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Wednesday, 13 February 2019
WHILE the World Economic Forum in Davos, Switzerland, helped start the year with a colourful blast of celebrity talking heads, most of them with an eye to TV news back home and only a few demonstrating real economic knowledge, Australia actually scored some brownie points for what has been described as pioneering work in the development of new international rules in digital trade.
Australia, Japan and Singapore hosted an informal meeting of ministers on the World Trade Organization www.wto.org e-commerce initiative on the sidelines of Davos plenary sessions.
Sorting out globally-acceptable rules for handling digital trade is of major importance to the air cargo sector, which is a key stakeholder.
Australia - and the WTO overall - has signalled a willingness to consult industry on this initiative, which will build on already established e-commerce systems, many of them developed or progressed by Australia, New Zealand and other Asia Pacific economies.
In the past few months, Australian efforts have done much to ignite negotiations with 75 other WTO members on developing international digital trade rules. That cohort represents more than 90 per cent of global trade, confirming this is a move that’s likely to progress rapidly rather than fading away in well-meaning verbiage at events such as Davos.
Simon Birmingham, Australia’s minister for Trade, Tourism and Investment said establishing new international rules for digital trade would help keep markets open, reduce barriers and make it easier for Australian businesses to grow into new markets and operate across borders.
“Digital trade is an increasingly important way for Australia to do business with the rest of the world. It provides more opportunities for Australian businesses to reach more customers across the globe as well as help further grow our economy.
“We know half of Australian businesses are already engaged in the digital economy in some way and this number will continue to grow at a rapid rate.”
Birmingham noted a recent report by the Hinrich Foundation www.hinrichfoundation.com had estimated Australia’s digital exports could grow by 210 per cent by 2030 and that digital trade could enable close to A$200 billion of economic value in the Australian domestic economy.
Hinrich Foundation, whose positioning statement is ‘promoting sustainable global trade’ was formed by Merle Hinrich of Global Sources fame.
A WTO ministers’ meeting in Ottawa late last year responded to Australian legwork by agreeing to get meaningful negotiations under way, the aim being to achieve a standard outcome with the participation of as many global economies as possible. This would allow harmonisation of digital trade regulations and broad international acceptance from Day 1, rather than delayed sign-ups, ratifications and tinkering.
“Commencing WTO negotiations on e-commerce is a significant step towards updating international trade rules in line with how modern business is done,” said Birmingham at Davos.
“Through these negotiations we will demonstrate the importance of the multilateral trading system in helping reduce barriers, remove red tape and increase global trade.”
Hiroshige Seko, Japan’s minister of economy, trade and industry said “it would be truly meaningful for the world economy if we could create trade rules for the 21st century that address the new challenges and promote the growth of the digital economy”.
S Iswaran, Singapore’s minister in charge of trade relations commented: “Digital trade is the future of global trade.
“It fosters inclusive growth by enabling MSMEs to reach global markets. Modern WTO digital trade rules that address core needs will create an open and predictable environment for businesses to better harness the digital economy.”
Iswaran, who holds a degree in economics from the University of Adelaide, is also Singapore’s minister for Communications and Information, which will add weight to Singapore’s input. He has also been both a public servant and active in the private sector at senior level so is very well placed to contribute.
The issue was also discussed with NZ’s trade minister David Parker on a recent visit to Australia.
Birmingham said it was expected negotiations would “consider a range of possible rules specific to facilitating e-commerce such as paperless import/export procedures, the ability to securely and flexibly transfer and store data and ensuring online consumer protection”.
The minister also pointed out the initiative would contribute substantially to revitalising the WTO, whose role has fragmented somewhat in the past decade.
“The start of these negotiations in an open and inclusive way will reaffirm the importance of the multilateral trading system by signalling the revitalisation of the WTO negotiating function, which is an important part of its reform,” he said.
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Wednesday, 13 February 2019
The Australian Productivity Commission (PC) web site describes its main role as “Providing independent research and advice to Government on economic, social and environmental issues affecting the welfare of Australians.”
The PC undertakes these tasks both as requested by Government or according to its annual work program. The PC has a long history of being involved in reviews and reports on issues affecting the trade and transport industry among its other work. Some of those reviews and reports affecting industry have included:
• A report on the collection models for GST on low-value imported goods..
• The review of the impact of Australia’s Free Trade Agreements.
• The review of the efficiency of Anti - Dumping regulations.
• Inquiries into whether safeguard measures should be imposed on imports of processed fruit and tomato products.
The traditional process is for the inquiry or review to be announced, for submissions to be taken while the PC undertakes its work, then the issue of a draft report followed by further submissions and public hearings leading to a final report being delivered to Government. There is no obligation on Government to act on the recommendations of the PC, which generally are based on economic concepts and detailed review whereas Government decisions will take into account wider considerations.
The PC has often recommended the removal of all Customs duties at import as they distort the market and cost more to implement and administer than the amount they contribute to government revenues or economic well-being.
I have been involved in a number of PC inquiries including making written submissions and appearing before the PC during hearings to elaborate on submissions and to ask questions raised by the PC. It is an interesting jurisdiction with a combination of financial, economic, legal and public policy issues being considered.
On 6 February 2019, the PC released its draft report on the ‘Economic Regulation of Airports’, which followed an earlier report of the same title in 2012. Obviously, the regulation of airports, along with other trade infrastructure such as ports, roads and railways is an important element in an efficient supply chain and optimal allocation of resources. There is a special level of interest in trade infrastructure as its costs are significant, meaning that ownership and operation only resides in a few parties and therefore requires a careful approach to competition and regulation. As the PC points out in its draft report, economic regulation of airports includes the general provisions of competition and consumer law and airport-specific light-handed regulations that were introduced following the privatisation of airports in the late 1990s.
In the ‘Overview’ section of the draft report the PC summarises some of the issues around airports as follows
“Australia’s airports are critical infrastructure and their performance depends on, among other things, high-quality management and a regulatory regime that promotes efficient operations and timely investment, and facilitates commercial negotiation between airport operators and users of airport services.”
In this way, the comments also reflect the types of concerns around the operations of Australian ports and the stevedores operating at those ports which is firmly under attention by the ACCC and State Governments.
The draft report was awaited with real interest. In general terms, the PC has formed the preliminary view that most of the regulation of the airports and their operations were in order.
Some of the findings in the draft report were as follows:
• Existing airport regulation benefits the community and remains fit for purpose.
• Despite the preceding finding, airport operators should not remain complacent as further scrutiny on some aspects needs further review and tailored reforms would be needed for specific areas of concern.
• The four major airports have ‘market power’ in services provided to airports and charges for international services in Brisbane and Sydney are high compared to overseas airport charges.
• Airports could exercise their market power in landside access services to encourage people to use airport-owned car parks but there is insufficient evidence to determine if that is the case. More data on the issues is required.
• While, on balance, commercial negotiations between airports and airlines give little cause for concern, some agreements contain clauses restraining the airlines’ access to regulatory remedies for the exercise of market power and clauses that restrict airports abilities to offer incentives to other airlines. Those clauses are anti-competitive and should be removed.
• Car parking charges at airports are not caused by the exercise of market power by airports but reflect consumer demand.
• The Sydney airport curfew restricts noise for locals but does reduce the airport efficiency. The PC is seeking other options that could meet noise objectives at a lower cost.
• Government funding of airport infrastructure investment should be subject to rigorous published assessment. There is also scope to improve the financial management of airport assets at some regional airports.
• That the ‘last resort’ arbitration proposed by a number of parties to resolve disputes was a ‘bad idea’, may not be an appropriate way to resolve disputes and could adversely impact on a range of airport users.
• That airports should provide to the ACCC each year, more detailed information on use of the airport for passenger and other services.
• Within 12 months the ACCC should provide advice on an updated set of quality service indicators in consultation with affected parties. Those updated indicators should then be legislated.
Some of these preliminary findings have caused surprise and attracted criticism. Graeme Samuel, the former head of the ACCC and now an advocate for the airlines, expressed reservations suggesting that the PC may not have undertaken direct investigations on the issues and had ‘ignored’ evidence from a number of affected parties found here. However at the same time, Infrastructure Partnerships Australia supported the draft report, suggesting that the existing regime was working to support long-term investment and that disruptions would jeopardise that investment.
The PC has been at pains to point out that it is limited by the evidence of its own investigations and evidence which is provided to it. This places a premium on affected parties making their views known and providing additional evidence whether before proposed hearings in March or in writing.
The PC has requested written submissions by 25 March 2019 and once the final report is completed it will be submitted to the Australian Government in June 2019. Mind you, the political identity of that Government and its response is far from certain. If nothing else, comments need to be made lest they not be included in the final assessment.
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Wednesday, 13 February 2019
VIRGIN Atlantic Cargo and Delta Cargo are promising customers more choice and reach, plus greater automation as their trans-Atlantic joint venture celebrates its fifth anniversary.
The airlines already have increased customers’ access to major cities in the UK and North America, with a 20 per cent rise in the number of Delta and Virgin Atlantic flights since the joint venture began.
Customers now have a choice of 74 daily flights serving 28 routes between the UK and US which in 2018 carried over a quarter of total trans-Atlantic air cargo volumes.
Pictured: Celebrating five years as partners Shawn Cole of Delta Cargo (left) and Dominic Kennedy of Virgin Atlantic Cargo.
“Our long-term cargo strategy is to build an unmatched trans-Atlantic partnership with our joint venture partner, Virgin Atlantic. We are focused on finding ways to work more closely, collaborate and share information ensuring we are doing all we can to support our customers on both sides of the Atlantic,” said Shawn Cole, Delta’s vice president-Cargo.
“The original deal was a game changer for Delta, transforming our ability to compete on trans-Atlantic routes with access to London Heathrow as much as providing Virgin Atlantic unparalleled access to Delta’s US network.”
2019 is shaping up to be another exciting year for Delta and Virgin Atlantic, building on their successes of being the most on-time partnership to North America at London Heathrow, moving into a new state-of-the-art warehouse at London Heathrow later in the year plus a focus on digitisation and ensuring transparency throughout the shipment journey.
Next, Delta is adding a new non-stop service from Edinburgh to Boston, while Virgin Atlantic has scheduled an additional daily flight to Boston from London Heathrow.
Virgin Atlantic is also adding more flights between Manchester and the US, with a new non-stop service to Los Angeles and increased frequencies to Las Vegas, Boston and New York.
Dominic Kennedy, managing director of Virgin Atlantic Cargo said: “Our intention has always been to ensure that whatever we do as a joint venture, it must deliver real benefits for our customers in terms of more choice, service quality and being easier to do business with. We are very excited about what more we can achieve as a cargo JV and have been inspired by the great relationship and mutual respect between our cargo teams. Our partnership benefits and strengthens our respective cargo businesses, leverages the best of both airlines and ultimately, will continue to offer new opportunities for our customers as we move forward together.”
For further information on the airlines, log on to deltacargo.com and virginatlanticcargo.com.
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Wednesday, 13 February 2019
Alan Hedge (pictured right) recently formed his own aviation consulting practice.
With the international air trade beset by issues clouding business trends, he says there is increased demand for professional independent analysis of potential obstacles and new opportunities.
There also is a confusing array of data available on the air cargo industry and on freighter aircraft of varying quality. His new consultancy offers to cut through the clutter with insightful analysis.
Hedge has been involved in airline, freighter aircraft, and airport consulting, financial analysis and management for 26 years.
He also has edited several reports on air freight, freighters and e-commerce.
His company Hedge & Associates has released its first off-the-shelf analysis, The Freighter Lifecycle.
The report provides comprehensive analysis of factory and converted freighter life, including survivor curves for freighters such as the 737 Classic and 747‑400. It also looks in detail at how the in-service freighter fleet responded to the downturn and recovery associated with the Global Financial Crisis.
Hedge agreed to talk to AirCargo-Asia-Pacific on recent developments and trends in air cargo going forward.
How do you expect the current US-China trade negotiations to pan out?
If US negotiators think they are going to get China to accede to a trade regime featuring strong technology rights for non-Chinese firms operating in China, removal of corporate state aid and a fully floating currency, they are sorely deluded.
However, if both sides will settle for taking a few steps back from an all-out trade war, the world economy and air cargo businesses could breathe easier. US president Trump has a strong domestic political interest in being tough on China, so although we have seen a recent pause in trade tensions, I am not optimistic that much more than the truce now in place can be negotiated.
Apart from e-commerce, do you have a view of the US-China talks’ impact on global air freight?
Although mostly a concern on the trans-Pacific, one risk is that if the next round of tariffs go through, they will contribute to higher costs for products as producers pass the tariffs through to consumers, and consumers will be able to afford fewer consumer goods that might travel by air.
China’s GDP has slowed. What impact will this have on world trade lanes this year and next?
China’s GDP has been slowing over an extended period – I think we have to measure the change versus market expectations – provided the gradual deceleration of Chinese economic growth occurs at the expected rate, there will be little near-term effect on world trade. However, the Chinese economy has structural problems such as non-transparent corporate and local government debt and zombie state-owned firms. Misallocation of capital could become a drag on growth in the long term.
Brexit is another major concern. What is your preferred solution to the present political impasse?
Brexit is a highly-emotional political issue that started out as a fact-free feel-good unleashing of voter frustration. The passage of time has given UK politicians ample opportunity to harden positions on which they have pinned their political futures. Any path forward that the EU would accept would come at political cost for someone in London, Belfast or Edinburgh and some “solutions” could effectively result in the eventual breakup of the UK. Personally, I would prefer that the UK choose a soft, Norwegian-style exit, resolutely turn its back on the battlefield and declare victory, but that does not solve the original Brexit issues surrounding controlling the border and sets in motion a pitched partisan fight over the soul of the UK. The best that might be possible in the current environment is for the UK to ask for, and the EU to graciously concede, a delay to the Article 50 March deadline and kick the can down the road.
Do you agree that Britain needs a ‘deal’ with the EU or do you favour a ‘no deal’ Brexit for the air cargo industry?
The UK economy is the fifth largest in nominal GDP. A no deal Brexit could not only be messy (at least initially) for commercial aviation, but it would reduce economic growth in the UK, thus also decreasing air cargo growth.
Domestically, the US has enjoyed a long period of sustained economic growth. Do you see it continuing or is it due for a correction?
The US economy is enjoying one of the longest economic expansions on record. Can it last forever? No. Is the next recession imminent? No. Although the US Federal Reserve Bank is divided on raising short-term interest rates, employment keeps growing and inflation seems contained. I worry more right now about the economic slowdown in the eurozone with ‘too big to fail’ Italy already technically in recession. Dysfunctional and authoritarian populist governments in some countries have the potential to create market and trade uncertainty. Plus, trade tensions with China, geopolitical flash points in the Middle East, Asia and now South America could spook investors and reduce consumer confidence.
The US under president Trump seems far from predictable in its international trade practices. What do you make of the MAGA campaign?
I do not expect predictable trade practices in the next two years. The US government, not just the presidential administration, stumbles from crisis to crisis, luckily so far with little attention from the real economy. With a divided government in Washington and continuing pressure from various investigations into the president, his campaign and his and his family’s finances, Trump’s focus will be on executive actions he can take unilaterally. The runup to the 2020 political campaign will not improve the prospects for deliberative action.
E-commerce has been positive for air freight growth, particularly over the last couple of years. Do you see this market continuing to perform well or is it going to move more to companies like Amazon that promise super-fast deliveries?
If one looks at Amazon and its own controlled air network as a participant in air freight, then e-commerce will continue to support growth in air freight demand. E-commerce is also buoying intra-Asia and China-Europe air freight markets. Now, if one separates air freight into traditional airlines and shipper-controlled air networks, we are seeing a shift to the benefit of the ACMI carriers that support such networks, but this is positive for overall air freight growth.
How do you rate India’s and Indonesia’s air trade prospects over the next few years?
Economic growth in India, at 7.2 per cent, is higher than China’s and accelerating. We are already seeing India take off with airlines like SpiceJet taking deliveries of converted 737-800 freighters. Indonesia’s economy is also currently a success (5.17 per cent growth in 2018, the highest since 2013), e-commerce in Indonesia is doubling every year and market penetration is still small. Southeast Asia also seems bound to benefit from trade troubles between the US and China, although dependence on exports to China could slow growth.
Was it a mistake for the US to quit the TPP before giving it a chance? Do you see the US re-joining at some stage?
The TPP was dead on arrival in the US. In the current climate of increasing nationalism, another trade agreement that adjudicated conflicts between multi-national companies outside the US court system did not encourage domestic political confidence. Under the current administration, I see no possibility of the US entering such an agreement, leaving a giant diplomatic and economic opening for Chinese leadership. On the other hand, Trump likes to deal bilaterally, so it is possible that individual trade agreements could be negotiated between the US and some of the participants in the TPP.
Where is most air freight growth going to be generated in the next few years?
The highest air freight growth markets will be intra-Asia.
How do you see AI impacting air freight in the short to medium term?
Automation is already taking over warehousing and has the potential to disintermediate forwarders, but massive disintermediation has been predicted for years and still has not arrived. Rather, I think AI is more likely to be imposed from below rather than above, as the global e-commerce marketplaces leverage their formidable IT resources to permeate the logistics chain.
Do you see drones playing a growing role in the home delivery market?
Drones have great potential in last-mile delivery, especially in suburban areas, with lower package densities and although drones would cut through crowded urban traffic, they are a high-cost solution compared to package lockers and partnerships with brick-and-mortar retailers. It is also extremely unclear in an urban setting how convenient it would be for a consignee to go outdoors to retrieve a package, even if the recipient could choose their own ten-minute window for delivery. Finally, it is unclear how drone technology will prevent packages (or the drones themselves) from being stolen.
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Wednesday, 05 December 2018
This has been a good year for board appointments in the Australasian cargo sector, with airlines, freight forwarders, airports, logistics groups and others tapping people with strong industry backgrounds as well as the diverse portfolio of other skills required for effective governance.
As an industry we’ve done a lot to bring in staff with education and skills, helping them take a pathway to further personal growth. We’ve also – slowly – begun to position our sector as a career zone worth targeting, delivering upward mobility to all those willing to make the personal effort to contribute and develop, as well as understanding what their companies want to achieve.
Sometimes, though, it seems that the company itself, at senior management and board levels, is not entirely clear on its goals or even on its operational strategy.
In the past there was the tradition of a strong person setting the agenda, or perhaps following one set largely set by an earlier generation. A board of directors might be composed of school mates, a lawyer or two, a banker to help access funding, maybe a former politician for personal connections, a previous executive.
Then came the phenomenon of the professional director, largely male in its initial phase. At first these were mostly from legal, accountancy or banking backgrounds, usually dependable and professional but possibly low on vision and goals other than profitability.
That set a foundation on which a new era of professional directors evolved, one that drew much from hands-on managerial and command roles.
We’ve benefited from that. A prime example is Qantas appointing Tony Tyler as a non-executive director. Tyler brings an awe-inspiring background of heading up IATA and Cathay Pacific as well as directorships for the likes of Dragonair, BOC Aviation, Bombardier, Hong Kong Aircraft Engineering Co and National Air Traffic Services.
He brings to Qantas not only a solid understanding of the industry but also a feel for the scope of vision that should be inherent in governance strategy along with the more prosaic financials.
Plus he plays a mean jazz harmonica.
Another recent example of how we are maturing at governance level is Freightways’ appointment of Andrea Staines as an independent director. A professional director based in Australia, her executive background is mostly in airlines, including American in Dallas and Qantas in Sydney. During her last five years at Qantas, she co-launched Australian Airlines (mark II). Earlier roles at Qantas included running global revenue management.
She is also renowned for her vision, seen at other organisations on whose boards she sits, such as QIC, Tourism Australia and SeaLink Travel.
Whether she plays the jazz harmonica I don’t know.
- Kelvin King
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Wednesday, 05 December 2018
AIS (Advance Information System) – the new module from CCS-UK User Group – is transforming the process of delivering air cargo to London’s Heathrow Airport, but not everyone is on board.
Well-documented peak-time delays at Heathrow’s outdated cargo terminal have been a fact of life going back years.
A lack of on-airport truck parking, narrow approach roads and tight manoeuvring space for today’s larger articulated vehicles frequently lead to long truck queues backing up on the airport’s perimeter road, with trucks and drivers tied up for hours.
Two years ago, the CCS-UK User Group – which represents all users of the UK’s air cargo community computer system - announced it was starting work on a new module to enable freight agents and transport companies working on their behalf to pre-alert handling agents of loads being delivered and picked up, down to house AWB level, as well as submit Electronic Consignment Security Declarations (e-CSD).
This advance information – including vehicle, driver, cargo being delivered, handling agent and ETA – was to be submitted either through a web portal or using messages sent direct from the forwarder’s own system. The information would be accessible to all relevant parties in the supply chain.
By receiving this information electronically in advance, handlers would be able to populate their systems with the shipment information, reducing paperwork and delays on arrival of the truck and eradicating re-keying errors.
Most importantly, by obtaining advance warning of cargo en route, handlers would be able to anticipate workloads, schedule resources, and allocate handling slots for the trucks. This would help to reduce the number of vehicles at the cargo terminal and cut queue times.
AIS has now been live for around a year and – although still subject to ongoing development – already is in use at a growing number of hauliers, handlers and forwarders. One of the early adopters was Mixed Freight Services, which provides off-airport security screening for air cargo exports, and then feeds the screened cargo to Heathrow’s cargo sheds. As one of the largest operators at Heathrow, it had been suffering unacceptable delays for some years.
Steve O’Keeffe, director MIxed Freight Services said: “On one occasion, one of our trailers was turned away five times over one weekend due to the handlers’ inability to cope with the volume of trucks already queued and warehouse facilities being at capacity.
“We can’t change the Heathrow infrastructure, so we realised we would have to change the way we worked. So we focused on capacity management: Collating cargo off-airport, and then delivering just in time, ideally between 12 and 24 hours ahead of the flight.
“AIS is enabling us to work more efficiently with ground handlers; we screen the cargo, submit the e-CSD and manifest to the handler and then deliver. It has dramatically simplified and streamlined our process, giving the handler visibility of pending export cargo which is security screened and ready for delivery.”
Lawrence Cockburn, Business Systems manager at dnata was involved in the original concept and design of AIS, and is reporting significant reductions in dwell time for 75 per cent of the vehicles dnata processes: “Dnata’s gatehouse concept streamlines the delivery and collection process,” said Cockburn. “AIS is now building on this, giving us the ability to further enhance our gatehouse and counter processes. We no longer have to capture data, we just verify it.”
Dnata has seven facilities located away from the most congested on-airport areas and it is now incentivising greater takeup of AIS.
“Agents and truckers who use AIS can take advantage of our ‘Blue Lane’, giving them priority over all other vehicles, regardless of the order in which they arrived,” said Cockburn.
“Carriers are seeing the benefit of AIS, which goes a long way to dealing with the challenges at Heathrow. They are very supportive.”
Carl Aspital, director of forwarder Air and Cargo Services, one of the AIS pilot testers, also reports positive experiences: “We were dnata’s first Blue Lane-approved operator. We have noticed a significant difference, particularly with night-time deliveries. As we use AIS, dnata has nothing to input, so the payback is faster handling. Our driver is given a door immediately on arrival.”
“Forwarders can often suffer up to five hour waits at every shed. So, if everything else is equal, we would always now favour a carrier whose handler uses AIS. With a 20 minute turnaround, we can save GBP200 in driver costs alone.”
The AIS module is free of charge for all CCS-UK subscribers, which number around 900 forwarders, cargo terminal operators and airlines. Yet AIS has still to gain full take-up within the UK air cargo industry.
CCS-UK User Group chairman Steve Parker said: “All AIS requires is a modest change to ways of working. It’s hard to understand why many are still holding back, as AIS is free of charge, and its widespread adoption will help everyone in the community.”
He added: “With the uncertainties surrounding Brexit leading to the possibility of more complex procedures and even dramatic increases in traffic, now is the time to take all possible steps to streamline the UK’s air cargo industry, which will become an even-more vital trading tool. So, we hope the success of AIS to date will inspire much greater take-up in the next few months.”
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Wednesday, 05 December 2018
NEW Zealand’s National Road Carriers Association (NRCA) and the Ports of Auckland are combining forces to promote change in the supply chain to improve delivery times and prevent delays.
The initiative is because of supply chain capacity issues which were highlighted following an accident at Ports of Auckland in August.
Imported freight has taken longer to deliver and exporters have encountered delays getting their goods away, leading to frustration all round.
“The supply chain is running at capacity, so unexpected problems can have a domino effect,” said David Aitken, chief executive NRCA.
“At its heart, the problem is Auckland’s growth. The supply chain needs to evolve and we’re all going to have to change the way we work to prevent future problems. Better planning and coordination are the key.
“We’re letting stakeholders know what causes hold ups and we’re working with partners to improve our end-to-end processes,” he added.
Situations contributing to delays can arise at any stage in the supply chain, sometimes occurring thousands of kilometres away from New Zealand.”
“In the past 12 months, over half of all container ships arrived at Auckland late (often as a result of bad weather), causing congestion,” said Craig Sain, Ports of Auckland’s general manager Commercial Relationships. “This makes it hard for us to staff the terminal properly, causing delays.”
Labour scheduling issues at the port are made worse by a shortage of labour in Auckland, which also affects the trucking industry.
The port is currently installing an automated container handling system to address this problem, but the work required to install the system has reduced terminal capacity by about 20 per cent, adding to congestion. This situation will remain until late 2019, when the project will be completed.
“With reduced space in the terminal and more containers coming in due to growing Auckland demand for freight, it is taking us longer to service trucks visiting the port,” said Sain.
Another problem is that getting containers off the port can be delayed because there is nowhere for the containers to go. The port works 24/7 and has capacity at nights and weekends, but often distribution centres, importers warehouses and empty container depots are closed at these times.
“In the past, working 9-5 Monday to Friday was fine, but now Auckland has over 1.5 million people it is no longer feasible,” said Sain.
“The whole industry needs to be able to work 24/7, not just the port and carriers, and this means distribution centres and importers need to be open nights and weekends to receive imports.”
The road freight transport industry is caught in the middle, said Aitken.
“Importers don’t want to pay for weekend or after hours work but they also don’t want to pay to hold containers at the port or container depots as a result of their limited business hours.
“We are storing containers at freight hubs for longer, which adds costs for double handling, or are delivering goods later than originally expected because of holdups. We’re also facing higher costs because of Auckland’s congestion, costs which could be avoided by working 24/7,” he added.
The solution is going to come through a combination of technology, greater co-ordination and a move to 24/7 working throughout the supply chain.
As well as investing in automated container handling, Ports of Auckland is working with NRCA to update its processes and business rules to minimise manual intervention and incentivise off-peak container movements. Last minute freight moves will become a thing of the past, with all movements having to be planned in advance.
“As a port we have a key role to play and we are trying to educate other players in the supply chain so that they understand the need for change and what they can do to make the process more efficient,” said Sain. “Ultimately, these changes will benefit New Zealand through the fast, efficient and cost-effective delivery of freight.”
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Wednesday, 05 December 2018
MAINFREIGHT Limited is a listed New Zealand logistics and transport company headquartered in Auckland, where it launched in 1978.
During the past three years, it has completed significant building upgrades in Australia, with the latest a full refurbishment of its Sydney airfreight branch.
As a result, the company’s operational footprint in Sydney has increased from 745m2 to 3,133m2. The expansion involved a doubling of capabilities and now includes three chillers (850m2), a freezer (169m2), a rapid cooling room, two quarantine inspection rooms and two fumigation chambers that can be used year round.
Lisa Harrison is branch manager, New South Wales for Mainfreight and talked to AirCargo AP about her role, the benefits of the expansion and market expectations.
What is your role and how long have you been with Mainfreight?
I’m branch manager for Mainfreight Air and Ocean Sydney Perishable branch which launched with three team members in December 2011.
What made you choose freight forwarding and logistics as a career?
I fell into it when I was looking for a job and saw an advertisement for a customer service representative for a freight forwarder. The ad said ‘travel included’ and that was appealing. And today, here I am.
Mainfreight is a relatively young company, how does it differentiate itself from its rivals?
Mainfreight has in fact been operating for 40 years but its air and ocean business in Australia is younger at 20 years. We have people who think and act with pace and are not afraid to take a chance on something different and give it a go.
Our motto is “we are a 100-year company, and the 100 years start today”, so we do see ourselves ahead of our rivals as we are not the traditional freight forwarder, but more an industry partner working with both Quarantine and our customers to ensure that there is smooth transition of product either into new protocol markets for export or on the import side, having product moving through the system as quickly and efficiently as possible.
Mainfreight is the only forwarder in Sydney and one of few in other States to have the full logistics chain available on site.
On the East coast of Australia each of our sites has Quarantine inspection rooms, coolrooms/freezers, pre-cooling rooms and fumigation chambers.
Our team are trained and licensed fumigators for the treatment of both import and export products and Quarantine-approved officers for the inspection of export produce.
What do the new warehouse facilities in Sydney do for Mainfreight and its customers?
As we are the only forwarder in the Sydney market that can offer the full service chain, our facilities enable us to help our customers grow their businesses.
For imports this allows us to have full control of the product and keep our customers informed, from the moment it lands in Sydney until its delivery to destination in excellent condition.
For the export market the new facility will assist us with growth, including the opening of the China market for summer fruit and cherries under the new protocol.
Using fumigation, we can treat the product at the right temperature and place it in our pre-cooling room to bring the temperature back down before uplift, with minimum fuss or movement of the product as it is all in the one place. Our traditional business also benefits as the facilities can hold more product at any given time, meaning customers can deliver into our store in the evening instead of waiting till the morning, knowing their product will be held at the correct temperatures at all times and enabling their trucks to be out of the Sydney area before peak hour traffic.
How has the market changed in Australia since you moved into a management role?
Over the past 10 years the market has changed dramatically. For exports we handle the full process including Quarantine inspection. Fumigation has always been there, but we have changed the footprint by bringing it in house. With new protocol markets opening every year, we need to stay in the know and change our processes to suit. Imports used to see the majority of inspections done either at Quarantine or at a seafreight container facility. Once again we have changed this and bought it in house to ensure control. It is possibly a harder job these days and certainly has more responsibility placed on the forwarder. The growth of imports into Australia has been massive over the past 10 years and is expected to continue.
December must be the busiest period of the year for you. What are the main challenges?
Mangoes, stonefruit and cherries all are in full swing for export and berries and asparagus are being imported. The challenge for us is to ensure we keep the product moving and maintain the standards of quality and temperatures so we can ensure the product arrives at destination in the best condition. It is a busy time and sometimes we can be short on team members due to this, but we move people around to ensure that where the pressure is, is where the people are. We do not believe in bringing in outside assistance as we want to ensure standards are maintained.
How is 2019 shaping up for Mainfreight? Do you expect continued growth?
2019 will be extremely exciting and we are ready for the changes. We have been advised that pre-clearance inspections will stop and as such all horticultural product will need facilities such as ours.
In reality the commercial world for perishable products is getting smaller. Years ago you would not have seen cherries in Australia in June but now it is accepted and expected that citrus is all year round. There also are more protocol export opportunities being worked on by Australian Quarantine. So yes, it is exciting times for Mainfreight and anyone involved in the perishables Industry.
What is Mainfreight’s take on training and technology. Does the company make use of latest developments?
Training for most of the hands-on perishable operations is done on site and we are staying ahead of the developments within the perishable industry, with currently 10 quarantine-licensed fumigation officers, four export-approved quarantine offices and our warehouse team all trained on load and restraint of airlines units in our facilities throughout Australia. Mainfreight also has an extensive training program with a purpose-built training centre located in Melbourne with a team of nine trainers.
We provide training in a wide range of areas to enhance our teams’ skillsets for their day to day tasks, legislation requirements and also to develop their leadership skills.
Would you recommend freight forwarding and logistics as a good career move for young people?
Absolutely. Every day is different and the people I get to work with are as passionate as I am, as it is that type of business. I have worked hard but have loved every minute, although some years have been tougher than others. It is a totally different industry to the one I started in, with certainly more responsibility on the forwarder, but what a fantastic opportunity for young people. The world is getting smaller in regards to food being available and everyone eats so yes, it is worth getting passionate about.
After the YoY drop in worldwide air cargo volume in September, October showed a small YoY growth of 2.0 per cent world wide. Three regions recorded growth in both outgoing and incoming air cargo: Asia Pacific performed best with growth percentages of 4.2 per cent and 2.7 per cent respectively. For Europe, the corresponding percentages were 0.5 and 2.7 per cent and for MESA (Middle East & South Asia) 3.4 and 0.1 per cent. In the other areas, the picture was mixed: Africa and North America grew in incoming but contracted in outgoing traffic, while Central and South America showed the opposite trend. Both In October and in the year-to-date, the highest region-to-region growth was observed from Central and South America to Asia Pacific (+33 per cent in October), mainly driven by the export of seafood.
