Aircargopedia Newsblast: March 2022!
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25th March 2022  
 


Dear Air Cargo Professional:

Russia’s invasion of Ukraine is driving up air cargo costs by Pat from SUNTEC.

Read more about supply chain headaches in this article by Peter Canellis, Professor of Management, Vaughn College.

In more World Air Cargo news, DHL Express and Singapore Airlines expand partnership with new agreement.

Emirates and Dubai Desert Conservation Reserve’s efforts to restore and preserve fragile desert ecosystems. transport logistic and TIACA organize joint event in San Francisco
  DJ Ghosh

D.J. Ghosh
President & Publisher
AIRCARGOPEDIA
WWW.AIRCARGOPEDIA.COM
”The Complete Encyclopedia for the Air Cargo Professional & Investor”


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Russia’s invasion of Ukraine is driving up air cargo costs

The cost of transporting goods by air has surged since Russia’s invasion of Ukraine last week, just as consumers are already grappling with the fastest pace of inflation in nearly 40 years.

Carriers, including KLM Royal Dutch Airlines and United Parcel Service, are filling their planes with pricier fuel for longer Asia routes to avoid Russia due to airspace closures. Jet fuel prices in the United States this week hit the highest in more than a decade.

The U.S. on Tuesday joined Canada and much of Europe in barring Russian aircraft from its airspace. In January, more than 2,500 flights that departed the U.S. used Russian airspace, while 493 flights from Russia used U.S. airspace.

“With the uncertainty of Russian airspace restrictions to civilian aircraft, UPS decided on Mar. 1 to avoid use of Russian airspace for our Northern Pacific (NOPAC) operations until further notice,” UPS’ pilots union told aviators Wednesday.

Higher transportation costs are likely to get passed along to consumers as it gets pricier to ship everything from manufacturing components to perishables like imported cheese and fruit. Commodity prices from wheat to aluminum are already spiking.

The U.S. ban of Russian aircraft included cargo giant Volga-Dnepr, which flies large aircraft pieces like wing parts for some Boeing jets.

“We work closely with our wide range of supply chain and logistics partners to manage through any potential impacts,” the aircraft manufacturer said in a statement.

Some carriers are canceling flights altogether, and Russian airlines have been hobbled by airspace bans. The reduced capacity is driving up rates during what is normally a seasonal lull for shipping in the months after year-end holidays.

Air cargo rates from China to Europe jumped 80% this week from last to $11.36 a kilogram, the highest since October. FedEx on Thursday said it its Express unit is increasing surcharges for international packages and freight. Some peak surcharges will more than double – such as the rate for shipping from Hong Kong to Europe, Africa and the Middle East, which the company will raise from 55 cents a pound to $1.20 a pound, according to a notice on its website.

Air cargo demand and prices have soared over the past two years. Carriers reaped the rewards of customers who paid a premium to fly over port snarls and make up for other supply chain backups, getting goods to factories and consumers faster.

Stronger e-commerce demand in the pandemic and limited aircraft belly capacity as international passenger travel plunged has kept rates firm, even before Russia’s invasion.

Now costs are going up even more, testing how much customers are willing to pay air cargo haulers and how much consumers will shell out at retailers.

U.S. benchmark jet fuel on Friday was going for more than $3.882 a gallon, the highest since September 2008. Benchmark jet fuel in Asia this week hit a more than eight-year high while Europe’s benchmark rose to the highest since August 2008, according to S&P data.

Pat Praveen
SUTEC LLC.
suntecrm.com

For any questions, please contact Pat at pat@suntecrm.com
For more info please visit www.suntecrm.com


Transport Logistics

Politics + Economics ≡ Supply Chain Headaches !!

Low cost strategies are great, except when …

In one of my previous articles for this series, I opined that:
“Orchestrating this [supply chain] symphony, across time and geography, in response to the forces of nature and world politics is our challenge. We’re all strategists now. If we aren’t we need to learn – fast !!”

While I’m never bashful about mooting a contrarian position, I’m still happier when I find myself in agreement with people who know a lot more about these issues than I do. A front-page article in the Wall Street Journal of March 11, 2022 suggests the possibility that the current worldwide trading regime, adjudicated by the World Trade Organization (WTO), is in danger of disintegration.

The article quotes Jennifer Hillman, a trade lawyer and former jurist on the WTO’s trade court who now teaches international law at Georgetown University. Professor Hillman speculated that trading blocs that are “coalitions of the like- minded” may very well be emerging.

Intrigued by Professor Hillman’s comments, I blew the dust off some data that I was trying to analyze just a couple of weeks ago. The question I posed to myself was whether a reasonably credible indicator of potential political hotspots (and concomitant supply chain headaches) might be a combination of the following three factors:

1. A country’s largest export market
2. A country’s largest import source
3. The disparity between the reference country and its major trading partners in rankings on the Economic Freedom Index (EFI)

To start my examination, I looked at all countries and their respective largest export markets. For each pair, I subtracted the ranking number of the export market from that of the reference country. The results were then put in order from largest difference to smallest difference.

It’s important to note here that the above analysis needs to be further divided into two parts. Why? Because the calculated differences can be positive or negative depending upon which of the two trading partners are more or less free.

The same analysis was conducted for all countries with their respective largest import sources.

The end product, provided below, consists of four tables. Each provide some examples of trading relationships that either already are or could be strained because of a lack of “like-mindedness” between the associated countries. These examples are highlighted in red, and are briefly addressed below.

Table 1: Top 10 Differences in EFI for Export Markets When Reference Country is LESS FREE Than Its Leading Export Market

The “second-worst” relationship is that between the Venezuela and the USA. No surprise there. Rounding out the top 10: China and the USA. Not exactly a shocker either.

Supply Chain


Table 2: Top 10 Differences in EFI for Export Markets When Reference Country is MORE FREE Than Its Leading Export Market

This is an interesting table. The top 10 pair in this category all have China as their leading export market. They include New Zealand, Taiwan, and Japan. These economies (highlighted in red) are heavily dependent upon China and, though geographically close, have “light years” of separation with China with respect to economic freedom.

Supply Chain

Table 3: Top 10 Differences in EFI for Import Sources When Reference Country is LESS FREE Than Its Leading Import Source

Here again, in the “third-worst” position is Venezuela and the USA. What is, of course, particularly vexing is that these country pairs are on bad terms “coming and going” (i.e., the USA is Venezuela’s biggest export market AND its biggest import source).

The number nine spot in the top ten is occupied by Iran and its leading import source, the United Arab Emirates (UAR). This doesn’t bode well for Iran as they have funded some of the UAR’s enemies in the Middle East.

Supply Chain

Table 4: Top 10 Differences in EFI for Import Sources When Reference Country is MORE FREE Than Its Leading Import Source

Another interesting table. Here we see again that China occupies all ten slots in its role as leading import source for countries that are at the other end of the Economic Freedom scale. Of particular note is that Japan, Taiwan and New Zealand are also these countries’ largest export markets (as discussed in the analysis of primary export markets above). The USA and European Union 6 (EU) also count China as their leading import source.

Supply Chain

Can these trading relationships, with high economic dependence coupled with greatly divergent socio-political perspectives and philosophies, continue? If so, for how long? Business as usual, or, as the song goes, “There’ll Be Some Changes Made”? If not, will trading blocs of the “like-minded” develop and prevail?

The mathematically inclined will have noticed that my title includes an identity sign (≡) rather than an equal (=) sign. In an identity, the left side of the equation must equal the right side of the equation for all values, all the time.

Anyone who ever wanted to be an actor is getting their wish: we’re all actors in what is proving to be one of the greatest dramas in history!

Yours in Supply Chain,
Peter Canellis

Peter Canellis

Regards,
Peter Canellis
Professor of Management
Vaughn College of Aeronautics and Technology


CNS 2022

DHL Express and Singapore Airlines Expand Partnership with New Agreement

DHL Express has entered into a Crew and Maintenance Agreement with Singapore Airlines to deploy five Boeing 777 freighters. This agreement marks a further step in DHL Express' expansion of its intercontinental air network to meet customer demand in fast-growing international express shipping markets.

Travis Cobb, EVP Global Network Operations and Aviation at DHL Express, stated, “With the deployment of five Boeing 777 freighters, we can expand our express service linking the Asia Pacific region with the Americas. Following the pandemic, we see good prospects for strong growth in trans-Pacific trade lanes. By collaborating with Singapore Airlines, we see a unique chance to establish a long-lasting relationship with a long-time partner who shares common values and operates at the highest standard.”

Based at Singapore’s Changi Airport and serving DHL’s South Asia Hub located there, the freighters, which will sport a dual DHL-SIA livery, will be operated by SIA pilots on routes to the USA via points in North Asia. Singapore Airlines will also oversee the maintenance of these aircraft.

The initial agreement is set for more than four years with the opportunity for an extension. As part of the agreement, the first aircraft delivery will be in July 2022, with the second in October 2022. The remaining three aircraft are planned for delivery throughout 2023.

According to Lee Lik Hsin, Executive Vice President Commercial of Singapore Airlines, “Today’s agreement builds on and strengthens the long-standing partnership between Singapore Airlines and DHL. This new freighter operation will support the fast-growing e-commerce segment, in addition to other key business segments that rely on trusted express services that DHL excels in providing. It also provides a foundation on which the partnership between Singapore Airlines and DHL can be further expanded in the future. Basing these freighters at Changi Airport will further reinforce Singapore’s position as a key air cargo and e-commerce logistics hub, contributing to its growth and development.”

Moreover, Ken Lee, CEO DHL Express Asia Pacific, stated, “This new agreement guarantees capacity on our critical routes out of Singapore as we gear up for ongoing growth in Asia Pacific trade. It gives us greater flexibility to add new routes and optimize our aircraft utilization in the face of unpredictable changes or sudden increases in demand.”

DHL Express operates over 320 dedicated aircraft across its global network of 220 countries and territories. The Boeing 777 freighters are the world's largest, longest range, and most capable twin-engine freighters that also contribute to DHL’s sustainability goals, reducing CO2 emissions by 18 percent compared to the legacy B747-400s.

Singapore Airlines’s cargo division operates to more than 90 destinations as part of its current network, which includes a fleet of freighters as well as the bellyhold space of the Singapore Airlines and Scoot passenger aircraft. The company recently ordered Airbus A350F freighters as part of its fleet renewal program.

Peter Canellis
Kevin Pflug


Airbridge banner

World Wildlife Day: Emirates and Dubai Desert Conservation Reserve’s efforts to restore and preserve fragile desert ecosystems

DUBAI, UAE 3 March 2022

For almost 20 years, Emirates has helped support a sustainable and balanced ecosystem at the Dubai Desert Conservation Reserve (DDCR) through an ongoing investment of over AED 28 million (USD $7.6 million). The funding has helped to preserve Dubai’s unique desert environment that is teeming with indigenous flora and fauna of all shapes and sizes, and has helped to raise awareness about the abundant natural beauty found in the UAE’s terrestrial ecosystems.

DDCR is a 225 square kilometre conservation reserve, and represents close to 5% of Dubai’s total land area - the biggest piece of land which Dubai has dedicated to a single project. The reserve protects the incredible wildlife and resilient vegetation within the vibrant UAE ecosystem, and today houses over 560 different species and 31,000 native trees. Over 29,000 of those trees are now sustainable without irrigation, like the native Ghaf tree (Prosopis cineraria), which has roots that can go down to 30 metres, enabling it to reach the water table in the DDCR.

Emirates

While many may think that the desert’s harsh, ever-changing habitat is barren of wildlife or vegetation, the collective efforts of Emirates and the DDCR have enabled many species to survive and thrive, and the reserve has become a showcase to some of the most important desert conservation accomplishments over recent years. Here are just some of the animals that have benefited from these conservation efforts:

• Over 1,300 Sand gazelles, Arabian gazelles and Arabian Oryx are thriving: Starting from just 230 vulnerable ungulates, these species have steadily grown since DDCR’s reintroduction and breeding programme started, contributing to the objective of natural, sustainable development of free-roaming mammal populations that contribute to the health of the overall eco-system. Another 171 Arabian Oryx have been relocated to other protected areas in the UAE.
• Birdlife is flourishing: Over 2,800 Houbara, or Macqueen’s Bustard, have been reintroduced into the DDCR since 2010, with the birds freely moving in and out of the reserve. A healthy population of the Pharaoh eagle-owl also resides in the DDCR, and natural breeding at the south of the reserve will soon see owlets flying out and about. The reserve has also been an important feeding site for the endangered lapped-face vulture, and numerous visits have been recorded for the Cinereous Vulture, a rare visitor to the UAE.
• The diversity of species at DDCR has more than doubled: Careful protected area management, along with promoting natural processes have helped to rewild the desert habitat. In 2003, DDCR’s list of species consisted of approximately 150. Today, the conservation reserve boasts over 560 species of plants and trees, birds, mammals, reptiles and arthropods.

DDCR has also become a centre for sustainable tourism, with authentic desert experiences in store and a careful selection of activities that do not undermine the natural habitats of the local flora and fauna. DDCR runs a strict ‘Approved Excursion’ accreditation process for tour operators, who undergo specialised training to get acquainted with the reserve’s flora, fauna and sustainable practices to protect the desert’s ecosystem.

More than 125,000 visitors made their way to the DDCR in 2021, and plans are underway for a Visitor’s Centre at the reserve to enhance the visitor experience and will also be used as a platform to develop educational programmes for schools and higher educational institutions.

Emirates also supports the protection of Australia’s wilderness and bush through the conservation based Emirates One&Only Wolgan Valley, located in the World Heritage-listed Greater Blue Mountains region.

The airline is also actively involved in the fight against illegal wildlife trafficking and exploitation, and is a member of the United for Wildlife Transport Taskforce, and is also a partner of ROUTES (Reducing Opportunities for Unlawful Transport of Endangered Species). Its freight arm, Emirates SkyCargo, has adopted a zero tolerance policy on illegal wildlife trade which includes big cats, elephants, rhinos and pangolins, among other types of wildlife, and has implemented a complete ban on hunting trophies.


Turkish Cargo

transport logistic and TIACA organize joint event in San Francisco

Presence Congress meets strong demand in the airfreight and logistics industry

From 22 to 25 March 2022, the global air cargo and logistics industry will meet at the 2+2 event in San Francisco. The air cargo sector proved to be a safeguard for global supply chains during the pandemic and secured the supply of important medical and industrial goods. At the face-to-face event, leading industry representatives and experts will discuss the les- sons learned from the pandemic and other current topics such as digitali- zation, sustainability, and UAVs directly in Silicon Valley. Registrations among exhibitors, visitors and sponsors are already high.


Messe München and the air cargo association TIACA are merging their events for the first time. The 2+2 event will be one of the largest gatherings of experts and decision-makers in the air cargo and logistics industry. A two-day confer- ence program at the Hyatt Regency Hotel in San Francisco will feature panel dis- cussions, keynotes, workshops, and presentations. In addition to the air cargo sector's experiences and insights from the pandemic, topics such as digitaliza- tion, sustainability as well as gender diversity or UAV technologies will also be discussed. The future of the industry will also be addressed: TIACA board mem- ber Steven Polmans, for example, will moderate a panel discussion on the future direction of the association. The subsequent two-day Innovation Journey gives visitors direct and on-site insights at innovation leaders and up-and-coming Sili- con Valley start-ups.

The number of exhibitors, speakers, sponsors, and trade visitors is already high and the anticipation is rising among everyone involved. Patrik Tschirch, Manag- ing Director of LUG air cargo handling and Chairman of the Board of Air Cargo Community Frankfurt, also sees the advantages of a presence event: "For the globally active air cargo sector, an international gathering is enormously im- portant. Thanks to the promising concept, we are looking forward to the 2+2 event in San Francisco with great confidence."

transport logistic

An original date for the event in September 2021 was postponed as a precaution due to the pandemic at the time. The current COVID-regulations and the full implementation of applicable protective measures in the state of California allow the event to take place in the usual attendance form. There will be no restrictions on the number of visitors. Since last November, the United States has allowed foreign citizens to enter the country if they are fully vaccinated and present a negative COVID-19 test or proof of recovery recognized by the WHO.

"The TIACA Executive Summit, together with the transport logistic Americas Fo- rum, will once again bring together the key decision makers and experts in the air cargo industry in one place, live and in person. We look forward to a wide- ranging conference program and accompanying exhibition where current and up- coming air cargo topics will be discussed with a broad audience," said Steven Polmans, Chairman of the TIACA Board of Directors and Vice President Busi- ness Development & Free Zone Regulatory Affairs at Abu Dhabi Airports

"With the 2+2 event in San Francisco, we can again offer the airfreight and logis- tics industry an intensive exchange in presence. With various online events, we have proven that such events can also take on other attractive formats. How- ever, personal contact on site is indispensable, especially for an industry like lo- gistics and airfreight with its many diverse and international players. We are glad to be able to offer our guests this opportunity again, while observing all safety precautions," adds Dr. Robert Schönberger, Head of transport logistic exhibitions at Messe München.

Further information on the 2+2 event is available at https://www.aircargofo- rum.org/conference/2plus2/.


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