Canberra progresses its cargo hub goals with a Master Plan targeting air and road freight

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Wednesday, 04 September 2019

CANBERRA Airport is determined to be a freight hub, according to its just-issued ‘preliminary draft’ 2020 Master Plan. 

Its cargo aspirations have long been known and respected and the new plan is well reasoned.

It is available online at www.canberraairport.com.au/masterplan or readers can purchase a hard copy for A$60 from the Capital Airport Group office on the airport precinct.

The plan is mandated by mid-1990s legislation as specified in the Airports Act 1996.

The planning period to be covered is defined in section 72 as 20 years, although environmental strategy is a tighter five years.

The Canberra draft is now open for submissions from stakeholders including the air cargo sector.  These will be accepted until November 6.

ACT support

Canberra Airport’s freight aspirations are supported by the Australian Capital Territory Government, as noted in its policy document Moving Canberra 2019-45:  ‘Working in partnership with land use and planning, transport can play an integral part in supporting the emergence of industrial areas and economic hubs, such as Canberra’s international airport and its future air freight potential for the Capital region and beyond.’

The plan says: ‘Ongoing curfew restrictions at Sydney Airport are expected to deliver substantial new opportunities for airfreight at Canberra Airport over the next 10 years at least, until Western Sydney Airport is commissioned and is operating.’

Curfew-free essential

That Canberra will remain curfew-free is a ‘given’ and Canberra Airport management has openly disclosed to the community the assumed future aircraft noise impacts coming from a long-term unrestricted operation of the airport. 

It warns: ‘It is not realistic for members of the public to anticipate a curfew in years to come, or to expect it will solve their aircraft noise problem.’

Hub concept

The 2020 Master Plan envisages international, trans-Tasman and domestic freight flights landing at Canberra, exchanging freight and departing again for their final destination, with some travelling by air and some local (NSW and Victorian freight) transferred to trucks. The hub is envisaged to be possible within seven years.

It also says one trans-Tasman overnight freight operator is interested in operating services to Canberra instead of Sydney, ‘especially if a domestic freight network is established’.

Heavy freighters

‘It is expected international air freight services to Canberra will grow gradually, commencing with one airline operating two to three weekly B747-800F (or equivalent) services to and from Canberra in the next five to eight years’ it says. 

‘This number would be expected to gradually increase.’

New taxiway will be safer

WORK is under way at Canberra Airport on a taxiway extension that will provide more efficient and safer aircraft movements, reduce the amount of time planes take to taxi and replace the current taxiway that has been in place since the 1940s. 

Currently, aircraft leave the runway after landing and transfer to taxiway A, but they then must cross the main runway to reach the terminal. This often requires them to wait for other planes to land. 

When construction is complete, taxiway B will run the entire length of the main runway and eliminate the crossing via taxiway A. 

Construction will last 12-18 months, with work conducted during the day and at night after the last flight has landed. The cross runway will remain open 24 hours a day. 

INTERVIEW: Throw whatever you like at us, Hactl is prepared and ready for airfreight’s future, says Kwong

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Thursday, 20 June 2019

OPERATING since 1976, Hong Kong Air Cargo Terminals Limited (Hactl) supports the import, export and trans-shipment of air cargo in Hong Kong, contributing to the growth of the Chinese island’s economy.

SuperTerminal 1 is the single largest multi-level air cargo terminal in the world, boasting 3,500 container storage system positions, 10,000 box storage system positions and a  range of specialised cargo handling facilities to cater for all cargo types including temperature-controlled products, valuable goods and livestock. The facility is capable of handling up to 3.5 million tonnes of air cargo every year.

Key to  SuperTerminal 1’s  performance is COSAC-Plus, a new generation air cargo management system that enables the most efficient cargo tracking, information sharing and facilitates e-freight. 

The system is designed for all airlines, freight forwarders and related government departments to monitor and manage air cargo handled by Hactl. Every day, the system handles more than 3,500 users and over 1,000,000 data transactions.

Asia-Pacific airlines saw demand for air freight contract by 7.4 per cent in April 2019, compared to the same period in 2018. A trade war between the US and China currently impacts freight movements, resulting in falling demand in the region, where international volumes are down 8.1 per cent compared to a year ago. 

Wilson Kwong, chief executive Hactl (pictured above) spoke to Aircargo Asia-Pacific on the effects of the current impasse in trade negotiations between the two super powers and his plans for returning Hactl to growth.  

Hong Kong International Airport (HKIA) is focusing on cross-boundary e-commerce, high-value cargo and enhancing regional cargo services. How does this fit with Hactl’s own plans?

HKIA’s future direction is fully aligned with Hactl’s. For some years, our value-added logistics subsidiary Hacis has supported the e-commerce sector with dedicated services enhanced by its specialised IT system, plus an inland cargo depot in China (one of its nine-strong network) located in Nansha, southern Guangzhou within a dedicated e-commerce zone and, most recently, by working with postal  authorities to provide a cost-effective export gateway for mail containing electronic and other e-commerce packages. 

The decision by Cianiao to open a premium logistics centre in Hong Kong is a huge vote of confidence in the airport and its administration, and Hactl hopes to participate in this new venture as a service partner.

Meanwhile, HKIA’s recent initiative to create the world’s first IATA CEIV Fresh hub is also something we strongly support. 

Hactl was the first WHO GDP-certified handler in Hong Kong, and now is the first to certify under CEIV Pharma (for which we received our certification at the World Cargo Symposium in Singapore). 

CEIV Fresh is based totally on airline requirements and so will quickly gain critical mass in the industry. This encourages exactly the kind of uniformity in standards and processes which the industry needs in order to safeguard existing perishables and pharma traffic (the two being closely related due to similarities in their requirements) and to attract new business. The modern consumer expects year-round availability of all commodities and this presents a huge opportunity for air cargo. But we all have to meet the same high standards so that goods arrive in peak condition.

 Hong Kong is a natural location for a major regional Asian hub. It’s centrally located, has unparalleled air connections, offers choice of carrier and plentiful maindeck capacity, enjoys a modern Customs regime and is bi-lingual. With the opening of the three runway system, we will also have unrestricted capacity for growth.

Chinese air hubs face pressure from challenges brought by the rise of cross-border e-commerce. How has this impacted Hactl?

As mentioned earlier, Hacis is working closely with postal authorities to provide a fast and efficient export route for e-commerce cargo. It currently handles some 3,000 mail bags daily. New contracts under discussion will add to this traffic. Again, the spread of destinations served, the choice of carrier, the frequencies, the maindeck capacity and the trade-supportive Customs regime all favour Hong Kong and Hactl. I believe we will increasingly be seen as China’s e-commerce gateway – just as we have been seen as China’s global cargo gateway over several decades.

Asia-Pacific airlines saw demand for air freight contract by 7.4 per cent in April 2019 compared to the same period in 2018. How is the current China-USA trade spat affecting Hactl’s growth targets?

The current friction over trade between China and the USA has certainly had an impact at Hactl, but it is far less than we initially feared – around five per cent down year to date. This is actually better than the local market as a whole, and we attribute this result to our proactive measures to increase traffic in the pharma, fresh and e-commerce sectors, which have cushioned us. Longer term, we believe the disputes will be resolved, and that organic growth alone will mitigate any lasting impacts.

Do you plan initiatives to counter a general trade downturn globally?

Global trade never rises in a long, straight line: It’s a series of peaks and troughs which materialise in air cargo traffic globally. We take the long term view that global trade will always increase and that, with our 100-strong airline portfolio’s global coverage, we will enjoy growth whenever and wherever it occurs. 

But, rather than taking for granted natural organic growth, we continue to partner with our airline customers to strengthen and broaden their service offerings. 

And, behind the scenes, we continue to invest and innovate in order to create the highest possible service standards. We are deeply invested in our customers: We can only be successful if they are. The scope and quality of Hactl services becomes a strong sales tool for them. This is our constant motivation.

AI and technology have revolutionised the way air freight is being handled today. What progress has Hactl made with technology?

Hactl has always believed in the need to employ the latest and best technology. We have a proud 43-year history of innovation -  including designing, building and constantly improving our own IT systems (COSAC-Plus is the third iteration of our self-developed community cargo management system) using in-house resources. 

We already employ AI to deal with repetitive, labour-intensive processing such as charter job management and invoicing, and to add security to our mission-critical IT systems by constant monitoring for cyber threats. There are additional potential applications for AI which we are currently evaluating.

 Our engagement with innovation is driven by our Performance Enhancement team, whose sole task is to uncover areas for improvement in our processes, working methods and infrastructure. Their biggest success so far has been the switch to mobile computing throughout our giant facility, which has revolutionised our business. More recently, they devised the Smart Cargo Locating system which combines RFID and GPS technology to streamline the task of racking and retrieving outsize loose cargo – which has a direct positive impact on performance during ULD build-up.

 We continue to invest in innovation. Hactl is ahead of the game, and we want to stay that way!

Perishable goods is a growing market for air cargo. Ensuring short-shelf life products reach the customer unspoiled with minimal waste and loss is essential. How do Hactl’s facilities stack up?

Through initial and ongoing investment, Hactl’s facilities and processes have always been the best available. This begins with a large, purpose-built, multi-zone temperature controlled facility that includes thermal dollies for temperature conservation in transit on the apron. What has changed in recent times is our certification, first under GDP and subsequently under CEIV Pharma and CEIV Fresh. 

This required relatively little work or adaptation, because of our already-advanced status - but it meant we now comply with a standard recognised and accepted by all airlines. 

As the rest of the industry moves to adopt the same standard, it will achieve the end-to-end uniformity, conformity and consistency that all pharma and fresh supply chains demand. This will consolidate our industry’s position and nurture further growth in our markets that will benefit all players.

Hactl has a strong safety record in place. What initiatives are in place to promote this focus?

Hactl has worked hard for many years to create a safe and comfortable working environment for its workforce: We believe that is the staff’s right, and our duty. Awareness and practising safe working procedures is paramount, and is an inherent part of our intensive in-house training program. To reinforce this, we hold two events each year designed to drive home the need for constant vigilance: Our International Forklift Truck Driving and Pallet Building competition (to which we also invite our customers as participants), and our annual Safety Week – which brings together an intensive program of events, presentations and activities that are designed to raise safety awareness among our 2400 staff. Yet again, it’s a significant investment – but one we support wholeheartedly. Our staff are our most valuable asset and we do everything possible to protect them.

Any expansion plans to tackle increased  competition?

Competition in Hong Kong is strong, but it’s also a motivator to be better – and it holds no fears for Hactl. Last year, Hactl once again renewed its handling concession for a further 10 years because we are here to stay. 

Yes, we have many plans to expand our business and our resources, but we are not at liberty to divulge these at present.

Is cybersecurity a problem for facilities like Hactl?

 Hactl is a mission-critical business for Hong Kong. If it ceased to function, even for a few hours, it would bring the airport to a standstill. That’s why we take even the remotest risk of cyber attacks extremely seriously. All our systems have been re-written using the latest IT architecture and run on state-of-the-art equipment, which provides greatly-enhanced security. But we also employ AI to provide an early-warning system for any suspicious activity. That, with parallel redundant IT infrastructure, robust procedures and the best possible housekeeping ensure that Hactl and its customers remain secure from any attack.

Does Hactl see any threat to future  growth by deliveries from drones operating from off-airport sites?

 Drone technology is fascinating, and there is a place for it in the logistics industry. But its current nature and limitations favour small payloads over relatively short distances – so it is unlikely to make visible inroads into the mainstream global air cargo industry, at least for the foreseeable future.

Time of opportunity for world trade system despite issues with USA-China and UK- EU

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Thursday, 20 June 2019

REFORM of the World Trade Organization www.wto.org – called for by leaders of the G20 (Australia among them) and many others – is vital to the well-being of global trade and thus to the freight and logistics sector.  Without such an overhaul, the ageing system will fail to meet current and future requirements.

Speaking recently to the AIG Global Forum in Rotterdam, WTO deputy director-general Alan Wolff referred to the current situation as a time of ‘stress’ for the trading system, providing the opportunity to adapt to current realities and prepare for future challenges.

Reform would require perseverance and leadership, he said, not just from the largest trading countries but from all WTO members.

AIG www.aig.com is a major global insurance organisation serving more than 70 million clients.  With a far-reaching intelligence service and contacts at high economic and government levels, AIG is renowned for its ability to generate useful international discussions, including the AIG Global Forum.

“Were it not for the multilateral trading system, it is highly unlikely that the record of growth in trade and the global economy would be anything like the astoundingly positive numbers that have been achieved to date,” said Wolff.

“Tariffs would be a lot higher, import quotas would be common, discrimination would be rampant, product standards would choke trade and every dispute could risk retaliation and counter-retaliation. 

“Without the multilateral trading system, bilateral and regional arrangements could have created a miasma of regional content requirements that could make goods crossing a border a nightmare.” 

What has been created since the WTO was formed in 1995 (a 1947 attempt at forming such an international trade organisation failed) was of enormous value, Wolff observed.

“Nevertheless, there is an increasingly negative feeling about trade in many quarters.   Few know how important the multilateral trading system is to them, and many who are aware of the WTO’s existence tend to focus on its deficiencies, not on its accomplishments. 

“That can be useful, to an extent, because complacency would be more of a danger to the world trading system than well-founded criticism.  But there is one major caution: Progress is not likely to be born out of ennui or despair.  The times call for both increased leadership and strenuous co-operative efforts.”

There have been a series of danger signals that should have served as wake-up calls, Wolff claimed. These included the pre-emptive US withdrawal from the TPPA and the current exchange of tariff salvos between the US and China.

“On top of all of these concerns, it is still unclear what the width of the English Channel is going to be after Brexit and the degree of openness of what is now largely an invisible Irish border is still unsettled.”

Among the other major factors at play, he noted, was the possibility that the two-year moratorium on levying Customs duties on electronic transmissions might not be renewed.

“In the modern world of e-commerce, the levying of Customs duties on the content of cross border data flows could be catastrophic. 

“Policy space for national governments means the absence of coverage by international agreement, which while healthy in many respects, can in certain instances be deadly for the world economy.”

A separate Australian response to today’s global trade impasse?

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Thursday, 20 June 2019

Those in industry (let alone anyone with an interest in world news) will be painfully aware that global trade is under massive pressure at the moment. Examples of threats are everywhere and if they come to pass, the consequences will be uniformly bad. 

Trade and global integration have been a driver of financial and social improvement, with the World Bank estimating more than a billion people have been lifted out of poverty over the past 25 years.

The ongoing political and trade battle between the US and China (and between the US and Mexico and Canada) fills the front pages of newspapers and stories on television thanks to the significant increases in tariffs by the US and threats to escalate those tariffs and other protective measures. China has threatened to retaliate in similar terms. The inability to complete a multilateral trade deal at the WTO together with the inability to resolve the disagreements between the US and the rest of the world on the appellate division of the WTO or the shape of any rules - based platform to resolve international trade disputes have left massive uncertainty for future plans. 

The ongoing Brexit fiasco contributes to that uncertainty as we come closer to the current deadline of 31 October 2019 to complete an organised UK departure from the EU. 

The WTO has already noted the adverse impact on world GDP and other costs with one view being that we are being shielded from the real drop in GDP as parties bring forward their business activities in fear that they will be more grievously injured once the ‘wheels really fall off’ and the looming war kicks into a higher gear with real restrictions being imposed if the impasse on reform at the WTO is not resolved. Problems with cooperation at the WTO and its dispute resolution system would be a modern tragedy as it has until now been very successful in a number of ways, encouraging reductions in tariffs, improvements in trade integration and the creation of a number of valuable plurilateral agreements. There seems to be general agreement that some reform is useful but the demands for significant change on a unilateral basis from the US (to serve US ends) could be seen as an attempt to move away from the rule of law to the rule of force. Sensible global reform and improvement to advance the global cause would be the preferred outcome.

On a parochial basis, these developments are creating real and immediate concerns for Australia. In more recent time, following decades of protectionist policies, Australia has been at the forefront of trade liberalisation, including early unilateral reductions in tariffs and protection for certain ‘sheltered’ industries. This has led to the country’s average tariff now being close to zero as it secured increased global trade integration. Australia is working extensively on bilateral and plurilateral Free Trade Agreements (FTAs) and is working through the WTO and elsewhere to develop other trade initiatives. It is also collaborating with other like -minded major trading partners to develop plans to reform and maintain the WTO and all of its operations including facilitating trade enhancement and providing a basis for resolution of trade disputes.

Some despair

Despite its existing work, some have despaired that Australia, acting alone, cannot influence the global agenda and can do little to maintain its economic security, let alone continue its growth.  The question of unilateral Australian action has recently been addressed by the Productivity Commission with the publication of its Trade and Assistance Review 2017 - 18 (Review) the most recent of its annual reviews including a chapter entitled ‘The future of the world trading system’ as its ‘Theme Chapter’ to the Review.

The Commission has long been a source of valuable research and recommendation in economic matters including in relation to trade. In an earlier report it questioned the real value of its FTAs citing no real significant gains from those FTAs. In earlier editions of the Review it had called for unilateral reductions in tariffs to zero, the reduction in other industry support and removal (or revision) of Australia’s anti - dumping regime due to the recognition that dumping and subsidies could actually deliver an advantage to the economy far in excess of the damage to Australian industry. This included a separate proposal for a ‘national Interest’ test to assess whether trade remedies measures were actually in the broader national interest as opposed to merely looking at injury to local industries affected by the dumping or subsidy.

The Review was released on June 12, 2019, with a lead message confirming that global trade is under its greatest threat since World War II. It includes a series of recommendations on economic and trade issues, as well as social issues although my focus is on economic and trade issues, only some of which are discussed below.

Consequences of a trade war

The Commission observed that even though Australia is not directly engaged with the majority of the main trade issues, it would be directly affected by the consequences of a trade war - and would also be directly affected if that war was averted between the US and China (and maybe the EU) through a series of massive trade deals which would divert trade away from Australia. 

Further, even though Australia has been portrayed as a proponent and leading party in liberalising trade, the Commission found that Australia “has continued to retreat into protectionism in some areas” through A$14.4 billion in annual assistance to industries that lowered its international competitiveness. The Commission further found that “we damage our own prosperity by maintaining nuisance tariffs, other trade restrictions and one of the most active anti -dumping regimes in the world”.  According to the Commission, manufacturing and primary production receive 28 per cent of assistance while contributing nine per cent of value added to the Australian economy. 

In the context of the primary production industry it found that government support through droughts often undermined the incentives to farmers to manage their own risks and were ineffective in supporting sustainable farming practices. It said that a new drought policy and a review of subsidies was warranted.

Although there were a number of recommendations in the Review, some which were consistent to previous recommendations were that Australia should dismantle its anti-dumping regime and unilaterally remove its one-to-five per cent tariffs, which the Commission described as ‘nuisance’ measures only delivering A$2 billion a year but requiring a massive support network to be levied and recovered.

Those particular recommendations were of no great surprise as they echoed earlier recommendations by the Commission. They had previously been rejected and there seems little prospect that they will now be accepted either in political or commercial circles.  The recommendations draw from the Commission’s own form of economic assessment which may not include consideration of wider policy issues.  It is not surprising that some responses were that the current policy settings were there for good reason in accordance with international agreements, policies and standards so that movement would need to be driven by other factors (for example, the offer of reducing tariffs on European vehicles as part of negotiations with the EU for an FTA). 

However, in my view, the recommendations of the Commission warrant very close attention together with considering how there could be a ‘second best’ reform which includes keeping the existing regimes but improving how they operate so that they are not seen as protectionist or inefficient.

Consistent with its position on the importance of an open global economy, the Commission was also strong in its recommendations to support the WTO and to take all possible steps to achieve position outcomes from the current tensions.

One ray of light from the Review was an apparent slight thaw in the position of the Commission regarding FTAs. In an earlier report, the Commission questioned the value of the FTAs (from a pure economic perspective). However the Review includes a recommendation for better outreach and engagement on the benefits and use of FTAs seeking to overcome general lack of knowledge or negativity regarding FTAs - which suggests a view that there are merits in FTAs after all.

The Review and its recommendations provide excellent hard data on current trade issues and propose changes which, even if not accepted in full, form the vital basis for work to improve on current economic and social policies.

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