QUARTERLY MAGAZINE AIR FRANCE CARGO-KLM CARGO VOLUME 22 ˆ NUMBER 28 ˆ MARCH 2007

cargovision

Passion Powers Panalpina

CEE How it Grows
Moving FastShip

GULF
STREAM
 cargovision editorial cargovision contents

© Kamil/Arabiann Eye
GREAT OUTDOORS Formula 1 Grand Prix, page 4

Ice skating is great fun. Especially outdoors - gliding over inland waterways to places that are mostly
inaccessible. Good skating, like most outdoor activities, depends on good weather. And in this case
that means cold weather. To get perfect conditions, you need a more-or-less stable environment. Yet,
it turns out that the environment is not so stable, and that is a growing concern. Aviation, like every
human activity, has an impact on the world around us. Our industry’s record of accomplishment in
lowering noise and emissions has been remarkably good and will continue to improve as quickly as
technology allows. The AF-KL Group is fully committed to all available measures that can protect our
environment. This topic has been debated at length in recent times, and this is reflected in our sec-
tion on news and opinion.
4 GULF STREAM
High oil revenues in the Middle East have lifted the region's airlines and airports to the top of IATA's growth
charts. How will air cargo activities in this dynamic region be affected by plans to create a common market
in 2007 and a single currency by 2010?
14 PASSION POWERS PANALPINA
Panalpina's stock price almost doubled over the past year. The Swiss-based company is known for its reli-
ability and passion for innovative solutions. "Owning assets leads to inflexibility. You tend to focus on utiliz-
ing them, rather than serving your customer." says Panalpina CEO Monika Ribar.

Of course, you bring up the environment and you are suddenly talking about oil. High prices have
created a windfall for countries in the Middle East. They are building excellent transportation and 16 OPEN SOURCE
communications infrastructures at a fantastic pace. Six of the Arab states have formed the Gulf Sodexi lets forwarders and carriers provide door-to-door express services that match those of the integra-
Cooperation Council to create a single market and a single currency. Just as creation of the EU tors. But the company also wants to promote sustainable air trade and a higher standard of living for
brought changes to air transport, so will this new organization in the Middle East. Our lead feature impoverished nations.
looks into the progress of this initiative and some of the consequences anticipated by executives in Catherine Avez, page 19
the region. This issue’s Market Monitor also offers you some timely insights into the broader global
effects that current oil prices are having on trade and transportation. WROCLAW
19 PEOPLE MAKE A DIFFERENCE
Catherine Avez has seen many changes in her 20 years with Air France. But they have been coming fast
Developments in this broader context are also the topic of three other articles in this issue. Firstly, PRAGUE VI LVIV
and furious since the integration with KLM Cargo. "The Unique-Voice Portal is the starting point for a future
FastShip is working on a four-day transatlantic container service that is now being pitched to air- BRATISLAVA on a different scale."
VIENNA V
freight carriers, shippers and intermediaries. But even at half the cost of airfreight and twice the
BUDAPEST
speed of sea freight, there are doubts as to whether this new concept will ever sail. Secondly, the GRAZ

logistics market in Central and Eastern Europe is coming into its own and is worth EUR 800 million NA
IV

BELGRADE VII
20 CEE HOW IT GROWS
these days. If investment continues at its present rate, demand for logistics services could double by ZAGREB The logistics market in Central and Eastern Europe is now worth € 800 million, but if investment continues
2010 and have a pronounced effect on traditional traffic patterns. Thirdly, all of the AF-KL Cargo’s SARAJEVO at its present rate, demand for logistics services could double by 2010. Andy Weston takes a look a
S
X
Equation and Mail services through Paris flow through Sodexi’s warehouse. This express operation developments in the region.
lets forwarders and carriers provide door-to-door services matching those of the integrators. Looking Growing Network, page 20
ahead, Sodexi aims to promote sustainable air trade and a higher standard of living for impoverished
nations. And that brings us back to the environment. Which we should cherish, whether it be on the 25 MOVING FASTSHIP
ice or in the sky. Half the cost of airfreight, twice the speed of sea freight! For the past eight years, Roland Bullard has been
repeating that mantra to shippers, bankers, and governments. The four-day transatlantic container service
seems to be moving closer to launch, but there's still no ship in the water.
Sincerely,

AREND R. DE JONG

© Lee Snider/Photo Images/Corbis

Senior Vice President - Marketing & Network 08 news & datelines
Air France Cargo-KLM Cargo 22 Alain Chaille
26 country file: Bangladesh
28 market monitor
30 postscript
31 information and colophon

COVER IMAGE
Building of the new F1 track in Bahrain Princeton Univerity, page 30
© Chris Steele-Perking/HH

2 cargovision | MARCH 07 cargovision 3

© JD Dallet/Arabian Eye/Blink
GULF STREAM
High oil revenues in the Middle East have lifted the region’s airlines and
airports to the top of IATA’s growth charts. How will air cargo activities in
this dynamic region be affected by the plan of the Cooperation Council
for the Arab States of the Gulf (GCC) to create a common market in
2007 and a single currency by 2010?
BY PHILLIP HASTINGS
4 cargovision
■ The six members of the Gulf Cooperation Council
- Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the
United Arab Emirates - had planned to form a com-
mon market in 2007. The concept would be along the
lines of the European Union, with a single currency to
be adopted in 2010.
Both target dates now look overly ambitious. However,
most air cargo executives in the region believe these
developments will come to pass eventually, bringing
significant benefit for their international logistics busi-
nesses.
“Creation of a GCC common market will liberalize the
movement of air cargo between member states and
stabilize the integration of multimodal platforms here,”
says Saud Arab, general manager of cargo and airmail
sales and services system for Saudi Arabian Airlines.
“We will see more logistics companies established in
all of the GCC states as a result of the economic and
© Jochem Fack/Arabian Eye/Blink
commercial agreements that level the playing field for
all.”
But when exactly will the GCC single market become
a reality? “Clearly, the borders are still there for the
foreseeable future,” says Charbel Abou-Jaoude, man-
aging director of global integrated logistics for Agility,
the Kuwaiti firm formerly known as PWC Logistics.
“We’ve seen progress towards a single market, such
as in the area of customs harmonization, but there is
still much to do before the region is knit together as
closely as nations in the EU.”
COME TOGETHER
Ram Menen, divisional SVP of cargo for Emirates,
says that a single GCC market will definitely materialize
in the next few years, but not before logistics cus-
5
cargovision gulf stream
tomers encounter confusion and ambiguity. “In other
words, a single GCC market will develop no different-
ly than it did in the EU. Anything new has got to bed
in. It is not just a question of having common docu-
mentation or processes. A lot depends on how bor-
der officials interpret them. Until they all get used to
new procedures, we will face challenges.”
© JKatarina Premfors/Arabian Eye/Blink
Christian Berquier, the AF-KL Cargo director for the
Gulf, Iran, Pakistan, Sri Lanka and Bangladesh,
agrees: “Customs clearance for goods entering the
GCC can now be done at the first point of entry, but
some border officials still need to learn this. Certain
GCC states are more flexible than others in opening
their markets. While some have not disclosed their
positions, the purposeful march towards a single
GCC market appears irreversible.”
Logistics organizations and air cargo companies
operating in the Gulf are already positioning them-
AIR FRANCE CARGO selves to draw advantage from the single market by
-KLM CARGO preparing for expansion of their regional trucking
IN THE GULF activity.
“A single GCC market will tremendously simplify the
AF-KL Cargo covers the GCC movement of goods by road,” explains Jean Pierre
markets extensively from both De Pauw, SVP of Dnata Cargo in Dubai. “Roads here
Charles de Gaulle and Schiphol are generally excellent. It is just a matter of putting
with a mix of freighter and pas- proper rules and procedures in place.”
senger belly capacity. Flights Road feeder services will increase tremendously
currently serve the United Arab once the Gulf becomes a single market, adds Des
Emirates (Dubai and Abu Vertannes, head of cargo for Gulf Air. “They will be
Dhabi), Saudi Arabia (Jeddah, spawned by the carriers serving the region, who will
Riyadh, and Dammam), Kuwait need more frequent services to support all the new
(Kuwait city), Bahrain, and international airfreight capacity they are bringing here
Qatar (Doha). and GCC moves to facilitate a more seamless distri-
bution infrastructure across its member borders.”
“Dubai and Abu Dhabi are the
main Gulf region gateways for
AF-KL Cargo,” says Christian START YOUR ENGINES
Berquier, AF-KL Cargo director
for Gulf, Iran, Pakistan, Sri Until now, most of the interregional cargo moved by
Lanka & Bangladesh. sea or air, says Bill Hill, group vice president of GAC
“We operate around 20 Logistics in Dubai. However, recent highway
freighter and 30 passenger improvements and simplified customs procedures
flights a week. Other stations in have made road haulage much more viable. “When
Bahrain, which AF now serves all of the GCC customs processes are implemented,
twice-weekly with freighters road freight will be the preferred mode of transport
from Paris, Doha and Kuwait for everything but the overnight air satchel business.”
are now developing good Dnata, GAC and Gulf Air all expanded regional truck-
infrastructures and are starting ing operations during the past year. Dnata linked up
to become significant transit with Agility to establish a joint-venture, intra-airport
platforms for neighboring road transport operation called DPAL (Dnata-PWC
markets like Africa and the Airport Logistics). “Through DPAL, Dnata intends to
Indian sub-continent.” be one of the main players in this niche sector, as the
6 cargovision | MARCH 07
market opens,” says Mr. De Pauw.
At the same time, GAC launched a regional full-
truckload and less-than-truckload service called
GAC Xpress, offering customers time-definite depot-
to-depot or door-to-door delivery in Bahrain, Kuwait,
Saudi Arabia and the UAE. GAC plans further expan-
sion and will use its network to distribute both
inbound cargo arriving at Gulf sea and airports and
local traffic.
After Gulf Air withdrew international air service from
Abu Dhabi last year, it established daily truck runs
between Oman and the UAE. “We’ve had no prob-
lems whatsoever with transit times for those servic-
es,” says Mr. Vertannes. “Cross-border movements
are becoming easier and more efficient. It is just a
question of customs officials setting and applying
consistent rules for this particular line of activity.”
One man who does not foresee positive improve-
ments in regional trucking over the short-term is
Emirates’ Ram Menen. “We already truck cargo from
Dubai to Bahrain. We use a couple of trucking firms
for ad hoc purposes, such as moving oversize cargo
from Dubai to Doha or Kuwait. However, to date, we
have generally found it better to fly cargo between
points in the Gulf.”
SHIFTING FLOWS
The prospect of a single GCC market brings up the
fundamental question of how this might redistribute
the flow of transshipments through the existing gate-
ways. Predictably, senior executives at each of the
Gulf region’s major air cargo hubs believe - or at least
argue - that their local airport will be among the main
beneficiaries.
Many, of course, claim Dubai will be the big winner.
The prospect of more and faster trucking operations
to and from other GCC states would further
strengthen its well-established position as the lead-
ing gateway in the Gulf. “The 110 airlines touching
down regularly in Dubai have created a connectivity
THE GCC
The Cooperation Council for the
Arab States of the Gulf, more
and buzz that is unmatched so far in the region,” commonly known as the Gulf
claims Mr. De Pauw. “While we cannot ignore Doha Cooperation Council (GCC), was
and Abu Dhabi, which are also rapidly expanding formed in 1981 by the State of
their potential, the new airport being developed in Bahrain, the State of Kuwait, the
Jebel Ali will only add to the attraction of Dubai.” Sultanate of Oman, the State of
On the other hand, better road connections could Qatar, the Kingdom of Saudi
help develop the two Gulf Air hubs in Bahrain and Arabia, and the United Arab
Muscat into distribution centers for other major Gulf Emirates.
markets like Saudi Arabia and the UAE, says Mr.
Vertannes. And new procedures will remedy a com- Its objectives are to effect coor-
mon situation faced by carriers like Gulf Air, when it dination, integration and inter-
operates trucking services from Bahrain to the Saudi connection between member
center of Dammam – vehicles are only allowed to go states in all fields. One of its sig-
into a duty-free zone, some 30-40 minutes’ drive nificant developments to date
from airport. “Forwarding agents have an issue with has been the implementation of a
this because they are based around the airport,” Mr. customs union in 2003, wherein
Vertannes says. “We hope that development of a the members agreed to levy a
GCC single market will open the option to truck common customs tax of 5% on
cross-border, airport-to-airport, or from an airport all foreign goods entering their
terminal handling facility in one member state to a states, except for about 200
cargo warehouse in another.” “essential” items that are
exempted from duty.
GCC rules say that customs
inspectors should impose tariffs
on goods entering GCC coun-
tries at the first entry point in any
member state. More specifically,
“The first window or the entry
point, through which the goods
enter, carries out procedures
such as inspecting incoming for-
eign goods, verifying documents,
establishing whether those
goods are free from any prohibit-
ed items and collecting due cus-
toms taxes. After this, goods
imported from outside the GCC
customs union can move freely
in any GCC country.”
As of late last year, GCC politi-
cians were still discussing how
the next major step, the creation
of a full single market, could
become a reality by the end of
2007. However, with a range of
issues yet unresolved, that
© Magnum Photos/Hollandse Hoogte
timetable looks unfeasible.
Moreover, their plan to adopt a
single currency by 2010 also
took a knock when Oman
announced recently that it could
not meet the objective.
cargovision 7
 cargovision news around the world cargovision news around the world

Our quarterly review of

industry news keeps you
abeast of developments
in key sectors around
the world.
on all domestic and international flights between EU
airports and from 2012 on flights originating outside
Europe.
The EU’s apparent weakening of the spine led the
European Low Fares Airline Association to say it was
disappointed, because limiting the scope of intra-EU
flights initially will capture only 20% of EU aviation car-
bon emissions, or approximately 0.5% of overall EU
emissions.
The Association of Asia Pacific Airlines blasted the EU
from the other side, saying its unilateral actions appear
to reject the well-established role of the UN
International Civil Aviation Organization in setting glob-
ally harmonized standards for aviation, including envi-
ronmental issues.
Spencer said in January that it would spend £200 million to become car-
bon neutral over the next five years. Among other efforts, it will focus on
sourcing food from the UK and Ireland in order to reduce airfreight. Both
retailers will label food brought into the UK by plane as “flown.”
Bill Vorley, head of the sustainable markets group of the Institute for
Environment & Development in the UK, says that while airfreight is prob-
lematic, it belongs in the overall context of the environmental footprint of
the UK food system. “Airfreight of fresh fruits and vegetables from sub-
Saharan Africa accounts for less than 0.1% of total UK carbon emissions.
Far more emissions result from the domestic transport of food goods with-
in the country. The UK must first look to the huge impact of our food sys-
tem at home before pulling up the ladder on Africa.”
To discourage further purchases of produce flown into the UK, the Soil INTERMEDIARIES
Association added its concerns over the potential damage caused by
emissions from flights carrying food around the world. The UK’s largest
certifier of organic produce said that organic foods arriving by air into the Dhahran
UK could eventually lose their organic label. In January, the organization Saudi Aramco hired DHL Exel Supply Chain in January
launched a yearlong study of options ranging from carbon offsetting, label- to develop a national logistics infrastructure. The 10-
ing produce to specify the “food miles” traveled, and an outright ban on the year deal includes provisioning, managing and operat-
air freighting of organic food. ing four distribution centers in Damman, Riyadh,
The Soil Association acknowledges that little organic produce arrives by air, Jeddah and Yanbu, and 14 material service centers
but adds that the organic farming movement must lead the way to help elsewhere in the Kingdom. At the same time,
curb climate change. Besides, just-in-time food distribution is vulnerable to SNAS/DHL, the DHL Middle East affiliate headquar-
disruption, whereas regional and local food network are more resilient to tered in Bahrain, said it would invest US$34 million to
rising energy costs and reduced oil availability. create new facilities in the Kingdom in order to accom-
Organic farming may consume 15% less energy to produce the same modate the 10-15% annual growth in weight.
amount of food as non-organic farming, mostly because it does not use
energy-intensive fertilizers.
Osaka
Hankyu Express International Co. and Hanshin Air
Cargo Co. are discussing plans to cooperate in cargo

© Image 100/Corbis
© EU

The plan announced would impose emissions limits from 2011
ENVIRONMENT
Brussels
Airlines will pay a € 2.9-billion premium for fuel in 2011 if the proposed
European Union Emissions Trading Scheme goes into affect, Giovanni
Bisgnani said in January. Four days after IATA’s director general deliver his
opinion, the Institute for Public Policy Research in the UK rebutted, saying
that, by their calculation, airlines stood to make £2.7 billion in profit from
the scheme.
These astronomical differences did not stop authorities in Asia and the US
from trouncing the proposal, which would have included non-European
carriers, with such vigor that the EU quickly backed off, but only just. The
plan, announced on January 20, would impose emissions limits from 2011
Next, the Air Transport Association of America jumped collection and delivery and to realign their overseas
in, citing its disappointed at the EU’s intent to unilater- offices before they merge in 2009. The two air cargo
ally cover the flights of non-European Union carriers in companies are part of the Hankyu Hanshin railway.
its emissions trading scheme. Hankyu Express International has widespread interna-
tional operations. Hanshin Air Cargo specializes in
freight to and from Europe and Asia. Together, they
London had 8% of Japan’s import market last year, right
The concept of Food Miles, a measure of how far pro- behind Yusen Air & Sea Service Co. with 10%.
duce travels from farm to plate, could end up threaten-
ing cargo operators even more than carbon trading,
although they are related. UK’s supermarket giants -
Tesco, Marks & Spencer, Waitrose, and Sainsbury’s -
have said they will reduce their carbon footprints.
The largest chain, Tesco, plans to fly less than 1% of
its products, compared with the current 3%. Most of
the retailer’s flown perishables come from Kenya,
which sends 23% of the strawberries, green beans
and flowers it exports each year to Europe. Marks &

8 cargovision | MARCH 07 cargovision 9

 cargovision news around the world cargovision news around the world

Airbus, placing an order for six aircraft on January 16.

The country’s domestic airlines say they are earning
10% of their revenue from package and document
shipments. International carriers have seen their freight
traffic almost triple from 5 million tons in 2001 to 14
million in 2005. Still, many exporters are facing difficul-
ties.
Although air transport is faster than ocean shipping,
Indian perishable exporters are choosing the sea route
more often. Shipping lines have become more attrac-
The next day, MNG Airlines, the Turkish cargo operator
based in Istanbul, became a launch customer by sign-
ing a Memorandum of Understanding for two A330-
200F’s plus one option. Then, on January 18,
Guggenheim Aviation Partners of Chicago became
the first customer to sign a contract for the freighter,
by converting a Letter of Intent for six aircraft it had
signed last October.
The A330-200F is the latest entrant in the over-60-
tonne niche. It has a non-stop range of 4,000 nm
(7,400 km) carrying 64 tonnes, and 3,200 nm
(5,930 km) carrying 69 tonnes.
Singapore
FedEx hired Singapore Technologies Engineering Ltd.
to convert 87 B757-200 passenger aircraft to cargo

© Polaris Images/HH
tive with lower costs and greater efficiency. Grapes and
Mangos that traveled exclusively by air until recently are
now moving in refrigerated ocean containers.
Meat exports also traveled in volume as airfreight.
planes. The Mobile Aerospace Engineering unit will
begin converting the aircraft this year under a US$ 470
million contract that will run for seven years.

INDUSTRY
Washington
US railroads were ordered in January to overhaul their methods of setting
fuel surcharges. The government’s Surface Transportation Board said in a
statement that the new rule will remove the possibility that railroads view
fuel surcharges as a profit center. US railroads have set surcharges as a
percentage of base shipping rates. Their customers objected because the
fees didn’t always correlate to actual changes in fuel costs. Some railroads
have adopted mileage-based fuel surcharges on some shipments. The
arguments in this case sounded very much like those of airlines and their
customers. The ruling might have precedents for the airfreight industry.
New Delhi
India’s Ministry of Civil Aviation wants to equip its domestic airport infra-
structure to handle international cargo more effectively. Air cargo is an
underdeveloped segment of India’s aviation industry. Officials from the
ministries of civil aviation, finance and commerce formed a group in
January to attract funding from private industry and foreign direct
investors to correct this.
The policy makers are thinking of establishing a center for perishable car-
go that would expedite cargo movements at airports. They plan to open
cold storage facilities at major airports and other warehouses to handle
textiles and other durable freight. They also propose to build an electronic
data clearance system to manage the flow of goods.
However, new rules forbid sending meat carcasses by
air, forcing exporters to use ships. They can export
boneless meat by air, but only after applying stringent
packing standards.
India’s flower exporters face a 50-60% cost disadvan-
tage compared to their competitors in Africa.
Floricultural trade groups are petitioning the govern-
ment to raise their airfreight subsidy from the current
23% of freight onboard.
Brussels
The EU changed security regulations for air waybills on
January 1. To avoid extra cost and delay, forwarders
are advised to use the following designations: (1)
“SPX” instead of “SECURED,” meaning secure for
passenger and cargo aircraft only; (2) “SCO” instead of
“SECURED FREIGHTER ONLY,” meaning secure for
cargo aircraft only; and (3) “X” (Export) must be the
status on the air waybill for “Free Goods” (“C-STA-
TUS”), meaning cargo headed to a final destination
outside the EU.
Hyderabad
Following authorization last summer to deploy the
A330 freighter, Intrepid Aviation Group of New York
signed a Letter of Intent for the purchase of 20 A330-
200 freighters on January 15. India’s Flyington
Freighters became the first cargo airline to sign with
Toulouse
A380F. R.I.P.
INFRASTRUCTURE
Singapore
Singapore is looking over its shoulder. The island
nation’s cargo traffic growth slowed from 10% in 2004
to 3% in 2005. Pudong airport in Shanghai surpassed
Changi in 2005 to become the ninth largest cargo ter-
minal. Beijing and Guangzhou airports are gaining
stature rapidly. To boost its competitiveness,
Singapore launched an airport logistics park in 2003,
inside a free trade zone, the first of its kind, and is
investing in the Chinese airports that threaten its
future. Changi Airports International is starting to mar-
ket its vibrant aviation tradition by initiating projects to
improve airports in China, India, the Middle East, and
Russia.
Hawlêr City
The Kurdistan Regional Government in northern Iraq is
spending US$300 million to upgrade Arbil (Erbil)
© Airclass
The A330-200F has a non-stop range of 7,400 kmm carying 64 tonnes
and 5,930km carrying 69 tonnes
International Airport, which lies 60 miles from the Turkish-Iranian
border. Kurdistan has no established postal system and expects to
see growing demand for cargo services and facilities. A number of
cargo planes use the airport now, including Il-76’s and C-17’s. The
government’s expansion program includes plans to further develop
cargo facilities at the airport.
Hong Kong
The Airport Authority Hong Kong said in December that construc-
tion of a third air cargo terminal would proceed by way of open ten-
der. Secretary for Economic Development and Labor, Stephen Ip,
said that the authority forecasts that Hong Kong will need 8 million
tonnes of cargo capacity by 2025, exceeding the capacity of its
present facilities.
Munich
2
By March, the 2,500-m perishable facility is expected to open in
Munich, helping Germany catch up with France, the Netherlands
and the UK in perishable traffic. By the end of the year, the airport
2
plans to open a 35,000-m logistics center, its second of this kind.

10 cargovision | MARCH 07 cargovision 11

 cargovision news around the world cargovision datelines

March 5-8 April 29-May 1

MOVING ON World IATA World Cargo Symposium 2007 CNS Partnership Conference 2007
Mexico City, Mexico Rancho Bernardo Inn, San Diego
Centro Banamex Contact: Fran Harris
Loyola de Palacio www.iata.org/cargosymposium T: +1 515 747 3312
The former European transport commissioner E: fharris@dnsc.us
died in December after a five-month battle with March 19-22 www.cnsc.net
cancer. She was 56. Those who heard her China Aviation Week 2007
speak will miss this extraordinary woman, who Beijing, China May 28-30
was both engaging and determined at the Contact: Vincent Pan Airport Show Dubai.
ONLINE CARRIERS World same time. T: +86 21 5160 8888 www.theairportshow.com
F: +86 21 6236 3719
Chris Foyle E: Marketing@jfpearson.com.cn June 12-15
Geneva Shanghai The chairman and founder of Air Foyle became www.aviationweekchina.com Air Cargo Europe / Transport Logistic 2007
IATA and Cargo 2000 have seen the light. The two Air China said in January that it would form a 50:50 the newest member of the TIACA Hall of Fame New Munich Trade Fair Centre
organizations will join forces to build a common stan- cargo venture with Cathay Pacific by midyear. The new in January. Mr. Foyle, a Fellow of the Royal March 27-30 Contact: Ms. Caroline Fehrenbach
dard to unify electronic messaging. IATA’s e-freight company would be the largest cargo carrier on China’s Aeronautical Society, is best known in the air- TransRussia 2007 T: +49 89 949 113 68
initiative is an effort to simplify documentation. Cargo mainland. Air China had been talking about a cargo freight community for parlaying a second-hand Olympiyskiy SC, Moscow F: +49 89 949 113 69
2000 is an effort to improve quality standards. venture with China Eastern, but those plans went awry Piper Aztec acquired in 1978 into a fleet of T: +7 495 935 7350 E: info@transportlogistic.de
In practice, this union means that IATA’s message after China Eastern cargo executives were questioned chartered and leased AN 124’s in 1989. E: transport@ite-expo.ru www.transportlogistic.de
improvement program will become an extra quality about kickbacks. Meanwhile, at its Beijing headquar-
measurement within Cargo 2000. E-freight will also ters, Air China signed a codesharing agreement with David Abney March 28-30 June 18-24
align its messages with Cargo 2000 practices. Asiana of Korea, covering the 11 key routes between Mr. Abney, 51, is the new chief operating office Logistics World 2007 46th International Paris Air Show
Both programs are working towards the same goal: the two countries. for UPS and president of UPS airlines. He Suzhou International Expo Center Le Bourget, Paris.
shipment tracing at the piece level, in combination started with the company in 1974 as a shop Expo Plaza, Xiandai Avenue, Suzhou E: siae@salon-du-bourget.fr
with document tracking. Also, in January, Great Wall Airlines resumed cargo floor loader and served most recently as presi- Industrial Park www.paris-air-show.com
flights between Shanghai Pudong and Amsterdam dent of UPS International since 2002. In his Suzhou Jiang Su 215021, China
Schiphol. The Sino-Singapore cargo airline from new position, Mr. Abney will oversee interna- T: +86 512 62804420 September 3-6
Waterloo Shanghai had to suspend operations in September tional operations, US package operations, F: +86 512 62804355 Asian Aerospace
Descartes Systems Group has become an e-freight after the US Treasury Department imposed sanctions global transportation, and labor and freight AsiaWorld-Expo Complex, Hong Kong
preferred partner in IATA’s Strategic Partner Program. on its parent, Great Wall Industry Corp., for allegedly activities. April 15-17 www.asianaerospace.com
The Canadian firm connects 2,300 forwarder and air supplying missile parts to Iran. Back in business now, TIACA Executive Conference and Annual
carrier locations through its network. IATA is conduct- the airline plans to connect manufacturing hubs in Tay Yoshitani General Meeting
ing e-freight pilot programs this year linking Canada, China with overseas markets, moving next into the The new director of the Port of Seattle is a Cologne Bonn Airport
Hong Kong, the Netherlands, Singapore, and the UK. Indian cities of Mumbai and Chennai. West Point graduate and a Harvard MBA. He T: +1 786 265 7011
led ports in Oakland and Baltimore before F: +1 786 265 7012
working as deputy executive director for the www.tiaca.org
Moscow Port of Los Angeles.
In January, Airbridge Cargo became the most April 18-20
recent airline to join Cargo 2000. Fourth China Air Cargo Summit 2007
Hyatt Regency, Hangzhou, China
Contact: Fowler Wang
T: +86 21 5237 9998
F: +86 21 5237 5557
E: Marketing@aircargosummit.org
© Justin Guariglia/Corbis

www.aircargosummit.org

Chinese women dancing with red fans on the bund in Shanghai for
excercise every morning

12 cargovision | DECEMBER 06 cargovision 13

 PASSION POWERS PANALPINA
BY HEINER SIEGMUND
Panalpina’s stock price almost doubled over the past year. The Swiss-based company
is known for its reliability and passion for innovative solutions, says Monika Ribar, who
has been the company’s CEO since October 2006. Heiner Siegmund tried to unravel the
secret of Panalpina’s success. “Owning assets leads to inflexibility. You tend to focus
on utilizing them, rather than serving your customer.”

© Barnabas Bosschart/Corbis5

Since January 2006, Panalpina’s stock price
has rocketed, almost doubling the company’s
value. What’s going on?
In general, the entire logistics sector has traded well
COMPANY PROFILE recently due to its convincing performance. Our com-
petitor Kuehne + Nagel has also seen its stock price
■ rise, for example. But specifically for Panalpina, I am
Panalpina is a global leader in for- very pleased that the capital market has regained trust
warding and logistics services, in our company, following some financial disruption in
specializing in intercontinental air 2005. Traders seem to have honored both our impres-
and ocean freight and associated sive commercial and financial performances in 2006
supply chain management and our success in filling top management positions
solutions. with young and ambitious staff. We also exchange
■ views frequently with analysts and investors, fostering
The company has a network of a frank and trustworthy atmosphere. You could say
around 500 offices in more than that no single incident has driven up our share price,
80 countries, and cooperates but rather a full basket of factors.
closely with selected partners in
a further 60 countries. Does a high share value protect you from
■ takeover? Or do you plan to embark on a
With a workforce of around shopping tour of the logistics market, as
14,000 worldwide, the Panalpina other companies have?
Group generated revenue to the That is a highly strategic question. Deutsche Post
sum of CHF8,293 million in 2005. started its shopping spree because its monopoly for
■ transporting letters ended in December. But what
For further information, does a high share price do for us in the airfreight
visit www.panalpina.com. business? Well, cargo carriers will concede only a
limited rebate on your tonnage. Why? Because at the
end of the day, they want to make money, too.
The chairman of Deutsche Post, Mr. Zumwinkel,
once said in an interview that they wanted to buy
Panalpina. He said we possess critical mass as one
of the world’s leading air and ocean service
providers. But I don’t believe in giant setups. The
dinosaurs vanished from our planet even though they
were huge. Our strategy does not support the idea
of a mega-merger. Over the years, companies in our
field have burnt a lot of money trying to make them
work. Instead, we are looking for further opportuni-
ties to strengthen our network and market presence
by acquiring companies that fit our portfolio. By sub-
contracting those activities that we don’t consider
part of our core business, like flying, trucking ware-
housing etcetera, we are free to concentrate on
organic growth.
Does this mean that, unlike DHL and TNT, you
will not invest in freighters?
We definitely will not. We do not know how to run a
cargo airline. Nor is it necessary since we rely on using
preferred partner airlines. Within this concept, we work
closely with the first-class cargo carriers. One of them,
of course, is Air France Cargo-KLM Cargo.
Why should a shipper choose Panalpina over
its competitors?
Anyone can offer port-to-port or airport-to-airport
service. We take a different approach, and because
we don’t spend millions on advertising, people may
not know of our methods. Firstly, we are passionate
about developing innovative solutions. However, we
can formulate them only by approaching customers
directly and maintaining constant dialogue about
their specific needs. Having been with the company
for over 15 years, I am fully convinced that nobody
tops our passion for this work.
Secondly, we do not invest in warehouses, fleets or
heavy equipment, unless the required infrastructure
is not available. Owning assets leads to inflexibility.
You tend to focus on utilizing them, rather than serv-
ing your customer. If a customer decides to pack up
and move to another city, we must be able to follow.
That would be difficult if we were tied to expensive
assets. For contract logistics and supply chain man-
agement services, we prefer to rent space or collab-
orate with firms that own their premises.
Various shippers and carriers often cite
reliability as a cornerstone of their relations
with Panalpina.
Yes. In working with business partners, we believe in
maintaining consistency in the long term. This
includes all partners along the supply chain, espe-
cially airlines. We don’t jump to a different one just
because they lift a kilogram for a couple of cents
less. Our costs must be competitive, of course, but
we don’t automatically jump at the lowest offer. The
whole package is much more important, including
service, communication, and a coherent understand-
ing of our mutual needs.
We were wondering: are you the Frau Merkel
of Panalpina? Like Germany’s head of state,
you seem to be a team player that consults
with leading management.
(Laughing) Nobody has compared me with Frau
Merkel yet. But generally speaking, I like people and
have to rely on their expertise. The business is too
complicated to understand every facet. It wouldn’t Monika Ribar became
be very wise for a manager not to listen to her Panalpina’s chief executive
experts. This is a collaborative philosophy, which I try officer in October 2006.
to convey to our employees. However, when the time She joined the transport and
comes to choose a solution, the decision is mine. logistics firm in 1991, holding
Our staff, our business partners and our clients several positions in finance,
expect this resolve from Panalpina’s CEO. IT, and global project
management. She was chief
information officer and a
member of the Executive
Board from 2000 until 2005,
when she was appointed
chief financial officer.

14 cargovision | MARCH 07 cargovision 15

 OPEN ■ What’s next? For two decades, this question has haunted
Jean-François Bouilhaguet, a man of sensible neckties and
daring ideas.
During the 1980’s, when the integrators started expanding in
earnest, some airlines tried to stem the exodus of high-yield
traffic by creating their own rapid delivery systems. None of
them has proven as original and enduring as the Société pour
SOURCE le Développement de l’Express International, founded in 1988
by Air France. Mr. Bouilhaguet was one of company’s first
employees. Today he is Sodexi’s director general.
It began as an effort to adapt commercial passenger stations
to service express customers, Mr. Bouilhaguet says. “Airlines
build and operate airport-to-airport services. They don’t
Sodexi lets forwarders and carriers provide door-to-door express services that match the speed, scope organize airport-to-door package delivery. We set up a struc-
and sophistication of the integrators. However, the company’s vision goes well beyond that: it wants to ture to do this independently of the airline. It gives anyone,
promote sustainable air trade and a higher standard of living for impoverished nations. including forwarders who cannot invest in their own delivery
networks, a worldwide system that competes with the integra-
tors. It also gives airlines express capacity to sell over and
BY MARK W. LYON above their airfreight capacity.”
The concept thrives because, firstly, Sodexi remains a neutral
participant in a world of proprietary express systems. The La
Poste subsidiary, GeoPost, and privately held TAT Express
S.A. each own 20% of Sodexi while Air France-KLM holds
60%. Another 20 airlines are business partners. Secondly, it
offers related services: door-to-door delivery in 200 countries,
global tracking, ground handling, automation, customs clear-
ance, systems engineering, and e-commerce. And thirdly, Mr.
Bouilhaguet is a shrewd innovator.
GROUND SWELL
Inspiration for Société came to Mr. Bouilhaguet in [1988??
Check please!]. A computer engineer, he had just completed
two years running his own IT business in Beijing. He knew
nothing about airfreight and saw how slowly cargo operations
embraced automation. He also saw that Parisians could send
packages to China on the same day using an Integrator, but
had to wait three days for service from Air France. “Yet, I knew
the fleet and schedule were growing and that we could soon
sell an all-inclusive airport-to-door system in many places. But
to manage it, we would need a high level of track and trace.”
Sodexi created its automation and bought dedicated trans-
mission lines. “Now we have IT,” Mr. Bouilhaguet continues.
If we manage it correctly and give good service, forwarders
should bring us their business. Plus, the integrators can use
our system to serve places where they cannot profitably open
their own offices.”
The Mach Plus network soon included state-of-the-art sorting,
© Sodexi
high-tech surveillance, custom-built aircraft loaders, and
streamlined acceptance processes. To enhance service,
16 cargovision | MARCH 07
© Sodexi
Sodexi decided to move its top customers into a hub at
Charles de Gaulle. The Express Supermarket opened in 1996,
with warehouse and office space for each customer. Over 350
people from these companies now work on site. Many of
Sodexi’s own staff of 400 members also work for customers
who timeshare their wages.
“We have 10 people working for Sodexi and for us,” says Elie
Slim, Director of Aramex, France. “Since we created our hub
here in the Sodexi warehouse four years ago, we have grown
from 17 people to 45. Being in the warehouse saves time,
which is our biggest problem in France. Being here also
enables us to go to big companies and say that we are agent
of Sodexi. It’s a good reference.”
“There is an advantage to having our office close to the hub,”
adds Alain Cohen, CEO of Universal Express - SDV. “But we
use Sodexi mainly because of its excellent network in Africa.”
Sodexi delivers in 20 countries for FedEx and in 15 for TNT. Its
partnerships with 20 other airlines cover those places not
served by Air France-KLM. Where local air express services
are unavailable, it uses the integrators, FedEx, for example, to
handle deliveries in the US and Canada.
Last year Sodexi’s volume increased 25% over 2005. All of the
AF-KL Cargo Equation and Mail services through Paris flow
through its warehouse. “Half of our business is transit traffic,”
Mr. Bouilhaguet explains. “Three quarters is sold outside of
France.”
PARTNER AND PROSPER
Mr. Bouilhaguet has set up an engineering department and
sells his system to agents, shippers, and airlines. It works for
any station that uses manifesting and IATA standard mes-
sages, and is available in Arabic and Chinese versions. In
2005, Royal Air Maroc Cargo and Casablanca airport acquired
the Sodexi application to control cargo handling.
cargovision 17
cargovision open source
Last fall, Softair AG, the vendor of Cargospot, called Mr.
Bouilhaguet from Zurich and invited Sodexi to participate in
developing a unified global express system. The French com-
pany would create the administrative systems and contribute
its expertise in bar coding and express handling. The venture
would expose Sodexi’s products to a much broader market;
the US, Middle East for example, where Softair has large
clients. Mr. Bouilhaguet expects to announce an agreement
with Softair in March.
The company is also considering automated acceptance for
airports. “Imagine that a customer arrives with his parcel,” Mr.
Bouilhaguet says. “He puts it on a conveyor. The system reads
his access card and the air waybill, then checks the documen-
tation and weighs the parcel automatically. He chooses pay-
ment options, approves the transaction and it’s done. Of
course, for restricted items and animals you need people, but
for basic traffic, this gives you a very profitable system without
them.”
While Sodexi might outdo the integrators for services originat-
ing in Europe and Africa, its director says, “I can’t say the
same for traffic from South America and the US.” However, Mr.
Bouilhaguet is striving to establish hubs that will improve
Sodexi’s services in Latin America and Asia. Copa Airlines
starts flying to Paris in 2008. Its flights to 30 cities in the region
make Panama City a good choice. Thailand is Southeast
Asia’s most industrialized nation and has a new airport in
Bangkok, making it a suitable candidate in the Far East.
BUY AND BYE
Mr. Bouilhaguet believes there is still time to organize small for-
warders and keep 20% of the world’s express traffic on pas-
senger flights. Sodexi can provide them with delivery to any
address and with competitive technology that gives multina-
18 cargovision | MARCH 07
Mr. Bouilhaguet: “Our network
can pick up and deliver anywhere
in the world
tional shippers the same ability as the integrators to track and
manage shipments. Any additional high-revenue traffic would
help fill belly space and indirectly improve cargo load factor.
Cargo space flies one-third empty for most passenger and
cargo flights “We are very far from optimizing this free capacity.
Increasing load factors should be the first method of lowering
costs.” Otherwise, Sodexi has done all of the basics: improv-
ing connectivity and quality of service. “We cannot invent
something new - change aircraft or container size,”
Mr. Bouilhaguet says. “The problem now is organization.
Innovation will involve door-to-door e-commerce, where you
transport, deliver and sell. In e-business, we are not just trans-
ferring freight. That is not where the money is. Our network
can pick up and deliver anywhere in the world, and we invest
with local people so we can collect from small factories and
they can sell products worldwide.”
© Sodexi
© Bunno Fert
cargovision interview
Catherine Avez has been with Air France for almost 20 years, spending the last seven as
a sales assistant in Lyon. She has seen changes over the years, but since the integration
with KLM Cargo they have been coming fast and furious.
BY IAN PUTZGER
PEOPLE MAKE A DIFFERENCE CATHERINE AVEZ
■ Lyon is one of 10 stations in Europe that began
using AF-KL Cargo’s Unique-Voice Portal in Novem-
ber. This application lets customer service represen-
tatives view the combined Air France and KLM net-
works for the first time. It displays all the information
they need to offer customers the best route, sched-
ule and price from both systems. It is a huge step
towards a joint reservation system for AF-KL Cargo.
“The UVP is crucial for our integration,” Ms. Avez
says. The KLM and Air France Cargo sales groups in
Lyon have been under one roof since last October.
On April 1, they will become a single integrated team.
The UVP will facilitate that union.
Ms. Avez says the new application was easy to learn,
even quicker than the Visual booking system Air
France introduced last year in preparation for the
integration. She also sees how the UVP brings
changes that are fundamental to her work and far-
reaching for customers. “It changes our way of think-
ing. It is a revolution.”
Until now, the Air France sales team has dealt with
applications only in French. But the UVP is in English
and it will not only change the organization, but the
character of the stations as well.
“The UVP is the starting point for a future on a differ-
ent scale,” Ms. Avez reflects. “We lose a bit of our
French identity, the way we have always worked, and
now we will change our way of thinking. I am proud
to be one of those blazing a trail in this company.”
The Lyon sales team first got to grips with the UVP
amidst the hustle-bustle of the Beaujolais Nouveau
season. They have yet to fully concentrate on its fea-
tures and possibilities, due to the workload in
November and the yearend holidays. Still, Ms. Avez
has already found it valuable for her customers, who
mostly truck cargo from Lyon to Paris, and she is
looking forward to new features. “Soon it will auto-
matically give me a truck number as well as a flight
number, “ she muses.
cargovision 19
 CEE HOW IT GROWS
The logistics market in Central and Eastern Europe is now worth €800 million, mainly because the consumer
I

II

III
■ The Central and Eastern European (CEE) coun-
tries have educated populations and their civil institu-
express operators and equity companies have
focused on improving small regional airports,
markets are small and the region is rather fragmented. If investment continues at its present rate, demand for
logistics services could double by 2010. A 280-page report from Transport Intelligence looks at the CEE’s tions and infrastructures are improving. Many inter- because of their growth potential. Airlines throughout
logistics trends and the companies that make them. national organizations have relocated manufacturing, the region are upgrading their fleets to conform to
IV and outsourced business processes and research EU safety, noise and emission standards. This will
into the CEE countries to take advantage of low eventually increase the efficiency of airfreight, offering
BY ANDY WESTON costs and a well-educated workforce. With this forwarders greater payload and speed.
V migration of international companies has come an
influx of supply-chain providers, according to the
Central and Eastern Europe Logistics Report 2007, SOME LIKE IT HOT
VI published last fall by Transport Intelligence Ltd.
There are few homegrown international corporations There are companies that want products fast and
in Central and Eastern Europe, nor any indigenous others that want them cheap. European firms that
VII logistics providers who operate supply chain man- need to reach markets quickly, those in the garment
HELSINKI ST. PETERSBURG
agement systems on a global scale. Most of the CEE industry for instance, have located production facili-
TALLINN NIZHNI NOVOGOROD
nations have one local logistics presence serving the ties in Central and Eastern Europe and the
VIII needs of local businesses and several multinational Mediterranean. Fast-fashion retailers like Zara source
forwarders serving the international newcomers. some product lines nearby so they can manufacture
Many of these multinational logistics firms operate in and deliver in weeks, rather than the three months
RIGA MOSCOW
IX other CEE countries and offer comprehensive servic- typically needed to bring goods from China.
es across the region. Over time, a few of the local While labor costs in CEE countries are half of those in
II
KALININGRAD
firms will probably group together and emerge as Western Europe, they are still not as cheap as in
VILNIUS
X significant providers for Europe; others will remain India, where they are only a quarter as much. As the
GDANSK I MINSK IX small and serve local businesses or become CEE economies integrate more with the West, labor
TRANS EUROPEAN providers to the international logistics companies. costs will rise making those nations even less com-
NETWORK (TEN) petitive for making goods where overall cost is para-
WARSAW
BERLIN mount. The CEE nations that adopt the euro will
WROCLAW KIEV After the fall of the Soviet Union, HOW IT MOVES eliminate currency fluctuations and mitigate trade
DRESDEN as the newly independent CEE risks. This is important for the automotive industry
III
PRAGUE VI LVIV countries began to increase The expansion of the EU in 2004 brought 23% more and may lead to more production facilities appearing
NUREMBURG trade with the EU countries, land, 24% highways and 31% more railways. in those countries.
BRATISLAVA they encountered a neglected Although the rail gauge is different in the Baltic The growing importance of the CEE states in the
VIENNA V KISHINEV ODESSA transportation infrastructure. States, those networks increased the amount of rail production of automobiles has been an important
SALZBURG
BUDAPEST The countries designated 10 transportation in the EU by 49% in 2005. Surface development. During the past 10 years, Poland, the
GRAZ
transport corridors to develop transport fulfills much of the demand for logistics Czech Republic, Slovakia, Hungary and Romania
IV BUCHAREST
LJUBLJANA as priorities with national and services, however air and express play roles as well. have seen over 10 new plants opened or acquired by
BELGRADE VII
EU financial assistance. Security is a concern because borders lack controls, Western manufacturers. In the triangle of Slovakia,
VENICE ZAGREB
Work is ongoing and as Trans legal systems are less strict on theft, unemployment Czech Republic and Poland, 450 automotive suppli-
SARAJEVO Europe Network (TEN) is com- in some areas is high, and criminals are organized. ers have settled within a radius of 200 kilometers.
SOFIA VIII
X
pleted it will connect Western Because the biggest threat is during ground transit, The differences between freight forwarders and
ISTANBUL
SKOPJE Europe with the CEE countries, air is a safer option. express providers have not solidified in the CEE
© Richard Ottema

in addition to providing trade
TIRANA THESSALONIKI
routes from Russia, other
Eastern European countries and
ports in Southeastern Europe.
Bringing CEE countries into the EU is forcing these region as they have in Western Europe. This will
nations to improve their air cargo facilities. Many change as shippers demand specialized services
existing airports have added runways and carriers and prices consistent with those they receive in
have scheduled more flights. A number of Western the West.

20 cargovision | MARCH 07 cargovision 21

 cargovision a week in the life of
ALAIN CHAILLE
Alain Chaille has a dual role at the heart of FedEx’s European operations. As vice president southern
Europe, he is responsible for France, Switzerland, Italy, Spain, and Portugal. But he is also in charge
of the integrator’s main European hub at Charles de Gaulle airport in Paris.
SUNDAY - PARIS
I have a very normal Sunday. I get up, have a coffee, and read
WITH PETER CONWAY the newspaper. I like to cook, so sometimes I make dinner. But
in the afternoon or evening, I also make time to check my
emails. Saturday is a big operational day for us at CDG and I
need to review what happened in order to start Monday with a
clear idea of the week’s priorities.
MONDAY - PARIS
Every weekday morning, our Global Operations Control
Center records messages updating the status of the previous
night’s operations at CDG as well as our other hubs in
Frankfurt, Cologne, Stansted, and Dubai. I listen to them in my
car on the way to work, and once I arrive, talk to all the man-
agers that report directly to me. Later, we have a conference
call to agree on any corrective actions.
In the afternoon, I visit one of our stations, where I meet man-
agers and staff, and listen to their concerns. I also talk to the
couriers when they get back from their pick-ups at 7:00 p.m.
I do one of these visits every week, and this week it is in
Gennevilliers, close to Paris. But it might just as easily be in
Spain, Italy, or anywhere in the region
TUESDAY - PARIS
In the morning, we meet to discuss various projects we have
lined up for 2007. Express is growing by 10-15% a year, so we
always have to add stations or expand operations. The key
challenge is to do this while meeting and improving on our
service parameters. We measure our service levels daily and
then try and improve them. For example, we look at how
quickly the drivers upload proof of delivery data to the system,
allowing customers to access it. Are we meeting our targets in
this area? How could we do better?
In the late afternoon, I take a group on a tour of the CDG hub.
I do this once or twice a week, often for customers, but in this
case for an association of people who live around the airport.
© FedEx I explain how we have reduced noise over the past few years
by flying quieter aircraft, such as the A300 and MD-11, and
how we are an important local employer.
© FedEx
22 cargovision | MARCH 07
WEDNESDAY - MILAN
I fly to Milan to do a business review with the full team in Italy.
All departments are present, from finance to sales to opera-
tions. I also visit two stations close to Milan as well as our staff
at Malpensa airport. In the evening, I fly back to Paris.
THURSDAY - PARIS
I am back in Gennevilliers and spend two hours listening to our
call center staff interacting with customers. We encourage all
managers and managing directors to do this occasionally, to
get a better idea of what customers want. Afterwards, we
have a debriefing and agree on corrective actions. What
emerges from these sessions is always interesting, often small
changes can be made to improve the customers’ experience.
Once a quarter, I go out with the couriers to pick up packages
and talk to customers directly.
In the afternoon, I meet with Air France, La Poste, Aeroports
de Paris, and handler WFS to discuss the CAREX project in
which high speed trains are used to move express shipments
within Europe. We aim to have dedicated trains by 2010 or
2012, fitted with roller beds that can carry aircraft containers
from CDG to London, Liege, Cologne and Brussels. Due to
government noise caps, we can’t add night flights at CDG,
so it is vital that we explore new ways to expand our opera-
tions. There is also the environmental angle, of course: I am
sure that in a few years there will be emission limits, on flights
within the European Union. There is still much work to do
and the meeting is encouraging.
FRIDAY - BRUSSELS
I make a day trip to Brussels to meet with our president for
Europe, Middle East and Africa, as well as other departments
at our European headquarters. We discuss various projects,
most of them confidential.
SATURDAY - PARIS
I check my emails on Saturday morning, but I do my best not
to work weekends. Being responsible for CDG hub opera-
tions, I often have to work well into the evening during the
week, and I also travel a lot. So on Saturday I relax with my
family. I do a lot of reading, particularly about politics, but
also fiction.
cargovision 23
 MOVING FASTSHIP
Half the cost of airfreight, twice the speed of sea freight! For the past eight years, Roland Bullard has been repeating
that mantra to shippers, bankers, and governments. The president and CEO of FastShip, Inc. certainly gets full marks
for persistence. But there’s still no ship in the water.
BY CHRIS POCOCK ■ The FastShip project has, however, moved a step
closer to launch, with a call for tenders. The four-day
transatlantic container service is now being targeted
squarely at airfreight carriers, shippers, and intermedi-
aries. A belief in this so-called “middle market” drives
Bullard on. Various studies back him up - there are
indeed high-value, time-sensitive products for which
airfreight is too expensive and ocean too slow.
“Nobody has said to my face, that this is a stupid
idea,” says Bullard. And so the long search for invest-
ment continues.
The latest plan is for three JetShips to provide a twice-
weekly service between Philadelphia and Cherbourg.
The journey would take 91 hours, thanks to a semi-
planing monohull design. A V-shaped hull in the bow
widens to a very broad stern that is concave under
water. This creates a high-pressure zone, lifting the
stern and overcoming the pressure drag that restricts
conventional container ships from exceeding about
25 knots. Powerful water jets, driven by large marine
gas turbines, can then drive the ship to a top speed
of 40 knots.
The design has been fully verified by Det Norske
Veritas, the Norwegian ship classification authority.
24 cargovision | MARCH 07
But no one has yet built a semi-planing monohull that
is even half the size of the design for JetShips. They
will be 265 meters long, with a payload of 10,000
tonnes (1,400 TEUs). Bullard says the construction
costs are confidential. According to a reliable source,
however, it could cost US$1 billion for the first three.
The FastShip project was born in Philadelphia, a port
and shipbuilding center that was in need of a boost.
Some US$55 million was raised in seed capital, mainly
from individual investors. The original plan was to build
four ships there, with loan guarantees from a US fed-
eral government agency covering 88% of the cost.
After that prospect faded, FastShip turned to the gov-
ernment-owned IZAR shipyard in Spain, which would
have financed half of the vessels’ cost. This plan has
also foundered. FastShip has now selected a German
shipyard owned by Norway’s Aker Group.
Some development risk was removed from the project
by opting to use higher rated versions of the existing
Rolls-Royce MT30 marine gas turbine, rather than
creating a new design. Rolls would also supply the
water jets and maintain the propulsion system under
contract. Lockheed Martin, another industrial heavy-
weight, would provide overall project management
and systems integration. JP Morgan is the financial
advisor.
Finance for both of the terminals has been secured
from government and regional authorities in the US
and France. Handling must be quick and efficient, not
only to turn the ships around in six hours, but also to
make good on FastShip’s promise of a time-definite,
door-to-door transit in seven days. TTS Technology of
Norway has designed a new system using automated
vehicles with rubber tires to carry double-stacked
ocean containers on and off the vessels. It replaces
their earlier, more expensive railcar design.
After spending several years selling the concept to
ocean carriers and their big shippers without success,
FastShip has decided that the airfreight market is a
better bet. Last September, it asked Triangle
Management Services of the UK to manage a tender
for capacity, for a service to start in December 2009.
Triangle says that rising fuel cost is pricing airfreight
out of the market, and has been trying to persuade
airlines to take space on FastShip as a defensive
strategy. To the integrators, Triangle’s message is that
© 005AP100021_SMW /Blink
they can create a new tier of time-definite service with-
Roland Bullard:
out diluting their existing air express volumes.
Forwarders are being invited to switch their airfreight
consolidation business.
“We’re a start-up
FastShip needs to show potential equity investors that
it can command a revenue stream that will service the
company with a
debt. But 20,000 tonnes each way, every week is a lot
of capacity to sell in advance. And US$1 billion is a lot new technology
of debt. Despite paying nearly US$2 per gallon for
fuel, the airlines still sell transatlantic capacity for US$1 for a new market
per kilo - at a loss, perhaps. Can FastShip really offer
US$0.50 per kilo? space”
The vessel’s cost per gallon of fuel is not much cheap-
er. Some observers believe that FastShip should start
on the transpacific instead, where demand is greatest.
It would take only seven days from Shanghai to
Seattle via Kobe. But as Bullard notes, that market is
more imbalanced. And, it seems, the current FastShip
design is sized for shorter transatlantic voyages. When
asked why the FastShip concept has not yet gained
traction, Bullard explains: “We’re a start-up company
with a new technology for a new market space.” He
knows it’s a tough sell. “But somebody is going to
make this happen, and I want to be a part of it.”
cargovision 25
 cargovision country file
BANGLADESH
BY KAREN E. THUERMER
NEED TO KNOW
■ Government: multi-party
parliamentary democracy
■ Head of State and Govern-
ment: Prime Minister Khaleda
Zia (since Oct. 10, 2001)
■ Population: 147,365,352
(July 2006 estimate.)
■ Language: Bangla (also
known as Bengali), but Eng-
lish is also spoken.
■ GDP: 6.4% (2005 est.)
■ Economy: A poor, over-
populated and inefficiently
governed nation. Half of GDP
is earned via the service
sector, yet two-thirds of
Bangladeshis work in
agriculture.
■ Trade: Free-trade agree-
ment negotiations underway
with SAARC, BIMST-EC,
India, Pakistan and Sri-Lanka,
as is a Trade and Investment
Framework Agreement with
the U.S. Bangladesh has
FTA status with Morocco.
■ Exports: Garments,
knitwear, hosiery, frozen
foods, jute goods, leather,
chemical products, raw jute.
Source:
Bangladesh Government
website; CIA World Factbook-
Bangladesh
26 cargovision | MARCH 07
■ Agriculture is the staple of the Bangladesh econo-
my and perishables comprise almost half of its air
exports. Garments, leather goods and handicrafts
make up nearly all of the rest.
In the early 1990s, Bangladesh launched wide-rang-
ing trade reforms that reduced and simplified tariffs,
removed quantitative restrictions, and freed exchange
rates. Although the nation’s trade integration rose
from 18% in 1990 to 32% in 2004, tariff protections
continue to be among the region’s highest. And while
the boom in garment trade created rapid airfreight
development, infrastructure deficiencies still deter
economic growth.
Nearly 95% of the country’s air cargo moves through
its largest airport, Dhaka Zia International Airport, with
only a small portion going through Chittagong
International Airport. Scheduled cargo capacity is
around 112,900 tonnes annually. Today, 14 air carri-
ers offer cargo service to Zia and 16 fly passengers.
Slightly more than half of the country’s international
flights (180 per week) operate through Zia. Biman, the
national carrier offers about 30% of the cargo capaci-
ty on its 26 weekly flights.
© David H. Wells/Corbis
TRAVEL TIPS
■ Bangladesh is a hierarchi-
cal society that respects age
and position.
■ Business etiquette is rea-
sonably formal.
Left and right: Parlement building Bangladesh ■ Foreign men should nod to
© Magnum Photos/HH
a Bangladeshi woman, unless
she extends her hand.
■ Business cards are
exchanged after the initial
The cargo complex at Dhaka has facilities for both dry introduction. Present with the
© David H. Wells/Arabian Eye/Blink
and perishable cargo. The import and export ware- Vegatables are brought to market by boat on the river Chango right hand and respect cards
house currently offers sufficient storage, but will need given to you. Study them,
expansion to meet future requirements. In fact, airport comment on them, and ideally
facilities are far from the ideal needed to handle the place them in a business card
country’s double-digit growth in airfreight. AIRFREIGHT BOOM of garment exports varies with the season and with the holder.
Mahbubul Anam various designs requested by US and European buy- ■ Meetings are where deci-
Managing Director of the Expolanka Group, ers. Most consignments go to retailers in the United sions are disseminated rather
Bangladesh States, followed by European customers in London, than made.
WHAT THEY SAY Amsterdam, Paris, Frankfurt, and Milan. ■ Many people eat with their
“The boom in the airfreight industry in the early 90’s hands, but it is not impolite to
POSITIVE OUTLOOK brought local entrepreneurs and international groups ask for utensils.
Economic Review of Bangladesh, to the airfreight scene, resulting in the market becom- FREIGHTER SERVICE ■ Guests are served first,
International Monetary Fund (IMF) ing very competitive, with very high service expecta- Christian Berquier, then the eldest, continuing in
tions. The airfreight market has stabilized since the Regional Cargo Manager for AF-KL Cargo in DXB descending order of seniority.
“The Bangladesh economy has continued to exhibit introduction of the World Trade Organization. Do not start eating until the
robust growth. The authorities’ stewardship of fiscal Although perishables are still seasonal, the garment “The Air France-KLM Group has operated as an off- eldest person begins.
and monetary policies has been broadly appropriate, trade has equalized over the entire year. Chittagong line carrier in Bangladesh for many years. But last ■ When dining, the left hand
as reflected in the falling overall deficit as well as the airport has the potential to take a substantial share of November we launched weekly B747 cargo service is considered unclean. Eat,
size of the current account deficit. The country has the air cargo export market from Bangladesh because between Charles de Gaulle and Dhaka. We offer cus- pass dishes and drink with the
weathered the phasing out of the Multi-Fiber it has a large number of garments factories nearby. tomers in Bangladesh 100 tonnes of export capacity right hand.
Agreement exceptionally well, as can be judged Ready-made garments constitute the majority of com- and, after two months of activity, we can say the
from the robust increase in garment exports.” modities air freighted out of Bangladesh. The volume operation is a success.” Source: Various
cargovision 27
 cargovision market monitor
Overall, the airfreight industry recorded only average growth in 2006, with rates below 5%.
But Africa and the Middle East were booming, with growth rates exceeding those for Asia-Pacific.

IT’S THE OIL PRICE, STUPID! Dick van den Berg weighs the underlying factors.

BY DICK VAN DEN BERG

Major Scheduled Airlines - Global Freight Traffic Growth Africa and Middle East Exports and Imports (2005) exports to
imports from
■ The airfreight industry recorded only average growth in 2006, 20%
Growth - Quarter vs Quarter previous Year
350 ■ Both Africa and the Middle East export commodities mainly to
Average Growth of Last 3 Years = 6.5%
with rates below 5%. Coming on the heels of low growth in 2005, Growth - Month vs Month Previous Year
Asia and Europe. Bulk minerals travel by sea, and airfreight plays no
300
this disappointed many in the industry. It now seems that the role in the imbalanced flow of that traffic. Besides oil, Africa and the
15%
expansion in 2004 was a once-in-a-lifetime exception, created by Middle East export natural gas (Qatar), copper (Zambia), and gold
250
the opening of China. IATA has concluded that high oil prices are and diamonds (South Africa). Imports that arrive by air are mainly
one constraint on airfreight growth: many shippers prefer sea 10%
200
consumer and investment products with higher per-kilo values. This
freight because of the fuel surcharges on airfreight. traffic is the source of the ongoing boom in airfreight bound for

Annual Growth
150 Africa and the Middle East.
5%

100

0%
50

bln US$
-5% 0
Oct ‘03 Jan ‘04 Apr ‘04 Jul ‘04 Oct ‘04 Jan ‘05 Apr ‘05 Jul ‘05 Oct ‘05 Jan ‘06 Apr ‘06 Jul ‘06 Oct ë06
North America Europe Asia

IATA FTK Growth per Region 2005 Oil and Gas Exports of Major African and Middle Eastern Countries
■ 2005 and 2006 were also remarkable because the industry’s 20%
2006 until Nov.
150.000
■ Oil and gas products have the greatest impact on the global
2000
highest growth was not recorded in Asia-Pacific, as it was during economy. Higher prices have created severe trade imbalances in
16,1% 2005
most of the past 20 years. Growth rates in Africa and the Middle the USA, but massive additional cash flow for Russia, Norway,
14,6%
15%
East were higher than in Asia, and were driven by three factors. Canada, and many Middle Eastern and African nations. The largest
Firstly, rising imports in countries with sudden wealth from their bur- 100.000 cash increase went to Saudi Arabia, which now receives US$70 bil-
geoning exports of oil and minerals. Secondly, a growing flow of 10% lion more per year than it did in 2000. It will be interesting to see
perishables from Africa to Europe. Thirdly, acceptance of the Mid- 6,9% 6,6% how the country chooses to invest this money. Every country has
6,1%
dle East as an air traffic hub between Europe and Asia meant that a 5% 4,2%
4,8% 4,8% its own agenda for spending its income from oil and natural gas.
50.000
large part of the region’s exports originated in Asia. 3,2%
The United Arab Emirates is probably best known for the creativity it
1,7%
1,1%
0,5% displays in launching new investment projects. In Dubai, however,

millions of US$
0,4%
0%
oil is not the major source of income: trade and tourism are pro-
-1,2%
pelling its growth.
-
-5% Saudi UAE Algeria Nigeria Iran Kuwait Libya Iraq Qatar Angola Oman
Africa Middle East Asia Pacific Europe North Latin World Arabia
America America

Price Development Energy and Metals metals

Africa & Middle East - Major Freight Airlines (IATA) 2000
Indexed with January ‘97 = 100 energy 2005
■ Heightened economic activity in China, India and other emerg- ■ The developments we have discussed would suggest that
350 Emirates
ing nations has caused a steep rise in demand for oil and metals. African and Middle Eastern carriers would show significant gains in
As prices went up, so did the income of the countries that produce Air France - KLM airfreight traffic. This is true for Emirates Airlines and Qatar Airways.
300
them. While many of these resources are located in Africa and the Saudi Arabian
Emirates freight traffic alone makes up more than half of the two
Middle East, we should not overlook countries like Russia and regions’ growth and Etihad Airways may soon join their double-digit
250 El Al
Canada. Increased income in all these nations resulted not only in club. However, the other airlines in these two important regions
higher consumption, but also in greater liquidity and cheaper capi- Qatar Airways have not shown spectacular growth. Indeed, European airlines
tal, spurring the growth of cities along the Gulf coast, for example. 200 have profited more from these developments than most of their
South African
Although these commodity prices are now below peak values, they African and the Middle Eastern counterparts.
will continue to remain higher than in the past due to continued 150
British Airways

© Olé ontwerpers
growth in Asia. Lufthansa

100 Gulf Air

Cargolux
50
jan ‘97 jan ‘98 jan ‘99 jan ‘00 jan ‘01 jan ‘02 jan ‘03 jan ‘04 jan ‘05 jan ‘06 jan ‘07 0 500 1000 1500 2000 2500 3000 3500 4000 4500
28 cargovision | MARCH 07 FTK (millions) cargovision 29
 cargovision postscript cargovision information

GAMERA LIVES
■ Some of the latest designs for a cargo aircraft come straight out of a
cargovision
Godzilla flick. A combination of blimp, plane and hovercraft, they look like Cargovision is the management magazine of AF-KL Cargo.

LIGHTER AND CLEANER
■ Would you be interested in a hydrogen-powered
lawnmower? Seriously. Some bright researchers at
Princeton University developed a mechanical power
control for a hydrogen fuel cell. It is like stepping on the
gas pedal to make your car accelerate.
Designers normally adjust a fuel cell’s power with elec-
tronic controls, which need complex systems to man-
age humidity and recover fuel, and recycling systems
to make the whole thing efficient. The new process
feeds hydrogen into the fuel cell as needed and also
creates a closed system that uses waste water to reg-
ulate the size of the reaction chamber where oxygen
and hydrogen combine to form heat and water. The
design uses 100% of the fuel and needs no recycling
system. Fuel for the current model comes in returnable
tanks, like those used for outdoor gas grills.
The researchers next step is to scale a design to com-
pete with fuel cells being tested for the auto industry.
But what about aircraft? I recently saw photos of a
German motorcycle powered by 24 chainsaw motors.
© UPI Photo/Eyevine/HH
the giant turtle of sci-fi fame. Such lighter-than-air craft are practical for Its function is to disseminate information on transport,
colder regions, keeping a cadre of designers busy in Russia and the US, distribution, logistics, information services, and general
exploring odd-looking contraptions that float just beneath the threshold of business developments. The editorial opinions expressed
our consciousness. Occasionally, they surface. in the magazine are not necessarily those of AF-KLM.
Two US firms showed their airships to business leaders, students and Reproduction in whole or in part without written permission
academics at a gathering held at the University of Alaska in Anchorage is prohibited.
last fall. Worldwide Aeros Corp. of California and Hybrid Aircraft Corp. of
New Mexico presented modern designs featuring ridged, helium-filled
bladders for lift and aircraft engines for thrust.
Hybrid’s SkyCat is expected to carry 1,000 tons over 4,500 nmi at 100
GEEKS BEARING GIFTS
knots. It will not need a long runway or a special hangar. Hybrid is devel-
oping its airships in partnership with Lockheed Martin. The company has ■ Boeing’s Large Cargo Freighter made its appear- SUBSCRIBER SERVICES
built one ship and has orders for others. ance in January, to begin flying fuselage sections of
Aeros is currently building a test craft and has designs for several configu- the company’s B787 Dreamliner between manufactur- Cargovision is published quarterly by AF-KL Cargo
3
rations. One can lift 100 tons vertically and carry it 2,000 miles at 100 ing facilities. The LCF holds 65,000 ft , about three and mailed to subscribers in almost every country.
mph. Another will haul 500 tons. times that of a typical B747.
Airships use less fuel than helicopters and airplanes, but are expensive to Maine has not registered high on the list of aerospace Please visit www.cargovision.org
build and cost more to operate than boats and trucks. Hybrid hopes to destinations in the past, but now we learn that it is a and click on the Subscribe icon.
have them available commercially by 2010, for use in project work and in leader in the field of composites and may find itself in You will be able to:
the oil and timber industries. ■ line for a visit from the LCF. Curious. What other unfa-
miliar sites and cities will benefit from Boeing’s 787 ■ Sign up for a free subscription
construction project and perhaps alter air-shipping ■ Change your address
cargovision
patterns? ■ ■ Cancel your subscription Passion Powers Panalpina
CEE How it Grows
■ Review recent editions Moving FastShip

Surely a hydrogen-powered cargo plane can’t be too

far off? ■

PURLOINED IN PENANG GULF

STREAM
■ Last November, 20 armed men robbed the
MASKargo complex in Batu Maung. It took them less
than one hour to fill two sea containers with 585 car-
tons and 18 pallets of microchips and motherboards
made by a multinational in Bayan Lepas. Supposedly,
Malaysia’s largest heist, the estimated value of the haul
was US$13 million. The robbers also swiped footage
of the robbery from the closed-circuit TV cameras.
In December, after thieves fled with more than
US$600,000 worth of goods from a another ware- Published by AF-KL Cargo Communication, P.O. Box 7700, 1117 ZL
house in Bukit Tengah, the state deputy police chief Schiphol, The Netherlands. Christelle Dufour Theuws, dufourtheuws@cargovision.org
disclosed that 24 lorry hijacks and factory robberies Kirsten Hemmer, hemmer@cargovision.org

were reported statewide last year.

© Lee Snider/Photo Images/Corbis

Concept & Realization: vdBJ Communicatie Groep, Bloemendaal, The Netherlands

As of press time, police arrested two transport compa-
ny drivers in connection with the theft of the
microchips. They had detained 18 people after the
incident but released them after investigations showed
they were not involved with the November heist. ■
www.vdbj.nl, vdbj@cargovision.org
Editor in Chief: Mark W. Lyon, lyon@cargovision.org
Project Manager: Urtha Ririhatuela, ririhatuela@vdbj.nl
Art Direction: Sok Visueel Management, Amsterdam, The Netherlands
Editorial Office: Vijverweg 18, 2016 GX Bloemendaal, The Netherlands, T +31(0) 23 541 1701
Circulation Manager: Herman Brijssinck, T +32 2752 90 51, brijssinck@cargovision.org

by Mark W. Lyon, editor-in-chief AF-KL Cargo © MAR 2007 Volume 22 Number 28

30 cargovision | MARCH 07 cargovision 31

32 cargovision | MARCH 07