Singapore's state investment company, Temasek Holdings has invested US$300 million for a 21.7% stake in Hong Kong-based global supply chain giant Li & Fung's logistics business.
The Temasek injection, through its indirect wholly-owned subsidiary Dahlia Investments Pte Ltd, will value the business, LF Logistics, at approximately US$1.4 billion.

In a statement, Li & Fung said that as a result of Temasek's investment, it will postpone a previous proposed spin-off initial public offering for LF Logistics. It will remain a controlling shareholder of LF Logistics with a 78.3% stake.
Proceeds from the investment will be used to fund LF Logistics' future capital expenditures, business growth initiatives and to repay its existing bank loans.
"The investment from Temasek will allow us to unlock the value of LF Logistics and accelerate its business growth. It will also enhance Li & Fung's capital structure and financial flexibility," said Spencer Fung, Group CEO, Li & Fung.
LF Logistics has achieved multiple-year double-digit organic growth, and is rapidly growing in Asean and expanding into new geographies including Japan, Korea and India, said Li & Fung.

LF Logistics suffers under the U.S.-China tariff dispute
A Bloomberg report noted that the deal will bolster the Hong Kong-based supplier to global giants like Walmart Inc. and Macy’s Inc. as it attempts to turn its business around from a five-year profit slump.
A wave of bankruptcies and store closures among its big retail clients sparked a three-year restructuring plan and the company said earlier this month that the tit-for-tat tariff war between the U.S. and China will accelerate the diversification of its supply chain out of China.
“The company likely will miss its 2017-19 goals, struggling to retain orders from customers amid uncertain U.S.-China trade outcomes,” Catherine Lim, an analyst with Bloomberg Intelligence said in a note this month.

Nol van Fenema

Eastern Air Logistics, the logistics arm of state-owned China Eastern Airlines, has filed for an initial public offering (IPO) with domestic securities regulators to raise more than 2.4 billion yuan (US$348 million), a Caixin report said, adding that the public offering will mark the last step for the once state-controlled company to complete a two-year restructuring to diversify its ownership.

Proceeds of the offering will be used to invest in logistics facilities, network improvements, equipment purchases and technology upgrades, said the company.
Eastern Air Logistics, formerly China Cargo Airlines, was formed in 2012 using the latter's resources to build a high-end brand for air logistics and ground services.
In June 2017, it sold a 25% stake to Legend Holdings, 10% to Global Logistic Properties, 5% each to Deppon Logistics and Greenland Financial Investment, and 10% to representatives of Eastern Air Logistics' core shareholding employees, reducing the state holding to 45%. The company has since prepared for a public listing as a final step of the mixed-ownership restructuring.

Wide-spread ownership
Eastern Air Logistics booked 10.7 billion yuan of revenue in 2018 and 987 million yuan of net profit, according to the prospectus. Total assets reached 5.7 billion yuan, with a debt-to-asset ratio of 47.6%.
Eastern Air Logistics, which is involved in the freight logistics business, on-ground services and logistics solutions for cross-border e-commerce and other emerging business, wholly-owns Shanghai Eastern Transport and Eastern Express, while it also holds an 83% stake in China Cargo Airlines.

HNA continues paying down debts
In another development, embattled conglomerate HNA Group said it disposed of the office building which houses the company’s flagship Hainan Airlines Beijing operations in a continuing effort to pay down debt from a years-long multibillion-dollar buying spree.
HNA said in a statement that it’s selling its 75% stake in the building to a unit of Vanke, one of China’s top real estate developers, for 1.3 billion yuan (US$189 million). This latest sale comes after HNA said last month it would sell 25% of the building to Vanke for 430 million yuan.
HNA Group earlier this year sold off its stake in Guangdong-based brokerage Lianxun Securities. It’s also reportedly looking to sell Ingram Micro, the U.S. computer component distributor it acquired for US$7.5 billion in 2016.

Transfer of A350-900 purchase rights
In other news, HNA Group said its subsidiary Hong Kong Airlines has transferred its purchase rights of two Airbus A350-900s to sister company Hainan Airlines for free, as the latter moves to ramp up capacity and growth.
As part of the deal, the HNA Group will provide a guarantee of US$509 million, and the Hainan Airlines Group will provide a counter-guarantee of US$509 million.
Hong Kong Airlines has 10 A350-900s on order. It has another six in service, and three more in storage. Meanwhile, Hainan Airlines has four A350-900s in service, and another two on order.
Hainan Airlines will also borrow US$234 million from China Development Bank to help with the purchase.

Nol van Fenema

The Indian government has ordered a probe by the Serious Fraud Investigation Office (SFIO) into the affairs of Indian carrier Jet Airways and its group companies, after finding instances of fund diversions and large-scale irregularities, the Economic Times reported quoting unnamed sources as saying.
The report also revealed that the government would oppose airline founder Naresh Goyal's plea in the Delhi High Court seeking the lifting of a travel ban. The sources said Goyal is likely to be summoned by the SFIO, which comes under the Ministry of Corporate Affairs (MCA).

A seemingly never-ending story!

After quite a few failed attempts to sell off Air India, The country’s government body is now said to have put the carrier back on the “for sale” list.  This move apparently follows on Indian cabinet ministers having given their approval to put Air India and its subsidiary companies up for sale (again)!
Hard to believe what’s fact or fiction these days with Air India. In our 29. June issue of CargoForwarder Global we reported based on information received that the Indian government had put the sale process on hold due to high oil prices and volatile currency movements.
Well - oil won’t get cheaper in the near future - so, who’s in control as far as Air India is concerned.

Never ending story
The once proud Indian operator has been bandied around as a sale item for the past couple of years. There were quite a few companies, including airlines such as Singapore Airlines, who’d previously shown their interest in taking all or part of the carrier. Most were scared off by the almost unacceptable terms laid down by the Indian government. It was then in March 2018 that the government did a turn-around and in their wisdom decided that the sales process should be terminated altogether. Since then, Air India’s employees having been living in a limbo, not knowing whether they’ll go backwards or forwards in the future.
In a report published at the end of June by India’s Press Information Bureau, it was stated that Prime Minister Narendra Modi’s close advisors had now again given the green light for a “strategic disinvestment” of Air India along with its five subsidiary companies. This decision followed on the apparent recommendation of the Air India Specific Alternative Mechanism (AISAM) committee.

Who will sell what?
There however seems to be some disagreement between what AISAM officials are saying and the views of those sitting in the Indian Ministry of Civil Aviation (MOCA).
The MOCA gentlemen are not in agreement with AISAM’s claims that Air India’s losses for the 2018/2019 period are expected to reach a staggering USD 1.107 billion (INR76.35 billion). Reports state that the 2017/2018 loss amounted to almost USD 776 million (INR53,48 billion).
If the above figures were to be proven as being correct, then the government would face an even larger problem than experienced with the previous sales effort whereby many interested investors backed off due to Air India’s enormous debt picture of which they (investors) were expected to carry up to almost USD 5 billion if a sale were agreed.
Maybe Air India has now become a more interesting investment for some as Jet Airways, their largest long-haul competitor, is finally going into bankruptcy. Providing other foreign carriers don’t jump in first, Air India could benefit by getting a larger portion of the international routes into and out of India. To do this they would have to claim many of the slots now being freed up by the Jet Airways demise.
This could then bring more much needed revenue and support the MOCA claim that losses won’t be as high as their colleagues at AISAM say they will be.

The proliferation of regulation and compliance will be one of the greatest challenges for the air cargo market and freight forwarding as a whole, says Eric Martin-Neuville Executive VP Freight Forwarding at Geodis in an exclusive discussion with CargoForwarder Global. He is convinced that customs brokerage will become a fourth independent mode besides air, ocean and projects.

The freight carrier’s volumes handled at Munich Airport are growing, despite the general contraction of tonnage flown on board its fleet. It’s the high attractiveness of the local Bavarian market that keeps the business soaring, explains Johannes Zinkl, Head of Handling at LH Cargo’s Munich hub.

IN BRIEF - THE LATEST AIR CARGO INDUSTRY NEWS

EL AL ceases B747F operations
EL AL Israel Airlines which has been operating B747-400 freighter services since 2010 has decided to phase out the aircraft and to compensate have formed a partnership with AirBridgeCargo Airlines and ASL Airlines.
The company reports that during the nine years of their B747F operations that they have flown a total of 275,000 tons - which gave an average utilization of around 2,500 tons per month. The last flight was between Liege and Tel Aviv where the aircraft was then handed back to the lessor. The new partnership with ASL and AirBridgeCargo was celebrated at a special event held recently at Tel Aviv’s Ben Gurion Airport attended among others by the Russian Ambassador to Israel, ABC’s CEO Sergey Lazarev and EL AL Chairman Eli Defes. It has not yet been revealed as to which routes will be operated for EL AL in the new partnership although it is reported that the carrier would like to introduce services to Moscow, using ABC aircraft.

Cargolux ups Xiamen flights
The Luxembourg-based all cargo carrier, Cargolux, has announced that as of 1. July, they have added a third weekly B747F service to the Chinese city of Xiamen. The aircraft departs Luxembourg on Monday mornings and arrives in Xiamen early Tuesday morning. The return flight is routed across the Pacific to Los Angeles before returning to Luxembourg.
CV has been operating regular services to Xiamen since 2006 and the third frequency provides the only direct freighter flight between Xiamen and the USA. On this sector to Los Angeles the aircraft will mainly carry garments and electronic goods.

Ethiopian Cargo starts to Chongqing
Addis Ababa-based Ethiopian Cargo which has established itself over the past few years as Africa’s number one passenger and cargo airline, has now added a new Boeing 777F service to the large Chinese city of Chongqing.
The return flight from Chongqing routes via Shanghai and Delhi to Addis Ababa. From there it continues onto Lagos, Sao Paulo, Quito and Miami. This new service gives Chinese exporters access to African, South American and North American markets via Addis Ababa.
Ethiopian Cargo continues to expand their freighter operations as part of the carrier’s Vision 2025 planning. The aim is to have nineteen dedicated freighters in operation by then, serving almost 60 destinations around the world.

Swissport pushes pharma handling ahead at BRU
Ground handler Swissport aims to take its cargo service delivery at Belgium’s Zaventem Airport to the next level by operating a state-of-the-art cargo facility. The premises will consist of a 25,000 sqm warehouse, a four-story office building for Swissport and its customers and dedicated pharma space of 2,620 sqm. Additional-ly, a 1,000 sqm cooling facility (+2° to +8°C) will be available for customers. With its new end-to-end cool chain, Swissport intends to further grow its share in the phar-ma air transport business in Brussels as well as worldwide, reads their press re-lease. “Our new warehouse and the state-of-the-art Swissport Pharma Center will be the benchmark for modern and efficient air cargo and pharma logistics,” says Luzius Wirth, Executive Vice President Europe, Middle East & Africa (EMEA) for Swissport. “The investment underlines our commitment to the Belgian market. In parallel we are working to improve the profitability of our Belgian business activities in order to cre-ate long-term job security for our staff.”
The building is being constructed by Brussels Airport Company and will be opera-tional in about 1.5 years from today. Swissport has signed a long-term lease and is investing several million euros in equipment and fittings for the new facility. The company handles more than 550,000 tons of cargo annually in Belgium and em-ploys some 2,000 staff in the country. The global tonnage handled by Swissport amounted to 4.8 million tons in 2018.

Fraport cargo figures drop again
Germany’s largest airport operator Fraport has published their June and first half-year results. Whereas the passenger business continues to flourish, the air cargo figures dropped considerably in June of this year.
Fraport cargo throughput at Frankfurt Airport dropped by 4.7% last month to just 174,392 tons. In their statement Fraport put the blame for this on the continuing weak global economy as well as two public holidays which fell in June this year. The cumulative air cargo figure from January to June was 1.1 million tons which represents an almost -3% drop compared to the first half-year 2018.
Passenger figures at FRA rose by 3% to reach 33.6 million for the period January to June. Fraport’s other international Group activities which are mainly related to the passenger business, almost all performed well during June and the first six months.

Fleet cutbacks, cost saving initiatives, staff redundancies and other issues have been widely reported for the air cargo industry during the past few months. Figures to-date show a continuing decline in cargo transports and as we now pass the half-way mark for this year, the question in some minds is whether 2019 will turn into disaster.

May figures confirm continued decline
We follow closely month-by-month the air cargo statistics issued by IATA and WorldACD. In general, both usually come to the same conclusion and their figures are more-or-less on a par to each other although IATA tends to concentrate on FTKs, whereas WorldACD looks closer at chargeable weight.
Both have shown that the first five months of this year are not good and maybe an indication that there is worse to come.
Latest figures indicate that chargeable weight flown went down by 5% when calculated year-over-year (YoY). WorldACD notes that YoY general cargo transport has dropped by -7.2%. Also surprising is that that special cargo (pharma etc.) now is at -0.1% YoY. Is this because there is a tendency back to ocean freight for such cargo?
Yield however tends to be a more worrying long-term problem. Higher yields bring more revenue, hence better bottom line results.
May average yields dropped again and were -2% MoM and YoY they are approaching the -6% mark (-5.6%). On top of this average load factors dipped again by -2.1% YoY. These two factors, plus a trend for a continuing decline in volumes carried, are worrying airline CFOs across the globe. If this trend worsens during the second half of this year and the annual peak period falls away, then there will be more drastic measures being taken.

No reason to panic?
Air freight is a volatile business, and always has been. The industry has gone through worse times than we are presently facing.
But, our world is also changing fast. Liberalisation is being replaced by Populistic groupings in almost all corners of the world. Short term results have been the trade wars triggered by the USA and China and one just has to look at May’s Asia-Pacific air cargo results to see that if the situation gets out of control, then air freight could well be the long-term loser.
We now are in the midst of the summer lull with the hope that the last quarter will bring figures back to an almost acceptable level for all concerned. If not - carriers will cut back, forwarders will lose volumes and handlers will either be pressured to lower their rates further or risk losing airline clients.

The Dutch government is considering a modest increase of aircraft movements at Schiphol Airport beyond 2020 as part of its updated aviation policy. Cargo carriers could benefit should more landing rights become available through a revised slot allocation system. But the new scheme, if implemented, is subject to conditions.

The largest parcel facility and delivery centre in the southern hemisphere is set to start operations in October when Australia Post opens its new Redbank facility in Queensland, which will be able to process up to 700,000 parcels per day at its peak – or over 35,000 parcels an hour.
The new facility is part of Australia Post’s three-year, A$900 million investment in parcel processing nationally and underlines the strong growth of e-commerce in Australia.

Lasting love affair
Australia Post Group Chief Operating Officer Bob Black said the 50,000 square metre site will meet the growing demands of online shopping in Queensland.
“We know Australia’s love affair with online shopping isn’t slowing down. Last year Australians spent A$27.5 billion nationally, an increase of 24% on 2017,” Black said, adding “Queensland’s love affair with online shopping also continues, and in 2018 it grew by 21% from the previous year - ahead of the national average. Making up 19% of all online shopping across the nation, Queensland also had three of the top 10 postcodes – Toowoomba, Mackay and Bundaberg – each with strong growth all above 20%."

State-of-the-art facility
As parcel numbers grow, Mr Black said it’s important to invest in new technology to help deliver increasing volumes and help create new and safer workplaces. The facility will use the latest technology to increase parcel processing capabilities, including robotic arms, automated guided vehicles and an automated parcel picker, the first of its kind in Australia.

NZ Post: courier delivery surpassed traditional mail
In a related development, a new report from NZ Post has indicated that online shopping in New Zealand grew eight times faster than shopping in-store in 2018. Their respective growth rates were 16% and 2%.
The “Full Download 2019 report” showed that 1.8 million New Zealanders chose to shop online last year spending a total of NZ$4.2billion. The large growth in online shopping has mainly come from people shopping more often, with online shoppers now hitting that ‘buy’ button 22 times each per year. The report also found that spending with New Zealand online stores grew at nearly double the rate of growth for international online stores. It noted that shoppers feel more satisfied when buying directly from New Zealand websites (88%) and marketplaces (81%), than buying from overseas based websites (66%) or marketplaces (55%).
NZ Post said that it had undertaken the report “because courier delivery has now surpassed mail as the largest contributor to NZ Post revenue”.

Nol van Fenema

AirAsia’s cargo and logistics arm Teleport - previously known as RedCargo - and leading venture capital firm Gobi Partners have invested US$10.6 million in EasyParcel, a regional e-commerce and parcel delivery player, which has close to half a million users. It will use the Series B funding to expand its offering for small and medium enterprises (SME) customers.

The investment was announced by AirAsia Group CEO Tony Fernandes, Teleport CEO Pete Chareonwongsak, Gobi Partners Managing Director Malaysia Jamaludin Bujang and EasyParcel founder and CEO Clarence Leong in Kuala Lumpur earlier this week.
Fernandes said the airline has about 50% to 60% belly space for cargo in an airplane, while 40% to 50% are for passengers’ bags. Of the 60% available belly space for cargo, AirAsia currently utilises only 15%.

Audacious announcement
Teleport CEO Chareonwongsak said the company is expected to increase cargo space utilisation by 5% within a year. Teleport currently contributes about 4% revenue or MYR 400 million (US$ 97 million) to the AirAsia Group and Chareonwongsak said he aims to double this number to MYR 800 million in the next twelve months.
Fernandes noted that he had always believed that AirAsia’s logistics business "has a huge opportunity to be part of the social and e-commerce ecosystem. Today, we are unlocking that potential with the help of EasyParcel, making parcel delivery across Asean more accessible and inclusive for everyone."

Interesting new business model
Founded in 2014, EasyParcel is an online booking platform for parcel deliveries that allows users, mostly SMEs, to arrange for delivery from multiple established courier companies at an affordable rate. The firm has a presence in Malaysia, Singapore, Indonesia, and Thailand, and it has an average shipping volume of one million parcels per month.
EasyParcel said that the funds would be used to leverage Teleport’s logistics assets and infrastructure capacities which include more than 10,000 AirAsia flights per week to over 100 cities. AirAsia’s passenger fleet has more than one million tonnes of cargo capacity.

Enlarging the client base
EasyParcel wants to strengthen its presence in its existing markets and aims to reach a new customer segment, traditional SMEs, in addition to its online business customers.
Teleport's investment is funded from retained earnings, whilst Gobi Partners makes its investment through the Meranti Asean Growth Fund, a fund which seeks to invest in Asean innovation such as cloud services, e-commerce and financial technology.

Joint effort for taking over Malaysia Airlines…
In another development involving Air Asia, Malaysian media reported that AirAsia co-founder and former chairman Datuk Pahamin Ab Rajab is leading a group gathered under the umbrella of Najah Air Sdn Bhd that is seeking to raise RM1 billion believed to be for their attempt to take over ailing Malaysia Airlines.
The Edge reported that the group is seeking a loan for the sum from a Japanese lender. The paper also reported that Tan Sri Syed Azman Syed Ibrahim of Weststar Group, who is also eyeing Malaysia Airlines, had contacted Najah Air to discuss possibly pooling their resources for a joint takeover.

… but the revitalization plan is met with skepticism
Interest in a possible takeover of Malaysia Airlines erupted after Prime Minister Tun Dr Mahathir Mohamad indicated that the carrier may be sold as the government could no longer continue bailing it out.
However, Dr Mahathir also said that the suitors so far have not convinced him of their ability to revive the struggling airline.
After continued chronic losses, Malaysia Airlines endured two major incidents in 2014 when it lost Flight MH370 and Flight MH17. The two disasters effectively doomed the previous revival of the airline and forced government-owned investment arm Khazanah Nasional into its latest rescue plan that included delisting Malaysia Airlines from the local stock exchange.

Nol van Fenema

India is considering inviting expressions of interest to sell national carrier Air India by the end of next month as the government aims to complete the transaction this year. It will conduct roadshows as well as be open to meet prospective buyers even before the expressions of interest are sought a Bloomberg report quoted people with knowledge of the matter as saying.

The process will likely allow the bidders to look at the accounts of the airline except for some portions that are confidential and also see the share purchase agreement.
The potential bidders will have the option to make suggestions for changes in the sale terms during the process of expressing their interest in the deal, Bloomberg said, adding that the government is looking to sell its entire stake in the carrier.
The plan is being prepared after the government’s attempt to partially exit the carrier failed to attract any bidder last year. Finance Minister Nirmala Sitharaman in her budget presentation for the current financial year said the government will revive plans to sell Air India and the divestment would be part of the government’s efforts to raise.

Himalayan high mountain of debts
1.05 trillion rupees (US$15.3 billion) selling stakes in state-run companies.
Air India, which is surviving on a 300-billion-rupee taxpayer-funded bailout, has failed to maintain its market dominance as a slew of carriers including InterGlobe Aviation Ltd. and SpiceJet Ltd. started to offer ultra-cheap, on-time flights more than a decade ago.
The state-run airline has total debts of US$8.4 billion and posted losses of more than 76 billion rupees last year, according to provisional estimates.

Vistara widens ist network
In another development, Vistara, the joint venture airline of Tata and Singapore Airlines has announced the launch of its international operations from next month with flight services to Singapore from New Delhi and Mumbai.
The services to Singapore, Vistara's first international destination, will be operated with a B737-800NG and Vistara's chief executive officer Leslie Thng said that after the launch of the services to Singapore, Vistara will expand its footprint to other international markets.

Nol van Fenema

In another three months we’ll know whether the United Kingdom will have struck a final deal with the EU or whether they’ll force a so called “hard Brexit.“
The latter, despite soothing words from some of the UK’s government ministers, will surely bring much uncertainty and in the worst case chaos for a large portion of the transport industry.

Branson - the pound will plummet!
Sir Richard Branson, one of the UK’s most successful business entrepreneurs, is convinced that the UK is heading for disaster with hard Brexit scenario.
He emphatically warned in a recent interview with the BBC that a hard Brexit would be “devastating“ for Virgin and would mean that the group will be forced to shift investment out of the UK.
Richard Branson who founded Virgin Atlantic Airlines and in the meantime whose group’s portfolio includes media companies as well as financial services, main worry at the moment is that the British currency will slump overnight to an all-time low if a hard Brexit becomes fact. He warned already last December that it’s his firm conviction that the UK will be almost bankrupted if they crash out of Europe.

Virgin Atlantic will be hard hit
Branson has always been one who never minces his words and has himself taken quite a few brave decisions during his career. 
He’s worried about the future for Virgin Atlantic which in the BBC interview he says has already lost large amounts of revenue since the referendum took place in 2016. At that time, he stated, the UK pound was listed at US$1,53 and today it has slumped to US$1,22. He goes even further by saying that the fund would collapse to a one-for-one parity with the dollar.
This would in his view mean that because Virgin Atlantic’s costs are mostly in dollars, that the carrier would suffer a further sterling loss amounting to UKP100 million per annum and that air cargo shipments to the USA would more or less fall apart. It’s not just the airline he’s worried about, but many of the other Virgin business interests.
Hard words from a wide-awake businessman who is definitely not known as being a scare monger and undoubtedly has British interests at heart.
Branson is also involved in a hefty dispute with the British Department for Transport who because of a fight as to who should carry the risk for pensions, have disqualified Virgin Trains and their partner Stagecoach from bidding for the new West Coast Mainline franchise which Virgin has been operating for more than twenty years.

The Central American country’s economic development has come to a near standstill, negatively impacting the entire industry including cargo carriers serving the country. This worrisome racehorse to snail conversion is caused by both external and internal developments.
How to keep your head above water despite strong Mexican headwind is exemplified by Lufthansa Cargo.

The economic engine of the 12th largest global exporter has been stuttering for many months. Foreign investments into the Mexican economy dropped close to zero; the gross domestic product is expected to grow by a meager 0.8 percent in 2019, thus far from former figures that fluctuated during the last ten years between 5 and 2 percent annually according to OECD data. The situation is aggravated by the repeated Trump tweets, insulting Mexicans as criminals and threatening to impose punitive tariffs on the country if immigration into the U.S. continues unabated. This leads to widespread uncertainty. By and large a worrisome constellation for Latin America’s once leading powerhouse.

Political obstacles
Secondly, there is a homemade problem, caused by the new government that’s in office since last year and whose decisions are not always business friendly, to express it mildly. Seen by the fact that all contracts for constructing a new airport in Mexico City, sealed by the preceding government, were cancelled, although 30 percent of the entire work had already been completed.
Not really a motivating sign for airlines and trading companies.
 
Best-in-class service
Therefore, the question is how Mr Nozinsky and his local 23 LHC colleagues cope with the current challenges. His answer: to deliver utmost quality to the market. “This is our main selling point, differentiating Lufthansa Cargo from other carriers that link Mexico with Europe including transits to the Far East.” First class and reliable services – that’s his formula to secure the existing business and - at best - to gain new clients. However, he can hardly influence the ongoing pressure on the yields. This also applies to the import/export ratio of goods flown on board LH aircraft to/from Mexico that is cemented at a 3:1 imbalance.

Ample capacity offering
Lufthansa has a strong foothold in Mexico, thanks to daily B747-8 passenger flights between Frankfurt and Mexico City complemented by five A350 or A340 operations out of Munich. All deployed long-haul pax aircraft offer ample capacity in their lower decks for cargo carriage.
On top of this the carrier offers the market ample main deck capacity on its five weekly Triple Seven freighters connecting Frankfurt and Mexico City, of which three call at Guadalajara on their way back and two return via Dallas/Fort Worth.
Thanks to this combination of freighter and passenger operations, “we have a market share of 12 percent of all exports leaving Mexico on transcontinental routes,” holds the manager. Conversely this means that “there are 88 percent left to be captured,” he ironically tells. So still much to do for him and his team.
 
Self-handling and third-party services
In addition to this, LH Cargo has developed a second mainstay in Mexico by creating LCSLM. The acronym stands for “Lufthansa Cargo Servicio Logistico de Mexico Ltd.”, a ground handling unit that employs roughly 100 staff working at the cargo station in Mexico City. Not really surprising that LH Cargo is the largest LCSLM client. However, in addition to the parent company services are provided to All Nippon Airways, the local Mexican freight airline Estafeta Cargo Aérea, forwarding agent Dachser, and LH subsidiary time:matters.
“Our founding of LCSLM was a smart move,” reasons the handling company’s helmsman Nozinsky.
 
Security comes first
A final question remains: the role of security in cargo. After all, Mexico is confronted with a high crime rate and years of flourishing corruption. Mr Nozinsky’s answer: “Thanks to more than 60 cameras installed in our freight facilities every single process is monitored. We even guard each consignment on its way from the warehouse to the aircraft until it is loaded.”
The result, he proudly tells, is zero theft.
 
Heiner Siegmund

Luxembourg-based IT solutions provider CHAMP Cargosystems is developing technical means guaranteeing users full visibility of air freight along the entire supply chain. Core piece of the future scheme is the constant data flow during flights from the items stowed on board an aircraft to their contractors, be it forwarders or shippers.
We spoke with Nicholas Xenocostas, VP Commercial & Customer Engagement at CHAMP about the status of this project.

How much would users have to pay for constant data transparency during flights?

NX: There are various commercial models towards pricing for this. Ultimately, the stakeholders paying for the services will require some granularity to link the cost on a per monitored shipment basis, as it’s related to overall cost base for that particular shipment. Currently, we do have a partner airline that is looking into the costing for their freighter fleet.

What’s the timeline for getting the system going?

NX:  We would expect that in the next 2 years, if not earlier, “cargo connectivity” will become an extension of the well-established passenger WiFi services.

Any specific carrier on the hook becoming CHAMP’s WiFi Guinea pig?

NX: We are speaking to a few customers of ours in terms of getting a POC up and running. Once we have progressed further, we would be able to share the news. We aim to have the POC done by the end of the year or early 2020.

Please give our users a hint which other major projects are waiting in CHAMP’s drawer.

NX: We are seeing key technological advances reaching a level of maturity that can now act as a springboard for some exciting new products in our industry. The complexities of these technologies mean these developments require collaboration among the various stakeholders, and also require players in the industry that can integrate such technology in our processes.  In this respect, CHAMP is very proud that in the last 6 months CHAMP, in partnership with technology providers, has either won or been a finalist in a number of Industry Innovation awards. In keeping up with our current customers, we have created and implemented the CHAMP Academy which gives CHAMP users the tools needed to become experts in using CHAMP products. This ensures our customers are up to date with the latest product functionalities.

Interview: Heiner Siegmund

IN BRIEF - THE LATEST AIR CARGO INDUSTRY NEWS

CV Italia starts Korean service
The Italian subsidiary of Cargolux, Cargolux Italia which operates out of Milan-Malpensa Airport with a fleet of four Boeing 747-400 freighters, has announced the start of a new service to Korea’s Seoul-Incheon Airport.
The first flight in this new series was performed on July 16th and in future there will be two weekly operations from Milan to the Korean capital city. Flights will depart Malpensa on Tuesdays and Thursdays and on the return leg will route via Zhengzhou, China and back to Malpensa. CV Italia intends to carry large amounts of fashion goods, pharmaceuticals, machine parts and luxury cars on the outbound leg to Seoul. With Seoul, CV Italia now operates to eleven destinations out of Italy.

SASI brings two new experts on board
Montreal-based Strategic Aviation Solutions (SASI) who work closely with TIACA in setting up training programmers for the air cargo industry, have added two new member to their management team.
P. Balasubramanian (Bala) will take up responsibility for the Indian Sub Continent. Bala is no stranger to the air cargo business, having spent 25 years with Emirates Air Cargo where he also worked closely with IATA, ICAO and IAEA.
Dutch national Hans van der Zwet will join the team and will concentrate on developing new IT solutions in future air cargo terminal facilities. SASI is also involved in assisting in the planning and development of such areas and sees the need for a far better future development in order to keep pace with e-commerce traffic moving by air. Hans van der Zwet will be based in Amsterdam.

Qantas looking to replace their B737 freighters
Recent reports out of Australia indicate that Qantas Freight is looking closely at finding replacement aircraft for their aging B737 freighters which are said to have almost come to the end of their operational lifetime.
Four aircraft are from the 737-300 series and there is also a single B737-400F in the fleet. They are all operated by the Qantas Freight daughter company, Express Freight Australia. The aircraft which were all converted passenger versions are said to have an average age of between 29 to 33 years. Replacement aircraft could come from future B737-700 or -800 passenger versions.

KL-AF-MP Cargo signs for AFSL Exchange
Accenture who are a global services company offering digital technology solutions has introduced their new AFLS Exchange, which is a cloud based connectivity and collaboration platform aimed at helping air cargo carriers to integrate their partner networks to initiate new business opportunities.
Air France - KLM - Martinair Cargo have signed up as the launch carrier for the new AFSL exchange system. Both the carriers and Accenture state that the system gives airlines a real-time view into their partner and joint venture networks, thereby enabling them to provide efficient, seamless and secure transactions for their key business functions. These include showing available capacity, following bookings from end-to-end and showing up-to-date information on routes available.

John Mc Donagh

A new Express shipping Service connecting South-East India And Europe, dubbed IEX – will start operations next October.  So will an additional Africa service, called MIAX, linking the Arabian Gulf, India, Sri Lanka, La Réunion, South Africa and West Africa.

Regarding the upcoming IEX offering, H-L officials speak of a “game changer”, as it will be the first dedicated direct sea route from South-East India to Europe”, offering connectivity to the global network of Hapag-Lloyd”, emphasizes Maximilian Rothkopf, Chief Operating Officer at Hapag-Lloyd.
The weekly operations, to be jointly conducted with ONE, YML and COSCO, will be made up of nine 6,500 TEU vessels, with H-L contributing four ships adding up to 26,000 standard container positions. 
IEX was triggered by increasing market demand. “Our customers have been talking to us about their growing needs in the Indian and Bangladeshi markets, and we have been listening,” states Mr Rothkopf. The following ports will be called on the rotations: Visakhapatnam, Krishnapatnam, Chennai, Tuticorin, Colombo, Cochin, Damietta, Piraeus, Rotterdam, London Gateway Port, Hamburg, Antwerp, Le Havre, Damietta, Jeddah, Colombo, Visakhapatnam.
The first departures will take place on 26 October.

Strengthening African presence
IEX is complemented by the carrier’s upcoming Middle East-India-Africa Express liner service as well, starting next October. H-L emphasizes that MIAX is integrated into their Global Mainline Network with the central ports Jebel Ali (Dubai) and Colombo. The service will be jointly operated with Ocean Network Express. In total, nine vessels with a capacity of 2,800 TEU each will be used for the new route, with five of them provided by Hapag-Lloyd.

Heiner Siegmund

Being on guard duty during the best season of the year is not a desire media folks really stand in line for. But particularly this applies to journalists whose kids are not yet or no longer required to attend school, who live as a single person or because of other obvious reasons have to bite the bullet and go to work in July and August, letting colleagues enjoy vacations. For these subjugated folks Communication Chief Nils Haupt of Hamburg-based shipping line Hapag-Lloyd organizes every year a steamboat trip down- and upstream on the Elbe River, to brighten up their day. This wonderful event took place again last Wednesday.

Hapag-Lloyd sent out the invitation and more than 100 guests showed up at the quayside of Hamburg’s museum harbour, among them media representatives, executives of the port industry, members of PR agencies, forwarders, aviation managers and other invitees. They all stepped onto the deck of MS Bleichen, a 1958 built general cargo vessel belonging now to Hamburg’s Maritime Museum and operated by volunteer crews on particular occasions.

Thumbs up – or down
One of his many tasks was to check the local security regime at locations in Africa, South America and Far East, to determine if they qualified to be added to the global network of LH Cargo or if operating there would be too risky. In one (African) case he recommended to fly and unload consignments there but not to load a single pound on board a Lufthansa aircraft on the way back due to insufficient security controls by the local ground handlers and the lack of adequate technical means for detecting explosives or drugs.
A climax in his role as security expert he experienced 2010, when the U.S. Congress invited him to deliver a speech on air freight security at a hearing in Washington. An extraordinary acknowledgement since Zielinski was the only representative of a foreign airline speaking at the meeting. This was a kind of a knightly accolade for him and the German freight carrier.

In a 10-day event Liege Airport hopes to bring the air cargo industry together in an Innovation Lab & Summit labelled ‘we cargo’. The idea is to invite start-ups to come forward with new concepts for the industry, especially on the ground, says the airport’s Vice-President Commercial Steven Verhasselt.

Once termed as a secondary airport, Leipzig Halle (LEJ) has step by step moved itself up in the league of the big cargo airports. It’s now not only DHL, which is the airport’s main customer, but also the Volga-Dnepr Group (CargoForwarder Global reported) who announced plans to use Leipzig, along with Belgium’s Liege Airport, as a main distribution hub.

More expansion to follow
There’s plenty of space at LEJ for future expansion, but to cater for this a heavy investment is needed to erect new handling facilities as well as expansion of apron stands for larger freighter aircraft.
The passenger business at Leipzig has long since taken the back seat in favour of air cargo. The airport’s supervisory board are being carried along with the success story and recently approved a major investment which will include a second Cargo City at the airport.
Keeping the lucrative DHL operation away from the normal air cargo traffic may well be a good move as nobody wants DHL to start thinking about moving elsewhere or reducing their operation. At the moment a highly unlikely scenario.
It seems however that the expansion scheme is not just geared towards air cargo handling and distribution. In almost ten years LEJ has moved up from handling 261,000 tons (2009) to just over 1.2 million tons in 2018. The figure for 2019 is expected to be even higher. Admittedly, the lion’s share still comes from the DHL operation which keeps the airport busy at night. Aerologic, the combined Lufthansa / DHL operation, wants to expand further at LEJ and Panattoni Logistics who design and develop logistics parks, have both committed to expansion in Leipzig.

An ideal e-commerce distribution point?
There’s enough space, a 24/7 operation, good motorway connections to the east and west and a local government which has seen the light and is willing to invest in the future infrastructure of the airport.
All of these are ideal arguments for Leipzig to position itself as Germany’s number one e-commerce distribution point. The major airports are overcrowded and mainly lack the space and flexibility needed to cater for future e-commerce flows. The recently announced deal with the Volga-Dnepr Group may well be seen as the first move in this direction.
Leipzig will be getting competition in this area from Budapest Airport who are busy getting their new Cargo City up and running. Although not as large as Leipzig, Budapest is ideally situated for Chinese carriers to position themselves for the eastern European e-commerce market which is starting to gather pace.
Leipzig, Budapest and Liege - all gearing up to cater for the future air cargo handling scene?

John Mc Donagh