cargo.1.

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QUARTERLY MAGAZINE AF-KL CARGO VOLUME 24 ˆ NO. 35 ˆ JANUARY 2009

cargovision
Matchmaker
Olympic Hangover
Anatomically Correct

SURVIVAL
TOUR
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cargovision editorial cargovision contents

© Getty Images
UNPREDICTABLE Olympic Hangover, page 16

■ Times are confusing and uncertain, and we are in the midst of a period of profound crisis. Our most real-
istic business plan for traversing such unforgiving terrain is to focus on doing a good job every day, managing
our people and helping them to cope with challenging circumstances. We must also push innovation in order
to modernize our business, because the airfreight industry we knew yesterday will not be the same tomorrow.
Where to begin?
In operations, we are confronted daily by a cargo booking process where a 20% difference between tonnage
booked and tonnage delivered at the airline terminal isn’t uncommon. We can manage this by making better
use of information. To reduce uncertainty at origin, we teach frontline staff how to ask for more precise ship-
ment details during the booking process. We develop computer intelligence to analyze loads in the system so
our customers can avoid the unexpected. And by anticipating outcomes on the day of the flight, we can react
quickly to a deviation in schedule.
This part of the cargo business is complex, but not complicated. Smart people and big computers have
solved complicated problems like flying to the moon. But to deal with a complex task that is difficult to fore-
cast and changes from day to day, such as high-quality cargo services, you need more than just one very
smart cookie. You need teams of open-minded and creative people, accustomed to dealing with uncertainty
and whose reactions help manage the underlying complexity. They also need tools that help them improve
customer satisfaction, such as Cargo 2000 for monitoring quality.
Maintaining our investments in people, processes and tools is the only rational response to difficult times.
We will continue to hire smart workers, train them to employ new processes and tools and keep them
informed. Also, we are pushing for innovations that can help control complexity today and tomorrow.
The cargo business’ most dramatic improvements in efficiency and service still come from the domain of
information technology. For example, handling the shipment and paperwork, as we do today, forces us to
manage both the goods and a cargo pouch filled with documents. Our progress towards paperless transac-
tions will simplify this radically. Other innovations, such as RFID, will help airlines monitor shipment status
more precisely.
We know that cargo-handling processes are complex and improvements are mainly about managing people.
We clearly see the bumps in the road ahead, but they do not distract us. Our progress is methodical and
continuous. This may not bring about a revolution, but it will ensure our continued success.
4 SURVIVAL TOUR
Demand for goods and services is still declining and financial conditions look even more bleak than when
the economic crisis first raised its ugly head. Is it just a very rough patch or a lasting change in economic
conditions? Michael Westlake goes in search of answers.
14 MATCHMAKER
Partnerships are the backbone of international airfreight forwarding. But good ones can be difficult to find
and even harder to maintain. Fortunately, there are associations that can facilitate these marriages.
Cargovision spoke to David Yokeum, founder and president of the World Cargo Alliance.
16 OLYMPIC HANGOVER
With the world heading towards recession, one might think the Beijing Olympics were the last hurrah we would
hear from China for some time. But one should never jump to conclusions. Karen E. Thuermer discovers there
is cause for optimism.
Matchmaker, page 14
19 EXCURSIONIST
A round of golf, a DIY project or some football would hardly be enough for Pier Luigi Vigada, AF-KL Cargo's
newly appointed Director for Argentina, Chile, Uruguay & Paraguay. He left his former post in Nairobi by Land
Rover and spent six weeks driving the 12,800 kilometers to his home near Turin.
20 CHARTER CHATTER
Air cargo charters encompass a wide array of activities, aircraft, commodities, and destinations. Predictably,
then, charter operators offer a mixed outlook for their markets: some are battling the storm, while others see
a silver lining.
Charter Chatter, page 20
24 ANATOMICALLY CORRECT
A largely unsung sector of the airfreight industry specializes in shipping anatomical parts, medical materials,
and tissue samples. Rigorous standards must be met. “Each shipment we transport contains a vivid human
story. This is not just business. We share responsibility for the patient.”

Sincerely, 8 NEWS & DATELINES

22 A WEEK IN THE LIFE OF CHRISTOPHER SHAWDON
Pascal Morvan 26 COUNTRY FILE: CANADA
Senior Vice President & Chief Operations Officer 28 MARKET MONITOR
Air France Cargo-KLM Cargo 30 POSTSCRIPT
31 INFORMATION AND COLOPHON

COVER IMAGE
Broken chain link
© Rick Barrentine/Corbis

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SURVIVAL Demand for goods and ■ Several months into a recovery plan that itself

TOUR
continues to teeter on the edge of disaster, the
services is still declining world’s financial state may no longer actually be at

and financial conditions death’s door, though it’s likely to be a while before it
leaves hospital. And for many businesses as well as
look even more bleak than many members of the general public, the pain is very
when the economic crisis real. Orders for manufactured goods have declined,
demand for basic commodities has dropped, shops
was first recognized a few and restaurants are doing less business, and people
months ago. Is it just a very in general are spending less. At least 30 airlines have
closed, and more airlines and other business casual-
rough patch or a lasting ties are inevitable.
change in economic A European-led rescue plan kick-started banks into
conditions? pushing money into the system again in October.
The original United States plan to buy up distressed
BY MICHAEL WESTLAKE assets was not enough. It took Europe’s action in
mid-October to buy up bank shares – i.e. effectively
recapitalizing banks – and guaranteeing loans to
spark similar action by the US, a pattern quickly fol-
lowed by the rest of the world. That was enough to
stop the panic that froze financial markets in
September and killed credit just about everywhere.
But following the panic, there was and still is a wide-
spread lack of trust. The advent of a new US admin-
istration will inevitably raise expectations, but just
how much a new president can do with the limited
resources at hand is open to debate. If President
Barack Obama can at least inspire confidence, he
will already have achieved a lot.

LIKE DOMINOS
The financial meltdown and its hoped-for solution
illustrate the interdependent nature of modern mar-
kets. That an economic crash was on its way had
been widely predicted; economies had been bub-
bling to new heights for a long time. That a US
Republican administration would backtrack on its
declared free-market principles by bailing out mort-
gage and insurance giants had not been foreseen.
Nor had the effective trigger for the final crash of the
markets: the collapse of investment bank Lehman

© Rick Barrentine/Corbis
Brothers.

Allowing Lehman to go under instead of rescuing it,

is now seen as a mistake, but it probably did not
matter in terms of the crisis. By the time Lehman
imploded, just about any corporate failure would

cargovision 5
cargo.1.09:Opmaak 1 12-01-2009
cargovision survival tour
“We are witnessing a
change and it started
earlier, not just in
economics, but in the
structure of the
economy”
6 cargovision | JANUARY 09
11:21 Pagina 6
have been fatal to confidence in the economy.
Outside the US, the problem was seen as American
flu, a consequence of bad US sub-prime mortgage
loans that caused write-downs wherever they were
sold as investment-grade material, but not a huge
problem except to minimize the chances of infection.
Then Iceland announced it was bankrupt. Iceland?
Yes, Iceland, a tiny country that had become rich but
was now in trouble because it had been parking
money of its own and from offshore funds into vari-
ous investments, including sub-prime mortgages. In
effect, Iceland had turned its economy into a hedge
fund, and it was just as vulnerable as any other
hedge fund. The credit crunch stopped Iceland’s
economy in its tracks and the government sought
help from the International Monetary Fund, as a
lender of last resort, and from Russia. Iceland also
began offering various assets for sale, including
property holdings in Hong Kong and Macau. Europe
began to take serious note of the crisis.
The next unlikely prime mover was Ireland, which
announced that it would guarantee all Irish bank
loans, a move that effectively forced the rest of
Europe (at first reluctantly) to do the same. This
became part of the game plan announced by the
European Union, in addition to recapitalizing banks.
Then the rest of the world, including the US, cascad-
ed along the same route. Credit is now becoming
available once again, but slowly, and it is almost cer-
tainly going to cost more.
DOUBLE-SIXES
All this leaves a lot of questions about where the
world economy goes from here, and what effects the
crisis is likely to have on trade, in particular trade with
China, which for some years has been the Workshop
for the World. China was riding an emotional and
nationalistic high, having hosted the 2008 Olympics
during the summer and following up with a space-
walk in late September. Alas, a surge in demand for
passenger seats during the Olympics was not fol-
lowed by a continued surge of interest in visiting
China after the Games ended. Then came a crisis
over contaminated baby formula, plus a fall-off in
orders as foreign demand dropped and the credit
crunch hit.
In the short-to-medium term, there will be pain, but
there will be a recovery, even if things are not quite
the same as before. The problem now is to define
medium term, and the fear is that it may be longer
than had at first been thought. One China-based for-
eign economist says: “We are witnessing a change
and it started earlier, not just in economics, but in the
structure of the economy.” We have seen this before,
he says, with China’s reaction to the Asian financial
crisis that began in 1997. It lasted about two years.
“With the slowdown of
China’s economic model is more controlled than the
the Western economies
Western free-market equivalent espoused by the IMF
there will be less
when it helped Indonesia to revamp its economy.
demand for Western
“We should be modest,” he says. “The Beijing and
products”
Malaysian models fared better.”
Eric Eugene, global head of the Transportation
Group at BNP Paribas in Paris, agrees that what’s
happening is the beginning of a major, long-term
change. The definition of fair value in banking and
accounting systems is likely to change, and moral
hazard, the notion that people take greater risks if
they know they’ll be bailed out, needs to be
rethought. Looking at the world economy in general,
he says: “The inter-bank problem, lack of lending,
has been dealt with by government guarantees.
That’s the core issue. It brings back some sense to
the system, even though it won’t bring recovery
overnight.”
A second China-based foreign economist believes
that the current crisis will last until at least mid-2009,
with the risk that it could spread to other sectors of
the economy, because of the slowdown and the
higher cost of credit.
MAH-JONG
What is the risk specifically for China? It’s not so bad.
The second economist points out that China’s huge
trade surplus has always accounted for only a part of
China’s economic growth. “The main two factors are
investment and consumption,” he says. “For exam-
ple, in 2007, with GDP growth of 12%, commercial
surplus accounted for less than 3 percentage points,
whereas consumption accounted for 4.5 points and
investment for 4.5 points. If investment will remain
strong, the real challenge for China is to increase the
growth and the GDP parts of consumption.”
Also on consumption, Eric Eugene says: “With the
slowdown of the Western economies there will be
less demand for Western products. There may be a
re-balancing of trade, but it will not overcome China’s
five-year plans. There will be a slowdown for one or
two years, and China will try to move up the value-
added ladder.” According to the first economist:
“Europe is a bigger trading partner for China than the
United States, so China has already diversified. In the
short term, we’ll see a decrease in China’s export
surplus, while in the long term, there will be more
outsourcing to China, because of cost advantages.”
All three men agree that Asia’s economies have not
yet decoupled from Europe and the US. The second
economist is emphatic: “Intra-Asian trade has grown
tremendously, but it is distributed manufacturing or
processing trade. The final demand still depends
heavily on the Western markets (EU and the US).
Typically in China, imports from Japan, Korea and
Taiwan will contribute to Chinese industrial produc-
tion (or industrial production conducted in China by
Japanese, Korean and Taiwanese companies) and
will be exported further, with the most important
parts going to markets in developed countries.” Not
that other regions of the world are unimportant, he
points out. “The three regions of South America,
Middle East and Africa contribute 17 basis points of
the mainland’s export growth (a total of around 25%),
almost twice as much as the US.”
ARE WE SAFE YET?
Is the Western model of capitalism broken? Does the
US buy-in of bank shares indicate a form of managed
© Ace stock limited/Imageselect
capitalism, something Europe is used to? Or perhaps
socialism with US characteristics? Eric Eugene thinks
not: “It’s just pragmatism.” The agreements are time-
limited so the shares can be re-sold later, though he
adds: “Pragmatism can change over time.”
Away from general economic models, while the
effects of the crisis linger, business forecasting has
now become more difficult. The recent boom in air-
craft orders may not suffer badly, because many of
those orders are spread over the next five years or
longer. However, financing new aircraft is likely to be
tougher.
José Abramovici, global head of Aviation Group & Rail
Finance at corporate and investment lender Calyon in
Paris, warns: “The cost of financing the fleets of air-
lines and lessors will increase substantially, although
major cargo airlines are generally strong credits and
should still have access to bank financing.”
“If we assume US$70 billion of global passenger and
cargo aircraft deliveries in 2009, we believe there will
be a US$55-billion funding requirement after airlines
and lessors have made a US$15-billion equity contri-
bution from their own cash or from their shareholders’
cash. We think that export credit agencies can
assume US$15 billion, which will require a further
US$40 billion of commercial debt. With 20 active avi-
ation banks in the market, we think that the shortfall
of funding would represent US$20 to US$25 billion.
This huge amount will have to be filled by (i) capital
markets such as commercial paper or long-term
securitization when these markets resume again; (ii)
sovereign funds; (iii) non-aviation local banks; (iv) US
hedge funds mainly for the US airlines; (v) manufac-
turers; and/or (vi) a combination of the preceding.”
Declining fuel prices have brought some relief for air-
lines, but not much. According to Eric Sananes,
energy derivatives sales at JPMorgan Chase Bank in
London, supply is more constrained than demand.
He sees oil prices ranging between US$75 and
US$90 a barrel. “But the risk is for the upside for the
next six to nine months.” ■
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cargovision news around the world cargovision news around the world

Our quarterly review of

industry news keeps you MCMINNVILLE
abreast of developments The U.S. Department of Transportation said Evergreen
International Airlines could fly six weekly cargo flights
in key sectors around between Shanghai and New York, with stops in Dallas,
the world. Chicago, and Columbus. Evergreen proposed that its
eastbound flights stop twice a week in Dallas and four
times in Chicago, and that its westbound flights stop
in Columbus. Kalitta Air received backup authority
from the DOT if Evergreen does not begin service.
Evergreen received the tentative approval to begin

© Bilderberg/Hollandse Hoogte
AIRCRAFT - WORLD flights next March. By then, it plans to acquire two
Boeing 747-400 freighters to fly an anticipated 360
tonnes of cargo a week out of China. The business
AMSTERDAM could be worth up to US$27 million a year.
The Dutch aircraft lessor, AerCap Holdings N. V. agreed in July to become
the launch customer for the Airbus Freighter Conversion A320. In
September, AerCap indicated that Lan Cargo would probably operate the TOKYO
first of the passenger-to-freighter conversions when it is delivered in 2012. Japan Airlines said that it would end cargo flights Sheet metal stamping for the motor industry
The plane would be a good fit for the airline, because LAN Chile and its between Narita and New York in January and reduce
affiliates already operate A320 passenger jets. freighter frequencies to Los Angeles from six to five describes how this dilemma is producing unpredictable consequences for
per week. Last January, JAL discontinued cargo flights automakers and their logistics providers around the world.
to Atlanta and San Francisco. It is retiring its last two
ATHENS Boeing 747-200Fs and canceling a planned conver- At press time, American automakers were asking the US government for
Greek airline Airgo Airlines SA, based at Athens International Airport, began sion of one 747-400 from passenger to freighter. US$50 billion to help them stay in business. These firms have already
© Gamma/Hollandse Hoogte

flying an eight-tonne ATP freighter in August between Greece and Bulgaria,
Cyprus, the Balkan states, Albania, and Turkey. The twin turboprop ATPF
has a large freight door and is subleased from West Air Sweden, which will
provide maintenance and support for the new operation.
ULYANOVSK
In October, Aviastar-SP delivered the first of several Russian-made
freighters that were ordered in 2001 by International Cargo Transport Ltd.
of China, a joint venture of Air China, Citic Pacific Ltd., and Beijing Capital
International Airport. The aircraft, a Tupolev Tu-204-120CE, is a 28-tonne,
medium-range jet powered by Rolls Royce RB211-535E4-B-75 engines,
and equipped with Western avionics. It complies with Russian and Euro-
pean aviation standards. Aviastar-SP intends to deliver two more Tupolev
204-120s to the Chinese carrier in 2009.
CARRIERS - WORLD
GOTHENBURG
West Air Europe and Atlantic Airlines agreed to merge in October. The new
entity, West Atlantic, will be Europe’s largest all-cargo regional carrier, with
a fleet of 41 BAE 8-tonne ATPs, one eight-tonne ATR-72, six 15-tonne
Lockheed Electras, and two seven-tonne Bombardier CRJ200PFs. The
two airlines carry postal and express traffic in the UK
and Sweden. Their combined turnover is €125 million,
and they employ about 500 workers.
ALMATY
In August, Aeroflot Cargo expanded the highway
transport for airfreight traveling between Almaty Airport
and destinations throughout the Central Asian coun-
tries of Kazakhstan, Uzbekistan, Kyrgyzstan, Turk-
menistan, and Tajikistan.
CHENGDU
Pending approval from government authorities, Shen-
zhen Airlines is to begin all-cargo flights between
Sichuan’s capital city and Hong Kong, to supplement the
belly-hold capacity traders now use to carry exports.
RIO DE JANEIRO
In September, TAM Cargo began operating from a
new domestic cargo terminal at Tom Jobim Airport
that is four times larger than the old terminal. Customs
requirements dictate that international cargo continues
to move through the existing Infraero terminal in Rio. In
August, the cargo subsidiary of TAM Linhas Aereas of
Brazil opened its largest freight terminal, a 2,160-m2
facility in Manaus. During 2008, TAM Cargo invested
US$12 million to improve the infrastructure of its
domestic cargo terminals, and another US$4 million
for its national and international terminals. The first half
of the year showed a 34% growth in cargo sales to
US$261 million over the same period in 2007.
COMMODITIES - WORLD
LONDON
The global car industry is in crisis, writes Thomas
Cullen, senior analyst covering the automotive industry
for Transport Intelligence. Mr. Cullen’s latest report
taken in-house many of the services that attract logistics service providers
like Ryder Logistics, including distributing finished vehicles and managing
parts inventory. In Europe, meanwhile, DHL Exel Supply Chain, Schenker
and Ceva operate lucrative contracts for collecting and distributing compo-
nents to the plants of Jaguar-Land Rover, Volkswagen, and Fiat, respec-
tively. Still, vehicle manufacturers have become supremely aggressive in
their pricing and even dedicated automotive logistics service providers are
finding other markets to be more attractive.
Shifting fortunes have transformed the global automotive market in the
past few years. Russia could now become a larger market than Germany.
China could be as large as the US within a decade. The location of
assembly plants has changed, with factories designed to serve European
markets opening in Turkey and North Africa, and some production located
in China moving to plants outside the country.
Automotive components have become an important commodity for airlines
and forwarders because suppliers make more of them from lightweight
materials and electronics. At the same time, these electronics suppliers are
taking greater control of automotive logistics. Their growing dominance is
likely to divert automotive production from local suppliers to global
sources, as will the greater use of polymers and batteries in autos,
Mr. Cullen writes. Large logistics suppliers would do well to view this evolu-
tion as an opportunity to replicate the market penetration that they have
achieved in consumer electronics, for example, with the growth of their
freight forwarding business.

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cargovision news around the world cargovision news around the world

ENVIRONMENT - EUROPE

BRUSSELS compared to the enthusiasm shown for the question- EUROPE

Not all cowboys live in Texas. A large gang of them is kicking up dust in able impact of the Emissions Trading Scheme. But progress has also been made in Europe. In
the streets of Brussels. Late in the summer, the European Parliament “Without the Single Sky,” he said, “We would be September, IATA, Eurocontrol and the Civil Air Navigation
adopted a compromise agreement with the European Council to include required to buy permits for the fuel we waste flying Services Organization agreed on a six-month work
aviation in Europe’s Emissions Trading System beginning January 2012. zigzag routes and holding patterns caused by program to improve European air traffic management. It is
European airline operators were not amused. They said the initiative could airspace inefficiencies.” expected to save 470,000 tonnes of fuel per year, worth
force passengers to pay an additional €4.60 to €39.60 for a roundtrip The European Commission at least must have heard €390 million, and 1.5 million tonnes of CO2 emissions. The
ticket by 2020 if they had to pass along its full cost. the voices of Mr. Hartman and others because it work program comes in addition to other existing efforts to
endorsed a new Single European Sky measures in improve European air traffic management. For example, air
Airline operators from other regions roundly condemned the go-it-alone December to enable a national governments to create traffic grew 25% between 1999 and 2007, yet delays
nature of the EU‘s initiative also. Cathay Pacific ceo Tony Tyler noted the functional airspace blocks within 3 years. caused by traffic control fell 66% and air routes were
absurdity of taxing each flight according to the distance flown between its shortened an average of 4 km. Together, these efforts

last point of departure and its European destination. Flying from Hong However, the European Parliament’s Committee on
Kong to London, an airline would pay a higher tax on a fuel efficient, non- the Environment, Public Health and Food Safety took
stop flight than it would for one that burns more fuel during the journey by its own shots at the airline desperados. The
landing and taking off in the Middle East. "How does it help the environ- committee voted in October to amend the previously
ment?“ Mr. Tyler asked. “It doesn't. If anything it makes matters worse.“ accepted ETS. They increased the number of emis-
sions certificates available for auction in 2013 and
Then there is the matter of priorities. Europe‘s inefficient air traffic control reduced the cap on aviation emissions each year
system costs airlines €5 billion a year, says Peter Hartman, ceo of KLM and thereafter. The airlines could feel another hand
current chairman of the Association of European Airlines. This is a wasteful reaching into their pocket and fired back. Among
figure at the best of times and a crippling burden during the ongoing finan- them, Sylviane Lust, Director General of the Interna-
cial crisis. From the environmental perspective, better air traffic control tional Air Carrier Association, who said that the regime
would reduce airline CO2 emissions over Europe by 16 million tonnes for including aviation in the ETS was adopted only 3
annually while no one is sure just how much the ETS will lower emissions. months ago after reaching a difficult political compro-
Given the potential benefits, how can the EU make no progress on unifying mise. Re-opening the debate on aviation emissions
air traffic control since talks began in the 1960s yet create a European trading now only creates a high level of financial and
Trading Scheme for aviation in a year an a half? legal anxiety for airlines. Living in the Old West as
never easy.
Mr. Hartman scoffs at the lukewarm political response for a Single Euro-
pean Sky, which brings demonstrable benefits for the environment,
UNITED NATIONS
The UN stirred up particulate of its own when it strode
into the environmental debate during October. The UN
Food and Agriculture Organization released its annual
report, saying that biofuels will offset only a modest
share of fossil energy, but could have great impact on
agriculture and food security. The turnaround from the
agency’s prior statements that fuels made from agri-
cultural commodities offered both opportunity and
challenge, came after findings that some biofuels
result in more greenhouse emissions than consump-
© Charlie Newham/Imageselect
reduce CO2 by 3.5 million tonnes a year.
FORWARDERS -WORLD
EKATERINBURG
In October, Russian forwarder STS Logistics opened a
freight terminal in Ekaterinburg. The new STS terminal is
part of an industrial and logistics park in this city of 1.3
million and is one of three offices STS will open in Central
Asia this year as it swings its logistics focus around
towards China.
JOHANNESBURG
Seko Synergy opened its doors in August, offering air,
ocean, brokerage, warehousing and distribution services
from offices in Durban and Johannesburg, including a
4,000-m2 warehouse near Johannesburg Airport. The
startup is the brainchild of three South African logistics
professionals: Richard Mallabone, Chandra Booysen, and
Samantha Bellaram, who all previously held senior posi-
tions at multinational logistics firms in South Africa. Seko
Synergy is the newest member of the Seko network of
120 locally owned and managed offices around the world.
© Focus/Hollandse Hoogte
Souvenir market, Ekaterinburg
airports, aligning processes, and improving airside operations and
baggage and cargo handling. The industrial cooperation is expected to run
for 12 years and includes the proposed launch of a high-speed rail link in
2010. The two airport operators agreed to an 8% cross-shareholding
agreement that will cost the Dutch €530 million and the French, €370
million. The operators anticipate that by 2013 the agreement will generate
a net €71 million a year in additional revenue and cost savings and reduce
annual capital expenditures by €18 million.
SINGAPORE
The Singapore government has decided to separate the business of oper-
ating its airport from the business of controlling the airport and overseeing
national aviation policy. It is reorganizing the Civil Aviation Authority of
Singapore.
Beginning in July, Temasek, the government’s investment agency, will
acquire Changi airport and its operating businesses. A new, yet unnamed,
company will take control of Changi. In addition, a new civil aviation
authority will oversee Singapore’s national aviation policy and its regulatory
and air traffic issues.

tion of fossil fuels. Apart from the Brazilian fuels made
from sugar cane, none of the world’s biofuel produc-
tions is likely to be profitable, the agency said. More-
over, demand for biofuels contributes to higher prices
for agricultural commodities used to produce them. Fly
those eco-friendly green beans from Nairobi, but use
only Jet A, please.
GATEWAYS - WORLD
PARIS – AMSTERDAM
Aéroports de Paris and the Schiphol Group said in
October they would develop a dual hub for passengers
and cargo by optimizing connectivity between the two
INFRASTRUCTURE - INDIA
DELHI
India’s airlines are developing cargo hubs in a variety of locations designed
to help them distribute airfreight services around the country. According to

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cargovision news around the world cargovision datelines

local reports, Nacil, the company formed after the merger of Air India and RAIL - TRANSSIBERIAN
Indian Airlines, is considering Nagpur, which is striving to become a main-
tenance facility, as well as Delhi and some other localities. Deccan Cargo &
Express Logistics signed a deal to operate its logistics hub at Nagpur and HAMBURG
committed to developing feeder hubs in Delhi and Hyderabad airports. Asia’s rail systems are modernizing at dizzying speed,
mainly because stakeholders see a lucrative opportu-
Jet Airways is planning to establish hubs at Hyderabad and Bangalore. nity to co-opt some of the high value goods that now
Kingfisher Airlines is considering Goa and Bangalore. GoAir says it will start fly between Asia and Europe. In October, Fujitsu
a cargo airline based in Mumbai. SpiceJet and IndiGo are still identifying Siemens Computers accepted the first consignment
locations for cargo hubs. of electronics to move by a new rail service from Asia
to Europe. The 10,000-kilometer journey from Xiang-
tang took 17 days. Schenker will begin selling sched-
uled rail services on this route in February, after the
ONLINE - MIDDLE EAST Chinese New Year. The new service, the Trans Eurasia
Express, will start with two weekly container trains
linking China and Germany in less than 20 days.
DUBAI
Paperless cargo handling came to Dubai in November, with the startup of VLADIVOSTOK
the IATA e-freight initiative. The Emirate became the 14th location to offer At the Asian terminus of the Transsiberian Railway, the
the more efficient method for clearing cargo. The service operates between Japanese government will help fund a US$638 billion
Dubai and Singapore, Hong Kong and London. investment to modernize the far-eastern end of the
network. A combination of government-backed loans
and trade insurance will pay for the upgrade that will
enable trains to reach Moscow in one week when it is
WEDDINGS - WORLD completed, which is half the time they need today.
SHANGHAI ZABAIKALSK
Baisui United Logistics of Shanghai became the latest acquisition in China An expanded and modernized cargo terminal opened
for Kuwait-based Agility in September. Baisui has 300 employees and 15 in October at the rail line’s Zabaikalsk station, two
offices in China and specializes in chemicals, automotive and fast-moving miles inside Russia, near the Chinese border. Billed as
consumer goods. It also has a domestic transportation network along the largest rail-side inland container terminal in Russia,
China’s east coast and along the Yangtze River. it has a 600,000-teu capacity. However, its chief value
lies in the ability to transfer containers between railcars
on China’s standard-gage, 1,435-mm track and rail-
BRØNDBY cars on Russia’s broad-gage, 1,520-mm track.
In October, DSV completed its acquisition of the freight forwarder ABX Terminal operators can simultaneously load and
Logistics of Brussels, which was owned by the private equity investor 3i. unload three block trains each day. The terminal has
The €750 million deal merged two complementary European logistics been under renovation since 2006 and is part of broad
networks, DSV’s in the north and ABX’s in the south and west, and added initiative to speed up container transportation between
seven new countries to DSV’s international destinations: Argentina, Brazil, China and Russia.
Chile, Egypt, Japan, Mexico, and Venezuela.
In 2007, the two companies had revenue of €6.5 billion, and the combina-
tion, operating under the DSV Air & Sea Division, will have a presence in 59
countries with 25,000 employees.
SECURITY MOVING ON - World MARCH 2-5
IATA World Cargo Symposium 2009
Centara Grand at Central World Hotel
BRUSSELS Hans-Jörg Hager joined Bangkok
The EU and the US agreed in November on air cargo Kuehne+Nagel in as a consultant in T: +41 22 770 2525
screening standards for passenger aircraft. The October. Mr. Hagar was former www.iata.org/events/calendar
government agencies agreed to screen half of the chairman of the board of manage-
cargo on US-bound passenger flights by February and ment of Schenker Deutschland and
all cargo on all flights by 2010. The agreement estab- a member of the Schenker board of APRIL 1-2
lishes consistent screening requirements for air cargo management responsible for land 7th Annual Cargo Aircraft and
between the US and the EU. Screeners in both transport in Europe. His new role will Operations Conference
domains will use the same screening equipment, be to support K+N’s expansion of its Brussels
provide the same training to screeners, and impose European road and rail logistics T: +44 207 579 4856
the same security requirements for the facilities where activities. E: alicem@aviation-industry.com
the cargo is screened. There are about 300 flights a
day from EU countries to the US. Screening tests
conducted at Seattle-Tacoma Airport led US security Rupert Hogg took over as MAY 12–15
officials to estimate that technology-based screening director of cargo for Cathay Pacific in Air Cargo Europe 2009
would cost US$0.8/lb to US$0.12/lb, and canine September. Mr. Hogg is responsible Munich Trade Fair Center
screening US$0.1/lb. for all aspects of Cathay Pacific Munich
Group’s cargo business worldwide, T: +44 1737 645777
including operations, marketing, and F: +44 1737 645888
AMSTERDAM sales. He is also a director of AHK E: cf@a-zgroup.com
Cargo thefts during transit cost business worldwide Air Hong Kong Limited and Cathay www.aircargoeurope.com
from €25 billion to €50 billion annually, say security and Pacific Services Limited.
government officials. They believe losses in the EU
reached €8.5 billion during 2007. In the Netherlands, MAY 12–15
the costs totaled €330 million. Unfortunately, the Robert Fordree became Etihad Transport Logistic 2009
number of reported incidents in the Netherlands rose Crystal Cargo’s new cargo services Munich Trade Fair Center
from 98 in 2005 to 405 last year, according to the delivery manager for Europe and the T: +49 89 949 11368
Transported Asset Protection Association. Concern Americas in October. From London F: +49 89 949 11369
that these figures could prompt shippers to avoid Heathrow airport, Fordree will E: info@transportlogistic.de
routing high-value shipments through the Netherlands, manage Etihad Crystal Cargo’s www.transportlogistic.de
brought more than 100 government officials, manufac- regional operations and service
turers, law enforcement agencies, and transportation performance and oversee shipment
providers to Amsterdam in September, to search for a transfers. MAY 13-15
way to lower the nation’s vulnerability to cargo theft. CSCMP Europe 2009
As a mean to improve supply-chain security, the dele- Copenhagen Business School
gates proposed to create a new crime reduction task- Copenhagen
force for the Netherlands and to work towards closer T: +1 630 574 0985
cooperation with the Dutch government and the EU. E: CSCMPseminars@cscmp.org
The conference gained the support of the supply-
chain industry as well as the Dutch Ministry of
Economic Affairs, the Dutch Lower House, and the
European Parliament. “Officials and businesses in the
Netherlands clearly understand the seriousness of this
issue and the potential consequences if the causes of
cargo crime go unchallenged,” said Steve McHugh,
strategic head of TAPA EMEA.

12 cargovision | JANUARY 09 cargovision 13

cargo.1.09:Opmaak 1 12-01-2009
MATCHMAKER
SHORT RESUME:
David Yokeum is a native of
Los Angeles. He founded the
WCA Family of Logistic
Networks 11 years ago in
Bangkok after previously
creating his first independent
forwarding network, United
Shipping, in Seattle in 1988.
Mr. Yokeum views his mission
as helping to advance the
interests of small, medium,
and regional international
freight forwarders. He located
WCA in Thailand because of
its proximity to China, its direct
air connections to other Asian
cities and its appealing culture.
14 cargovision | JANUARY 09
11:21 Pagina 14
Partnerships are the backbone of international airfreight forwarding. However, good ones can be
difficult to find and even harder to maintain. Fortunately, a number of associations can facilitate
these marriages. Headquartered in Bangkok, the World Cargo Alliance is one such organization.
Cargovision asked its founder and president, David Yokeum, to explain how WCA works.
BY MARK W. LYON
© WCA
Q: Mr. Yokeum, what are the main benefits
of joining an organization like WCA?
We offer our members two main benefits: the oppor-
tunity to meet and talk face-to-face with other
forwarders from around the globe during our annual
meeting. And second, we offer parties financial secu-
rity to a transaction.
Our annual meeting is unusual, because we reserve
80% of the time for forwarders to sit down and talk
with one another. They can arrange beforehand to
meet someone through our scheduler on the
internet. We expect to see over 1,400 agents sitting
at conference tables and developing partnerships
during our meeting in Bangkok this February.
Q: What about the financial aspects?
We propose two financial services. Firstly, bank fees
constitute a higher proportion of costs when a
forwarder makes a small payment than when he
makes a large one, which means they can really
erode his profit. Last year, WCA members spent over
US$10 million in bank fees. We therefore negotiated
an arrangement that enables our partners to credit
as many members as they need with only one
transfer fee. Nearly 500 members are using this
service and have reduced their bank fees by 80%.
These savings exceed their US$3,500 annual dues
to WCA.
Our second initiative was to provide risk manage-
ment. When international forwarders kept bringing us
problems involving errors and omissions or legal
liability insurance, we realized there was a huge
knowledge void there. Forwarders in North America
and Europe understand legal systems and insurance
issues, but not everyone else does. To help out, we
now offer Freight Services Liability, an insurance
policy through our company that includes errors and
omission and legal liability. We can protect our
members’ receivables under our own policy. In addi-
tion, if a member can show he has proper risk
management insurance, we put a logo by his name
in our directory. Otherwise, we can sell him a policy
for 40% to 70% less than he would pay elsewhere.
Q: How can you offer such low rates?
During their audit, our underwriters realized that we
have first-hand knowledge of claims. For example, if
a container is released by accident, the consignee
doesn’t go immediately to the insurance company.
He wants to claim it and comes to us. We investigate
and usually resolve the issue. When underwriters
saw the extent of our knowledge and our willingness
to take action on a company in default, they gave us
a commensurate rate. We have had no problem
kicking scofflaws out of the group. In fact, we reject
75% of applicants that come to us, because they are
not financially qualified.
Q: Which other services do members use?
In Bangkok, we have a graphics department,
webmasters and other IT professionals, administra-
tors, and people who plan and execute meetings.
About 75 members use our marketing staff to create
and produce all their marketing materials. I’d say we
spend over US$6 million a year just on staffing,
offices, and paying claims.
Q: How many claims do you handle?
Members come to us with problems every day –
“I have been given a unique
opportunity. My responsibility
is to help the independent
airfreight forwarder
community. Our business
model is designed to help
them. I am proud of the job
we do and the members are
proud of the organization they
belong to.”
David Yokeum, president of
the World Cargo Alliance
based in Bangkok.
© Art Kowalsky/Imageselect
usually matters of communication. We try to resolve
them with both parties through our dispute resolution
service in Bangkok. But if our staff cannot help, we
will take the issue to an arbitration group like
fowarderlaw.com. Our members transact over US$5
billion a year between 2,500 offices. If someone in
China, for example, doesn’t understand a specific
law in Brazil, it can get nasty.
Q: Sounds like payments are a big issue,
right?
They are more of an issue outside our association. COMPANY PROFILE:
I mean, would you travel 4,000 miles to sue some- The World Cargo Alliance is a
body and how much would you spend? Within WCA, privately held association of
when someone has waited 90 days for payment and local and regional freight
comes to us, we listen to both sides of the story and forwarders. Now in its 11th year
send the participants to arbitration, if necessary. of operation, the WCA repre-
sents nearly 2,500 airfreight
Most of the time, the delinquent is embarrassed and forwarders in 150 countries.
doesn’t want a bad name within the group. However, A staff of 54 people works in
we have expelled good companies with good WCA’s Bangkok headquarters
records because they were arrogant and wanted to and another 35 people work at
spin payments out 120 to 150 days. If members do its regional support centers in
not pay according to the agreed terms, they know Amsterdam, Buenos Aires,
we will approach them. Mostly, they pay and settle Las Vegas, Mumbai, Tampa,
before the matter gets to us. ■ and Shanghai.
cargovision 15
cargo.1.09:Opmaak 1 12-01-2009 11:21 Pagina 16
With worldwide business conditions heading toward a recession,
you might think that the Beijing Olympic Games were the last
hurrah we would hear from China for some time. But we should
never jump to conclusions. There is certainly cause for optimism.
BY KAREN E. THUERMER
OLYMPIC HANGOVER
■ Even in June 2008, before the Olympic Games got
underway, airlines serving China began suffering from a
hangover as fuel prices headed north and airfreight growth
turned south. Now that some time has passed since the last
athlete headed home, carriers are still encountering chal-
lenges in the long-haul air trade.
According to New York-based Seabury Cargo Advisory,
June 2008, the month the games got underway, marked the
first indication of a downturn in Chinese-made exports. The
consultancy viewed the change as significant because the
Asia-Pacific region comprises 45% of the global airfreight
market. China’s air cargo exports decreased by 10.3% that
month compared to the same month one year earlier. It was
the largest one-month decline since China’s export boom
began in 2007, following its entry into the World Trade
Organization in December 2006. That year, China registered
10.4% growth.
However, in June 2008, China’s air exports to the United
States, its largest market, declined 17%, according to
Seabury. Exports of televisions and computer parts to the
US dropped 46%. Significantly, air trade with Hong Kong,
the United Kingdom, and the Netherlands also declined by
over 20% in June.
July and August were not much better. Compared to the
same months in 2007, the Association of Asia Pacific Airlines
© Getty Images
reported a 5.5% drop in cargo traffic for airlines based in the
Asia-Pacific region – the worst since 9/11. It was the sixth
straight month of accelerating declines in the region’s
airfreight trade.
16 cargovision | JANUARY 09
In response to weakening demand, airlines accelerated
efforts to remove aircraft from the region. By July, they had
reduced capacity 5.9% compared to July 2007. Brian
Pearce, chief economist for the International Air Transport
Association, reported that cargo load factors in August were
79.2%, down 1.8% point compared to 2007. This drop
included an even larger decline posted by Asia-Pacific
airlines of 3.7%. “Our great concern is that the continuing fall
in load factors, despite attempts to slow capacity growth, is
reducing unit revenues and adding to pressure on profit-
ability.”
There is no doubt that the current airfreight market is
dysfunctional, says Ned Laird, founder of the Air Cargo
Management Group in Seattle. “It is dislocated and
depressed because of high fuel surcharges, the growing
recession in Europe, and the existing recession in the United
States. Who knows what impact Washington’s financial
bailout will have on the ability of US producers and
consumers to afford foreign manufactured goods or to have
them imported by air. As the year goes on, circumstances
become less favorable for high-value goods shipped as
heavyweight freight. Meanwhile, the market is over-served
and opportunities for profit are limited.” Mr. Laird does not
expect the airfreight industry to recover until mid 2010.
TAKE TWO ASPIRIN
Nevertheless, some growth is anticipated. Shippers continue
to demand airfreight services out of China, although they are
asking for less capacity than they did six months ago. This
suggests that airlines can survive if they stay in touch with
cargovision 17
cargo.1.09:Opmaak 1 12-01-2009 11:21 Pagina 18
cargovision olympic hangover
© Hollandse Hoogte
Closing ceremony Olympic Games 2008
their markets, revamp their networks, and find the correct
balance between lift and capacity.
Early in the summer, Air France Cargo-KLM Cargo felt a drop
in the airfreight volume out of China. It responded by refining
its network and reducing capacity, says Arend de Jong, AF-
KL Cargo’s Senior Vice President for Marketing & Network.
“Between mid-June and September 2008, we suspended
service to Beijing from Charles de Gaulle. In August, we
suspended Air France freighter service to Guangzhou.”
The volatile market requires AF-KL Cargo to monitor load
factors daily, Mr. de Jong explains. “If load factors are too
low, freighters will not fly unless their cargo provides higher
yields. We can play that game on destinations where we
have twice-daily passenger flights, like Hong Kong and
Shanghai. Aircraft flying those routes have sufficient belly
capacity.”
Nevertheless, adjustments must be continuously made. The
fourth quarter of 2008 saw the CDG network reduce the
number of freighters from 11 to 10. In addition, it removed
five to six weekly flights from Asia and from other destina-
tions in Buenos Aires, Japan, Hong Kong, and Guangzhou.
KLM is grounding some of its 747 combis and replacing their
capacity with more fuel efficient and economical aircraft,
Mr. de Jong says. “For the remainder of the winter season,
we will reduce the use of these aircraft, because of the
downward pressure being felt from the passenger side.”
Mr. de Jong acknowledges that these cuts will affect
customers, but says that AF-KL Cargo is making changes
prudently. “For the short-term, the market in China is
declining, but we are confident that in the medium and long-
term, we will see an average 4% to 5% growth between
China and the rest of the world. As we go forward, we are
not pessimistic.”
Another near-term strategy for improving flight results on Air
France-KLM routes between Europe and Asia has been to
incorporate intermediate stops such as Moscow, Istanbul,
18 cargovision | JANUARY 09
and Almaty, Mr. de Jong adds. “This allows us to address
directional imbalances and increase purchasing power in
China and Asia.”
PARTNERS WITH CURES
The merger between SkyTeam partners Delta Airlines and
Northwest Airlines, dovetails nicely into the AF-KL Cargo
network and provide the opportunity for additional growth.
“Our flights have been performing extremely well,” says Neel
Shah, Delta’s Vice-President of air cargo. The Atlanta-based
carrier has been revamping its cargo business, trimming
unprofitable domestic flights and expanding its international
network. “Our team is learning to be more creative in
searching for business.”
Delta, known mainly as a strong passenger airline, also has a
robust cargo network serving South America, Europe, and
the Middle East. Merging with Northwest will add consider-
able strength to its cargo operations by introducing a vibrant
presence in Asia. Northwest, the only major US carrier oper-
ating freighters, has a long history of serving Asia, although it
canceled freighter service at Guangzhou and Taipei in July. It
also shifted its cargo hub operations for Asia to Shanghai,
where it now operates 12 weekly freighters to the United
States. Earlier this year, Northwest halted freighter service
over Tokyo to Singapore and Bangkok.
“From a network perspective, joining Northwest will be
phenomenal,” Mr. Shah says, “the combined network is
compelling. It’s a real game changer.”
Mr. de Jong concurs. “The combination of Delta and North-
west will bring us two bilateral North Atlantic routes: one that
has existed for a long time between KLM and Northwest,
and the second between Delta and Air France. These will
migrate over the longer term into a two-way joint venture
with the new Delta-Northwest and existing Air France-KLM
combinations.”
SkyTeam partner Korean Air also brings opportunity into the
mix. This cargo carrier has been building its global network
aggressively by developing new routes and differentiated
services. Korean’s network is so strong, that it continues to
be a valuable partner even though it reduced frequencies on
12 routes this summer and will continue its scaled-back
schedule during winter. The changes included flights from
Incheon to San Francisco, Seattle, Dallas, and Prague, and
to Amsterdam and Madrid. It is also in the process of
merging some European routes from Incheon, namely to
Vienna and Zurich. ■
cargovision people make a difference: Pier Luigi Vigada
EXCURSIONIST
A round of golf, a Do It Yourself project or some football would hardly be enough for Pier Luigi Vigada,
who just switched from AF-KL Cargo Director for East Africa to Cargo Director for Argentina, Chile,
Uruguay & Paraguay. For him, it’s the Zen of adventure.
BY MARCIA MACLEOD
© Courtesy to Pier Luigi Vigada
■ In the summer of 2008 ‘Pigi’ as Pier Luigi Vigada is
known to friends and colleagues, spent six weeks driving
12,800 km from his African home in Nairobi to his Italian
home near Turin, relying on his trusty Land Rover, Landy,
for horsepower. Why? “The same reasons anyone wants to
work in Africa: the scenery, the people, the way of life.”
Now 40, ‘but 20 inside,’ Mr. Vigada got a taste for Africa
from his parents, who crossed the Sahara 16 times. He
had traveled all over the continent before accepting the
Kenya post in 2001.
“I always said that I would leave Africa by car,” he recalls.
“It was physically challenging, driving 720 km a day in a hot
and dusty environment. The tenth day was the hardest,
July 21, negotiating 971 km from Khartoum to Wadi Haifa
by myself.”
Pigi's friend, Thomas, joined him from Nairobi to Khartoum
and his wife, Brigette, from Cairo to Italy. He traveled solo
between Khartoum and Cairo. Car trouble in the early
stages didn't help; nor did bureaucracies that made border
crossings frustrating. “But I learned to be more patient,
which has never been my strong point.”
Rewards were plentiful, too, Mr. Vigada adds. “The scenery
was stunning, especially in Libya. You really feel alone in the
middle of the Sahara. And you learn how strong you are
mentally and physically on a trip like this. When you are on
your own, you have a lot of time to think about how you live
and what you leave behind. I learned so much from the
African people. They have such dignity, yet they are modest
and generous.”
Now, our adventurer is looking forward to encountering a
new culture, as well as dealing with new cargo. “Working
with cargo is much more exciting and faster moving than
with passengers, which is where I started with KLM in
1995,” Mr. Vigada recalls. Always up for a new exploit, he
sat on a horse for the first time just a few weeks after
arriving in Buenos Aires and ended up playing polo. “I even
managed to hit the ball!”
Where next? The Antarctic, Mr. Vigada says. Or possibly a
return trip to Africa. This time touring the west coast. Let’s
hope Landy can keep up. ■
cargovision 19
cargo.1.09:Opmaak 1 12-01-2009 11:21 Pagina 20
CHARTER
CHATTER
Air cargo charters encompass a wide array of activities,
aircraft, commodities, and destinations. Predictably, then,
the assorted charter operators offer a mixed outlook for their
markets: while some see their business hit hard, others see
a silver lining in the clouds.
BY PHILLIP HASTINGS
© AF-KL Cargo
■ One bright spot is the variety of freighters available for charter, as
scheduled carriers encounter slower demand and seek to redeploy their
under-utilized aircraft. A second source of optimism is the fact that oil and
gas operations are still running at high levels, which in turn are stimulating
demand for air cargo charters to carry heavy project equipment.
However, some cargo charter operators say that times have become
much tougher and have forced them to develop new strategies to survive.
North American firm 9-1-1 Air Charter provides cargo charter and
onboard courier services to move automotive production parts within the
US, Canada, and Mexico. That sector of the company’s business has
declined 75% in the past year. It has suffered from the sharp drop in new
car sales in the US.
To counter this slump, 9-1-1 Air Charter has broadened the scope of its air
cargo services to include trucking goods from the supplier to the origin
airport and from the destination airport to the consignee. The company
plans to develop its truck brokerage activities further through acquisition,
says Mark Mangrum, 9-1-1’s chief strategist. “We aim to grow our trucking-
related activities from nothing to 20% or 25% of our overall business.”
20 cargovision | JANUARY 09
A backup plan to diversify the business should be an
essential part of running an air cargo company. It is a
business that has always been fast-moving and required
flexible thinking, says Chris Chapman, co-founder and
chairman of Chapman Freeborn Airchartering in London.
“These are particularly turbulent times, but we have
always had to contend with volatility in the market.”
AVAILABILITY LISTS
The recent downturn in scheduled airfreight demand is
likely to feed through into the charter sector, Mr.
Chapman acknowledges. However, there is a positive
side to this trend. “We recently went through a period
when it was extremely difficult to obtain certain types of
freighters. Now, with a drop in demand resulting from a
difficult global economy and the fact airlines are going to
the wall, we find more aircraft available for charter.”
“You could not get your hands on a Boeing 747 freighter
six to twelve months ago,” adds Darren Finucane, the
Dublin office director of Avico Air, a French international
air charter and aviation services company. “Now,
freighter operators that did not have to advertise previ-
ously to get business for their aircraft are emailing us
regularly with availability lists.”
World Airways, a US-based supplier of MD11, Boeing
747-400 and DC10-30 freighters, sees clear signs that
air cargo customers are feeling the economic downturn,
says Steve Dix, senior director of cargo sales for that
operator’s parent company, Global Aero Logistics Inc.
For one thing, forwarders are refraining from operating
their own freighters, preferring instead to play it safe and
continue using scheduled airline capacity. For another,
airlines are being more cautious about acquiring addi-
tional freighter capacity in the short-term, Mr. Dix adds.
“Longer term, though, we are happy. Supplying
freighters is a good business. Obviously, there is a lot of
concern now about how the economic situation will affect everyone’s
business, but we have always been very flexible and adaptable.”
PROJECT MANAGING
In one area, international air cargo charters are still experiencing strong
demand: outsize and heavy shipments. This sector, known as project
cargo, is most often served by Russian AN-124 freighters. Oil and gas
industry exploration and production drives much of the demand for
project cargo, but government and military organizations are other impor-
tant sources, according to Avico. The French company has a strong
involvement in the latter sector and frequently charters AN-124s from
Russian sources like Volga-Dnepr and Polet Airlines.
Price is not the dominant factor when it comes to service selection by
these organizations, says Gilles Gompertz, Avico’s Paris-based general
manager. “We provide air cargo charter services to many customers who
have no other choice. The equipment they are moving is too large to fit
even into a nose-loading Boeing 747 freighter. So they have to use char-
tered Russian freighters, either the AN-124 or the IL-76.” ■
cargovision 21
cargo.1.09:Opmaak 1 12-01-2009
cargovision a week in the life of
22 cargovision | JANUARY 09
11:21 Pagina 22
Airlines and forwarders will recognize Mr. Shawdon as a strong advocate for more effective industry automation.
Since becoming vice president of Logistics Solutions for Unisys’ Global Transportation Division in 2001, Mr. Shawdon
has expanded the business by making all its services web-based, partnering with third parties and launching its
popular air cargo booking portal. Before joining Unisys, he managed Syntegra’s air cargo community systems,
following a successful 12-year term with IBM.
BY ANDY WESTON
CHRISTOPHER SHAWDON
MONDAY: Beijing
My daughter’s 16th birthday and I’m away. As
she reminds me, it was the same last year. This
time, I suggested she come with me since she’s
off school. A look at the hotel website and the
promise of a weekend with no work convinced
her to join me. The local sales team lend us the
company driver for the day and the car with
white curtains and dark windows impresses
Sophie. We see sights, walk four hours on the
great wall, and play the fool together. That
evening the local sales team brings cake and
sings happy birthday in the hotel lounge. We
then retire to the bar and tell stories until late.
MONDAY: Beijing
My week always starts with reports to ten
airline leadership teams on their bookings
through our portal. Because this is sensitive
data, I run the reports and add a few words of
encouragement and maybe insight. I spend
the rest of the day with a client. Lunch is a
challenge. It’s a banquet and I’ve forgotten
how to drink at midday. The local custom is to
propose a toast to each of the others in turn
and drink a small glass of wine in one go.
Water is not allowed. That aside, I enjoy the
cut and thrust. Debrief with the local team and
finalize actions in the evening.
TUESDAY: SEAT 14K
Miracles do happen: BA upgrades us to busi-
ness class. Sophie is impressed and gets the
© 2008 PhotoShelter
wrong idea about global travel. The cabin ser-
vices director quietly asks if I’m OK with her
having a second glass of champagne, 30
minutes into the flight. I tell him her grand-
mother is French, so he chills. Third time this
year I’ve done the trip, but I still gaze out of the
window at the huge wilderness below. After a
little sleep, I prepare a presentation, approve
client change requests, and winnow my in-box
to one page.
WEDNESDAY: London
Back-to-back meetings. I work from home, as
most of my colleagues are in other countries,
so everything is on the phone or computer.
Start early to finalize a summary for our
Chinese friends, based on input from the US
when I was flying. Then take a shower. Two
European clients call and one internal. At
10:30 the US wakes up, so lots of talking.
Steal a coffee between calls and then one of
our global sales leads and I present a big new
opportunity to our global deal review board.
That goes well. They understand our business,
but ask about the risk of debt. I tell them that
as core system managed services, we’re top
of the payments tree. They approve and wish
us luck. Team meeting follows, so review key
metrics, share thoughts about clients and
competitors and hear feedback. Then, chal-
lenge team to find synergies between our ser-
vices. Close off around 18:30, but creep back
for a 30-min fix later on.
THURSDAY: London
With two colleagues, I present to a carrier’s
senior staff meeting on progress towards inte-
grating two cargo carriers. Attendees include
the airline CEO, who wants it all tomorrow;
finance and operations, who want it cheaper
but right; and the client’s technology groups,
who must deliver the changes that will connect
to other airline systems. We’re doing radical
things, which include combining client-written
software with ours and bringing up a revenue
optimization engine from JDA. The meeting
works well because we sent a report before-
hand, so can focus on decisions rather than
background. Later, I join my new CEO’s
monthly meeting. Three months into the job,
he's being radical, which I like as we fit his
vision.
FRIDAY: London
Run a quarterly review of our booking portal
use with head of cargo and sales leaders.
Remember to walk carefully between telling
them how they’re doing, and saying they
should do more since they pay my salary.
There’s lots of agreement, but I feel too little
will change. Determine to push the potential
for e-Business in next FastForward – our little
newsletter. Talk to a colleague about some
clever new security offerings and agree to test
them with five organizations around Heathrow.
Late afternoon, I meet a senior lady from Kale
Consultants with whom I’ve just finalized a
partnership deal for their revenue accounting
software. She’s in London and comes to my
home office. We do a review of potential
around the dining room table, and then my
wife and I take her to a local restaurant for
dinner.
SATURDAY: London
My cousin’s family comes for dinner. For once
Sophie talks up her dad, his job, and his work-
mates. My cousin is a property barrister. Either
his clients come to him or he travels – but only
in the UK. It’s one of those times that global
travel has its rewards. ■
cargovision 23
cargo.1.09:Opmaak 1 12-01-2009
A largely unsung sector of the airfreight industry specializes in shipping anatomical parts, medical
materials, and tissue samples. We asked some of the companies involved about the skills required to
move this cargo between public and private research facilities or to meet urgent clinical needs.
BY TONY CARDING
ANATOMICALLY
CORRECT
Frederic Labeque:
“We share responsibility
for the patient”
24 cargovision | JANUARY 09
11:21 Pagina 24
■ The London-based company, Marken, is one of a
small group of specialized businesses that provide
logistics and support to biopharmaceutical compa-
nies and contract research organizations. Marken’s
daily activities include moving trial medication,
vaccines, clinical trial material and bulk drug supplies
around the world. The firm’s export departments
manage shipments from its distribution offices in
London, New York, Miami, and Los Angeles, as well
as from sites in Basel and Singapore.
Private pharmaceutical companies carry out clinical
trials of their treatments all over the world, says Fred-
eric Labeque, Marken’s personal service manager
based in Paris. “You have thousands of sites in each
country and patients who go to these sites. Samples
from these trials, perhaps blood or urine, must be
transported at a constant temperature to a central
laboratory. Specialist companies operate these labo-
ratories in the United States, Europe, and elsewhere.
We are able to provide all the logistics support the
laboratories need to ship biological substances.
About 80% of our activity is providing premium trans-
port to those very important facilities.”
Air shipping such delicate samples calls for special
treatment, Mr. Labeque continues. “Depending on
the type of material, we have special packaging that
conforms to its particular requirements for transport:
dry ice, for example, to keep a specimen frozen. A
specialized transport company, such as Marken,
must understand the physical and chemical proper-
ties of the substances we are shipping, as well as all
the rules governing its transport. For this reason,
there are only a limited number of companies moving
these goods. At Marken, we have biologists and
pharmacists who know about the commodities we
ship. This specialized business is not simply picking
up a sample and bringing it to another part of the
world.”
THE OPERATING THEATER
“We must also bear in mind that each shipment we
transport contains a vivid human story,” Mr. Labeque
continues. “There is someone who needs it and for
those people the result will be used for their treat-
ment. Ultimately, this is not just business. We share
responsibility for the patient.”
A box with a human organ ready for transport
Working with medical companies that transport
goods internationally is a small but important activity
at Transmanage Worldwide, states Rick Ringhausen,
CEO of the Arkansas-based forwarder. The firm’s
clients include facilities that conduct research on
internal organs, blood and tissues and often need to
transfer samples to other sites or laboratories.
“We work mainly with hospitals, universities and
research centers,” Mr. Ringhausen says, “although,
we also move anatomical specimens for emergency
surgery. The operation may be in progress and the
doctors just waiting for us to deliver specimens so
they can finish the work. In those situations, we co-
ordinate all of the logistics support.”
It’s easy to see how the commercial activity of a
company like Transmanage has become consider-
ably more complex since 9/11. “This is true,” Mr.
Ringhausen confirms, “but the vast majority of the
complications have all had positive impact on our
security. The world has changed dramatically for our
industry. Before 9/11, I could take a phone call from
a company I didn’t know and fly their package from
© T-Pool/Getty Images
New York to Miami the same day. Now, I can’t even
talk about taking a consignment unless we know the
shipper.”
COMPLICATED PROCEDURES
It gets even more complicated, Mr. Ringhausen
adds, “Some of the specimens, tissues and blood fall
under the heading of dangerous goods and you
need to be sure you have correctly prepared the
paperwork. Depending on the commodity, we may
work with other vendors that have additional certifi-
cation so we are sure that we operate within the Rick Ringhausen:
confines of all requirements and regulations.” “Some of the specimens,
tissues and blood, fall
Although shipping anatomical goods is a small part under the heading of
of Transmanage’s traffic, Mr. Ringhausen believes dangerous goods”
that it is a worthwhile business; one, because there
is a lot of activity and, two, it creates an opportunity
for Transmanage to demonstrate how well it could
serve a company’s other logistical requirements.
“Our approach has always been that if you can
service one segment of somebody’s business you
may have an opportunity to service him in another.” ■
cargovision 25
cargo.1.09:Opmaak 1 12-01-2009
cargovision country file
CANADA
NEED TO KNOW
■ Size: Canada is the second-
largest country in the world,
behind Russia, but 90% of the
population lives within 160 km of
the US border.
■ Capital: Ottawa
■ Population: 32,507,874
■ Languages: English, French
■ Power: 120 V, 60 Hz
■ Currency: Canadian Dollar
C$ 1 =US$ 0.8902
■ Climate: Canada’s climate
varies due to its size and geog-
raphy, from temperate in the
southern regions to sub arctic and
arctic in the northern territories.
Summers tend to be hot and
humid, and winters cold and
snowy.
■ Industries: transportation equip-
ment, chemicals, processed and
unprocessed minerals, food prod-
ucts, wood and paper products,
fish products, petroleum and
natural gas.
■ Export: US$431.1 billion f.o.b.
(2007 est.)
■ Export commodities: motor
vehicles and parts, industrial
machinery, aircraft, telecommuni-
cations equipment, chemicals,
plastics, fertilizers, wood pulp,
timber, crude petroleum, natural
gas, electricity, and aluminum.
■ Export partners: US 79.3%,
UK 2.8%, China 2.1% (2007)
■ Import: US$386.4 billion f.o.b.
(2007 est.)
■ Import commodities: machinery
and equipment, motor vehicles
and parts, crude oil, chemicals,
electricity, and durable consumer
goods
■ Import partners: US 54.4%,
China 9.4%, Mexico 4.2% (2007)
26 cargovision | JANUARY 09
11:21 Pagina 26
BY IAN PUTZGER
© Steve Allen/Imageselect
Scienceworld dome in Vancouver
■ Buoyed by a strong currency and booming
exports, Canada seemed immune to the ailments of
its southern neighbor, but the gloom has now spread
across the border. Some sectors, such as manufac-
turing and transportation, were already feeling the
pinch of a soaring Canadian dollar and a troubled US
economy.
The transportation sector has felt the pain from
manufacturers who are suffering from the strong
currency and weakening demand in the US, Canada’s
largest export market. “A good portion of the busi-
ness of our large clients is tied into their distribution in
the US,” observes Bill Gottlieb, president of David
Kirsch Forwarders and a director of the Canadian
International Freight Forwarders Association.
Despite the strong dollar, Canadian intercontinental
exports have remained stable. The currency may
have diminished the quantity of cargo that forwarders
can draw out of the US, but overall traffic has not
declined, says Lori Burrell, Director for Canada at Air
France Cargo-KLM Cargo.
Panalpina’s Vice President of airfreight, Angelo
D’Amico, agrees that the strong Canadian dollar has
undermined the viability of moving US exports over
Canadian gateways. On the other hand, soaring
exports from the US have led to a space crunch at
gateways south of the border, pushing some freight
Totem pole, Stanley Park, Vancouver
north, says Eric Allard, Vice President of international
airfreight at Schenker. Despite dedicated freighter lift
to US airports, the Deutsche Bahn subsidiary has
moved some US exports through Canada, chiefly via
Toronto. Agents have had no problems finding
capacity out of Canada and rates have been corre-
spondingly steady.
Air France-KLM operates 55 flights a week in and out
of Canadian airports during the summer and 43
during winter. Mrs. Burrell is glad that KLM is once
again flying Boeing 747-400 combi’s to Toronto three
times a week, citing forwarders’ strong demand for
upper deck space.
“We need main deck capacity,” says Nikos Simou,
Vice President of airfreight at Kuehne + Nagel. “There
are opportunities out of Chicago and New York, but it
Horseshoe Falls of Niagara Canadian Falls
is important to have more upper deck capacity in
Canada.”
Indeed, freighter lift has been a problem in Alberta,
where a strong oil and gas industry has generated
soaring exports and a booming economy. The lion’s
share of this business moves by ocean vessel, but also
definitely plays a role for airfreight, says Mr. Simou.
Canada’s strong dollar and the rising price of its raw
materials have hurt much of the manufacturing
sector, except aerospace, which is doing well. With
its integration of BAX Global now complete,
Schenker has been targeting specific industry
sectors and has generated strong growth from aero-
space, Mr. Allard reports.
While the pharmaceutical industry is producing
healthy growth for forwarders and carriers operating
in Canada, concerns about avian influenza have
devastated its trade in hatching eggs and baby
chicks, formerly strong airfreight commodities, Mrs.
Burrell adds.
The volume of seafood has also gone down signifi-
cantly, says Mr. Simou. Canada used to export large
quantities of lobster, fish and seafood by air from its
eastern seaboard, mainly to Europe, but also to Asia.
However, higher airfreight rates and surcharges now
absorb all the profit and force shippers to search for
other markets and cheaper transportation. Most of
this year’s catch went to the US by truck.
Canadian airports on the East Coast want to attract
TRAVELER TIPS
© David Ball/Imageselect
■ Passports are required for
anyone traveling by air to
Canada and were supposed to
be required for land and sea trips
starting in 2008.
However, travelers have a
reprieve until a later date.
freighter operators to fly seafood, but they face two ■ Speed and distance are
hurdles, Mr. Allard says. First, only lobsters move in measured in metric units
sufficient quantity to fill a cargo aircraft and then only (km/h and km).
twice a year. Second, fierce competition among fish- ■ Human weight and height are
ermen in the Maritime Provinces has spawned a measured in pounds and feet
stubborn refusal to pool their catch in order to fill a and inches.
freighter. ■ Outdoor temperature is meas-
ured in degrees Celsius, but
Another trend that has hurt the airfreight business out ovens are measured in degrees
of Canada this year has been the model shift from air Fahrenheit.
to ocean, Mr. Simou says. “We’ve seen many big ■ Liquids are measured
corporations that formerly moved traffic by air switch according to type. Gas and milk
everything to ocean, even in the healthcare sector.” are sold in liters, beer and coffee
in ounces.
Cost pressures, the uncertainty about how the ■ Canadian money is denomi-
economic slowdown will affect Canada’s economy, nated in $100, $50, $20, $10 and
and the financial turmoil in the US, are forcing logis- $5 bills. Coins are $1 (loonie), $2
tics companies to concentrate on cost management, (toonie), 25 cents (quarter), 10
Mr. Allard says. “The key words are: manage your cents (dime), 5 cents (nickel) and
costs intelligently. Anybody can move freight. Now, 1 cent (penny). When Canada
it’s how you control cost and deliver value.” introduced the C$1 coin in 1987,
people nicknamed it the loonie
On the bright side, Schenker hopes that electronic because one side showed the
communication will bring greater efficiency. Mr. Allard common Canadian bird called a
says that his company participated in the first round loon. When Canada introduced
of e-freight trials last year and the experience was the C$ 2 in 1996, people nick-
positive. Schenker wants to use the concept with named it after a pun on loonie,
more carriers and adopt it throughout Canada. the toonie (two loonies).
■ Tipping 10% to 20% is
Mrs. Burrell would also like to see greater use of the customary in restaurants, bars,
electronic booking channels available with AF-KL pubs, taxis and hairdressers. If a
Cargo. However, she says, most Canadian service charge is added to a
customers still seem to prefer the phone. ■ restaurant bill, it is the tip.
cargovision 27
cargo.1.09:Opmaak 1 12-01-2009 11:21 Pagina 28

cargovision market monitor

People have looked to Asia in the recent past, China in particular, for the energy to drive

ANOTHER ASIAN AIRFREIGHT CRISIS? global manufacturing. Now, no one seems to be immune in the current financial crisis.
This does not bode well for the airfreight business in this dynamic region.

BY DICK VAN DEN BERG

Sea Freight from Asia

Major Scheduled Airlines - Global Freight Traffic Growth Fig.1. Growth in TEU
Asia to Europe
Fig.4.
■ Airfreight markets worsened considerably in the second half of ■ In the past five years sea freight grew much faster than airfreight
Asia to North America
25%
8%
2008, with most regions reporting very negative growth by with an increasing number of sea containers contributing to China’s
20%
6% October. The growing financial crisis and high fuel prices curtailed export boom. However, the sea freight world is also feeling the
4%
both consumption, investments and production in the West. The 15% current economic contraction. Container traffic to North America
crisis started in America and spread to Europe, eventually causing was down in 2007 and we now see the first signs of weaker traffic
2% 10%
all airfreight sectors to and from the Far East to feel the brunt of the to Europe. This is another illustration of how recession started in
0%
drop-off. In the current world economy, the Middle East, Africa and 5%
America and followed half a year later in Europe. It is now acknowl-
Latin America seem to be the best markets for airfreight. edged by the international economic organizations that USA,
-2% 0% Europe and Japan are in a recession.
Annual Growth

-4%
-5%

Growth - Quarter vs Quarter previous Year

-6%
Average Growth of Last 3 Years = 3,3% -10%
Growth - Month vs Month Previous Year
-8% 2006Q1 2006Q2 2006Q3 2006Q4 2007Q1 2007Q2 2007Q3 2007Q4 2008Q1 2008Q2
Aug ‘05 Nov ‘05 Feb ‘06 May ‘06 Aug ‘06 Nov ‘06 Feb ‘07 May ‘07 Aug ‘07 Nov ‘07 Feb ‘08 May ‘08 Aug ‘08

IATA FTK Growth vs JP Morgan Global PMI

3 months leading Top-6 Airports Far East
12% 65
IATA FTK Fig.2. Growth of Air Freight 2005 Fig.5.
JP Morgan PMI Manufacturing New Orders
■ A decline in the airfreight market was to be expected. A bleak 20%
2006 ■ Major airports in Asia also provide a picture of the developing
2007
8% 60
economic outlook usually results in lower demand for many manu- 2008 u/i Aug crisis. Japan and Taiwan felt the effects of a weaker economy years
factured goods. The JP Morgan Purchasing Manager’s Index is a 15% ago. China was always the star in the sea and airfreight markets,
4% 55 good indicator of worldwide manufacturing activity. The index for but the latest data show a weakening trend even there.
IATA FTK Growth

new orders stood at 36.2 as of October, well below 50, the value 10% The Chinese economy may still be growing at a lower rate, but the

Growth in tonnes
0% 50 for no change; this is the lowest value ever recorded. The growth of major importers of Chinese goods, Europe and the US, have come
IATA freight-tonne kilometers lags this index by three months. It 5% to a standstill and now import less from the Far East.
-4% 45 therefore looks like the worst part of the decline is still to come.
0%

-8% 40
-5%

-12% 35

-10%
Jan ‘06 Apr ‘06 Jul ‘06 Oct ‘06 Jan ‘07 Apr ‘07 Jul ‘07 Oct ‘07 Jan ‘08 Apr ‘08 Jul ‘08 Oct ‘08 Jan ‘09
Hong Kong Shanghai PVG Seoul ICN Tokyo NRT Hong Kong Taipei

Growth of Asian Air Freight (FTK) US carriers Pacific Growth of Airlines in FTK - Jan.-Sep. 2008
Far East traffic only
10% Asian Pacific carriers Fig.3. Fig.6.
AEA carriers Far East
■ Because the financial crisis started in the USA, it is no surprise UPS ■ The slackening growth of major airlines operating to and from
8%
that the decrease in airfreight traffic hit US carriers on the Pacific British Airways Asia reflect the slower development of the region’s airports and
6% first. Europe is behind America’s business cycle and the decline in Cathay Pacific exports. Only a few airlines are still seeing positive traffic results on
Asia-Europe traffic started later. The figures also show that Asian Cargolux
Asian routes in 2008. Cathay’s growth spurt is partly the result of
4% FedEx
carriers are feeling the effects of weaker markets. Intra-Asian traffic taking over Dragonair during the first quarter. For most other
Lufthansa
2% consists mostly of components that regional manufactures use to airlines, the latest monthly results are dismal. We have a new Asian
Singapore Airlines
assemble finished products for shipment to the West. Hence, the airfreight crisis, a virulent disease that began as an isolated infec-
0% Air China
decline in air cargo is affecting all sectors in Asia. tion in US sub-prime mortgages.

© Olé ontwerpers
Air France - KLM
-2% Korean Air

Japan Airlines
-4%
China Airlines

-6% Northwest Airlines

2006 2007 2008 Sep. EVA air

-10% -5% 0% 5% 10% 15%

28 cargovision | JANUARY 09 cargovision 29

cargo.1.09:Opmaak 1 12-01-2009 11:21 Pagina 30

cargovision postscript cargovision information

NO FLY ZONE
cargovision
Cargovision is the management magazine of AF-KL Cargo.
■ The banking crisis is also disrupting the airline industry,
Its function is to disseminate information on transport,
although estimating the damage to the cargo sector is distribution, logistics, information services, and general
more difficult because no index exists for airfreight that is business developments. The editorial opinions expressed
comparable to the Baltic Dry Index for sea freight. We do in the magazine are not necessarily those of Air France KLM.
know that international freight traffic has been falling since Reproduction in whole or in part without written permission
January at about 3% per month at the 322 airports is prohibited.
tracked by the Airports Council International. However,
ACI’s rolling 12-month average for tonnage had increased
3% at the end of September. IATA’s figures show that its
member airlines carried 0.1% more cargo traffic in the first SUBSCRIBER SERVICES
nine months of 2008 than during the comparable period in
of credit could easily generate US$1 million in monthly revenue 2007. Additionally, the following results posted by carriers Cargovision is published quarterly by AF-KL Cargo
MASKED BANDITS to the bank. Yet, since the credit crunch, those costs have risen in November suggest that while cargo tonnage is off, from and mailed to subscribers in almost every country.
six-fold, according to Pascal Lamy. The director general of the a revenue standpoint, many are not suffering. However,
■ Just when Somali pirates threaten to become the scourge World Trade Organization said in November that current the overall expectation is that worse is still to come. ■ Please visit www.cargovision.org
of global trade, their infamy suddenly pales under the economic conditions have left the market for trade finance, and click on the subscribe icon.
emerging radiance of the humble letter-of-credit. This unin- which funds 90% of the US$14 trillion world trade, lacking You will be able to:
tended casualty of the banking crisis lies gasping as we US$25 billion in equity. Airline % Chg Type* Period ( mo)
speak, draining the lifeblood from the flow of goods and serv- ■ Sign up for a free subscription
ices. Bankers tighten the credit knot. Blank letters of credit Some 41% of US retailers are seeing tight credit as a result of Lufthansa + 9.0 Rev 9 ■ Change your address cargovision
flutter in the air, inflicting casualties on forwarders, ship the crisis in the banking sector, while exporters to China and British Airways + 22.0 Rev 6 ■ Cancel your subscription
owners, airline cargo executives, even whole societies if we India cannot get funding for basics like recycled plastic, elec- Volga Dnepr + 80.0 Rev 9 ■ Review recent editions
are to believe the more radical views like those of weblogger tronic components, and steel. Chinese banks began tightening Airbridge Cargo + 68.0 Rev 9
London Banker: their credit standards in late summer. ■ Delta + 11.0 FTM 10
United + 0.2 FTM 10
“Trade finance is rapidly communicating the stress on bank Continental + 0.4 FTM 10 SURVIVAL
liquidity to the real economy. Controlling access to trade
finance determines who loses their jobs, whose children go
NO HOLDS BARRED American
China Eastern
- 2.7
+ 0.6
FTM
FTK
10
9
TOUR
hungry, who riots, which governments fall. It presents a ■ Ship owners cannot get banks to issue letters of credit for Japan Airlines - 7.5 Rev 6
systemic risk much more frightening than the collapsing value cargos of price-volatile commodities that may not provide ANA + 21.0 Rev 6
of bits of paper traded electronically in London and New York. adequate collateral. Even when credit is available, trading part- Singapore Airlines - 1.7 RTK 6
It could collapse the employment, the well-being and the polit- ners tend now to accept letters only from established banks Cathay Pacific-Dragonair + 2.4 Tonne 6
ical stability of most of the world’s population.” and they charge premiums. Royal Jordanian + 20.0 Rev 9
Published by AF-KL Cargo Communication, P.O. Box 7700, 1117 ZL Schiphol,
Kenya Airways 0.0 Tonne 6 The Netherlands. Eric Grognet, Jean Claude Raynaud, Maaike Arwert,
For over 400 years, commercial letters of credit helped traders At present, the LOC problem looks worse for bulk ocean traffic Turkish Airlines + 7.1 Tonne 10 arwert@cargovision.org
overcome bad weather, unfamiliar laws, fluctuating currencies than for airfreight, although that may change during the first
and botched instructions so they could transact business with quarter when air cargo traffic usually slows. The Baltic Dry *Type of change is either revenue, freight-ton-mile, Concept & Realization: vdBJ Communicatie Groep, Bloemendaal-NL
www.vdbj.nl, vdbj@cargovision.org
distant partners. To purchase goods, an importer has his bank Index, a measure of shipping costs across different ship sizes, revenue-tonne-kilometer or tonnes
Editor in Chief: Mark W. Lyon, lyon@cargovision.org
issue a letter of credit to the exporter’s bank, creating a usually fell 93% from a record high in May. Analysts guess that 50 and Editorial Manager: Jurgen van Gessel, j.vangessel@vdbj.nl
irrevocable guarantee to pay the vendor. An importer in the 100 capsized vessels, commonly hired to haul coal and ore, sit Project Manager: Urtha Ririhatuela, u.ririhatuela@vdbj.nl
West typically funds his transaction with bank borrowing at a idle today, and that number could soon reach 150. On June 30, Art Direction: Sok Visueel Management, sok@euronet.nl
rate of 5% to 7%, the premium reflecting a risk that the goods 43 vessels were idle. According to figures from the Baltic Editorial Office: Vijverweg 18, 2016 GX Bloemendaal-NL, T +31(0) 23 541 1701
Circulation: Pondres Direct Mail B.V., T +32 13 595 35 00
may never arrive or at least not intact. Exchange in London, spot rates dropped 98% in five months,
Printed on 90 grs. Galerie Silk, M-real. Promoting sustainable forest management -
from US$233,988 a day in June to US$4,793 in November. for more info: www.pefc.org
Amazingly, 20 banks fund 55% of global trade. Until recently, a That is below the cost of paying for crew, insurance, mainte-
large trading company that would have paid US$600 per letter nance and lubricants. ■ AF-KL Cargo © January 2009 Volume 24 Number 35
MARK W. LYON, EDITOR-IN-CHIEF

30 cargovision | JANUARY 09 cargovision 31