United

IASC okays Qantas, V Australia’s bids for more South Africa services

Magazine Stories August Issue 2008
Saturday, 21 June 2008
WHATEVER South African Airways’ intentions might be for Australia - a continuing mystery and the subject of many a rumour - Australian carriers are still showing enormous confidence in the route’s potential for cargo and passenger haulage between the two countries.

Qantas has applied to the International Air Services Commission to boost its existing frequency of three flights weekly between Sydney and Johannesburg to five, while V Australia wanted five weekly movements on the route.
Both airlines got the thumbs up, although with only five frequencies available at the time of application, V Australia got an OK for three now and two more in October when a further four weekly frequencies become available - as we outlined in the last issue of AirCargo Asia-Pacific.

The delay didn’t bother V Australia, which had already indicated that services would not commence until October 1 next year, dovetailing nicely into the extension of the bilateral air services agreement.

The IASC determination gives the new carrier - which also has picked up cargo and passenger allocations on the North American route - until the end of October 2009 to get things moving on a five times a week basis using B773-ER equipment. Rival Qantas will utilise B744 aircraft.

The Qantas application sought one of the extra flights effective December this year and the second from April 2009.  This scenario was, said Jane McKeon, the carrier’s general manager Government and International Relations, “contingent on the progressive delivery of Qantas’s new A380 aircraft, which will release B747-400s currently operating between Australia and the US”.

IASC gave Qantas until the end of July to get the new schedule operating but added a rider of “or from any other date approved by the Commission” which gives the carrier some wriggle room.

It was planned that SAA would code share on the additional frequencies, noted McKeon.  “Qantas will seek the Commission’s approval for this to occur as part of a separate detailed application for the extension of authorisations for SAA to code share on our existing Sydney-Johannesburg services beyond December 31 2008.”

Both the Qantas and V Australia allocations are for five years (after which they are reviewed for renewal, a process that usually is little more than a formality if operations are proceeding smoothly) and came with the usual conditions, including the requirement that the carriers are “not permitted to utilise the capacity to provide services jointly with another Australian carrier or any other person without the approval of the Commission”.

Changes of ownership or management affecting the carriers’ Australian status also need the IASC’s consideration and approval, as always.

Interview: Technology, expanded network to drive Emirates freight growth

Magazine Stories August Issue 2008
Saturday, 21 June 2008

Greg Johnson,  the new cargo manager Australia for Emirates Airline, joined the Emirates SkyCargo team as NSW Cargo manager when Emirates launched services to Sydney eight years ago. Johnson was responsible for establishing the cargo arm of the business in Australia’s busiest air freight airport.

Emirates SkyCargo in Australia has developed substantially under Johnson’s leadership, with Emirates currently the third ranked airline in terms of total cargo tonnage uplifted from Australia.

Johnson, who has a degree in aviation studies, is married to partner Miriam and has two children, Ben and Rebecca.


AirCargo Asia Pacific: IATA has made significant changes to the TACT book in the Australian market. Many forwarders believe this will make it harder for the smaller forwarder and easier for the likes of DHL and Fedex and UPS.  The big airlines with extensive networks like Emirates, Singapore Airlines and Korean also look likely to gain most in the changes. How do you see the changes affecting the marketplace?

Greg Johnson: IATA member airlines operating in and out of Australia recently voted not to seek further immunity from the ACCC in respect of the final review affecting the cargo tariff and associated interline activities. As a result of this decision, effective the 30th September 2008 the IATA cargo tariff co-ordination will no longer be applicable for routes to / from Australia. However, the airlines will have the option to publish their own general cargo rates in the TACT Rates book so there should be no major implications for small, medium or large forwarders.


What does your new position entail?

Primarily my role is to create maximum awareness of Emirates SkyCargo in the Australian market and to ensure that we maintain our very high standard of service to our customers. We are continuously reviewing the requirements of our customers to ensure that we provide the product and solution that is best suited to the customers need.


Why move head office from Melbourne to Sydney?

The move of our corporate head-office to Sydney was a decision based on the geographical position of our major passenger corporate account head-offices.


Dnata had quite a few teething problems when they took over Emirates handling in Australia. Has it improved?

The Toll/Dnata joint venture has enabled us to not only to enhance our service levels but also strengthen our cargo product in the Australian market. We now have one entity providing cargo, ramp and passenger services for Emirates in Sydney, Brisbane and Melbourne and this has enabled more streamlined communications between all departments. In addition, the formation of Toll/Dnata Airport Services has seen the injection of new capital, equipment and technology into the cargo and airport operations.


Emirates Skycargo has always placed great emphasis on technology. I believe Australia won the Emirates network award this year for best use of technology. What difference has the latest technology made to the business? Have forwarders become more tech savvy?

Yes, the Australian Cargo team received the award for ‘best effective SkyChain usage’ at our recent World-Wide Conference.

SkyChain is Emirates SkyCargo’s fully automated system for cargo logistics and provides our customers with an integrated network of information and business support systems. The SkyChain system acts as a seamless information pipeline which provides the tools that enables everyone involved at any point on the entire logistics chain to extract, update and share information.


Fuel prices have eased in the last few weeks and the exchange rate has improved almost 13.5 per cent.  Has this led to a bounce in space enquiries?

 The high price of oil and low US Dollar (High AUD) inevitably resulted in pressure on air freight. The recent improved exchange rate has seen a slight increase in the uplift of manufactured goods but again, the changes in global demand will ultimately be the driver for increases in air freight.


The perishables market has declined following increased competition from ocean freight and new cheaper sources in overseas markets. Is it recoverable?

Without question there has been a decline in the export tonnages of perishable commodities. With most importers being able to source product at lower prices from other world market places plus the high valued AUD our exporters have found it extremely difficult to compete and secure orders.

Moreover, when you review the specific perishable commodity markets for air freight, there is a reduced demand which tends to see shipments move from the air onto the sea. 

However, our data indicates that the demand for perishable capacity is on the increase and we see this trend continuing from our Australian gateways.


What do you see as the major issues facing the industry going forward?

Emirates SkyCargo achieved fantastic results in the 2007-2008 financial year considering what a turbulent year it was for the air cargo industry. Cargo revenue contributed 19 per cent to the airline’s total transport revenue, which is certainly one of the highest contributions of any airline in the world with a similar fleet. This financial year 2008-2009, Emirates SkyCargo will be looking to increase cargo revenues by 22 per cent on last year.

The forecast for airline profitability has obviously deteriorated with the escalating oil prices. The cost of jet fuel has risen to new heights in fact the jet fuel prices in May/June 2008 were 80 per cent higher than a year ago. In addition to the Fuel crisis, we are also feeling the effects of the US Sub-Prime crisis, the global economic slow-down and the high Australian dollar / weak US dollar are all factors which impact our business and require constant monitoring.  


The industry struggles to attract new workers. Is it because of pay and work conditions or lack of opportunities?

I think that in order to recruit young workers into the transport and logistics work place we need to have a concerted effort by the industry associations and government agencies to conduct forums and workshops that can show the younger generation that this industry is not just about loading and unloading large trucks and ships. We need to collectively highlight the variety of employment opportunities available in areas such as procurement, warehousing and distribution, supply chain management, logistics, sales and customer service to mention just a few.


The US market is going into recession and the Chinese market is showing distinct signs of softening. Carriers will be chasing fewer opportunities over the next couple of years until markets bounces back. Where should exporters and importers look to maintain business?

Emirates SkyCargo continues to operate in the Chinese market, in fact on the 1st July 2008, Emirates SkyCargo launched six direct Guangzhou-Dubai flights a week in addition to our double daily freighter services to Beijing and Shanghai and 14 weekly flights into Hong Kong.

There is an increasing middle class population developing in both China and India and this growth will result in a substantial increase in their respective consumer spending and the need for increased access to goods and services.

The Middle East continues to provide opportunities.  A recent news release from IATA indicated that Middle Eastern carriers reported the strongest performance results with a 12.1 per cent increase in June 2008 compared to the May 2008 figure of 10.7 per cent.

Therefore, the global challenge for us will be to ensure that we have the capacity available where and when it is required.


Emirates has reduced freighter operations to Djibouti and Nairobi. Is that market softening or has fuel changed the market dynamics?

The freighter aircraft are certainly being closely monitored in terms of their overall revenue generation and of course the high fuel costs have increased the overall operating costs on the freighter aircraft substantially.

Furthermore, as the world markets shift we will continue to utilise the freighter aircraft where the demand is strongest. It is considerably easier for Emirates to re-position freighter aircraft onto different routes compared to our passenger aircraft.

Our freighter aircraft contributed approximately 30 per cent of the Emirates SkyCargo’s revenue last financial year.


What if anything can Emirates do to stimulate new business?

The air cargo business is extremely competitive and not just from other airlines, but from other forms of transportation such as sea, road and rail.

The ever increasing Emirates world-wide network continues to provide business opportunities for our customers and we continue to look at opportunities to develop new trade-lanes in conjunction with our customers.

One of the main criteria for using air freight is speed. The aircraft remains the fastest mode of transportation that is commercially available but it is the overall transportation time that counts, and it is in this area where air freight comes into its own. The transaction time of a shipment is expedited when the shipment is carried as airfreight, as the goods can be provided to the consignee in a much faster time-frame thus allowing the shipper to receive payment earlier than if the shipment had moved by one of the other modes of transportation. 

Emirates has confirmed Australia’s status as a premier trade and tourism destination by announcing additional flights to Brisbane, Melbourne and Sydney.  We will see the current 49 flights a week operating to Australia increase to a total of 56 flights per week, with further increases again planned for 2009 with the introduction of the A380 on the Sydney route. 


Qatar Airlines and Etihad seem determined to wrestle hard-earned business away from Emirates. How do you rate the competition?

Competition ensures that we maintain a focus on our own business, as the market demands change we too must be able to adapt and change accordingly to meet our customer’s requirements.  As such, we welcome the opportunities that arise from an increase in market competition. One facet of the air cargo industry that I thoroughly enjoy is the challenge of meeting the demands of our customers both on a local and global level, and at Emirates we have both the network and aircraft type that allow us to maximise all opportunities that are presented to us. 

Keep on trucking, safely

Magazine Stories August Issue 2008
Saturday, 21 June 2008
BEFORE anyone starts on me, yes I know that this is an “Air Cargo Magazine” and I do know that it seems odd to have a column dedicated to road freight.  However, the reality is that those in the air cargo industry, whether carriers or freight forwarders, still need road transport.  After all, it is difficult to effect door to door services with a 737 freighter.  There is no parking!  Accordingly, developments with road transport regulation are important to those reading this magazine.  One significant issue is the ongoing development in “Chain of Responsibility” (CoR) legislation. 

In a rare example of effective Federal and State collaboration on regulation, the Australian National Transport Commission (NTC)  — www.ntc.gov.au — has provided a forum to develop consistent road regulations.

Put simply, CoR endeavours to ensure that everyone in the supply chain is allocated responsibility to ensure the safe carriage of goods by road.  The adoption of a national framework is intended to ensure consistency in treatment across all States and Territories.

Recent CoR regulation related to prohibitions on overweight loads and the requirement to use Container Weight Declarations to ensure that parties had a more accurate idea as to loads being carried.  Although the provisions have not been uniformly adopted, some prosecutions have arisen in respect of “bogus” Declarations.

The next tranche of CoR regulation relates to management of “Heavy Vehicle Driver Fatigue”.  It is intended that new regulations are to be implemented in Victoria, New South Wales, South Australia and Queensland on 29 September 2008.  The reforms allocate responsibility to all parties in the supply chain which goes beyond the traditional focus on owners and drivers.

Responsibility is being placed on a number of parties including:

• the driver;
• the employer of a driver;
• the prime contractor of a driver;
• the operator of the vehicle;
• the scheduler of goods or passengers for transport by the vehicle and also the scheduler of the driver;
• the consignee and consignor;
• the loading manager (being the person who supervises loading or unloading or manages the premises where that occurs); and
• the loader and unloader of the goods.

The concept of “loading manager” is of particular interest as it will apply to those employed at premises where at least five “regulated vehicles” (of specific weight) are loaded or unloaded in any business day.  This could include stevedores, empty container parks, importers and exporters, distribution centres and freight forwarders’ premises.
For example, this may create an issue at the various stevedores’ premises where vehicles are often lined up for some hours waiting for a slot to collect freight.  This could oblige the stevedores to provide rest areas for drivers and to advise them personally if they are to be delayed beyond their allocated slot time.

The obligation on these parties is to adopt reasonable steps to ensure that drivers will not be permitted to:

• drive while impaired;
• drive in breach of another law to avoid driving while impaired or fatigued; or
• breach the driver’s work/rest option.
According to the NTC, the types of “reasonable steps” could include the following:
• providing for rest to be taken with adequate facilities;
• providing for the reporting of travel delays and providing a mechanism for managing late arrivals;
• allowing loading and unloading to occur at agreed times;
• having a system of setting and allocating loading and unloading times that a driver can reasonably rely on so that they can comply with their work/rest hours options.
• developing an industry code of practice;
• use of accreditation schemes;
• reviewing your business practices;
• changing your commercial arrangements; and
• adopting a risk management approach.

In relation to vehicle loading and unloading, it is interesting that the Retail Logistics Supply Chain of Conduct has now developed a “Time Slot and Queuing Principles” and standards which echo many of the requirements in the new regulations.

It is noted that in Victoria no “reasonable steps” defence is available for owners and drivers.

Clearly, compliance is dictated not just by a desire to observe the law.  There are also substantial financial penalties and demerit points which could be issued.

All of these driver fatigue requirements will impose significant additional burdens on those in the industry.  Those who are affected should be taking immediate steps to ensure that they are aware of the obligations and implement processes to allow for proper protections and ensure that reasonable steps are taken.  Proving that “reasonable steps” have been taken would require proof of a review of the regulation, identification of risks and the steps taken to address the risks. 

The time for review and compliance is now!

NZ Commerce Commission presses ahead with carrier anti-cartel disclosure demands

Magazine Stories August Issue 2008
Saturday, 21 June 2008
NEW Zealand’s Commerce Commission is continuing its investigations into allegations of price-fixing and other possibly anti-competitive conduct in the air cargo industry, although the current status of those investigations is slightly different to the interpretation put forward by world media.

Some international news reports have suggested the Commission is prosecuting carriers for operating a cartel, in line with anti-cartel charges by regulatory authority elsewhere, but this is not yet the case.

The Commission is at this stage only acting to ensure that carriers provide the information needed for it to carry out a full investigation.

The Commission has filed criminal charges against Cathay Pacific Airways, Singapore Airlines and Aerolineas Argentinas, alleging non-compliance with statutory notices issued under the Commerce Act in October last year.  These notices required - compulsorily - that the carriers provide documentation and information by a specified date in November 2007.

“Any failure to comply with statutory notices that form part of a Commission investigation is a serious enforcement issue,” said Paula Rebstock, who chairs the Commission. 

Rebstock described cartels as “insidious”, saying that they “cause extensive damage to the New Zealand economy.  They are difficult to detect and extremely difficult to investigate because of their secretive nature.

“If the current investigation concludes that there is a breach of the Commerce Act, the Commission will be seeking to file proceedings in the High Court later this year.  The Commission will continue to strongly pursue cartels involved in price-fixing and other anti-competitive conduct.”

Meanwhile, two of Australia’s leading commentators on business cartel legislation have suggested, in a paper presented to a law conference, that New Zealand should try to avoid the deficiencies and glitches the two claim are inherent in Australia’s model for identifying and prosecuting business cartel behaviour.

The University of Melbourne’s Brent Fisse and Caron Beaton-Wells presented a paper entitled ‘The Australian Criminal Cartel Regime: A Model for New Zealand?’ to the 19th annual workshop of the Competition Law and Policy Institute of New Zealand.

This was a critique of Australia’s proposed new legislation criminalising business cartel behaviour.  It focused on the definition of cartel offences and the implications for enforcement, including leniency and cooperation policies.

“As much as reform in Australia is a positive step forward, the models that have been put on the table so far are full of problems,” said Fisse.  “New Zealand is well placed to avoid those problems and needs to do so.”

Beaton-Wells noted that “one of the key issues for New Zealand under a criminal model will be which agencies have the job of investigating and prosecuting these crimes - the Commerce Commission or the new Organised and Financial Crime Agency, or both”.

TSA disputes claim that screening problems will impact US freight

Magazine Stories August Issue 2008
Saturday, 21 June 2008
A US, a government subcommittee on aviation has been told there are significant challenges in meeting legislative requirements for the screening of 50 per cent of cargo on passenger aircraft by next February — and of all such cargo by August 2010.

However, Transport Security Administration (TSA) assistant secretary, Kip Hawley, said the TSA was on track to meet the air cargo screening requirement due next February.

 “To meet these challenges, TSA is emphasising effective security management  of the entire cargo supply chain by building upon our established programs: air cargo security regulations, standard security programs, security directives, information sharing and increased use of TSA-certified explosives detection canine teams, as well as Transportation Security Inspectors (TSIs) for cargo,” he said.

Hawley said the key to the success of the screening regime would be collaboration with stakeholders - US-based shippers, freight forwarders and passenger air carriers — through a program that would allow them to receive TSA certification to screen cargo early in the supply chain and to implement a secure chain of custody up to the point at which cargo was accepted by the aircraft operator.

“Certified screeners will use TSA-approved screening methods and will implement stringent facility and personnel security standards,” he said.

“TSA’s strategy involves every component of the air cargo shipping system from the entity originating the freight to the freight consolidators/forwarders, airports, air carriers who transport the cargo, and the people involved in the process that have access to cargo at every point in the supply chain.

“Even before we meet the 50 per cent goal, the vast majority of flights, carrying more than three-quarters of all passengers, will have their cargo screened at the 100 per cent level. Over 90 per cent of flights carry approximately 80 per cent of passengers, but transport less than 30 per cent of air cargo. Our emphasis on these flights represents a significant step forward in ensuring the security of air travellers.”

Hawley appeared before the sub-committee to explain the TSA’s efforts to improve the US aviation security environment.
HACTL
Cathay Cargo
United

IASC okays Qantas, V Australia’s bids for more South Africa services

Magazine Stories August Issue 2008
Saturday, 21 June 2008
WHATEVER South African Airways’ intentions might be for Australia - a continuing mystery and the subject of many a rumour - Australian carriers are still showing enormous confidence in the route’s potential for cargo and passenger haulage between the two countries.

Qantas has applied to the International Air Services Commission to boost its existing frequency of three flights weekly between Sydney and Johannesburg to five, while V Australia wanted five weekly movements on the route.
Both airlines got the thumbs up, although with only five frequencies available at the time of application, V Australia got an OK for three now and two more in October when a further four weekly frequencies become available - as we outlined in the last issue of AirCargo Asia-Pacific.

The delay didn’t bother V Australia, which had already indicated that services would not commence until October 1 next year, dovetailing nicely into the extension of the bilateral air services agreement.

The IASC determination gives the new carrier - which also has picked up cargo and passenger allocations on the North American route - until the end of October 2009 to get things moving on a five times a week basis using B773-ER equipment. Rival Qantas will utilise B744 aircraft.

The Qantas application sought one of the extra flights effective December this year and the second from April 2009.  This scenario was, said Jane McKeon, the carrier’s general manager Government and International Relations, “contingent on the progressive delivery of Qantas’s new A380 aircraft, which will release B747-400s currently operating between Australia and the US”.

IASC gave Qantas until the end of July to get the new schedule operating but added a rider of “or from any other date approved by the Commission” which gives the carrier some wriggle room.

It was planned that SAA would code share on the additional frequencies, noted McKeon.  “Qantas will seek the Commission’s approval for this to occur as part of a separate detailed application for the extension of authorisations for SAA to code share on our existing Sydney-Johannesburg services beyond December 31 2008.”

Both the Qantas and V Australia allocations are for five years (after which they are reviewed for renewal, a process that usually is little more than a formality if operations are proceeding smoothly) and came with the usual conditions, including the requirement that the carriers are “not permitted to utilise the capacity to provide services jointly with another Australian carrier or any other person without the approval of the Commission”.

Changes of ownership or management affecting the carriers’ Australian status also need the IASC’s consideration and approval, as always.

Interview: Technology, expanded network to drive Emirates freight growth

Magazine Stories August Issue 2008
Saturday, 21 June 2008

Greg Johnson,  the new cargo manager Australia for Emirates Airline, joined the Emirates SkyCargo team as NSW Cargo manager when Emirates launched services to Sydney eight years ago. Johnson was responsible for establishing the cargo arm of the business in Australia’s busiest air freight airport.

Emirates SkyCargo in Australia has developed substantially under Johnson’s leadership, with Emirates currently the third ranked airline in terms of total cargo tonnage uplifted from Australia.

Johnson, who has a degree in aviation studies, is married to partner Miriam and has two children, Ben and Rebecca.


AirCargo Asia Pacific: IATA has made significant changes to the TACT book in the Australian market. Many forwarders believe this will make it harder for the smaller forwarder and easier for the likes of DHL and Fedex and UPS.  The big airlines with extensive networks like Emirates, Singapore Airlines and Korean also look likely to gain most in the changes. How do you see the changes affecting the marketplace?

Greg Johnson: IATA member airlines operating in and out of Australia recently voted not to seek further immunity from the ACCC in respect of the final review affecting the cargo tariff and associated interline activities. As a result of this decision, effective the 30th September 2008 the IATA cargo tariff co-ordination will no longer be applicable for routes to / from Australia. However, the airlines will have the option to publish their own general cargo rates in the TACT Rates book so there should be no major implications for small, medium or large forwarders.


What does your new position entail?

Primarily my role is to create maximum awareness of Emirates SkyCargo in the Australian market and to ensure that we maintain our very high standard of service to our customers. We are continuously reviewing the requirements of our customers to ensure that we provide the product and solution that is best suited to the customers need.


Why move head office from Melbourne to Sydney?

The move of our corporate head-office to Sydney was a decision based on the geographical position of our major passenger corporate account head-offices.


Dnata had quite a few teething problems when they took over Emirates handling in Australia. Has it improved?

The Toll/Dnata joint venture has enabled us to not only to enhance our service levels but also strengthen our cargo product in the Australian market. We now have one entity providing cargo, ramp and passenger services for Emirates in Sydney, Brisbane and Melbourne and this has enabled more streamlined communications between all departments. In addition, the formation of Toll/Dnata Airport Services has seen the injection of new capital, equipment and technology into the cargo and airport operations.


Emirates Skycargo has always placed great emphasis on technology. I believe Australia won the Emirates network award this year for best use of technology. What difference has the latest technology made to the business? Have forwarders become more tech savvy?

Yes, the Australian Cargo team received the award for ‘best effective SkyChain usage’ at our recent World-Wide Conference.

SkyChain is Emirates SkyCargo’s fully automated system for cargo logistics and provides our customers with an integrated network of information and business support systems. The SkyChain system acts as a seamless information pipeline which provides the tools that enables everyone involved at any point on the entire logistics chain to extract, update and share information.


Fuel prices have eased in the last few weeks and the exchange rate has improved almost 13.5 per cent.  Has this led to a bounce in space enquiries?

 The high price of oil and low US Dollar (High AUD) inevitably resulted in pressure on air freight. The recent improved exchange rate has seen a slight increase in the uplift of manufactured goods but again, the changes in global demand will ultimately be the driver for increases in air freight.


The perishables market has declined following increased competition from ocean freight and new cheaper sources in overseas markets. Is it recoverable?

Without question there has been a decline in the export tonnages of perishable commodities. With most importers being able to source product at lower prices from other world market places plus the high valued AUD our exporters have found it extremely difficult to compete and secure orders.

Moreover, when you review the specific perishable commodity markets for air freight, there is a reduced demand which tends to see shipments move from the air onto the sea. 

However, our data indicates that the demand for perishable capacity is on the increase and we see this trend continuing from our Australian gateways.


What do you see as the major issues facing the industry going forward?

Emirates SkyCargo achieved fantastic results in the 2007-2008 financial year considering what a turbulent year it was for the air cargo industry. Cargo revenue contributed 19 per cent to the airline’s total transport revenue, which is certainly one of the highest contributions of any airline in the world with a similar fleet. This financial year 2008-2009, Emirates SkyCargo will be looking to increase cargo revenues by 22 per cent on last year.

The forecast for airline profitability has obviously deteriorated with the escalating oil prices. The cost of jet fuel has risen to new heights in fact the jet fuel prices in May/June 2008 were 80 per cent higher than a year ago. In addition to the Fuel crisis, we are also feeling the effects of the US Sub-Prime crisis, the global economic slow-down and the high Australian dollar / weak US dollar are all factors which impact our business and require constant monitoring.  


The industry struggles to attract new workers. Is it because of pay and work conditions or lack of opportunities?

I think that in order to recruit young workers into the transport and logistics work place we need to have a concerted effort by the industry associations and government agencies to conduct forums and workshops that can show the younger generation that this industry is not just about loading and unloading large trucks and ships. We need to collectively highlight the variety of employment opportunities available in areas such as procurement, warehousing and distribution, supply chain management, logistics, sales and customer service to mention just a few.


The US market is going into recession and the Chinese market is showing distinct signs of softening. Carriers will be chasing fewer opportunities over the next couple of years until markets bounces back. Where should exporters and importers look to maintain business?

Emirates SkyCargo continues to operate in the Chinese market, in fact on the 1st July 2008, Emirates SkyCargo launched six direct Guangzhou-Dubai flights a week in addition to our double daily freighter services to Beijing and Shanghai and 14 weekly flights into Hong Kong.

There is an increasing middle class population developing in both China and India and this growth will result in a substantial increase in their respective consumer spending and the need for increased access to goods and services.

The Middle East continues to provide opportunities.  A recent news release from IATA indicated that Middle Eastern carriers reported the strongest performance results with a 12.1 per cent increase in June 2008 compared to the May 2008 figure of 10.7 per cent.

Therefore, the global challenge for us will be to ensure that we have the capacity available where and when it is required.


Emirates has reduced freighter operations to Djibouti and Nairobi. Is that market softening or has fuel changed the market dynamics?

The freighter aircraft are certainly being closely monitored in terms of their overall revenue generation and of course the high fuel costs have increased the overall operating costs on the freighter aircraft substantially.

Furthermore, as the world markets shift we will continue to utilise the freighter aircraft where the demand is strongest. It is considerably easier for Emirates to re-position freighter aircraft onto different routes compared to our passenger aircraft.

Our freighter aircraft contributed approximately 30 per cent of the Emirates SkyCargo’s revenue last financial year.


What if anything can Emirates do to stimulate new business?

The air cargo business is extremely competitive and not just from other airlines, but from other forms of transportation such as sea, road and rail.

The ever increasing Emirates world-wide network continues to provide business opportunities for our customers and we continue to look at opportunities to develop new trade-lanes in conjunction with our customers.

One of the main criteria for using air freight is speed. The aircraft remains the fastest mode of transportation that is commercially available but it is the overall transportation time that counts, and it is in this area where air freight comes into its own. The transaction time of a shipment is expedited when the shipment is carried as airfreight, as the goods can be provided to the consignee in a much faster time-frame thus allowing the shipper to receive payment earlier than if the shipment had moved by one of the other modes of transportation. 

Emirates has confirmed Australia’s status as a premier trade and tourism destination by announcing additional flights to Brisbane, Melbourne and Sydney.  We will see the current 49 flights a week operating to Australia increase to a total of 56 flights per week, with further increases again planned for 2009 with the introduction of the A380 on the Sydney route. 


Qatar Airlines and Etihad seem determined to wrestle hard-earned business away from Emirates. How do you rate the competition?

Competition ensures that we maintain a focus on our own business, as the market demands change we too must be able to adapt and change accordingly to meet our customer’s requirements.  As such, we welcome the opportunities that arise from an increase in market competition. One facet of the air cargo industry that I thoroughly enjoy is the challenge of meeting the demands of our customers both on a local and global level, and at Emirates we have both the network and aircraft type that allow us to maximise all opportunities that are presented to us. 

Keep on trucking, safely

Magazine Stories August Issue 2008
Saturday, 21 June 2008
BEFORE anyone starts on me, yes I know that this is an “Air Cargo Magazine” and I do know that it seems odd to have a column dedicated to road freight.  However, the reality is that those in the air cargo industry, whether carriers or freight forwarders, still need road transport.  After all, it is difficult to effect door to door services with a 737 freighter.  There is no parking!  Accordingly, developments with road transport regulation are important to those reading this magazine.  One significant issue is the ongoing development in “Chain of Responsibility” (CoR) legislation. 

In a rare example of effective Federal and State collaboration on regulation, the Australian National Transport Commission (NTC)  — www.ntc.gov.au — has provided a forum to develop consistent road regulations.

Put simply, CoR endeavours to ensure that everyone in the supply chain is allocated responsibility to ensure the safe carriage of goods by road.  The adoption of a national framework is intended to ensure consistency in treatment across all States and Territories.

Recent CoR regulation related to prohibitions on overweight loads and the requirement to use Container Weight Declarations to ensure that parties had a more accurate idea as to loads being carried.  Although the provisions have not been uniformly adopted, some prosecutions have arisen in respect of “bogus” Declarations.

The next tranche of CoR regulation relates to management of “Heavy Vehicle Driver Fatigue”.  It is intended that new regulations are to be implemented in Victoria, New South Wales, South Australia and Queensland on 29 September 2008.  The reforms allocate responsibility to all parties in the supply chain which goes beyond the traditional focus on owners and drivers.

Responsibility is being placed on a number of parties including:

• the driver;
• the employer of a driver;
• the prime contractor of a driver;
• the operator of the vehicle;
• the scheduler of goods or passengers for transport by the vehicle and also the scheduler of the driver;
• the consignee and consignor;
• the loading manager (being the person who supervises loading or unloading or manages the premises where that occurs); and
• the loader and unloader of the goods.

The concept of “loading manager” is of particular interest as it will apply to those employed at premises where at least five “regulated vehicles” (of specific weight) are loaded or unloaded in any business day.  This could include stevedores, empty container parks, importers and exporters, distribution centres and freight forwarders’ premises.
For example, this may create an issue at the various stevedores’ premises where vehicles are often lined up for some hours waiting for a slot to collect freight.  This could oblige the stevedores to provide rest areas for drivers and to advise them personally if they are to be delayed beyond their allocated slot time.

The obligation on these parties is to adopt reasonable steps to ensure that drivers will not be permitted to:

• drive while impaired;
• drive in breach of another law to avoid driving while impaired or fatigued; or
• breach the driver’s work/rest option.
According to the NTC, the types of “reasonable steps” could include the following:
• providing for rest to be taken with adequate facilities;
• providing for the reporting of travel delays and providing a mechanism for managing late arrivals;
• allowing loading and unloading to occur at agreed times;
• having a system of setting and allocating loading and unloading times that a driver can reasonably rely on so that they can comply with their work/rest hours options.
• developing an industry code of practice;
• use of accreditation schemes;
• reviewing your business practices;
• changing your commercial arrangements; and
• adopting a risk management approach.

In relation to vehicle loading and unloading, it is interesting that the Retail Logistics Supply Chain of Conduct has now developed a “Time Slot and Queuing Principles” and standards which echo many of the requirements in the new regulations.

It is noted that in Victoria no “reasonable steps” defence is available for owners and drivers.

Clearly, compliance is dictated not just by a desire to observe the law.  There are also substantial financial penalties and demerit points which could be issued.

All of these driver fatigue requirements will impose significant additional burdens on those in the industry.  Those who are affected should be taking immediate steps to ensure that they are aware of the obligations and implement processes to allow for proper protections and ensure that reasonable steps are taken.  Proving that “reasonable steps” have been taken would require proof of a review of the regulation, identification of risks and the steps taken to address the risks. 

The time for review and compliance is now!

NZ Commerce Commission presses ahead with carrier anti-cartel disclosure demands

Magazine Stories August Issue 2008
Saturday, 21 June 2008
NEW Zealand’s Commerce Commission is continuing its investigations into allegations of price-fixing and other possibly anti-competitive conduct in the air cargo industry, although the current status of those investigations is slightly different to the interpretation put forward by world media.

Some international news reports have suggested the Commission is prosecuting carriers for operating a cartel, in line with anti-cartel charges by regulatory authority elsewhere, but this is not yet the case.

The Commission is at this stage only acting to ensure that carriers provide the information needed for it to carry out a full investigation.

The Commission has filed criminal charges against Cathay Pacific Airways, Singapore Airlines and Aerolineas Argentinas, alleging non-compliance with statutory notices issued under the Commerce Act in October last year.  These notices required - compulsorily - that the carriers provide documentation and information by a specified date in November 2007.

“Any failure to comply with statutory notices that form part of a Commission investigation is a serious enforcement issue,” said Paula Rebstock, who chairs the Commission. 

Rebstock described cartels as “insidious”, saying that they “cause extensive damage to the New Zealand economy.  They are difficult to detect and extremely difficult to investigate because of their secretive nature.

“If the current investigation concludes that there is a breach of the Commerce Act, the Commission will be seeking to file proceedings in the High Court later this year.  The Commission will continue to strongly pursue cartels involved in price-fixing and other anti-competitive conduct.”

Meanwhile, two of Australia’s leading commentators on business cartel legislation have suggested, in a paper presented to a law conference, that New Zealand should try to avoid the deficiencies and glitches the two claim are inherent in Australia’s model for identifying and prosecuting business cartel behaviour.

The University of Melbourne’s Brent Fisse and Caron Beaton-Wells presented a paper entitled ‘The Australian Criminal Cartel Regime: A Model for New Zealand?’ to the 19th annual workshop of the Competition Law and Policy Institute of New Zealand.

This was a critique of Australia’s proposed new legislation criminalising business cartel behaviour.  It focused on the definition of cartel offences and the implications for enforcement, including leniency and cooperation policies.

“As much as reform in Australia is a positive step forward, the models that have been put on the table so far are full of problems,” said Fisse.  “New Zealand is well placed to avoid those problems and needs to do so.”

Beaton-Wells noted that “one of the key issues for New Zealand under a criminal model will be which agencies have the job of investigating and prosecuting these crimes - the Commerce Commission or the new Organised and Financial Crime Agency, or both”.

TSA disputes claim that screening problems will impact US freight

Magazine Stories August Issue 2008
Saturday, 21 June 2008
A US, a government subcommittee on aviation has been told there are significant challenges in meeting legislative requirements for the screening of 50 per cent of cargo on passenger aircraft by next February — and of all such cargo by August 2010.

However, Transport Security Administration (TSA) assistant secretary, Kip Hawley, said the TSA was on track to meet the air cargo screening requirement due next February.

 “To meet these challenges, TSA is emphasising effective security management  of the entire cargo supply chain by building upon our established programs: air cargo security regulations, standard security programs, security directives, information sharing and increased use of TSA-certified explosives detection canine teams, as well as Transportation Security Inspectors (TSIs) for cargo,” he said.

Hawley said the key to the success of the screening regime would be collaboration with stakeholders - US-based shippers, freight forwarders and passenger air carriers — through a program that would allow them to receive TSA certification to screen cargo early in the supply chain and to implement a secure chain of custody up to the point at which cargo was accepted by the aircraft operator.

“Certified screeners will use TSA-approved screening methods and will implement stringent facility and personnel security standards,” he said.

“TSA’s strategy involves every component of the air cargo shipping system from the entity originating the freight to the freight consolidators/forwarders, airports, air carriers who transport the cargo, and the people involved in the process that have access to cargo at every point in the supply chain.

“Even before we meet the 50 per cent goal, the vast majority of flights, carrying more than three-quarters of all passengers, will have their cargo screened at the 100 per cent level. Over 90 per cent of flights carry approximately 80 per cent of passengers, but transport less than 30 per cent of air cargo. Our emphasis on these flights represents a significant step forward in ensuring the security of air travellers.”

Hawley appeared before the sub-committee to explain the TSA’s efforts to improve the US aviation security environment.
HACTL
Cathay Cargo
HACTL
Cathay Cargo