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UTi shareholders back DSV takeover

60 seconds with laurentjossart

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The weekly newspaper for air cargo professionals

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UTI WORLDWIDE shareholders have voted in favour of a $1.35 billion takeover by Danish logistics company DSV.

The firm held meetings on 15 January, where the deal was backed.

In a statement UTi says it had voted “overwhelmingly voted to adopt the pre-viously announced merger agreement providing for the acquisition of UTi World-wide by DSV”.

UTi adds: “Upon completion of the transaction, each ordinary share of UTi Worldwide will convert into the right to re-ceive a cash payment of $7.10, without interest.”

DSV is making the acquisition as it is seeking to expand in both the US air and sea freight markets.

On 3 September last year, UTi cut its 2016 profit forecast for the second time in six months after earlier in the year an-nouncing job and cost cuts, accelerating a year-to-date plunge of 61 per cent.

DSV and UTi had combined sales of $13 billion in 2014 and will have 44,000 employees in 84 countries. DSV expects UTi’s profit margin to improve in the “long term,” and feels the combined entity will deliver the same margins.

The Cargolux Airlines board of directors has approved an investment of $77 million in Car-golux China, a new Chinese cargo airline joint venture to be based at Zhengzhou (China).

The investment represents a 35 per cent share in the new carrier for Cargolux, which is set to start operations in 2017, focusing on transpacific and intra-Asian routes.

Cargolux China’s fleet is planned to grow to five Boeing 747 Freighters within the first three years of operation. Cargolux China is the youngest addition to the Cargolux Group, which operates 25 747F, including four for Cargolux Italia. With the China joint venture, Cargolux will expand its fleet to 30 aircraft by 2017.

Other shareholders are Henan Civil Aviation Development and Investment Co (HNCA), which will hold 49 per cent, Xin Gang Invest-

ment & Development of Zhengzhou Airport Comprehensive Economic Experimental Zone with eight per cent and the Henan Air-port Group Co, with eight per cent.

HNCA, which is also a 35 per cent share-holder in Cargolux, is a state-owned enterprise,

concentrating on the development of the civil aviation industry, and construction of the Zhengzhou Airport Economy Zone.

Xin Gang Investment & Development Co is a private firm engaged in construction projects and development of the airport economic zone.

Henan Airport Group is the operator of Zhengzhou Xinzheng International Airport, the fastest growing cargo hub in China.

Cargolux says it flew 114,792 block hours in 2015, 8.8 per cent more than in 2014, which was an all-time record. Tonnes sold grew by 7.4 per cent to 889,746 while the average load fac-tor was unchanged at 66 per cent, due to the increase in its fleet size.

Up to and including November 2015, Car-golux says it had a global market share of 3.8 per cent.

southern Air set to be bought by Atlas Air Worldwide

Atlas Air Worldwide Holdings has entered into an agreement to acquire privately held Southern Air Hold-

ings as part of a $110 million deal.The company says the deal with

the provider of intercontinental and domestic air cargo services is subject to customary closing conditions and approval by the US Department of Transportation.

Atlas Air Worldwide expects to close the acquisition sometime over the next few months.

Southern Air is the parent com-pany of Worldwide Air Logistics Group and its two operating subsidiaries, Southern Air, and Florida West International Airways.

Atlas Air Worldwide president and chief executive officer (CEO), William Flynn (pictured) explains: “We are very pleased to announce a strategically compelling, highly complementary and immediately accretive acquisition of Southern Air.

“And we are eager to capitalise on the substantial opportunities that the transaction will provide,

especially (Boeing) 777 and 737 aircraft operations.

“The result will be a more diversified and profitable com-pany offering access to the widest range of modern, efficient aircraft, together with a broader mix of services and a greater scale and global footprint that will drive sig-nificant value for our customers and shareholders.”

Southern Air Holdings CEO, Daniel McHugh says: “We very much look forward to joining the Atlas Air family of companies. We share the same commitment to providing superior cus-

tomer service via our exceptional team of aviation professionals.

“And Southern Air will now have a strong and viable parent to enable us to continue to grow.”

Atlas Air Worldwide says the acquisition has strategic and financial benefits through enhanced service offerings and customer relationships and pro-

vides immediate entry into 777 and 737 aircraft

operating platforms, with potential for developing additional business with existing and new customers of

both companies.Southern Air’s main

operating company flies five Boe-ing 777-200 Freighters and five Boeing 737-400 Freighters under flight services (crew, maintenance and insurance) agreements with DHL Express.

Atlas says that the platforms provided by these aircraft will augment its ability to offer cus-tomers a broad array of aircraft and operating services for domes-tic, regional and international applications.

It also anticipates the combi-nation with Southern Air will add approximately $100 million to its annual revenues and provide a “solid foundation for additional growth”.

cargolux to invest $77 million in chinese joint venture

Volume: 19 Issue: 3 25 January 2016

aircargoweek.com

NEWSWEEK

D HL Express has stepped up its presence at Marseille Provence Airport and has inaugurated a hub that has dou-bled in size as part of an eight

million euro ($8.7 million) investment at the French gateway.

The surface area of the warehouse has more than doubled, from 1,300 square metres to 3,000 square metres and the workforce will also soon be doubled, increasing from 42 to 84 employees by the end of February.

DHL says it has made investment in response to increasing traffic after it saw a 20 per cent rise between 2014 and 2015, due mainly to the growth of traffic with Tunisia and Malta. Starting Monday 18 January, the renovations of the hub carried out to extend and modernise the site have enabled the integrator to add Algeria to

the list of countries with direct links from France via DHL Express. It begun a new direct express flight to Algiers on 18 Janu-ary. This site, is dedicated to international traffic and direct points of exchange with the countries of North Africa.

DHL Express France chief executive offi-cer, Michel Akavi says: “Our Marseille hub plays a crucial role in our exchanges with North Africa. By increasing both human and material resources to handle this traf-

fic, we are responding to the growth in volume and providing additional quality of service to our customers. This invest-ment demonstrates the importance of France for DHL within its interna-tional infrastructure.”

The Marseille hub is one of DHL’s 19 regional hubs throughout the world and one of two in France, the other being at Paris Charles de Gaulle Airport.

DHL France director, Hervé Allié notes: “This new hub will have a crucial impact on the network. It will allow us to support the Leipzig and Brussels hubs. Thanks to its new equipment, we are now able to han-dle the sorting of pieces from Leipzig and Brussels, which we were previously unable to do.”

2 ACW 25 january 2016

DHL doubles hub size at Marseille Provence

CATHAY PACIFIC AIRWAYS saw a 4.3 per cent tonnage uplift in 2015, but has concerns what impact over-capacity and pressure on yields will have moving forward.

For the whole of last year, Cathay Pacific and Dragonair combined handled 1,797,785 tonnes. The cargo and mail load factor was 64.2 per cent, down 0.1 of a percentage point, capacity measured in available cargo/mail tonne kilo-metres, was 16,481,022 million for 2015, up 5.4 per cent and the cargo and mail revenue tonne kilometres flown in-creased to 10,586,211 million, up 5.4 per cent.

Cathay Pacific general manager for cargo sales and mar-keting, Mark Sutch says: “Unfortunately, the excess of capacity in the world’s air cargo markets made it difficult for carriers to get rates up to the kind of levels expected during the year-end peak. Overcapacity and pressure on yield will remain concerns for the industry moving into the New Year.”

Hong Kong International Airport’s volumes grew margin-ally by 0.1 per cent in 2015 to just under 4.4 million tonnes.

KUEHNE + NAGEL (K + N) has started operating at Heathrow Airport’s 130,000 square foot Heathrow South Cargo Centre.

The facility includes warehouses and offices and is adja-cent to the airport’s cargo area. K + N says it offers security certification including TAPA, Regulated Agent and ETSF to support import, export and general operations. The facility is temperature controlled at 15 – 25 degrees centigrade and a two – eight degrees centigrade area with MHRA and GXP cer-tification and provides capacity for further expansion.

K + N explains: “This major investment for K + N demon-strates and reinforces our commitment to remain a market leading service provider in the UK airfreight market.”

K + N says relocating from Uxbridge to the cargo centre will make its operations more efficient and environmentally friendly. Heathrow South Cargo Centre is based on the A30 trunk road to the east of Heathrow’s perimeter road. The A30 provides access to the M25 motorway at junction 13 and the M4 via the A312.

isis

aircargoweek.com

Growth for Cathay Pacific in 2015

K + N moves to Heathrow centre

NEWSWEEK

3ACW 25 JANUARY 2016

Milan Malpensa Airport (pictured) handled a record amount of cargo in 2015 of more than 500,000 tonnes, up 8.8 per cent on 2014, driven by rising export flows.

Italy’s busiest cargo hub saw a 14.2 per cent uplift in export volumes, but also a 1.5 per cent rise in import tonnage levels.

The airport explains to Air Cargo Week the figures demonstrate how the Expo 2015 had a positive impact on air cargo, while the Ital-ian industry of high value products was “very dynamic in foreign markets”.

“A more positive and stable economic sit-uation forecasted in Italy for next year, make us confident about a better recovery also for import flows in 2016,” the gateway adds.

Milan Malpensa notes another factor boost-ing growth was the diversion to the airport of Italian airfreight formerly trucked by road feeder services to other hubs in Europe such as

Paris, Frankfurt and Amsterdam, but last year it regained part of the freight traffic lost during previous years.

Milan Malpensa transported mainly by all cargo flights (about 60 per cent, 305,000 tonnes), then belly (30 per cent, 145,000 tonnes) and courier (10 per cent, 50,000 tonnes).

The growth of belly traffic during 2015 was particularly strong compared to 2014 (+10.5 per cent), due to the high quantity of cargo

transported via widebody passenger intercon-tinental flights operating new connections and additional frequencies to and from Malpensa.

The main exports markets are the US and Far East (Japan, China, South Korea, Hong Kong) and goods included fashion products, sports cars, food and wine.

Another airport seeing rising cargo volumes was Liege Airport, which saw an increase of 10 per cent to 649,829 tonnes in 2015, up from 590,579 tonnes in 2014.

The gateway says traffic has been boosted by airlines Qatar Airways and ANA Aviation, while TNT saw strong growth and CAL Cargo Airlines, El Al and Icelandair are on the up.

News from Finland was not so good as ton-nage at Helsinki Airport fell by a substantial 13.8 per cent in 2015, coming in at 167,980 tonnes, down from 194,932 tonnes in 2014. The airport’s international volumes were the main reason, down 13.5 per cent to 154,869 tonnes.

Milan Malpensa and Liege soar as Helsinki falls

VOLGA-DNEPR AIRLINES has operated three Anton-ov AN-124-100 flights from Italy to Kazakhstan carrying equipment and materials for the ExoMars space explora-tion programme to see if there is life on Mars.

The flights for logistics company, Bollore Logistics, departed Turin on 18, 20 and 22 December for con-signor, Alenia Space Italy, for Kazakhstan’s Baikonur Cosmodrome via Moscow’s Sheremetyevo Airport. Load-ing for each flight started at 09.00h and departed Turin Airport at 15.30h for Russian consignee, FGUP TsENKI, which provides launch services for the space industry.

The cargo included the entry, descent and landing demonstration module, and the trace gas orbiter, to be launched in the first mission in March 2016. It transported 20 x 20 foot containers including two ‘hi-cube’ containers with materials for the ExoMars project launch campaign, loose cargo and a satellite container.

Volga helped a Mars mission in November 2011 moving parts of the launch for NASA’s ‘Curiosity’ rover mission.

Volga aids mission to Mars

WorldNewsTHE Cargo 2000 (C2K) board has cre-ated a technical manager position and appointed Chris Davies as the first in the role. Davies brings over 14 years of experience in the airfreight IT sector and joins the new Cargo 2000 management team, headed by Ariaen Zimmerman, executive director. Davies previously served on the C2K Technical Working Group and will be responsible for deliv-ering the core technical C2K product.

LATAM AIRLINES GROUP has signed joint ventures with its oneworld part-ners, American Airlines and IAG, who will get access to LATAM’s network of over 100 belly routes. LATAM, which consists of LAN and TAM, and its affili-ates, will have access to 420 routes to North America with American and to Eu-rope with IAG.

decline in tonnage at FrankfurtFRANKFURT AIRPORT’s volumes fell 2.3 per cent in 2015 to about 2.1 million tonnes, which it attributes to mainly to weakening global trade and economic difficulties in some emerging markets.

The operator Fraport, says the gateway handled a total of 2,114,579 tonnes in 2015. Fraport says other airports it runs such as Lima International Airport in Peru saw a 0.6 per cent fall in tonnage to 300,686 tonnes last year, while Ljubljana Airport in Slovenia saw a 3.1 per cent uplift to 10,140 tonnes.

Xi’an International Airport in China saw a 13.8 per cent surge in freight volumes to 211,591 tonnes, compared to last year.

And back in Germany, Leipzig Halle Airport set a tonnage record for the 11th consecutive year in 2015, handling 988,240 tonnes of cargo.

Operator Mitteldeutsche Flughafen says this was a growth rate of 8.5 per cent compared to the tonnage figure achieved in 2014.

In Bavaria, Munich Airport saw a strong surge in 2015 with tonnage up 8.9 per cent to more than 317,000 tonnes. This compares with the 291,475 tonnes it handled in 2014.

aircargoweek.com

4 ACW 25 JANUARY 2016

60seconds

Justin Burns, ACW: How did LuxairCARGO perform in 2015?Jossart: Volumes increased by almost five per cent to 760,000 tonnes, which means a surplus of 35,000 tonnes compared to 2014. However, the end of the year peak was tremendous (plus nine per cent). Our best week was in November

with a 16 per cent increase compared to the same week in 2014.

Justin Burns, ACW: What is your forecast for tonnage this year?Jossart: We expect for 2016 a more moderate growth, which conservatively has been

estimated to be an additional 20,000 tonnes, which would be a 2.5 per cent increase.

Justin Burns, ACW: How will this be achieved?Jossart: Our aim is to make available the best possible conditions in terms of:1) Infrastructure: GDP certified Pharma Center, high capacity AVI station, high sensitive shipment storage areas (CCTV surveillance) 2) Processes: dedicated dangerous goods (DGR) handling processes, integrated forwarders handling processes, integrated ramp-handling processes etc.3) People: specialised outsized cargo handling teams.4) Trucking network: provide competitive and efficient trucking solutions to more than 50 different European destinations to support the operations of our customers.Our focus will be on time, cost and quality. A major focus will be on streamlining the processes to avoid unproductive inefficiencies.

Justin Burns, ACW: Where are you planning on making investments in?Jossart: During 2015 we invested in a first phase of the extension of our outsized handling area and in 2016, we will construct another shelter to accommodate under best possible conditions the increasing volumes of non-standard shipments (HEA). We plan to have additional covered and secured warehouse space for sensitive outsized shipments to

prepare the ground for our customers to offer additional high value niche products through Luxembourg.Our overall investment budget for next year surmounts to seven million euros including infrastructures, equipment and advanced training for our staff.

Justin Burns, ACW: Do you think cargo handling consolidation will continue?Jossart: As you can see, some of the traditional carriers are no longer investing in replacement of their fleet of ageing cargo aircraft and concentrate on belly freight.Therefore, we assume for those shipments, which will need freighter capacities (outsized shipments, AVI and DGR), the market shares will consolidate on a few airports providing an extensive network with adequate capacities.In this sector, Luxembourg is well positioned and therefore also our focus on suitable infrastructures and handling equipment to accommodate those commodities.

Justin Burns, ACW: What are the challenges for air cargo handlers in the future?Jossart: Again, time, cost and quality. To do better than today, it requires innovation and more partnership and cooperation among all players of the air cargo logistic chain: airline, forwarder, road feeder services and handler. We need to keep up with other transportation modes to extend the advantage of air cargo.

Justin Burns, ACW: How important is the adoption of e-freight and technology?Jossart: E-freight and technology are very important to improve time, cost and quality. You will neither significantly reduce the flight time nor the ground time for the physical handling part.But by reducing the manual information transfer and providing accurate and timely automated information prior to the arrival of the aircraft and/or the truck, the ground handling agent can better steer the operation and thus reduce idle time of shipments sitting on the ground in a warehouse waiting for the documentation to be prepared before the next step of the supply chain can start.E-freight and technology will help to keep the cargo flowing, reduce unproductive work steps with the help of automated steering tools of the physical handling steps and provide a more transparent supply chain to the end customers.

Justin Burns, ACW: Where do you see the air cargo industry in 10 years time?Jossart: We are rather confident about the future of the air cargo industry and optimistic innovation will bring us the necessary tools to defend our position and thus continue to play an important role in the supply chain of the global trade.

Luxembourg is one of europe’s principal airfreight gateways and handling agent LuxaircARGo is at the forefront of activities, and is the eighth largest air cargo platform on the continent.Air cargo Week spoke to the handler’s executive vice president, Laurent Jossart about how LuxaircARGo is performing along with plans and to get his future outlook for the industry.60 withLAURENT JOSSART

seconds

LAURENT JOSSART

aircargoweek.com

ACW 25 january 2016 6

W orldwide Flight Services (WFS) handled around 4.5 mil-lion tonnes of cargo across its network in 2015 – but it is by no means standing still. It has big

plans for expansion.Cargo handling makes up about 60-65 per

cent of WFS’s business and group chief operat-ing officer, Barry Nassberg says: “At our core, we see ourselves as a global cargo handler. The key activity of the company is cargo and all else (pas-senger and ramp handling) flows from that.”

That 60-65 per cent ratio is likely to remain just about steady, Nassberg believes, as WFS grows across its various business portfolios. Certainly, he is expecting to see further growth along the lines of expansion WFS saw during 2015 and has characterised the start of this year. In January, the handler agreed a deal to acquire Consolidated Aviation Services (CAS), one of the largest cargo handlers in the US.

WFS executive chairman and president, Olivier Bijaoui, explains it will create a unique organisation in the US combining the best of both firms, but also reinforce WFS’s position as one of the world’s premier cargo handlers.”

The highlight last year, in terms of cargo, for

WFS was its take-up of a 51 per cent stake in Fraport Cargo Services (FCS), part of a stra-tegic partnership with Frankfurt Airport operator Fraport. The deal was announced in the summer and closed in November.

“It represented WFS’s most significant cargo transaction of 2015,” Nassberg says, building significantly on what had been only a small WFS presence at Frankfurt, which itself had been WFS’s only involvement in cargo handling in Germany. The Frankfurt venture can act as a “springboard” for further expansion in Germany and across Central Europe, he considers. “It changes the dynamic for us” and is “right in line with our growth strategy”.

Another highlight in 2015 was the acquisition of WFS by Platinum Equity. The private equity firm has invested in all aspects of the company, not just cargo, Nassberg informs, adding the change in ownership has “done what we hoped

it would do – brought us greater access to capi-tal which will support our expansion strategy”.

The Platinum team is providing “strong sup-port and commitment” for what is likely to be a period of further growth, he suggests, with expansion likely across “multiple regions”.

As well as growth in Europe, WFS’s home market and one it has continued to develop in Germany and through cargo handling at new locations in Spain, fresh markets will be tapped. In South America, WFS’s already strong ground handling presence may provide a platform for cargo handling operations; “We are working on a number of possible opportunities there,” Nass-berg says. Brazil is likely to play host initially, he indicates, mentioning expectations of possible developments as early as the first few months of this year. In Africa, expansion in cargo handling in Nairobi and Dar-es-Salaam may also be con-tinued at other locations in this growing market.

No region not on the WFS expansion radarCARGO HANDLING AGENTS

2016 is a big year for LUG aircargo han-dling, which today handles cargo at both Frankfurt and Munich airports, as it cele-brates its 50th anniversary later this year.

The cargo handler’s business has grown over the decades, while the industry changed over that period, and handlers such as LUG had to adapt accordingly. Not all the chang-es have been positive. The firm’s managing director and chief operating officer, Patrik Tschirch (pictured) notes: “There will never be the big growth rates of the past.”

Why? In large part, he says, because there is so much competition at all levels of the airfreight sector. Over-capacity is not just a problem for the carriers, especially freighter operators, it’s also a problem for other links in the chain. There is over-ca-pacity in the number of handling agents at Frankfurt, for example, Tschirch points out. The traditional airfreight industry has also suffered from the scale and efficiencies of integrators, which can afford to invest mas-sively in the latest technologies and offer a complete, door-to-door delivery service.

Plus, the airfreight sector has not, tra-ditionally, been sufficiently innovative, Tschirch believes. It has thus been left be-hind somewhat. Of course, the logistics and

transport business will continue to expand

as the global economy grows and the world becomes ever more connect-ed, but the airfreight busi-

ness lacks the coherency offered

by the integrators, he observes.Handlers have traditionally faced tight

margins and had to compete strongly for relatively small profits. So what can a ser-vice provider such as LUG do to combat the negative trends? First, they have to be very innovative, Tschirch says, pointing to changes LUG has made to increase the transparency of its operations and to invest in new equipment and systems. They must monitor a wide range of key performance indicators (KPIs), not just simply basic turn-around times, to ensure that all aspects of their businesses are efficient, and must en-sure they are supported by all that the latest IT can offer.Moreover, they should ensure they deliver value-added services to their customers can set them apart and ensure their airline cli-ents’ loyalties. LUG is in the planning phase of creating a new Perishable Facility South at Frankfurt. LUG has a 40 per cent share in the current Perishable Center Frankfurt (PCF), and while LUG will own the new facil-ity, PCF will operate it.This set to be open within a year or two, it will be available for use by all carriers fly-ing perishables through the southern part of Germany’s busiest airfreight gateway.

LUG continues to adapt in changing times

aircargoweek.com

Swissport handles upwards of four million tonnes of cargo a year across 85 stations with Europe accounting for almost 50 per cent, North Amer-ica at around 35 per cent and the

remainer across Latin America, Asia and Africa.Contributing a revenue share of around 20

per cent of total Swissport income, the han-dler wants to “sustain and develop” its existing cargo business: “We have to further optimise where possible and additionally grow the busi-ness where it will make sense to do so,” explains Swissport’s executive vice president for global cargo, Nils Pries Knudsen.

Swissport’s new station in Accra, Ghana, is an example of its expansion plans. “The newly opened station shows perfectly what can be achieved when you combine partnerships locally with our global expertise, creating an entirely new operational infrastructure for the benefit of everyone involved,” Knudsen says. The high-tech cargo terminal has additional office buildings will offer customers the best the industry can offer and be a benchmark for future projects he adds.

Some of the requirements of cargo handlers are changing, Knudsen feels. “We live and work in an ever-changing world and our industry is not so different from many other industries. Having said that, it’s absolutely essential that we continue to develop our business infrastruc-ture so that we can continue to differentiate from the competition and offer best-in-class solutions at the lowest possible cost.

“We need to deliver consistent and safe oper-ational performance and ensure a continuous high-level of service provision to cater to or to exceed customer expectations, and at the same

time find ways to streamline and optimise internally to improve our financial position.

“We need to continue to work closely with our customers to understand existing and future needs so we have this knowledge as a focal point, developing our market strategies for each station, country and region,” Knudsen insists.

“The industry in general and cargo handlers specifically face a situation where margins are constantly under pressure. We are part of an industry where customer choices and transportation modes are truly manifold. By streamlining processes and specifically by focusing on efficiency gains, we can try to offset some of the challenge, but also have to further develop service provision in areas that generate real benefits for our customers.

“Additionally we are already involved in specific activities that will further help us understand what drives our cost, so going for-ward can take the necessary informed decisions for the benefit of customers and Swissport,” Knudsen concludes.

CARGO HANDLING AGENTSSwissport looks to optimise

7ACW 25 january 2016

CONSOLIDATED AVIATION SERVICES (CAS) has more than 250 airline contracts and handles more than 1.8 million tonnes of cargo a year, according to Ray Jetha, senor vice president for sales and marketing.

He says: “Although we have fast-grow-ing passenger, ramp and express and mail businesses, cargo represents the biggest share of our business – as it has since CAS was founded in 1998. We still see tremen-dous growth potential in the cargo market and continue to win new contracts in North America from airlines all over the world.

“That is because we are able to combine proven expertise in cargo handling with a highly skilled workforce and our unique technology solutions that give our custom-ers fast and accurate information as well as the opportunities for efficiencies that air-lines need in such a competitive market.”

In January, Worldwide Flight Services agreed a deal to acquire CAS, which is yet to gain regulatory approval. Moreover, CAS is changing the way it supports its many cus-tomers. It is to assist its client cargo agents in the US to transition to electronic air way-bill (e-AWB) processing with the launch of its new ePic Easy Export web-based tool. The system “will help the 3,000 freight for-warders already utilising ePic to transition to e-AWB processing. It supports our commit-ment to a paperless air cargo environment in support of IATA’s e-freight programme and the e-cargo initiatives of our airline custom-ers,” Jetha says.

“Our Miami Perishables Center is another positive example where we have respond-

ed to customer demand with action and investment by providing a significant in-crease in temperature-controlled capacity at the biggest perishables gateway into the US market,” Jetha remarks, of a facility CAS more than doubled the size of in 2014 with the addition of a new 18,000 square foot cooler alongside its 12,000 square foot perishables building. “We are seeing a strong return on our $2.5 million investment with our perishables throughput in Miami climbing to 70,000 tonnes in the first nine months of 2015, a 400 per cent increase on volumes before the investment, and expect to see more growth in 2016.”Jetha is looking to grow CAS in new mar-kets: “We have a network spanning North America and are winning new airline con-tracts on a regular basis. We will continue to grow where customers tell us there is the demand. We see massive potential in South America, where we have a presence in Brazil and Ecuador and are continuing to explore new opportunities there,” he notes.

CAS sees growth potential

aircargoweek.com

ACW 25 january 2016 8

R ickenbacker International Air-port (pictured) saw cargo volumes increase by 21 per cent up to Novem-ber as airlines increase services to the Ohio hub.

The airport, part of Rickenbacker Inland Port, and is managed by Columbus Regional Airport Authority, has seen a 21 per cent increase in volumes to 81,883 tonnes up to November. International volumes have seen the

most notable increase, up 158 per cent year to date to 29,890 tonnes.

Columbus Regional Airport Authority vice president business development and commu-nications, David Whitaker tells Air Cargo Week (ACW): “2015 gave us many reasons to celebrate and look to the future.”

Emirates SkyCargo started weekly flights to Rickenbacker in May, increasing to twice a week in October due to high demand. Whitaker says: “The new international service with Emirates SkyCargo did so well in its first few months of operation that they added a second weekly flight from Dubai in order to meet import demand.”

In the first six months of service, Emirates SkyCargo moved 2,353 tonnes through Rick-enbacker and is likely to see further growth in 2016. Cathay Pacific Cargo started twice weekly services in 2014, rising to four times a week in October 2015. Cargolux also operates

flights to Rickenbacker.Whitaker comments: “Businesses in the East-

ern half of the United States are starting to take advantage of the ability to import and export goods anywhere around the world in a way that is predictable, reliable and stable.”

Meanwhile in the West, following explosive growth of 11.8 per cent in 2014, Seattle-Taco-ma International Airport posted an increase of 1.7 per cent in 2015, but the hub is positive despite the more modest figure. Its operator, Port of Seattle tells ACW: “2015 saw a bit of a slowdown from the strong growth in 2014, but we are finishing the year positive overall with continued strength in international airfreight.”

In 2014, cargo had increased by 11.8 per cent to 327,240 tonnes, with international freight rising by 21.6 per cent to 107,752 tonnes. This was followed 1.7 per cent growth in 2015 to 332,636 tonnes, with international freight in-creasing by 7.1 per cent to 115,357 tonnes.

For 2016, Seattle says: “We are cautiously

optimistic for continued growth but the world economic picture, particularly China, are a concern, as a key trade partner. International freight has become a major component of our total tonnage, setting another record in 2015.”

International freight makes up 42 per cent of volumes and domestic accounts for 58 per cent. Asian freight accounts for 29 per cent of Seat-tle’s total, with 13 per cent coming from Europe.

Seattle comments: “The significant change is the increasing percentage of international freight comprises of total airfreight tonnage.”

By weight, cherries are Seattle’s largest ex-port, followed by seafood. By value, aircraft parts are the largest export. Imports large-ly consist of aircraft parts, finished electrical goods, textiles and apparel. Seattle also handled over 1,000 large freighter aircraft, including 175 Boeing 747-8s and 20 Antonov AN124s. It says normally it only handles two or three AN-124s a year, but 2015 saw the “completion of a $23 million cargo capital improvement project which expanded and improved hardstand ca-pacity from one to five simultaneous Group VI freighter operations (i.e. B747-8F, AN124)”.

Volumes rising in both East and WestUSA

Growth continues in Seattle

The US is continuing to be Virgin Atlantic Cargo’s largest market, something it ex-pects to continue as it increases services, according to senior vice president, John Lloyd (pictured).

Lloyd tells Air Cargo Week: “2015 was a significant year of network change that saw us grow our destinations and total capacity to and from the US.”

In 2015, Virgin started flying to Detroit, and increased services to and from Atlanta, Los Angeles, New York and San Francisco.

It also offers flights to Boston, Newark, Washington, Orlando, Miami, Las Vegas and seasonal services to Chicago.

Virgin, like many companies, saw a no-ticeable boost at the start of 2015 due to the US West coast seaport strike.

Lloyd comments: “The West coast port strike obviously contributed to a strong start to last year as customers routed cargo to the US any way they could and this con-

tinued into the second quarter before the market returned to a more normal level.”

Lloyd says Virgin transports a lot of high value perishables to the US such as Scottish and North Sea salmon, and high end cars.

Pharmaceuticals to and from North America continue to prove lucrative and e-commerce continues to rise.

“The US is our biggest market and we are also excited about the further potential of our transatlantic partnership with Delta Air Lines and the opportunities this brings for us and our customers.”

“The currency situation will have a strong impact in 2016 by boosting exports from europe but putting further pressure on import volumes from the US We expect to see single digit growth,” he adds.

USA continues to prove valuable

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United Cargo has seen volumes increase by 5.1 per cent in 2015 despite uncertainty in the world economy, the carrier’s vice president of sales for the Americas, Jim Bellinder tells Air Cargo Week (ACW).

Bellinder says: “If I had to choose an single word to describe my expectations, it would be “uncertain.” It’s always been difficult to predict future business conditions in air cargo,

but the global economy now seems to be buffeted on a daily basis by one impending calamity after another.” He adds: “And these effects are mild compared to the impact a major geopolitical event might have. Also, within the industry there are pending regulatory changes that hint at both positive and negative effects on our business.”

Despite market concerns, United’s imports and exports have remained consistent, handling industrial supplies and materials, consumer goods and perishable food. Bellinder says United has been investing in its TempControl product, catering for ever rising demand for pharmaceuticals.

He tells ACW: “United Cargo’s TempControl product is the fastest-growing area of our business. We have also seen a resurgence in the automotive-related sector. This has always been a part of our traffic, but we’ve noted a strong recent revival in this area.”

United has been investing in new aircraft such as the Boeing 787-9 Dreamliner. Bellinder com-ments: “The addition of the Boeing 787 Dreamliner continues to be the most important recent fleet development from the cargo perspective … the 787 has developed into a very efficient and valuable aircraft for cargo. United currently has 25 Boeing 787s in our fleet with 30 more to be delivered.”

The 787-9s are being relocated to the West coast hubs of Los Angeles and San Francisco so they can be used on San Francisco to Sydney, Taipei and Tokyo Haneda, and Los Angeles to Sydney, Mel-

bourne, Tokyo Narita, Shanghai and London Heathrow. Bellinder says: “The 787-9 will also fly a new route we’re very excited about at United Cargo: San

Francisco - Tel Aviv that begins in late March 2016.”United will continue to expand into Asia even though China is no longer growing at the double

digit rates seen in the past. The airline will be increasing services to China with San Francisco – Xi’an from May. Bellinder tells ACW: “This will be the first trans-Pacific service to Xi’an operated by any airline, and we will be the first US airline to serve the city. It’s vital that we’re agile enough to adjust our expansion strategies to whatever the global market presents to us.”

USAUnited volumes up 5.1% despite global uncertainty

9ACW 25 january 2016

The industry as a whole found 2015 challenging, but American Airlines Cargo (AA) director of cargo market-ing, Brian Hodges says it gave the opportunity to leverage assets.

Hodges (pictured) tells Air Cargo Week (ACW) that wrap-ping up integration with US Airways at the end of 2014 gave AA great opportunities. He says: “2015 brought additional market combinations to our network, as well as new aircraft types and destinations, even increased frequency to markets we’ve served in the past.”

He says all parties have been working hard to make sure the integration works well and benefits customers.

“It’s been all hands on deck to leverage these changes and to position ourselves for growth so that when the economic winds start to blow in a positive direction, we’re well prepared to capitalise.”

For 2016, Hodges says AA is looking beyond new aircraft and destinations for expansion. “On top of new metal and new destinations, we’re also implementing new customer service strategies that will deliver a better overall custom-er experience. So, while the economic climate is uncertain, we’re going to do all we can to offer value to shippers and outperform the market.

“We’ll grow as the airline grows. That seems to be the stan-dard response from belly carriers, but it’s true. Fortunately, American Airlines is growing, and as a cargo organisation we’re benefitting. New routes, new planes… it’s as simple as that.”

He says diversity is the word that springs to mind when describing the goods AA transports, and it is growing ever more diverse. “From flowers to salmon, computer chips to Italian textiles and everything in between, our business covers the full spectrum of international trade.

“It’s growing even more diverse. We’re starting to see greater de-mand for temperature control, particularly pharmaceuticals, and we’re also seeing an uptick in year round perishables, especially where we have modern cooling capabilities in our facilities.”

Opportunity to lever assets

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ACW 25 january 2016 10

A eronautical Engineers (AEI) had a “mild year“ in 2015 but expects 2016 to be its best ever, according to the firm’s senior vice president for sales and mar-keting, Robert Convey (pictured).

He explains to Air Cargo Week that last year was steady in comparison to 2013 and 2014 for the passenger to freighter (P2F) conversion company, as only 20 conversions were delivered. “The primary driver for this was a lack of Boeing 737-400 feedstock as demand held steady,” he says.

Convey notes there were new trends emerging in the P2F conversion mar-

ket during 2015. “There was a new interest in the Boeing 737-800 P2F programmes in 2015 as the 737-400 feedstock began to dry up. This strong demand is unusual because the supplemental type certificate

(STC) will not be available until early 2018.”AEI runs various P2F conversion

programmes and Convey says the Boeing 737-200SF is now clas-sified as complete, while the 737-300SF is slowing and it should see the last conversions being completed in 2016.

He explains the 737-400SF programme is still running strong and is forecasting 20-plus per year for the next three years. As for the MDN80SF, he says it is slow with only two or three con-versions a year, while the CRJ200SF is nearing certification and currently has 40 orders. The 737-800SF is a work in progress with the prototype aircraft arriving in June this year.

In October, AEI received an order from Aviation Capital Group

of 15 aircraft with options for an additional 15 freighters for its 737-800SF conversion.

AEI says it will commence the conformity of the 737-800SF modification in 2016 and expects to receive Federal Aviation Administration STC in 2017. To date, AEI has 50 potential orders for 737-800SFs.

As for overall demand, Convey says: “The 737-400SF has seen 20+ conversions per year for the past three years and is forecasted to see 20+ until 2018.” This he says has come from integrators such as DHL, UPS and FedEx, who are driving demand for the 734’s weather direct or through a third party. The strongest regions are Europe, the US and South America.

As for the future he adds: “We have a backlog of 28 conversions in 2016 and could book another 10 orders making 2016 AEI’s best year ever. Other than the 738 the Airbus A320 and A321 are the only aircraft in an age profile that would make P2F likely.”

There are challenges, Convey notes: “The biggest challenge for AEI and our customers remain available feedstock. The 738 will ease the pressure but the cost of the 738 is much higher than the 734 and will not be available to all customers.”

Steady year for AEI, as its eyes next conversion programmeP2F CONVERSIONS

THE next passenger to freighter (P2F) conversion programme for Precision Aircraft Solutions could be the Airbus A320 or A321, but it is yet to make a decision on which it goes for.

The firm’s president, Gary Warner tells Air Cargo Week that Precision is now assessing options about the next pro-gramme it takes on once its Boeing 757-200 drops off. He explains any move will depend on feedstock and it could potentially start another programme in 2018-19.

Warner says: “It is about making the right decision based on what is the best performing. We are looking at options and looking at the feedstock. We have the luxury of choice of either Boeing or Airbus when we have to invest and have to make the right decision.

“When it comes to the operators it must fit them, which can vary depending on payloads, container types, specifi-cations, performance and economics. A lot comes to what the operator needs, and cargo carrier operators and express carriers have different needs such as payloads, volumes, cost and price.”

Warner says 2015 was a good year for Precision and its 757-200 programme was successful and he expects 18 more to be delivered in 2016, similar to the 2015 figure.

In November, Precision redelivered four 757-200 P2F conversions from four maintenance, repair and operations locations around the world to three different customers.

Customers included to DHL at Flightstar in Jacksonville (US), SF Airlines at CAMB in Chengdu (China), Vx Capital Partners at HEACO Americas in Greensboro (US) and SF Airlines at Aeroturbine in Goodyear (US).

Warner continues: “I hope to see 15 per year (of the 757-200) until feedstock of passenger aircraft runs out. Our peak two to three years are ahead and then it will drop of there after.”

He explains Precision is seeing passenger aircraft on the market at the right price and with values coming down, it is working for operators like DHL for its European operations and SF Airlines in China.

Warner says P2Fs are all about the price and economics and in the past years there has been aircraft available, but not demand like there is now.

For now, he says Precision is concentrating on getting the maximum possible from its 757 conversion programme, as believes the firm cannot start another one until this one has run dry.

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Precision looking at P2F options

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