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cargovisionQUARTERLY MAGAZINEAIR FRANCE CARGO-KLM CARGO VOLUME 21 NUMBER 27 DECMEBER 2006

Calgary or BustHorses for CoursesElectronic Creep

INTO

AFRICA


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4 INTO AFRICAThe World Bank has again identified Africa as the most challenging place to do business. Howeranked South Africa, Mauritius, Namibia and Botswana among the least challenging. Several lar

operators are seeing bright spots on the Dark Continent.

14 MR. PRESIDENTSecurity is a hot issue in the airfreight industry, but few people are as close to the fire as William

As incoming president of the International Federation of Freight Forwarders Associations and pre

David Kirsch Forwarders Ltd., he has a clear view of both sides of the coin.

16 CALGARY OR BUSTMore than 850 air cargo executives from 74 countries attended the 2006 Air Cargo Forum and E

in Calgary in September. The Canadian Pavilion and Emirates Sky Cargo boasted the largest dis

Karen Thuermer runs through the highlights.

19 PEOPLE MAKE A DIFFERENCEA nine-tonne pallet has jammed on a main deck in Houston. It won't budge and the KLM aircrafnowhere until it does. Across the Atlantic it's after midnight when Cargo Duty Manager Jan Kop

the distress call from the Houston team.

20 ELECTRONIC CREEPCustoms authorities are increasingly insisting on receiving advance notification of airfreight shipm

has helped to expand the quantity and frequency of electronic messaging; despite the air cargo

rather slow adoption of electronic air waybill transmissions.

24 HORSES FOR COURSESA horse is a horse, of course - but not to Variation Live staff at AF-KL Cargo. Polo ponies are sm

enjoy being cozy together, while high-strung racehorses do not. Karen Thuermer explains the int

moving horses through the AF-KL Cargo network.

08 news & datelines22 Jim Friedel

26 country file: Chile

28 market monitor

30 postscript

31 information and colophon

COVER IMAGE

Gas station in the middle of a vast desertplateau in Central Sudan Benjamin Lowy/corbis

Africa is a complex continent - a huge market with tremendous human and natural resources thatremain relatively underdeveloped. Yet, many African nations are working hard and finding success

converting their resources into products and services that compete in world markets. An efficient air

transportation system helps them deliver goods to international customers in exchange for income

to help grow and diversify a local economic base. For decades, Air France and KLM have served

passenger and cargo customers in different parts of Africa. In this issue, we take a look at some of

the traditional and innovative businesses that are helping these nations succeed.

Meanwhile, across the Atlantic, South American countries are also busy developing resources and

finding markets in North America and Europe. In this issue, we look at two of them. Chiles air cargo

market has been growing at a faster rate than the global average, mainly due to its exports of fish

and fresh produce to markets in the Northern Hemisphere during their winter.

Argentina also has a number of successful agricultural exports, but in this issue we concentrate on

horses. These animals, which travel as Variation Live cargo, have been a staple for KLM Cargo for

many years. Following the merger of with Air France, the staff of AF-KL Cargo had to solve the chal-

lenge of moving these delicate travelers not only to new destinations, but also between the Schiphol

and Charles de Gaulle hubs. One of the results is that Air France is carrying many more horses

today than it did a year ago.

Heading north to Canada, we review the Air Cargo Forum and Exposition in Calgary to see whats

buzzing among the industrys leading spokesmen. We take a look at the topics that dominated this

biannual event. For instance, how greater airline access to new markets helps customers around

the world and improves living and working conditions for local producers, and how paperless air-

freight could save a billion dollars and make freight flow faster.

Northwest Airlines Cargo president, Jim Friedel is among those championing development of the

paperless environment. How he goes about conveying this to his colleagues is evident as we follow

him in our Week in The Life feature.

FIATAs new president Bill Gottlieb also had something to say about the paperless environment in

Calgary, but he was even more effusive on the topic of whether forwarders should assume greater

responsibility for inspecting airfreight shipments. We spoke to him for our Forwarder Q&A,

Lastly, we look briefly at the trend among customs authorities to insist on receiving advance notifica-

tion of airfreight shipments. This has helped expand the quantity and frequency of electronic mes-

saging, despite the industrys rather slow adoption of electronic air waybill transmissions.

Sincerely,

BATRICE DELPUECHVice President - Equation for Air France Cargo-KLM Cargo

2 cargovision | DECEMBER 06

William M. Gottlieb,

page 14

Trans-Asian rail systems, page 30

Area of Nafadji, Mali, page 4

Polo ponies, page 25

NOURISHING POTENTIAL

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Africa is becoming one of our sources of growth,

says Michael Barber, general manager of Schenkersbusiness development in South Africa.

Growth in Africa has been good, especially on the air

cargo side, says Tito Beeharry, Eagle Global Logistics

Africa development manager. Eagle set up an African

division four years ago.

Africa is booming, adds Wolfgang Meier, executive

vice president and director of Panalpina Air & Ocean.

The Swiss forwarder, a leading force on the continent

for decades, is now expanding in Entebbe, Nairobi

and Tripoli.

Oil and gas exploration activities and mining are driving

Africas growth. Huge new mining projects underway

in the Democratic Republic of Congo and Zambia are

generating abundant airfreight into these countries,

not only for mining-related equipment, but also for

goods needed by the industrys growing support busi-

nesses. Most inbound traffic comes from Europe, but

a growing share comes from the Chinese export jug-gernaut. With their economies on the ascent, African

countries also display a voracious appetite for

telecommunication equipment from Asia.

Although exports are increasing from some African

countries, the level is still set to improve. Now, the

ratio of cargo is 7:6 in favor of southbound traffic.

says Gilles Roche, AF-KL Cargo vice president for

4

The World Bank has again identified Africa as the most challenginto do business. However, it also ranked South Africa, Mauritius, Nand Botswana among the least challenging. Indeed, parts of the DContinent have become bright spots on the map for several largetics operators.

BY IAN PUTZGER

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INTOAFRICA

France, Dom-Tom, North & West Africa. In the past

there was an imbalance, but we could compensate bydeveloping perishables traffic.

OIL FOR FOOD

Fish, flowers and vegetables still account for 70% of

Africas northbound airfreight. The flow is stable and

volume is increasing. Most perishables are destined

for Europe. For example, 90% of the Air France perish-

able cargo from Africa unloads in Paris. Only 10%

connects to outgoing flights.

Air France operates flights to 30 African destinations

and serves as a conduit linking them with North

America and Asia.

Until recently, Panalpina built its African program with

dedicated B747 freighter flights between Luxembourg

and South Africa. This daily service is still the mainstay

of its operation, but flights are now traveling moreoften through the Middle East. Growing trade between

Asia and Africa is making Dubai a primary gateway for

Africa. Panalpina currently flies two dedicated

freighters a week from Dubai to eastern and western

Africa and expects this number to rise sharply.

We are building a hub in Dubai like the one we have in

Luxembourg, Mr. Meier says. It will have four or five

MAPPINAFRICA

The African netw

France and KLM

each other with in South Africa.

to 30 destinatio

North Africa and

Ocean. KLM do

East and South

Air France carrie

African cargo in

A330, A340 and

jets it flies to the

It supplements t

with B747-200 f

Dakar and to the

Some of these f

via Kenya while

serves 13 destin

in western and n

KLM operates p

to eastern and s

In Johannesburg

combination of

senger aircraft a

provide main de

South African m


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weekly flights by the end of next year. Panalpina also

formed a partnership with TAAG Angola to operate

weekly B747 freighters between Luanda and Ostend.

Flexibility is essential when you encounter sponta-

neous fuel shortages in many African markets, Mr.

Meier says. We fly a fixed weekly uplift, but withenough flexibility to reroute if necessary. If we cannot fit

into the schedule, then we run additional charters.

Flexibility is equally important in accommodating the

seasonality of perishables. Northbound Air France

freighters stop in Cairo during December, to take on

fuel so they can carry Madagascars lychee produc-

tion. The lions share of Air France-KLM traffic moving

out of Africa travels in passenger bellies. Its freighters

simply complement that capacity and add flexibility.

For example, it leases an A300-600 freighter for a

route that covers 13 destinations in Africa. We adapt

on a seasonal basis, Mr. Roche says. For this years

winter season, Libreville and Pointe Noire are being

added to the schedule, and Dakar in addition to the

two weekly B747 freighters and the daily B777-200

passenger flight.

Most African air exports passes through Nigeria or

South Africa, the continents two largest gateways.Both countries have abundant connections to

Europe, ensuring competitive rates. However, for-

warders and shippers have less choice reaching other

African destinations. Much of the traffic b eyond

Nigeria moves on charters.South African Airways

recently bought two freighters because it sees

demand for a regional cargo service. However, it is


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unlikely to add more capacity until the regions insta-

bility is resolved, says Eagles Mr. Barber.

A TRUCK. ITS STUCK

Trucking movements within South Africa, tend to go

smoothly. But it is another matter in nearby coun-

tries, where roads are steadily improving. So are

border crossings. From South Africa to Zambia

you have to cross four borders, Mr. Beeharry says.

Everything depends on congestion at those

borders. Sometimes you have a queue of 400 to

500 trucks.

Truck equipment is also in short supply, due to a

building surge in Zambia and the Congo. However,

rail is even worse because tracks are not maintained.

Rail is madness, Mr. Beeharry says. We try to

avoid it, but during the busiest season we have to

use it. On the other hand, forwarders say Africas

airport infrastructures are basic but reliable and rea-

sonably efficient. Many cities have seen remarkable

improvements. Johannesburg is a cut above the

rest, but still faces some problems for cargo.Security measures had to be tightened after recent

thefts. Planners want to move the entire cargo sec-

tion to another part of the airport to make way for a

major expansion of its passenger facilities. If this cre-

ates congestion and backlogs, it could hurt

Johannesburgs traffic by causing forwarders to seek

other options.

An efficient and well-equipped airport infrastructure

is essential for exporting the regions perishables by

air. Problems would certainly hurt shipments of tuna

destined to become sushi in Tokyo, or lobsters and

fish destined for diners in Europe. Much of the f ish

heads to Spain. Panalpina, along with some fishexporters, operates dedicated flights from

Johannesburg to Zaragoza.

GROW AND THRIVE

Seafood is a good export business, and one that

other countries want to cultivate. Tanzania is building

an aquaculture business on its coastline. Nile perch

already accounts for a sizeable tonnage on Air

France freighters from east Africa, says Guy Lenain,

vice president for the Middle East, India, Southern

and Eastern Africa for AF-KL Cargo.

Kenya is the main supplier for flowers for Europe.

Now, other African countries want a piece of that

action, too. The Ethiopian government has been fos-

tering the development of horticulture, adding 100

hectares of land since last winter. However, investorsremain cautious, largely because of red tape.

Beans, another mainstay of Kenyas exports, also fill

most Air France freighters leaving Reunion and KLM

B777 passenger flights from Nairobi. Morocco and

Egypt have joined the market and both are closer to

Europe. However, they have yet to match the quality

of Kenyan beans.

Skyservices is a Johannesburg forwarder that spe-

cializes in moving fruit, vegetables, flowers, fish and

ostrich meat overseas. Bernd Jlicher, the compa-

nys managing director, sees a trend toward value-

added shipments. Instead of shipping produce in

bulk, they now fly packaged and ready for supermar-ket shelves. Flowers are shipped in bouquets. Fruit is

sliced or cut and mixed for fruit salads.

The high value of the South African rand, combined

with the high cost of air cargo, has reduced perish-

able exports by air from South Africa, Mr. Jlicher

says. However, other African nations, with lower

exchange rates have seen perishable consignments

rise. Air exports of industrial products are still negligi-

ble, except for automotive cargo from South Africa,

where the auto industry has a strong base. However,

electronics shipments are starting to move from

Tunisia and Morocco, where Air France has regular

flights and flies traffic on to Singapore, Hong Kong,

Japan and Los Angeles.

Several countries in Africa continue to export textiles,

but this business has been devastated by the

Chinese garment industry. In Lesotho and Malawi, a

lot of producers closed their doors, Mr. Barber says.Botswana is faced with similar troubles. While there

are definite business hurdles in much of the conti-

nent, optimism mostly prevails and industrial devel-

opment is expected to grow as investors see new

opportunities and feel greater confidence in using

their money to support Africas amazing potential.

DEVELONEW NI

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freighters from east

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CARRIERS World

HahnAeroflot Cargo became an independent unit of Aeroflot in October and will

base 18 of its 227 staff members in Hahn. The wholly-owned subsidiary

will lease six MD-11 freighters and base them at Hahn when they start

arriving in 2007. The new freighters will gradually replace the four DC-10freighters now in Hahn, which will then begin service inside Russia.

Aeroflot DC-10s operate 13 times a week from Hahn to Russia and Asia.

This is over half of the cargo flights in and out of the airport. In October, the

airline added road feeder services for its customers between Hahn and

Milan, Paris, Brussels, Amsterdam, and Frankfurt.

BeijingKorean Air got its long-sought opening in China when

it signed an agreement in September to launch a

cargo joint venture with Sinotrans Air Transportation

Development, a subsidiary of Sinotrans, Chinas

biggest logistics company.

Sinotrans specializes in cargo forwarding for air, seaand ground transportation with its 16 subsidiaries.

Sinotrans Air already has a comprehensive network

in China.

The new company will operate in the Chinese domes-

tic and international airfreight transportation and

related businesses, says Korean Air spokesman Soo

Yeon Kim. Executives from Korean Air will assume

the top two posts, chief executive officer and chief

financial officer.

Korean Air already operates 23 weekly freighter

services to Hong Kong, Shanghai, Beijing, Tianjin,

Guangzhou, and Hang Zhou, and serves an additional

10 cities with passenger flights. It intends to expand

the frequency of its existing freighter services and

inaugurate new ones to Chengdu, Qingtao, Ximen, and

Dalian, in line with the Korea-China open sky policy.

The influence of Sinotrans Air in Chinas air cargo

trade is expected to play an important role in bringingforth an outcome that is sometimes difficult for a

foreign entity alone to perform, Mr. Kim says.

The joint venture will be funded with EUR51 million

(US$65 million), 51% from Sinotrans Air, 25% from

Korean Air, 13% from Hana Capital, and 11% from

Shinhan Capital. The two smaller shareholders are both South Korean

financial institutions.

The new business is expected to become profitable in two to three years

time and will not involve other SkyTeam Members.

BrusselsDHL said in October that it would invest EUR119 million (US$150 million)

to acquire a 49% equity stake in Polar Air Cargo, including a 25% voting

interest. The deal also includes a 20-year block space agreement for

guaranteed capacity on Polar flights across the Pacific. Finalization is

subject to regulatory approvals, but the companies expect to close late

this year or in early spring.

The arrangement enables DHL to have its own air capacity for the first time

between its large parcel networks in Asia and its growing coverage in the

US. It is clearly a challenge to UPS and FedEx who now dominate the

transpacific express market. DHL would like a greater share of the North

America market, at the same time the US parcel companies want to unseat

DHL in Europe and Asia.

Earlier in the summer, DHL said it would buy the shares of Indias Blue Dart

Express Ltd. and take it private to strengthen its position in one of the

worlds fastest growing markets. DHLs Singapore subsidiary bought 81%

of Blue Dart almost two years ago.


cargovision news around thcargovision news around the world

Our quarterly review ofindustry news keeps youabeast of developmentsin key sectors aroundthe world.

Korean Air signed an agreement for a cargo joint venture with Sinotrans

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INFRASTRUCTURE A

ChinaMore concerns about Chinas logistics a

as more companies expand sourcing in t

Kingdom.

As a percent of GDP, logistics costs in C

double those in the U.S. It costs US$40

move a 40-ft container on the toll roads f

to Shanghai, 1,500 km away. To keep p

economy, these services will have to grow

every 1% increase in GDP, says Adrian G

the ARC Advisory Group, director of the

executive council.Even though logistics services may be ex

inconsistent, China is a still good sourcin

products with stable demand patterns, b

their longer lead times and replenishmen

However, products with highly variable d

not normally great candidates for China s

unless they have a very high value-to-we

that justifies using airfreight.

Shippers of perishables, including pharm

flowers, food, and chemicals, have a par

difficult time with processing, packaging

portation in China. Although there are 3

stores for 6 million tonnes and air-condit

for another 2 million tonnes, the capacity

according to the China Supply Chain Co

Freight carts and vans packed with ice c

the fruit and vegetables. Only 10% of thimoves in vehicles with refrigeration. Fruit

run 15% to 30% and total losses could f

million people each year, the council repo


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GATEWAYS World

IstanbulCargo business is still not back to usual at Atatrk

Airport since fire destroyed the main cargo terminal

earlier this year, although many companies are trying

hard to keep freight moving as before.

Most agents with offices in the cargo terminal relocat-

ed after the fire. They have new spaces in an old con-

crete cargo building operated by the State Airport

Administration, says Demir Ozerman, managing direc-

tor of Kargo Sistem, the Turkish member of the EGSAconsortium of independent GSAA companies. Some

agents moved to the MNG building and a few others

to equipped vans.

Air France-KLM Cargo, Emirates, Kuzu, Lufthansa,

MNG, UPS, and TNT are all using MNGs cargo han-

dling space located to the right of the passenger ter-

minal, Mr. Ozerman says. Others are accepting export

freight in a corridor at the cargo terminal building.

Once accepted, handling companies process the

freight in a closed area of tarmac away from the cargo

building. This is obviously a problem during the peak

season, Mr. Ozerman says.

Imports encounter better conditions, because MNG,

elebi Corp, and Sistem Logistics have additional

warehouse space less than 5 km from the airport.

However, no approved or definitive action plan has yet

emerged to replace the burned out cargo terminal, Mr.

Ozerman says. The reason for the delay is a conditionin the contract for passenger terminal operations

between TAV and DHMI (State Airports

Administration). It requires DHMI to release more con-

struction space for passenger terminals. For the

moment, it looks like that space will be the burned-out

INDUSTRYWorld

IrkutskThe worldwide shortage of cargo aircraft has prompt-

ed EADS, representing Airbus and conversion special-

ist Elbe Flugzeugwerke GmbH (EFW) of Dresden, to

create a joint venture with Russian aircraft maker Irkut.

EFW now converts 20 A300s and A310s annually. The

new venture will add Irkuts conversion for the A320

family, as well as managing the work in Germany and

Russia.

Both the partnership and the individual firms will

design the conversions, manufacture the conversion

kits, perform the conversions, and market and sell the

conversion services. Production is scheduled to start

in 2010, with an initial goal of 30 A320 and A321 con-versions a year.

Irkut is one of Russias leading aircraft manufacturers.

Its order book amounts to US$5.1 billion. It is a strate-

gic partner of EADS and an official supplier of Airbus.

In December 2005, EADS purchased a 10% stake in

Irkut and has had a representative on the Irkut Board

of Directors since March 2006. According to con-tracts signed in 2004 and 2006, Irkutsk Aviation Plant

(main production centre of Irkut) has started produc-

tion of floor grids, nose landing gear bay components,

keel beams, flap tracks, and wing ribs and stringers for

the A320, as well as wing ribs and flap tracks for the

A330-A340 family.

A team of Irkut and Airbus specialists recently mod-

ernized Irkuts production facilities to support the man-

ufacture of Airbus components. All of the main

processes, including mechanical and thermal process-

ing, galvanization, and painting, are now certified to

Airbus standards.

Toulouse, Long BeachAirbus says the first A380 will not reach Singapore

Airlines until October 2007, 18 months after the origi-

nal delivery date. This has made a number of earlycustomers jittery. Although UPS and FedEx are said to

be waiting patiently, others are considering alternative

solutions available from Boeing. They wont have to

hurry to find C-17s, however. After saying in August

that it would cease production of its rugged US$200-

million freighter, the company won a reprieve from

Congress to keep the manufacturing plant in San

Diego open until 2010, thanks in part to an appeal by

Arnold Schwarzenegger, Californias governator.

cargo area. Ironically, the extension of p assenger terminal will cre-

ate more demand for cargo processing. The Turkish Government

seems to have a two-pronged approach to alleviating congestion,

Mr. Ozerman says.

The first is to divert freight charters to Istanbuls other airport,

Sabiha Gken International on the Asian side of the Bosphorus,

about 55 km (34 miles) east of Atatrk. This will solve 15% of the

space problem, Mr. Ozerman says, but at the expense of creating

an imbalanced competitive position for foreign AOC and call sign

holder freighter operators. The governments second plan is to

seek investors for an Atatrk Airport Cargo City. Enough space

exists for a cargo city across the highway from the passenger ter-

minal, but the government has not yet found investors to buy the

land, construct and operate it, Mr. Ozerman says.

Tehran

In a bid to develop Irans airports, Iran Airports Co. has concludeda cooperative agreement with South Koreas Incheon International

Airport. During the summer, the Iranian government launched

EUR113 million (US$143 million) in infrastructure projects, including

radar, x-ray equipment, passenger search gateways, and ground

safety vehicles.

cargovision news around the world cargovision news around th

ANPFo

to

Black smoke billows from the Ataturk Airport in Istanbul on may 24, 2006

Nevertheless, some perishable shippers, particularly

those in the pharmaceuticals sector, are prepared topay extra for quality. This will become increasingly

important as competition reduces supply-chain lead

times and product life cycles and the nations health

regulations become more stringent. This is motivating

some logistics companies to improve services.

Similar changes are taking place in the food industry,

in step with the Chinese consumers growing desire for

fresh imported food products and out-of-season fruit

and vegetables. The Ministry of Commerce has been

urging farmers to raise production standards following

the imposition of stricter standards on chemical

residues issued by Japan. China is Japans largest

source of farm produce, exporting nearly US$8 billion

worth of agricultural products to Japan last year.


7/17

12 cargovision | DECEMBER06

ONLINE World

DubaiMercator, the IT division of the Emirates Group, will

begin selling Emirates new SkyChain cargo reserva-

tion and management system to cargo carriers. Th e

new system was written in Java and is one of several

systems hoping to replace the legacy cargo systems

used by many airlines.

NorcrossLXE, a venerable supplier of barcode products, has

decided not to fall under the wheels of the RFID jug-

gernaut. Instead, the company combined barcodeswith voice recognition, to offer an inexpensive alterna-

tive for warehouse operators and cargo handlers.

In many warehouses, a worker receives a note on a

computer screen requesting a pickup from a stock

location. He must scan the location tag and the item

tag and put it on a pallet so the system knows he has

done the right job and is ready for the next one.

However, in terminals with an LXE solution, workers

wear wireless headsets connected to computers.

When one of them receives a verbal instruction from

the computer to pick an item, he pulls it from storage

and puts it on the pallet. An RFID reader tells the

computer what is on the pallet.

The RFID tags improve quality control, for example,

when a worker scans three items but takes only two.

RFID eliminate the scanning process. Voice recogni-

tion helps the worker keep his eyes on the task and his

hands free. Over the course of a day, the systemsaves a lot of time, says Mark Dessommes, LXEs

marketing director, from company headquarters in the

state of Georgia.

MOVING ON World

BerlinJana Schebera, a Berlin-based business development executive

for Goldjet Airfreight of Guangzhou, has written a detailed study of

the Southern Chinese air cargo market. Ms. Schebera, an econo-

mist who is fluent in Chinese, lived and worked in Guangzhou,interviewing Chinese forwarders and combining information from

both official and unofficial sources to prepare a comprehensive

analysis of the regions air cargo potential and the outlook for its

five airports. For more information about the report, please contact

[email protected]

Hong KongKenny Tang has replaced Stanley Hui as chief executive officer of

Dragonair. Mr. Tang, a chartered accountant, joined Cathay

Pacifics Accounts department in 1979, rising through the ranks to

become general manager of Corporate Finan ce in 1994. Mr. Tang

was appointed chief operating officer of f reight carrier Air Hong

Kong in 1997 and took over as general manager of Cargo for

Cathay Pacific in February 2000.

BonnDeutsche Post World Net board memberJohn Allen has assumed

sole management responsibility for the companys logistics divi-sion. The co-chair, Dr. Peter Kruse, has left the management

board in best mutual agreement and assumed a new role in the

group as a special representative of the CEO. Mr. Allen will oversee

all of DPWNs air, sea and road cargo forwarding businesses, under

the recently reorganized logistics division. John Mullen now heads

DPNWs express globally.

DorvalBill Gottlieb was elected president of FIATA. Mr. Gottlieb is presi-

dent of David Kirsch Forwarders Ltd. in Montreal. Mr. Gottlieb is a

past chairman of FIATAs Airfreight Institute and past president of

the Canadian International Freight Forwarders Association. He is

also a member of the CASS Global Forwarders Dialogue Group

and the Cargo Paperless Transportation Project Management

Group.

Minneapolis

John P. Wiehoffwill become chairman of the Board of Directorsfor C. H. Robinson Worldwide on December 31, 2006. Mr. Wiehoff

replaces D.R. Sid Verdoorn who will retire at that time. Mr.

Wiehoff was named CEO in 2002 after serving as chief financial

officer, senior vice president, and president. He joined the compa-

ny as controller in 1992. He has been a director since 2001.

February 21-23InterAirport India 2007,

Pragati Maidan Exhibition Cent

New Delhi.

Tel: +44 (0) 1727 814 400

Fax: +44 (0) 1727 814 401

[email protected]

www.interairportindia.com

March 4-8IATA World Cargo Symposium

Mexico City.Tel: +1 514 874 0202

Fax: +1 514 874 2654

www.iata.org

March 11-13AirCargo 2007,

Sheraton Wild Horse Pass,

Phoenix.

Tel: +1 602 225 0100

Fax: +1 703 361 5274

[email protected]

www.aircargoconference.org

March 20-22Aviation Industry Expo,

Orange County Convention Ce

Orlando.

Tel: +1 800 827 8009Fax: +1 650 565 9600

www.aviationindustryexpo.c

April 18-20The Fourth China Aircargo Sum

Hyatt Regency,

Hang Zhou.

Fax: +8621-52379998

[email protected]

April 15-17TIACA Executive Conference a

Annual General Meeting,

Cologne Bonn Airport.

Phone: +1 786 265 7011

Fax: +1 786 265 7012

www.tiaca.org

April 29-May 1CNS Partnership Conference 2

Rancho Bernardo Inn, San Die

Contact: Fran Harris

Tel: +1 515 747-3312

[email protected]

www.cnsc.net

cargovision datelinecargovision news around the world

INTERMEDIARIES World

BangkokOver 200 independent forwarders from around the

world met at the Plaza Athenee hotel in the Thai capi-

tal in September to swap business ideas and find part-

ners. Attendees at the Advanced Professional

Logistics Network (www.wcafamily.com) meeting also

listened to presentations, including one to provide new

and exclusive online freight liability insurance.

The goal of these annual gatherings is to provide a

venue for forwarders to conduct face-to-face meet-

ings with counterparts from other regions who might

be promising partners. Before attending the confer-

ence, agents can use APLNs online scheduling tool tosearch the roster of prospective attendees for suitable

candidates and to arrange a conference agenda

before they leave home. Both FIATA and TIACA have

adopted this software for use at their own events,

according to the ALPA organizers.

MoscowRussian Logistics Service Group will add 35,000 m2 of

warehouse space in the Podolsk, Moscow region and

15,000 m2 of space in St. Petersburg. The company

is on track to become one of the leading warehouse

operators in Russia by the end of 2007.


8/17

What is your view on spreading

the responsibility for security to other

participants in the supply chain?

This is relevant for Canada because of what is happen-

ing in the US. New TSA regulations coming in

December are sending shock waves through Canada

because we do not have a regulated agent program or

a known shipper program that is as sophisticated as

those existing or proposed in the US. We are con-

cerned that we will not be able ship cargo across theborder if the US regulations are applied in the manner

written. We wonder how we can initiate a pilot program

for known shippers, regulated agents, and screening

processes, without hampering the flow of goods.

Transport Canada is looking at the question. Both gov-

ernments want to ensure that cargo is secure and

shore up any weaknesses.

In Europe, the government certifies shippers. To


secure the whole supply chain, the f orwarder must

know his client. Nevertheless, we could also have an

approved list of secure exporters. This would allow us

to deal in a commercial relationship with our clients

while the government deals in a regulatory relationship

with them.

Which security issue do you think

forwarders find most troubling today?

Since 9-11, we have seen security surcharges ofCA$0.25/kg or US$0.20/kg. The airlines said this was

not for screening, the government was handling the

security aspects, but the cost was to cover the higher

liability premiums they needed to operate. CA$0.20/kg

could be 20% of the base rate for some shipments

and the charge is applicable whether the distance is

100 km or 1,000 km. We know that fuel cost is volatile,

but security has been stable for the last five years. At

what point does insurance become a cost of doing

business? We would prefer to see airlines anticipatethe cost of security and include it in their service.

Would you be in favor of forwarders

screening cargo?

We are being asked to screen cargo and so are for-

warders in other countries. Airport authorities and car-

riers say they do not have space at the airport to

screen everything. Airlines have gotten out of cargo

business and outsourced their ground handling. Now

their handling facilities are small, cargo flows through

quickly, and there is little room for new equipment.

Where will freight be screened and at what level?

In Canada, we talked about screening 100% of cargo

from unknown shippers, 30% from known shippers,

and 3% from trusted shippers. We work hard to have

our shippers certified, and that means only 3% to 30%

of the cargo going through our warehouse is screened.How do you explain to a trusted shipper, who went

through the certification process, that you want more

charges?

You either have equipment in the warehouse to screen

cargo before you palletize it, or you give it loose to the

airline and let them screen it. For US$50, it is a better

choice to let them do it if you want to minimize your

risk and liability.

Where does the forwarder fit into

this chain of responsibility?

Most freight forwarders have liability insurance and

most associations require it. It may cover only US$1-2

million per incident. We have seen cargo claim litigation

go on for years with appeals. Moreover, when the

amount of the claim is defined, the litigators go after

everyone and let the courts decide who is responsible.

If it was a terrorist incident and could be tracked,

everyone would be in civil court. The cost of defending

that suit could devastate a company that may have no

direct relationship to the incident. But you still have to

prove it.

What should forwarders be prepared

to do then?

Airfreight forwarders do not want to take on unrealistic

requirements. We can train staff and cargo handlers to

a higher level of awareness. We can change businesspractices so things are more secure. Simple things, like

not leaving trucks unlocked during lunch. Many things

are already happening in many countries. Heightened

security has already reduced commercial cargo losses

Legitimate costs have to be worked into pricing. We

prefer to see it as cost of the service, rather than a sur-

charge. Were not asking airlines to lose money

because of higher security costs.

MR. PRESIDENTBY ANDY WESTON

Security is a hot issue in the

airfreight industry, but few

people are as close to the

fire as William M. Gottlieb.

As incoming president of

the International Federationof Freight Forwarders

Associations, he is closely

involved in regulatory develop-

ments and has to keep close

tabs on the bigger picture.

As president of David Kirsch

Forwarders Ltd, he is also

confronted with the costs and

other everyday consequences

of such regulations.

His answers to our questions

confirm that he has a clear

view of both sides of the coin.

William M. Gottlieb is incoming president of the International Federation of

Freight Forwarders Associations. He is also president of Montreal-based

David Kirsch Forwarders Ltd. Mr. Gottlieb is past chairman of FIATAs

Airfreight Institute and a member of the CASS Global Forwarders Dialogue

Group and the Cargo Paperless Transportation Project Management Group.

He is past president of the Canadian International Freight Forwarders.

COMPANY

David Kirsch Fo

was established

in 1936 and also

Toronto, Vancou

Winnipeg.

Its services inclu

freight forwardin

customs broker

insurance, and a

Over the past 70

company has ga

experience acro

from Algeria to U

For further inform

visit www.kirsch

Tibor

Bogn

r/C

orb

is

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Montreals Olympic Stadium

Place des Arts, subwaystation in Montreal (left) and detail of Thunderbird House Post (right)


9/17

The International Air Cargo Association reports that over 850 air cargo executives from

attended the 2006 Air Cargo Forum and Exposition held in Calgary in September. The

Pavilion and Emirates Sky Cargo boasted the largest displays, amid festivities replete w

and a performance by Cirque du Soleil. Here are some highlights f rom the event.

BY KAREN E. THUERMER

The Canadians lassoed ACF 2006 in style. Morning ses-

sions addressed access to markets, air cargos impact on the

global economy, shippers views of the industry, and the pros

and cons of paperless cargo processing. During the afternoon,

participants explored the 165 exhibits dominated by airports, IT

systems, and handling operators.

Fuel costs were a recurrent topic of conversation. Ram

Menen, divisional senior vice president at Emirates SkyCargo,

questioned whether high fuel prices for the long term would

cause manufacturers to shift manufacturing back to the United

States. Considering that China and Indias economies are

growing fast and their cost advantages are disappearing, it

could change trade lanes completely.

However, the formal discussions stayed on topic.

The program began with the airlines. As sourcing becomes

more global and shippers use air cargo to manage their supply

chains, airline cargo executives would like to see greater

access to their customers markets. We are seeing an

increase in time-sensitive shipments, said Ulrich Ogiermann,president and CEO of Cargolux. We need an air network envi-

ronment that allows us to be part of the global supply chain.

Cargoluxs home base, Luxembourg, has negotiated 76 bilat-

eral air service agreements, but only 14 are open skies agree-

ments for cargo. This is still a very high number compared to

other countries, Mr. Ogiermann contended.

Most of Luxembourgs ongoing negotiations do not entail

open skies, Mr. Ogiermann explained. There should be a min-

imum of third and fourth freedom rights, and we would prefer

fifth and seventh freedoms as well. The more rights, the more

interesting business is for us. There should be a minimum of

two weekly frequencies per destination, with no limitations on

capacity, and routing flexibility.

Ideally, carriers would be able to offer air cargo services freely

according to trade requirements and commercial considera-

tions and be limited only by operational and safety considera-

tions. Generalized open skies, at least for cargo, should be

the ultimate goal, Mr. Ogiermann said.

OPEN FOR ALL

On the other hand, open skies would not necessarily enhance

response times for project cargo, said Alexey Isaikin, president

and CEO of the Volga-Dnepr Group, who spoke through a

translator. Given the uniqueness of each shipment, produc-

tive communication with customers regarding their a

needs is still more important.

Everyone benefits from open skies, not just the sup

also the manufacturer, said Erik Britton, director of

ics at Oxford Economic Forecasting. Air cargo imp

sales, marketing and transportation for finished prod

makes manufacturing more efficient through improv

tory management, reduced risk of interrupting prod

rationalizing production sites, and rationalizing sour

materials and parts. Air transportation contributed

lion to global GDP in 2004, Mr. Britton said. Air carg

part of that contribution. Forty percent of value of th

manufactured exports is transported by air, though

export volume. Still, the industry could do better wit

the business lost through restrictions placed upon it

THAT SHIPPER SAID WHAT?

Airfreight is important to IBM as it transforms itself i

al enterprise. Richard W. Macomber, IBMs program

er for Global Logistics Procurement, Americas, Integ

Supply Chain of IBM told the conference. IBM ships

valent of 22 747s f ull of freight every d ay, not includi

tic traffic. Big Blue is relocating its US manufacturin

to Brazil, Russia, India, and China, Mr. Macomber s

that besides the economic growth potential of these

they are home to nine of the worlds busiest airports

of the largest cargo operators.

Air cargo already accounts for 78% of Intels freight s

said Gregory Skrovan, of the firms Customer Fulfillm

Planning & Logistics Group. Intel spends 59% of thi

with 20% coming from China 3PLs. Because the ch

sending smaller shipments to more remote location

the risk of falling victim to their unstable logistics infr

tures, thus emphasizing its need for high visibility du

ping.For us, air cargo is about reducing inventories and

to market, added Greg Andrews, director of Globa

Transportation for Adtran, a maker of telecommunic

routers. To turn on a dime, we need decreased inve

shorter lead times. Not to mention that using airfreig

lowered our inventory carrying costs from 7% to 2.3

Mr. Andrews said he wanted to work more closely w

riers, but criticized the industrys responses to highe


CALGARY ORBUST

Laurence

Go

dart


10/17

CARGO DUTY MANAGERJAN KOPP

A KLM Combi is parked at Bush Intercontinental Airport in Hou ston after arriving f rom Europe. Already, are embarking for the return flight to Amsterdams Schiphol Airport. But t here is a problem. An inbound nine tonnes of cargo has jammed on the B747s main deck during unloading. It will not move forward anbe rolled back to its original position. As things stand, the aircraft is going nowhere.

BY PHILLIP HASTINGS


Enter Jan Koppen, one of six caragers based at the KLM Operations

Amsterdam, where it is nearly midnig

with the cargo handlers in Houston a

crew, he must find a solution.

I came up with the idea of securing t

stood, using a lot of straps and putti

locks. Houston relayed pictures to m

show them to the safety control peop

Amsterdam, who could determine w

safe to fly, explains Mr. Koppen. Th

for Amsterdam after only a slight dela

believe, it took four and a half hours t

off the aircraft after it arrived in Amste

However, Mr. Koppens job entails a contending with the impact of unexp

which may include heavy weather, te

ties, industrial action, crew issues, an

eruptions. He also has to deal with c

control matters, both on a routine da

and when particular situations arise.

when there is need to replace a Com

passenger aircraft on a certain route

instances, he often wears two hats: a

tive of AF-KL Cargos interests and a

between that organization and the O

Control Center. In that case, I must

needs to advise me, and who I must

decision is made.

Mr. Koppen joined KLM Cargos res

ment, as it was 15 years ago, in Ams

some ways, the job has not changedreservations department was also inv

like capacity planning. What has cha

the technology we now use to help m

and the increased time pressure resu

speed at which aircraft have to be tu

costs and increased security screening. The fuel surcharges

defy logic and only pad the carriers revenues. One also needs

to ask why half of the air cargo service providers are under

scrutiny and investigation for price fixing.

In discussing security and cargo screening, Mr. Andrews

questioned whether airports should begin to screen freight

and passengers separately, noting that some US airports,

Huntsville, Rickenbacker, Southern California Logistics Airport

and Alliance Airport could easily undertake such a system.

DROWNING IN PAPER

The air cargo industry could fill 39 Boeing 747 freighters each

year with paper wasted on documentation, according to the

International Air Transport Association.

IATA is concentrating on its e-freight initiative because industry

processes remain paper dependent, said Jens Tubbesing,

president of Cargo Network Services Corp., IATAs US partner.

This has resulted in missing or incorrect documentation that

hamper progress in the supply chain. Keeping documents

and freight in sync is complex and costly. Having multiple par-

ties capturing the same data leads to inefficiency and errors.

Northwest Airlines was an early adopter of e-commerce and is

largely paperless today, according to Jim Friedel, president of

Northwest Airlines Cargo and senior vice president of Pacific

Northwest Airlines Inc. Mr. Friedel was an advocate for helping

carriers move e-freight forward.

The industry should be ashamed of its progress in automating

air cargo traffic, said Christopher Shawdon, vice president ofLogistics Solutions for Unisys Corp. Mr. Shawdon noted how

quickly passenger carriers adopted e-tickets while airfreights

major weakness is still its uncoordinated IT systems.

However, e-freight may not benefit everyone. Filing paper-

work is how f reight forwarders make most of their money,

said William Gottlieb, president of David Kirsch Forwarders

Limited. Forwarders have an intimate understanding of the

needs of the commercial traders they serve. The carrier is

entrusted with the forwarders cargo. It is the forwarder who is

the customer of the air carrier.

IATA should focus on spearheading global industry wide coop-

erative efforts, to lobby states that have yet to ratify the 1999

Montreal Convention, Mr. Gottlieb said, thereby allowing the

modernization of the air transport legal framework. The asso-

ciation should also promote the functionality of global e-com-

merce in air transport. In particular, IATA carriers should be

required to accept laser-printed, plain-paper air waybills. Is it

realistic to believe that IATAs ambitious e-freight project, ascurrently structured, will succeed, unlike its paperless endeav-

ors of the past?

Yes, paperless cargo processing could save the industry $1.2

billion each year, Mr. Gottlieb conceded. But who saves? We

do not see a strong business argument for air carriers and

paperless filing. Its about reducing shippers time by 25%.

cargovision interviewcargovision NO LOOSE THREADS

Martin Kamstra

ATTENDEE VOTE

During ACF sessions, attendees vote on statements dealing with

key issues. Here are the results:

The national flag basis for air service rights should be scrapped

for freighters only.

Yes: 61%

No: 39%

The national flag basis for air service rights should be scrapped

for all airline operations.

Yes: 65%

No: 35%

Air alliances for air cargo are:

1. Useful, but only for specific markets:

47%

2.A major step toward a fundamental change in the industry:

35%

3. Something I read about in Air Trade in 1997 and forgot about:

18%

Openness to foreign investment is an EU prerequisite for an air

services agreement with the US. Do you believe that homeland

security concerns justify the US Congress opposing foreign

investment in US airlines?

Yes: 20%

No: 80%

Many countries still limit fifth freedom rights and insist on

government control of cargo handling facilities. Is progress being

made in easing these restrictions?Yes: 34%

No: 66%

Security screening in air cargo is a controversial topic.

1. Is air cargo screening not workable:

17%

2.All air cargo should be screened:

47%

3. Only cargo in bellies of passenger aircraft should be screened:

36%

Is EDI an effective tool for eliminating air cargo paper?

Yes: 77%

No: 23%

E-freight will save the in dustry time and money. However, many

small shippers, forwarders and air carriers are not prepared to

implement e-freight.

Agree: 79%

Disagree: 21 %

Before e-freight can be successful, there must be changes in thepolicies of customs officials and tax authorities in many countries

who insist on paper records.

Agree: 95%

Disagree: 5%


11/17

the aircraft leaves the last airport before landing in

Indonesia. These conditions are roughly similar tothose imposed by the US Automated Manifest

System, the Canadian Advanced Commercial

Information, and the Australian Integrated Customs

System.

Even earlier in the year, the number of messages

processed by Traxon Europe had grown by almost

70% during the first eight months of this year, com-

pared to the same period in 2005. The annual mes-

sage count doubled over the past five years and

could top 100 million this year.

In some European countries, Traxon connects 90%

of IATA-registered freight forwarders. It hopes to

expand its customer base in North and South

America during the coming year.

Growing competitive pressures, rising costs and

stricter security directives are creating greater

reliance on paperless systems that speed upprocesses between airlines, forwarders and service

providers, and optimize airfreight service, says Felix

Keck, managing director of TRAXON Europe.

Industry initiatives, such as Cargo 2000 and IATAs e-

Freight, are also pushing both airlines and forwarders

to share more information electronically.

The airlines themselves are helping to prod along the

transition from paper by imposing surcharges on for-

warders that do not electronically submit consolida-

tion data that will go to customs authorities.

THOSE WHO CAN, DO

Compared to the steady rise in the number of elec-

tronic messages, use of electronic air waybills has

grown more slowly, about 10% per year, although

Traxon expects growth to reach 15% during 2006.

Of the 35 million air waybills sent globally in 2005,

carriers and forwarders processed 20 million of them

manually. The 20-million figure includes activity with

carriers in Africa and South America that do not reg-

ularly use electronic messaging, as well as with small

forwarders that may lack the resources to acquire

this capability. The fact that some airfreight markets

have less advanced electronic communications than

others is luring Traxon beyond its strong European

base. The company is taking advantage of an oppor-tunity to have more forwarders and carriers adopt

electronic messaging. Newly-signed agents have the

benefit of becoming more competitive in global mar-

kets, and Traxon earns more from the increase in its

message traffic.

Traxon has been a rising presence in South America

over the past two years, and plans a push into North

America this coming year. It is relying on a business

model of letting forwarders use many of its electronic

services without charge if they transmit all of their airwaybills electronically. In the U.S. and India, the com-

pany has also begun electronic communication with

customs authorities to expedite the flow of shipment

data, enhance security, and shorten hold times for

shipment releases.

PANALPINA

Panalpina has been co-operating with Traxon for

many years and is now enabling its existing branches

in the US as well as its new branches in Scandinavia

and Canada to access selected major airlines. As of

October 2006, the Swiss forwarder had connected

42 additional branches for a total of 259 offices in 52

countries. Panalpina uses Traxons services to send

messages for air waybills, status updates and con-

solidation lists. It can also acknowledge the receipt ofelectronic air waybills and electronic consolidation

lists, even though some airlines are not yet providing

this service.

Traxon has worked recently to improve the quality of

the messages used by customs agencies. It is cur-

rently connected with 90 airlines that handle 95% of

all IATA registered traffic, as well as 9,000 forwarders

offices worldwide. Its headquarters are in Frankfurt.

Customs authorities are increasingly insisting on receiving advance notification of airfreightshipments. This has helped expand the quantity and frequency of electronic messaging;despite the air cargo industrys rather slow adoption of electronic air waybill transmissions.

BY ANDY WESTON

When the US CBP began requiring carriers to use

its Air AMS for advance electronic submission in2004, executives at Air France Cargo and KLM Cargo

realized that this trend would eventually spread to

other countries, albeit with different policies and tech-

nologies, says Pascal Morvan, SVP of Cargo Opera-

tions & Logistics for AF-KL Cargo.

We developed a solution together with Traxon, that

enables us to exchange a standard set of messages

with them, and they ensure that the data arrive at the

proper customs authority on time and in the correct

format.

AF-KL Cargo began using Traxon in October to send

electronic manifests to Canadian customs. AF-KL

Cargo does not require forwarders to use Traxon. It

is just one of many choices available to them for

communicating electronically with the company.

Also in October, Indonesia became the latest country

to require advance filing of cargo manifests.

INDONESIA

Forwarders must now send an electronic FMS mes-

sage describing the master air waybill, as well as an

FHL message describing the house bill consign-

ments and their association with a master air waybill.

The messages must be transmitted two hours before


CREEP

ELECTRONIC

Felix Keck:

Growing competitive

pressures, rising costs

and stricter security

directives are creating

greater reliance on

paperless systems.


12/17

SUNDAYMINNEAPOLIS

My working week generally starts on

Sunday evening, since that is Monday

morning in Asia. This week I have a confer-

ence call at 05:00 about the new passen-

ger lounge we are building at Tokyo Narita,

which will be used by customers of several

SkyTeam carriers, such as Continental,

Delta, and Air France KLM. The passenger

business really is a separate world from the

cargo business. They are like two separate

families and I have to constantly switch my

mindset. In cargo, you are dealing with a

smaller group of customers. The number of

complications is lower, but the detail is

higher, because each manager has to han-

dle more responsibility. On the passenger

side, revenues are twice as big, so there are

many more staff, which allows them to be

experts in their area.

MONDAYMINNEAPOLIS

I start the day with meetings and phone

calls to cargo and passenger staff, to make

sure they are all aligned on their key dead-

lines for the week. Then we have one of our

bi-weekly cargo meetings about e-com-

merce. We discuss a barcode scanning

solution we are experimenting with, and

also CPS, our cargo e-booking portal, and

the Message Improvement Program of

IATA, in which we are taking a key role. We

started these meetings four years ago,

when we were trying to promote CPS. They

involve staff from sales, IT, and operations.

This multi-departmental approach is theonly way to get results.

I then record my bi-weekly video for our

cargo staff around the world. The video

goes up on the web to keep our freighter

pilots, who are based in Anchorage, in the

loop. Then in the evening, I head to the air-

port for a flight to Korea

WEDNESDAYSEOUL

I cross the international dateline, so the

next day is Wednesday. Tuesday just disap-

pears. I meet with Korean Air in Seoul to

talk about cargo cooperation. We code-

share with them, and for a year and a half

have been swapping freight loads at

Anchorage. They fly our cargo from

Anchorage to Atlanta and we fly theirs from

Osaka to Anchorage. We want to expand

this activity. I also have a conference call

with the passenger sales staff in Asia about

our new central reservations office in

Singapore. It replaces offices scattered

around Asia and has streamlined our costs.

In the evening, I fly to Shanghai

THURSDAYSHANGHAI

I meet with another SkyTeam partner, China

Southern, about passenger and cargo

cooperation. I also brief our local staff about

our application to the US Department of

Transportation seeking more traffic rights

into China. We already have freighters from

Tokyo to Shanghai, but we would like to fly

non-stop from Detroit. We argue that this

would benefit US auto manufacturers. In the

evening, I have dinner with cargo cus-

tomers. Whenever I go to Asia, I try to meet

them.

FRIDAYSHANGHAI AND TOKYO

First thing, I meet with the passenger

check-in staff and mechanics at Pudongairport and then fly to Tokyo. While waiting

for my connecting flight to Minneapolis, I

phone our passenger manager there to dis-

cuss key account strategy. Contracts with

businesses such as General Motors and

Toyota are important to our passenger

business, because their people fly so often.

We talk about how we can appro

Japanese corporate customers, p

in Osaka.

FRIDAYMINNEAPOLIS

Crossing the international datelin

arrive in Minneapolis at 11:00 on

morning. I am a good flyer and c

on almost any flight, which is just

My passenger role means I travel

I did when I handled cargo only.

a keener interest now in the deta

service. Cargo people tend to sc

passenger business is all about d

how many peanuts you get in bu

class, but the details of inflight se

essential to winning customers.

Back in the office, I meet with our

cargo sales team about a joint eff

KLM Cargo to grow small expresments via our respective hubs. W

generate express traffic from Den

Dsseldorf via Detroit and via Am

rather than just from Minneapolis

Amsterdam. The real trick is to en

hub transfers run smoothly and t

customers information is clearly d

Since both carriers use the CPS

portal, life is a lot easier. Back ho

is, ironically, a Chinese take-out.

SATURDAYMINNEAPOLIS

I have a daughter of five and a so

en. Both love sports. On Saturda

soccer mom, taking my daughte

soccer game and my son to his fball. That is American football, bu

the physical contact.

This is a typical Saturday, bouncin

one child activity to the next. In th

we are lucky enough to have a ba

so my wife and I go to a private d

JIM FRIEDEL Jim Friedel is not just president of Northwest Airlines Cargo, he is also senior vice president of Pacifwest Airlines Inc. That gives him unique insight into both the cargo and passenger sides of the airlinehis base in Minneapolis, he ov ersees alliance development, e-commerce initiatives, and corporate sWITH PETER CONWAY

cargovision a week in the life of


Nort

hwes

tAirlines

Inc.


13/17


14/17


Perishables dominate Chiles air cargo exports,comprising about 70% of the total tonnage.

This South American country is the second-largest

producer of fresh salmon in the world, just behind

Norway, and exports 90,000 tonnes a year, mainly to

the US. The latter is also Chiles largest overall air car-

go export market. Chile additionally exports large

quantities of seafood to both Europe and Asia all year

round.

Fruit and vegetable exports are more seasonal, pri-

marily from October through to April. Major traffics

include cherries, grapes, berries, and nectarines.

Chile is one of the main suppliers of fruit and vegeta-

bles to the northern hemisphere during that regions

winter. Another major seasonal export trade is plant

seeds. Newer developing traffic flows include fresh

flowers, baby lobsters, and snails.

Chiles overall international air cargo market is cur-

rently growing by around 7% a year, based on recent-

ly-published Chilean Civil Aeronautics Board figures

for Santiagos Arturo Merino Benitez Airport, which

showed traffic through that gateway up by 6.7% over

the first eight months of 2006.

POSITIVE OUTLOOKEconomic Review of Chile,

International Monetary Fund (IMF)

For the past 15 years, structural reform and prudent

policies have helped anchor Chiles successful eco-

nomic performance. In recent years, a fiscal policy

rule, inflation targeting, trade liberalisation and an

open capital account have yielded strong economic

growth and low inflation. High copper prices enabled

the central government to register surpluses averag-

ing 3.5% of GDP in 2004-05. A surplus of 6% of

GDP is projected for 2006. Chiles outlook is positive,

reflecting strong prospects for copper and robust

domestic demand.

TRAFFIC IMBALANCEPatrick Bazelot,

Director of AF-KL Cargo for Argentina, Chile,

Uruguay, Paraguay

The biggest challenge for international airlines pro-

viding air cargo capacity in the Chilean market is an

imbalance between import and export traffic. The for-

mer is much larger. Another issue is product season-

ality, especially fruit and seed exports, which last only

a few months of the year. Chile has a very strong high

season to Europe and Asia from October-November

through March-April, when it exports red fruits. For

the rest of the year, though, export volumes in those

sectors are very weak. Total air cargo volume to theUS is consistent year-round, helped by the free trade

agreement between the two countries.

SUPPLEMENTAL FREIGHTERSSamuel Guillemet,

AF-KL Cargo Manager for Chile

The AF-KL group has been operating to Chile without

interruption for 40 years. Year-round scheduled B777-

200 flights to Santiago now provide belly cargo

capacity of up to 60 tonnes a week. During the peak

season for Chilean air cargo exports, we supplement

those operations with freighter flights that add another

300 tonnes weekly.AF-KL Cargo is also the cargo general sales agent

for Delta Air Lines, making it the only carrier in Chile

able to cover 300 destinations worldwide through its

own network, including Chiles main exports mar-

kets: the US, Europe, and Asia. Altogether, AF-KL

Cargo handles 12,000 tonnes of airfreight to and

from Chile each year.

REGIONAL INTEGRATIONMichelle Bachelet,

President of Chile

Chile will continue to promote integration among Latin

American countries as the best way to achieve devel-

opment. We are doing it with other countries and weare going to continue doing so, because we are seri-

ous when we talk about integration. We think it is

important to have an institution in South America with

a clear voice, because we share common challenges.

But on the other hand, we want a strong relationship

with Central America and Mexico, working with Latin

America as a whole.

CHILEBY PHILLIP HASTINGS

NEED TO KNOW

Government: Republic, politi-

cally stable multi-party

democracy.

Head of State and Govern-

ment: President Michelle

Bachelet (since January

2006).

Population: 16 million.

Language: Spanish is the offi-

cial language, but English is

widely spoken.

GDP: Projected growth

5-5.5% in 2006 (6.3% in

2005).

Economy: Open economy

that thrives on foreign trade.

Trade: Free trade agreements

with many countries and trade

blocs, including US, Canada,

Mexico, South Korea, EFTA

(European Free Trade Agree-

ment), Central America, China

and, most recently, Peru.

Exports: Major commoditiesare copper, fruit, fish prod-

ucts, paper and pulp, chemi-

cals, wine.

Sources:

Chilean Government website;

CIA World Factbook-Chile

TRAVEL

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cargovision country file

Businessmen passing World Trade Center sculpture

Electoral propaganda 14 January, 2006 in Santiago

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15/17

FORECASTS - IS THE FUTURE BRIGHT?

Although airfreight growth in 2006 is higher than the low rates of

2005 (Fig.1), there is still a general feeling that it is disappointing,

especially in the Far East, the region with the greatest impact on

the combined world total.

Beginning in 2006, most economists expect trade growth to

diminish, especially in the USA and China as reflected in the new

IMF World Economic Outlook (Fig.2). Because of the strong rela-

tion between trade and airfreight traffic, we could expect airfreight

growth to diminish at the same time.

Three new cargo forecasts were published this year. The latest

one from IATA shows a declining growth trend, while those from

Boeing and MergeGlobal remain more optimistic: they see a bright

future for airfreight with growth rates similar or higher than historic

ones (Fig.3).

Boeing presented its latest World Air Cargo Forec

ber, during the TIACA meeting in Calgary. Although th

dicts lower total growth for the next 20 years (6.1%) t

edition (6.2%), it reflects a more bullish outlook for th

ket. Recent orders seem to justify this estimate, but t

more years before we can make a final judgment. Alt

impossible to see 20 years into the future, Boeing an

manufacturers use that period because it reflects the

period and production life of an aircraft. Of course, a

live their designers objectives, but after 20 years, the

be considering replacement. Hence, we view Boeing

sales tool that must be optimistic. The company antic

many markets will grow more during the next 20 yea

did during the last 10 (Fig.5). This is remarkable bec

volume of growth means the growth rate is likely to c

IATA bases its forecast on input from its member

most airlines base their forecasts on their own capac

inside knowledge of their markets, we think this fore

realistic than the other ones (Fig.4). Most of IATAs f

pate 5% growth, but there are always unexpected t

ket. They did not anticipate a downturn in 2001 from

of the ICT market, nor the pleasing high growth in 20

Chinese export boom.


cargovision market monitor

While the global economy is surging ahead full steam and sea freight is recording double-digit

airfreight will probably expand by less than 6% in 2006.

BY DICK VAN DEN BERG

The deviation from the historic trends is most visi

domestic US and the North Atlantic markets. Boein

a reason for the new growth, but we are struck by h

mark the forecasts have been from the actual develo

example, in the US d omestic market(Fig.6). Boeing

the move to trucking in lieu of flying within the USA, booming US market. Remarkable. We conclude fro

cations that annual airfreight growth will be somewh

4% and 7%. However, be prepared for the unexpec

that the future may always differ from the past and m

bright. We recommend a healthy grain of salt!

Major Scheduled Airlines - Global Freight Traffic Growth

-5%

0%

5%

10%

15%

20%

Apr06Apr 03 Jul 0 3 Oct 0 3 Ja n0 4 Apr 04 Jul 04 Oct 0 4 J an 05 Apr 05 Jul 0 5 O ct 0 5 Ja n06

AnnualGrowth

Growth - Quarter vsQuarter previous Year

AverageGrowth of Last 3 Years = 7.2%

Growth - Month vs Month Previous Year

0%

2%

4%

6%

8%

10%

12%

2004 2005 2006 2007 2008 2009 2010

IMF Forecast September 2006 WorldGDP growthWorld trade growth

International Air Freight - History and Forecast

15%

10%

5%

0%

-5%

-10%

IATA history

MergeGlobal forecast

Boeing forecast

IATA forecast

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

IATA: FTKGrowth Forecasts for next 5 years

-5%

0%

5%

10%

15%

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Actual Values

Forecast 2001

Forecast 2002

Forecast 2003

Forecast 2004

Forecast 2005

Forecast 2006

Jan - Aug

Boeing Forecast - US Domestic Market

100

150

200

250

300

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

2017

2019

2021

2023

2025

Real development

Forecast 1996

Forecast 1998

Forecast 2000

Forecast 2002

Forecast 2004

Forecast 2006

Indexed values of RTK with 1995 = 100

Boeing Air Cargo Forecast 2006

History (1995-2005) and forecast (2005-2025)

0%

1995 - 2005

2005 - 2025

1%

2%

3%

4%

5%

6%

7%

8%

9%

Total world Domestic USA E ur ope -

North America

Europe -

Asia/Pac

Asia -

North America

Intra-Asia

i i t i t i i i f ti


16/17


Cargovision is the management magazine of AF-

Its function is to disseminate information on tran

distribution, logistics, information services, and g

business developments. The editorial opinions ex

in the magazine are not necessarily those of AF-K

Reproduction in whole or in part without written

is prohibited.

cargovision postscript cargovision information

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Review recent editions

THE LITTLE ENGINE THAT MIGHT

Our report last issue on Central Asia mentioned two developments

in Trans-Asian rail systems that could eventually compete with planes

for some Asia-Europe cargo. Apparently, the idea has been on other

minds longer than we thought. Vaudine England, writing in the Interna-

tional Herald Tribune in October, tells us that planners were already

studying the feasibility of a continuous link from Singapore to Turkey in

1960. In spite of periodic attempt to revive the concept of a Trans-

Asian railroad, it has yet to emerge intact from a 50-year cycle of wars,

civil conflicts, the Cold War, and communism.

However, transport ministers from two-dozen countries are meeting

in Busan in November, to sign the Intergovernmental Agreement to the

Trans-Asian Railway Network. The United Nations Economic and

Social Commission for Asia Pacific will oversee the project and we

actually might have rail shipments begin sooner rather than later.

Besides the initiatives cited in our story by railroads in Germany,

Russia and China to improve the transiberian network, we now learn

that Soyuztranslink, a multimodal forwarder and partner of Kazakhstan

Railways, has launched rail services from China to Central Asia and

other CIS states. This announcement follows an increase in China-

Kazakhstan trade by 400% during the past four years, to a current

value of about US$10 billion annually.

Why do we, being in the airfreight business and all, care about these

activities? Unlike other parts of the developed world, the air and rail

networks in Central Asia are beginning to modernize concurrently.

Both are big, expensive undertakings, fraught with political potholes.

Watching their relative progress is like watching elephants race

through a swamp: impossible to predict the outcome.

HELP WANTED

Looking for a job in aviation? Why not try package

sorting? There are bound to be vacancies at the ABX

Air hub in Wilmington, Ohio. Unfortunately, ABX fell

victim to fraud by two companies that supplied over

1,000 illegal immigrants to sort freight during the past

few years. Most of them were f rom Mexico. The

scheme fell apart in January 2005, when a routine

inspection of ABX by the Transportation Security

Administration discovered that almost all of its 400

workers were using invalid or fraudulent Social Securi-

ty cards. ABX cooperated with the ensuing US Justice

Department investigation. In October this year, Max-

imino Garcia, owner of both firms, his sister Dominga

McCarroll, former vice president of the two firms, and

their human resources director, Gina Luciano, all

pleaded guilty to conspiring to provide hundreds of

illegal aliens to work for ABX.

CARBON CYCLE

Another recent Cargovision story discussed how

airlines might participate in the EUs Emissions Trading

Scheme. Now an Oxford University report, cited by the

BBC, tells us that Britain will not be able to meet its

goal of lowering carbon dioxide emission 60% by

2050, unless it curbs demand for air travel. Naturally,

the British Air Transport Association says, Hogwash,

air travel alone will have little impact. According to the

BBC, carbon emissions from aviation doubled during

the 1990s, while those from the rest of the economy

fell. Aircraft currently produce about 5.5% of UKs

emissions.

by Mark W. Lyon, editor-in-chief

CARGO FLAP

Airplanes may one day have flapping wings,

becoming what the technically astute call ornithopters,

reports award winning aviation writer Jason Wastnage.

Flapping wings would certainly be an anti-icing solu-

tion, but beyond that, were not sure you should rush

out to book freight capacity yet. A team working at the

University of Toronto Institute for Aerospace Studies

since the early 1990s needed almost 9 years to accel-

erate a proof-of-concept vehicle to takeoff speed and

until last July for it to sustain level flight.

During the last of its three attempts to rotate aloft, the

aircraft reached forward speed of around 43 kt (80

km/h), the wings were given maximum throttle, flap-

ping at a rate of 1 Hz, lifting the aircraft off the runway

at Toronto Downsview airport for 10s of straight and

level flight at 48 kt. The Canadian team behind the

flight believes the prospect of a manned craft is now

real, despite video evidence showing the experimental

craft suffered a buckled trailing edge in the attempt.

Hmm, sounds like crumpled feathers would have

been more descriptive.

Ho

llan

dse

Hoog

te

Milepos

t921/2/Corb

is

cargovisi

Published by AF-KL Cargo Communication, P.O. Box 7700, 1117 ZL

Schiphol, The Netherlands. Christelle Dufour Theuws, dufourtheuws

Kirsten Hemmer,[email protected]

Concept & Realization: vdBJ Communicatie Groep, Bloemendaal, Th

www.vdbj.nl,[email protected]

Editor in Chief: Mark W. Lyon,[email protected]

Project Manager: Urtha Ririhatuela,[email protected]

Art Direction: Sok Visueel Management, Amsterdam, The Netherland

Editorial Office: Vijverweg 18, 2016 GX Bloemendaal, The Netherland

Circulation Manager: Herman Brijssinck, T +32 2752 90 51,brijssinc

AF-KL Cargo DEC 2006 Volume 21 Number 27

cargo

Calgary or BHorses for CElectronic C

INTAF


17/17


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