INTERVIEW: Volga-Dnepr is shaping its future with a range of innovative solutions

News Feed

Tuesday, 01 May 2018

Volga-Dnepr Airlines Group is a Russia-based cargo airlines group, offering scheduled and charter services globally. It specialises in providing cargo aircraft air charter services.

It is a global leader in the market for the movement of unique and heavy air cargo and specialises in outsize heavy cargo movements for the oil and gas, energy, aerospace, heavy machinery and telecommunications industries as well as the humanitarian and emergency services sectors.

The fleet comprises 12 An-124, 18 Boeing 747F - including 11 747-8F — plus five Ilyushin IL-76TD-90VD and three B737-400F aircraft.

Volga-Dnepr Airlines was established in August 1990 as a joint stock company by its major shareholders. It started operations in October 1991, when it carried a 120-ton cargo from Amsterdam to Almaty.

The company evolved and Volga-Dnepr Group was formed in 2001 with Volga-Dnepr Airlines its first company and the key element of its chartered cargo sub group. In 2004, the Group launched AirBridgeCargo Airlines offering scheduled cargo services. The Group also operates maintenance facilities for its own fleet and third party MRO customers.

Robert van de Weg is vice president Sales and Marketing, Volga-Dnepr Group, responsible for the commercial activities of the Group’s airlines AirBridgeCargo Airlines, Volga-Dnepr Airlines and Atran Airlines, aiming to strengthen and develop their ‘cargo supermarket’ strategy.

Van de Weg previously spent nearly three years in senior roles with the Group before leaving in 2017.

Since that time, however, he has continued to provide advisory and consulting services, using his extensive knowledge of the air freight industry to support the Group’s overall growth and success.

He is based in London, UK.

AC: You’ve rejoined Volga-Dnepr Group after a short time away – why are you back and what excites you most about the Group’s plans and ambitions? 

Robert van de Weg: The consultancy part of the job was successful after I left the Group, and I        continued to be involved with       Volga-Dnepr. But I missed the action and being part of a team.

Sometimes you need a break – but I realised it was too early for me to just consult and advise. Both sides started talking late last year and we reached an agreement early 2018. The company has very ambitious plans and I want to contribute. I want to be part of something intense – I don’t want to be standing on the sidelines.

Low fuel costs have been a boon to airlines over the past couple of years. Do you expect the current price recovery to continue and, if so, how will this impact the air cargo market?

AirBridgeCargo - and Volga-Dnepr - is investing in its fleet and now has 11 Boeing-747-8Fs that can carry 16 per cent more cargo and are 17 per cent more fuel-efficient than their predecessor. This modern fleet is one of our key competitive advantages should fuel prices rise.

AirBridgeCargo is reporting more year-on-year growth. What is driving the success of that business?

AirBridgeCargo continuously outperforms market growth. This can be mostly attributed to:

• Strong customer relations in Europe, APAC and the Americas.

• Two new 747-8Fs delivered last year, taking the overall fleet to 18.

• A focus on special cargo: Pharma heads the growth at +128 per cent, followed by dangerous goods +45 per cent, off-size&heavy +36 per cent and e-commerce +9 per cent.

• Introduction of our Control Tower, which monitors all movements 24/7 and responds with either preventative or corrective actions if potential disruption develops.

CargoLogicAir, which is registered in the UK, was set up to partner AirBridgeCargo. Is the alliance ongoing and if so, what strengths does each partner bring to the table?

Yes, it’s ongoing. This is a multi-level partnership covering operations, sales and marketing activities. Each carrier benefits customers in different regions of the world – combining ABC’s expertise and mature market position with young and ambitious CLA. 

Volga-Dnepr Airlines has a long history of supporting international humanitarian aid projects. How challenging is it to respond quickly?   

Since 1990 Volga-Dnepr Group has been at the heart of global response, working for international organisations, governments, charities and corporations using An-124, IL 76 and B747Fs. We often are first on the ground with humanitarian aid and we have become a vital component of relief efforts, carrying more than 5,000 tons of aid to regions suffering disasters.

Our fast response is down to: 

- A unique fleet of ramp aircraft (An-124-100 and IL-76TD-90VD) that can operate even in the most remote regions of the world.

- Our own loading/offloading equipment for different types of cargo.

- Five operational bases in different regions to provide 24/7 administrative support for flights, including traffic rights, routing, ground handling, equipment, loading etc. Aircraft can be deployed in matter of hours to the destination from the nearest operational base.

- Staff with great experience in working in time-critical conditions who deliver high quality logistics solutions.

- Standard operating procedures that help our specialists act quickly.

- Experience transporting mobile hospitals, medical equipment, medicines, water purification equipment, laboratory containers, generators, telecom equipment, heavy trucks, cranes and other vehicles.

Is there any progress on Volga Dnepr creating a new European airline based in Leipzig?

No decisions have been made as yet.

What impact did the end of Volga-Dnepr’s An-124 joint venture have on your business?

It was positive for us: We can develop our commercial strategy and set our commercial priorities independently.

How are current tensions between the West and Moscow affecting Volga Dnepr’s operations?

There are changes in traffic flows, but we are a global company, which reduces specific market risks.

How do you assess the air cargo business outlook for oil, gas, energy and mining projects in 2018 and beyond?

2018 has started with quite high demand from aerospace, energy and the heavy machinery sector as well as oil and gas.

The Middle East, South America and Australia could be strong due to increasing construction activities in the oil & gas sector and mining industry. We expect project work based on our current long-term commitments to customers to continue thanks in part to our custom-tailored solutions and unique fleet.

Any update on your previously-discussed plans for a next-generation An-124 aircraft?

There is no concrete development at this stage.

Have US and European sanctions impacted aircraft purchases? If so, how and to what extent?

Sanctions have not impacted our aircraft purchases.

What new markets are in the pipeline for the group?

We want to be where our customers want us. We also consider the future requirements of industries like pharma, aerospace, fashion & apparel and e-commerce.

With this in mind, we select airports with the infrastructure, staff and facilities needed to handle certain types of cargo. This makes it a multi-tier process of negotiations between all supply chain stakeholders, including shippers.

There are some new markets and products planned.

Where will future growth be generated?

- Fleet and network growth.

- Development of products with precise attention to service quality, thus gaining more customer confidence and IT solutions that make transportation fast, seamless, and transparent.

- Developing our ‘Cargo Supermarket’ concept (a set of services using our mix of aircraft types and unique products).

- Being quick to respond to customers’ requests with effective and cost-efficient logistics solutions and customer support.

Blockchain is really taking off. What is Volga Dnepr’s take on it?

Blockchain is a technology of the future, with most leading industries in a ‘wait-and-see’ position. In the aviation sector, standard messaging guarantees safety, security, and effectiveness and we anticipate future growth and success on the basis of openness, co-operation and collaboration including a commitment to data-sharing among all supply chain stakeholders. 

Digitalisation is another hot topic – what does it mean for Volga-Dnepr, how are you preparing for it, and what can your customers expect?

At the current stage, the main drag on further development is the ‘fear’ of sharing data between industry-related participants and at the end of the day it has to be beneficial for all companies concerned as well as the final consumer.

Tech-savvy customers are searching for options that simplify the process of transportation and make it more transparent, coupled with real-time information on shipment movements.

This means embracing smartphone applications or web platforms to guarantee 100 per cent traceability, transparency and digitalisation plus the Internet of Things, but most importantly, communication between all stakeholders possessing different bits of Big Data and being willing to share it. Only an open approach to data sharing will deliver the full benefits of these high-end technologies.

A few projects we are working on:

- E-documentation (e-AWB, e-booking, e-feedback and e-claims [the project is at an initial stage).

- Possibility of tracking and tracing shipments with exact, real-time information about its status, location, etc.

How has China’s Silk Road One Belt One Road initiative affected East West air trade?

The OBOR (One Belt, One Road) initiative encourages the development of Central & Western China and boosts freight volume in these regions including booming e-commerce volumes. In 2017, air freight from China to Europe grew by more than 10 per cent in part due to high-tech goods and different machinery parts.

You mentioned your ‘cargo supermarket’ – what does it mean for your customers?

The ‘Cargo Supermarket’ gives customers the widest choice of transportation and logistics solutions for all types of cargo, including the most outsize, heavyweight and complex shipments to the most remote regions of the world.

The whole spectrum of aircraft types, coupled with our 28 years of experience and highly-skilled logistics specialists, gives Volga-Dnepr the opportunity to offer logistics solutions in the most cost-efficient manner using our fleet of An-124-100, IL-76TD-90VD, Boeing 747 and 737 freighters. The Supermarket covers air-charter, sub-charters from partner airlines (An-12, An-26, An-72) and offers our customers best value, scheduled air cargo services, international road feeder services, managed warehouse solutions, turnkey projects, crane equipment leases, road permits, Customs brokerage and more. All the work - preliminary, flight operations, post-flight and so on is completed by highly-skilled personnel using their expertise in transportation.

How do you see the scheduled and charter markets in the Asia Pacific region developing over the next year or so?

People all over the world use products produced in different Asian countries. In 2017, the industry witnessed a 13 per cent increase of air exports from Asia including high-technology and consumer goods. Among leading factors impacting air cargo/freight industry in/out/around Asia are:

- Strong global demand, particularly for electronic devices and semiconductors (this is set to continue in 2018).

- Rising incomes among middle class consumers in the region, especially in China and emerging demands for higher-quality lifestyles coupled with China’s transition towards an economic model based on services and consumption.

- Ever-increasing growth in demand for e-commerce products, which has been developing at a fast pace for the last couple of years within and outwith Asia.

- The OBOR (One Belt, One Road) initiative that encourages the development of Central & Western China and boosts freight volume in these regions.

- A high level of urbanisation, especially in China, where people are moving from rural areas to cities with changes in their lifestyle.

From the charter perspective, there might be more opportunities due to increasing construction activities in the oil & gas and mining sectors. We believe our experience and unique fleet will benefit our customers world wide, with Volga-Dnepr developing and implementing the most cost-efficient logistics solutions for project and oversize consignments.

Our own ‘Letter from America’ suffers uncertainty caused by the US president’s Twittering

News Feed

Tuesday, 01 May 2018

THE RENOWNED journalist Alistair Cooke famously wrote and broadcast ‘Letter from America’ from the US for a period of 58 years.

It was a concise and learned spoken piece, around 15 minutes in length, in which Cooke delivered observations on developments in the US over the preceding week to a BBC audience in a manner intended to educate the listener and remove some of the confusion often associated with the US.  The ‘letters’ were subsequently broadcast to a much wider audience through the BBC World Service (including to Australia) and also formed the basis of a television series.

Such was his fame that he was even included in a Monty Python sketch in which he was ‘attacked by a duck’ while delivering one of his letters. It was certainly silly but just being the subject of a sketch reflected his status in society and the media

Having listened to many of the letters as a younger man, it occurred to me that this article could draw from the ‘letter from America’ history but focus on observations on trade matters from my current trip to New York City, Washington DC and Chicago, the homes to much of American politics and industry.

During the visit I was fortunate to spend some time with people very close to the centre of the issues we are facing today.

• The uncertainty is very real and shared by all. I spent time with lawyers who have moved to the equivalent of ‘DEFCON 3’ and haven’t rested much since early April as they log the threatened moves and counter-moves to try and navigate the (trade and political) agenda.

• Many of those in the US were keen to get my take on what is happening and what might happen. They seem to have little idea themselves, with most of what they hear coming from the US president via Twitter. This means conventional mechanisms are not providing the usual information, with much of the action taken at the ‘Executive’ level without reference to a wider Cabinet, let alone Congress.

• Though we may have focused on dumping and possible retaliatory actions, we can’t ignore the area of sanctions on certain countries. This is creating significant impediments to trade and delaying investment decisions. In addition, many are concerned that relaxed sanctions on Iran may yet be reversed by the US. The direct and indirect impact of US trade sanctions cannot be underestimated even if Australian sanctions are cleared, because of what the US might do.

• There also is a concern that the experience of the US Trade representative Robert Lightzier has largely been confined to trade remedies against China, which might mean his proposed responses to other trade problems are limited to ‘what he already knows’ rather than investigating other options.

• The ongoing spiral of unilateral action by the US and retaliation by US trading partners merely contribute to everyone’s uncertainty.  Measures are announced and then adjusted even before they are imposed (such as the additional tariffs on steel and aluminium being exported to the US).

• The ongoing ‘war’ on steel and aluminium overcapacity in Asian and other markets will be a major battleground, with Australia and the US sharing information on ‘circumvention measures’ and ‘measures to stop circumvention’.  We can expect additional actions soon.

• The Federal Maritime Commission investigation into detention and demurrage and related unfair practices (see for example at https://www.logisticsmgmt.com/article/fmc_launches_investigation_on_detention_demurrage_and_per_diem_charges) is a serious attempt to review these practices and is likely to flow into other jurisdictions. I was lucky enough to speak to lawyers closely involved in the investigation representing companies paying these charges and a lot of work is focused on what is seen as a massive and unreasonable cost to industry.

• The debate on the impact of ‘modern slavery’ has taken on significant impact, with studies showing that much of the supply chain producing seafood in South East Asia  is operating in conditions that could be described as modern slavery. The textiles and footwear industries may also be guilty of similar offences. Even though the provisions only directly affect large companies, those companies will pass down the obligations and expectations to smaller parties who supply to them.

• After a brief (three-day) ‘dalliance’ with the idea of re - joining the CPTPP, the Trump administration now seems set on not joining that alliance and is pressing its NAFTA partners on renegotiation of that deal.  NAFTA seems the most pressing of issues, consistent with the promises made during the election campaign.

Ultimately the sense is that we should continue to press our own interests and complete as many other deals as possible as the US looks to have vacated its leadership role and is continuing to follow an increasingly insular agenda.  So, even though we cannot ignore US actions and its responses, we have little real ability to impact those actions and we should continue to progress our own agenda with trade partners from whom we can receive a higher level of certainty.  In the US, interests are looking with some envy on proposals to develop FTAs with the EU and the UK.

Oh - and if pain persists, consult your friendly neighbourhood trade lawyer as well as considering a ‘trade psychic hotline.

COMMENT: Infrastructure planning will directly impact on Aust’s logistics sector

News Feed

Tuesday, 01 May 2018

Australia has two pressing issues to address at present.  Well, more than two but these ones are of far-reaching significance for the present day, the next 10 years and decades beyond:  They are productivity and infrastructure and both impact directly on the freight and logistics sector.

We’re making a reasonable effort at long last on productivity, as is New Zealand and some of our other Asia-Pacific regional neighbours.  There’s lots more to do and we can learn from others; indeed we can work on many productivity essentials together.

Infrastructure is more localised in terms of planning, even though some of it reaches regionally and globally, such as air and marine freight corridors, passenger services, telecommunications and the internet.

Localised in terms of planning, especially.  Building national infrastructure is complicated, costly and challenging.

Establishing a new international air link is far from simple. Supporters have to assess its long-term revenue deliveries, sustainability and market appeal, as well as securing the necessary rights and setting up ground arrangements, staffing and administration.

But it is relatively straightforward in comparison to the need for national transport and resources infrastructure that embraces roads, rail lines, ports, airports, fuel lines, transport hubs and much more. 

Such an infrastructure is not only aligned to the national wellbeing, it is part of daily lives. 

As we report in this issue, Infrastructure Australia – a body that functions as an independent advisor – has a list of what it sees, with input from stakeholders, as priority projects and initiatives.

A first read of the list might suggest that aviation, while well represented, is to some extent outweighed by other modes.

That would be a misinterpretation.  The evolution of Australia’s 21st century infrastructure is a balanced affair.  Air freight cannot prosper without efficient road networks and not just the main airport roads.  Pick-up and delivery of air cargo consignments can be affected by something as seemingly unrelated as Melbourne’s ongoing problem of railway level crossings which cause congestion and delay for people and freight alike.

What’s more, it is in the national interest – and sheer common sense – that some freight moves by rail, road or sea rather than air. 

Infrastructure is in every way a big picture.  It affects everyone whether they are aware of this or not.  And it’s ongoing – there will never be a point where we can sit back and say ‘well, that’s done’.  But we can develop infrastructure to a point where it needs only building on or tweaking, rather than starting from scratch.  We’re starting to make real progress.

- Kelvin King

Aviation is highlighted in 2018 IPL as govt grapples with huge population increases

News Feed

Tuesday, 01 May 2018

Aviation features strongly in Infrastructure Australia’s recently released 2018 Infrastructure Priority List, both in terms of airport projects and the broader picture where air cargo movement is an integral part of inter-modal transfers and cost-efficient alternatives.

Introducing the 2018 edition, Infrastructure Australia chair Julieanne Alroe commented that in the decade since IA was formed, “the Priority List has helped establish a longer-term view of our infrastructure needs – one that enables our leaders to look beyond elections and budgetary cycles to make evidence-based decisions on the best use of our limited infrastructure funding.

“It’s about building our collective capacity to deliver world-class infrastructure that meets the challenges of the future – in particular, the challenge of how to maintain our enviable quality of life in the face of significant population growth.”

She noted that Australia’s population growth is now one of the fastest in the OECD and easily outstrips the UK, Canada and the United States. “And there is no doubt that this is a significant challenge for our political leaders.

“In the next 30 years, Australia will be home to 36 million people. This rate of growth is equivalent to adding a new city, roughly the size of Canberra, each year for the next 30 years.

“We know the vast majority of this growth, about 75%, will be centred in our largest cities – Sydney, Melbourne, Brisbane and Perth.

“This is a challenge that we can’t afford to manage passively. We must invest our infrastructure dollars wisely to maintain our existing infrastructure and we must build new infrastructure when and where it is most needed.”

The Infrastructure Priority List //ia-priority-list.herokuapp.com/pdf contains two broad groupings: projects and initiatives.

Projects are advanced proposals that have a fully developed business case that has been positively assessed by the independent Infrastructure Australia board, Alroe explained.

“These advanced proposals address a nationally-significant problem and deliver demonstrated economic benefits. For example, improving connectivity between Australia’s cities and regional centres, strengthening our global role as an exporter of goods and services or making our infrastructure more resilient.

“Initiatives, on the other hand, are proposals that have been identified to potentially address a nationally-significant problem, but require further development to determine if they are the best course of action.”

Western Sydney Airport is one of the six ‘high priority projects’ in the 2018 list.  Preserving corridors for a WSA fuel pipeline and rail connection are listed as ‘high priority initiatives’.

Also in the ‘high priority initiatives’ listings is the Sydney Gateway – a connection between West Connex at St Peters and Sydney Airport/Port Botany.

‘Priority initiatives’ include third runways for both Melbourne and Perth airports.

Infrastructure Australia’s board has an impressive balance of hands-on and academic experience, with plenty of direct transport contact including aviation.

Alroe has a particularly strong aviation background.  She was appointed in July 2009 to the position of ceo and managing director at Brisbane Airport Corporation.  She had previously held a number of roles at Sydney Airport Corporation including executive management positions in the commercial, operations, corporate affairs, planning and infrastructure departments.

Among her previous board appointments were chairman of Airports Coordination Australia Ltd and Airports Council International Safety and Technical Standing Committee.