QUARTERLY MAGAZINE AIR FRANCE CARGO-KLM CARGO VOLUME 21 ˆ NUMBER 27 ˆ DECMEBER 2006

cargovision

Calgary or Bust
Horses for Courses
Electronic Creep

INTO
AFRICA
 cargovision editorial cargovision contents

© Dieter Telemans/Hollandse Hoogte

NOURISHING POTENTIAL Area of Nafadji, Mali, page 4

Africa is a complex continent - a huge market with tremendous human and natural resources that
remain relatively underdeveloped. Yet, many African nations are working hard and finding success
converting their resources into products and services that compete in world markets. An efficient air
transportation system helps them deliver goods to international customers in exchange for income
to help grow and diversify a local economic base. For decades, Air France and KLM have served
passenger and cargo customers in different parts of Africa. In this issue, we take a look at some of
the traditional and innovative businesses that are helping these nations succeed.
Meanwhile, across the Atlantic, South American countries are also busy developing resources and
finding markets in North America and Europe. In this issue, we look at two of them. Chile’s air cargo
market has been growing at a faster rate than the global average, mainly due to its exports of fish
and fresh produce to markets in the Northern Hemisphere during their winter.
Argentina also has a number of successful agricultural exports, but in this issue we concentrate on
horses. These animals, which travel as Variation Live cargo, have been a staple for KLM Cargo for
many years. Following the merger of with Air France, the staff of AF-KL Cargo had to solve the chal-
lenge of moving these delicate travelers not only to new destinations, but also between the Schiphol
and Charles de Gaulle hubs. One of the results is that Air France is carrying many more horses
today than it did a year ago.
Heading north to Canada, we review the Air Cargo Forum and Exposition in Calgary to see what’s
buzzing among the industry’s leading spokesmen. We take a look at the topics that dominated this
biannual event. For instance, how greater airline access to new markets helps customers around
the world and improves living and working conditions for local producers, and how paperless air-
freight could save a billion dollars and make freight flow faster.
Northwest Airlines Cargo president, Jim Friedel is among those championing development of the
paperless environment. How he goes about conveying this to his colleagues is evident as we follow
him in our Week in The Life feature.
FIATA’s new president Bill Gottlieb also had something to say about the paperless environment in
Calgary, but he was even more effusive on the topic of whether forwarders should assume greater
responsibility for inspecting airfreight shipments. We spoke to him for our Forwarder Q&A,
4 INTO AFRICA
The World Bank has again identified Africa as the most challenging place to do business. However, it also
ranked South Africa, Mauritius, Namibia and Botswana among the least challenging. Several large logistic
operators are seeing bright spots on the Dark Continent.
14 MR. PRESIDENT
Security is a hot issue in the airfreight industry, but few people are as close to the fire as William M. Gottlieb.
As incoming president of the International Federation of Freight Forwarders Associations and president of
David Kirsch Forwarders Ltd., he has a clear view of both sides of the coin.
16 CALGARY OR BUST
More than 850 air cargo executives from 74 countries attended the 2006 Air Cargo Forum and Exposition
in Calgary in September. The Canadian Pavilion and Emirates Sky Cargo boasted the largest displays.
William M. Gottlieb, Karen Thuermer runs through the highlights.
page 14
19 PEOPLE MAKE A DIFFERENCE
A nine-tonne pallet has jammed on a main deck in Houston. It won't budge and the KLM aircraft is going
nowhere until it does. Across the Atlantic it's after midnight when Cargo Duty Manager Jan Koppen gets
the distress call from the Houston team.
20 ELECTRONIC CREEP
Customs authorities are increasingly insisting on receiving advance notification of airfreight shipments. This
has helped to expand the quantity and frequency of electronic messaging; despite the air cargo industry’s
Polo ponies, page 25 rather slow adoption of electronic air waybill transmissions.
24 HORSES FOR COURSES
A horse is a horse, of course - but not to Variation Live staff at AF-KL Cargo. Polo ponies are small and
enjoy being cozy together, while high-strung racehorses do not. Karen Thuermer explains the intricacies of
moving horses through the AF-KL Cargo network.

Lastly, we look briefly at the trend among customs authorities to insist on receiving advance notifica-
tion of airfreight shipments. This has helped expand the quantity and frequency of electronic mes-
saging, despite the industry’s rather slow adoption of electronic air waybill transmissions. 08 news & datelines
22 Jim Friedel

© Milepost 921/2/Corbis
Sincerely, 26 country file: Chile
28 market monitor
BÉATRICE DELPUECH 30 postscript
Vice President - Equation for Air France Cargo-KLM Cargo 31 information and colophon

COVER IMAGE
Gas station in the middle of a vast desert Trans-Asian rail systems, page 30
plateau in Central Sudan
© Benjamin Lowy/corbis
2 cargovision | DECEMBER 06 cargovision 3
 The World Bank has again identified Africa as the most challenging place
to do business. However, it also ranked South Africa, Mauritius, Namibia
and Botswana among the least challenging. Indeed, parts of the Dark
Continent have become bright spots on the map for several large logis-
tics operators.
BY IAN PUTZGER

INTO
AFRICA
■ “Africa is becoming one of our sources of growth,”
says Michael Barber, general manager of Schenker’s
business development in South Africa.
“Growth in Africa has been good, especially on the air
cargo side,” says Tito Beeharry, Eagle Global Logistics
Africa development manager. Eagle set up an African
division four years ago.
“Africa is booming,” adds Wolfgang Meier, executive
vice president and director of Panalpina Air & Ocean.
The Swiss forwarder, a leading force on the continent
for decades, is now expanding in Entebbe, Nairobi
and Tripoli.
Oil and gas exploration activities and mining are driving
Africa’s growth. Huge new mining projects underway
in the Democratic Republic of Congo and Zambia are
generating abundant airfreight into these countries,
not only for mining-related equipment, but also for
goods needed by the industry’s growing support busi-
nesses. Most inbound traffic comes from Europe, but
a growing share comes from the Chinese export jug-
gernaut. With their economies on the ascent, African
countries also display a voracious appetite for
telecommunication equipment from Asia.
Although exports are increasing from some African
© Septemberlegs/Alamy
MAPPING
AFRICA
The African networks of Air
France, Dom-Tom, North & West Africa. “In the past France and KLM complement
there was an imbalance, but we could compensate by each other with overlap mainly
developing perishables traffic.” in South Africa. Air France flies
to 30 destinations in West and
North Africa and the Indian
OIL FOR FOOD Ocean. KLM dominates in
East and South Africa.
Fish, flowers and vegetables still account for 70% of
Africa’s northbound airfreight. The flow is stable and Air France carries 80% of its
volume is increasing. Most perishables are destined African cargo in the bellies of the
for Europe. For example, 90% of the Air France perish- A330, A340 and B777 passenger
able cargo from Africa unloads in Paris. Only 10% jets it flies to the continent.
connects to outgoing flights. It supplements these services
Air France operates flights to 30 African destinations with B747-200 freighter flights to
and serves as a conduit linking them with North Dakar and to the Indian Ocean.
America and Asia. Some of these freighters return
Until recently, Panalpina built its African program with via Kenya while an A300-600F
dedicated B747 freighter flights between Luxembourg serves 13 destinations, mostly
and South Africa. This daily service is still the mainstay in western and northern Africa.
of its operation, but flights are now traveling more
often through the Middle East. Growing trade between KLM operates passenger flights
Asia and Africa is making Dubai a primary gateway for to eastern and southern Africa.
Africa. Panalpina currently flies two dedicated In Johannesburg, it operates a
freighters a week from Dubai to eastern and western combination of B747-400 pas-

countries, the level is still set to improve. “Now, the Africa and expects this number to rise sharply. senger aircraft and combis to
ratio of cargo is 7:6 in favor of southbound traffic.” “We are building a hub in Dubai like the one we have in provide main deck uplift for the
says Gilles Roche, AF-KL Cargo vice president for Luxembourg,” Mr. Meier says. “It will have four or five South African market.

4 cargovision 5
cargovision into Afrika
© Laif/Hollandse Hoogte
Gilles Roche: weekly flights by the end of next year.” Panalpina also
“One of our current formed a partnership with TAAG Angola to operate
action plans is to weekly B747 freighters between Luanda and Ostend.
develop new flows Flexibility is essential when you encounter sponta-
with our Variation neous fuel shortages in many African markets, Mr.
product.” Meier says. “We fly a fixed weekly uplift, but with
enough flexibility to reroute if necessary. If we cannot fit
into the schedule, then we run additional charters.”
Flexibility is equally important in accommodating the
seasonality of perishables. Northbound Air France
freighters stop in Cairo during December, to take on
fuel so they can carry Madagascar’s lychee produc-
tion. The lion’s share of Air France-KLM traffic moving
out of Africa travels in passenger bellies. Its freighters
simply complement that capacity and add flexibility.
For example, it leases an A300-600 freighter for a
route that covers 13 destinations in Africa. “We adapt
on a seasonal basis, Mr. Roche says. “ For this year’s
winter season, Libreville and Pointe Noire are being
added to the schedule, and Dakar in addition to the
two weekly B747 freighters and the daily B777-200
passenger flight.
Guy Lenain: Most African air exports passes through Nigeria or
“Nile perch already South Africa, the continent’s two largest gateways.
accounts for a sizeable Both countries have abundant connections to
tonnage on Air France Europe, ensuring competitive rates. However, for-
freighters from east warders and shippers have less choice reaching other
Africa.” African destinations. Much of the traffic beyond
Nigeria moves on charters.South African Airways
recently bought two freighters because it sees
demand for a regional cargo service. However, it is
6 cargovision | DECEMBER 06
unlikely to add more capacity until the region’s insta-
bility is resolved, says Eagle’s Mr. Barber.
A TRUCK. IT’S STUCK
Trucking movements within South Africa, tend to go
smoothly. But it is another matter in nearby coun-
tries, where roads are steadily improving. So are
border crossings. “From South Africa to Zambia
you have to cross four borders,” Mr. Beeharry says.
“Everything depends on congestion at those
borders. Sometimes you have a queue of 400 to
500 trucks.”
Truck equipment is also in short supply, due to a
building surge in Zambia and the Congo. However,
rail is even worse because tracks are not maintained.
“Rail is madness,” Mr. Beeharry says. “We try to
avoid it, but during the busiest season we have to
use it.” On the other hand, forwarders say Africa’s
airport infrastructures are basic but reliable and rea-
sonably efficient. Many cities have seen remarkable
improvements. Johannesburg is a cut above the
rest, but still faces some problems for cargo.
Security measures had to be tightened after recent
thefts. Planners want to move the entire cargo sec-
tion to another part of the airport to make way for a
major expansion of its passenger facilities. If this cre-
ates congestion and backlogs, it could hurt
Johannesburg’s traffic by causing forwarders to seek
other options.
An efficient and well-equipped airport infrastructure
is essential for exporting the region’s perishables by
air. Problems would certainly hurt shipments of tuna
destined to become sushi in Tokyo, or lobsters and
fish destined for diners in Europe. Much of the fish
heads to Spain. Panalpina, along with some fish
exporters, operates dedicated flights from
Johannesburg to Zaragoza.
GROW AND THRIVE
Seafood is a good export business, and one that
other countries want to cultivate. Tanzania is building
an aquaculture business on its coastline. Nile perch
already accounts for a sizeable tonnage on Air
France freighters from east Africa, says Guy Lenain,
vice president for the Middle East, India, Southern
and Eastern Africa for AF-KL Cargo.
Kenya is the main supplier for flowers for Europe.
Now, other African countries want a piece of that
action, too. The Ethiopian government has been fos-
tering the development of horticulture, adding 100
hectares of land since last winter. However, investors
remain cautious, largely because of red tape.
Beans, another mainstay of Kenya’s exports, also fill
most Air France freighters leaving Reunion and KLM
B777 passenger flights from Nairobi. Morocco and
Egypt have joined the market and both are closer to
Europe. However, they have yet to match the quality
of Kenyan beans.
DEVELOPING
NEW NICHES
© Annie Belt/Corbis and right: Paul van Riel/Hollandse Hoogte
Over the past three years, Air
France has been carrying shark
fins from several locations in West
Africa to Hong Kong. This traffic
does not constitute a huge vol-
ume, but reflects a continuing
search for new business and mar-
kets. “One of our current action
plans is to develop new flows with
our Variation product,” says AF-
KL Cargo’s Gilles Roche.
One commodity that has estab-
lished itself firmly is fresh tuna.
AF-KL Cargo flies a lot from Africa
to Japan. Much of it comes from
Skyservices is a Johannesburg forwarder that spe- Tunisia. Between October and
cializes in moving fruit, vegetables, flowers, fish and March, Tunisian companies
ostrich meat overseas. Bernd Jülicher, the compa- export farmed tuna. From
ny’s managing director, sees a trend toward value- February to June, they ship wild
added shipments. Instead of shipping produce in tuna.Air France flies the fish to
bulk, they now fly packaged and ready for supermar- Paris on passenger or freighter
ket shelves. Flowers are shipped in bouquets. Fruit is flights. There it is transferred to
sliced or cut and mixed for fruit salads. planes departing the same day for
The high value of the South African rand, combined Tokyo, where it arrives in time for
with the high cost of air cargo, has reduced perish- delivery to the Tsukiji wholesale
able exports by air from South Africa, Mr. Jülicher fish market, where inspections
says. However, other African nations, with lower begin at 03:00 every day.
exchange rates have seen perishable consignments Skyservices sends swordfish and
rise. Air exports of industrial products are still negligi- long-line tuna from Johannesburg
ble, except for automotive cargo from South Africa, to Japan, New York and Boston.
where the auto industry has a strong base. However, “It’s quite a challenge, because
electronics shipments are starting to move from it’s unpredictable,” says Bernd
Tunisia and Morocco, where Air France has regular Jülicher. The boat radios the
flights and flies traffic on to Singapore, Hong Kong, results of the catch to shore so
Japan and Los Angeles. Skyservices can make provisional
Several countries in Africa continue to export textiles, bookings. However, the forwarder
but this business has been devastated by the does not know until the day
Chinese garment industry. “In Lesotho and Malawi, a before the shipments leave how
lot of producers closed their doors,” Mr. Barber says. much fish goes to Tokyo and how
Botswana is faced with similar troubles. While there much to the US.
are definite business hurdles in much of the conti- Snails from southern Africa began
nent, optimism mostly prevails and industrial devel- creeping into AF-KL Cargo holds
opment is expected to grow as investors see new last year as the newest north-
opportunities and feel greater confidence in using bound commodity, most of them
their money to support Africa’s amazing potential. destined for France. “It seems to
be a growing business,” says AF-
KL Cargo’s Guy Lenain.
cargovision 7
 cargovision news around the world
Our quarterly review of
industry news keeps you
abeast of developments
in key sectors around
the world.
Korean Air signed an agreement for a cargo joint venture with Sinotrans
CARRIERS World
Hahn
Aeroflot Cargo became an independent unit of Aeroflot in October and will
base 18 of its 227 staff members in Hahn. The wholly-owned subsidiary
will lease six MD-11 freighters and base them at Hahn when they start
arriving in 2007. The new freighters will gradually replace the four DC-10
freighters now in Hahn, which will then begin service inside Russia.
Aeroflot DC-10’s operate 13 times a week from Hahn to Russia and Asia.
This is over half of the cargo flights in and out of the airport. In October, the
airline added road feeder services for its customers between Hahn and
Milan, Paris, Brussels, Amsterdam, and Frankfurt.
8 cargovision | DECEMBER 06
Beijing
Korean Air got its long-sought opening in China when
it signed an agreement in September to launch a
cargo joint venture with Sinotrans Air Transportation
Development, a subsidiary of Sinotrans, China’s
biggest logistics company.
Sinotrans specializes in cargo forwarding for air, sea
and ground transportation with its 16 subsidiaries.
Sinotrans Air already has a comprehensive network
in China.
The new company will operate in the Chinese domes-
tic and international airfreight transportation and
related businesses, says Korean Air spokesman Soo
Yeon Kim. Executives from Korean Air will assume
the top two posts, chief executive officer and chief
financial officer.
Korean Air already operates 23 weekly freighter
services to Hong Kong, Shanghai, Beijing, Tianjin,
Guangzhou, and Hang Zhou, and serves an additional
10 cities with passenger flights. It intends to expand
the frequency of its existing freighter services and
inaugurate new ones to Chengdu, Qingtao, Ximen, and
Dalian, in line with the Korea-China open sky policy.
The influence of Sinotrans Air in China’s air cargo
trade is expected to play an important role in bringing
forth an outcome that is sometimes difficult for a
foreign entity alone to perform, Mr. Kim says.
The joint venture will be funded with EUR51 million
(US$65 million), 51% from Sinotrans Air, 25% from
Korean Air, 13% from Hana Capital, and 11% from
cargovision news around the world
Shinhan Capital. The two smaller shareholders are both South Korean
financial institutions.
The new business is expected to become profitable in two to three years’
time and will not involve other SkyTeam Members.
Brussels
DHL said in October that it would invest EUR119 million (US$150 million)
to acquire a 49% equity stake in Polar Air Cargo, including a 25% voting
interest. The deal also includes a 20-year block space agreement for INFRASTRUCTURE Asia
guaranteed capacity on Polar flights across the Pacific. Finalization is
subject to regulatory approvals, but the companies expect to close late
this year or in early spring. China
The arrangement enables DHL to have its own air capacity for the first time More concerns about China’s logistics are surfacing
between its large parcel networks in Asia and its growing coverage in the as more companies expand sourcing in the Middle
US. It is clearly a challenge to UPS and FedEx who now dominate the Kingdom.
transpacific express market. DHL would like a greater share of the North As a percent of GDP, logistics costs in China are
America market, at the same time the US parcel companies want to unseat double those in the U.S. It costs US$400 in tolls to
DHL in Europe and Asia. move a 40-ft container on the toll roads from Beijing
Earlier in the summer, DHL said it would buy the shares of India’s Blue Dart to Shanghai, 1,500 km away. To keep pace with the
Express Ltd. and take it private to strengthen its position in one of the economy, these services will have to grow 2.8% for
world’s fastest growing markets. DHL’s Singapore subsidiary bought 81% every 1% increase in GDP, says Adrian Gonzalez of
of Blue Dart almost two years ago. the ARC Advisory Group, director of their logistics
executive council.
Even though logistics services may be expensive and
inconsistent, China is a still good sourcing option for
products with stable demand patterns, because of
their longer lead times and replenishment cycles.
However, products with highly variable demand are
not normally great candidates for China sourcing
unless they have a very high value-to-weight ratio
that justifies using airfreight.
Shippers of perishables, including pharmaceuticals,
flowers, food, and chemicals, have a particularly
difficult time with processing, packaging and trans-
portation in China. Although there are 30,000 cold
stores for 6 million tonnes and air-conditioned stores
for another 2 million tonnes, the capacity is insufficient,
according to the China Supply Chain Council.
Freight carts and vans packed with ice carry most of
© Dieter Telemans/Hollandse Hoogte
the fruit and vegetables. Only 10% of this produce
moves in vehicles with refrigeration. Fruit damages
run 15% to 30% and total losses could feed 150
million people each year, the council reports.
cargovision 9
 cargovision news around the world
Nevertheless, some perishable shippers, particularly
those in the pharmaceuticals sector, are prepared to
pay extra for quality. This will become increasingly
important as competition reduces supply-chain lead
times and product life cycles and the nation’s health
regulations become more stringent. This is motivating
some logistics companies to improve services.
Similar changes are taking place in the food industry,
in step with the Chinese consumer’s growing desire for
fresh imported food products and out-of-season fruit
and vegetables. The Ministry of Commerce has been
urging farmers to raise production standards following
the imposition of stricter standards on chemical
residues issued by Japan. China is Japan’s largest
source of farm produce, exporting nearly US$8 billion
worth of agricultural products to Japan last year.
INDUSTRY World
Irkutsk
The worldwide shortage of cargo aircraft has prompt-
ed EADS, representing Airbus and conversion special-
ist Elbe Flugzeugwerke GmbH (EFW) of Dresden, to
create a joint venture with Russian aircraft maker Irkut.
EFW now converts 20 A300s and A310s annually. The
new venture will add Irkut’s conversion for the A320
family, as well as managing the work in Germany and
Russia.
Both the partnership and the individual firms will
design the conversions, manufacture the conversion
kits, perform the conversions, and market and sell the
conversion services. Production is scheduled to start
in 2010, with an initial goal of 30 A320 and A321 con-
versions a year.
Irkut is one of Russia’s leading aircraft manufacturers.
Its order book amounts to US$5.1 billion. It is a strate-
gic partner of EADS and an official supplier of Airbus.
In December 2005, EADS purchased a 10% stake in
10 cargovision | DECEMBER 06
Irkut and has had a representative on the Irkut Board
of Directors since March 2006. According to con-
tracts signed in 2004 and 2006, Irkutsk Aviation Plant
(main production centre of Irkut) has started produc-
tion of floor grids, nose landing gear bay components,
keel beams, flap tracks, and wing ribs and stringers for
the A320, as well as wing ribs and flap tracks for the
A330-A340 family.
A team of Irkut and Airbus specialists recently mod-
ernized Irkut’s production facilities to support the man-
ufacture of Airbus components. All of the main
processes, including mechanical and thermal process-
ing, galvanization, and painting, are now certified to
Airbus standards.
Toulouse, Long Beach
Airbus says the first A380 will not reach Singapore
Airlines until October 2007, 18 months after the origi-
nal delivery date. This has made a number of early
customers jittery. Although UPS and FedEx are said to
be waiting patiently, others are considering alternative
solutions available from Boeing. They won’t have to
hurry to find C-17’s, however. After saying in August
that it would cease production of its rugged US$200-
million freighter, the company won a reprieve from
Congress to keep the manufacturing plant in San
Diego open until 2010, thanks in part to an appeal by
Arnold Schwarzenegger, California’s “governator.”
© ANP Foto
GATEWAYS World
Istanbul
Cargo business is still not back to usual at Atatürk
Airport since fire destroyed the main cargo terminal
earlier this year, although many companies are trying
hard to keep freight moving as before.
Most agents with offices in the cargo terminal relocat-
ed after the fire. They have new spaces in an old con-
crete cargo building operated by the State Airport
Administration, says Demir Ozerman, managing direc-
tor of Kargo Sistem, the Turkish member of the EGSA
consortium of independent GSAA companies. “Some
agents moved to the MNG building and a few others
to equipped vans.”
Air France-KLM Cargo, Emirates, Kuzu, Lufthansa,
MNG, UPS, and TNT are all using MNG’s cargo han-
dling space located to the right of the passenger ter-
minal, Mr. Ozerman says. Others are accepting export
freight in a corridor at the cargo terminal building.
Once accepted, handling companies process the
freight in a closed area of tarmac away from the cargo
building. This is obviously a problem during the peak
season, Mr. Ozerman says.
Imports encounter better conditions, because MNG,
Çelebi Corp, and Sistem Logistics have additional
warehouse space less than 5 km from the airport.
However, no approved or definitive action plan has yet
emerged to replace the burned out cargo terminal, Mr.
Ozerman says. The reason for the delay is a condition
in the contract for passenger terminal operations
between TAV and DHMI (State Airports
Administration). It requires DHMI to release more con-
struction space for passenger terminals. For the
moment, it looks like that space will be the burned-out
cargovision news around the world
Black smoke billows from the Ataturk Airport in Istanbul on may 24, 2006
cargo area. Ironically, the extension of passenger terminal will cre-
ate more demand for cargo processing. The Turkish Government
seems to have a two-pronged approach to alleviating congestion,
Mr. Ozerman says.
The first is to divert freight charters to Istanbul’s other airport,
Sabiha Gökçen International on the Asian side of the Bosphorus,
about 55 km (34 miles) east of Atatürk. This will solve 15% of the
space problem, Mr. Ozerman says, but at the expense of creating
an imbalanced competitive position for foreign AOC and call sign
holder freighter operators. The government’s second plan is to
seek investors for an Atatürk Airport Cargo City. Enough space
exists for a cargo city across the highway from the passenger ter-
minal, but the government has not yet found investors to buy the
land, construct and operate it, Mr. Ozerman says.
Tehran
In a bid to develop Iran’s airports, Iran Airports Co. has concluded
a cooperative agreement with South Korea’s Incheon International
Airport. During the summer, the Iranian government launched
EUR113 million (US$143 million) in infrastructure projects, including
radar, x-ray equipment, passenger search gateways, and ground
safety vehicles.
cargovision 11
 cargovision news around the world
ONLINE World
Dubai
Mercator, the IT division of the Emirates Group, will
begin selling Emirates’ new SkyChain cargo reserva-
tion and management system to cargo carriers. The
new system was written in Java and is one of several
systems hoping to replace the legacy cargo systems
used by many airlines.
Norcross
LXE, a venerable supplier of barcode products, has
decided not to fall under the wheels of the RFID jug-
gernaut. Instead, the company combined barcodes
with voice recognition, to offer an inexpensive alterna-
tive for warehouse operators and cargo handlers.
In many warehouses, a worker receives a note on a
computer screen requesting a pickup from a stock
location. He must scan the location tag and the item
tag and put it on a pallet so the system knows he has
done the right job and is ready for the next one.
However, in terminals with an LXE solution, workers
wear wireless headsets connected to computers.
When one of them receives a verbal instruction from
the computer to pick an item, he pulls it from storage
and puts it on the pallet. An RFID reader tells the
computer what is on the pallet.
The RFID tags improve quality control, for example,
when a worker scans three items but takes only two.
RFID eliminate the scanning process. Voice recogni-
tion helps the worker keep his eyes on the task and his
hands free. Over the course of a day, the system
saves a lot of time, says Mark Dessommes, LXE’s
marketing director, from company headquarters in the
state of Georgia.
12 cargovision | DECEMBER 06
cargovision datelines
February 21-23
InterAirport India 2007,
Pragati Maidan Exhibition Centre,
New Delhi.
MOVING ON World Tel: +44 (0) 1727 814 400
Fax: +44 (0) 1727 814 401
India@interairport.com
Berlin www.interairportindia.com
Jana Schebera, a Berlin-based business development executive
for Goldjet Airfreight of Guangzhou, has written a detailed study of March 4-8
the Southern Chinese air cargo market. Ms. Schebera, an econo- IATA World Cargo Symposium,
mist who is fluent in Chinese, lived and worked in Guangzhou, Mexico City.
interviewing Chinese forwarders and combining information from Tel: +1 514 874 0202
both official and unofficial sources to prepare a comprehensive Fax: +1 514 874 2654
INTERMEDIARIES World analysis of the region’s air cargo potential and the outlook for its www.iata.org
five airports. For more information about the report, please contact
jschebera@yahoo.com March 11-13
Bangkok AirCargo 2007,
Over 200 independent forwarders from around the Hong Kong Sheraton Wild Horse Pass,
world met at the Plaza Athenee hotel in the Thai capi- Kenny Tang has replaced Stanley Hui as chief executive officer of Phoenix.
tal in September to swap business ideas and find part- Dragonair. Mr. Tang, a chartered accountant, joined Cathay Tel: +1 602 225 0100
ners. Attendees at the Advanced Professional Pacific’s Accounts department in 1979, rising through the ranks to Fax: +1 703 361 5274
Logistics Network (www.wcafamily.com) meeting also become general manager of Corporate Finance in 1994. Mr. Tang Fiona@aemca.org
listened to presentations, including one to provide new was appointed chief operating officer of freight carrier Air Hong www.aircargoconference.org
and exclusive online freight liability insurance. Kong in 1997 and took over as general manager of Cargo for
The goal of these annual gatherings is to provide a Cathay Pacific in February 2000. March 20-22
venue for forwarders to conduct face-to-face meet- Aviation Industry Expo,
ings with counterparts from other regions who might Bonn Orange County Convention Center,
be promising partners. Before attending the confer- Deutsche Post World Net board member John Allen has assumed Orlando.
ence, agents can use APLN’s online scheduling tool to sole management responsibility for the company’s logistics divi- Tel: +1 800 827 8009
search the roster of prospective attendees for suitable sion. The co-chair, Dr. Peter Kruse, has left the management Fax: +1 650 565 9600
candidates and to arrange a conference agenda board in best mutual agreement and assumed a new role in the www.aviationindustryexpo.com
before they leave home. Both FIATA and TIACA have group as a special representative of the CEO. Mr. Allen will oversee
adopted this software for use at their own events, all of DPWN’s air, sea and road cargo forwarding businesses, under April 18-20
according to the ALPA organizers. the recently reorganized logistics division. John Mullen now heads The Fourth China Aircargo Summit 2007,
DPNW’s express globally. Hyatt Regency,
Hang Zhou.
Moscow Dorval Fax: +8621-52379998
Russian Logistics Service Group will add 35,000 m2 of Bill Gottlieb was elected president of FIATA. Mr. Gottlieb is presi- Marketing@aircargosummit.org
warehouse space in the Podolsk, Moscow region and dent of David Kirsch Forwarders Ltd. in Montreal. Mr. Gottlieb is a
15,000 m2 of space in St. Petersburg. The company past chairman of FIATA’s Airfreight Institute and past president of April 15-17
is on track to become one of the leading warehouse the Canadian International Freight Forwarders Association. He is TIACA Executive Conference and
operators in Russia by the end of 2007. also a member of the CASS Global Forwarders Dialogue Group Annual General Meeting,
and the Cargo Paperless Transportation Project Management Cologne Bonn Airport.
Group. Phone: +1 786 265 7011
Fax: +1 786 265 7012
Minneapolis www.tiaca.org
John P. Wiehoff will become chairman of the Board of Directors
for C. H. Robinson Worldwide on December 31, 2006. Mr. Wiehoff April 29-May 1
replaces D.R. “Sid” Verdoorn who will retire at that time. Mr. CNS Partnership Conference 2007,
Wiehoff was named CEO in 2002 after serving as chief financial Rancho Bernardo Inn, San Diego.
officer, senior vice president, and president. He joined the compa- Contact: Fran Harris
ny as controller in 1992. He has been a director since 2001. Tel: +1 515 747-3312
fharris@dnsc.us
www.cnsc.net
cargovision 13

MR. PRESIDENT
BY ANDY WESTON
Security is a hot issue in the
airfreight industry, but few
people are as close to the
fire as William M. Gottlieb.
As incoming president of
the International Federation
of Freight Forwarders
Associations, he is closely
involved in regulatory develop-
ments and has to keep close
tabs on the bigger picture.
As president of David Kirsch
Forwarders Ltd, he is also
confronted with the costs and
other everyday consequences
of such regulations.
His answers to our questions
confirm that he has a clear
view of both sides of the coin.
14 cargovision | DECEMBER 06
© Tibor Bognàr/Corbis
© Rudy Sulgan/Corbis
Montreal’s Olympic Stadium
Place des Arts, subwaystation in Montreal (left) and detail of Thunderbird House Post (right)
© Ron Watts/Corbis
William M. Gottlieb is incoming president of the International Federation of
Freight Forwarders Associations. He is also president of Montreal-based
David Kirsch Forwarders Ltd. Mr. Gottlieb is past chairman of FIATA’s
what point does insurance become a cost of doing Where does the forwarder fit into
Airfreight Institute and a member of the CASS Global Forwarders Dialogue business? We would prefer to see airlines anticipate this chain of responsibility?
Group and the Cargo Paperless Transportation Project Management Group. the cost of security and include it in their service. Most freight forwarders have liability insurance and COMPANY PROFILE
most associations require it. It may cover only US$1-2
He is past president of the Canadian International Freight Forwarders. million per incident. We have seen cargo claim litigation ■
Would you be in favor of forwarders go on for years with appeals. Moreover, when the David Kirsch Forwarders Ltd.
screening cargo? amount of the claim is defined, the litigators go after was established in Montreal
We are being asked to screen cargo and so are for- everyone and let the courts decide who is responsible. in 1936 and also has offices in
warders in other countries. Airport authorities and car- If it was a terrorist incident and could be tracked, Toronto, Vancouver, and
What is your view on spreading secure the whole supply chain, the forwarder must riers say they do not have space at the airport to everyone would be in civil court. The cost of defending Winnipeg.
the responsibility for security to other know his client. Nevertheless, we could also have an screen everything. Airlines have gotten out of cargo that suit could devastate a company that may have no ■
participants in the supply chain? approved list of secure exporters. This would allow us business and outsourced their ground handling. Now direct relationship to the incident. But you still have to Its services include air and ocean
to deal in a commercial relationship with our clients their handling facilities are small, cargo flows through prove it. freight forwarding, licensed
This is relevant for Canada because of what is happen- while the government deals in a regulatory relationship quickly, and there is little room for new equipment. customs brokerage, marine
ing in the US. New TSA regulations coming in with them. Where will freight be screened and at what level? insurance, and a travel agency.
December are sending shock waves through Canada In Canada, we talked about screening 100% of cargo What should forwarders be prepared ■
because we do not have a regulated agent program or from unknown shippers, 30% from known shippers, to do then? Over the past 70 years, the
a known shipper program that is as sophisticated as Which security issue do you think and 3% from trusted shippers. We work hard to have Airfreight forwarders do not want to take on unrealistic company has gained export
those existing or proposed in the US. We are con- forwarders find most troubling today? our shippers certified, and that means only 3% to 30% requirements. We can train staff and cargo handlers to experience across the globe,
cerned that we will not be able ship cargo across the Since 9-11, we have seen security surcharges of of the cargo going through our warehouse is screened. a higher level of awareness. We can change business from Algeria to Uruguay.
border if the US regulations are applied in the manner CA$0.25/kg or US$0.20/kg. The airlines said this was How do you explain to a trusted shipper, who went practices so things are more secure. Simple things, like ■
written. We wonder how we can initiate a pilot program not for screening, the government was handling the through the certification process, that you want more not leaving trucks unlocked during lunch. Many things For further information,
for known shippers, regulated agents, and screening security aspects, but the cost was to cover the higher charges? are already happening in many countries. Heightened visit www.kirsch.ca
processes, without hampering the flow of goods. liability premiums they needed to operate. CA$0.20/kg You either have equipment in the warehouse to screen security has already reduced commercial cargo losses
Transport Canada is looking at the question. Both gov- could be 20% of the base rate for some shipments cargo before you palletize it, or you give it loose to the Legitimate costs have to be worked into pricing. We
ernments want to ensure that cargo is secure and and the charge is applicable whether the distance is airline and let them screen it. For US$50, it is a better prefer to see it as cost of the service, rather than a sur-
shore up any weaknesses. 100 km or 1,000 km. We know that fuel cost is volatile, choice to let them do it if you want to minimize your charge. We’re not asking airlines to lose money
In Europe, the government certifies shippers. To but security has been stable for the last five years. At risk and liability. because of higher security costs.
cargovision 15
 BUST
The International Air Cargo Association reports that over 850 air cargo executives from 74 countries
CALGARY OR attended the 2006 Air Cargo Forum and Exposition held in Calgary in September. The Canadian
Pavilion and Emirates Sky Cargo boasted the largest displays, amid festivities replete with a rodeo
and a performance by Cirque du Soleil. Here are some highlights from the event.
BY KAREN E. THUERMER
■ The Canadians lassoed ACF 2006 in style. Morning ses-
sions addressed access to markets, air cargo’s impact on the
global economy, shippers’ views of the industry, and the pros
and cons of paperless cargo processing. During the afternoon,
participants explored the 165 exhibits dominated by airports, IT
systems, and handling operators.
Fuel costs were a recurrent topic of conversation. Ram
Menen, divisional senior vice president at Emirates SkyCargo,
questioned whether high fuel prices for the long term would
cause manufacturers to shift manufacturing back to the United
States. “Considering that China and India’s economies are
growing fast and their cost advantages are disappearing, it
could change trade lanes completely.”
However, the formal discussions stayed on topic.
The program began with the airlines. As sourcing becomes
more global and shippers use air cargo to manage their supply
chains, airline cargo executives would like to see greater
access to their customers’ markets. “We are seeing an
increase in time-sensitive shipments,” said Ulrich Ogiermann,
president and CEO of Cargolux. “We need an air network envi-
ronment that allows us to be part of the global supply chain.”
Cargolux’s home base, Luxembourg, has negotiated 76 bilat-
eral air service agreements, but only 14 are open skies agree-
ments for cargo. “This is still a very high number compared to
other countries,” Mr. Ogiermann contended.
Most of Luxembourg’s ongoing negotiations do not entail
open skies, Mr. Ogiermann explained. “There should be a min-
imum of third and fourth freedom rights, and we would prefer
fifth and seventh freedoms as well. The more rights, the more
interesting business is for us. There should be a minimum of
two weekly frequencies per destination, with no limitations on
capacity, and routing flexibility.”
Ideally, carriers would be able to offer air cargo services freely
according to trade requirements and commercial considera-
tions and be limited only by operational and safety considera-
tions. “Generalized open skies, at least for cargo, should be
the ultimate goal, “ Mr. Ogiermann said.
OPEN FOR ALL
© Laurence Godart
On the other hand, open skies would not necessarily enhance
response times for project cargo, said Alexey Isaikin, president
and CEO of the Volga-Dnepr Group, who spoke through a
translator. “Given the uniqueness of each shipment, produc-
16 cargovision | DECEMBER 06
tive communication with customers regarding their air cargo
needs is still more important.”
“Everyone benefits from open skies, not just the supplier, but
also the manufacturer”, said Erik Britton, director of econom-
ics at Oxford Economic Forecasting. “Air cargo improves
sales, marketing and transportation for finished products. It
makes manufacturing more efficient through improved inven-
tory management, reduced risk of interrupting production,
rationalizing production sites, and rationalizing sourcing of raw
materials and parts.” Air transportation contributed $880 bil-
lion to global GDP in 2004, Mr. Britton said. “Air cargo is a key
part of that contribution. Forty percent of value of the world’s
manufactured exports is transported by air, though only 2% of
export volume. Still, the industry could do better without all of
the business lost through restrictions placed upon its growth.”
THAT SHIPPER SAID WHAT?
“Airfreight is important to IBM as it transforms itself into a glob-
al enterprise.” Richard W. Macomber, IBM’s programs manag-
er for Global Logistics Procurement, Americas, Integrated
Supply Chain of IBM told the conference. IBM ships the equi-
valent of 22 747s full of freight every day, not including domes-
tic traffic. Big Blue is relocating its US manufacturing facilities
to Brazil, Russia, India, and China, Mr. Macomber said, noting
that besides the economic growth potential of these nations,
they are home to nine of the world’s busiest airports and eight
of the largest cargo operators.
Air cargo already accounts for 78% of Intel’s freight spending,
said Gregory Skrovan, of the firm’s Customer Fulfillment
Planning & Logistics Group. Intel spends 59% of this in Asia,
with 20% coming from China 3PLs. Because the chipmaker is
sending smaller shipments to more remote locations, it runs
the risk of falling victim to their unstable logistics infrastruc-
tures, thus emphasizing its need for high visibility during ship-
ping.
“For us, air cargo is about reducing inventories and being fast
to market,” added Greg Andrews, director of Global Logistics-
Transportation for Adtran, a maker of telecommunications
routers. “To turn on a dime, we need decreased inventory and
shorter lead times. Not to mention that using airfreight has
lowered our inventory carrying costs from 7% to 2.3%.”
Mr. Andrews said he wanted to work more closely with air car-
riers, but criticized the industry’s responses to higher fuel
cargovision 17
cargovision NO LOOSE THREADS
costs and increased security screening. “The fuel surcharges
defy logic and only pad the carrier’s revenues. One also needs
to ask why half of the air cargo service providers are under
scrutiny and investigation for price fixing.”
In discussing security and cargo screening, Mr. Andrews
questioned whether airports should begin to screen freight
and passengers separately, noting that some US airports,
Huntsville, Rickenbacker, Southern California Logistics Airport
and Alliance Airport could easily undertake such a system.
DROWNING IN PAPER
The air cargo industry could fill 39 Boeing 747 freighters each
year with paper wasted on documentation, according to the
International Air Transport Association.
IATA is concentrating on its e-freight initiative because industry
processes remain paper dependent, said Jens Tubbesing,
president of Cargo Network Services Corp., IATA’s US partner.
This has resulted in missing or incorrect documentation that
hamper progress in the supply chain. “Keeping documents
and freight in sync is complex and costly. Having multiple par-
ties capturing the same data leads to inefficiency and errors.”
Northwest Airlines was an early adopter of e-commerce and is
largely paperless today, according to Jim Friedel, president of
Northwest Airlines Cargo and senior vice president of Pacific
Northwest Airlines Inc. Mr. Friedel was an advocate for helping
carriers move e-freight forward.
The industry should be ashamed of its progress in automating
air cargo traffic, said Christopher Shawdon, vice president of
Logistics Solutions for Unisys Corp. Mr. Shawdon noted how
quickly passenger carriers adopted e-tickets while airfreight’s
major weakness is still its uncoordinated IT systems.
However, e-freight may not benefit everyone. “Filing paper-
work is how freight forwarders make most of their money,”
said William Gottlieb, president of David Kirsch Forwarders
Limited. “Forwarders have an intimate understanding of the
needs of the commercial traders they serve. The carrier is
entrusted with the forwarder’s cargo. It is the forwarder who is
the customer of the air carrier.”
IATA should focus on spearheading global industry wide coop-
erative efforts, to lobby states that have yet to ratify the 1999
Montreal Convention, Mr. Gottlieb said, thereby allowing the
modernization of the air transport legal framework. The asso-
ciation should also promote the functionality of global e-com-
merce in air transport. In particular, IATA carriers should be
required to accept laser-printed, plain-paper air waybills. “Is it
realistic to believe that IATA’s ambitious e-freight project, as
currently structured, will succeed, unlike its paperless endeav-
ors of the past?”
Yes, paperless cargo processing could save the industry $1.2
billion each year, Mr. Gottlieb conceded. “But who saves? We
do not see a strong business argument for air carriers and
paperless filing. It’s about reducing shippers time by 25%.”
18 cargovision | DECEMBER 06
cargovision interview
A KLM Combi is parked at Bush Intercontinental Airport in Houston after arriving from Europe. Already, passengers
are embarking for the return flight to Amsterdam’s Schiphol Airport. But there is a problem. An inbound pallet with
ATTENDEE VOTE nine tonnes of cargo has jammed on the B747’s main deck during unloading. It will not move forward and cannot
be rolled back to its original position. As things stand, the aircraft is going nowhere.
During ACF sessions, attendees vote on statements dealing with
key issues. Here are the results:
BY PHILLIP HASTINGS
The “national flag” basis for air service rights should be scrapped
for freighters only.
Yes: 61%
CARGO DUTY MANAGER JAN KOPPEN
No: 39%
The “national flag” basis for air service rights should be scrapped
for all airline operations.
Yes: 65%
No: 35% ■ Enter Jan Koppen, one of six cargo duty man-
Air alliances for air cargo are: agers based at the KLM Operations Control Center in
1. Useful, but only for specific markets: Amsterdam, where it is nearly midnight. Together
47% with the cargo handlers in Houston and the aircraft
2. A major step toward a fundamental change in the industry: crew, he must find a solution.
35%
3. Something I read about in Air Trade in 1997 and forgot about: “I came up with the idea of securing the unit where it
18% stood, using a lot of straps and putting up all the floor
Openness to foreign investment is an EU prerequisite for an air locks. Houston relayed pictures to me so that I could
services agreement with the US. Do you believe that homeland show them to the safety control people here in
security concerns justify the US Congress opposing foreign Amsterdam, who could determine whether it was
investment in US airlines? safe to fly,” explains Mr. Koppen. “The aircraft took off
Yes: 20% for Amsterdam after only a slight delay. Would you
No: 80% believe, it took four and a half hours to get the pallet
Many countries still limit fifth freedom rights and insist on off the aircraft after it arrived in Amsterdam.”
government control of cargo handling facilities. Is progress being
made in easing these restrictions? However, Mr. Koppen’s job entails a lot more than
Yes: 34% contending with the impact of unexpected events,
No: 66% which may include heavy weather, technical difficul-
Security screening in air cargo is a controversial topic. ties, industrial action, crew issues, and even volcanic
1. Is air cargo screening not workable: eruptions. He also has to deal with cargo capacity
17% control matters, both on a routine day-to-day basis
2. All air cargo should be screened: and when particular situations arise. For example,
47% when there is need to replace a Combi with an all-
3. Only cargo in bellies of passenger aircraft should be screened: passenger aircraft on a certain route. In such
36% instances, he often wears two hats: as a representa-
Is EDI an effective tool for eliminating air cargo paper? tive of AF-KL Cargo’s interests and as a liaison
Yes: 77% between that organization and the Operations
No: 23% Control Center. “In that case, I must decide who
E-freight will save the industry time and money. However, many needs to advise me, and who I must inform once the
small shippers, forwarders and air carriers are not prepared to decision is made.”
implement e-freight.
Agree: 79% Mr. Koppen joined KLM Cargo’s reservations depart-
Disagree: 21 % ment, as it was 15 years ago, in Amsterdam. “In
Before e-freight can be successful, there must be changes in the some ways, the job has not changed much. The old
policies of customs officials and tax authorities in many countries reservations department was also involved in matters
who insist on paper records. like capacity planning. What has changed, though, is
Agree: 95% the technology we now use to help make decisions
Disagree: 5% and the increased time pressure resulting from the
speed at which aircraft have to be turned round.”
© Martin Kamstra
cargovision 19
 ELECTRONIC
CREEP
Customs authorities are increasingly insisting on receiving advance notification of airfreight
shipments. This has helped expand the quantity and frequency of electronic messaging;
despite the air cargo industry’s rather slow adoption of electronic air waybill transmissions.
BY ANDY WESTON
Felix Keck:
“Growing competitive
pressures, rising costs
and stricter security
directives are creating
greater reliance on
paperless systems.”
20 cargovision | DECEMBER 06
■ When the US CBP began requiring carriers to use
its Air AMS for advance electronic submission in
2004, executives at Air France Cargo and KLM Cargo
realized that this trend would eventually spread to
other countries, albeit with different policies and tech-
nologies, says Pascal Morvan, SVP of Cargo Opera-
tions & Logistics for AF-KL Cargo.
“We developed a solution together with Traxon, that
enables us to exchange a standard set of messages
with them, and they ensure that the data arrive at the
proper customs authority on time and in the correct
format.”
AF-KL Cargo began using Traxon in October to send
electronic manifests to Canadian customs. AF-KL
Cargo does not require forwarders to use Traxon. It
is just one of many choices available to them for
communicating electronically with the company.
Also in October, Indonesia became the latest country
to require advance filing of cargo manifests.
INDONESIA
Forwarders must now send an electronic FMS mes-
sage describing the master air waybill, as well as an
FHL message describing the house bill consign-
ments and their association with a master air waybill.
The messages must be transmitted two hours before
the aircraft leaves the last airport before landing in
Indonesia. These conditions are roughly similar to
those imposed by the US Automated Manifest
System, the Canadian Advanced Commercial
Information, and the Australian Integrated Customs
System.
Even earlier in the year, the number of messages
processed by Traxon Europe had grown by almost
70% during the first eight months of this year, com-
pared to the same period in 2005. The annual mes-
sage count doubled over the past five years and
could top 100 million this year.
In some European countries, Traxon connects 90%
of IATA-registered freight forwarders. It hopes to
expand its customer base in North and South
America during the coming year.
Growing competitive pressures, rising costs and
stricter security directives are creating greater
reliance on paperless systems that speed up
processes between airlines, forwarders and service
providers, and optimize airfreight service, says Felix
Keck, managing director of TRAXON Europe.
Industry initiatives, such as Cargo 2000 and IATA’s e-
Freight, are also pushing both airlines and forwarders
to share more information electronically.
The airlines themselves are helping to prod along the
transition from paper by imposing surcharges on for-
warders that do not electronically submit consolida-
tion data that will go to customs authorities.
THOSE WHO CAN, DO
Compared to the steady rise in the number of elec-
tronic messages, use of electronic air waybills has
grown more slowly, about 10% per year, although
Traxon expects growth to reach 15% during 2006.
Of the 35 million air waybills sent globally in 2005,
carriers and forwarders processed 20 million of them
manually. The 20-million figure includes activity with
carriers in Africa and South America that do not reg-
ularly use electronic messaging, as well as with small
forwarders that may lack the resources to acquire
this capability. The fact that some airfreight markets
have less advanced electronic communications than
others is luring Traxon beyond its strong European
base. The company is taking advantage of an oppor-
tunity to have more forwarders and carriers adopt
electronic messaging. Newly-signed agents have the
benefit of becoming more competitive in global mar-
kets, and Traxon earns more from the increase in its
message traffic.
Traxon has been a rising presence in South America
over the past two years, and plans a push into North
America this coming year. It is relying on a business
model of letting forwarders use many of its electronic
© Corbis
services without charge if they transmit all of their air
waybills electronically. In the U.S. and India, the com-
pany has also begun electronic communication with
customs authorities to expedite the flow of shipment
data, enhance security, and shorten hold times for
shipment releases.
PANALPINA
Panalpina has been co-operating with Traxon for
many years and is now enabling its existing branches
in the US as well as its new branches in Scandinavia
and Canada to access selected major airlines. As of
October 2006, the Swiss forwarder had connected
42 additional branches for a total of 259 offices in 52
countries. Panalpina uses Traxon’s services to send
messages for air waybills, status updates and con-
solidation lists. It can also acknowledge the receipt of
electronic air waybills and electronic consolidation
lists, even though some airlines are not yet providing
this service.
Traxon has worked recently to improve the quality of
the messages used by customs agencies. It is cur-
rently connected with 90 airlines that handle 95% of
all IATA registered traffic, as well as 9,000 forwarders’
offices worldwide. Its headquarters are in Frankfurt.
cargovision 21
 cargovision a week in the life of
JIM FRIEDEL Jim Friedel is not just president of Northwest Airlines Cargo, he is also senior vice president of Pacific North-
west Airlines Inc. That gives him unique insight into both the cargo and passenger sides of the airline. From
his base in Minneapolis, he oversees alliance development, e-commerce initiatives, and corporate sales.
WITH PETER CONWAY
SUNDAY
MINNEAPOLIS
My working week generally starts on
Sunday evening, since that is Monday
morning in Asia. This week I have a confer-
ence call at 05:00 about the new passen-
ger lounge we are building at Tokyo Narita,
which will be used by customers of several
SkyTeam carriers, such as Continental,
Delta, and Air France KLM. The passenger
business really is a separate world from the
cargo business. They are like two separate
families and I have to constantly switch my
mindset. In cargo, you are dealing with a
smaller group of customers. The number of
complications is lower, but the detail is
higher, because each manager has to han-
dle more responsibility. On the passenger
side, revenues are twice as big, so there are
many more staff, which allows them to be
experts in their area.
MONDAY
MINNEAPOLIS
I start the day with meetings and phone
calls to cargo and passenger staff, to make
sure they are all aligned on their key dead-
lines for the week. Then we have one of our
bi-weekly cargo meetings about e-com-
merce. We discuss a barcode scanning
solution we are experimenting with, and
also CPS, our cargo e-booking portal, and
the Message Improvement Program of
IATA, in which we are taking a key role. We
started these meetings four years ago,
when we were trying to promote CPS. They
involve staff from sales, IT, and operations.
This multi-departmental approach is the
only way to get results.
© Northwest Airlines Inc.
I then record my bi-weekly video for our
cargo staff around the world. The video
goes up on the web to keep our freighter
pilots, who are based in Anchorage, in the
loop. Then in the evening, I head to the air-
port for a flight to Korea
22 cargovision | DECEMBER 06
WEDNESDAY
SEOUL
I cross the international dateline, so the
next day is Wednesday. Tuesday just disap-
pears. I meet with Korean Air in Seoul to
talk about cargo cooperation. We code-
share with them, and for a year and a half
have been swapping freight loads at
Anchorage. They fly our cargo from
Anchorage to Atlanta and we fly theirs from
Osaka to Anchorage. We want to expand
this activity. I also have a conference call
with the passenger sales staff in Asia about
our new central reservations office in
Singapore. It replaces offices scattered
around Asia and has streamlined our costs.
In the evening, I fly to Shanghai
THURSDAY
SHANGHAI
I meet with another SkyTeam partner, China
Southern, about passenger and cargo
cooperation. I also brief our local staff about
our application to the US Department of
Transportation seeking more traffic rights
into China. We already have freighters from
Tokyo to Shanghai, but we would like to fly
non-stop from Detroit. We argue that this
would benefit US auto manufacturers. In the
evening, I have dinner with cargo cus-
tomers. Whenever I go to Asia, I try to meet
them.
FRIDAY
SHANGHAI AND TOKYO
First thing, I meet with the passenger
check-in staff and mechanics at Pudong
airport and then fly to Tokyo. While waiting
for my connecting flight to Minneapolis, I
phone our passenger manager there to dis-
cuss key account strategy. Contracts with
businesses such as General Motors and
Toyota are important to our passenger
business, because their people fly so often.
We talk about how we can approach
Japanese corporate customers, particularly
in Osaka.
FRIDAY
MINNEAPOLIS
Crossing the international dateline again, I
arrive in Minneapolis at 11:00 on Friday
morning. I am a good flyer and can sleep
on almost any flight, which is just as well.
My passenger role means I travel more than
I did when I handled cargo only. I also take
a keener interest now in the details of cabin
service. Cargo people tend to scoff that the
passenger business is all about deciding
how many peanuts you get in business
class, but the details of inflight service are
essential to winning customers.
Back in the office, I meet with our Atlantic
cargo sales team about a joint effort with
KLM Cargo to grow small express ship-
ments via our respective hubs. We want to
generate express traffic from Denver to
Düsseldorf via Detroit and via Amsterdam,
rather than just from Minneapolis to
Amsterdam. The real trick is to ensure that
hub transfers run smoothly and that the
customer’s information is clearly displayed.
Since both carriers use the CPS booking
portal, life is a lot easier. Back home, dinner
is, ironically, a Chinese take-out.
SATURDAY
MINNEAPOLIS
I have a daughter of five and a son of sev-
en. Both love sports. On Saturday, I am a
soccer mom, taking my daughter to her
soccer game and my son to his flag foot-
ball. That is American football, but without
the physical contact.
This is a typical Saturday, bouncing from
one child activity to the next. In the evening,
we are lucky enough to have a babysitter,
so my wife and I go to a private dinner.
cargovision 23
 Horses move through the AF-KL Cargo network on B747 freighters.
Traveling from place to place may involve more than one network.
And besides space on specific flights, flying horses need a cozy
place to stay at the airport and inspectors to guarantee their health.
Coordinating all of these elements is the job of the Variation Live team
BY KAREN E. THUERMER

HORSES FOR

© Google earth
COURSES
■ A horse is a horse, of course, but not to Variation

Live staff of AF-KL Cargo. Consider the differences
between flying polo ponies and racehorses. Polo
ponies are small and enjoy being cozy together, while
their high-strung counterparts, the racehorses, do
not.
“By putting many cameras in many horse stalls over
the years, we have learned that it is better to ship
four polo ponies together in one stall, rather than
shipping three horses in the same stall, separated by
partitions,” says Bart Kruijsen, director of Variation
Live at AF-KL Cargo.
Horses are big and so is the business of flying them.
They have long been a specialty for KLM Cargo, the
world’s leading equine carrier. On average, AF-KL
Cargo flies 6,500 horses a year via Amsterdam, con-
siderably more than the 1,500 that fly via Paris CDG.
However, since last year’s AF-KL merger, the number
of horses traveling on Air France flights has grown
considerably, now that customers have the benefit of
connections between both airline networks.
© Anzenberger/Hollandse Hoogte
“We have more than doubled the number of polo
ponies flying from Argentina to Charles de Gaulle
Airport this year,” Mr. Kruijsen says. “From April to
September, horse traffic represented 38% of the total
turnover for the Variation Live service. Just two sta-
tions generate 70% of this revenue: Buenos Aires
and Paris.”
Since the merger, AF-KL Cargo has flown 1,000 polo
ponies out of Argentina, which is the largest market
for this service. That compares to 400 horses during
the previous year. About 700 of the animals that flew
this year from Buenos Aires to Paris were destined
for the European polo market. The other 300 animals
flew on to places like Dubai, Bombay, Singapore,
Kuala Lumpur, and Bangkok.
“The same transfer can happen in reverse,” says
Jean-Paul Leval, product manager for the AF-KL
Cargo Variation product at Charles de Gaulle. By
working together and utilizing both airline networks,
the AF-KL Cargo Variation Live team also gain other
advantages, such as better managing their inventory
of dedicated horse stalls. KLM owns more stalls than
Air France, but the latter has 10 collapsible units
designed for polo ponies. “These units are not suit-
able for racehorses or other endurance animals that
are more fragile,” Mr. Leval says. The advantage of
the collapsible containers is that when broken down,
they fit into passenger belly holds, making them easi-
er to move. Air France Cargo and KLM Cargo lend
stalls to each other when either airline lacks capacity
for a specific flight. A stall must be available for a
specific flight before an agent can book space for
Variation Live on the journey.
“In this regard, we are working on our supply chain
management,” Mr. Leval explains. “As the originating
station, we send a message to the ULD Department
asking to have empty stalls at airports. It could be
Paris or Buenos Aires. The department checks to
see whether stalls are available. If so, we book space
on the flight.” Without proper communication, space
on a desired flight many not be available.
The Variation Live team also maintains contact with
the destination stations. For example, Air France
does not operate a dedicated animal hotel, like the
KLM facility at Schiphol. Instead, Air France must use
the live animal facility at CDG, just like any other air-
line. If the stables are unavailable, horses cannot
arrive or depart from the airport.
“The AF-KL Cargo Variation team are managing rela-
tions with the third party that operates this stable, to
ensure that space is available when we need it and
that the process of health checks and regulatory
inspections will go smoothly and swiftly,” Mr. Kruijsen
says. The merger of AF-KL Cargo has helped the
organizers and participants of the world’s racing and
polo venues to bring new animals and new competi-
tors to their events. “If we were only Air France
Cargo or only KLM Cargo, I doubt whether we would
be able to do as much for these customers as we
are doing today,” Mr. Leval says.

24 cargovision | DECEMBER 06 cargovision 25

 cargovision country file

CHILE
BY PHILLIP HASTINGS

© Chris Rogers/Corbis
NEED TO KNOW
■
Government: Republic, politi-
cally stable multi-party
© AFP

democracy.
■ Electoral propaganda 14 January, 2006 in Santiago
Head of State and Govern-
ment: President Michelle
Bachelet (since January ■ Perishables dominate Chile’s air cargo exports, rule, inflation targeting, trade liberalisation and an
TRAVEL TIPS
2006). comprising about 70% of the total tonnage. open capital account have yielded strong economic ■ There is a tendency to for-
■ This South American country is the second-largest growth and low inflation. High copper prices enabled mality. When meeting some-
Population: 16 million. producer of fresh salmon in the world, just behind the central government to register surpluses averag- one, a handshake is custom-
■ Norway, and exports 90,000 tonnes a year, mainly to ing 3.5% of GDP in 2004-05. A surplus of 6% of ary.
Language: Spanish is the offi- the US. The latter is also Chile’s largest overall air car- GDP is projected for 2006. Chile’s outlook is positive, ■ Chileans leave little space
cial language, but English is go export market. Chile additionally exports large reflecting strong prospects for copper and robust between each other when
widely spoken. quantities of seafood to both Europe and Asia all year domestic demand.” talking. The person you are
■ round. speaking with may place a
GDP: Projected growth Fruit and vegetable exports are more seasonal, pri- hand on your shoulder during

© Pablo Corral/Corbis
5-5.5% in 2006 (6.3% in marily from October through to April. Major traffics TRAFFIC IMBALANCE the discussion.
2005). include cherries, grapes, berries, and nectarines. Patrick Bazelot, ■ Honor is important in
■ Chile is one of the main suppliers of fruit and vegeta- Director of AF-KL Cargo for Argentina, Chile, Chilean society. Never criti-
Economy: Open economy bles to the northern hemisphere during that region’s Uruguay, Paraguay cise people in public or cause
that thrives on foreign trade. winter. Another major seasonal export trade is plant them embarrassment.
■ seeds. Newer developing traffic flows include fresh “The biggest challenge for international airlines pro- Businessmen passing World Trade Center sculpture ■ Chileans negotiate in a
Trade: Free trade agreements flowers, baby lobsters, and snails. viding air cargo capacity in the Chilean market is an straight-talking manner. They
with many countries and trade Chile’s overall international air cargo market is cur- imbalance between import and export traffic. The for- like people to be upfront, but
blocs, including US, Canada, rently growing by around 7% a year, based on recent- mer is much larger. Another issue is product season- “The AF-KL group has been operating to Chile without REGIONAL INTEGRATION respond negatively to “hard
Mexico, South Korea, EFTA ly-published Chilean Civil Aeronautics Board figures ality, especially fruit and seed exports, which last only interruption for 40 years. Year-round scheduled B777- Michelle Bachelet, sell” tactics.
(European Free Trade Agree- for Santiago’s Arturo Merino Benitez Airport, which a few months of the year. Chile has a very strong high 200 flights to Santiago now provide belly cargo President of Chile ■ Business people should
ment), Central America, China showed traffic through that gateway up by 6.7% over season to Europe and Asia from October-November capacity of up to 60 tonnes a week. During the peak wear formal clothes in dark
and, most recently, Peru. the first eight months of 2006. through March-April, when it exports red fruits. For season for Chilean air cargo exports, we supplement “Chile will continue to promote integration among Latin colours for official functions,
■ the rest of the year, though, export volumes in those those operations with freighter flights that add another American countries as the best way to achieve devel- dinners, smart restaurants,
Exports: Major commodities sectors are very weak. Total air cargo volume to the 300 tonnes weekly. opment. We are doing it with other countries and we and hotels.
are copper, fruit, fish prod- POSITIVE OUTLOOK US is consistent year-round, helped by the free trade AF-KL Cargo is also the cargo general sales agent are going to continue doing so, because we are seri- ■ Best months for business
ucts, paper and pulp, chemi- Economic Review of Chile, agreement between the two countries.” for Delta Air Lines, making it the only carrier in Chile ous when we talk about integration. We think it is visits are April to December.
cals, wine. International Monetary Fund (IMF) able to cover 300 destinations worldwide through its important to have an institution in South America with ■ Business hours are gener-
own network, including Chile’s main exports mar- a clear voice, because we share common challenges. ally 0900-1800, Monday to
Sources: “For the past 15 years, structural reform and prudent SUPPLEMENTAL FREIGHTERS kets: the US, Europe, and Asia. Altogether, AF-KL But on the other hand, we want a strong relationship Friday.
Chilean Government website; policies have helped anchor Chile’s successful eco- Samuel Guillemet, Cargo handles 12,000 tonnes of airfreight to and with Central America and Mexico, working with Latin
CIA World Factbook-Chile nomic performance. In recent years, a fiscal policy AF-KL Cargo Manager for Chile from Chile each year. America as a whole.” Sources: various

26 cargovision | DECEMBER 06 cargovision 27

 cargovision market monitor

While the global economy is surging ahead full steam and sea freight is recording double-digit growth,
FORECASTS - IS THE FUTURE BRIGHT? airfreight will probably expand by less than 6% in 2006.

BY DICK VAN DEN BERG

IATA: FTK Growth Forecasts for next 5 years

Major Scheduled Airlines - Global Freight Traffic Growth
■ Although airfreight growth in 2006 is higher than the low rates of 20% Growth - Quarter vs Quarter previous Year
Actual Values
Forecast 2001
■ IATA bases its forecast on input from its members. Because
Average Growth of Last 3 Years = 7.2% 15% Forecast 2002
2005 (Fig.1), there is still a general feeling that it is disappointing, Growth - Month vs Month Previous Year
Forecast 2003
most airlines base their forecasts on their own capacity plans and
especially in the Far East, the region with the greatest impact on Forecast 2004 inside knowledge of their markets, we think this forecast is more
15% Forecast 2005
the combined world total. Forecast 2006 realistic than the other ones (Fig.4). Most of IATA’s forecasts antici-
10% pate 5% growth, but there are always unexpected turns in the mar-
10% ket. They did not anticipate a downturn in 2001 from the collapse
of the ICT market, nor the pleasing high growth in 2004 from the

Annual Growth
5% Chinese export boom.
5%

0% 0%
Jan - Aug

-5%
Apr ‘03 Jul ‘03 Oct ‘03 Jan ‘04 Apr ‘04 Jul ‘04 Oct ‘04 Jan ‘05 Apr ‘05 Jul ‘05 Oct ‘05 Jan ‘06 Apr ë06
-5%
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Boeing Air Cargo Forecast 2006 1995 - 2005

■ Beginning in 2006, most economists expect trade growth to IMF Forecast September 2006 World GDP growth History (1995-2005) and forecast (2005-2025) 2005 - 2025 ■ Boeing presented its latest World Air Cargo Forecast in Septem-
World trade growth
diminish, especially in the USA and China as reflected in the new 9% ber, during the TIACA meeting in Calgary. Although the study pre-
12%
IMF World Economic Outlook (Fig.2). Because of the strong rela- 8%
dicts lower total growth for the next 20 years (6.1%) than the 2004
tion between trade and airfreight traffic, we could expect airfreight 10%
edition (6.2%), it reflects a more bullish outlook for the freighter mar-
7%
growth to diminish at the same time. ket. Recent orders seem to justify this estimate, but there are still 19
8% 6% more years before we can make a final judgment. Although it is
impossible to see 20 years into the future, Boeing and other aircraft
5%
6% manufacturers use that period because it reflects the depreciation
4%
period and production life of an aircraft. Of course, aircraft often out-
4% 3% live their designer’s objectives, but after 20 years, the first owner will
be considering replacement. Hence, we view Boeing’s forecast as a
2%
2% sales tool that must be optimistic. The company anticipates that
1% many markets will grow more during the next 20 years, than they
0%
0% did during the last 10 (Fig.5). This is remarkable because the larger
2004 2005 2006 2007 2008 2009 2010
Total world Domestic USA Europe - Europe - Asia - Intra-Asia volume of growth means the growth rate is likely to come down.
North America Asia/Pac North America

International Air Freight - History and Forecast

■ Three new cargo forecasts were published this year. The latest IATA history Boeing Forecast - US Domestic Market ■ The deviation from the historic trends is most visible in the
15% MergeGlobal forecast
one from IATA shows a declining growth trend, while those from Indexed values of RTK with 1995 = 100 domestic US and the North Atlantic markets. Boeing does not give
Boeing forecast
Boeing and MergeGlobal remain more optimistic: they see a bright IATA forecast
300
a reason for the new growth, but we are struck by how wide of the
future for airfreight with growth rates similar or higher than historic 10%
Real development
mark the forecasts have been from the actual development, for
ones (Fig.3). Forecast 1996 example, in the US domestic market (Fig.6). Boeing writes about
250 Forecast 1998
5% Forecast 2000
the move to trucking in lieu of flying within the USA, but still sees a
Forecast 2002 booming US market. Remarkable. We conclude from these publi-
Forecast 2004
200 Forecast 2006
cations that annual airfreight growth will be somewhere between
0%
4% and 7%. However, be prepared for the unexpected and realize
that the future may always differ from the past and may be less
-5%
150 bright. We recommend a healthy grain of salt!

-10% 100
95

97

99

01

03

05

07

09

11

13

15

17

19

21

23

25
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
19

19

19

20

20

20

20

20

20

20

20

20

20

20

20

20
28 cargovision | DECEMBER 06 cargovision 29
 cargovision postscript
HELP WANTED
■ Looking for a job in aviation? Why not try package
sorting? There are bound to be vacancies at the ABX
Air hub in Wilmington, Ohio. Unfortunately, ABX fell
victim to fraud by two companies that supplied over
1,000 illegal immigrants to sort freight during the past
few years. Most of them were from Mexico. The
scheme fell apart in January 2005, when a routine
inspection of ABX by the Transportation Security
Administration discovered that almost all of its 400
workers were using invalid or fraudulent Social Securi-
ty cards. ABX cooperated with the ensuing US Justice
Department investigation. In October this year, Max-
imino Garcia, owner of both firms, his sister Dominga
McCarroll, former vice president of the two firms, and
their human resources director, Gina Luciano, all
pleaded guilty to conspiring to provide hundreds of
illegal aliens to work for ABX. ■
30 cargovision | DECEMBER 06
THE LITTLE ENGINE THAT MIGHT
■ Our report last issue on Central Asia mentioned two developments
in Trans-Asian rail systems that could eventually compete with planes
for some Asia-Europe cargo. Apparently, the idea has been on other
minds longer than we thought. Vaudine England, writing in the Interna-
tional Herald Tribune in October, tells us that planners were already
studying the feasibility of a continuous link from Singapore to Turkey in
1960. In spite of periodic attempt to revive the concept of a Trans-
Asian railroad, it has yet to emerge intact from a 50-year cycle of wars,
civil conflicts, the Cold War, and communism.
However, transport ministers from two-dozen countries are meeting
in Busan in November, to sign the Intergovernmental Agreement to the
Trans-Asian Railway Network. The United Nations Economic and
Social Commission for Asia Pacific will oversee the project and we
actually might have rail shipments begin sooner rather than later.
Besides the initiatives cited in our story by railroads in Germany,
Russia and China to improve the transiberian network, we now learn
that Soyuztranslink, a multimodal forwarder and partner of Kazakhstan
Railways, has launched rail services from China to Central Asia and
other CIS states. This announcement follows an increase in China-
Kazakhstan trade by 400% during the past four years, to a current
value of about US$10 billion annually.
Why do we, being in the airfreight business and all, care about these
activities? Unlike other parts of the developed world, the air and rail
networks in Central Asia are beginning to modernize concurrently.
Both are big, expensive undertakings, fraught with political potholes.
Watching their relative progress is like watching elephants race
through a swamp: impossible to predict the outcome. ■
© Milepost 921/2/Corbis
cargovision information
cargovision
Cargovision is the management magazine of AF-KL Cargo.
Its function is to disseminate information on transport,
© Hollandse Hoogte
distribution, logistics, information services, and general
business developments. The editorial opinions expressed
in the magazine are not necessarily those of AF-KLM.
Reproduction in whole or in part without written permission
is prohibited.
CARGO FLAP
■ Airplanes may one day have flapping wings,
becoming what the technically astute call ornithopters, SUBSCRIBER SERVICES
reports award winning aviation writer Jason Wastnage.
Flapping wings would certainly be an anti-icing solu- Cargovision is published quarterly by AF-KL Cargo
tion, but beyond that, we’re not sure you should rush and mailed to subscribers in almost every country.
out to book freight capacity yet. A team working at the
University of Toronto Institute for Aerospace Studies Please visit www.cargovision.org
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Electronic Creep
level flight at 48 kt. The Canadian team behind the
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craft suffered a buckled trailing edge in the attempt.
INTO
Hmm, sounds like crumpled feathers would have AFRICA
been more descriptive. ■
CARBON CYCLE
■ ‘Another recent Cargovision story discussed how
airlines might participate in the EU’s Emissions Trading
Scheme. Now an Oxford University report, cited by the Published by AF-KL Cargo Communication, P.O. Box 7700, 1117 ZL
BBC, tells us that Britain will not be able to meet its Schiphol, The Netherlands. Christelle Dufour Theuws, dufourtheuws@cargovision.org
goal of lowering carbon dioxide emission 60% by Kirsten Hemmer, hemmer@cargovision.org
2050, unless it curbs demand for air travel. Naturally,
Concept & Realization: vdBJ Communicatie Groep, Bloemendaal, The Netherlands
the British Air Transport Association says, “Hogwash, www.vdbj.nl, vdbj@cargovision.org
air travel alone will have little impact.” According to the Editor in Chief: Mark W. Lyon, lyon@cargovision.org
BBC, carbon emissions from aviation doubled during Project Manager: Urtha Ririhatuela, ririhatuela@vdbj.nl
the 1990s, while those from the rest of the economy Art Direction: Sok Visueel Management, Amsterdam, The Netherlands
Editorial Office: Vijverweg 18, 2016 GX Bloemendaal, The Netherlands, T +31(0) 23 541 1701
fell. Aircraft currently produce about 5.5% of UK’s
Circulation Manager: Herman Brijssinck, T +32 2752 90 51, brijssinck@cargovision.org
emissions. ■
AF-KL Cargo © DEC 2006 Volume 21 Number 27
by Mark W. Lyon, editor-in-chief
cargovision 31
32 cargovision | DECEMBER 06