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Emirates SkyCargo tops world ranking of e-freight shipments

: Magazine Stories January Issue 2009; Thursday, 28 January 2016

JUST months ago, in December 2008, UAE carrier Emirates SkyCargo became the first e-freight-compliant carrier in the Middle East.

Today, having successfully handled more than 1,000 e-freight shipments, it is the leading airline worldwide in terms of the number of e-freight consignments carried each week.

E-freight has been adopted by numerous freight forwarders sending cargo both to and through the carrier’s Dubai hub.

The thousandth e-freight shipment was sent by Dubai based Allport Cargo from Dubai to the UK’s London Heathrow. To date, the leading freight forwarder network-wide is DHL Global Forwarding, with nearly 400 shipments on Emirates SkyCargo alone.

Niranjan Navaratnarajah, Emirates manager Cargo Systems & Revenue Planning and co-chairperson of the Dubai implementation team said: “Part of the reason for the quick uptake in Dubai is the complete buy-in from the authorities involved in implementing the initiative.”

Participants claim forwarders who send traffic using e-freight can enjoy the benefits of a faster service through reduced cycle times; greater reliability and accuracy with its one-time electronic data entry at point of origin; better visibility because electronic documentation allows for online track and trace functionality; and Customs benefits as the number of fines are reduced and deposits are no longer required. On top of these benefits, there is the added financial stimulus for Dubai-based customers because Customs does not retain the forwarders’ deposits.
It is estimated that e-freight saves the industry US$1.2 billion annually through reduced inventories and document processing cost savings.

Dubai Customs, Emirates SkyCargo and Dnata have been working closely with Dubai’s freight forwarding community to encourage the uptake of e-freight.

Juma Al Ghaith, executive director for Customs Development at Dubai Customs said: “At Dubai Customs we have long held the principle of working closely with other authorities and the private sector to improve trading processes and reduce the cycle time of goods being transported to Dubai. The introduction of the declaration processing system, Mirsal 2, which enables paperless declarations to Customs of freight arriving in Dubai; and the implementation of the e-freight initiative are just two of the many ways we at Dubai Customs are contributing to the ongoing success of Dubai as an international trading hub.”

Mr Navaratnarajah added that while many freight forwarders had started sending e-freight shipments on enabled routes, there was still a lot of potential for growth – with more forwarders still to begin using it, as well as a greater number of shipments to be sent via e-freight.

Emirates SkyCargo has been a strong supporter of IATA e-freight since the concept was first tabled. There are now airports at 16 countries which are e-freight enabled, including Dubai, Singapore, Hong Kong, South Korea, Australia, New Zealand, Mauritius, UK, Netherlands, Germany, Luxembourg, Denmark, Sweden, Norway, Canada and the USA.

Express shippers find new ways to skin cats as customers seek â€˜economyâ€™ alternatives

: Magazine Stories January Issue 2009; Thursday, 28 January 2016

THE EXPRESS parcel industry is becoming increasingly reliant on the business to consumer (B2C) segment and growing demand for online shopping deliveries as the economic downturn reduces business to business (B2B) volumes.

Market analyst Datamonitor says overall, shippers appear to be moving towards more ‘economy’ products, prompting a shift from air to road and encouraging express players to implement creative solutions for surviving the current market climate.

The economic downturn has damaged conditions in the express market, leading to an unprecedented reduction in volumes of parcels, predominantly on the premium side. This decline in the express market is spreading from western Europe and the US to other parts of the world and recently saw DHL withdraw from the US domestic market.

The economic downturn has caused integrators to implement cost reductions and pushed them to look for ways to keep existing customers and exploit new opportunities. Recent media reports suggest DHL Express, for example, is planning to close five local service centres in the UK, laying off about 60 staff in order to adjust to the worsening economic conditions.

Supply chain

Overall, global markets are suffering from lower consumer demand, which has caused shippers to rethink their use of express services. The consolidation of shipments and the use of economy services where possible are strategies increasingly adopted by customers that want to reduce costs in their supply chain.

Lower volumes, as well as the movement of customers from premium to economy services, has led integrators to come up with strategies to compensate for the declining revenues in their express businesses. This has been reflected in integrators' moves to broaden their economy-type service portfolio and raise their upper weight limits to compensate for the reduction in demand for documents and parcels, especially at the time-sensitive premium end of the market.

While some integrators adopt strategies to broaden their economy product portfolio, a few others such as FedEx, have started to provide time-sensitive freight services to attract shipments from business customers looking to better manage their inventories. Most B2B customers are feeling the brunt of rising transportation costs and are looking for options to incur the lowest costs possible in order to manage their inventory levels and increase customer demand. This and other initiatives are causing the merging of services within freight and express segments.

Although the express industry has clearly been affected by the falling demand from business customers, opportunities are being presented by the increasing demand for home deliveries as online shopping continues to flourish, especially in the UK.

Flexible times

Home shopping has been a convenient option for consumers looking for an easy way to hunt for bargains, as long as their needs are met by reliable and flexible delivery services. Despite the slump in retail sales, the online B2C segment saw consumers making increasing numbers of purchases during the festive season, according to Datamonitor logistics & express senior analyst Erik Van Baaren.

“Although the number of online shoppers was lower, the volumes were high, resulting in overall growth in this market segment and offering opportunities to those operators that have suitable home delivery services.”

The current market situation demands that express companies re-focus their portfolio on those sectors, trade flows and geographies that offer the largest opportunities and make up for their falling volumes and profit margins, Van Baaren said. “DHL has already initiated efforts to tap the potential in the B2C segment by delivering packages at flexible times that suit different customer types.”

He concluded: “Further development of home delivery, freight express and geographic re-focusing could be feasible alternatives for the other integrators such as TNT, FedEx and UPS, as long as they can develop the necessary road and air networks – both domestically and internationally – and serve the needs of a more discerning customer base.”

Get rid of your outdated equipment and ready for the upturn ahead, says Keller

: Magazine Stories January Issue 2009; Thursday, 28 January 2016

AN INDUSTRY chief contends that despite the current global economic slump, the future of international, intermodal transportation will be strong and vibrant in this era of globalisation.

“Certainly, we are all concerned about the current economic situation and the state of our international supply chain community, which has seen confidence wither and demand decline; but we cannot turn back the clock,” said Peter Keller, a member of the board of directors of the Intermodal Transportation Institute at the University of Denver and president of America’s NYK Line (NA) Inc.

“Our world will continue to shrink, to flatten, and we will continue to be more independent. While we are all in a difficult economy, we should dismiss the distinctions between the short, medium and long-term future of transportation in a global economy. International trade and transportation will flourish in the long-term, Keller said in a keynote address at the Denver Transportation Club’s 28th annual transportation forum.

“From adversity and change comes opportunity – and we must be ready for the turnaround, he told representatives from transportation, government and academia. “Each business cycle increases the pace of change, so we must be prepared to accelerate our pace of improvement and accelerate our activity levels. An economic depression is the time to review our transportation processes, to remove old, marginally productive assets, and to consider how we can add additional value to the international supply chain by reducing costs and increasing efficiencies,” said Keeler.

“We need to re-evaluate our service models and patterns for the future. Yes, the near-term economic and transportation bubbles have burst, but after the downturn, we all know there will be an upturn. We need to plan for that eventuality now. We need to continue to seek global partnerships and opportunities. In this small world, which is getting smaller every day, many people are still concerned or scared about the global marketplace. Don’t be – it is the future.”

Keller also pointed out there will be challenges to be met. These included:

• Fuel prices will rise again. We must plan now rather than simply hope for depressed rates to continue;

• We need to consider the impact that the Panama Canal expansion, scheduled for 2014, will have on global trade and plan accordingly to meet the shipping demands it will create as economic normalcy returns;

• We need to consider, how with economic upheaval, our population might relocate as industries evolve, consumer demand returns, employment returns and freight begins to flow again; and

• We need to adapt to our global supply chains as they mature and evolve.

“Those transportation companies that are forward-thinking and bold in embracing globalisation and receptive to change will survive and prosper in the long-term to enjoy the summer fruits after this hard economic chill,” added Keller.

India puts its faith in IT as the most cost-effective way to grow logistics

: Magazine Stories January Issue 2009; Thursday, 28 January 2016

IT’s been estimated that IT spend in the Indian logistics industry will soar to about US$210 million in the next five years — that’s almost triple the existing figure of US$83 million.

India currently spends around 13 per cent of its GDP on logistics — higher than the United States (10 per cent), Europe (11 per cent) and Japan (10 per cent).

This, according to a survey for the Indian logistics industry, translates to around $US31 billion in operating costs for the economy.

The survey says India risks missing out on one to two per cent GDP unless significant strides are made to bridge this gap and improve supply chain efficiencies by effectively using technology.

The key objective of the study - by Kale Consultants in partnership with Feedback Business Consulting Services - was to assess the market dynamics and highlight the technology adoption trends in the logistics industry.

“There is a lot of activity happening in this highly fragmented market and the trends are quite revealing,” said Sumeet Nadkar, head- logistics SBU, Kale Consultants. “3PL players are growing at over 25 per cent. Small and medium family-owned enterprises are growing in stature in the integrated logistics space. Global majors have committed to huge investments for their Indian operations. PE funds are continually eyeing the sector, which has already attracted investments of more than US$4.1 billion in the first half of 2008.”

Key finds included:

• Freight forwarding: Technology spends in freight forwarding is expected to grow by 160 per cent. This industry presently constitutes 14 per cent of the IT demand and is expected to rise to about 17 per cent of the overall IT spend by 2013.

• Airports: Current IT spends by airports is estimated at approximately 1.1 per cent of their overall revenues. New investments of US$5.95 billion are expected in the next four years to boost IT requirements. This is one of the segments where IT utilisation is high compared with other segments in the logistics space.

• Warehousing: Technology spend is expected to jump from the current US$10 million to about US$25 million by 2013. This industry is fast emerging as a strategic function, due to rapid growth in retail and expansion by domestic and international players. This requires end-to-end solutions that improve efficiencies in supply chain management. The market size currently is US$627 million and expected to reach US$1.5 billion by 2013.

• Express & Courier services: This industry will continue to remain the highest technology buyers with 33 per cent of the technology spend by 2013, up from the present 29 per cent.

• Radio Frequency Identification: RFID is also expected to grow rapidly with nearly 80 per cent of the respondents indicating that they will be adopting the technology (in spite of cost concerns). The demand will primarily be driven by their overseas customers and the domestic retail boom. The ICD/CFS market size together is currently at US$1.3 billion and is expected to reach US$1.6 billion and US$2.6 billion by 2013.

The survey of 500 respondents was conducted across 10 locations in India — Delhi, Bangalore, Chennai, Mumbai, Pune, Kochi, Vizag, Kolkata, Paradip and Hyderabad.

Industry must understand limits of IATA airfreight sales figures

: Magazine Stories January Issue 2009; Thursday, 28 January 2016

THE INTERNATIONAL Air Transport Association (IATA) airfreight sales figures drawn from countries in the Asian region still are being misinterpreted as an ‘accurate reflection of results for both the companies and the countries listed’, according to Hellmann Worldwide Logistics’ director of projects and administration - Asia, Shannon Hellmann.

In reality, Hellmann says, the IATA report now includes only the limited figures that come from Cargo Accounts Settlement System (CASS-registered) carriers.

Further, while most logistics companies do provide IATA with their actual total annual airline revenue -- which includes CASS, non-CASS and charter business figures -- in 2006 IATA stopped releasing gross regional figures for countries in which CASS has been implemented.

This means that, for example, Hong Kong as a region achieved US$5351 million in total airfreight sales revenue in 2004, yet in 2006, only US$1818 million was reported for the same region using CASS data. And while CASS is growing at an impressive rate and handling US$23 billion in transactions, IATA says CASS still covers less than half of the industry’s business.

As a result, there are billions of dollars in CASS countries’ total revenues either not reported to IATA or simply not published in the airfreight sales totals. This is especially relevant in Hong Kong and The People’s Republic of China, where reported revenues are strongly distorted.

Further, airfreight charter totals also are mostly excluded, as those carriers tend to be either non-IATA or non-CASS affiliated. This is particularly relevant as leading logistics providers can each average several hundred charter flights out of Hong Kong and Shanghai in any given year.

In summary, since 2006, any analysis of the IATA report being employed to rank industry leaders and top-performing countries is not only misleading, but confusing and erroneous as well.

IATA itself is well aware of the under reporting and states that the figures are not intended for publication.

Industry should check the differences between Warsaw and Montreal rules

: Magazine Stories January Issue 2009; Thursday, 28 January 2016

SINCE 24 January 2008, the Convention for the Unification of Certain Rules For International Carriage by Air signed in Montreal in 1999 (Montreal Convention) has governed the liability of air carriers in respect of most international carriage to and from Australia, writes Andrew Hudson.

What is the Montreal Convention?

The Montreal Convention sets out a framework for determining the liability of air carriers for injury or death of a passenger, loss or damage to luggage or cargo and damage caused by a delay in the transport of passengers, luggage or cargo which occurs during the course of international carriage.

The need for the Montreal Convention stems from the inadequacy of the Convention for the Unification of Certain Rules Relating to International Carriage by Air (Warsaw Convention) which originally determined carriers’ liability. The Warsaw Convention, having been first signed in 1929, reflects an era in which the young aviation industry required protection from potentially ruinous compensation claims.

The Warsaw Convention was amended several times. However, not all signatories to the original Convention ratified all amendments. This created difficulties in determining which version of the Warsaw Convention applied.

The Montreal Convention addresses these problems by raising carriers’ liability limits, presenting the liability framework in a single consistent Convention and updating the terminology used.

When does it apply?

The Montreal Convention will apply to international carriage where the country of departure and the country of destination have both adopted the Convention. Most of Australia’s major trading partners have already adopted the Montreal Convention, including the US, China, the EU, New Zealand and Japan.

Where the flight is to or from a country that has not adopted the Montreal Convention (such as India, Indonesia or Thailand), the applicable version of the Warsaw Convention will apply.

In respect of cargo, the Montreal Convention applies during the period the cargo is in the charge of the carrier and extends to carriage by land, sea or inland waterway within an airport and in other limited circumstances.
In respect of passengers, the Montreal Convention applies to accidents which take place on board an aircraft or in the course of embarking or disembarking.

The Montreal Convention will not affect domestic carriage.

What has changed?

The Montreal Convention introduces a 2 tiered liability framework in respect of injuries to, or death of, a passenger. The first tier is up to 100,000 Special Drawing Rights (SDRs) (approximately AUD$230,000). The first tier is a strict liability tier and liability of the carrier can only be reduced in the case of contributory negligence by the passenger.

The second tier is unlimited. However, the carrier can avoid liability by proving that the damage was not due to its negligence or was due solely to the negligence or other wrongful act or omission of a third party.

Liability for destruction, loss, damage or delay to baggage is limited to 1,000 SDRs (approximately AUD$2,300) unless the passenger has made a special declaration of interest at the time of checking the luggage.

Liability for destruction, loss, damage or delay to cargo is set at 17 SDRs (approximately AUD$39) per kilogram unless the consignor made a special declaration of interest at the time the cargo was handed over to the carrier.

This is the same limit as under some versions of the Warsaw Convention, but is greater than under the original Warsaw Convention.

Other changes include:

• the requirement that liability limits be reviewed every five years. This means the liability limits can be increased to account for inflation;

• the ability for a damages claim to be brought in the country where the passenger resides at the time of the accident if it is a country from which the carrier operates and where it has premises; and

• allowing for simplified documentation including electronic ticketing.

What you need to do

With increasing liability limits, carriers need to consider the adequacy of their existing insurance cover.

The Montreal Convention will apply regardless of whether reference to the Convention is made in a carrier’s terms and conditions. However, it is possible for carriers to agree to higher limits of liability. It is therefore important for carriers to ensure that they do not, through their terms and conditions, unintentionally agree to higher liability limits than those prescribed by the Montreal Convention. One method to ensure this is to reference the Montreal Convention in the carrier’s terms and conditions and provide that liability limits are in accordance with the limits set in the Convention.

Carriers should also be aware that liability in relation to delays and damage to cargo is not strict and that in the event of a claim, there may be defences available. Carriers should also be aware that liability limits do not apply to acts by the carrier that are deemed wilful or deliberate.

NZâ€™s Commerce Commission riding high â€” promises to continue cartel-busting run

: Magazine Stories January Issue 2009; Thursday, 28 January 2016

CALLS for New Zealand’s Commerce Commission to be revamped — or even disbanded — are not likely to affect its current prosecution of several major carriers for alleged price-fixing and other cartel-type actions in air cargo.

The Commission is continuing its cartel-busting campaign and in January its investigations led to Aerolineas Argentinas being socked with a NZ$11,000 file for non-compliance after a Commission statutory request for information.

The Argentinian carrier is not one of those being prosecuted as part of what the Commission sees as an international cartel.

Charges against two other carriers that failed to provide the required information — enforceable by law under section 98 of the Commerce Act — are continuing. Cathay Pacific and Singapore Airlines Cargo are also charged as being part of the alleged cartel, along with Air New Zealand, British Airways, Cargolux, Emirates, Garuda Indonesia, JAL, Korean, Malaysia Airlines, Qantas, Singapore Airlines, Thai and United.

In applauding the successful prosecution of Aeronlineas Argentinas, Commission chair Paula Rebstock claimed it “reinforces that businesses must ensure that they respond to the Commerce Commission’s section 98 notices on time and fully.

“Statutory notices are an effective tool and the commission relies heavily on them to gain evidence from parties under investigation.”

As reported earlier, the cartel-busting moves attracted some criticism because of the Commission’s perceived aggressiveness and its apparent aura of ‘wannabe’ emulation of overseas jurisdictions where air cargo has been heavily hit by prosecutions involving supposed cartel-type behaviour.

While this may not be either fair or accurate, the commission’s activities in 2008 saw greater intervention in business under the banner of anti-competitive regulation. Further, when Rebstock moved against the airlines she indicated the Commission was hot on the heels of other alleged cartels, including one she referred to as ‘affecting more commerce’ than the airline one.

Dissatisfied mutterings came to a head in mid-February when a senior lawyer who is active in competition law released a paper calling for radical reform of the Commerce Commission.

Complicating this was the fact that the lawyer’s practice — one of the major legal groups — handles NZ Telecom which has long been critical of the Commission’s powers and actions. Both the lawyer and Telecom were quick to stress that his paper was not part of a lobbying strategy but had been researched in a private capacity.

Air New Zealand made no comment. Late last year, as we already have reported, Air New Zealand’s general counsel described the Commission’s announcement of court proceedings as “clearly an approach designed to justify their existence and seems more about grandstanding than about getting to the bottom of the allegations and facilitating a co-operative approach from the airlines”.

The lawyer’s paper initially touched off a breadth of generally supportive comment, although few were keen to be identified, presumably for fear of finding themselves in the sights of Rebstock and her team with powers undiminished.

Simon Power, New Zealand’s Minister of Commerce, responded to the report and support by saying that he would “cast a fresh eye” on the commission.

Within a few days, however, the tide turned more to those who felt the Commission should not be tampered with, other than to make improvements.

John Collinge, a former Commission chairman, said that “without a competition law, we would return to the days of the robber barons, or when New Zealand business was operated through clubbish trade associations, or when politicians were inundated with pleas to promote one merger partner or the other”.

He felt the Commission should continue its work, with improvements such as boosting its neutrality (“the Commission does appear to have been subject to political influences and vested interests”), dealing with more difficult anti-competitive issues, using New Zealand evidence rather than drawing so much on overseas material, and freeing it from some of its regulatory roles in price control and regulation.

In a lead editorial headed ‘Consumer will be worse off if watchdog goes’, The New Zealand Herald observed that “those seeking to defang the Commission know its powers are far from extraordinary in a global context.

“Indeed, even if they succeeded, they would find their transtasman ambitions quashed by the Australian Competition and Consumer Commission. In terms of upholding the public benefit, it is far more ferocious than its local counterpart, as Air New Zealand discovered when it sought various relationships with Qantas.”

Overseas in the US as it promised at the time of its earlier — controversial — air cargo cartel prosecutions, the US Department of Justice has continued to beaver away in partnership with the FBI to find the evidence that would gather more carrier trophies.

In late January, LAN Cargo, Aerolinhas Brasileiras and El Al Israel Airlines pleaded guilty to their roles in a conspiracy to fix air cargo prices. The Chilean and Brazilian carriers agreed to a joint fine of US$109 million, while El Al signed for a US$15.7 million fine.

They joined British Airways, Korean, Qantas, JAL, Martinair Holland, Cathay Pacific, SAS Cargo, Air France and KLM in their guilty pleas.

Justice pointed out that it isn’t over yet. “Anyone with information concerning price fixing or other anti-competitive conduct in their air transportation industry” was urged to call Justice’s Antitrust Division or the FBI’s Washington field office.

Toll expects improvement in second half of this year

: Magazine Stories January Issue 2009; Thursday, 28 January 2016

TRANSPORT and logistics provider Toll Holdings reported profit after tax for the six months to 31 December, 2008 was (in AUD) $176.9 million, an 11.5 per cent increase over the previous corresponding period of $158.8 million.

Toll managing director Paul Little said: “This is a strong result given that the company managed to maintain margins and achieve revenue growth entering into a period of slowing economic activity.”

Revenue for the six months was $3.5 billion, an increase of 30 per cent over the previous period of $2.7 billion for continuing operations. Revenue growth included $533 million relating to new acquisitions, principally relating to the BALtrans acquisition which was completed in April, 2008.

The underlying revenue growth in Australia was $79 million or four per cent, and 7.8 per cent in Toll Asia. While the lower growth rate in Australia reflected a slowdown in economic activity the benefits of prior acquisitions improved overall revenue growth.

The company says it has a strong balance sheet with a net debt position of $715 million at 31 December 2008.
Little said “although freight volumes will be impacted by slowing economic growth and conditions will be challenging, the company is very well positioned to cope with any economic slowdown. The diversity of the Toll business, combined with a high variable cost base is expected to soften the impact of any global economic downturn.

Increases in market share achieved during the past six months are expected to continue as customers seek to outsource their non core supply chain activities.

"The company is very well positioned to maintain strong results and take advantage of opportunities as they occur."
"For the remainder of the 2009 financial year allowing for reduced activity levels, but at the same time benefiting from the strength of the Toll integrated model, we consider that results of continuing operations in the second half of the financial year to June 2009 will exceed those of the previous corresponding period, subject to no further material deterioration in key markets of the group."

Where thereâ€™s a Weil, thereâ€™s a way â€” Kiwijet claims countdown status

: Magazine Stories January Issue 2009; Thursday, 28 January 2016

WOULD-be New Zealand domestic airline Kiwijet, spearheaded by American Patrick Weil, claims it is on countdown to commence cargo operations, with passenger services to be added later.

There is a some scepticism in the New Zealand aviation industry that Kiwijet can operate profitably, especially with growing competition from existing carriers and the impending arrival of Jetstar on domestic routes.

Weil has over an extended period made a series of claims about various arrangements being undertaken or imminent, including securing aircraft and specialist staff.

His latest scenario has Kiwijet launched with two BAe 146-300 Quiet Trader aircraft.

Weil also said he has established Kiwijet Holdings USA “to facilitate a financial trust for investor funds”.
Inn turn, Kiwijet Holdings has appointed LA-based Commercial Aircraft Group to “handle all aircraft-related transactions and key personnel placement on Kiwijet’s behalf”.

Kiwijet claims to be comfortable launching services in the current economic climate, noting that movements in exchange rates and oil prices make operating costs lower than earlier projections.

“Our decision to jump into the domestic cargo market was based solely on the lack of suitable cargo aircraft in New Zealand. Operators in New Zealand’s overnight air cargo business are operating aircraft 30 to 60 years old. Our BAe 146-300 QTs can operate into 26 airports across the country without curfew limitations due to noise.”

This assessment of current domestic air cargo requirements in New Zealand has drawn sharply questioning comment within the industry. The current cargo fleet is for the most part operating efficiently and profitably, while increased belly-hold competition on passenger services has mopped up some of the demand, especially for daytime small package movement.

Cargo throughput at most small ports in New Zealand would not justify a freighter of the Quiet Trader’s capacity, especially on regular services, rivals say.