

CUBA’S potential as a market in the Americas for the air-freight industry to exploit was revealed in a presentation at the Air Cargo Americas conference in Miami.

American Airlines and United Airlines are eyeing the launch of scheduled routes to Cuba after the two coun-tries reopened their embassies in July after being closed for more than a century since 1961, but the trade embargo stopping US firms trading in Cuba still remains.

BG Consultants managing partner and chief executive officer, Dr Teo Babun gave an insight into possible trade opportunities, which could be on offer in the region and ex-plains there is an opportunity for firms as its is set to open up and is situated only 90 miles off the coast of Miami.

Babun says Cuba needs $2.5-3 billion investment each year in foreign direct investment to pay for a raft of projects needed, especially in construction and infrastructure.

He says there is the potential for exports of mineral com-modities, while the top products in large supply in Cuba are cobalt, used to make mobile phones and nickel. Oil could also lye off the coast of Cuba Babun notes.

“Cuba is the last of the frontier markets about to open, but whether that will be next week or next year or five years from now we are not sure,” Babun explains. He adds the Cuban government has just released tenders for 246 proj-ects, and is seeking an investment of $15 billion.

Babun notes there will be challenges if it opens up such as different cutlures, legislation, while he says the US is being sidelined by the Cuba government for investment, which is putting firms from the likes of Spain and Canada first for any business investment opportunities.

During the afternoon of the second day, delegates were also given other specialist presentations when different seminars took place.

They included from the United Nations’ (UN) procure-ment division’s chief of logistics and transportation, Soomi Ro who urges airfreight operators to register up for the UN’s projects that span the Americas.

Ro gave insights into the bidding process firms need to go through to assist with UN peacekeeping missions across Central and South America and in the Caribbean.

The US Commissioner for Customs and Border Protection (CBP), Gil Kerlikowske also gave news on the latest CBP initiatives and explains how the CBP is working to develop technical and operational solutions to achieve a paperless single window for exports and imports.

Cuba set to open for business

ACW 23 november 2015 8

Business has remained challenging as the global economy continues to prove unstable, but Chartersphere managing director, Paul Bennett (pictured) says the company has

remained profitable.Bennett tells Air Cargo Week (ACW) that Char-

tersphere’s first six month profits were strong, helped by the US West coast seaport strike at the beginning of the year, resulting in strong demand from the Japanese automotive business.

He says: “The US port strike offered consider-able opportunity especially in the movement of urgent automotive parts from the Far East and March we recorded our most profitable month in the company’s history.”

Bennett tells ACW that the third quarter is tra-ditionally a quiet period but business is picking up again for the end of the year. “Traditionally the third quarter is quieter for cargo charters and this summer was no exception, but as we

enter the peak season requests are again flood-ing in and we expect to end the year on another high.”

He says world events can breed uncertainty, such as problems in the Eurozone economies, a UK referendum on the European Union, the slowdown of the Chinese economy and continu-ing low oil prices meaning oil and gas projects have stalled. Bennett says: “Growth within the air cargo sector remains similarly subdued and in the charter market competition gets ever

fiercer. The charter market has always been unpredictable and who knows what opportuni-ties 2016 might throw up?”

Being a young company, established in 2009, Bennett says it is looking to all regions and industry areas as having potential for growth. He is specifically looking to automotive parts, food, oil and gas could see recovery if prices rise in 2016 though in the meantime, Charter-sphere is working on the energy sector. Bennett tells ACW: “If as predicted oil prices bounce back during 2016 that could mean that stalled oil and gas projects are resumed and that should pres-ent some good opportunities for us.”

Geographically, Bennett says Europe contin-ues to show potential while the Middle East and sub-Saharan Africa are developing regions. Chartersphere’s Spanish speaking desk is work-ing hard on expanding into Latin America while in Asia, India and Indonesia are showing a lot of potential. He tells ACW: “Other countries that look attractive to investors right now are India and Indonesia and it will be interesting to see whether demand for charters increases here.”

Wherever you operate in the world, charter is an unpredictable industry, something which Ben-nett says makes it so exciting to operate in. Bennett says in his time in the charter business, he has dealt with all man-ner of products from gold bullion to camels. Some prove to be particularly memorable, such as the surge in demand for large Boeings such as MD-11Fs, 777Fs and 747-800Fs because of the US West coast seaport strike. Another one that stood out was urgently moving solar panels from Europe to Japan because the previous shipment was lost at sea.

Bennett says it is very exciting when char-tering a very large aircraft such as an Antonov An-124, as Chartersphere did for an outsized rotor from a power station in Chile (pictured). Bennett tells ACW: “The rotor was a vital piece of machinery in a power plant which feeds elec-tricity to a major city in Chile. An overhaul of the part was needed and this could only be done in Europe.”

Challenging times but 2015 ending wellAIR CHARTER

Review processes

The world economy may not be picking up as quickly as hoped but Chapman Freeborn group cargo director, Reto Hunziker (pic-tured) says 2015 has been a success so far.

Hunziker says US and Asian offices re-ceived a particularly strong boost at the beginning of the year thanks to the US West coast seaport strike. He tells Air Cargo Week (ACW): “Our offices in Asia and the US have performed very well and show sig-nificant growth on 2014 figures. There are various contributing factors including the US West coast port slowdown, as well as our strengths in project related business.”

Hunziker says Europe has been perform-ing above expectation as well. “Alongside project work, automotive related business has been a big positive for our offices in markets like Germany and Poland. The Cal-ais strikes in the summer provided a boost in terms of charter and on board courier demand.”

He is hoping this momentum will continue into 2016. One thing that is proving chal-lenging is charter restrictions at Chinese airports but Hunziker remains optimistic.

He says: “We remain busy and our teams there have been active-ly helping forwarders find solutions via alter-native airports such as Chengdu, Hong Kong and Zhengzhou.”

Chapman Freeborn is also looking at Latin America and Africa as fu-ture markets. Hunziker tells ACW: “In some of these markets we’ve seen economic slowdown having a negative impact on the cargo market as a whole – but we view them as a long term investments for the future.”

As for further expansion, Chapman Free-born has signed a partnership agreement with Norwegian firm, Airbroker. Hunziker tells ACW it will: “Further expand our mar-ket coverage in Scandinavia and give local clients greater access to the international charter market.” He adds: “We’re always looking to further strengthen our product offering globally and there are several new expansion projects currently under consid-eration for 2016. Watch this space!”

A slow year butstill a success

A ir Partner says it often has to operate charters in remote locations, where weather conditions and lack of infrastructure makes work challenging.

Director of freight, Richard Smith tells Air Cargo Week (ACW) operating in remote locations is usu-

ally because of customers working in the oil and gas industry or responding to natural disasters.

He says: “We are very often called upon to fly to and from remote destinations that cannot be accessed by scheduled ser-vices – such as when we are working for our oil and gas customers or acting in response to a natural disaster.”

Smith continues: “These sort of environments can be challeng-ing in a number of ways, ranging from lack of infrastructure to inhospitable weather conditions, and therefore it is extremely important to have the right expertise, knowledge and supplier networks in order to operate the flight safely – especially when the deadline is tight.”

He tells ACW that over the past 18 months, Air Partner has operated a number of charters to West Africa to help combat the Ebola virus outbreak. “We have done a lot of work helping the Ebola crisis, using our contacts to secure overflight permits and

landing permits to make sure that life-saving were delivered as quickly as possible.”

Other charters this year included 90 tonnes to the Central Afri-can Republic for the United Nations Multidimensional Integrated Stablization Mission in the Central African Republic (pictured).

For the first half of 2015, Air Partner’s freight division has made a profit of £0.4 million ($0.6 million) compared to breaking even in 2014. Smith says: “We have continued our work with gov-ernment aid agencies to assist in a number of geopolitical crises and in addition, good growth has been seen in our UK, German and US businesses, albeit from a low base.”

He adds: “We have benefitted from our continual focus on devel-oping stronger relationships and a good reputation with freight forwarders, and our ‘Red Track’ [real-time tracking] technology has contributed to success of our AOG [aircraft parts] business.”

For 2016, Smith is optimistic the AOG and automotive sectors will see strong growth and so will oil and gas. Smith tells ACW: “We are also seeing a pick-up in oil and gas, which we hope to

continue following the announcement that Baines Simmons, the leading aviation safety consultancy Air Partner acquired in August [2015], is now offering our clients in the sector bespoke safety and airworthiness audits and assessment services.”

Solid growth

Remote charter demand driving business at Air Partner

9ACW 23 NOVEMbER 2015

AIR CHARTER

C om p etitive and c hang ing m arket

PROAIR CHARTER TRANSPORT is happy with performance in 2015, despite slow demand for outsized shipments and the pre-Christmas peak not proving as strong as expected.

ProAir general manager, Andreas Wald tells Air Cargo Week (ACW): “We are quite happy with the development of our cargo business in 2015 compared to 2014. We have been able to secure a couple of permanent contracts with global key players in the automotive industry which has given us significant additional business mainly for the smaller sized aircraft.” He says ProAir has taken cargo on business jets from its ProAir Aviation fleet.

Wald says project and outsized cargo has been quiet in 2015, but should pick up. “Our customers in this business segment expect the projects they work on will result in charters in 2016 or even 2017. To make up for this the market for part charters and rerouted flights is very good.”

Wald says the pre-Christmas peak will not be as strong and adds: “Our main customers, the freight forwarders, report the general cargo market is low and a lively peak period is not likely to happen. We expect interesting flights to come in December, especially in the second half.”

AIR CHARTER SERVICE (ACS) is having a record breaking year with growth coming from all regions of the world.

Group commercial director, Justin Lancaster (pictured) tells Air Cargo Week (ACW) growth is coming from all sectors with no one in particular surg-

ing. He says the start of the year was helped greatly by the US West coast sea-

port strike at the end of 2014 continuing into early 2015.

He tells ACW: “Growth is coming from all sectors, no one sector is particularly amazing. We are global now, you might find Europe is down in one quarter but the US and Far East are up.”

Lancaster says things have quietened down for now though November is shaping up to be a good month with the Americas expected to see strong performance in the run up to Christmas though Europe will be slower as it is better served by scheduled carriers.

In May, ACS invested heavily in its on board courier (OBC) division, opening an OBC operations office in Frank-furt (Germany). Now, six months on, Lancaster says it has exceeded expectations. He adds: “OBC is beating all expectations, it is probably double where we thought it would be six months on. A lot of clients trust us and I think we had a good relationship with them so they were happy to give us a chance.”

Pre-Corpstths pehr nvt strvnn

Grvwto wvrlkwpke mvr ACS

ACW 23 november 2015 10

T he South American airfreight market has been struggling with cargo rev-enues and tonnage affected by woes of the continent’s economic power-house Brazil and poor performing

currencies.Among those facing challenging times is

LATAM Airlines Group, and speculation was rife it was in discussions with International Airlines Group (IAG) about joining the group, which was denied by LATAM earlier this month.

The Chilean-based carrier saw declines in October and in the third quarter (Q3) with cargo revenues and volumes continuing to be hit by slow South American economic performance.

LATAM says in October cargo traffic was weak in the Brazil domestic and international markets and adds: “As a result, cargo traffic for LATAM Airlines Group decreased 15.1 per cent in Octo-ber, and the cargo load factor decreased 7.9 points to 54.9 per cent. We continue to adjust cargo capacity through a reduced freighter operation, which resulted in a decline of 2.9 per cent of cargo ATKs (capacity) in October.”

In Q3, cargo revenue fell 24.5 per cent year-on-year (YOY) to $310 million driven by a 12.2 per cent year-on-year fall in cargo traffic to 908

million cargo revenue tonne kilometres.LATAM says: “During the quarter, cargo

demand remained weak, especially in the Bra-zilian domestic and international market. In addition, connecting cargo traffic in Sao Paulo Guarulhos Airport was affected by an ongoing strike in customs personnel.”

In Q3 the overall financial performance of LATAM also fell and it saw a net loss of $113.3 million in Q3, similar to the net loss of $107.8 million in Q3 2014.

LATAM says: “As a result of a weaker macro-economic environment in South America and the significant devaluations of Latin American currencies during the period, especially the 55.5 per cent depreciation of the Brazilian real, total revenues for the Group during the third quarter 2015 declined by 19.9 per cent as compared to third quarter 2014.”

LATAM says it is revising its fleet capital expenditures for the next three years and aiming to reduce fleet commitments for the 2016-18 period by approximately 40 per cent. The company is planning the redelivery of 20 aircraft for 2016, including “rationalising” its freighter capacity, having finalised the sub-lease of one of its four Boeing 777-200 Freighters to a third party.

THE AMERICAS

FLIGHTS added by Cathay Pacific Cargo and Emirates SkyCargo have boosted tonnage at Rickenbacker International Airport, but the gateway still feels freight forwarders and shippers are not aware of it as an option to move goods.

Columbus Regional Airport Authority operates Rickenbacker and vice president of business development and communica-tions, David Whitaker says the additional weekly frequencies added by Cathay and Emirates in October are paying off.

He says the airport is seeing “unprece-dented growth”, especially in international volumes, up 250 per cent through the third quarter (Q3) compared to Q3 in 2014.

“While we are not privy to rates and yields, we can advise the planes are arriv-ing at Rickenbacker at capacity and space continues to be in high demand,” Whitak-er tells Air Cargo Week.

He hopes Trans-Atlantic or Trans-Pacific bellyhold routes will be added to the Rick-enbacker schedule in the next few years, which will give a further boost to cargo vol-umes and operators.

Asia accounts for virtually all the im-

ported cargo at the gateway from South East Asia and India. As for exports the air-port is seeing greater geographic diversity while charters are alsp doing well, boost-ed by links developed with forwarders and airlines during the US West coast port strike.

The airport still faces challenges, notably making air cargo operators and custom-ers aware of what it offers. Whitaker says there are benefits of Rickenbacker: “We don’t have the congestion difficulties of other airports and the region is continually investing in the infrastructure surrounding the airport that allows trucks to access highways very easily and efficiently.”

He adds the airport is working closely with gateway minded forwarders to include Rickenbacker as a gateway option.

Rickenbacker will open a new 100,000 square foot cargo terminal in the mid-dle of next year to meet rising demand. Whitaker says: “Our existing warehouses are full and more capacity is essential if we are to grow. We simply would not be able to grow without additional on-airport warehouse capacity.”

Asia boosting Rickenbacker LATAM hit by regional fall

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