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NOVEMBER 2005 INTERNATIONAL EDITION

Europe Airports • Dubai’s Ambitions • Fuel Drag

Aircraft Report

Hungry for FreightersAircraft Report

Hungry for Freighters

NOVEMBER 2005 INTERNATIONAL EDITION

CoverINT 10/21/05 1:51 PM Page 1

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MARCUS SAMUELSSON EXECUTIVE CHEF / OWNER AQUAVIT

“ “

Finding the finestingredients from all over the globe isn’t enough.

They also have to be the freshest.

From Arctic char to Asian choy, The Port Authority of New York and New Jersey’s

air cargo network helps Marcus Samuelsson bring in the best fare from all over the world.

Every day, thousands of metric tons of fresh produce, fish, nuts and dairy products come and go

through New York and New Jersey’s air cargo network — including the Arctic char Marcus selects

from the seas of Iceland, Canada and Japan. Our airports offer refrigerated cargo facilities and

expert, efficient handling to get even the most delicate and time-sensitive cargo to more than

100 million consumers within one day of arrival.

To Marcus, our facilities mean being able to plan a menu with the freshest, most high-quality

ingredients, without being limited by seasonality. To your business, it means finding new

routes to success, no matter your specialty.

If you want customers to rave about your business, contact air cargo manager

Michael Bednarz toll free in the US at 866.353.1031, at 212.435.3772

or email [email protected].

Kennedy · Newark Liberty · LaGuardia

C2ACWI1105 10/19/05 4:20 AM Page 1

mailto:[email protected]

November 2005 1AirCargoWorld

INTERNATIONAL EDITION

REGIONS

10 North AmericaU.S. airports are feeling the

pain of major American airlines’deepening financial troubles

12 EuropeDeutsche Post’s international

expansion rises to another levelwith the acquisition of Exel

16 PacificHong Kong’s famously prof-

itable airlines are not immune tohigh fuel costs • Converting EVA

DEPARTMENTS

2 Edit Note4 News Updates

41 Events42 BACK Aviation

Aircraft Report44 People46 Bottom Line48 Forwarder’s

Forum

Cargo Aircraft

Air Cargo ManagementGroup’s annual analysisprojects a strong demandfor freighters.

BiggerDubai

With a new airport and lo-gistics center on the way,Dubai’s cargo ambitions arespreading well beyond theMiddle East.

Euro Airports

Airports throughout Eu-rope are trying to becomethe continent’s alternate car-go hubs, but airlines aren’tquite buying their pitch.

November 2005 C O N T E N T S Volume 8 , Number 9

Cover photo courtesy Boeing

Air Cargo World (ISSN 0745-5100) is published monthly by Commonwealth Business Media. Editorial and production offices are at 1270 National Press Building, Washington, DC,20045. Telephone: (202) 355-1172. Air Cargo World is a registered trademark of Commonwealth Business Media. ©2005. Periodicals postage paid at Newark, NJ and at additionalmailing offices. Subscription rates: 1 year, $58; 2 year $92; outside USA surface mail/1 year $78; 2 year $132; outside US air mail/1 year $118; 2 year $212. Single copies $10.Express Delivery Guide, Carrier Guide, Freight Forwarder Directory and Airport Directory single copies $14.95 domestic; $21.95 overseas. Microfilm copies are available from

University Microfilms, 300 North Zeeb Road, Ann Arbor, MI 48106. Opinions expressed by authors and contributors are not necessarily those of the editors or publisher. Articles may not bereproduced in whole or part without the express written permission of the publisher. Air Cargo World is not responsible for unsolicited manuscripts, photographs or artwork. Please enclose a self-addressed envelope to guarantee that materials will be returned. Authorization to photocopy items for internal or personal use is granted by Air Cargo World, provided the base fee of $3 per page ispaid directly to Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, and provided the number of copies is less than 100. For authorization, contact CCC at (508) 750-8400. TheTransactional Reporting Service fee code is: 0745-5100/96/$3.00. For those seeking 100 or more copies, please contact the magazine directly.POSTMASTER and subscriber services: Call or write to Air Cargo World, Customer Care Department, 400 Windsor Corporate Park, 50 Millstone Rd., Suite 200, East Windsor, NJ 08520-1415; telephone(888) 215-6084

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November 20052 AirCargoWorld

Editor’s NoteInternational Edition

EditorPaul Page • [email protected]

Managing EditorAaron Karp • [email protected]

Contributing EditorsRoger Turney, Ian Putzger

Mike Seemuth

Art & Production DirectorJay Sevidal • [email protected]

Editorial Offices1270 National Press Bldg., Washington, DC 20045, U.S.

+01 (202) 355-1170 • Fax: (202) 355-1171

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U.S. Business and Advertising1080 Holcomb Bridge Rd. • Roswell Summit Building 200, Suite 255 • Roswell, GA 30076

+01 (770) 642-9170 • Fax: +01 (770) 642-9982

Assistant to PublisherSusan Addy • [email protected]

International Advertising Offices

Europe, United Kingdom, Middle EastDavid Collison • +44 [email protected]

Hong Kong, Malaysia, Singapore Joseph Yap • +65-6-337-6996

[email protected]

Japan Masami Shimazaki • +81-3-6418-0580

[email protected]

Thailand Chower Narula • +66-2-641-2695

[email protected]

Taiwan Ye Chang • +886 [email protected]

KoreaMr. Jung-won Suh • +82-2-3275-5969

[email protected]

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CUSTOMER SERVICE OR TO SUBSCRIBE: 888-215-6084

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& Production Meg Palladino

POSTMASTER: Send address change to: Air Cargo World, 400Windsor Corporate Park, 50 Millstone Road, Suite 200, EastWindsor, NJ 08520-1415. © 2005 Commonwealth Business MediaInc. — All Rights Reserved

For more information visit our website at www.aircargoworld.com

Uncontrollable As 2005 draws closer to an end, it is apparent that air cargo

operators won’t have nearly as much to celebrate this NewYear’s Eve as they did last year. There was almost giddiness

among air freight players last November and December as the in-dustry completed its best year of traffic growth since 1997. Somebelieved the hard times of the early part of the decade were pastand that 2004’s heady growth was a harbinger of things to come.

In this space last November we noted Korean Air Cargo President Ken Choi’swarning that 2004 was “too good” and that expectations for 2005 should bemore realistic. Choi understood the nature of air cargo and the global economyto which it is so closely tied: change is frequent and unpredictable.

Oil prices skyrocketed this year and what was once a nightmare scenario —crude oil prices at $50 per barrel — is now something airline operators yearn

for. The price of oil, which hovered around $60 per barrelthroughout October, isn’t likely to go down. The real hopenow is that it will not make another giant leap upwards.

In fact, many shippers and forwarders have decided tomove some international air freight business to less expensiveocean liners, one sign of how soaring fuel costs have shiftedexpedited shipping patterns.

Airlines throughout the world have been stymied by highfuel costs and forwarders have been made dizzy by carriers’frequently ascending fuel surcharges. Airlines are expected to

lose a collective $7.4 billion in 2005, losses that come on top of more than$30 billion in losses from 2001 to 2004. United and Northwest airlines, DeltaAir Lines and Varig Brazilian Airways — all signature, global brands — areamong the carriers currently operating under bankruptcy protection.

The good news for those in the cargo sector is that freight is a bright spotfor most major airlines. But air cargo traffic growth has been sagging, and thefreight divisions at combination carriers are in many ways a hostage of air-lines’ overall profitability — or lack thereof.

American Airlines, which has so far avoided bankruptcy, posted a slim profitin the second quarter, its first net positive quarter since 2000. But the world’slargest airline came back to earth in the third quarter, losing $214 million.

“It’s certainly disappointing to have swung (back) to a loss,” lamentedAmerican CEO Gerard Arpey. “The fact that we were unable to sustain prof-itability … says a lot about our inability to pass on fuel-price increases.”

Although long-term air cargo traffic growth of more than 6 percent is stillwidely expected, and lucrative opportunities in Asia provide reason for excite-ment, air cargo players may take this year as a lesson. Nothing is assured, andprospects can change dramatically when costs largely out of operators’ control— such as fuel — surge to unprecedented heights.

02EditorialINT 10/21/05 1:22 PM Page 2










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Line


UpdatesNews

IATA cites high fuel costs as themain culprit leading to a forecasted$7.4 billion loss for the world’s air-lines this year.

The Air Transport Association ofAmerica says the jet fuel bill for itscarriers will be $30.6 billion this year,double what it was in 2003.

And the oil pinch is leading tofears of a slowing global economy.Speaking to Japanese investors, U.S.Federal Reserve Chairman AlanGreenspan warned that the “recentsurge in energy prices will undoubt-edly be a drag from now on.”

Slipping Peak

Whether it was because of fuel

surcharges or economic con-

ditions, airlines across the world

were reporting sagging cargo num-

bers just as the peak shipping sea-

son was supposed to be starting.

Cargo traffic for the U.S. carriers

grew just 1.6 percent in August, a

meager figure that nevertheless was

better than the reports from Asia

and Europe.

Asian airlines’ traffic was up only

1.3 percent in August, half the rate

of growth in capacity. And business

for European airlines was up just

1.1 percent.

For some, it looked to be getting

worse in September.

Lufthansa Cargo’s traffic, mea-

sured in revenue tonne-kilometers,

fell 4.7 percent in September and

was off 6.4 percent in the usually

strong Asia-Pacific lanes. Cargolux

reported a 6.3 percent increase in

its traffic over September 2004, but

that was a retreat from its usual

double-digit growth and the Sep-

tember figure was actually below

what Cargolux had handled in usu-

ally slow July.

Fuel Proves Flight Drag

Soaring oil prices are likely to make 2005a disappointing year for air cargo. Airfreight traffic has generally grown slow-ly this year as airlines bleed red ink and

rapidly tack on fuel surcharge increases for car-go shipments. The ramifications are widespreadacross the cargo spectrum — carriers from Chinato the United States are having difficulty copingwith unprecedented fuel costs.

A host of major airlines upped fuel surcharges twice last month, bring-ing the standard surcharge rate to 60 cents per kilogram. Air France,Lufthansa, American Airlines, Northwest Airlines, Cargolux and BritishAirways all raised surcharges twice in October. “The decision reflects therising (fuel) costs that Cargolux is exposed to and that affect the entire in-dustry,” said Cargolux.

But the surcharges weren’t the only noticeable impact of crude oil pricesthat hovered around $60 per barrel. China Aviation Oil Holding, the main jetfuel supplier for Chinese airlines, last month raised the price of jet fuel by 9.4percent. That was the fourth time this year jet fuel prices have risen in China,where airlines now are paying $89 per barrel of jet fuel.

In the U.S., American Airlines extended a previously announced reductionin flights for at least the rest of the year, citing high fuel prices. The carrier alsoaxed 15 daily flights between Dallas and Chicago. AA says fuel costs now ex-ceed salaries as the airline’s greatest expense.

The International Air Transport Association estimates airlines will pay acollective $97 billion for fuel costs for 2005, 30 percent above last year.

04NewsUpdateINT 10/21/05 1:23 PM Page 4


Cathay Pacific defied the trend,

with cargo growing 19.8 percent in

September, but the carrier was

hardly boasting since that was be-

hind the growth in capacity.

Helped by transshipments, the

tonnage “masks the softening in

demand for exports from China, in-

cluding a slowdown in garment

shipments,” said Cathay Cargo Di-

rector Ron Mathison. “We have

seen a significant increase in cargo

capacity in the market in the last

few months and remain highly con-

cerned about the pressure on yields

and loads, particularly in the con-

text of high jet fuel prices.”

Polar Thaws

Polar Air Cargo is back in the airafter its pilots agreed to a new la-

bor contract, averting a protractedstrike that threatened to permanent-ly ground the 747 scheduled all-car-go airline.

Polar pilots went on strike inmid-September after negotiationswith parent Atlas Air WorldwideHoldings ended without resolution.But talks called by the National Me-diation Board brought the two sidestogether last month, and an accordwas reached. Polar’s internationalnetwork had been grounded fortwo weeks.

The contract provides a10.5 percent pay increase ef-fective June 1, 2005, and anincrease in the company’scontribution to pilots’ retire-ment plan, according toAAWH. Jeffrey Erickson,AAWH president and CEO,said the company is movingits attention to the “upcom-ing peak shipping season.”He added that the new con-

tract paves the way for AAWH tomerge the pilot workforces of Polarand Atlas Air, AAWH’s 747 contractcargo subsidiary.

“We’re disappointed that it re-quired withholding our services toget” an agreement, said Bobb Hen-derson, chairman of the Polar Aircrewmember unit of the Air Line Pi-lots Association. “We know that astrike means that there was a failureof the labor relations process. …However, it is now time for Polar Air Cargo and its crewmembers tomove forward.”

Metric System

Service performance for partici-

pants in Cargo 2000 grew 10

percentage points over the past

year as airlines and forwarders

ramped up the routes and ship-

ments they are measuring in the

quality initiative.

The growth came in some of the

first performance reports that Cargo

2000, the International Air Trans-

port Association interest group,

started putting out to show

progress in meeting its goals — and

to bolster support for the effort

across the industry.

Public release of the figures, said

Mick Fountain, CEO of global freight

management at Exel and chairman

of Cargo 2000, is “a significant step

towards our goal of eliminating frag-

mentation in the worldwide air car-

go industry and delivering a com-

mon platform that brings together

reliability, predictability and proac-

tive shipment management with re-

duced costs and improved customer

satisfaction.”

There was slightly less satisfac-

tion in August, as the “flown as

booked” measure slipped to 92

percent from 93 percent in July.

But that was still sharply better

than the 82 percent performance in

October 2004 and it came with

some four times more shipments

measured and 1,356 lanes tabulat-

ed in August 2005 against 244 the

year before.

Communication also appears to

be improving, with the percentage

of forwarder freight waybills “cor-

rect received by the airline” almost

doubling over the past year.

The top performing carrier in the

measures was Cathay Pacific, which

handled all its Cargo 2000 ship-

ments flown as planned. The 92

percent average did not include sev-

eral Cargo 2000 members, including

Lufthansa, Cargolux and Singapore

Airlines, which were not ready to

have their shipments measured un-

der the group system.

NWA Booked

In a new bid to push moreover-the-counter customers

to the Web, Northwest Air-lines Cargo is adding a $5charge for customers bookingsame-day expedited serviceby phone or in person ratherthan online.

The charge for the “VIP”

UpdatesNews

75%

80%

85%

90%

95%

100%

8/057/056/055/054/053/052/051/0512/0411/0410/04

Percentage of shipments flown asplanned on participating airlines.

Source: Cargo 2000

Air-Cargo 2000


service is aimed at boosting bookingthrough the Cargo Portal System, theonline system managed by Unisysthat Northwest helped launch withseveral other carriers.

“The majority of our customersworldwide have embraced the advan-tages of technology, with over 70 per-cent of our bookings now comingthrough CPS,” said Jim Friedel, Presi-dent of NWA Cargo.

“Yet, we recognize that some VIPcustomers need the expertise of ourcustomer service agents. We will con-tinue to offer them the service theyrequire for a nominal fee and speedthe airport experience for our cus-tomers who help us minimize ourdistribution costs.”

The fee does not apply to North-west’s general international and do-mestic cargo service.

Carrying Debt

The flag carriers of Greece and

Brazil struggled for survival as

the international airline landscape is

redrawn in the face of mounting

losses.

Greece’s Olympic Airlines was

rocked by an order from the Euro-

pean Union calling for the carrier to

repay hundreds of millions of dollars

in state aid the EU ruled illegal. Al-

though the decision initially ap-

peared to be a death knell for

Olympic, the Greek government was

scrambling for ways to keep

Olympic in the air.

A Greek-American consortium

that had expressed interest in the

airline said it has not backed away.

But the EU order could scuttle a

buyout if the buyer is saddled with

the costs.

Greece’s finance minister,

George Alogoskoufis, told re-

porters that a sale is still possible,

but conceded the EU order compli-

cates previous efforts to sell the

carrier to private investors. The

outcome could be similar to what

transpired in Switzerland, where

Swiss International Airlines was

created out of leftover assets from

bankrupt Swissair.

Meanwhile, Varig Brazilian Air-

ways planned to cut its workforce by

13 percent and attempt to renegoti-

ate debt agreements to emerge from

bankruptcy protection. The airline,

which includes South America’s sec-

ond-largest cargo business, will also

spin off a new company to control

some of its smaller assets and will

sell shares in the new company as a

way to raise money.

Handling Virgin

Virgin Atlantic Cargo sayschanges in the ground services

business are pushing the airline outof its niche third-party ground han-dling operations in the UnitedStates.

Virgin last month sold its NorthAmerican cargo handling business toWorldwide Flight Services, endingthe airline’s attempt to build its self-handling operations into a largerbusiness serving other airlines.

Under the sale agreement, WFSwill take over Virgin’s handling as-sets and staff at five U.S. cities —Newark, Los Angeles, Miami, Wash-ington and Orlando — and serveVirgin and its customers for at leastfive years.

Virgin started selling handling ser-vice in the 1990s, but since thencompanies such as WFS and Menzieshave expanded into global businessesby buying up national operators andselling broader ramp services in addi-tion to cargo handling.

“The airline handling business haschanged dramatically over the last


UpdatesNews

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November 20058

couple of years and to remain com-petitive you have to be able to offer abroad range of services,” said JackFiol, Virgin Cargo’s vice president inthe United States.

“We reached a point where we hadto branch out, possibly into ramp orpassenger handling, or outsource theoperation to a company who can re-alize the value when aligned totheirs.”

Flowering ABCs

Business is blooming at AirBridge

Cargo. The 747 scheduled

freighter subsidiary of Volga-Dnepr

launched three-times-weekly service

from Amsterdam to Moscow aimed

at the strong flower trade.

ABC estimates Russia’s fresh

flower import business to be worth

some $1 billion and that the flights

on a lane not regularly served by

widebody freighters will provide “a

fast and reliable supply line” for the

business. The flower market out of

Amsterdam is a foundation for air

cargo and of the world’s flower

market.

The Russian consumer market for

flowers is one of largest in Europe,

and ABC estimates that 60 to 80 per-

cent of flowers imported into Russia

come from the Netherlands.

ABC service from Amsterdam

Schiphol Airport to Moscow’s

Sheremetyevo Airport will offer a

distribution channel for Dutch flower

exporters throughout Russia.

“Amsterdam is very important for

us,” says Stan Wraight, head of

ABC. “We are building up our hubs

in Europe and expanding our flight

network to meet the demands of

Russia’s growing economy. We

want to build AirBridge Cargo as an

airline that can stand on its own

against any competition and contin-

ue to be the largest scheduled air

carrier in Russia.”

IJS Builds

IJS Global, the small New York for-warder being piloted by former

leaders of Air Express International,made its first move outside the Unit-ed States as part of a larger expan-sion plan.

The company bought ESI Group,which includes air and ocean freightforwarding operations in Hong Kongand Shanghai, and suggested moreacquisitions are in the pipeline.

“As we expand our presence be-yond the U.S., we will first pursueopportunities in Asia because of itsspectacular growth prospects,” saidJohn Gallahan, a former AEI execu-tive who is president and CEO ofIJS Global.

Gallahan says the purchaselaunches “the next phase of our glob-al growth strategy,” a plan he expectsto “dramatically increase its marketshare in trans-Pacific and intra-Asianlane segments.”

IJS is backed by an investmentgroup headed by Hendrik Hartong,who was chairman of AEI. ■

AirCargoWorld

Amsterdam Airport Schiphol:

Europe’s favourite freighter hub

Over the last century, AmsterdamAirport Schiphol has evolved into amain gateway for Europe. The ex-tensive trucking network and excel-lent links to the European motorwayinfrastructure make Amsterdam Air-port Schiphol an ideal base fromwhich to serve all of North-West Eu-rope. Amsterdam Airport Schipholranks fourth among European air-ports in terms of passenger volume,and even higher – third – in terms ofcargo volume.

Amsterdam Airport Schiphol is morethan just an airport for passengersand cargo. It’s a place where supplyand demand meet. It’s an AirportCity.In addition to being a homebase forairlines, ICT companies establish of-fices at Schiphol and global corpora-tions set up their headquarters here.

Compared to other European air cargohubs, Amsterdam Airport Schiphol ac-commodates most full freighter flights(excluding integrator flights). At themoment, 26 airlines operate sched-uled full freighter services to and fromthe Amsterdam hub. In winter 05/06this number is expected to further in-crease with new full freighter airlinesstarting flight services to and from theAmsterdam hub.

We kindly invite you to challenge usto share with you our knowledge, ex-pertise and understanding of markettrends.

Please contact our marketingmanagers at the following address:

Amsterdam Airport SchipholCargo Department

P.O. Box 75011118 ZG SchipholThe Netherlands

Tel: +31 (0)20 601 4530Fax: +31 (0)20 601 2936

e-mail: [email protected]: www.schiphol.com

A D V E R T I S E M E N T

UpdatesNews



http://www.schiphol.com

For more information, please visit www.thaicargo.com or a THAI cargo branch office worldwide.

At THAI Cargo we believe every item we transport should finish it's voyage in exactly the same condition it started in. Regardless of whether your precious shipment is massive, microscopic or somewhere in the middle, we'll make absolutely sure that it receives the very highest levels of meticulous care and attention during every stageof its transportation. For every kind of cargo, put your trust in THAI Cargo.

At THAI Cargo little things are treated to the same kind of care as big things.

09ACWI1105 10/19/05 4:32 AM Page 1

http://www.thaicargo.com

ReportsRegional


And airport officials can’t ignore thepotential consequences if the airline,which operates more than 60 percentof Miami’s flights, reduces service.

Miami Slice

Standard & Poor’s Ratings Servicesrecently lowered its outlook on Mia-mi-Dade County’s outstanding avia-tion revenue bonds from stable to“negative” because of the impact theupheaval in the skies may have onthe ground.

A massive new terminal for Ameri-can flights was supposed to be finishedthis year. Instead, the project’s costshave swelled more than $1 billion overoriginal estimates and it sits half fin-ished. American has given up jurisdic-tion over the project, which was slatedto cost $900 million but is now near-ing a $2 billion price tag. American ispaying $105 million over 10 years tocover some of the cost overruns, butairport operator Miami-Dade Countyis stuck with the rest of the bill.

“The airport’s financial conditioncould weaken as it undertakes the

most complex portionsof … its capital improve-

ment program at a time when its traf-fic levels are relatively flat, the oper-ating environment has become in-creasingly competitive, and high fuelprices and intense price competitioncould lead to material service disrup-

The financial woes of United States airlines are reverberat-ing across the aviation world, leaving businesses tied tothe carriers struggling in the wake of the airlines’ roughride. The problem is growing more acute at several air-

ports, which are contending with reduced flight schedules andpullouts by struggling and restructuring airlines.

Major U.S. hubs are left to figure out what happens if primary airlines makesevere cost cuts that include reducing their presence at and investment in air-port facilities.

In Pittsburgh, officials are trying to recast the airport after US Airways with-drew its international hub operations. Cincinnati/Northern Ken-tucky Airport is searching for new options and dealing with polit-ical fallout after DHL moved its air express hub to Wilmington, Ohio, andbankrupt Delta Air Lines scaled back its flight schedule.

Miami International Airport, the main gateway between the United Statesand Latin America for cargo and passengers, is being buffeted by the financialdifficulties of its top carrier, American Airlines. The airport and American haveargued over who should pay for cost overruns on a major terminal project.

Airport PainU.S. airlines’ financial difficulties are echoing across hubs

that rely on carriers’ flight schedules and money

By Aaron Karp

NORTH AMERICA

10RegionalsINT 10/21/05 1:25 PM Page 10

tions or service changes by AmericanAirlines,” warned S&P.

American reported a small profit inthe second quarter of 2005, but haslost hundreds of millions of dollarsover the past four years and has nar-rowly avoided bankruptcy by cuttingcosts and winning labor givebacks.

The airline says it is now “in theclear” in terms of a Chapter 11 filing,but warns that high fuel costs are tak-ing a toll.

The potential toll on airports is al-ready evident at Pittsburgh Interna-tional Airport.

The airport was a big hub for US Air-ways, which operated trans-Atlanticflights through the site. But US Air-ways has struggled through two bank-ruptcy filings and now is merging withPhoenix-based America West.

In its restructuring efforts, the air-line ended hub activities at the air-port and withdrew all internationalservice. That left Pittsburgh withoutinternational flights and some oncebusy facilities sitting empty.

Airport officials have tried to rein-vent the airport as a domestic, low-cost passenger facility, and SouthwestAirlines now operates an increasingnumber of Pittsburgh’s flights. But in-ternational service remains elusive.

Harsh Reality

Cincinnati/Northern KentuckyAirport, recently a thriving cargo hubfor DHL and a busy passenger hubfor Delta, has already suffered theloss of DHL and is now dealing withfallout from Delta’s move into bank-ruptcy protection.

DHL decided it could not afford tokeep its hub at CVG, and moved op-erations to Wilmington, Ohio, whereit owns an airport purchased throughthe acquisition of Airborne Express.

For DHL, consolidating its air hub inWilmington was a necessary movegiven financial and logistical realities.

But it left CVG with a recently re-built air express hub only lightlyused. Airport officials say DHL is stillpaying rent on its facilities at CVGeven though flights by DHL subser-vice fliers have already moved toWilmington. But DHL is expected tokeep only a small presence at the air-port, and its former facilities will soonbe mostly empty.

DHL’s move has cost the city jobsand tax revenue but it’s actually be-ing celebrated by some in the com-munity who are happy to lose night-ly freighter flights. That may costCVG in the long run.

“We’ve got people in the commu-nity saying we shouldn’t do anythingabout DHL leaving,” says airportspokesman Ted Bushelman.

Community activists have writtennewspaper editorials saying the airportshould avoid trying to attract new all-cargo flights, allowing the night skiesto remain noise free. “We don’t wantto aggravate the issue,” says Bushel-man, noting any efforts to attractnew freight service will be decidedlyon the quiet side. “We’re keeping alow profile on this.”

Cincinnati still has its Delta huboperations, primarily flights by Deltasubsidiary Comair, but the airline hasalready cut 26 percent of its flights atthe airport and eliminated some1,000 workers.

The airport estimates it will lose $8million in revenue from passenger fa-cility charges on flight tickets. And asDelta restructures through bankrupt-cy, the airport could lose its hub sta-tus altogether.

Delta said last month it plans650 more job cuts at Comair andwill reduce the regional airline’s fleet

by 30 planes, moves that will likelyfurther damage Cincinnati/NorthernKentucky.

… Briefly

Nippon Cargo Airlines namedASIG to manage its warehouse atSan Francisco International Air-port, a site shared with All NipponAirways and Cathay Pacific. ...Emirates planned to launch its sec-ond weekly passenger service betweenDubai and New York this month us-ing an A340-500. ... AMB Property,which specializes in air cargo facili-ties, took a 5 percent stake in Cana-da’s IAT Air Cargo Facilities Fund,owner of International AviationTerminals, which owns and man-ages 1.25 million square feet of cargospace at five Canadian airports. ...Canada’s Purolator opened an of-fice in Irving, Texas, the companysays will focus on handling NAFTAtraffic. ... Forwarder Target LogisticServices moved into new corporateheadquarters in the Los Angeles areathat includes 100,000 square feet ofwarehouse space and fully automatedwarehouse management and ship-ping systems. … DSC Logistics saysits Chicagoland Logistics Center wascertified as a Foreign Trade Zone …After a stagnant year in 2004, cargotraffic at San Francisco Interna-tional Airport was up 8.7 percentin the first seven months of this year.… Continental Airlines said it willstart flights next year betweenNewark Liberty InternationalAirport and Canada’s GreaterMoncton International Airport,the first non-stop service between theUnited States and Moncton. …TransMeridian Airlines, a passen-ger charter carrier with some sched-uled service, ceased operations. ■


ReportsRegional


ReportsRegional


Now, while everyone has beenwatching Europe’s national airlinesmove through their slow consolida-tion dance either through mergers orthrough grand alliances, the logisticssector is preparing to witness the twolargest buyers of freight transport ser-vices in Europe combine into one.Other combinations are all but cer-tain to follow.

Merging Exel

Exel itself was a creation of themerger of two British companies,Ocean Group and Exel, just fiveyears ago, and its very identity is atestament to the consolidation wavethat has washed over the forwardingindustry.

Exel essentially combined thefreight forwarding operations ofOcean, known more familiarly per-haps through the name MSAS GlobalLogistics, with Exel’s predominantly

domestic contract logis-tics activities. The com-

bined operation was acknowledgedas the world’s largest contract logis-tics company.

MSAS Global Logistics had only ayear earlier re-branded from its for-mer moniker of MSAS Cargo Interna-tional, at the same time announcingthe continuation of a fairly aggressivestrategy of growth by acquisitionacross all markets.

Deutsche Post’s collection of designer label logistics ser-vice providers is set to be crowned with the acquisitionof United Kingdom rival Exel. By paying $6.7 billion incash (about 72 percent of the acquisition price) and the

balance in new shares, the German mail group will truly be creat-ing a global logistics giant.

It is a collection that already features such well-known main-street brands as Danzas, DHL, AEI and ASG. How will Exel fit intothis portfolio?

One clear sign is in the announcement by Deutsche Post that the new outfitwill be headquartered, not in Germany, but in the United Kingdom, at Exel’scurrent headquarters in Bracknell. The operation is to be headed by Exel’schief executive, John Allan, who will also be charged with overseeing the inte-gration process.

Deutsche Post, it would seem, wants to model its new lines very much inthe image and style of Exel, although it is believed “DHL” will be the predomi-nant brand label. More importantly, though, the new logistics venture will betop dog in Europe, the Americas and Asia.

Taking OverDeutsche Post’s planned acquisition of Exel will create a

logistics giant with worldwide reach

EUROPE

By Roger Turney


It had already scooped up suchnames as Intexo in Holland, the Mer-cury Group in the U.K. and Dutch AirPlus in the Netherlands.

It was also on the move in theNorth American market throughwhat it charmingly termed “organicacquisition,” namely the purchase ofits long-term partners. Folded in werecompanies such as domestic for-warder Skyking Freight Systems, fash-ion mover Airlink and customs bro-ker A.W. Fenton.

This so-called “eat lunch or belunch” strategy enabled MSAS toboost operating profits in the U.S. by30 percent in a single year. NorthAmerica, however, has proved moredifficult in recent times for Exel.

Even back then, MSAS was the sub-ject of takeover rumors, with FedExonce seen as the likely predator.

More recently, Exel’s acquisitionshave continued in Europe, Asia andSouth Africa, but have been aimedmore at strengthening the company’sposition in ocean forwarding. It hasacquired Eagle Freight in SouthAfrica, All Cargo Logistics in Austriaand United States Consolidations inNorth America.

Most notably, in contract logistics,Exel last year made the breathtakingbuy-out of U.K. domestic rival Tibbett& Brittten for nearly $600 million. Itwas a move that certainly caused asharp intake of breath among in-vestors, as Exel’s stock price fell overworries that the firm had overpaid onthe deal.

Expanding Giant

But Exel appears only to have gonefrom strength to strength. Last year,overall revenue for the companygrew 25 percent to $11.5 billion.More significantly, operating profit

rose 25 percent to $325 million toprovide an operating margin of 2.9percent. Air freight forwarding rev-enue topped $3 billion.

No wonder executives at DeutschePost were training their binocularsacross the English Channel. Exel’ssplit between contract logistics andfreight management operations nowlies roughly 60:40 in favor of the con-tract logistics business, with the ac-quisition of Tibbett & Britten tippingthe scales.

Contract logistics has enjoyedhigher profits and profit margins forthe company compared with freightmanagement, but that gap has closedover the last year.

Freight management margins haveimproved on increased air volume,up by 18 percent. Europe was particu-larly strong, with signs also that thecompany was coming to grips withits problematic U.S. operations. Asia-Pacific revenue climbed 26 percent.

In fact, for Exel’s freight manage-ment operations, the U.K. only repre-sents 10 percent of its business, withcontinental Europe and Africa repre-senting 26 percent of revenue, andthe Americas and Asia Pacific each ac-counting for about 30 percent.

Freight management operationsnow account for more than four mil-lion air freight shipments a year forExel, adding up to over 600,000tonnes. It has seen particularly stronggrowth in the last year, with theAmericas proving to be its ace in thehole, with growth rates in excess of23 percent. The European air freightmarket grew 16 percent for the com-pany with Asia Pacific up 18 percent.That provided an average globalgrowth by air weight of 18 percent.

In North America, Exel’s air cargobusiness accounts for around $540million in revenues. It was problems

with its U.S. domestic freight manage-ment business that caused Exel to un-dertake a restructuring program lastyear. This resulted in combining aprevious six operating units into justtwo divisions: Global Freight Manage-ment (air and sea) and DomesticFreight Management (road and rail).

Among the questions now beingasked of the bean counters in Bonnand in Bracknell will be which of thetwo companies are the stronger inthe various global markets, particular-ly in the keenly fought air freight sec-tor. It is also not only about sheerweight of business, but also about theindividual market perception of thesetwo substantial players.

In a recent shipper survey carriedout by U.K.-based Transport Intelli-gence, U.S. shippers put Exel wayahead of the field with 20 percent ofrespondents giving it a strong ap-proval rating, while DHL/Danzaslagged behind at around 12 percent-age points.

But it is on the global catwalk wheresize and perception matter most.

Deutsche Post’s frontline operationof DHL Danzas Air & Ocean, as themarket leader in air freight forward-ing, already accounts for a 6.4 per-cent market share, with fourth placeExel (after UPS and Panalpina) claim-ing a 4.7 percent market share. Domi-nant though the new duo might be,they will still only account for justover 10 percent of the business.

… Briefly

Cargo traffic for European carriersedged up 1.1 percent in August, ac-cording to the Association of Eu-ropean Airlines, as a 1.5 percentdecline on the North Atlantic offset6.2 percent growth on Asia routes.The overall business for the sched-


ReportsRegional


uled airlines was up 2.1 percent inthe first eight months of the year. ...SAS Cargo, opening a new businessline in cargo general sales agencywork, took over the freight activitiesof Sterling, formerly Maersk AirCargo, including the GSA businessrepresenting eight airlines in theNordic and Baltic countries. … TNTExpress will take on two 737-300freighters from GE Capital AviationServices to replace two sub-contract-ed aircraft in its European network. ...Finnair will add two MD-11 passen-ger aircraft in coming months andwill add them to its growing serviceto Asia. … Cargo traffic at AirFrance-KLM grew 3.2 percent in Au-

gust, less than half the capacitygrowth of 7 percent during what thecompany called “a persistently chal-lenging environment.” … Kuehne +Nagel opened a 72,000-square-footlogistics and handling facility in Nor-rkoping, Sweden. … British home im-provement goods wholesaler PJHGroup named APL Logistics tomanage its international supplychain. … Cargolux opened a com-pany office at the Zurich Airport,where the airline operates truck con-nections to its hub in Luxembourg,and named Gestao de ServicosAereos as its general sales agent inPortugal at the Lisbon and Porto air-ports. … France’s Vatry Interna-

tional Airport says it handledmore than 24,000 tonnes of cargo inthe first eight months of 2005, about5,000 tonnes more than it saw in allof 2004. Vatry started work on a29,000-square-foot building almostdouble the size of the industrial air-port’s existing cargo facility. …British Airways World Cargoappointed Airline Services GSAits cargo general sales agent for Fin-land. … Martinair Cargo startedweekly MD-11 freighter service be-tween Amsterdam and Khartoum,the capital of Sudan. ... Britain’s In-stitute of Exports named Select Air-line Management its ‘New Ex-porter of the Year.” ■


ReportsRegional

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15ACWI1105 10/19/05 4:35 AM Page 1

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ReportsRegional


But Mathison is not enamoredwith suggestions that the fuel sur-charge mechanism should be modi-fied to incorporate distance. Al-though this would help on thelonger routes, which are currently ata disadvantage from a carrier per-spective, it might affect the intendedtransparency and simplicity of thesurcharge, he said.

Longer Concern

Cathay is adding another longhaul sector to its cargo network, al-beit later than originally intended.

Its new 747-400 freighter trans-Pa-cific service to Dallas/Fort Worth andAtlanta, which had been scheduledto start in August, was postponed toNovember because of aircraft andcrew shortage. Mathison hopes thelong-awaited peak season will finallybe in full swing by then.

“There are signs of a slowdown indemand from Augustand market sentiment

seems to have deteriorated in the lastmonth,” he said. “Most pundits arenow forecasting a shorter and lesspronounced peak than last year. Weare increasingly concerned about theimpact of continued high fuel pricesand the ever increasing amount of ca-pacity being deployed in the market.”

He added that the downward pres-

Even famously profitable airlines like Cathay Pacific are notimpervious to the price of oil’s dizzying ascent. In the firstsix months of this year, Cathay’s earnings fell 5.7 percentto $215 million even though revenue was up 21.5 percent

to $3.1 billion. All that growth on the top line was eclipsed byCathay’s fuel bill, which skyrocketed 53 percent from last year.

The airline’s cargo traffic rose 8.6 percent for the period,partly due to the addition of a new 747-400 freighter to its fleetin January, but its load factor slipped 2.8 percentage points to 65.9 percent.

As on the passenger side, the rise in fuel costs is hurting Cathay’s cargobusiness. Fuel costs and softer demand combined to cancel previously plannedextra flights on the airline’s routes to Brussels and Los Angeles.

“The high price of jet fuel is having a serious impact on our longer haulfreighter route profitability, particularly those routes operated by our 747-200freighter, which are older and less fuel efficient aircraft,” said Ron Mathison,Cathay’s director and general manager of cargo. “As a result we are not operat-ing as many flights as we had originally planned this year.”

Fuel ImbalanceHong Kong’s airlines contend with high fuel costs and imbalanced

trans-Pacific loads

By Ian Putzger

PACIFIC


sure on westbound yields isa worry too. Flying threetimes a week to two newU.S. destinations is part ofMathison’s strategy to copewith directional imbal-ances and yield pressure, asthis positions the airlinecloser to more originpoints for cargo ratherthan funneling everythinginto its existing U.S. gateways. In ad-dition, Mathison hopes to developsome Latin American traffic throughAtlanta, glimpsing promise in theAsia-Latin America sector.

Plane Growth

Cathay rival Dragonair, which en-tered the U.S. market in the springwith a 747 freighter to New York, alsofinds westbound loads weak. “Wedeal with the problem by increasingthe revenue from the eastbound traf-fic (two rounds of rate increase duringthe peak seasons) and reducing thecost of operation,” said Albert Yau,Dragonair’s head of cargo. “One wayto achieve this is to fly direct from theU.S. back to HKG if the westboundload of the flight is within the pay-load limit of the aircraft.”

It helps that China Airlines is tak-ing some space on the aircraft.

Both Hong Kong-based carriershave more freighters coming. Cathay,with 14 747 freighters, is due to takedelivery of the first of six converted747-400s in December. Dragonair willget the first two out of five 747-400SFsin the second half of next year.

Yau has his eyes on Los Angeles,Chicago and Dallas/Fort Worth forexpansion of trans-Pacific activities.Whether or not the deal with ChinaAirlines will continue once Dragonairfields its own freighters will depend

on the market and the strategies ofboth carriers. “We see no reason whywe need to pull out the existing ser-vices if the market can sustain theadded capacity,” Yau said.

Meanwhile, Cathay is movingahead with its alignment with AirChina, in which the Hong Kong car-rier took an equity position a yearago. “We recently signed a specialprorate agreement with them, andtalks around further opportunities forcooperation are progressing well,”said Mathison.

EVA Converting

Taiwan’s EVA Airways signed a

deal with Israel Aircraft Indus-

tries to convert up to six 747-

400 combi aircraft into freighters.

The conversion work is slated to be-

gin in the second half of 2007.

The contract calls for four conver-sions, with options for two more. Ifsix conversions are done, the value ofthe deal could reach $100 million, ac-cording to IAI.

IAI’s Bedek Aviation Group previ-ously signed deals to convert 747-400s for Air China Cargo and AsianaAirlines. “Asia’s rapid economicgrowth is resulting in an increaseddemand for cargo aircraft,” says Be-dek Aviation General ManagerDavid Arzi.

He adds that IAI’s Bedek will soon

open its first conversionsite in Asia and is produc-ing kits to convert 767sas well.

… Briefly

Forwarder U-Freightsays its warehouse inHong Kong and two sitesin Singapore were certi-

fied under TAPA security guidelines.… Qantas freight revenue soared 46percent in the year ending June 30,to US$571.2 on the addition offreighter capacity and rising fuel sur-charges. ... Schenker Logistics wasnamed the freight forwarder and cus-toms clearance provider for the 2006Melbourne Commonwealth Games,the latest endorsement for the Ger-man forwarder’s division focused onglobal sports events. … Macau In-ternational Airport and Ger-many’s Frankfurt-Hahn Airportsigned a letter of intent to become“sister airports.” … MondialeFreight Systems, the largest for-warder in New Zealand, signed a reci-procal representation agreement withLos Angeles-based Corrigan’s Ex-press. … BDP Internationalopened an office in the coastal city ofNingbo, its seventh BDP office inChina. … French forwarder Geodislaunched a special Web site aimed atAsia business, www.asia.geodis.com. …The Federation of Asia-PacificAir Cargo Associations namedHong Kong International Air-port the “Most Friendly Airport forCargo” in the region. … EmiratesSkyCargo and Korean Air Cargowill codeshare cargo capacity onroutes from India and Mumbai in In-dia. … Thai Airways started three-times-weekly MD-11 passenger flightsbetween Bangkok and Moscow. ■


ReportsRegional

–5%

0%

5%

10%

15%

20%

25%

8/057/056/055/054/053/052/051/05

TrafficCapacity

Cathay Capacity

Monthly year-over-year change in cargotraffic and capacity at Cathay this year.

Source: Company reports


http://www.asia.geodis.com

www.boeing.com

18-19ACWI1105 10/19/05 4:43 AM Page 1

http://www.boeing.com

The new 777 Freighter is a powerful extension

of Boeing’s leadership in providing over 90%

of the world’s freighter capacity. In addition to

more than 100 tons of payload, the 777 offers

operators unmatched freighter efficiency and

range. Enabling customers to fly more cargo

to more places, more profitably. To take their

freight business further every day.

18-19ACWI1105 10/19/05 4:43 AM Page 2

Feature Focus:Cargo Aircraft

by Robert V. Dahl

Project DirectorAir Cargo Management Group

FreighterFreighterPh

oto

cour

tesy

Boei

ng

20F1-CargoINT 10/21/05 1:27 PM Page 20


These are truly exciting times in the freighter aircraftmarket and for those whose supply chains depend onall-cargo services. Never before has there been somuch interest in freighters, and never before haveprospective freighter operators had so many aircrafttypes from which to choose.

Until recently, the typical freighter was an aging, oldertechnology aircraft, often selected more for its low acquisitionprice than for its performance capability. Now, however, thefreighter fleet is undergoing a remarkable transformation as

more modern aircraft types become available. Moves by the world’s airlines to expand their freighter fleets are being dri-

ven by expectations of future economic growth and the inexorable expansionof global trade. Globalization, and the resulting increase in demand for themovement of high-value goods, will stimulate the expansion of the globalfreighter fleet.

Freight traffic grew 12 percent in2004, although part-year results for2005 indicate that total air freighttraffic this year will be up less than 5percent, on a year-over-year basis. Air-line trade groups in Europe and Asiaboth reported low single-digit growthin air freight traffic through August,and U.S. carriers as a group reportedflat cargo traffic for the first eightmonths of the year.

Given that air freight traffic has av-eraged 7 percent annual growth overthe past 30 years, 2004 was an excep-tionally good year, and despite lessimpressive results this year, the 2004-2005 period will reflect above-averagetraffic growth. This situation is clearlya welcome relief from 2001-2003, aperiod in which the air freight indus-try lost three years of growth basedon an unprecedented decline in 2001followed by only modest recovery inthe following two years.

Air Cargo Management Group pre-dicts that over the next 10 years, 650more widebody freighters will jointhe global fleet, and the widebodyshare of all jet freighters will increaseto 58 percent.

ACMG’s longer 20-year forecast forfreighters of all sizes indicates the fleetwill grow in size to more than 3,750units, up from roughly 1,700 aircrafttoday. The greatest growth will takeplace in the large-capacity segment.

In excess of 2,000 freighters will beneeded to meet the growing demandfor air freight services over the next20 years. In addition, 1,100 existingfreighters will be retired, includingmore than 500 narrowbody freighterretirements in the next 10 years. As aresult, ACMG foresees an active mar-ket for freighters in the future, withthe need for 3,170 freighters to be

Robust air cargogrowth is

producing bigorders forfreighters,

including manystraight from the

assembly line

rFeverrFever

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added through 2024 to meet bothgrowth and replacement needs.

The trend toward newer freightersis apparent across the full spec-

trum of aircraft sizes, from the 737-300 to the A380. And there is a lotof competition: Boeing versus Air-bus; new freighters versus conver-sions; and original equipment man-ufacturers versus independent con-version companies.

The competition will get evenmore intense in the coming monthsas additional conversion programsunder development gain certification.

The newer freighter trend is mostobvious in the large-capacityfreighter segment, where the 747-400has become the standard bearer, andwhere the A380 and 777 models willsoon join the fray. As recently as ayear ago, the question for many ob-servers was, “When will Boeing closethe 747 line?” Now the big questionis, “Can Boeing ramp-up 747 produc-tion fast enough to keep pace withthe orders that are pouring in?”

In a similar vein, many doubtedthat the long-talked-about 747 Ad-

vanced program would ever amountto anything more than talk. Now, al-though the 747 Advanced has notbeen formally launched, its eventualarrival is generally taken for granted— and sooner rather than later.

The resurgence of interest in pro-duction 747-400s has been drivenentirely by orders for the freightervariants; Boeing’s last order for apassenger-configured 747-400 camealmost three years ago. In the mean-time, the company has recorded 48orders for the 747-400 freighter orthe extended-range 747-400

freighter model. Boeing logged 28orders for 747-400s in the first ninemonths of 2005, and all of these or-ders were for the -400 freighter or400ER freighter models. By contrast,Boeing recorded only 31 orders for747-400s in the full three year peri-od from 2002 through 2004.

The outstanding firm orders for747-400s – as reported by Boeing andthe airlines involved – consists of abacklog of 25 basic 400 freighters, 17ER freighters and six passenger units.Recent major orders for 747-400freighters include orders for eight747-400 freighters by UPS and ordersfor six 747-400ER freighters by bothGuggenheim Aviation Partners andChinese start-up Jade Cargo.

Add in five to 10 unconfirmed, butlikely, additional orders and the man-ufacturer not only has enough ordersto bridge the gap until the start ofproduction on the 747 Advanced, butin fact will likely have to increase its747-400 production rate, which hasremained at about 1.25 units permonth for the past two years.

It is well known that convertedaircraft outnumber productionfreighters in the global fleet by athree-to-one margin. So it is some-what surprising that Boeing and Air-



FREIGHTER TYPE SIZE CATEGORY AVAILABLE NOW (CERTIFIED) UNDER DEVELOPMENT

Conversions:737-300 Narrowbody Pemco, IAI, AEI —737-400 Narrowbody — Pemco, IAI, AEI757-200 Narrowbody Boeing (DHL), IAI & Mobile Aero (Boeing)

Precision Conversions Alcoa-SIE767-200 Medium Wideboby IAI Boeing/Aeronavali

A310-300 Medium Widebody EADS-EFW —A300-600 Medium Widebody EADS-EFW —

MD-11 Large Boeing —747-400 Large — Boeing, IAI

Production Freighters:767-300F Medium widebody Boeing —

A300-600F Medium widebody Airbus —747-400F Large Boeing —

747-400ERF Large Boeing —747 Advanced F Large — Boeing (proposed)

777F Large — Boeing (from 2008)A30-800F Large — Airbus (from 2008)

Source: Air Cargo Management Group

Expanding Freighter Options

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

02004 2009 2014 2019 2024

Glo

bal

Fre

igh

ter

Flee

t

1,7071,927

2,507

3,146

3,758LargeMedium wideMedium narrowSmall

3,170 freighters needed for growth and replacementtrough 2024.


ACMG’s Freighter Fleet Forecast


www.vda.ruthe heavyweight in airfreight

If you’re facing an outsize orheavyweight air cargo challenge,please call us on;Russia: +7 8422 590059 USA: +1 832 585 8611UK: +44 1279 661166 China: +8610 650 58288

23ACWI1105 10/21/05 9:01 AM Page 1

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bus together have firm orders formore than 100 new freighter air-craft. The total includes the 42 747-400/747-400ERs, plus 27 A380freighters, 15 A300-600s, 10 767-300s and nine 777s. These ordersrepresent nearly $20 billion in valueat list prices, or in excess of $13 bil-lion even with typical discounting.

The 777 freighter, launched earlierthis year based on an order from AirFrance, has yet to attract significantfollow-on orders. However, its supe-rior twin-engine operating econom-ics and its ability to carry 10-foothigh loads will add to its long-termpopularity. The 777 freighter pro-gram was given a boost in Septemberwhen Iceland’s Avion Group placed

a firm order for four of the aircraft tobe operated by Air Atlanta Icelandic.

The increased interest in produc-tion 747-400 freighters comes as

deliveries of the 747-400 SpecialFreighter conversions are about tobegin. Some observers thought theavailability of converted 747-400s atsubstantially lower prices would un-dermine the sale of production 747-400 freighters, but that clearly hasnot been the case.

Such conversion programs,launched by Israel Aircraft Industriesand Boeing late in 2003, have en-joyed significant sales success. Boe-ing enjoys a two-to-one advantagein terms of orders, but what is most

significant is that together the twocompanies have received 51 firm or-ders for 747-400 Special Freighterconversions.

Airline customers for Boeing’sprogram include Air France, CathayPacific, Dragonair, Japan Airlines,Korean Air and Singapore Airlines.IAI’s announced customer base in-cludes Asiana, Atlas Air, EVA Air andGECAS. Combined with the firm or-ders for 747-400 freighters and ERfreighters discussed previously, theseconversion orders mean we are ap-proaching 100 outstanding firm or-ders for 747-400 freighters of alltypes. These aircraft will be in opera-tion by the end of 2008 when thefirst A380 freighters and 777




http://www.Alcoa-SIE.com

freighters go into service.It now seems almost certain there

will be sufficient demand to supportBoeing’s development of the 747Advanced.

Luxembourg-based all-cargo carri-er Cargolux has committed to take10 units of the freighter variant as-suming it is launched. Although noother deals have been publicly an-nounced, Boeing executives have re-cently expressed optimism that suffi-cient orders will be received for thepassenger and freighter versions tosupport an official launch of thisgrowth model by the end of 2005.The freighter version of the 747 Ad-vanced would feature a stretchedfuselage, allowing it to carry 34main-deck pallets, four more thancurrent models.

Moving down in size a notch, theAirbus models continue to dominatethe medium-widebody freightermarket segment, but the Boeing 767is making up some ground. Over thepast decade, this medium-widebodysegment has been the fastest grow-ing portion of the freighter market,increasing from just 25 units in 1995to more than 350 units today.

Boeing has recorded recent ordersfor factory-built 767-300ERfreighters from All Nippon Airways,LAN Airlines and Japan Airlines;meanwhile IAI has delivered about adozen converted 767-200 freightersto Tampa Cargo of Colombia, ABXAir and Europe’s Star Air.

Development of theBoeing/Aeronavali special freighterconversion program for 767-200s ismoving ahead, with first delivery tolaunch customer Cargo AircraftManagement scheduled for the thirdquarter of 2006.

Meanwhile, Airbus recently got anorder for six more A300-600

freighters from FedEx and a singleorder from Japan-based start-upGalaxy. EADS-EFW is also set to ex-pand its capacity based on increasingdemand for freighter conversions ofA300-600 and A310-300 models. Thecurrent capacity for 14 conversionsper year will be increased 50 percentby the end of next year through ahangar extension. Elsewhere, Airbusis expected to launch a freighter de-rivative of the A330-200 model,which will be used as the basis forthe EADS entry in the upcoming U.S.Air Force air refueling tanker compe-tition versus the 767-200ER.

There also is significant changetaking place in the narrowbody

freighter market. Competition is heating up with

three certified programs for the con-version of 737-300s at Pemco, IAIand Aeronautical Engineers. Pemco,for one, is also moving ahead onfreighter and combi conversions ofthe stretched 737-400 model, basedon a firm order from Alaska Airlines.

The Aeronautical Engineers737-300 conversion program re-ceived certification this fall. It isunique in having the capacity fornine full-size pallets, versus eightfor competing 737-300 conversions.

The 757-200 conversion market isalso expected to get more intense.

The only game in town at the mo-ment is the 15-pallet Precision Con-versions program that was certifiedin June 2005. However, Alcoa-SIEhas begun flight testing for its 14-plus pallet conversion, with certifica-



A380-800ZF777F 747-400F 747-400BCF 747-400ERF 747 ADVF PRODUCTION

PRODUCTION PRODUCTION COVERSION PRODUCTION PROPOSED (GENERAL FREIGHT)

Max takeoff weight (lbs) 766,000 875,000 870,000 910,000 960,000 1,300,000Main deck pallets 27 30 30 30 34 46 (17+29)Lower deck pallets 10 9+2LD-1 9 9+2LD-1 12+2LD-1 13Total cargo volume (cu ft) 22,535 25,547 24,409 25,547 29,792 32,760Max. revenue loadexcluding pallet tare (lbs.) 229,000 248,300 238,900 248,600 294,100 313,000Range with max. load (nmi) 4,965 4,445 4,100 4,970 4,475 5,600

Note: 1) Data taken from manufacturers’ brochures, as interpretted by ACMG.; 2) Cargo volume excludes lower-deckbulk space.; 3) 747 Advanced Freighter reflects ACMG estimates.; 4) A380F carries 17 upper deck pallets and 29 main

deck pallets.; 5) Alternate A380F loading for maximum volume carries 25 upper deck, and 33 main deck pallets.

All of the models shown are production freighters with the exception of the 747-400BCF (Boeing Converted Freighter). The standard bearer in this market segment todayis the production 747-400 freighter, of which Boeing has delivered 97 units (plus 13 of theERFs). The -400F can carry 30 main deck pallets, and it provides a total cargo volume ofabout 25,000 cubic feet and a maximum revenue load approaching 250,000 pounds. Therange for this model carrying a full load is just under 4,500 nautical miles.

In comparison to the 747-400F, other freighter types feature the following capabilities:■ The 777F has about 10 percent less payload weight and volume capability, but with

500 miles greater range. ■ The 747-400BCF has about 5 percent less payload weight and volume capability, and

about a 350-mile range penalty.■ The 747-400ERF offers the same payload weight and volume as the standard 747-

400F, but with a 500 mile range advantage.■ The 747 Advanced Freighter has 15 percent to 18 percent more payload weight and

volume capability than the -400F, with the same fully-loaded range.■ The A380F offers 26 percent to 29 percent more capability than the 747-400F in

terms of payload weight, payload volume and fully-loaded range. Airbus also shows an op-tional loading scheme for the A380F for low density freight with a total of 71 main, upperand lower deck pallets that provides nearly 40,000 cubic feet of space (55 percent morethan the 747-400F).


Large Widebody Freighter Characteristics


tion expected in the coming weeks. Also on the horizon is an update

by IAI and ST Mobile Aerospace ofthe earlier 757-200 Special Freighterprogram developed by Boeing forDHL. The joint IAI/Mobile Aero-space program, which uses data li-censed from Boeing, will be morecost competitive than the earlier 14-pallet Boeing/DHL conversion, andwill provide full 15-pallet capability.Assuming things go as planned, thismodel will enter service in 2007.

The orders and deliveries of con-verted 737-300s and 757-200s havenot developed as quickly as someobservers anticipated. But most ofthe freighters in this size categoryare used by the integrated expressoperators. Lack of growth in the U.S.domestic express market has causedthese companies to delay any deci-sion regarding upgrade or replace-ment of their narrowbody 727 andDC-9 freighter fleets.

Elsewhere, a growing market forregional, narrowbody freighters is de-veloping in China. In addition to the737-300/400 and 757-200 discussedabove, converted A320s are expectedto see considerable use in this marketsegment over the long term.

The recent emphasis on widebodyfreighters by the world’s airlines hasresulted in a decided increase in thesize of the average freighter. As re-cently as 1995 widebody modelsheld just a 24 percent share of theglobal freighter fleet. The widebodyshare now stands at 48 percent andis growing.

Robert V. Dahl is project director ofAir Cargo Management Group, a Seat-tle-based aviation consulting firm,and associate editor of the CARGOFACTS Newsletter, an ACMG-affiliat-ed publication.



Often it’s the little things, even with large freighters. That’s the

case for suppliers providing original equipment, such as upper

deck freight loading systems, for newly built or recently con-

verted freighter aircraft.

Typically, integrators such as FedEx and UPS and airlines

with freighter fleets ask original equipment manufacturer sup-

pliers to modify or customize equipment in order to make more

efficient use of cargo aircraft.

Even modest customizations mean OEM suppliers must tweak the

configuration hardware to better accommodate the various sized pal-

lets and containers being stowed on board, says Tim Dumbauld, vice

president and general manager of Goodrich Aerospace and Defense’s

cargo handling system operation in Jamestown, N.D.. Goodrich sup-

plies loading systems for the full range of Boeing and Airbus freighters

including 777s and A380s.

“There’s never been an aircraft we’ve purchased that we haven’t had

to modify in one way or another,” says Jay Burkett, UPS’s liaison with

freighter manufacturers.

FedEx, for example, requires that override latches and locks on the

floors of aircraft loading systems be configured so that it can quickly

and easily secure several different size containers on the main deck.

“It’s all about speed,” says Marco Sterk, FedEx’s manager of aircraft de-

velopment and acquisitions and A380 program.

More specifically, FedEx seeks the flexibility to accommodate two

sizes of containers or pallets on the upper decks of its widebody air-

craft: the AMJ, which is 96 inches high by 125 inches at its base and the

AYY, which is half as long. In addition, FedEx carries a third, smaller

standard-size container/pallet on its narrowbody aircraft.

With the ability to quickly load and secure both larger containers,

FedEx is better able to match container use to short-term demand from

a specific market, improving operating efficiency and aircraft utilization.

Moreover, FedEx wants the cargo loading system in its A380

freighters to have attenuated bumpers, or spring-loaded guide rails, as

well as the floor-based override latch and locks. FedEx ordered the

bumpers to protect the aircraft superstructure from damage caused by

containers being loaded aboard the A380’s two main cargo decks.

FedEx, which expects to introduce the A380 into service by late 2008,

has two main decks for cargo. The company has ordered 10 of the air-

craft, and has options for 10 more.

Goodrich is supplying A380 cargo loading systems to FedEx as buyer

furnished equipment. The other option is to sell such systems directly

to the aircraft manufacturer. ■

Even Freighters Get Detailing

by Ira Breskin


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Feature Focus:Western Airports

28

Feature Focus:European Airports

AlternativeEuropean airports

hope to becomefreight gateways,

but so far theresults are mixedBeyond

Vatry International Vatry International Ostend-Bruges International Ostend-Bruges International Amsterdam SchipholAmsterdam Schiphol


28F2-EuropeanINT 10/21/05 1:37 PM Page 28


To some extent, the story

of Europe’s air cargo

hubs seems to be that

the big are getting big-

ger. The big four —

Frankfurt, Paris, Ams-

terdam and London

Heathrow — all saw

healthy cargo growth of

between 8.4 and 11.4

percent in 2004, and fourth-

placed Heathrow had twice the

tonnage of No. 5 Luxembourg.

Yet talk in Europe about alternative

gateways is hardly diminishing. Air

cargo exhibitions are filled with the

stands of hopeful alternative cargo

hubs — Vatry, Vitoria, Hahn and Os-

tend, to name but a few. These air-

ports tout a new service from some

African or Middle Eastern cargo air-

line, or say they are in “advanced dis-

cussions” with a major Asian carrier. the Big Four by Peter Conway

Vitoria International Vitoria International

29


But, in reality, their progress oftenis one step forward, two steps back.The idea is there, but the cargo does-n’t look quite set to follow.

Part of the problem is that al-though the airports see themselvesas a viable alternative, cargo carriersusually see them only as a stopgap.Frankfurt Hahn, a former U.S. air-base 60 miles from the main Frank-furt airport, arguably fell into thistrap in September last year whenBritish Airways World Cargo startedrouting two of its freighters throughthe airport, adding two more in No-vember.

That was a key factor in boostingHahn’s flown tonnage 80 percent to66,145 tonnes in 2004, and led theairport to hope it might become thehub for all 10 of the 747 freightersBritish Airways routes via Germanyeach week.

But the fine detail might have giv-en the airport pause. BA moved its

first freighter to Hahn because ofnoise restrictions at Cologne for oneweekly freighter flight en route toJohannesburg; the second freighter,a Hong Kong service, was added forcrewing reasons.

Gareth Kirkwood, British AirwaysWorld Cargo managing director, ad-mits he would like to fly all 10freighters out of one airport, but it isa fair bet that the main Frankfurt air-port is the one he has in mind. “Wehave only just started to operate outof Hahn, so I can’t say if we wouldcommit to it in the longer term,” hesaid in August.

By September, the Hahn flightswere back down to two a week.

Hahn has been here before. Inthe late 1990s, Malaysian Air-

lines had an ambitious plan to makethe airport its cargo hub, but in2001 new management scrappedthe plan. Hahn’s cargo operations

went back to a few weekly flights bythe likes of Egyptair, Iran Air andTurkey’s MNG Airlines.

Two carriers that like Hahn, how-ever, are Aeroflot and Air France. TheRussian carrier shifted its freighterhub there from Luxembourg in2000, and now has 13 flights, operat-ed with four DC-10s, out of the air-port to Moscow and China.

“It is not so close to any town, butbetween all the major European cargohubs, and it has 24-hour operationsand flexible slots,” says Oleg Korolev,Aeroflot’s regional cargo manager Eu-rope. “All the other airports we oper-ate to apart from Moscow have strictslot regimes. In the old days, we oftenhad to sit in Moscow waiting for Lux-embourg to open.”

Korolev insists the lack of majorforwarders at Hahn is not a prob-lem. “Big forwarders have huge vol-umes and can deliver them in theirown trucks,” he says. For smallerforwarders, Aeroflot has recentlystarted a trucking service to otherEurope hubs.

The other fan of Hahn is AirFrance, which has a trucking hubthere, adding some 125,000 tonnesof cargo a year to Hahn’s volume —extra tonnage that often creeps intothe airport’s figures in airportleague tables.

But while Vatry in France has alarge TNT logistics operation nextdoor, there is not yet an example ofa trucking hub turning into a flighthub. Hahn still awaits flight opera-tions from Air France.

Perhaps Hahn’s biggest lack —apart from a runway too short for ful-ly loaded and fuelled 747 freighters, aproblem that is being rectified — isan integrator presence. This is un-doubtedly the royal road to successfor any alternative cargo airport.



Europe’s top 15 cargo airports in 2005,

through AprilRANK AIRPORT TRAFFIC % CHANGE

7. Frankfurt, Germany (FRA) 616,894 7.4

10. Paris (CDG) 564,910 7.5

16. Amsterdam (AMS) 489,070 3.8

17. London Heathrow (LHR) 444,040 0.8

26. Luxembourg (LUX) 238,306 9.1

28. Brussels (BRU) 234,255 7.9

32. Cologne (CGN) 202,491 4.4

41. Milan Malpensa (MXP) 127,224 13.2

42. Madrid (MAD) 122,391 0.4

55. Zurich (ZRH) 103,320 4.9

56. Liege (LGG) 102,362 -28.4

58. Nottingham (EMA) 97,646 14.1

64. London Stansted 85,738 12.7

67. Istanbul (IST) 83,126 3.973. London Gatwick (LGW) 75,152 -2.5

Source: Airports Council International


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Look at Liege in Belgium, which nowranks a mighty eighth among Euro-pean airports, with 382,325 tonnes ofcargo in 2004, on the strength of be-ing TNT’s European air hub.

Or Nottingham East MidlandsAirport, which has overtaken Lon-don Gatwick to become the UnitedKingdom’s second largest cargo air-port, with tonnage of 254,029tonnes, a figure includes “transit”cargo that never leaves aircraft. Itnightly hosts 20 DHL flights, sixUPS flights, and two TNT flights. Itis also a stop on the trans-Atlanticfreighter flights of DHL and UPS.

Although this boosts total volume(NEMA has more tonnage than Istan-bul, Munich, Moscow or Rome), theimpact on regular cargo operations isdebatable: NEMA has had mixed suc-cess attracting more traditionalfreighter operators for years.

Bill Blanchard, its cargo develop-ment manager, says just 29 percentof tonnage is non-integrator traffic.

Kalitta Air flies weekly en route be-tween Chicago, New York andKuwait, while Icelandair operatesweekly and Bluebird Cargo of Ice-land four times a week. The coopera-tion between Lufthansa and DHLalso means it has 15 flights a weekvia NEMA.

But despite intense overcrowdingand a complete lack of newfreighter slots at Heathrow, NEMAhas failed to win any big Asian car-riers. For a few years Cathay Pacificused NEMA for one freighter a weekduring the winter, but it has consol-idated operations at Manchester,which also hosts freighter operatorssuch as Dragonair and China Air-lines. Since Manchester ownsNEMA, Blanchard can’t complain.“At least it keeps these operationsin the family,” he says.

He remains hopeful NEMA willget its own Asian freighters in time.“As congestion in the southeast ofEngland makes freighter operations

there impossible, carriers will turn tothe next airport with a long runwayand strong cargo infrastructure, andthat is NEMA,” he says. “So it is nota matter of if, but when.”

NEMA is not the only airporthoping to pull off the trick of

adding conventional air cargo to in-tegrator operations.

Liège for a time played host to At-las Air’s ultimately doomed attemptto set up freighter “fractional leas-ing” operations, but since the pro-ject’s demise Liège has lost carrierssuch as Polar Air Cargo to Amster-dam. And Leipzig-Halle in Germany,which last year beat out Vatry to re-place Brussels as DHL’s main Euro-pean hub, also hopes the win willstimulate more mainstream traffic.

Eric Malitzke, Leipzig’s managingdirector, is fond of saying that theDHL decision “put Leipzig on themap” and he has been travelling toAsia and the Middle East making the



Munich Airport isn’t slowing down in itspush to make itself a major hub for the in-tegrated air carriers.

The German airport in Septemberopened a 15,800-square-foot Express Ser-vices Center that will be used exclusively by

FedEx, DHL and UPS.For Munich, the expansion in express business is

part of a larger effort to raise its profile in the air-line business both within Europe and in longer-haul international transport. The airport has be-come a large secondary passenger hub forLufthansa and has gained new connections in re-cent years to North America and Asia.

Munich’s 18.2 percent cargo growth in 2004placed it 84th in the world, just ahead of Hahn, andair freight tonnage was up 26.4 percent in the first

eight months of this year. That was almost largelybecause of the integrators as freight tonnage fromfreighters jumped 111 percent and made up about aquarter of the airport’s freight traffic in August.

“Thanks to Southern Germany’s strong exportsand our airport’s location at the heart of an ex-panded Europe, we have the opportunity to sustainour above average growth in the freight sector,” Pe-ter Trautmann, the airport’s managing director fortraffic operations and engineering said in openingthe new express center.

The construction is part of a larger expansion ef-fort aimed at ramping Munich up to compete withEurope’s leading gateways. The airport manage-ment company, FMG, this year started planning athird runway, saying it would reach capacity for itstwo parallel runways as early as 2008. ■

Munich Expresses Growth


most of the airport’s newfoundprominence. The results so far are aweekly DC-10 charter to Africa oper-ated by Ugandan carrier DAS Air andthree AN-12 flights a week toMoscow by Atran.

Malitzke says he is in discussionswith an unnamed carrier about 747freighter operations to Asia, and hecan also expect that Lufthansa Car-go will move the five intercontinen-tal routes it operates as a joint ven-ture with the DHL to Leipzig whenhub operations start in 2008, addingmore general cargo capacity.

But he insists Leipzig is differentfrom other alternative cargo airports.“We have excellent road infrastruc-ture, and it is just as quick to truck

to Munich or Northern Italy fromhere as from Frankfurt, and faster toHamburg and Scandinavia,” he says.Although Leipzig has with Siemens,BMW, Infineon and Dow Chemicalsall within the vicinity, Malitzke saysits location at the heart of Europe iswhat matters. “Air freight is deliv-ered all over Europe anyway,” hesays. “You might as well land it here,which is much cheaper than Frank-furt or Amsterdam.”

Leipzig knows the importance ofattracting freight forwarders to gener-ate air freight traffic. Malitzke admitsthis is one of his major priorities forthe next few years, and he is danglingsuch carrots as access to the ramp.

But the airport need not worry

too much. With DHL’s operationsalone, its traffic is likely to soar to600,000 tonnes in 2008, making itEurope’s sixth or seventh largest car-go airport. In 2004, its throughputwas just 15,000 tonnes.

Another strategy some would-becargo airports are using is going

for niche cargo. Perishables is usually the one cho-

sen, and France’s Vatry Internationalhas had modest success with it. Evenmore successful has been Vitoria inNorthern Spain.

That is in part due to the strangemanagement set-up at the airport,which was designed in the 1970s asa new airport for Bilbao. That city’s





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inhabitants preferred their existingairport, however, and Vitoria waslargely mothballed until the early1990s, when the Vitoria city govern-ment and its chamber of commerceset up a non-profit venture, VIA, topromote the airport as a cargo hub.

The airport has attracted carrierssuch as Cargolux, Cielos de Peruand British Airways to make stopson the way back from Africa orSouth America. With a 34,200-square-foot perishables facility, itboasts quick transfers to trucks andgood road links not just with Spainbut to the rest of Europe.

Ricardo Gonzalez, the director ofVIA, has gone further, however, andtaken the step of actually organizingflights on behalf of forwarders andshippers. His vehicle for this is VIAS,Vitoria Integrated Air Services, acombination handler and charterbroker created in 2001.

“If VIA sees an opportunity, theyask VIAS to exploit it,” says Gonzalez.Since he is head of both entities, he ispresumably often asking himself.

Perishables — mainly fish, forwhich the Spanish have a voraciousappetite — are the main target. Gon-zalez’s looks at fish-producing partsof the world and then try and findthe lift to satisfy the market. In2002, VIAS chartered a Gemini DC-10 to fly fish from Montreal, send-

ing Spanish vegetable and saladitems back in the opposite direction,and in 2004 he persuaded Air Cana-da to include a stop in Vitoria onone of its scheduled MD-11freighters to Frankfurt.

In February 2006, he is also hop-ing to start a 737 service betweenReykjavik and Vitoria, carrying fishsouthbound and Spanish fruit andvegetables northbound. And he al-ways has a clutch of other ideas. NilePerch from East Africa? Fish fromMexico? One long standing dream isto start a route to the Canaries andMauritania or Senegal in WestAfrica, aimed at carrying miningequipment and other capital goodssouthbound and fish and other per-ishables northbound.

This is helped Vitoria to clock up43,683 tonnes of flown cargo in2004. But this is a fishy story with asting in its tail: some 65 percent ofthis traffic is accounted for by goodold-fashioned integrator traffic. Most

of that – 26,000 tonnes in 2004 – isdue to DHL, which uses Vitoria as anIberian and Moroccan sub-hub.

And growth has been fitful. The2004 total was 8.7 percent up on2003, but only 2.8 percent higherthan 2002, and less than 2001,when the airport reported 45,000tonnes. DHL as much as fish is re-sponsible for Vitoria’s scale: in thefirst half of 2005, the integrator putsmaller aircraft on some of its routesinto Vitoria, and total volumes atthe airport fell 7 to 8 percent.

So no alternative airport in Eu-rope has yet found a successful strat-egy for attracting general cargo, un-less one counts Luxembourg, whichdespite passenger traffic ranks fifthon the continent with 712,954tonnes of cargo in 2004.

But alternative cargo airports stillhave reason for hope. In September,the European Commission publisheda paper on airport capacity whichwarned that by 2025 Europe’s top 20passenger airports would be saturat-ed for most of the day, while a fur-ther 40 airports would be congested.

That suggests that cargo airportsmay yet have their day — if they arestill cargo airports by then. BothNEMA and Hahn have a new growthbusiness — as hubs for low-cost pas-senger flights. For now, at least,Ryanair and EasyJet, are more attrac-tive customers in Europe thanAfrica-bound freighters. ■



“As congestion in the Southeast ofEngland makes freighter operationsthere impossible, carriers will turn to the next airport with a long runway

and strong cargo infrastructure,and that is NEMA.”

Munich International Munich International


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35ACWI1105 10/19/05 4:39 AM Page 1

aim is to be the largest airport inthe world.

This would hardly be Dubai ifthere were not a heavy emphasis onmoving goods, and that is an impor-tant part of the plan.

The first phase is set to becomeoperational in 2007 and the priorityin the first stage of construction is todevelop the airport as a major cargogateway through the creation ofDubai Logistics City.

Although a stand-alone project in

its own right and destined to coversome 18 square miles, the Dubai Lo-gistics City will be built alongsidethe new airport and have directapron and runway access, within ahuge free trade zone.

Although there is plenty offreighter lift transiting Dubai, serv-ing beyond regional markets withlocal freighter capacity has not al-ways been so easy. That situationhas been remedied of late with Emi-rates SkyCargo’s introduction of an

A310-330 converted freighter. Withthree aircraft set to be in operationby year’s end, the carrier says it willbe able to offer a more comprehen-sive transhipment product overDubai to points in the Arabian Gulfand other regional markets in Africaand India.

The Dubai Logistics City aims tomake such long-haul transship-

ment quite common. And in onesense, the logistics project is alreadyhalfway completed. It will effectivelybe bolted onto the existing oceanport at Jebel Ali, currently responsi-ble for handling 60 percent of allMiddle East imports, thus creatingthe other half of the DLC multi-modal platform.

The man charged with realizingthis huge enterprise is David Proffitt,who took on the job of as the DLCchief executive this year. Proffitt, a28-year industry veteran, was mostrecently with DHL Danzas Air &

Enough is never enough for Dubai. Already a world-classgateway, Dubai International Airport is to be supplementedwith the construction of an entirely new airport to thenorth of Dubai City. A primary focus of the project will bethe creation of Dubai Logistics City, a massive one-stopmulti-modal logistics interchange that designers hope willbe serve as the central cargo hub for the Middle East and amajor gateway for international trade.

When completed in 2015, the $10 billion Jebel Ali Airport willfeature six runways and a myriad of terminals capable of handling

120 million passengers and 12 million tonnes of cargo annually. And, inkeeping with the Dubai ethos of always being the biggest and the best, its


Region Focus:Middle East

Dubai’sGlobalAmbitions

by Roger Turney

36F3-MiddleEastINT 10/21/05 1:39 PM Page 36

With a newairport and

massive logisticsfacility underconstruction,

Dubai seeks tobe far more than

a regional hub


Ocean as executive director for Eu-rope and was a board member ofDeutsche Post’s Mail International.

The British national speaks excit-edly about the logistics hub’s poten-tial. “The strategic combination ofDLC, Jebel Ali sea port and the newJebel Ali airport will enable us to cre-ate the world’s first truly integratedlogistics multimodal transport plat-form,” he says. “It will make this aprime location for airlines and logis-tic providers to serve the region. Itwill also have the effect of attractingmore companies to Dubai to set upregional distribution hubs.”

Proffitt has spearheaded a trademission to the Far East to encour-age investment in the DLC projectfrom manufacturers and logisticsservice providers. The DLC is in dis-cussions with over 150 companiesthat have expressed an interest inthe project.

Proffitt says the early planning forthe new airport has made carefulprovision for the needs of differentusers, including the integrators thatwill be able to develop their own fa-cilities. Space has been provided forup to 16 separate cargo terminals,each nearly 130,000 square feet,which will be designed to handledifferent types of freight, such asperishables and sea-air traffic.

“The emphasis will be on freedomof operation, the reduction of dou-ble handling and speedier transittimes for sea-air business,” says Prof-fitt. “There will also be a huge catch-ment of companies operating withinthe single customs bonded free

zone which willmake up DubaiLogistics City.”

Dubai’s own lo-gistics catchmentarea now stretch-es well beyondthe Arabian Gulfand other MiddleEast markets. Itsdistribution reachstretches into In-dia, Africa andthe southern states of the formerSoviet Union, helping to positionDubai as the world’s third largestport for re-exports after Hong Kongand Singapore.

One man who has witnessedmost of that remarkable

growth is Issa Baluch, chairman andCEO of forwarder Swift Freight In-ternational. Baluch, who recentlycompleted a two-year tenure as pres-ident of FIATA, is credited with in-spiring and developing the sea-airconcept through Dubai.

“Sea-air has grown far beyondeven my own expectations,” he says.

“When I hear the current ton-nages, the numbers are staggering. Itis a business that continues to befurther bolstered by Dubai’s opensky policy, as well as efficient cus-toms facilitation and speedy han-dling between modes.”

He says that Far East-to-Europeshipping remains the main trafficlane for sea-air traffic movingthrough Dubai, but Africa is be-coming a growth market, particu-

larly for land-locked countries onthe continent.

Swift Freight shares the view thatAfrica may offer the greatest poten-tial for the growth of transferthrough Dubai, but it is also themarket with the biggest challenges.

“The continent of Africa offersthe potential of multiple new mar-kets which can be served fromDubai,” says Baluch. “But access tothese markets is not always easybecause some of these countrieshave not yet opened their doors toforeign business and remain highlyrestricted.”

Competition in the Dubai logis-tics market is becoming tougher, ac-cording to Baluch, with more of theglobal players seeking to establish agreater presence. But he insists thereremains a distinct difference be-tween them and the vibrant Dubaiforwarding community.

“The major players that are nowinvolved are using Dubai as a stagingpoint to serve their networks,” hesays. “Local companies, on the otherhand have grown out of their tradi-tional Dubai-generated business.These local companies may appear tobe serving the same markets as themajor players, but in reality, they donot. The local companies tend to spe-cialize in their own niche markets.”



400

600

800

1000

1,200

’04’03’02’01’00’99Source: Dubai International Airport

DUBAI GROWINGDubai International Airport’s cargo

traffic, 1999-2004 (in 000s of tonnes)

Competition in the Dubai logistics market isbecoming tougher … with more of the global

players seeking to establish a greater presence.


As for Swift, “We plan to focus onemerging markets that are foreigninvestment-friendly, capitalize ongrowing exports out of China, andfocus on Asia-Africa trade lanes,”said Baruch. “China’s position as acenter of global manufacturing willfurther strengthen Swift’s multi-modal product, as our offices inHong Kong and China link thisbooming economy to consumermarkets via Dubai.”

UPS can count itself as one ofDubai’s longer-term mainstream

global operators in a market thatcountry manager John Tansey says isbecoming increasingly sophisticated.“The distinction between local andglobal players is becoming moreblurred as the Dubai market ma-tures,” he says. “That is not only dri-ven by global dynamics, but by thefact that the populations of these Ara-bian Gulf countries are very youngand they have a very consumer mind-ed, next-day delivery attitude.”

Tansey insists it is important to beable to provide a global perspectiveat local level.

“UPS is involved in serving the re-gional markets out of Dubai, butwhat should not be forgotten is thatas a fast-growing global interchangewe can reach Europe or Asia out ofhere with next-day delivery,” hesays. “That is beginning to provevery attractive to some major com-panies who want to position theirinventory control in Dubai to serveboth these markets.”

What makes that possible is thelonghaul freighter lift, of course, andlocal service providers such as Al RaisLogistics are working to alleviate theshortage of domestically generatedfreighter lift. It has recently started op-

erating its second 727 freighter out ofDubai, following the introduction ofits first aircraft at the start of the year.

According to Anis Nazir, market-

ing manager for Al Rais Logistics,both aircraft have been made avail-able for local charter operations.

“We were operating flights to




http://www.dubaicargovillage.com

Baghdad on behalf of DHL, with thefirst aircraft and also regular chartersto Afghanistan, but both of theseoperations have stopped for the timebeing,” he says.

The aircraft are currently beingused to operate charters around theregion and for regular freighter ser-vices to Iran.

“We see a big potential for regularfreighter services between Dubai andTehran,” says Nazir. “It is market inwhich we have extensive experience.”

Al Rais Logistics is obviously con-fident about injecting more narrow-body freighter capacity into theDubai market, with plans to have atleast five 727 freighters in service bythe end of next year. The fledglingcarrier, however, appears to havereined in more ambitious plans tostart operating 747 freighters on keylonghaul routes.

“We have looked at scaling up to747s,” says Nazir. “But we havenow put those plans on hold forthe time being.”

Air cargo road feeder services outof Dubai to neighboring Gulf

states and other Middle East pointsare also being strengthened. A newdeal recently signed between local aircargo handler Dnata and Kuwait-based PWC Logistics will providewhat are described as inter-airport lo-gistics solutions in the region.

Says Gary Chapman, president ofDnata, “This joint venture is a strate-gic move to establish an airport-to-airport logistics network within theregion. The service is designed toprovide airlines with a wider-choiceof off-line routings, with quality ser-vices at competitive prices.”

Dnata-PWC Airport Logistics willbe managed by PWC and chaired byDnata.

“The company will initially focusits operations on the Arabian Gulfstates, Lebanon and Jordan,” saysChapman. “But, we are really bullishfor the expanded long termprospects for this business through-out the region.”

PWC recently completed its ac-quisition of California-based GeoLo-

gistics, in a deal valued at $454 mil-lion. Earlier this summer PWC Lo-gistics sealed a five-year rolling U.S.military contract worth $1.5 billionto provide logistics services inKuwait and Iraq.

The extent of Dubai’s logistics am-bitions can be judged by the fact thateven in the searing heat of Arabia, ithas risen to the challenge of openinga new state-of-the art transhipmentfacility for handling flowers. TheDubai Flower Center, which is short-ly to open its doors for business, isdesigned to speed the flow and trans-fer of cut-flower traffic throughDubai’s international airport.

When it comes to the logisticsbusiness, it seems Dubai really canmake the desert bloom. ■



Log on toTop News, Features, the Bottom Line...


Log on toTop News, Features, the Bottom Line...



http://WWW.AIRCARGOWORLD.COM

Nov. 12-16

Anaheim, Calif.: Transcomp2005, joint annual meeting ofNational Industrial Transporta-tion League, Intermodal Associ-ation of North America andTransportation IntermediariesAssociation, at the conventioncenter. For information, call (703)524-5011 (866) 438-EXPO or visit:www.intermodal.org.

Nov. 28-Dec. 1

Washington: Defense Logis-tics 2005, at the Renaissance Hotel,where private logistics providers gettheir marching orders. For informa-tion, call (888) 482-6012 or visit:www.defenselog.com.

Nov. 29-30

London: The Future of AirTransport, at the Waldorf, fromeconomic to environmental issues,including the CEOs of Atlas Air andOcean Airlines. For information, call+44 207 608 0541 or visit, www.mar-ketforce.eu.com/airtransport.

Dec. 5-6

Washington: Fourth Cargo Se-curity Forum, at the Willard Inter-continental, the eyefortransportevent has government officials, ship-pers and carriers looking at issus suchas screening and C-TPAT. For infor-mation, call +44 207 375 7231. or vis-it: www.eyefortransport.com.

Dec. 5-6

Miami: World Mail & Ex-press Americas, at the SheratonBal Harbour, the Triangle Manage-

ment event looks at how privatemeets postal in Latin America. Forinformation, call +44 870 950 7900or visit www.triangle.eu.com.

Dec. 5-6

Kuala Lumpur: Asia PacificAviation Outlook Summit, theforward-looking annual gatheringhosted by the Centre for Asia PacificAviation. For information, call +619241 3200 or 870 950 7900 or e-mail:[email protected].

Dec. 8-9

Tallin, Estonia: Transport &Logistics, Western operators meetCentral European partners. For infor-mation, call +372 627 2755 or visit,www.bi-info.ee.

2006Feb. 14-17

Shanghai: Air Freight Asia2006, at the Shanghai-Pudong Inter-national Conference and ExhibitionCenter, the Payload Asia event movesto China. For information, e-mail:[email protected].

March 12-14

Bal Harbour, Fla.: Air Cargo2006, at the Sheraton, the three-sided annual meeting of the Airfor-warders Association, Air & ExpeditedMotor Carriers and the Air CourierConference of America. For informa-tion, call (703) 519-0335 or visit:www.airforwarders.org.

March 26-28

Orlando, Fla.: ISTAT 23rd An-nual Conference, the annual meet-ing of the International Society ofTransport Aircraft Trading. For infor-mation, call (703) 978-8156 or visit:www.istate.org/conferences.

March 27-30

Cleveland: 2006 Material Han-dling and Logistics Show & Con-ference, at the I-X Center, the annualevent includes keynote speakers fromsupply chain chiefs at Lucent and TheLimited. For information, call (704)345-1190 or visit: www.NA2006.org.

April 9-11

Beijing: International Air Car-go Association Annual GeneralMeeting, TIACA’s high-level yearlygathering looks at air freight direc-tions in aircraft, Asia and fuel. For in-formation, call (786) 265 7011 orvisit: www.tiaca.org.

April 30-May 2

Las Vegas, Nev.: Cargo Net-work Services 2006 PartnershipConference, At the Hyatt Lake LasVegas, the largest yearly gathering ofthe international air freight business inNorth America. For information, call(516) 747-3312 or visit: www.cnsc.net.

May 11-12

Paris: World Express and MailEuropean Conference, at the Sofi-tel Forum Hotel, hosted by La Poste,

uniting the private and postalworlds. For information, call +44870 950 7900 or visitwww.triangle.eu.com. ■

Events

For more events, visit: www.aircargoworld.com/dept/events.htm


41EventsINT 10/21/05 1:42 PM Page 41

http://www.triangle.eu.com

http://www.istate.org/conferences

http://www.intermodal.org


http://www.NA2006.org

http://www.defenselog.com

http://www.bi-info.ee

http://www.tiaca.org


http://www.cnsc.net

http://www.eyefortransport.com

http://www.airforwarders.org

http://www.triangle.eu.com

http://www.marketforce.eu.com/airtransport

http://www.marketforce.eu.com/airtransport

http://www.aircargoworld.com/dept/events.htm

http://www.aircargoworld.com/dept/events.htm


Source: BACK Aviation Solutions

Aircraft ReportBACK Aviation

$10.00

$0.00

$20.00

$30.00

$40.00

$50.00

$60.00

2006 CBV 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Curr

ent B

ook

Valu

es (m

illio

ns)

1995

2004

Passenger Values

$10.00

$0.00

$20.00

$30.00

$40.00

$50.00

$60.00

2006 CBV 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Curr

ent B

ook

Valu

es (m

illio

ns)

1995

2004

Freighter Values

The twin-engine short-to-medium-range 757-200 is touted for its fuel efficiency, low noiselevels and efficient operating performance.Boeing launched the freighter derivative of the

757 in 1985 with an order for 20 from UPS, which nowoperates 75 of the aircraft. The basic maximum takeoffweight of the 757 freighter is 250,000 pounds (113,400kilograms), with an option for 255,000 pounds (115,600kilograms).

The 757 freighter has no passenger windows or doorsand no interior amenities. A large main-deck cargo dooris installed in the forward area of the fuselage on the left-hand side. The flight crew boards the aircraft through asingle entry door installed immediately aft of the flightdeck on the left side of the aircraft.

Up to 15 containers or pallets, each measuring 88 by125 inches (223 by 317 centimeters) at the base, can beaccommodated on the main deck of the 757 freighter.

Total main-deck container volume is 6,600 cubic feet(187 cubic meters) and the two lower holds of the air-craft provide 1,830 cubic feet (51.8 cubic meters) forbulk loading.

These provide a combined maximum revenue payload

capability of 87,700 pounds (39,780 kilograms), includ-ing container weight. When carrying the maximum load,the 757 freighter has a range of about 2,900 nauticalmiles (5,371 kilometers). ■

42BackAviationINT 10/21/05 1:46 PM Page 42


BOEING 757-200

OPERATOR EQUIPMENT TYPE ACTIVE IN SERVICE

American Airlines Passenger configuration 143Delta Air Lines Passenger configuration 121United Airlines Passenger configuration 97UPS Cargo 75Northwest Airlines Passenger configuration 51Continental Airlines Passenger configuration 41US Airways Passenger configuration 31DHL EUROPE Cargo 22China Southern Airlines Passenger configuration 20Britannia Airways Passenger configuration 19First Choice Airways Passenger configuration 18Thomas Cook Airlines Passenger configuration 15Europen Air Transport Cargo 13Britsh Airways Passenger configuration 13America West Airlines Passenger configuration 13Air China Passenger configuration 13Shanghai Airlines Passenger configuration 13VIM Airlines Passenger configuration 13Iberia Passenger configuration 10Icelandair Passenger configuration 10

Fleet by Configuration(Active / On order)

Passenger88%

Passenger88%

All-cargo12%

Average Direct Operating Costs Q1 2005

Engine MaintenanceExpense

11%

Depreciation/CapitalLeases

9%Crew Cost

24%

Fuel Cost47%

Fuel Cost47%

AircraftMaintenance

9%

Active Fleet by World Region

All Other2%

U.S.A64%

Europe20%

Far East10%

U.S.A64%

Europe20%

Far East10% Middle East

2%South

America1%

CentralAmerica

1%

AVIATION DATA / ANLYSIS / CONSULTING / ASSET MANAGEMENTA division of Commonwealth Business Media, Inc.

Specialists in RegionalAirline, Airports, Aircraft

1-203-752-2000 [email protected] www.BACKaviation.com

42BackAviationINT 10/21/05 1:47 PM Page 43


http://www.BACKaviation.com

Airlines

Etihad Crystal Cargo: The AbuDhabi-based carrier appointed BarryHaslett cargo handling operationsmanager and its main hub. Hasletthad been at FedEx Express for 17 yearsin the United Kingdom and Dubai.

Volga-DneprAirlines: The projectcargo specialistnamed MatthewThear customer ser-vice manager, a newposition based atLondon Stansted Air-port. Thear started at

Volga-Dnepr’s original British jointventure company in 1991 and hasbeen planning manager for the air-line since last year.

KLM Royal Dutch Airlines: Thecarrier named Ben J. Swagermandeputy chief of KLM Security Servicesand said he will replace division chiefTeun J. Platenkamp whenPlatenkamp retires next fall. Swager-man, 46, was most recently chief pros-ecutor in the Dutch city of Roermond.He was a prosecutor in The Hague,Curaçao and Amsterdam and alsoserved in the Dutch judiciary.

Integrators

DHL: DHL Express named JohnCameron, who had been with FedExGround, executive vice president ofground in the United States. Cam-eron was division vice president inthe Eastern division for the FedExparcel division. He started his careerwith FedEx Ground predecessor RPSin 1985. Meanwhile, DHL Malaysianamed named Lim Wooi Hooi se-curity manager, overseeing securityfor DHL Express, DHL Danzas andDHL Solutions. The 16-year industry

veteran had been with BAX Global.DHL Malaysia also named Tay LeeShee manager of research and plan-ning. She had worked for DHL as aspecial project consultant.

Third-Parties

Kuehne+Nagel: The forwardernamed Ewald Kaiser to its manage-ment board in a position running thebusiness unit in charge of road andrail logistics. The company said theappointment “underlines the strategicimportance of these activities for theglobally operating logistics company.”Kaiser has been managing director ofKN’s Germany business since 2001.

TransGlobal Logistics: TheNaples, Fla.-based company namedFlorida Foreign Trade AssociationVice President Joseph R. Smith toits board of directors. A former cargomanager for COPA Airlines, he hasbeen U.S. delegate of ALACAT.

WCA: The WorldCargo Alliance groupof international for-warders namedAndy Robins vicepresident with re-sponsibility forstrengthening tieswith membersthroughout Europe,the Middle East andAfrica. Robins, 45,has been in Thailandfor 10 years as mar-keting director of afreight forwarder.Also, Monica Tappijoined as director ofmembership development for Eu-rope. A native Italian, she worked at aforwarder in Ancona, Italy, and willbe based in Amsterdam.

TNT Logistics: The 3PL appoint-

ed William Sheeran a UnitedStates-based key account director forglobal automotive clients. Sheeranhas more than 20 years of transporta-tion and logistics experience in theautomotive field and started withTNT in 1995 in Brentwood, England.Before that, he was with AutoAllianceInternational and earlier was with theautomotive division of Johnson Con-trols and Central Transport.

Transgroup Worldwide Logis-tics: The Seattle-based forwardernamed Jacob Bech Hansen directorof Asia development. A 10-year indus-try veteran, he worked at Rohde &Liesenfeld and Formosa ContainerLine before becoming managing direc-tor of logistics company China LinQ.

Ozburn-Hessey Logistics: TheTennessee-based logistics companynamed Dave Hanley director of itsintegrated solutions group andNathan Sanders director of opera-tions at its Indianapolis site. Hanleyhad been with Triangle Services, Ry-der Integrated Logistics and Perfor-mance Logistics Group before joiningOzburn-Hessey last February. Sandersmost recently was operations directorat Brightpoint.

Samuel Shapiro & Co.: The Bal-timore-based forwarder and customsbroker named Sandy Peterson chieffinancial office. Peterson has 15years’ experience with non-profit or-ganizations, including MedStar andAssociated Catholic Charities, andhas also worked as a contractor forthe U.S. State Department.

Crown Relocations: The corpo-rate relocation and forwarding com-pany named Swati Pathak Seattle-based business development managerfor the Pacific Northwest. A seven-year veteran of the industry, she re-cently managed the operations forthe Bangalore branch of Crown India.

People


Robins

Tappi

Thear

44PeopleINT 10/21/05 1:48 PM Page 44

U-Freight: The Hong Kong-basedforwarder named I. J. Sahulatabranch manager for its new office onIndonesia’s Batam Island. He had beenat Garuda Indonesia Airways for morethan 30 years, most recently as generalmanager of the airline’s Batam office.

ACLS: Don Palmer, onetime headof the Intermodal Center at Alabama’sHuntsville International Airport, start-ed a consulting firm, Air Cargo Logis-tics Services. Palmer had most recentlybeen a business development directorat forwarder Panalpina.

Manufacturers

DVB Bank: The Frankfurt-basedbank, which specializes in transportfinance, placed Peter Kappel incharge of its new Securitization Unit.Kappel started his career at KPMG inCanada and Germany and laterworked at JP Morgan and Nomura Se-curities. He more recently worked inEuropean securitization at DresdnerKleinwort Benson and at Calyon.

Ground Handling

SAS Ground Services: The han-dling division of SAS named Bo Ek-lund president. Eklund, 42, had beenwith SAS until 10 years ago in posi-tions including economy and admin-istration manager at SAS Cargo. Morerecently, he was managing director ofDaimler Chrysler Rail Systems in Den-mark and earlier was group logisticsand IT director at ECCO Denmark.

ASIG: The Florida-based airlineservices firm named David L. As-chenbach vice president of salesand customer service, replacing LeifAndersson, who is retiring. A 35-year aviation industry veteran, As-chenbach had been vice president ofairport services at ATA Airlines.

Menzies Aviation: The UnitedKingdom-based worldwide groundhandler named Clive Macmillandirector for the Americas. A onetimemanaging director of handler Servi-sair in the United Kingdom, Macmil-lan joined Menzies and developedhandling operations for easyJet,bmibaby and Jet2.

AMB Property: The developer fo-cused on air freight distribution sitesnamed Afsaneh M. Beschloss tothe board of directors. She is presidentand CEO of The Rock Creek Group, aWashington-based investment com-pany, she formerly Carlyle Asset Man-agement Group. She earlier was trea-surer and chief investment officer ofthe World Bank and held positions atJ.P. Morgan in London and Shell In-ternational Group Planning.

Associations

Air Transport Association: Theassociation representing UnitedStates air carriers named DavidCastelveter vice president, commu-nications. Castelveter, 52, had beenwith US Airways and its predecessorAllegheny Airlines for 28 years in var-ious sales, marketing and operationsposts, most recently as managing di-rector of corporate communications.He also completed 26 years in theU.S. Armed Forces.

Airforwarders Association:The U.S. association of air forwardersnamed Ross Bacarella, president ofthe Connecticut-based BTX Air Ex-press, to the board of directors.Bacarella has more than 30 years ofexperience in the industry.

AAPA: The Association of AsiaPacific Airlines named aviation in-dustry veteran Beatrice Lim as itscommercial director. Lim had mostrecently been senior air transport

manager at the Civil Aviation Au-thority of Singapore.

Airports

Brussels InternationalAirport: The Belgian airport’s man-agement company named ArnaudFeist chief finance officer. Feist, 38,had been vice president of financeand information technology at SCAPackaging Europe, a unit of Sweden’sSCA, Europe’s largest corrugated boardpackaging company. He also workedat Coopers & Lybrand and at Swift.

Government

TSA: The U.S. Transportation Secu-rity Administration named DonaldL. Barker federal security director atMemphis International Airport. Bark-er had been federal security director atEugene, Ore., Mahlon Sweet Fieldsince 2002. A 21-year veteran officeof the U.S. Marine Corps, he holdsdegrees and has completed advancedstudies in transportation manage-ment and logistics at Northwesternand Penn State universities. ■

People

November 2005 AirCargoWorld 45AirCargoWorld

Air France Cargo ..........................................CV4Alcoa SIE Cargo...............................................24Amsterdam Airport Schiphol ..........................8Boeing..........................................................18-19Cargolux Airlines ............................................15Coyne Aviation...................................................6Dubai Cargo Village........................................39Lufthansa Cargo...............................................14Mercator............................................................27Polet Cargo Airlines .......................................33Port Authority of NY/NJ ..............................CV2Skyteam Cargo...................................................3Swiss World Cargo...........................................7Thai Airways ......................................................9Volga-Dnepr Airlines......................................23Winnipeg Airports Authority ........................31

Advertiser Index

44PeopleINT 10/21/05 1:48 PM Page 45

AirCargoWorld November 200546

Bottom LinetheAirCargo

Euro Cargo

Source: Association of European Airlines

–10% –5% 0% 5% 10% 15% 20%

Europe-Far East

South Atlantic

North Atlantic

Europe-Middle East

Europe-North Africa

Within Europe

Domestic

Selling Semis

–10%–8%–6%–4%–2%

0%2%4%6%8%

10%

Asia PacificJapanEuropeAmericas

Year-over-year percent change insemiconductor sales by market, July2005 compared to July 2004.

Source: Semiconductor Industry Association

Carrying Korea

–30%–20%–10%

0%10%20%30%40%50%

EuropeAmericasSoutheastAsia

ChinaJapanDomestic

Year-over-year percent change infreight tonne kilometers carried byKorean Air to/from key markets for thefirst eight months of 2005.

Source: Korean Air

Brisbane Bulk

0

20,000

40,000

60,000

80,000

100,000

’03/’04 ’02/’03’01/’02

DomesticInternational ImportsInternational Exports

Cargo traffic at Australia’s BrisbaneAirport for the past three fiscal years.(in tonnes)

Source: Brisbane Airport

Lufthansa Capacity

–6%

–3%

0%

3%

6%

9%

12%

15%

Traffic

Capacity

Aug.JulyJuneMayAprilMarchFeb.Jan.

Lufthansa Cargo monthly year-over-year percent change in cargo capacityand traffic.


Year-over-year percent growth/decline in cargo carried by European airlines, forthe first 8 months of 2005, in key markets.

46BottomLineINT 10/21/05 1:49 PM Page 46

AirCargoWorldNovember 2005 47

Air-Ocean


0%

5%

10%

15%

20%

25%

30%

35%

Ocean

Air

Q2’05Q1Q4Q3Q2’04Q1Q4Q3Q2’03Q1

World Cargo

–3%

0%

3%

6%

9%

12%

15%

OverallLatinAmerica

NorthAmerica

EuropeAsia/Pacific

AfricaMiddleEast

Year-over-year percent change in airfreight tonne kilometers, by region, forthe first eight months of 2005.

Source: International Air Transport Association

Exporting America

0%

5%

10%

15%

20%

25%

30%

35%

3/052/051/0512/0411/0410/049/048/047/04

EuropeAsia

Year-over-year percent change in U.S.air export tonnes to Europe and Asia,July 2004 through March 2005.

Dividing Exel

Europe, Middle East and Africa55.2%

Asia Pacific13.9%

Americas30.9%

Europe, Middle East and Africa55.2%

Asia Pacific13.9%

Americas30.9%

Percent of Exel’s total revenue bygeographic region for six monthsending June 30, 2005.


Exel Earning

$0.5

$1.0

$1.5

$2.0

$2.5

First half ’05First half ’04First half ’03

Freight managementContract logistics

Exel’s first half of year revenue bybusiness segment, 2003-2005.(in millions of Euros)

Source: U.S. Federal Aviation Administration

Source: Cargo Network Services CASS-USA

EGL’s quarterly net revenue growth for air and ocean freight, 2003-2005.

46BottomLineINT 10/21/05 1:49 PM Page 47

Paperless David E. Wirsing • Executive Director • U.S. Airforwarders Association

IATA’s e-freight paperless initiative offers a challenge the aircargo industry must take on


At a recent International Air Transport Asso-ciation in Singapore, IATA Director Gener-al Giovanni Bisignani stressed the need for

airlines to look into the future to define the initia-tives that will return the carriers and the industryto sound financial footing. He also suggested thatautomating and simplifying business processeswas the only way to accomplish this goal.

That was a strong statement coming from the chief ex-ecutive of the world’s airlines, although this is not thefirst time this has been broached by the industry and cer-tainly not the first by IATA.

However, there may be reason this time around tobelieve.

Even the most casual industryobserver will note that Bisignanihas made a number of sweepingchanges at IATA since he assumedthe leadership role. As a result, theprofile of cargo at IATA has takenon a much higher importance.

Focus GroupThis past April, Aleks Popovich was appointed the asso-

ciation’s global head of cargo, and thus far the result hasbeen impressive.

He has taken the director general’s words literally and hasrenewed the push for paperless cargo. Specifically, Aleks hasa stated goal to eliminate paper documents from cargoprocesses by 2010. This program, referred to as “IATA e-freight,” has been endorsed by the IATA board of governors,which is composed of the airline’s chief executive officers.

As for strategy, Aleks has chosen a small, focused groupof carriers — British Airways, Cargolux, Emirates, FedEx,Lufthansa Cargo and Singapore Airlines Cargo — to leadthe way by implementing paperless cargo processes ontheir core routes by the end of 2007. Therein liesPopovich’s first challenge.

At this initial point, he has not included many majorcarriers and will be pressed to explain why they were left

out of the loop. As for the forwarding side of the equa-tion, he has indicated that he will involve Cargo 2000 inthe process as soon as possible.

This is his second challenge. The multinational for-warders who have assisted in the electronic mappingprocess will be of great value to the development process,but are not representative of the small and medium-sizeforwarders who make up the majority of the day-to-daytransactions in the air freight world.

Legacy UsersSome believe that much of the system development

that a paperless environment requires is currently in placeand it is not necessary to reinvent the wheel.

Can we use the models that Glob-al Freight Exchange, Cargo PortalServices, Ezycargo, Traxon and oth-ers have developed and refined?Should representatives from theseservice providers be included in thediscussions and mapping process?

Aleks has indicated that the e-freight project team istasked with the challenge to make existing carrier systemsand service providers systems work together most effec-tively. That is a strong sign that IATA will and indeedmust work within the existing infrastructure if they are tobe successful.

In other words, carriers will not dispose of their exist-ing IT systems nor will they accept the financial burdenof duplicative systems to achieve a paperless environmentif they believe the capability currently exists.

But IATA and Aleks Popovich deserve the recognitionand participation of the cargo industry for taking on achallenge that, in the end, will serve to strengthen the car-riers and forwarders through the simplification of businesspractices. However, if all parties are not willing to becomeinvolved in this sea change, e-freight will be destined tothe file cabinets alongside previous paperless initiatives.

Let’s get behind this initiative and work together tomake it happen this time. ■

ForumForwarders

The profile of cargo atIATA has taken on amuch higher importance.

48ForwardersINT 10/21/05 1:50 PM Page 48

C3BackAviationDOM 10/21/05 11:53 AM Page 1

http://www.BACKaviation.com



YOU HAVE A UNIQUE NEED, WE HAVE TWICE AS MANY CHANCES TO ANSWER IT.Air France Cargo and KLM Cargo have joined forces.We integrate our commercial activities and co-ordinate our operational systems.Whatever solution suits you best, you can choose between our services and networks. Gradually, we will offer you more and more alternatives and answers to your questions.Inspired by the challenge, our unified sales and services team is close to you and readyto deliver as promised. One team, one face to the market.We are ready; our ears wide open, waiting to hear that unique voice. Yours!

C4ACWI1105 10/19/05 4:23 AM Page 1

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