acu- march april 2011

8/7/2019 ACU- March April 2011

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EDITORIAL

2011 has received a unanimous reaction from all corners of the aviation industry very positive. Baring some disrup-tions due to rising fuel prices, the airlines should at leasthave a decent year.We noticed similar sentiment being re ected at the recently

concluded Air Cargo Africa - the rst biennial international confer -ence and expo. 54 exhibitors representing various sectors of the aircargo industry from 19 countries displayed their world class productsand services, speci cally designed for the air transport industry.It emerged that Africa and particularly Kenya is proving to be a majorcargo hub and the continent needed an event like this to send themessage home. Clearly, there is a shift in focus towards emergingpowerhouses - Africa is going ahead with steady strides to becomethe most preferred trade market that offers oodles of growth opportu-nity. Though infrastructure is still a challenge, the government is com-mitted to change and to upgrading the airport facilities.We got the opportunity to catch up with Sauda Rajab, General Man-ager of Kenya Airways Cargo who says, Africa has the potential, andall we need to do is continue to strive for better consistency of servicebacked by liberal regulations.

Taking the countrys growth plans further, Kenya Airways Cargo willbring on line its own freighter in September. Turkish Cargo is planninga new route to Addis Ababa. Astral Aviation is in talks with RwandaAiron a new partnership. It will also lease a minimum of two MD-83s nextyear. A plethora of other airlines including Emirates SkyCargo, MASK-cargo and Maximus Air Cargo are hungrily eyeing new opportunitiesin the continent.Keeping up the tempo, Sanjeev Gadhia, CEO of Kenya-based cargoairline Astral Aviation says, 2011 will be one of the best years for

Astral. Business is booming, and weve seen increased activity in Jan-Feb. A series of new route deals has further forti ed the companysrevenue or the year.Meanwhile, based on anticipated improved market conditions andgrowth in business Netherlands based TNT express recently inaugu-rated their new air cargo handling facility at Dubai International.

Though it has been quite some time since Swift Freights of cial namechange to Barloworld, we still thought of following it up to nd outwhether it was more than just a cosmetic exercise. We speak withthe CEO of Barloworld Logistics, Freight Management & Services; Mr.Frank Courtney on what value has it added in the whole rebrandingprocess and what lies ahead for Barloworld Middle East.Of course as usual we have much more in the issue so enjoy yet an-other issue of Air Cargo Update!

Chief EditorChandrima [email protected]

EditorsNote

Bi-monthly: Vol 10 | Issue 2 | No 65Middle East, Africa and South Asia

PO Box: 9604, SAIF Zone, Sharjah - UAETel: +971 6 557 9579, Fax: +971 6 579569,[email protected]

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CONTENTS

06. World News

36. News - Middle East18. Astral Aviation 28. TNT

22. Barloworld 34. Security Screening

46. News Airlines

14. Cover Story Airlines look to continue theirrecovery process despitetemporaryupheavals

Kenya Airways Cargo greasing Africas economic wings

UAE air traf c movements rise 7.6%in February

Astral upbeat about 2011performance

Investing in future

A new beginning Tightening of security makescompliance to regulation morecomplex

Emirates is now worlds thirdlargest carrier

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22 28

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T H A I C a r g o , A LWAY S D E L I V E R S T H E B E S T.

Now we have room for every size, shape and quantity to

connect Asia, Europe and USA. For more information,

please access www.thaicargo.com/whats new.

More capacity to move your cargoaround the globe.

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WORLD NEWS

Political unrest in the Middle East has sent oil over $100per barrel. That is signi cantly higher than the $84 per barrelthat was the assumption in December. At the same time theglobal economy is now forecast to grow by 3.1% this yearafull 0.5 percentage point better than predicted just threemonths ago. But stronger revenues will provide only a partialoffset to higher costs. Pro ts will be cut in half compared tolast year and margins are a pathetic 1.4%, said GiovanniBisignani, IATAs Director General and CEO.

Forecast highlights include:Fuel: IATA raised its 2011 average oil price assumption to$96 per barrel of Brent crude (up from $84 in December),in line with market forecasts. Including the impact of fuelhedging, which is roughly 50% of expected consumption,this will increase the industry fuel bill by $10 billion to a total of $166 billion. Compared to levels in 2010, oil prices are nowexpected to be 20% higher in 2011. Fuel is now estimatedto represent 29% of total operating costs (up from 26% in2010).

Growing economies give airlines the opportunity to recoversome of these added costs with additional revenues. Forexample, since early 2009, rising oil prices added 25% to unitcosts while average fares (excluding surcharges) rose 20%.But in 2011 higher revenues are not expected to be suf cientto prevent the rise in oil prices from causing pro ts to shrink by 46% from 2010 levels.

Demand: An increase in global GDP forecasts to 3.1% (from2.6% in December) bodes well for continuing strong demandfor air transport. In line with this, IATA revised its passengerdemand growth forecast to 5.6% (from 5.2%) and its cargogrowth forecast to 6.1% (up from 5.5%). Overall, this willgenerate a 5.7% expansion in tonne kilometers own.Capacity: Published airline schedules indicate a capacity

increase of 6%, slightly lower than the 6.1% previouslyforecast. Of this, 5% will come from the 1,400 new aircraftbeing introduced to the eet over 2011. The additional 1%is expected to come from the normalization of underutilizedcapacity in the twin-aisle eet.

Yields: With capacity expected to increase by 6% in 2011and demand by 5.7%, the gap is 0.3 percentage points. Thishas narrowed from the previously forecast gap which was 0.8percentage points. While there has been some weakeningin passenger load factors, as of January they remained nearrecord levels at a seasonally adjusted 77.7%. Freight loadfactors are also high compared to previous cyclical peaks.

These tightening supply and demand conditions give scopefor yield improvements. Passenger yields are expected to growby 1.5% (up from the previous forecast of 0.5%) and cargoyields by 1.9% (up from the previous forecast of no growth).

Premium Travel: Premium traf c is an important contributorof a network airlines pro tability. Purchasing managerscon dence is a leading indicator for business travel. In

Airlines look to continue their recovery processdespite temporaryupheavals

Rising oil prices, political unrest and natural disastersare creating an uncertain environment for airlinesthat only recently began to recover from years of steep losses. The International Air Transport Association

(IATA) has downgraded its airline industry outlook for

2011 to $8.6 billion from the $9.1 billion it estimated in

December 2010. This is a 46% fall in net pro ts compared

to the $16 billion (revised from $15.1 billion) earned by the

industry in 2010. On expected industry revenues of $594

billion, the $8.6 billion 2011 pro t equates to a net pro t

margin of 1.4%.

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The industry consensus forecast released by theInternational Air Transport Association (IATA) indicates thatby 2014 international aviation will handle 38 million tonnesof air cargo, up 12.5 million tonnes from the 26 milliontonnes carried in 2009.

International freight volumes are expected to grow at aCAGR of 8.2% over the forecast period. Excluding theimpact of the rapid post recession rebound in 2010, forthe 2011-2014 period, the consensus view for air freight

is that it will stabilize at 5% CAGR. This is slightly belowthe forecast growth in world trade (6%) suggesting a stillconservative outlook after the recession shock and possiblysome loss of market share to sea shipping.

The top ve fastest growing international freight markets over2009-2014 will be Hong Kong (12.3%), China (11.7%), Vietnam(11.4%), Chinese Taipei (11.3%), Russian Federation (11.0%).

By 2014, the largest international freight markets will be

the US (8.8 million tonnes), Hong Kong (5.4 million tonnes),Germany (4.4 million tonnes), Japan (4.4 million tonnes) andChina (3.8 million tonnes). The volume growth expectedin China and Hong Kong will account for a third of globalvolume growth over the period to 2014.

International freight demand in the Middle East will grow8.1% as freight links to and via the region continue todevelop. The UAE will lead the region, handling 2.7 milliontonnes of cargo.

January, the JP Morgan/Markit Purchasing Managers Indexhit a record high. Moreover, strong corporate reporting at theend of 2010 and expanding world trade will continue to drivebusiness travel in 2011, albeit at a slower pace than we sawduring the 2010 post-recession rebound.

Risks: Rising oil prices are always a challenge for airlinepro tability. If they are accompanied by strong growingeconomies and world trade, airlines have some opportunityto command prices that can offset the rising fuel costs. If,however, rising energy prices stall global economic growththere is a strong downside risk to this forecast. With oil pricesnow being driven by speculation on geopolitical events in theMiddle East rather than strengthening economic growth, thisis a signi cant downside risk.

This year the industry is performing a balancing act on a verythin tight-rope of a 1.4% margin. It is a structural problem thatthe industry has faced with an average margin of just 0.1%over the last four decades. There is very little buffer for theindustry to keep its balance as it absorbs shocks. Today oil isthe biggest risk. If its rise stalls the global economic expansion,the outlook will deteriorate very quickly, said Bisignani

IATA also highlighted the risk of increasing taxation, particularlyin price sensitive leisure markets. In 2010, the industry sawnew and increased taxes in the range of 3-5% of ticket pricesin the UK, Germany and Austria. Recently, Iceland, India andSouth Africa have joined with plans for additional taxation.This is a price sensitive business. Aviation has the power tostimulate economies. But that ability is being compromisedby adding taxes at a time when we are struggling to copewith high fuel prices just to maintain anemic margins, saidBisignani.

Regional highlights follow: Asia-Paci c carriers are expected to deliver the largestcollective pro t of $3.7 billion and the highest operatingmargins of 4.6%. This is down substantially from the $7.6billion that the regions carriers made in 2010 and from thepreviously forecast $4.6 billion for 2011. While the strongeconomic growth in the region is still driving pro tability,in ation ghting measures in China are slowing trade andair cargo demand. The key reason for the downgrade fromDecembers forecast is that the region is more exposed tohigher fuel prices, due to relatively low hedging on average.

Middle East carriers are expected to return a pro t of $700million. This is considerably better than the $400 millionpreviously forecast, but down from the $1.1 billion pro t that

the region posted in 2010. Political instability in the regionis expected to take its toll in Egypt, Tunisia and Libya whichcombined account for about 20% of the regions internationalpassenger traf c. This is balanced by the Gulf area whichbene ts from economic activity related to high oil prices andwhose hubs continue to win long-haul market share. Loadfactors have also improved signi cantly for these airlines, asnew capacity is being added at a slower pace than demandincreases.

Industry expects 38 million tonnes by 2014, indicates IATA

2011 global freight traffic off toa strong start, says ACI

Boeing 747-8 jetliner

completes final gauntlet test

Fedex resumes fewJapanese routes

ACI (Airports Council International) member airports havereported total global freight traf c growth of 6.8%. The month-on-month averages indicate that the decline in freight traf cseen in Q3 has been replaced by a rming trend. Asia Paci csinternational freight rose by 9% and domestic by 12% andEurope international increased by 11.4%. Latin America hadthe strongest increase in domestic traf c (+16%), whereasNorth America, the largest domestic market, remained at(-0.8%). Angela Gittens, Director General of ACI Worldemphasised the implications of sustained traf c developmentfor airports worldwide. Traf c growth is clearly on the rise.Emerging markets are buoyant, and we also now see thatmature markets are returning to real growth compared to thepre-crisis levels. Although all markets are not progressing at thesame rate, the global imperative is clear: airports must prepareto handle twice as many passengers in just twenty years.

For capital-intensive infrastructure development, 20 years isa short time-frame to plan, nance and build new facilities toaccommodate growth. Airports are taking action to maximiseef cient use of current facilities, working closely with ourairline and air navigation service partners to implementnew technologies and agreed standards that streamlinepassenger and cargo handling processes as well as enhanceairside operations. That will not be suf cient to absorb twiceas many arriving and departing passengers.

Boeing has announced the completion of nal gauntlettesting on its rst 747-8 Intercontinental jetliner. Gauntlettesting simulates ight conditions to test systems and en -sure ight readiness. First ight of the aircraft is to takeplace after nal ight readiness reviews, receipt of docu -mentation from the US Federal Aviation Administrationand taxi testing.

FEDEXs pickup and delivery services in western Japanare running as normal, and now operations in ce rtain east-ern destination are slowly returning to ac tion.

Inbound shipments to eastern Japan, Guam, Okinawaand Saipan were being accepted on 15 March, excludingperishables, inbound FedEx International Express Freight,FedEx Airport-to-Airport and FedEx International Premiumservices.

Pickup and delivery service in eastern Japan will resumeexcept for Koriyama-Shi, Sendai-Shi and Miyagino-Ku.

WORLD NEWSWORLD NEWS


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Biwer, Cargolux head of Africa, stated. He feels Kenya is onesuch place that has been able to deal this situation well.

Preparing to handle further growthKenya Airways Cargo will bring on line its own freighter inSeptember. Turkish Cargo is planning a new route to Addis

Ababa. Astral Aviation is in talks with RwandaAir on a newpartnership. It will also lease a minimum of two MD-83s nextyear. A plethora of other airlines including Emirates SkyCargo,MASKcargo and Maximus Air Cargo are hungrily eyeing newopportunities in the continent.

The Ethiopian Airlines, one of the fastest growing airlines inthe industry, has bought ve Boeing 777-200LR aircraft, at acost of US$1.3 billion, making it the rst African carrier to ownand operate the long-range aircraft. The airline will also bringinto operation two more 737-800s before the end of this year.

According to the Ethiopian airliner, using the 777-200LR, theworlds most technologically advanced aircraft it will be ableto make a non-stop ight to new long-haul destinations suchas Washington and Beijing. It is also the rst airline in Africa tooperate with Boeing 787 Dreamliner.

Honouring achievers An awards night was also hosted along with the event. TheSTAT Times Gala Award Nite at Crowne Plaza in Nairobiwitnessed as many as 21 awards being conferred uponachievers in different sectors of the air cargo industry in

Africa and internationally as well. The event was graced bythe presence of Hon Amos Kimunya, Minister for Transport.Air Cargo Africa is a platform for players in the industry tonot only showcase their products and services but to equallydiscuss ways of capitalizing on the enormous opportunities inthe continent, he said.

Swissport Cargo Services polled the highest number of nominations in the International Ground Handler of the Yearin Africa. While Emirates Mercator won the nomination forInternational IT Systems Provider of the Year in Africa. Indiabased IBS Software Services came a close second.

Jomo Kenyatta International Airport won the nominationsfor African Airport of the Year Award. Mohammed Parkar,

Vice President Commercial & Finance received the award forMaximus Air Cargo as International All Cargo Carrier of the Year in Africa behind the European Giant Cargolux, who werethe winners of this c ategory.

Astral Aviation based in Nairobi took the honors in the Africa All Cargo Carrier of the Year sector. Ethiopian Airlines Cargoand Kenya Airways Cargo were the best and the second bestrespectively in the African Cargo Airline of the year sector.Over the years, it has become a habit for Emirates SkyCargoto win awards. It was not an exception this time also.Ram Menen received the award for Emirates who won theInternational Cargo Airline of the Year in Africa award. Therewere also awards for the Best Booth Display. Saudi AirlinesCargo was the undisputed winner while Etihad Crystal Cargowere the runner up for the same category.

The climactic moment of the event was the Life Time Achievement award presented to Girma Wake, former CEO of Ethiopian Airlines, for his excellent contribution to the aviationindustry in general and the Air Cargo industry in particular.

The event concluded with the announcement of Air Cargo Africa 2013 to be held in South Africa, at the EmperorsPalace, Johannesburg.

AFRICA BECKONS AFRICA BECKONS

Air Cargo Africa 2011 - the rst biennial internationalconference and expo concluded on 24th February on a verysuccessful note at the Kenyatta International ConferenceCentre, Nairobi, Kenya. The event was conceived toshowcase Africa as the land of opportunities for the air cargoindustry. Dr. Titus Naikuni, Group Managing Director & CEOof Kenya Airways inaugurated the event.

The event was themed Air Cargo in Emerging Africa and54 exhibitors representing various sectors of the air cargoindustry from 19 countries displayed their world classproducts and services, speci cally designed for the airtransport industry.

257 delegates from across the globe including Russia, China,USA, Europe, India, Australia, Canada, Singapore, and12 countries from Africa took part in the deliberations thatstretched over the three days. 2,429 visitors from 23 countriesacross Africa and 19 countries from other continents visitedthe exhibition to explore business prospects. Middle Easternrepresentatives were conspicuous by the presence of delegates from Qatar Airways Cargo, Saudi Airlines Cargo,Etihad Crystal Cargo and National Air Cargo.

The cream of the industry leaders dwelt upon various topicsranging from the status of the air cargo industry in Africa postthe economic revival, Integrating Africas potential & globalneeds, mega issues in ground handling in Africa, role of IT in developing air cargo in Africa. Speaking on air cargo in

Emerging Africa, Emirates Divisional Senior Vice PresidentCargo & Chairman IATA-Cargo Committee Ram C. Menensaid that close to 7.5 times more cargo is entering Africa thanis leaving, depicting increased consumer demand as Africaneconomies grow.

India, China drives growthOne of the most interesting topics discussed was the growingimportance of India and China driving growth in Africas aircargo business.

Clearly, there is a shift in focus towards emerging powerhousesof trade India and china. Previously Europe was a keymarket for Africa, which is still the ca se but it is slowly shiftingto a China-Africa stronghold with India not far behind.

Des Vertannes, group head cargo at IATA said that an ever-growing middle class with money to spend in India andChina are helping their countries grow. According to Naikuni,Chinese investment into Africa has reached US$1.12 billion,while India has invested around $50 billion.

The two day event also witnessed several companies sharetheir experiences of Africa as an air cargo destination.

Lot of them said they nd the African market to beimbalanced its a one-way trade as full freighters y into

African destinations and on the outbound journey its empty.Striking balance is the key objective for us, said Georges

Africa BeckonsInaugural edition of Air Cargo Africa highlightspotential of an emerging airfreight continent


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AIRCARGO AFRICA 2011 AIRCARGO AFRICA 2011

Aircargo Africa 2011 Conference Welcome Party P H O T O G R A P H B Y :

J A M A L


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COVER STORY

Kenya Airways Cargogreasing Africas economic wings

The airfreight industry in Africa is still developing, but local heavyweight Kenya AirwaysCargo (KAC) is expanding and stepping up services to cater to the rising demand andchange global perception.

Growth catalystSupported by KAC, the country is pitching hard to grab bothglobal and regional attention. KAC was formally launched on18th May 2004 as a division in the commercial departmentof Kenya Airways in a move that was part of the airlinescorporate re-organization strategy.

Through its central hub Jomo Kenyatta International Airport(JKIA) Nairobi that is currently undergoing expansion, Kenya

Airways Cargo serves its vast regional and internationalnetwork. Together with strategic partner airlines, the Kenya

Airways Cargo now serves over 54 destinations out of which44 are in Africa.

KAC offers belly capacity and charter brokerage services

mainly to freight forwarding agents, courier companies andpostal corporations. The airline also offers product such asexpress cargo, KQ pharma, perishables, general cargo, andlive animals.

According to Kenya Airports Authority, in 2010 exports at196,000 metrics tonnes accounted for 86% of all cargothroughput with imports at 32,800 metric tonnes accountingfor the remaining 14%. In 2010, perishables accounted for85% of total exports and owers in particular accountedfor 41%. Europe still remains the destination of choice forKenyan exports with 68% of total exports and the MiddleEast at 14%. India and China are also emerging as a majortrade partners as cargo movement continues to grow.

Statistics presented by Boeing at the Air Cargo Africa event,the rst on the continent, show that cargo in Africa is growingat an average of 20 per cent per annum. Cairo led withtonnage handled in 2009 standing at 285,000 metric tonnes,Nairobi emerged second with 263,000 tonnes, Johannesburg252,000 tonnes, and Lagos at 172,000 tonnes.

Perishable specialistHighly perishable goods incur a signi cant decrease inproduct value with any delay. A study on the impact of theair cargo industry on the global economy estimates thatapproximately 80 per cent of the international trade in cut

owers travels by air as does a similar proportion of specialtymeats. Currently, two-thirds of the sh traded internationallyare shipped by air while almost all of the trade in large liveanimals goes by air.

Kenyas economy, which is heavily dependent on agriculture,cannot grow as fast without the air cargo transport services.Perishability still plays a critical role in the decision to shipby air and it is also recognized that the air cargo industryhas been key in making Kenyas horticultural sector to rank as one of the countrys fastest growing industries. Nairobiexports 2,000 tons of perishables by air per week to Europewhich includes cut owers, fresh vegetables and fresh sh.

And, Kenya alone sells 82% of its horticultural exports in EUcountries.

JKIAs strategic location makes us better placed in terms of smooth cargo ow. Because of Kenya Airways intra-Africawide-body capacity, we are able to tap into the growinghorticulture business from other emerging African countriessuch as Uganda, Ethiopia, and Zambia, says Sauda.

The UAE alone imports over 160 tonnes of perishables everyweek, which is an indication of rising demand.

ChallengesIt is getting increasingly competitive as more airlinesparticularly from the Middle East and Asia are offering wide-body capacity. This extra capacity in Nairobi often leadsto low cargo yields. Most importantly, much of the cargofrom Nairobi is largely Europe bound and with increasingthe number of ights serving European destinations fromDubai, JKIA is having a bit of a tough time. However, there isenough business as KAC is known for developing specialisedproducts targeted at different consumer needs.

Another concern is most of the cargo is carried in theairlines belly hold. Belly capacity is the space availableafter passenger baggage and excess baggage has beenuplifted. Therefore, space constraint does become an issue.

COVER STORY

In the recent years Africa has picked up pace and is emergingto be the most preferred trade market that offers oodles of growth opportunity. The countrys strategic location makesit a natural hub for investors seeking to exploit not onlyresources but also a growing market for air freight.

Even investments in infrastructure point towards a determinedattitude to make Africa a centre of logistical excellence.Kenya in particular is moving ahead of the rest by evolvingwith global trends and changing the way airfreight industry isperceived and practised in Africa. This shift is being aided bytwo key factors: willingness to shift from traditional practicesand infrastructure growth.

Air freight has been the mainstay of our economy, saysSauda Rajab, General Manager of Kenya Airways Cargo.

Kenya is an agro-based economy and perishables constitutethe vast majority of exports from Kenya with owers being thegreatest contributor followed by fresh fruit and vegetables.

Africa in general remains a net importer with importsoutstripping exports. Jomo Kenyatta International Airport isan exception in Africa in that its airfreight exports are greaterthan imports.

Electronics, live-stock, pharmaceuticals, etc are importedand then distributed across Africa. So, there is enoughinternal air cargo movement and the potential for airfreight issubstantial, she explains.

Plus, Africa lacks proper in-land rail/road transportinfrastructure making air borne freight transport logisticallymore convenient and popular, she adds.

Dr. Titus Naikuni - Group Managing Director andCEO of Kenya Airways


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It is essential to optimize the cargo belly capacity on Kenya Airways passenger aircrafts and developing a dedicatedfreighter network.

However, the airline is not only limited to selling available bellyspace on ights. Extra capacity is obtained by brokeringcharters as well as utilising existing code-share agreements inplace with other airlines on routes that have high demand forcargo capacity. Plus, for most carriers in Africa, cargo ies onlyin one direction unlike passengers. Hence it does not work out that well for the airline. Growing fuel costs in the wakeof regional political unrest is also a growing concern, saysSauda. However, our biggest plus is our geographic location.Nairobi is centrally located unlike many other African airports,especially the ones down South. As we all know, air cargo isall about shortening the travel time, and Kenya Airways Cargowith its good network, ideal location will nally have a betterturnaround time despite being challenged on space.

Expansion to meet growing demandsIn the recently concluded Africa Air Cargo Conference Kenyaairways Cargo announced that it was developing its cargodivision further by boosting its cargo capacity. The airline is forthe rst time set to acquire one freighter and pla ns to increasethe freighter eet as business demands.

Speaking while opening the Africa Air Cargo Conference inNairobi, the Group Managing Director and CEO, Dr. TitusNaikuni said that the airline was sourcing for a cargo freighterto be in service by next nancial year which starts in April2011.

He said that the airline had noted rising demand for cargoservices from customers and was keen to support thegrowth in intra-Africa Cargo growth. The freighter will beused for operations across Africa destinations.It is intendedthat the freighter will be available both to the wider Kenya

Airways network as well as interline partners with regularintra-Africa traf c. He added that the freighter service will

be complemented by capacity offered by wide-body aircraftalready serving Lusaka, Lilongwe, Harare and Kinshasaroutes. The impending addition of the freighter follows thesuccessful launch of a three times weekly 767-300 service toRome. We aim to increase our services to London to double-daily served by Boeing 777-200 as soon as slot availabilitypermits at London Heathrow Airport. From April, we shall alsobe upgrading our daily Amsterdam service from 767-300 to777-200 which affords greater cargo capacity, he said.

This he said would not only take care of increased capacityfor passenger business but also increase the cargo uptake toEurope. Dr. Naikuni added that International aviation analystshave predicted that air cargo to grow exponentially especiallyintra Africa and between Africa and Asia with Nairobi

increasingly playing the role of a cargo hub for Africa.

He called for the expansion of cargo handling infrastructureparticularly at the JKIA as well Kisumu and Moi internationalairports. At Kenya Airways we have invested in cold roomfacilities to accommodate the growing horticultural exportbusiness. Our new Fast Flexible Fresh (FFF) facility is a 2500meter square warehouse with the capacity to store between90-100 pallets, he added.

Paperless system The air cargo industry has come under re recently for failingto adopt more ef cient paperless communications systems.But KAC said E-Freight would boost competitiveness byhelping to reduce costs and increase processing speeds andaccuracy. E-Freight is an International Air Transport Association (IATA)-led global initiative for the air cargo industry to replace paperdocuments with electronic messages and involves carriers,freight forwarders, ground handlers, shippers and customsauthorities, says Sauda.

Better future Africa and particularly Kenya is proving to be a major cargohub. Though infrastructure is still a challenge, the governmentis committed to change and to upgrading the airport facilities.However, to realise true prospects the countries need tofacilitate cargo transport by making cargo regulations moreliberal than passengers. They should also work towardsenhancing traf c by removing restrictions on prices andcapacity. Finally, authorities must work towards improvingef ciency in handling logistics in order to deliver value to theconsumer.

However, it is heartening to see that Africa has picked uppace, a fact certi ed by the increasing presence of local andinternational logistics companies that are ooding the market.Sauda agrees saying, Africa has the potential, and all weneed to do is continue to strive for better consistency of service backed by liberal regulations.

COVER STORY

Sauda Rajab, General Manager of Kenya Airways Cargo

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African pharmaceutical industry. Astral distributes cargo forover 20 international airlines that y into Kenya and works with

ve global freight-forwarders. Within its intra-African network,which encompasses 50 destinations, Astral operates acombination of non-scheduled and adhoc charters to a nother40 destinations along with value-added leasing services.

To further tap the intra-African market, Astral opened a newcustoms warehouse last year. It is also facilitating betterstorage and clearing of cargo at Juba airport. Trade in Juba,the capital of Southern Sudan has been on the increaseleading to demand for cargo imports, especially from Nairobi.

Tanzania has been another major route for the airline. Drivenby the countrys tourism and mining industry, Tanzania isattracting major airlines and cargo operators to y in.

The discovery of oil in Uganda is expected to increasedemand for ights to the landlocked country, with airlinesanticipating increased cargo and passenger numbers.

Clearing Obstacles There is no doubt that any new freighter destination has itsshare of obstacles to surmount. Some of these hurdles varyupon regions, others are universal.

The challenge for Africa is much to do with overcoming politicalobstacles and bureaucracy. Astral identi es this as key tosmooth operations in Africa. To succeed, Africas air cargosector needs a clear vision and a commitment to confrontthe risks associated with ill-conceived and uncoordinatedderegulation initiatives at the various country levels. Plus, theglobal slowdown did have a snowball effect on the aviationindustry and Africa was no exception. The airline derivesalmost 90% of its cargo from traditional markets of Europe,

USA and the Middle East, which were most badly affected.Our cargo volumes declined by 35% which affected yieldsand pro tability, says Gadhia. Astral implemented a cost-reduction program and a revenue optimization initiative in2009 which nally resulted in positive results.

However, the current issue of rising fuel prices is anothergreat barrier to success. Fuel accounts for 40% of the airlinesoperating costs. Due to the constant increase in the Fuel Index,

Astral Aviation again had to increase their fuel surcharge. If you keep loading these costs on to your clients/customers,they slowly move to companies that are less expensive,exclaims Gadhia and this further affects your bottom-line.

These obstacles have however not dampened the attractionto Africa and Astrals business plans for 2011 are rollingout. Africa is among the few regions promising growth inthe highly turbulent aerospace domain. This is backed by astrong intention to spearhead pioneering developments andthe regions business potential. And needless to say, theincrease in cargo activities serve as a clear barometer asto where the sector is heading, he states. Astral currentlyoperates a eet of two DC 93s and two Cessna Caravanaircraft out of its dual-hub at the Jomo Kenyatta International

Airport and Lokichoggio Airport, both of which are locatedin Kenya. With new destinations being brought on boardand accelerated business growth in recent past the airline isseriously contemplating buying additional aircraft. We havealready inspected two DC 8s in the UAE and are currently intalks with the Civil Aviation Authority to get them registered,declares Gadhia.

Astral is witnessing a huge upsurge in terms of business andI see every reason to say that 2011 will be one of our bestyears in terms of performance, he concludes.

ASTRAL AVIATION INTERVIEW

A ll of us at some point have heard the old adage hopefor better and prepare for worse but Sanjeev Ghadiais only hoping for the best and says con dently 2011will be one of the best years for Astral.

Africas growing economies have led to increased movementof goods with airlines positioning themselves to move morecargo. As international airlines link the continent to the rest of the world, Kenya-based airline Astral Aviation has positioneditself as the leading cargo carrier in East and Central Africa.

Route ExpansionBusiness is booming, weve seen increased activity in thepast two months, says Gadhia. A series of new route dealshas further forti ed the companys revenue.

The cargo carrier covers the whole of Africa and is currentlyexploring new destinations.

Gadhia has already signed a special interline agreement withRwandair Express. The bilateral agreement allows RwandairExpress to feed into Astrals Nairobi network which comprisesof scheduled cargo ights into Kigali, Entebbe, Juba, Dar-es-salaam, Mwanza and Zanzibar. Likewise, Astral Aviationwill feed into Rwandair Expresss passenger network whichcomprises of destinations from Kigali such as Brazzaville,Bujumbura, Johannesburg, Kilimanjaro and Kamembe.

Few days back, Astral struck another interline deal with EtihadCrystal Cargo. The partnership has given Etihad CrystalCargo access to the following seven Astral destinationsacross Africa: Entebbe, Zanzibar, Dar Es Salaam, Mwanza,

Juba, Kigali and Bujumbura.

Gadhia says, Interline traf c accounts for 60% of in-boundshipments into Astrals network, and the recent bilateralinterline agreement with Etihad Crystal Cargo marks animportant synergy for both airlines whose GSAs andcustomers will have access to a wider network.

The cargo airline already has interline agreements with Kenya Airways, Martinair Cargo, British Airways & Air Mauritius tofacilitate the consolidation and transhipment of in-boundcargoes at the freighter-friendly Jomo Kenyatta International

Airport.

Ever-growing Cargo MarketProactive government initiatives and increased investmentsinto infrastructure, telecommunication, agriculture, andmining are some of the major drivers of cargo movementin the continent, therefore seeking increased interest fromglobal markets.

Middle East and European airlines lead the pack in positioningthemselves to tap the opportunity, with freighters beingdeployed to move cargo into and out of the continent.

Asia is also emerging as a major trade partner as cargomovement between the two regions continues to grow. Weare also receiving lots of in-bound cargo from India, saysGadhia. India has been actively promoting trade with Africain recent years. It has already penetrated the $2.5 billionpharmaceutical market in West Africa. According to IMS,imports of nished products account for over 60% of the

ASTRAL AVIATION INTERVIEW

Astralupbeat about 2011performance

As the cargo carrier celebrates its10th anniversary, Chief executive

Of cer of Astral Aviation, SanjeevGadhia, predicts that 2011 will bea pivotal year for Astral. ChandrimaDutta reports. Sanjeev Gadhia - Chief executive Of cer of Astral Aviation


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INSIGHT

Air Cargo The International Air Transport Association (IATA) laidout an agenda for the air cargo value chain to improve itscompetitiveness with a four point agenda. The air cargovalue chain must offer better quality and improved ef ciencywith operations that are safer and even more secure, saidGiovanni Bisignani, IATAs Director general and CEO, in hisopening remarks to 900 air cargo executives gathered inIstanbul for the IATA World Cargo Symposium.

An ef cient air cargo industry is in everybodys interest. Transporting 35% by value of goods traded internationally, it

is critical to the global economy. Improving competitivenessto more effectively connect the world requires a team effortacross the air cargo value chain. Airlines, forwarders andshippers must work with governments on common goals tosolve air cargos key issues, said Bisignani.

IATA speci cally addressed the following issues:Security: Bisignani noted signi cant progress in collaborationwith the US Department of Homeland Security in 2010.He also rang a warning bell that many governments andpoliticians are working on change to air cargo security thatdramatically impacts the business. IATA is taking the lead toengage governments with industry knowledge and expertise.Our message to governments is clear. We must resist theknee-jerk call for 100% cargo screening. The industry mustbe secure with effective measures that facilitate the speedneeded to support global commerce. Air cargo security mustbe based on a combination of three measuressupply chainsecurity, scanning technology and better use of e-freightdata, said Bisignani.

IATAs vision for air cargo security includes a supply chainapproach that keeps shipments secure from the time of packing to loading. IATAs Secure Freight initiative helpsindustry and governments to work together on investment,processes, technology and risk assessment to implementa supply chain approach. Secure Freight is being pilotedsuccessfully in Malaysia and the target is for two othercountries to implement in 2011, including the United ArabEmirates. Second, new certi ed screening equipment isneeded to supplement the supply chain security process andhandle oversize items and pallets if required. And third, tofacilitate effective risk assessments, better use must be madeof electronic information.

e-freight: The IATA Board of Governors has targeted 10%e-freight volumes on capable trade lanes by the end of 2011,and 100% by 2015. The e-freight network covers 80% of cargo volumes. But e-freight penetration stands at just 2.8%.Most governments have legislation that recognizes electronicdocumentation. The exceptions include Thailand, Indonesia,

Russia and Vietnam which much catch-up fast or risk beingleft behind in this important business, said Bisignani. TheIATA e-freight program was started in 2004 with the aim of saving the industry $4.9 billion by converting 20+ shippingdocuments and the processes behind them to electronicformat. Its a no-brainer. If we can be faster, cheaper, moreaccurate and secure we need to get it done, said Bisignani.Quality: Cargo is a competitive business98% of thevolume goes by sea and 2% by air. Customers who pay apremium to ship by air demand premium quality. Cargo 2000has developed cargo standards. These should not be the

property of a club of a few committed airlines and freightforwarders. Customers want to know that their shipmentsare on time and if they are not, they need to know when toexpect them to plan around the delay. This is an example of basic good business practice that air cargo needs to adopt if it is to maintain or improve its competitiveness. My vision isto evolve these to global quality standards by the end of thisyear, said Bisignani.

Safety: With one accident for every 1.6 million ights in 2010,safety as measured by Western-built jet hull losses achieveda historical low. Bene tting from the IATA Operational Safety

Audit (IOSA) as a condition of membership, IATA airlinesoutperformed the industry with one accident for every 4million ights. Safety is our number one priority. The positivenumbers from 2010 show the strength of our commitment.

This commitment includes constant improvement and thereis an emerging risk with internet based commerce that wemust address. Individual sellers through websites are notprofessional shippers. They dont know their responsibilitiesto label, pack and declare dangerous goods. All air cargostakeholders must nd a way to bring these websites toaction to inform their customers of their responsibility. Andwe must do this fast, before we have a catastrophe, saidBisignani.

Positive Outlook Air cargo is expected to generate $68 billion to theindustrys $594 billion revenues. Volumes are expected togrow by 6.1% for a total of 46.2 million tonnes of air cargoin 2011. Stronger demand indicated by upwardly revisedGDP forecasts of 3.1% and careful capacity managementare expected to see cargo yields grow by 1.9% in 2011.

Along with the rest of the aviation business, air cargo isexpected to be hit hard by rising fuel costs. IATA raisedits assumption on the oil price to $96 per barrel from thepreviously forecast $84. Taking into account hedging levelsof about 50% of anticipated consumption, this added $10billion to the industrys fuel bill. This drove a 46% cut inglobal pro ts to $8.6 billion from the $16.0 billion thatairlines made in 2010.

Competitiveness Improves


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23

BARLOWORLD INTERVIEW BARLOWORLD INTERVIEW

Swift Freight being such a strong brand in the market, why would you like to change to Barloworld Logistics?

From the beginning Barloworlds intention was to eventuallychange the brand, in line with our international brandingstrategy to Barloworld Logistics. When we acquired Swift,we knew the change would come someday.

When we acquired Swift in 2008, considering the strengthand value of the brand, we planned to migrate over threeyears. We have been precisely doing that for the last threeyears.

It is now in line with our plan; the time has come for us tochange the brand to Barloworld Logistics as we are brandedall over the world. Barloworld acquired Swift to gain footholdinto the Middle East and GCC market and our intent is to

in line with the group strategy of to be a leading brand inthe markets where we operate. Our objective is to growBarloworld Logistics brand into a leading provider of supplychain management solutions.

What does it mean to your customer and the layman, this brand change or name change? What is it? Is it just a logochange or something more than that?

Barloworld is a 109 year old company and what the brandrepresents is reliability, quality service and long lastingpartnership. With regards to service quality, pricing, none of that gets affected because we have been in control of thebusiness for the last three years. We have been reviewingbusiness processes and improving, which our customers arereally enjoying. Obviously, this is an ongoing process as webelieve in continuous learning and continuous improvement.

A new beginningIn 2008, South Africas Barloworld Logistics bought Dubai-based Swift Freight Interna-tional to secure a strong foothold in a number of Asian and African countries. Air CargoUpdate caught up with CEO of Barloworld Logistics, Freight Management & Services,Mr. Frank Courtney to nd out why a renowned and trusted brand Swift Freight was re-branded to Barloworld Logistics. Has this been a positive re-branding exercise so fa rand if so, what is Barloworlds value addition in the whole process? Heres an excerpt.

So, for the laymen, they shouldnt feel any change becauseall we are changing is the brand. The customers will stillenjoy the same level of service from the same people, fromBarloworld Logistics as they always have.

So what is the Barloworld value addition in the whole process?

Being part of a six billion dollar group; Barloworld bringsnancial stability, governance, tried & tested business

processes into the equation and the customers will realizethe bene t of those services being applied.

Swift Freight was a local company and over a period of time, it grew across various geographies and it catered

services to the smallest possible customer to the bigcorporates. So when you mentioned that you are a

part of a six billion dollar Company, dont you think

it sounds little intimidating to me if I am a small timecustomer?

Our strategic intent is to provide, supply chain managementsolutions to large corporate customers. Our target market isthe large corporates. Fundamentally, we want to demonstrateour capabilities in the supply chain management through ourfreight forwarding, warehousing and distribution offerings thatwe have acquired from Swift.

We want to give our existing and potential customers, thecon dence that we are capable of providing integrated supplychain solutions to meet any of their needs in the market. Havingsaid that, obviously, we can ful ll the needs of an individualcustomer, who walks in with a single pallet; we would gladlyassist him. Strategically, people and companies that we aregoing to pursue are the large corporate customers, who have

Mr. Frank Courtney - CEO of Barloworld Logistics, Freight Management & Services


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25

complex supply chains, where we are certain to add valuethrough our integrated solutions.

What products and services do you intend to offer apart from traditional freight forwarding services?

When we bought Swift, we did not only buy freight forwarding,we also bought warehousing, distribution, transport andwhole lot of services. We already offer a wide range of servicesbeyond freight forwarding as many of our customers alsolook for value adding services. We believe in approaching ourcustomers with a blank piece of paper and explore their needwhich enables us to design and facilitate those needs withinour business offerings.

So how does that differentiate you from the existing large sized players?

I think, like all businesses, the real differentiation comes fromthe people. Everyone has same fork lifts and warehouses.

The difference between excellent service and mediocreservice are the people. We acquired in Swift was a groupof professionals, who understand the region and are able tooffer a superior service.

Obviously, a lot of other players in the market are migratingto a more integrated supply chain offering and looking forways of differentiating themselves. We are able to offer

differentiation through our software business where we canprovide network design solutions, inventory managementsolutions, demand planning solutions and host of analyticaltools. We are able to assist customers in understandingbetter what they are shipping and why they are shipping?.So, we want to understand the drive behind the customerto ship something, the mode, to make sure that, rst of all, they are choosing the correct mode and / or the rightquantity, because thats where you can get a big reduction.By understanding the supply chain on a broader aspect, youwill get a far better reduction.

If you dont, look at it holistically, What you are looking at is,a small increments in price change because in the supplychain, everyone has to try and make money. So you maybe able to negotiate at 2% or 1% better price with theairline company. Thats not a real saving to a customer. E.g.,instead of shipping a 100,000, you can ful ll his needs byair freighting 1000 and sea freighting the balance, you arecreating substantially more value for that client.

Earlier Swift Freight was very dominant in Africa, so what areas are Barloworld Logistics looking forward to operate and expand?

Barloworld, as a group, has many operations in Africa. Africais where Barloworld comes from. We are a South Africabased company and Africa has always been a part of what

BARLOWORLD INTERVIEW

we have done. Strategically, we wanted to insert ourselvesinto the northern hemisphere trade lanes; thats where themajority of global business occurs and we did that with Swiftacquisition.

The reason we acquired Swift and the Flynt in Hong Kong;was to put us into the East-West trade ow in the Northernhemisphere. So, along with our operations in South Africa,we will be focusing on Spain and Germany as well.

Just after the acquisition, you had a major downturn in this region. Well, no region was exception to this. How did you manage the new acquisition during that period?

We focused on providing better service than our competitors,so that our customers would remain loyal with us. Webattened down the hatches to weather the storm, which I ampleased to say, we have come through.

What future trends look like for the logistics industry?

As per WTO latest numbers the global trade has grew by13.5% in 2010 compare to expected 10%. This clearlyindicates that global trade is on the comeback. Our volumescurrently show a similar recovery. The Downturn has also leftmany good lessons to learn. Companies would like to focuson their core activity and leave logistics for the experts likeBarloworld Logistics to manage it.

As the cost base in traditional manufacturing increasesthere would shift in manufacturing base and supply chainmanagement companies like Barloworld Logistics, wouldhave to stay agile about changing origins and impacts onsupply chain.

Supply Chain Management companies which are integratedwith transportation ability and tools to manage them willsucceed better than those who are in pure consultancyspace for the fact their better knowledge on all the aspects of supply chain and control on those factors.

What are your future plans?

Our strategic intent is to provide, supply chain managementsolutions to corporate customers. Our target markets arecorporate companies. The year ahead will be streamlining theoperations, extracting synergies and focusing on trade lanegrowth. Once the consolidation is bedded down, we will look to strengthen our position in the Middle East.

In addition to geographical growth, we will also be lookingto increase our product offering in the Middle East marketi.e. to provide complete end to end supply chain solutionsand software solutions to manage the same. Such productsare suitable for all medium and large enterprises, howeverthe greater the complexity of the supply chain the greater thereturn.

BARLOWORLD INTERVIEW


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EVENTS

Dubai Gears Up to Gather70 Hosted Buyers at AirportShow 2011Dubai is gearing up to gather more than 70 Hosted Buyersfrom 20 different countries during the Airport Show 2011, an-nounced REED Exhibitions Middle East, a leading organiserof trade and consumer exhibitions.

The participation records a higher percentage than last yearwhen 56 buyers from 17 airports participated in the HostedBuyers programme, while the 2009 edition attracted 41 buy-

ers from 16 airports.

Organised under the patronage of His Highness Sheikh Ahmed Bin Saeed Al Maktoum, President of Dubai Civil Avia-tion Authority, Chairman of Dubai Airports and Chairman andChief Executive of Emirates airline and Group, the 11th edi-tion of Airport Show will be held from 31 May-2 June at Air-port Expo in Dubai.

Airport Show 2011 will gather suppliers of equipment andservices covering all areas of airport development and opera-tions with the Hosted Buyers under one roof in Dubai. The

event offers a one-stop platform catering to the needs of ex-isting and new airports in the region in which development

and expansion projects are estimated to cost US$90 billionover the next few years.

The outlook for 2011 remains positive with expenditure bud-gets at 78 per cent of the worlds airports either remaining athigher levels or indicating further increase, according to the

ndings of the seventh Airline IT Trends Survey. Asia-Paci c,the Middle East and Africa are projected to be the strongestgrowth sectors. According to the Middle East Airport SecurityMarket Assessment Report, safety and security remain animportant focus area in which spending is expected to reach

AED212 million (US$57.7million) by 2015.


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TNT - INTERVIEW

Investing in future

Regional Director for TNT Middle East, Bryan Mouldssays it is prudent to expand now as the company islooking to grow 20% this year, and if that forecastcontinues as he thinks it will over the next three to four years,

TNT will have to invest in future.

Based on anticipated improved market conditions and growthin business, Netherlands based TNT express inauguratedtheir new air cargo handling facility at Dubai International.His Highness Sheikh Ahmed Bin Saeed Al Maktoum,President of Dubai Civil Aviation Authority and Chairman of Dubai Airports of cially opened the facility which representsa substantial increase in size (ten times bigger) compared totheir previous facility. The state of the art building features morethan 2,500 square feet of space, exceptional accessibility andcustomer service areas. According to Moulds, this facility iscapable of handling materials of 767, 747, and 777 freighters.

Industry big-wigs like Paul Grif th, CEO of Dubai International Airport and Andrew Walsh, Vice President Cargo of DubaiInternational and DWC were also present. Terming the launchof the new facility as the continuation of a long and fruitfulpartnership between Dubai International and TNT, Sheikh

Ahmed said, Dubai International is an emerging globalhub for trade, cargo and logistics and the opening of a newfacility for a global player such as TNT serves to build thatmomentum. Dubai Airports is committed to providing high

TNTs new air hub to cater to Mideasts growing business demands

TNT - INTERVIEW

levels of customer service and facilitating the smooth andef cient operation of TNTs new facility at Dubai International.

Commenting on the inauguration of the air hub at DubaisInternational, Moulds said, This new facility is another step inour aggressive expansion in the region. We are committed toinvesting in the Middle East and want to thank His Highnessfor sparing the time to of cially open our new operation. TNTsvolumes on our freight network between Europe and the UAEhave grown by over 30 per cent in 2010 and the timing of expanding the hub was to allow us to further support andaccelerate volume growth. This is a complementary stepin enhancing our connectivity in the Middle East, alongsideinvestment in enhanced handling facilities in Dubai, Jebel Aliand our Middle East Road Network (MERN).

Middle East integral to growth TNT con rmed signi cant investments to accelerate their nextphase of growth in the Middle East, centred from its RegionalHeadquarters in Dubai, UAE. The ongoing investment in thelocal economy involves facilities, equipment and people andinvolves a signi cant ongoing commitment. Moulds said, Theonly way that we can continue the growth we have witnessedover the last ve years is by investing in the right places. Wereanticipating a 20% growth this year and it is prudent to investnow to ensure we do not limit our ability to grow.

There are several exciting developments linked to and

starting with the opening of this new 2,500m2 dedicatedfacility, where TNT has the bene t of close on site cooperationwith both Dubai Police and Customs authorities, which willenhance daily operations.

The recent launch of a dedicated B767 freighter, with adaily connection between Dubai and TNTs European airhub demonstrates the companys con dence, borne from astrong regional recovery centred in the UAE and speci callyDubai. With these developments, customers will enjoy fastertransit times, cost bene ts, greater control and visibility overtheir shipments.

Our success in the Middle east has been a continuation of success in the GCC countries and particularly the UAE, whichhas been highly instrumental in changing growth in the region.

And lead by the UAE and then Saudi Arabia, the powerhousesof the Middle East, I am con dent; it will continue to be thatway. While Saudi has a big consumer base UAE has thegrowth rates and size of business, he explained.

When asked about whether TNT Express is contemplating toestablish base in Dubai World Central, Moulds said, DubaiWorld Central is turning out to be a great place for companiesspecialising in air freight movements. We are already in talkswith Paul Grif ths and other of cials about having a facilitythere either by 2012 or 2013.

Bryan Moulds - Regional Director for TNT Middle East

HH Sheikh Ahmed Bin Saeed Al Maktoum, President of Dubai Civil Aviation Authority and Chairman of Dubai Airports of cially inaugurates the facility

(L - R) Andrew Walsh, Vice President of DWC, Dubai Airports; BryanMoulds, Regional Director for TNT Middle East; Paul Grif ths, CEO of Dubai Airports; a TNT of cial


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AL AIN AEROBATIC SHOW

T his years Al Ain Aerobatic Show ended having morethan lived up to its billing as the biggest and best everwith 71,000 spectators pouring through the gates

over the two days of the event. Friday saw a show day visitorrecord with some 39,000 spectators a ttending.

The Show was held under the patronage of HH GeneralSheikh Mohammed bin Zayed Al Nahyan, Crown Prince of

Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, and was carried out in partnership with Al AinMunicipality and Al Ain Police.

71,000 visit Al Ain AerobaticShow 2011

UNIVERSAL PESTICIDES INTERVIEW

Wood packaging material used for sendingcargo can spread pests, which can lead toserious problems around the world. Globallyapproved measures have now been established to re-duce this threat and protect local environments. If youuse wood packaging for your products, the material mustbe heated in agreement with the regulations stated in theISPM-15, says Pramod P, CEO of Universal Pesticides.

A crucial part of exporting lies in the physical transfer of the products to the desired location. This includesnot only the mode of transportation, but also thepackaging of the product.

Did you know that lot of your cargo are packed in hugewooden boxes? And, most of the time they are stuffed withfood grains and other edible items we consume on a dailybasis? And these boxes might have pests and mites of allstages (i.e. eggs, larvae, pupae, adults and hidden insects).

Therefore, it is essential to treat the wooden containers beforesending them off to their destination countries. The aim isto prevent pests, other insects and biological material frombeing transferred unknowingly from one country to another.

If you are regularly exporting cargo to countries such asUSA, UK, Canada, Japan, Australia, etc, you must be wellaware of the consequences of not having a heat treatmentor fumigation done before despatching cargo in woodencontainers. Often, exporters especially those who aresending goods for the rst time to these countries send off their consignment without ful lling these requirements only torealise later that their cargo has been considered untreated,objectionable, & non-compliant and therefore rejected.

Wood packaging material made of unprocessed raw woodcan spread pests, which can lead to serious problemsaround the world. Globally approved measures have nowbeen established to reduce this threat and protect localenvironments. If you use wood packaging for your products,the material must be heated in agreement with the regulationsstated in the ISPM-15, says Mr. Pramod P, CEO of UniversalPesticides.

Universal Pesticides is one such company which can helpyou in such situations - We are authorized to carry out allQuarantine requirements right from export cargo fumigation to

heat treatment and our certi cates are accepted worldwide,he adds.

The treatment of wood packaging materials is a meansof preventing the introduction and spread of pests. Thestandards are set out in the International Standards forPhytosanitary Measures: Guidelines for Regulating WoodPackaging Material in International Trade, or more commonlyISPM 15. In order to comply, the material must go throughone or several of the approved treatment procedures and bestamped with an an approved International Plant ProtectionConvention (IPPC) logo, he explains.

Under the ISPM15 requirements, exporters would berequired to heat treat wood packaging material to aminimum core temperature of 56 degrees Celsius for atleast 30 minutes. Exporters could also use Methyl Bromideor Aluminium Phosphate to fumigate the wood packing.

Though Methyl Bromide is most widely used fumigant forQuarantine purposes, we use Aluminium Phosphate here inour warehouse, which is equally effective, he adds.

Advantages of fumigationFumigation is a Quarantine requirement for countries such as

Australia, New Zealand and China before goods are admittedinto the country.

Fumigation is a process of exposing insects or materialinfested by insects to the fumes of a chemical at a lethalstrength in an enclosed space for a given period of time.Fumigant is a chemical, which at a required temperatureand pressure can exist in the gaseous state in suf cientconcentration to be lethal to a given pest organism.Fumigation is the introduction of the toxic gas in highconcentration so that the gas pervades the entire area andkills the insects prevalent and thus preserves the preciouscargo of the c ustomer.

Transportingpest-free cargo

Pramod P - CEO of Universal Pesticides.


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Fumigants are usually quick acting and therefore results intotal control of pest & insects. Fumigation can control at allstages of pests (i.e. eggs, larvae, pupae, adults and hiddeninsects). Fumigants being Gases, they diffuse through allparts of the structure or commodity and can reach to peststhat could not be reached with conventional pest controlmaterials or techniques. For certain commodities, Fumigationis the only recommended practical way to control pests. Plus,it has no adverse effect on Germination quality.

We use Aluminum Phosphate, which is available in the formof tablets and used worldwide for fumigation of raw andprocessed commodities including grains, tobacco, nuts,seeds, animal feeds, tea, coffee leaf, wheat our, processedspices, dried fruits, etc. It can also be used for fumigatingstorage structures all sorts of storage structures. It requiresthree to six days to fumigate containers depending onweather conditions and temperature.

Impact on exportersGovernments around the world are increasingly restrictingthe use of all forms of wood packaging, including pallets,crates, and skids. These restrictions are intended to stop theintroduction of foreign pests and have created an expensiveand complex scenario of interpretations of regulations,compliance methods and documentation procedures forexporters. They combine to create new risks to the exporter,ranging from total shipment rejections to expensive (perhapsproduct damaging) delays in the shipping process.

Beginning in October of 2001, the European Union (EU) hasimplemented emergency requirements to prevent the spreadof wood-carried, environmentally harmful pests into Europe.

These restrictions focus on coniferous, non-manufacturedwood packaging, including pallets, crates and dunnageexported from the United States, Canada, Japan and China.

All such packaging must carry proof of appropriate heat and/ or chemical treatment on each board!

Similarly Asia-Paci c countries, including Australia, Singapore,Hong Kong, and the Philippines have also tightenedrestrictions on importation of wood packaging as evidenceof dangerous wood hitch-hikers and their consequentialenvironmental damage is becoming increasingly evident.

But most of the exporters are not aware of these newregulations and checks that have been put in place. Plus, thecommercial and operational impacts of these standards arecertainly increasing the cost of wood pallets and packagingfor international shipments. New and additional paperwork isa certainty for everyone involved, adding another level of costand risk to the exporting process.

In March 2002 the International Plant Protection Organization(IPPO), which is a division of the United Nations, implementeda global standard governing all non-manufactured woodpackaging (both coniferous and non-coniferous), and said,it will be implemented over a 1-2 year timeframe. Actualimplementation was left to the individual country, creatingmore uncertainty and risk for exporters, as interpretation andconsequential actions at national authority levels relating tothe standard was undoubtedly non-standard for some time.

Till now, only heat treatment and fumigation are two globallyaccepted treatments to ght pests in wooden packaging. Weare trying our best to educate the local export companiesand individuals about the importance of getting it done beforesending international consignments. Even if the treatmentand certi cation procedures takes time and hurts you pocket,it at least saves you the risk of returned or rejected cargo.

And that cannot provide any price advantage, concludes Mr.Pramod.

UNIVERSAL PESTICIDES INTERVIEW

Heat treatment chamber

MIDEX AIRLINES

Operates from the UAE Airports. Our home base and main hub for our international

Air Cargo and Air Charter operations is Al Ain Airport.

Operates Six (6) A300B4-203F with a capacity of 44,500 Kg each.

Operates Three (3) B747-200 F (Nose Loader) with a capacity of 108,000 Kg each.

Transports dangerous goods, valuable cargo, deep freeze food and fruits and vegetables.

For any charter requirements, please contact us directly at:

Call: +971 50 2730020 or E-mail us at [email protected]*PS W e offer Regular Charters to Iraq and Afghanistan

Email: [email protected] ebsite: ww w .midexairlines.com

PO Box 9636, Dubai, United Arab EmiratesTel +971 4 2146808, Fax: +971 4 2146809

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18/29


19/29

NEWS - MIDDLE EAST NEWS - MIDDLE EAST

UAE signs openair services withMontenegro

The United Arab Emirates represented by the General Civil Aviation Authority (GCAA) has signed an open air servicesMemorandum of Understanding (MoU) and initialed an

Air Services Agreement (ASA) with the Government of Montenegro.

The agreement was initialled by H.E. Saif Al Suwaidi, DirectorGeneral of the UAE General Civil Aviation Authority (GCAA)and Mrs. Mirel Radi Ljubisavljevi, Deputy Minister for Airand Road Transport of Montenegro. Representatives from

Abu Dhabi Department of Transport, Dubai Civil Aviation Authority, Etihad Airways and Emirates Airline attended thenegotiations.

The two delegations agreed that any number of designatedairlines of both parties will have the right to perform scheduledair services. The UAE delegation designated Emirates Airline,Etihad Airways, Air Arabia, RAK Airways and FlyDubai asUAE national airlines under the Agreement. The MontenegroDelegation designated Montenegro Airlines as its designatedairline.

The MoU allows full exibility on the routes, capacity, numberof frequencies and types of aircraft, in any type of service(passenger or cargo). The signed memorandum alsoincludes the exercise of fth freedom traf c rights. In addition,both Parties agreed to allow unrestricted non-scheduledoperations between the two countries.

UAE air trafficmovements rise 7.6%in February

According to the UAE General Civil Aviation Authority, airtraf c movements in the country rose by 7.6% in Februarycompared to the same month in 2010. Total air traf cmovements during the month stood at 51,431 with a dailyaverage of 1,837 air traf c movements. Dubai came rstwith 23,459 air traf c movements. Over ights stood next at10,835, while Abu Dhabi ranked third with 7,665 air traf cmovements.

KSA transportation sector sees steady growth as inbound airborneshipments touch 289,000 tons, outbound reach 179,000 tons

Strong and steady growth in Saudi Arabias transportationsector and infrastructure investments have led to a signi cantincrease in volumes of inbound and outbound commodities.

The Kingdom saw the volume of its airborne inboundcommodities touch 289,000 tons whereas the volume of airborne outbound commodities reached 179,000 tons. Thegrowth clearly bene ted the corporate sector as well whichhas been showing impressive results.

Nael Al Attiyat, Sales and Marketing Director, TNT SABExpress Saudi Arabia commented, The encouraginggrowth in the transportation sector, witnessed through risein airborne traf c, is indicative of the strong overall economicdevelopment in KSA. This sector not only provides criticalservices to other production and services sectors; it generatesimmense investment and employment opportunities.

In relation to how this has had a positive effect at TNT SABExpress which is committed to provide world class servicesto its customers Al Attiyat went on to say, We have seengrowth of 24% in our inbound and outbound shipments, andalso saw progressive growth of revenue reached to 22%, in2010.

KSA also witnessed progressive growth in the number of passengers traveling through its international airports, whichtouched 29 million last year.

The strong performance of Saudi Arabias air, land, and

marine transportation sectors has been attributed to theefforts of the government and the leadership of HRH King

Abdullah Bin Abdul-Aziz Al Saud, King of Saudi Arabia, andCustodian of the Two Holy Mosques.

Al Attiyat concluded, We are con dent that the transportationsector will continue to show impressive growth and this willbe further fuelled by the execution of approved plans. Majorinvestments initiated in the past few years and additionalinfrastructural investments in KSA will yield massive economicbene ts to the Kingdom in the future as well.

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20/29

KSA domestic cargo demand togrow 4% to 5% through 2020

Egypts aviation sectorlost $170m due tounrest

Figures from the Saudi Arabian General Investment Authorityshow that the countrys rapid domestic development ledby planned economic cities indicates strong demand fordomestic cargo services. The cities alone could contribute anadditional 86 to 129 million tons per annum or approximately30% of the expected growth in cargo ow throughout theKingdom. Express services companies have been contributing directlyand indirectly to this growth throughout the scores of transactions they have completed over the past 12 months.One of the most active companies involved in the expressservices sector is expected to gain more than 30% marketshare in af rmation of the solid growth of the cargo industryin the KSA.

The cargo transactions that are playing major roles ineconomic growth are being carried out by key market playerswithin various industries such as construction, automotive, oiland gas and even education, explained Nael Attiyat, Salesand Marketing Director, TNT SAB Express Saudi Arabia. Inaddition, factors such as the availability of low-cost fuel, amain element in developing the Kingdoms express serviceindustry, are accelerating growth.

Saudi Arabias domestic cargo demand is expected to growby a compound annual rate of between 4 and 5%, whileinternational ows are expected to grow by 5% and between7 and 8% for air and sea cargo, respectively.

The unrest that led to the ouster of the Egyptian presidentHosni Mubarak has resulted in more than EGP1bn ($170m)in losses for the countrys airline industry. Over 60% of thelosses were recorded by the national carrier, EgyptAir,while the remainder came in losses at the countrys variousairports, civil aviation minister Ibrahim Manaa said. Theairline was forced to cancel 75% of its ights and to putup some of its newest planes for lease to offset projectedlosses.

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Airbus has said it has won the biggest order incommercial aviation history, worth $15bn at list price,from Indian low-cost carrier IndiGo Airlines. The dealcovers 180 eco-ef cient Airbus A320 aircraft, of which150 will be A320neos and 30 will be A320s. Availablefrom 2016, the A320neo incorporates new moreef cient engines and large wing tip devices calledSharklets delivering signi cant fuel savings of up to

15%, which represents up to 3,600 tonnes of CO2annually per aircraft.

Booming demand from Asia is keeping aircraft manufacturershappy, with the likes of Hong Kong Airlines and China Eastern

Airlines ordering freighters at a rapid pace. China will helpthe Asia-Paci c region account for a third of global planedeliveries over the next 20 years, Boeing said. Rival Airbussaid it expects airlines in Asia to take delivery of 8,560 aircraftin the next 20 years, representing a third of the global total.

In early March, Hong Kong Airlines agreed to buy six 777freighters from Boeing. Meanwhile, Boeings 747-8 freighter

version has won 74 orders from customers including CathayPaci c Airways, an Air China af liate.

Also this month, China Eastern Airlines, which operates amix of Airbus and Boeing freighters, has revealed a massiveexpansion plan of 250 extra ai rcraft by 2015. In four years the

eet will total 588 units comprising 531 passenger aircraft,30 freighters and 27 utility aircraft. As of 30 June 2010, theShanghai-based carrier operated 338 aircraft, comprising320 passenger aircraft and 18 freighters.

Indian carrier signs largest jetorder in aviation history

Freightermanufacturerscelebrate Asian

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22/29

43

IT has just become the rst cargo tenant at Budapest Airport, and now Celebi Holdings is planting big money inIndia. The Turkey-based airport services provider intendsto invest US$100 million in handling cargo at Delhi (right)and Mumbai airports by 2013. This complements the $30.2million injected into India to date. Celebi also plans to doubleits workforce in the country in the next ve years.

The company is waiting for a new ground handlingpolicy, being opposed by the airlines in India, to meetapproval soon. The policy allows only three groundhandlers at the six major airports of Bangalore,Chennai, Delhi, Hyderabad, Kolkata and Mumbai, andrestricts airlines to carry out certain aspects of groundhandling.

Cargo tonnage via Hong Kong International Airport (HKIA)saw a year-on-year decline in February as the Chinese New

Year holiday disrupted supply chains.

Stanley Hui Hon-chung, CEO of Airport Authority Hong Kong,said the airport handled 242,000 tonnes in February 2011,down 5.9% compared with a year earlier.

The combined cargo volume for the rst two months of the year showed a year-on-year growth of 3.1% reaching575,000 tonnes, he added.

This was driven by the strong performance of import andtranshipment. Strong momentum continued with the North

America market as it saw double-digit year-on-year growth inthe same period.

On a rolling 12-month basis, HKIA handled 4.1 million tonnesof cargo, an increase of 18.6% over the correspondingperiod last year. Flight movements also registered a growthof 11.8%, reaching 312,530.

Celebi pumpsUS$100m intoIndia

Hong Kong air freight takes new year holiday

NEWS SOUTH ASIA

Dubai Airport Freezone registered an impressive 23%increase in sales in 2010, as compared to the previousyear, disclosed HH Sheikh Ahmed bin Saeed Al Maktoum,Chairman of Dubai Airport Freezone.

This growth was driven by the increasing numbers of newcompanies and expansion by existing companies working inthe Freezone. Out of the 102 new companies registered in2010 in the Freezone, 28% are from Europe, 27% from theMiddle East & Gulf region, 21% from Asia and the rest fromthe USA, Japan and other countries.

Aviation companies form the largest segment in the Freezonewith 14%, followed by the electronics sector with 11%,followed by engineering, computer, cargo advisory servicesand consultancy companies.HH Sheikh Ahmed Bin Saeed Al Maktoum, Chairman of Dubai Airport Freezone, was pleased with these results. Heunderlined the achievements and growth rates accomplishedin Freezone during 2010, despite the economic challengesfaced by the global and local economies. HH Sheikh Ahmedwas also certain about Dubai Airport Freezones ability toovercome all the economic challenges and achieve the goalof sustainable development in the coming years.

The achievements in the past years are part of the uniquestrategy of the Freezone. The Freezone will continue to sustainperformance, quality and development, helping it to enter theforeign markets in future, which is one of the objectives andpriorities. We aim to achieve 20% growth in sales by the endof this year as compared to last year, he said.

Abu Dhabi Airports Co (Adac) has oated a tender for amid eld terminal to become the home of Etihad Airwaysand more than 50 other airlines serving the Abu DhabiInternational Airport later this decade, The National hasreported. The 700,000 sq m terminal building will havean initial capacity of between 27 million and 30 millionpassengers a year, and will accommodate 156 check-incounters, up to 65 boarding gates for aircraft as large as the

Airbus A380 superjumbo, and up to eight airline lounges. The entire MTB project is estimated to cost between Dh20billion (US$5.44bn) and Dh30bn, and is scheduled forcompletion by 2016, Adac said.

Dubai Airport Freezonegrows by 23% in 2010

Abu Dhabi terminal

tender floated

NEWS AIRPORTS

Lebanons Ra c Hariri International Airport has seen a 9.4%fall in passenger traf c since February of last year. Cargomovement also dropped with outbound and inbound importcargo dropping by 22.07% and 19.29%, respectively.

Beirut airport sees 9.4% drop in traffic


23/29

The general authority of Civil Aviation (GCAA) has completedpreliminary designs for the rst generation of airports to servesmall populations across the country, said Engineer AbdullahRahaimy, President of GACA.

He said the rst of these airports will be built in Qunfudha. Themoney for the construction has already been included in theauthoritys budget for the year 2011 to 2012.

He said studies are underway to build such airports in otherregions with a lower population density. Rahaimy said a newairport named King Abdul Aziz Airport will be constructedin Jizan at an approved site. The allocation for the airportsgeneral plan has been approved. The airport will include all thenecessary infrastructure. He said the Kingdom has witnessedunprecedented modernization of infrastructure, equipment,telecommunication systems and other installations.

These achievements are not limited to the construction of new airports and the development of existing airports butalso include other activities such as security, safety andregulations governing the work in this vital sector. Added tothis is the air navigation which includes complicated systemsand projects.

He said a series of developmental projects are beingcarried out at the countrys airports. The cost of these 34developmental projects is SR2.5 billion. Some of theseprojects have already nished.

He said the new project of King Abdul Aziz International Airport in Jeddah will increase the airports accommodationcapacity and that the SR27 billion project will nish in threeyears time. The foundation stone for the project was recentlylaid by Prince Sultan Bin Abdul Aziz, Deputy Prime Minister,Defense and Aviation Minister and Inspector General.

Rahaimy said arrangements are underway for the constructionof Prince Muhammad International Airport in Madina accordingto the BOT Buy, Operate and Transfer system.

He said the new airport has been designed to accommodateeight million passengers during the rst phase and 12 millionpassengers in the second stage. The project will be offeredfor public bid in the middle of this year.

He said GACA is currently working on the master plan forthe development of King Khled International Airport in Riyadh.

Saudi Arabias King Khaled International Airport (KKIA) is tobuild a new lounge for rst and business class passengers,

Arab News has reported. The new facility at Riyadhs airportis to be constructed at Terminal 1 to serve around 140,000departing and arriving foreign airline passengers annually.

The airport is also in talks with Saudi Arabian Airlines to putup similar lounges at Terminals 2 and 3 for international anddomestic passengers, KKIA director general, Abdullah Al-

Tassan said.

acu- march april 2011

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