Despite challenges Atlanta holds its own

While many airports are seeing the very tangible adverse effects of the lethargic global economy which has once again sent the cargo market into a slump, Atlanta Hartsfield-Jackson International Airport has remained on course, buoyed by a diverse customer base and a number of competitive advantages over other competing US airports. By Karen E. Thuermer.

When Robert Kennedy, director of Business Development at the Atlanta Hartsfield-Jackson International Airport (ATL), spoke to a room full of shippers last May at the Georgia Logistics Summit, he presented some pertinent facts: ATL is the world’s busiest passenger airport (Beijing ranks second), the busiest for aircraft operations (950,000 aircraft operations in 2010) and the ninth busiest cargo airport in the United States behind Memphis, Louisville, and Anchorage. It’s a message that shippers will hear increasingly more as Atlanta gears up to host TIACA’s Air Cargo Forum in October 2011. “Thirteen all-cargo airlines fly into ATL,” Kennedy said. “We have nine of the world’s top 10 cargo airlines in the world. Only one is missing and that is Emirates.” And be sure, airport officials are rapidly pursing them. Meanwhile, Qatar Airways commenced cargo flights to ATL in November, with a twice weekly service using B777 freighters on the route. Despite a tough economy, ATL continues to expand its air cargo reach and capacity. A press release stated that weekly cargo flights increased by more than 40 per cent from 2010 to 2011. Cargo carriers at ATL have added 24 flights per month in 2011. In September, Asiana Airlines began operating seven flights per week, with daily B747-400 service, up from the four weekly flights when it first commenced service at ATL last year. Also increasing cargo capacity between Atlanta and Asia are China Cargo Airlines and Singapore Airlines. In September, China Cargo Airlines doubled its weekly flights from three to six and Singapore Airlines added a flight this year, bringing it to four weekly flights. Cargolux has increased its presence at ATL by now offering five weekly flights with B747-400 freighters with textiles, manufactured goods and agricultural products making up the bulk of its cargo flown from Atlanta. And in February this year, Cargoitalia also began flying to ALT. ATL’s competitive advantage Kennedy emphasised that when airlines look for a location, they consider three major components: Low landing costs, strong local market and a competitive advantage. “We offer all three,” he said. ATL is only a day’s drive from 80 per cent of US businesses, it’s served by 120 air freight forwarders and operations are 24/7 with no slot restrictions or curfews. “We also have the lowest landing fees of any major US airport,” he added. “We compete with Miami (MIA), Los Angeles (LAX), Chicago (ORD), Dallas (DFW), and New York (JFK) and JFK is five times our rate.” Another advantage he presented: ATL has been the most efficient major airport in the world for the eighth straight year in a row. Despite the slumping world economy, cargo volumes year-to-date (YTD) through September 2011 showed a 1.87 per cent growth for the same period 2010, totaling 493,931 tonnes. “We continue to see slightly higher imports to Atlanta than exports,” reported Steve Luben, director of New Business Development at ATL. “The percentage of exports (44.9 per cent in 2011, 44.4 per cent in 2010) and imports (55.1 per cent in 2011, 55.6 per cent in 2010) has remained virtually the same from 2010 to 2011. Overall, we have a moderately balanced market.” The breakdown for import versus export traffic through ATL shows 2011 September YTD exports at 221,515 tonnes; 2011 September YTD imports at 272,416 tonnes. Among the top commodities exported are: Bird’s eggs in the shell – fresh, persevered or cooked; civilian aircraft, engines and parts; gas turbine parts; threaded screws, bolts and nuts. Top import commodities include: Digital data processing machines; fish fillets and other meat; taps, cocks, and valves for pipes/boiler shells/tanks/vats, including thermostatically controlled valves; automatic data processing storage units; and imports of articles exported and returned. Outlook For this year’s holiday season, airport officials expect the season to remain flat in terms of cargo moved with little to no growth. “We are continually working on our relationships with Asian and Middle Eastern airlines and airports to promote the Atlanta market and make them aware of the business and trade in our region,” Luben added. “The Atlanta Airport sends representatives to major tradeshows throughout the world to meet with airlines and airports to make the case for cargo operations in Atlanta. We are currently finalising plans for the 50th anniversary of TIACA’s Air Cargo Forum that will be held October 2 – 4, 2012 in Atlanta,” he added.

Latin-Asia connection drives Miami growth

While most carriers and airports are experiencing contracting volumes, Miami International Airport is actually enjoying growth thanks to a booming trade from Asia into South America. By Karen E. Thuermer.

Thanks largely to its Latin America connections, Miami International Airport (MIA) was ranked 10th among worldwide airports for international freight in 2010. But ever since 2007, serious momentum has been building on the Asia to South America via MIA trade flow with the advent of a second and then third Asian freight airline to MIA. “The numbers are building year over year, and despite the alleged slow-down in Asia, through October of this year, Asian freight at MIA is actually up nearly one per cent,” says Chris Mangos, director of the Marketing Division of the Miami-Dade Aviation Department of MIA. According to Mangos, two of the fastest growing commodities making their way to South America via MIA are computers and peripherals, as well as telecommunications equipment. In 2010, these commodities grew six per cent and 36 per cent, respectively, in volume and amounted, along with other hi-tech products, for an export value to South America of over US$990 million per month. “Yes, that’s nearly $1 billion monthly,” Mangos remarks. “Our assumption has always been that they are finished goods, as we do not see this product line among imports flowing northbound to MIA from South America.” Handling 1.6 million tonnes of international freight, for a 20.4 per cent increase over 2009 tonnage, MIA is the leading US airport for international freight. New York Kennedy (JFK) comes in second with 1.03 million tonnes; Los Angeles International (LAX) third with 997,903 tonnes; and Chicago O’Hare (ORD) fourth with 879,969 tonnes. For total freight (international and domestic), MIA ranked 11th among worldwide airports in 2010, with 1.8 million tonnes, up 18.8 per cent over 2009 figures. Leading MIA in the US was not surprisingly, Memphis/FedEx, which ranked second with 3.9 million tonnes, up 6 per cent over 2009; and Louisville International/UPS, ranked eighth with 2.17 million tonnes, up 11.2 per cent. MIA also ranked 11th for total cargo – freight and mail, with 1.83 million tonnes, up 17.9 per cent. Import/export volumes for freight and mail is nearly balanced. In 2010, MIA saw 815,464 tonnes of international freight deplaned and 804,643 tonnes enplaned. Domestic freight accounted for 122,578 tonnes deplaned and 93,486 tonnes enplaned. Peak season outlook Mangos finds the prospects for this year’s holiday season, compared to last year’s, good. “We saw a g re at comeback in October in international freight with over 11 per cent growth over last year,” he reports. “This follows some very dismal months of zero to negative growth from June through August, and a slightly recovering September.” MIA’s estimates for October were about 136,000 to 145,000 tonnes, but the airport actually handled just over 158,757 tonnes. “Should November and December perform along the same lines, we are looking at reaching or surpassing the 1.8 million tonne mark this year, about 9,000 tonnes over 2010 volumes,” Mangos remarks. Helping those figures is the fact northbound flows from Latin America have built up greatly in recent weeks and Asia, despite its woes, is performing well. “Add to the mix an astonishing 4.3 per cent growth in tonnage from Europe thus far, and we are gaining confidence of a good holiday season and year-end tally,” he says. Helping the figures is the fact in September MIA gained new service from Asiana Airlines cargo with thrice weekly freighters from Seoul. “This ties in well with Korean’s five to six weekly flights adding to veritable daily service to Incheon,” Mangos says. Additionally, China Airlines’ Taipei service is operating at least five times weekly, and Cathay Pacific will be increasing service to six weekly in the next few days. “We also see Cathay as the first operator at MIA with the new B747-8 freighter, and with that, an increase in frequency and capacity on the Hong Kong to Miami route,” he adds. A plus, in November ground was broken on a new cargo facility for Centurion Air Cargo’s new global headquarters and cargo center at MIA. The new 74,322 sqm cargo centre for Centurion, one of the largest carriers of perishable goods between North, Central and South America, will house an international shipping and receiving hub that features dry and refrigerated warehouse areas and an exclusive ramp with space to park up to eight wide-body freighters such as the B747. Centurion’s affiliate airlines include SkyLease, Cielos del Peru, and MTA from Brazil.

Delta cuts capacity to firm up its position

While a slowing global economy has stunted air cargo growth and rampant overcapacity has exacerbated the situation on some trades, Delta Cargo has made key strategic capacity cuts aimed at keeping the cargo carrier cost efficient and healthy. By Karen E. Thuermer.

When combined with its partners, Delta Airlines operates within one of the largest airline systems in the world. The carrier has hubs in Atlanta, Cincinnati, Detroit, Memphis, New York, Salt Lake City, Minneapolis, Paris, Amsterdam and Tokyo. From Atlanta alone, its largest hub, the carrier operates over 1,000 daily departures and arrivals to and from 210 destinations. Overall Delta serves 346 destinations within 64 countries, of which 100 of those destinations are international. Like other carriers, however, Delta is feeling the pinch from the slumping global economy. In fact, Neel Shah, senior vice president and chief cargo officer, reports that capacity to Europe is down double digits year-on-year (YoY). “There’s been rampant over-capacity across the transatlantic,” he says. Consequently, Delta has been taking aggressive steps to trim capacity, especially in unprofitable markets like Cairo, Egypt; Amman, Jordan; and Tel Aviv, Israel and is not committing to secondary markets like Budapest. “The yields just aren’t there to pay for the fuel,” he remarks. In fact, Delta’s fleet will be four per cent, or 52 aircraft, smaller next year. Sixty-eight per cent of the decrease, however, is regional jets. And Delta executives do expect significant growth between Brussels- New York (BRU-JFK), Paris-Seattle (CDG-SEA), and Frankfurt-New York (FRA-JFK). But a CDG capacity increase, in fact, will provide opportunities for increased offline traffic. Expanding its Asian reach Delta’s cargo volumes to and from Asia have been flat, largely because the carrier added new service to Beijing, Shanghai, and Japan with its new Los Angeles and Tokyo-Haneda flight. Nevertheless, the carrier experienced overall growth in the Asia market. For example, cargo tonne kilometers (CTK) in the Pacific, October year-to-date (YTD), Delta is up 14 per cent while exports US to Pacific in CTK is up 23 per cent YoY. “We feel good about Asia and the opportunities there,” Shah says. In fact, Delta plans to add more destinations to China next year, although it is making tactical trimming of some Asian flights. “Our exports to China are doing well,” Shah remarks. “There’s been a lot of project cargo, machinery and perishables. The Chinese middle class demand the best produce.” Helping Delta’s perishable business is the carrier’s large perishables center at Atlanta (ATL), which cargo managers affectionately call “the fridge.” The facility is fully temperature controlled for fruits, vegetables, fish and pharmaceuticals. The carrier continues to expand its reach in Asia with a Detroit-Beijing (DTW-PEK) service, as well as new interport flights, providing additional opportunities for grwoth. The carrier expects its Haneda- Detroit-Los Angeles (HND-DTW/LAX) service to return in Spring 2012 after a brief suspension driven by the Japan earthquake/tsunami in early 2011. And Fukuoka-Honolulu (FUK-HNL) service begins December 2011, providing additional growth opportunities from Japan. While Delta continues to remove capacity, the carrier is deploying more B777’s in the Pacific. “That’s good for cargo,” he says. Delta is also doing heavy fleet modifications on all of its international aircraft that will allow for higher takeoff weights on the A330-220, which will give the cargo division greater lift on long haul flights. Delta also plans to replace less fuel efficient aircraft with the delivery of 100 B737-900ER aircraft beginning in 2013. Meanwhile, the carrier has heavy B777 deployment in the Pacific and substantial B757 and Airbus deployment in the transatlantic. “We use 747s in the Pacific as well,” he adds. Going forward, Shah predicts next year will be much like 2011 in terms of cargo demand and consequently, he is planning for zero growth. Meanwhile, in Atlanta the cargo carrier has made significant changes to its facility and operational processes. Effective 24 October 2011, for example, Delta Cargo opened a new specialty area called ‘Breezeway’ to handle all domestic and international live animals, human remains and domestic perishables. On 16 September 2011, it launched the new Variation Wheels product, which allows Delta to transport cars on international flights from Atlanta, New York-JFK and Detroit that operate using B767-400 or B767-300 aircraft. The programme is tailored for car manufacturers who ship to, or from the US.

United/Cont’l soon to be world’s largest carrier

United and Continental Airlines are well on their way to becoming the world’s largest airline. With its merger set to be completed next year, its cargo division continues to take steps to see that all products and services are aligned. By Karen E. Thuermer.

The good news is that because the United and Continental networks were so complementary, we didn’t have to do much,” says Robbie Anderson, president, United Cargo. Only 15 lane segments overlapped, and theses were all in North America and flying between hubs, such as Houston (IAH) to Chicago (ORD). “What we’ve had to do is some fine tuning to give us a tremendous extended and parallel global network,” he says. Already United is No. 1 in the United States and Canada, No. 2 in Latin America, No. 2 across the Atlantic, and No. 1 across the Pacific. United/Continental currently has 10 hubs: Eight in the US – Newark (EWR); Washington, D.C. (IAD); Cleveland (CLW); Chicago (ORD), Houston ( IAH), Denver (DEN); Los Angeles (LAX); and San Francisco (SFO); two in Asia – Tokyo (NRT) and Guam (GUM). The NRT and GUM hubs offer strong intra-port opportunities. In fact, the B737 service from GUM offers seven additional destinations in Japan, where United flies 15 wide-bodies to and from. LAX, ORD, and EWR are the largest cargo markets for the merged carrier with EWR, alone, having over 34 destinations to 21 countries with daily flights across the Atlantic. “Houston operates as the largest hub in the network,” Anderson remarks. IAD is a major hub that focuses on the transatlantic, as well as South America and Asia. “But you will see a lot more service out of San Francisco and Los Angeles for the transpacific,” he adds. Merger timeline To date, the two carriers are on track to achieve the net merger synergy targets. By year end, 94 per cent of all cargo handled will be co-located. The next major milestone was the end of November when United/Continental received an operating schedule from the US Department of Transportation. “Next we will be getting the training in line,” Anderson explains. “After that the focus will be on the passenger side with a single platform scheduled for 3 March and the cargo side scheduled for April. This is when customers will see the greatest benefits.” A particularly important opportunity the merger presents cargo customers is the right sizing of aircraft with the right market. In addition, the carrier will be the North American launch customer for Boeing’s new 787 Dreamliner aircraft. The airline will take delivery of five in the last half of 2012, as well as 19 737-900ERs. “We are really excited about the 787,” Anderson reveals. “In fact we have firm orders for 50 B787s and another 60 on options.” The carrier also has orders for 25 Airbus A350 aircraft with options for 50 more. To date, the only route the company has announced for the B787 is non-stop service between Houston and Auckland, New Zealand. Anderson reveals that the carrier chose to operate this aircraft on this route because it burns 20 per cent less fuel than United’s current B747 aircraft on the route. “It is not as wide, so it so it is good for this market,” he adds noting the aircraft has tremendous range and operating efficieny. ORD cargo facility Construction on a new cargo facility at Chicago O’Hare International Airport (ORD) is also making progress. That facility, which is scheduled to open in the first quarter of 2012, will be 23,225 sqm and is sized according to operational projections through 2031. The facility provides parking positions for five B747 widebody aircraft. It will accommodate 51 land side truck dock doors and offer ambient, cooler and freezer bulk storage capability. The new construction uses green building techniques. “We have just changed cargo handlers from Swissport to Faro Cargo Handling Solutions,” Anderson says, adding “they will be migrating to the new facility in the first quarter.” Products offered Unique to this merger is the fact both carriers bring equal products. Consequently, the merger is able to take the best of both and align procedures for what is best for customers. To date, five of seven products have been harmonised. They are: EXP/GEN (expedited air freight for time sensitive priority shipments and economy air freight services); UASecure (high value shipments); TrustUs (human remains); Petsafe (service for pets); and Temp Control (temperature sensitive products). “We added a 100 per cent back guarantee for the expedited product,” Anderson says. Its sixth product, Petsafe, will go live in fourth quarter 2011. Its seventh, QuickPak, a product for international small packages, is expected to go live in first quarter 2012. “We are very excited about our product portfolio,” Anderson says. “In fact, Temp Control seems to be a very fast and upcoming product for us in terms of pharmaceutical and perishables.” Outlook Overall, Anderson is very optimistic for the future of the carrier and air freight in general, despite pessimism that abounds. He does comment on the fact some other carriers have lacked discipline in capacity management, however. “This year capacity started outpacing demand, especially with more freighters on the market,” Anderson says.

Volumes down, but LAX still a behemoth

While volumes have dipped nearly five per cent alongside the global slowdown, the airport is still a force to be reckoned with, in large part because of Asian carriers. By Karen E. Thuermer.

LAX is the seventh busiest airport in the world and third in the US, offering more than 565 daily flights to 81 domestic cities and over 1,000 weekly nonstop flights to 65 international destinations on over 75 carriers. In 2010, LAX processed over 1.9 million tonnes of air cargo valued at nearly US$77 billion and handled 575,835 aircraft operations (landings and takeoffs). Mirroring the economy, Los Angles World Airports (LAWA) reported a 4.71 per cent drop in air cargo tonnage between January-September 2011 and the same period 2010. For that period in 2011, LAWA logged 1.19 million tonnes of freight at LAX Nearly 60 per cent of the 2011 total for the January to September period encompassed international freight, weighing in at 711,769 tonnes, while domestic freight totalled 482,026 tonnes. Domestic and international mail was a bright spot, increasing 11 per cent over that time frame to 52,308 tonnes. Federal Express by far brings in the greatest tonnage of freight to LAX. Between January to September 2011, the carrier brought 241,427 tonnes, or 20 per cent of the total, comprised of both domestic and international freight. Korean Airlines was the dominant international carrier for this time frame, bringing in 59,035 tonnes, followed by China Airlines, Asiana Airlines, Cathay Pacific, Eva Airways, Polar Air Cargo, American Airlines, United Air Lines and Delta Air Lines. This ranking clearly indicates how Asian carriers continue to dominate LAX’s air cargo scene. Although LAWA does not break figures down in terms of domestic and international, its data for revenue pounds landed indicates a different picture. Here, between January-September 2011, American Airlines comes on top with 4.27 billion revenue pounds landed for that time period, followed by United at 4.13 billion revenue pounds. The first foreign carrier to rank is Qantas Airlines, coming in tenth at 962 million revenue pounds. Korean Airlines showed with 910 million revenue pounds; China Airlines, 561 million; and Asiana, 488 million. A key Asia-Pac hub Every major international air carrier serving the Pacific calls at Los Angeles, while European and Latin American air carriers fully serve LAX as well. The most exported air commodity in terms of tonnage from LAX is vegetables, fruit and nuts with 15.1 per cent of the total weight. Other leading exports are base metals and articles thereof; computer equipment; photo, science and medical instruments; paper and pulp products; chemical products; plastics and articles thereof; prepared foodstuffs; special classification provisions; and aircraft products. Apparel is the leading import commodity, followed by computer equipment, audio and video media, fish, office machinery, textiles, footwear, vehicles other than railway, photo, science and medical instruments and electronic components. Japan takes over 63,532 tonnes of LAX’s exports annually valued at $4.1 billion while the UK is next with 29,396 tonnes valued at $2.2 billion annually. Other leading nations buying US exports shipped through LAX are Taiwan, Australia, South Korea, Hong Kong, China, Singapore, Germany, and Mexico. China leads all nations in importing through LAX. Infrastructure investment The number of air carriers and their worldwide service area have created an extensive air cargo handling network at LAX. The airport has 195,096 sqm developed for cargo on 78.5 hectares. Nearly 371,612 sqm are developed for cargo use in the immediate vicinity of the airport. Among the carriers with cargo facilities there are: United Airlines, Virgin Atlantic Airways, Asiana Airlines, Qantas, Mercury Air Cargo, and Singapore Airlines. The Imperial Cargo Complex encompasses major tenants that include Lufthansa, Japan Airlines, Korean Air, Federal Express, China Airlines, Delta, Air Canada and Cargo Services Center (a provider to several air carriers). And a modern US Customs headquarters serves the growing trade. Improvements and enhancements by tenants and Los Angeles World Airports have been continually made at Century Cargo Complex, LAX’s first air cargo area. American, United, Virgin Atlantic, and Asiana house their freight operations at the Century Boulevard location. Alaska Airlines, British Airways, Southwest Airlines and US Airways are located there as well. Korean Air, meanwhile, currently has four daily departures from LAX to Seoul (three nonstop flights and one via Tokyo-Narita International Airport). LAX is the only US West Coast Korean Air serves. In September, Air China commenced its second nonstop daily flight from Beijing to Los Angeles, making it the only international carrier at LAX to offer nonstop flights between Los Angeles and Beijing. In fact, it is the only international carrier to offer a second daily flight between the US and China. Driving the service, which uses B747-400 aircraft, is a large Chinese population in Los Angeles. And United Airlines began new daily, nonstop service between LAX and Shanghai Pudong (PVG) in May. While United operates more routes from the US to China than any other airline, this is its first from LAX to PVG. One month earlier, American Airlines also commenced nonstop service from LAX to PVG. Regarding other new services, Iberia launched LAX-Madrid service in March. The A340 flights depart three times a week, making LAX the only nonstop service from Spain to the US West Coast. The service is part of the new business alliance between Iberia, British Airways and American Airlines. Turkish Airlines also commenced service between LAX and Istanbul in March, the only nonstop service between the US West Coast and Turkey. It operates four times per week and uses B777-300ER aircraft.