1 March 13, 2018 WCS Daily Report Subscribe to Air Cargo World at: AirCargoWorld.com/subscribe CONTENTS TUESDAY • MARCH 13, 2018 Careen: Changing Faces, Changing Cargoes 3 Tuesday’s Schedule 3 Southwest to launch SCS, international routes 4 Smart Facilities update 6 WORLD CARGO SYMPOSIUM THE DAILY PRESENTS r e p o r t IATA SEES A ROSY FIVE YEARS AHEAD, WITH MODEST AIR CARGO GROWTH THROUGH 2022 CARGO IN 2017: IT WAS A VERY GOOD YEAR By Caryn Livingston By Glyn Hughes, Global Head of Cargo, IATA After a wildly successful 2017, it ap- pears that the airfreight business is headed down the same path, not just for this year, but for the next five. This month, IATA released its five-year airfreight de- mand forecast and pro- jected that total airfreight traffic, measured in freight tonne kilometers (FTKs), will see growth averaging 4.9 percent each year through 2022, on the prospect of continued opportunities arising from e-commerce and other high-demand commodities. The new forecast repre- sents a slight increase over the actual compound an- nual growth rate (CAGR) of 4.7 percent at which FTKs grew each year from 2012 to 2017, but a significant decline from the 9 percent average y-o-y increase in FTKs for 2017. However, if, during the five- year horizon, trade growth resumes at its pre-global-financial-crisis level, IATA isn’t ruling out the possibility that FTK growth could instead aver- age as much as 9.5 percent per year. Historically, the relationship between global gross domestic product (GDP) and goods trade growth has been key to airfreight demand, with global goods trade growing at twice the rate of global GDP. But since the 2008 fi- nancial crisis, the 2x multiplier has gone, and global goods trade has only grown in line with global GDP. The global GDP growth that helped support robust airfreight volumes through 2017 is expected to remain steady over the next five years, ac- cording to forecasts from the Inter- national Monetary Fund (IMF). The IMF predicts 3.1 percent GDP growth between 2018 and 2022, up from 2.8 percent over the past five years. Whether or not growth in global goods trade will return to pre-crisis levels remains to be seen, IATA said, Welcome to Dallas for the 12th World Cargo Symposium (WCS). It’s in- credible to think that a full year has passed since we were last together in Abu Dhabi. But what a smashing year it has been for air cargo. The industry posted its strongest performance since the rebound from the global financial crisis in 2010. De- mand grew by 9.0 percent — twice the pace at which world trade ex- panded (4.3 percent) in 2017. And as capacity only rose by 3.0 percent, we saw significant improvements in load factors, revenues, and yields. Over the same period, air cargo car- ried 59.9 million metric tonnes of [Continued on p5] [Continued on p4] DALLAS, TEXAS
Transcript
1March 13, 2018 WCS Daily ReportSubscribe to Air Cargo World at: AirCargoWorld.com/subscribe
CONTENTSTUESDAY • MARCH 13, 2018
Careen: Changing Faces,
Changing Cargoes 3
Tuesday’s Schedule 3
Southwest to launch SCS,
international routes 4
Smart Facilities update 6
WORLD CARGO SYMPOSIUMTHE
DAILYPRESENTS
r e p o r tIATA SEES A ROSY FIVE YEARS AHEAD, WITH MODEST AIR CARGO GROWTH THROUGH 2022
CARGO IN 2017: IT WAS A VERY GOOD YEAR
By Caryn Livingston
By Glyn Hughes, Global Head of Cargo, IATA
After a wildly successful 2017, it ap-pears that the airfreight business is headed down the same path, not just for this year, but for the next five.
This month, IATA released its five-year airfreight de-mand forecast and pro-jected that total airfreight traffic, measured in freight tonne kilometers (FTKs), will see growth averaging 4.9 percent each year through 2022, on the prospect of continued opportunities arising from e-commerce and other high-demand commodities.
The new forecast repre-sents a slight increase over the actual compound an-nual growth rate (CAGR) of 4.7 percent at which FTKs grew each year from 2012 to 2017, but a significant decline from the 9 percent
average y-o-y increase in FTKs for 2017. However, if, during the five-year horizon, trade growth resumes at its pre-global-financial-crisis level, IATA isn’t ruling out the possibility
that FTK growth could instead aver-age as much as 9.5 percent per year.
Historically, the relationship between global gross domestic product (GDP) and goods trade growth has been key to airfreight demand, with global goods trade growing at twice the rate of global GDP. But since the 2008 fi-nancial crisis, the 2x multiplier has gone, and global goods trade has only grown in line with global GDP.
The global GDP growth that helped support robust airfreight volumes through 2017 is expected to remain steady over the next five years, ac-cording to forecasts from the Inter-national Monetary Fund (IMF). The IMF predicts 3.1 percent GDP growth between 2018 and 2022, up from 2.8 percent over the past five years.
Whether or not growth in global goods trade will return to pre-crisis levels remains to be seen, IATA said,
Welcome to Dallas for the 12th World Cargo Symposium (WCS). It’s in-credible to think that a full year has passed since we were last together in Abu Dhabi. But what a smashing year it has been for air cargo.
The industry posted its strongest performance since the rebound from the global financial crisis in 2010. De-
mand grew by 9.0 percent — twice the pace at which world trade ex-panded (4.3 percent) in 2017. And as capacity only rose by 3.0 percent, we saw significant improvements in load factors, revenues, and yields.
Over the same period, air cargo car-ried 59.9 million metric tonnes of
[Continued on p5]
[Continued on p4]
DALLAS, TEXAS
Here at American Airlines Cargo, we are fully committed to the proper handling of your perishables. Through our worldwide network and an attention to detail on even your most time-sensitive shipments, you’ll enjoy fast and safe delivery to more than 50 countries across the globe. With you all the way.
Let us keep it fresh for you at aacargo.com/freshcargo
002303_AACargo _CAAS_Perishables_8.0x10.875_3.5..indd 1 3/5/18 9:44 AM
3March 13, 2018 WCS Daily ReportSubscribe to Air Cargo World at: AirCargoWorld.com/subscribe
OPENING PLENARY SCHEDULE – TUESDAY, MARCH 139:00 – 9:10 Official WCS 2018 Opening with a Traditional Cultural Performance9:10 – 9:30Host Airline Welcome Jim Butler, President, SVP International and Cargo, American Airlines
9:30 – 9:50Keynote Speech Tom Overacker, Executive Director, Office of Field Operations, US CPB
9:50 – 10:10Cargo: The year in review Glyn Hughes, Global Head of Cargo, IATA
10:10 – 10:30Economic outlook: Will the positive growth continue? Brian Pearce, Chief Economist, IATA
10:30 – 11:15 Networking Break WCS Exhibition Hall
11:15 – 11:35Geopolitics and Global Trade: New Realities Brian Clancy, Managing Director of Logistics Capital & Strategy, LLC (LogCapStrat)
11:35 – 11:55 Air Cargo 2017: A record year! Marco Bloemen, Managing Director, Seabury Consulting
11:55 – 12:30Panel Discission eCommerce: embracing the opportunity • Liam O’Sullivan MILT, Director Operations, International Post Corporation (IPC)
• Lucas Kuehner, Global Head of Air Freight, Panalpina Management Ltd Moderated by Glyn Hughes, Global Head of Cargo, IATA
12:30 – 14:00 Networking Lunch
14:00 – 14:30CITES: Air cargo and the fight against illegal wildlife trade John Scanlon, Secretary General, CITES
14:30 – 14:45Spotlight on safety and security Nick Careen, SVP, Airports, Passenger, Cargo and Security Division, IATA
14:45 – 15:00Technology innovation in safety and security screening Jennifer Haigh, Aviation Security Consultant
15:00 – 15:15The advantages of canine screening for air cargo Brandon Fried, Executive Director, The Airforwarders Association
15:15 – 15:45Motivation Speech… Business and pro sports sharing a winning formulaDrew Pearson, Dallas Cowboys (Retired)
15:45 – 16:00Chairman’s closing remarks Glyn Hughes, Global Head of Cargo, IATA
16:00 – 16:45 Networking Break WCS Exhibition Hall
By Nick Careen, Senior Vice President Airports, Passenger, Cargo, Security, IATA CHANGING FACES, CHANGING CARGOES
Here at American Airlines Cargo, we are fully committed to the proper handling of your perishables. Through our worldwide network and an attention to detail on even your most time-sensitive shipments, you’ll enjoy fast and safe delivery to more than 50 countries across the globe. With you all the way.
Let us keep it fresh for you at aacargo.com/freshcargo
002303_AACargo _CAAS_Perishables_8.0x10.875_3.5..indd 1 3/5/18 9:44 AM
This year’s 12th World Cargo S y m p o s i u m (WCS) promises to be bigger and better than ever before in terms of content, dis-
cussion, workshops and innovations. Some of 2018’s featured topics at WCS include the transport of danger-ous goods (DG), IATA’s new CEIV Live Animals program and the next gen-eration of air cargo leaders.
Today, dangerous goods shipments account for around 5 percent of the more than 25 million annual air cargo shipments. With airfreight set to grow at 4.9 percent per year over the next five years, the number of DG ship-ments is also projected to rise, and add to current challenges dangerous goods pose to the air cargo industry. For the industry to accommodate this growth efficiently, the digitalization of the supply chain must accelerate.
In this regard, we have two exciting announcements at this year’s WCS. The first is the launch of DG Auto-Check, which will take place at the IATA booth on Wednesday, March 14, at 10:30 a.m. The second is the launch of e-DGD, which takes place at the end of the Dangerous Goods track later that day at 5:30 p.m.
Like dangerous goods, more precious cargo presents its own unique chal-lenges. Animal owners and shippers rely heavily on airlines to transport live animals, and guaranteeing the welfare of these animals as they fly round the world is essential. IATA’s new Center of Excellence for Inde-pendent Validators (CEIV) Live Ani-mals program will give stakeholders across the air cargo value chain ac-cess to a global certification and common audit process, ensuring that stakeholders operate to the high-est standards in the transport of live
animals. The CEIV Live Animals pro-gram will launch at the IATA booth on Wednesday, March 14, at 3:30 p.m.
Other highlights at this year’s WCS include the latest installment of the FACE (Future Air Cargo Executives) program — which is quickly becom-ing the place for future industry lead-ers to connect. CargoIQ will also be
holding a summit to highlight the benefits that quality and dynamic shipment management can bring to the industry’s commercial offering.
Get more details on DG and CEIV an-nouncements and the FACE UP final-ists in Thursday’s Daily Report. I wish you a successful WCS.
DAILY REPORTWorld Cargo Symposium DALLAS, TX
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SOUTHWEST TO LAUNCH NEW CARGO SUITE SYSTEM, FLY INTERNATIONAL ROUTESBy Caryn Livingston
The airfreight sector, long known for being slow to adopt new technology, is making moves to catch up with the times, carrier by carrier. One example is based right here in Dallas – South-west Cargo – which plans to not only implement a new point-of-sale sys-tem this month, called Southwest Cargo Suite (SCS), but will also begin international cargo service for the first time in its history.
The biggest change SCS will intro-duce to Southwest Cargo’s opera-tions is the ability for cargo custom-ers to book international or domestic cargo shipping space in advance. Ad-vance booking will likely undergo pilot testing first and then be rolled out later. Other offerings with the new SCS will include interline cargo capabilities, with international cargo
transport options beginning in Mexi-co and expanding from there.
“This system will replace a much old-er system from the 1990s,” said Wally Devereaux, senior director of cargo and charters at Southwest. “This has been an all-hands-on-deck effort.”
SCS will also be able to handle elec-tronic air waybills (eAWBs), Devereaux said, meeting IATA’s single-process methodology by completely phas-ing out paper air waybills. The system should also be ready for the eventual introduction of customer allotments, granting customers the ability to re-serve space long-term, after South-west Cargo completes more testing, he added. As it prepares for the SCS rollout, Southwest said it will educate its customers on the changes.
By May, the SCS will be put to the test when the carrier begins serving select cities in Mexico, including Mexico City, Cancun, Cabo San Lucas/Los Ca-bos and Puerto Vallarta. Southwest also plans to add stops in Mexico and the Caribbean later in 2018.
“We already have a large domes-tic cargo throughput, so the initial volume increase will be small,” De-vereaux said. The bigger idea, he added, is to begin these routes now so that in five years or so, internation-al volumes will be a substantial slice of its total cargo throughput.
Southwest expects healthy trade on its routes between the U.S. and Mex-ico, with northbound flights likely moving perishables and southbo-ound flights expected to transport pharma products and e-commerce.
The carrier will refresh the SWAcargo.com website later this year to provide better mobile access, and introduce a new customer portal in 2019, adding a channel for online booking, invoice retrieval, eAWBs and more.
but the potential shown by increases in e-commerce and pharmaceutical airfreight demand in recent years in-troduces uncertainty that could be a boon for airfreight demand.
The airfreight demand growth ex-perienced by certain specialty cargo categories may eventually lead to “opportunities for airfreight to po-tentially decouple altogether from the link with global goods trade in future years,” IATA said. Because only a very small portion of overall goods trade volumes are transported by air – about 1 percent by volume, but 35 percent in value, according to IATA – even a minimal increase in that share over a short time would mean im-pressive overperformance for total FTKs, compared to current forecasts.
“If the share were to rise by just 0.1 percentage points over five years, this would see airfreight growth outperform wider goods trade by around 2 per-centage points each year,” the report said.
However, if that shift does not occur with-in the next five years, factors like economic performance of countries across major trade lanes will have a larger effect on in-
dustry-wide FTK growth. Get more details on how this outlook will af-fect airfreight at Tuesday’s Economic Forecast during the Plenary Session.
[Continued from p1] IATA SEES A ROSY FIVE YEARS AHEAD, WITH MODEST AIR CARGO GROWTH THROUGH 2022
DAILY REPORTWorld Cargo Symposium DALLAS, TX
5March 13, 2018 WCS Daily ReportSubscribe to Air Cargo World at: AirCargoWorld.com/subscribeSubscribe to Air Cargo World at: AirCargoWorld.com/subscribe
goods, repre-senting about 35 percent of global trade by value. That is equiva-lent to US$5.6 trillion worth of goods, annually,
or $15.3 billion worth of goods every day. There can be no arguing with the economic and social benefits that the air cargo industry brings.
In 2017, air cargo reinforced its com-mitment to modernization, position-ing itself as the preferred mode of transport for the global economy’s high value-to-weight manufactured products such as microelectronics, pharmaceuticals, aerospace compo-nents and medical devices.
A resolution was agreed upon at the 73rd IATA Annual General Meeting to accelerate the modernization and transformation of the air cargo in-dustry. Customers were at the heart of the resolution that recognized the importance of partnerships in driv-ing industry transformation, espe-cially for an activity for which global standards are so vital. And slowly we are beginning to see progress. Indus-try participants are developing more customer-centric and predictable supply chains and enhancing ship-ping quality and service.
This year, export orders are strong and e-commerce volumes continue to grow. But with growth comes ad-ditional challenges, and we anticipate a number of them to grow in signifi-cance as we move forward together. Congested airports, slot restrictions, capacity constraints, complex regu-lations, demanding customer expec-tations, increasing needs for data digitalization, rapid technology en-hancements and the need to attract, retain and develop quality people are just a few of the challenges ahead.
This year’s World Cargo Symposium will bring together more than 1,000 senior industry leaders, influencers and experts to challenge, debate, ex-
plore and agree how best to move the industry forward. Our theme of “Connect, Collaborate, Modernize” truly sets the agenda for what we all must do in order to align with tomor-row’s business and consumer needs.
I am looking forward to a great week of discussions. As always, the agenda is packed and I am sure that the level
of participation will be high. In fact, some of the work has already begun – I’d like to thank the industry stan-dards-setting groups that have been here since the weekend and have al-ready started their important work.
Prepare yourself to be challenged, excited and inspired. Have a great symposium!
[Continued from p1] CARGO IN 2017: IT WAS A VERY GOOD YEAR
6 March 13, 2018 WCS Daily Report Subscribe to Air Cargo World at: AirCargoWorld.com/subscribe
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CARGO FACILITIES WORKING HARDER, GETTING SMARTER IN E-COMMERCE ERA By Randy Woods
Just what will the “Cargo Facility of the Future” look like? It’s a
question that goes back a few years and, in this time of transition, it may take a few more years before the vi-sion becomes clear. But the many lo-gistics visionaries gathered here this week in Dallas will undoubtedly play a crucial role in the answer.
In 2016, IATA launched its Cargo Fa-cility of the Future initiative, a pro-gram tasked with exploring what a cargo facility may look like as air cargo keeps pace with technologi-cal changes. The concept came from IATA’s Simplifying the Business (StB) Cargo program, and from findings made by its “Smart Facility” project.
Smart Facility aims to assess the cur-rent capabilities of cargo handling facilities against industry standards, with the intent to increase the capa-bilities of the industry through the adoption of best practices.
During initial investigations of the Smart Facility program, IATA noted that, while there are some standards related to air cargo material handling, there were “significant variations in the application of these standards,” which led to conflicting understand-ings of capabilities globally. At the same time, the association concluded that “the industry struggles on the facility front – what equipment to
choose, what level of automation, what customer and goods flows will be important in the coming years.”
Last year, IATA dedicated an entire track to the cargo facility of the fu-ture at the World Cargo Symposium (WCS), exploring the latest advance-ments in robotics, automatic identi-fication, augmented reality and ar-tificial intelligence. This year, similar themes of infrastructure, space con-siderations, new technology and pro-cess optimization will be discussed in the Cargo Operations track, to be held Thursday, March 15, at 9 a.m.
Cargo Operations begins with an overview of the current state of facili-ties and the audits, compliance mea-sures and standard practices. With this baseline understanding of stan-dardized cargo operations, the track will explore how Smart Facility can improve transparency and support data-driven decision-making and milestone improvements.
The session will include a “fireside chat” with two industry leaders — Dominique Perron of PwC, and Kester Meijer of KLM Cargo — who will ex-plore how global companies with dis-tant customer bases can still deliver airfreight locally. Meanwhile, Delta Air Lines’ Joseph Jensen will discuss how big data, predictive analytics and connected devices can all help improve customer service, safety and airline economics. On the ground-handling side, Victor Chin of WFS will
present a case study on how a glob-al handler was able to implement a comprehensive change program.
The session will close with a lively dis-cussion about how the above themes can be combined to deliver the high-est air cargo potential, featuring pan-elists Ashok Rajan with IBS Software Services; Wes Tucker of ACL Airshop; Steven Fox with the U.S. FAA; and Da-vid Clark of WFS.
DAILY REPORTWorld Cargo Symposium DALLAS, TX
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