cargovisionQUARTERLY MAGAZINE AIR FRANCE CARGO-KLM CARGO VOLUME 21 ˆ NUMBER 26 ˆ SEPTEMBER 2006

Emir of EMAIRLoose threadsUnique-Voice Portal

CASPIAN CURRENTS

4 CASPIAN CURRENTSThe Caspian Air Cargo Summit 2006 was held in Baku, Azerbaijan, in May. The event cracked open a win-dow to Central Asia, giving many Western cargo executives their first comprehensive look at the potential ofthis little-known region.

14 EMIR OF EMAIRGlobal logistics giant Expeditors merged its two administrative regions, the Middle East-India and Europe-South Africa, in 2001. How does Rommel Saber oversee this vast EMAIR region, spanning Europe, theMiddle East, Africa, and India?

16 LOOSE THREADSFashion retailers rely on airfreight to stock their shelves on time. Effective infrastructure has been in place for a long time, but changes in retailing are forcing carriers, forwarders and manufacturers to rethink theirlogistics. Karen Theurmer reports.

19 PEOPLE MAKE A DIFFERENCEJean Claude Toth knows time zones. That’s a necessity for the Liaison Manager in a global organization likeSkyTeam Cargo.

20 MATCHING STROKESMergers are not for the faint of heart, especially when they involve multinational corporations and thousandsof employees and customers. Ian Putzger reports on two of the industry’s active mergers: DHL-Exel andSchenker-BAX.

24 UNIQUE-VOICE PORTALForwarders will begin to taste the fruits of integration of the Air France and KLM cargo automation systemsin October. Their Unique-Voice Portal will expand schedule and routing options and speed up bookings.

08 news & datelines22 Ali Khalfan Al Jallaf26 country file28 market monitor30 postscript31 information and colophon

COVER IMAGE

Boy leading a camel caravan

© Keren Su/Corbis

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We cannot learn too much about mergers, it seems. At AF-KL Cargo, we have been joining forcesfor almost a year. Of course, we encounter difficulties but our step-by-step approach is thebackbone of our success. This exercise is also showing us that learning to work internally with ourpartner carrier helps us work better externally with our customers.

Evidently, we are able to address complex and difficult issues as an integrated team, solve themand start implementing solutions. We are encouraged that our customers seem to trust the roadwe have taken. Our systematic approach is gradually leading to a better offer of our products andservices.

Other large companies in our business face equally daunting mergers. In this issue, we look at two of the biggest, Danzas-DHL and Schenker-BAX, to try examine their successes as well as anyunforeseen consequences.

We also want you to know about one of the results of our own cooperation. As you know we havebrought our customer service staff under one roof in many stations. At the end of October, yourcustomer service representative will start using our Unique-Voice Portal system to offer you morechoices on routing, scheduling and booking for your shipments.

Your customers in the garment business are changing logistics strategies to better replenish theirretail turnover. These changes and the SkyTeam Cargo products that can help these customers arethe subject of our feature, Loose Threads.

We also write about business prospects in Central Asia. The region is not well known but is a bigplace with a lot of activity and could offer an exciting opportunity for the near future. We werefortunate to be able to talk with experts in the region for this report.

In the airfreight business, you acquire friends from all over the world. Our forwarder interview in thisissue features Rommel Saber, EMAIR president based in Beirut. We spoke with him in July justafter he arrived in Expeditors’ London office. Like most companies there, his had a backup officeand an evacuation plan that involved moving people to Europe and Egypt. Mr. Saber said most ofhis people did not want to leave Lebanon. We wish them well and offer our hopes that thingsreturn to normal soon.

Sincerely,

GILLES ROCHEVice President Area France, Dom-Tom, North & West Africa, Air France Cargo-KLM Cargo

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Romel Saber,

page 14

Turkeys, page 30

Kazakhstan, Desert Dyke, page 4

Claude Sereno,

page 25

TOGETHERNESS

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■ Few outside investors know Central Asia. A blankspot on most people’s mental maps, this land mass islarger than Western Europe. About 73 million hardypeople live on the windswept plains, mountains anddeserts that stretch from the Caspian Sea eastward toChina, and from Russia southward to Iran and Pakistan.Its five nations, Kazakhstan, Kyrgyzstan, Tajikistan,Turkmenistan and Uzbekistan, lie along the Silk Road,the ancient trading route between Asia and Europe.Their oil, gas, minerals, agriculture, and hydroelectricenergy have always attracted traders from the neigh-boring countries. Now, some Western firms are begin-ning to see in the region a supply of cheap labor, as well as an untapped market for manufactured goods.Although Central Asia has great promise, it takes anadventurous and determined spirit to unlock it, saysDinesh Prakash, general manager of sales for SwiftFreight International, Dubai.“Logistics in Central Asia is not as sophisticated as inEurope or Asia,” Mr. Prakash says. “Air cargo is impor-tant to these landlocked countries and we think vol-umes will double in 10 years. But the infrastructure willcome under pressure because the region needs openskies as well as modern physical and technical infra-structures.”For centuries, if you said “Silk Road,” people thought ofthe Italian explorer Marco Polo. Today, they are morelikely to associate Big Oil with the route, which is moresuitably named “The Energy Corridor,” says YavuzÇizmeci, president of the Turkish carrier, ACT Airlines.

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Euroavia International held the Caspian Air Cargo Summit 2006 in Baku,Azerbaijan, in May. By organizing the event, Lars-Gunnar Comén,cracked open a window to this little-known region, giving many Westerncargo executives their first comprehensive look at its potential.

BY MARK W. LYON

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CASPIAN CURRENTS

Central Asia has 15% of the world’s oil and 46% of itsgas reserves. Asia has one-quarter of the world’sdomestic production, Europe has one-third and if youadd Turkey and the Caspian region, you have over halfof the world’s GDP. “Central Asia sits in the middle of allthis production,” says Mr. Çizmeci. “Remember, logis-tics hubs, not capital cities will govern our future.”The region’s airports would all like to be logistic hubs,and eye the growing air trade with anticipation. Europecurrently flies about 35,000 tonnes a year to CentralAsia; China, 15,000 tonnes; America, 6,000 tonnes;and Russia, 4,000 tonnes, says Marco Bloemen, part-ner in YDL, a Dutch consultancy. “But the growth is lop-sided. It’s an import market today by about 6:1 for bothEurope and America. Oil and gas traffic is the main car-go flying to Central Asia from Europe and America,while fashion goods predominate from China.”The region’s airfreight traffic shows the seasonality typi-cal of most markets, Mr. Bloemen says, adding, “WhileIraq and Afghanistan show regular and growing airimports, Kazakhstan doubled its air imports fromEurope in 2005, to become Central Asia’s largest andfastest growing airfreight market.”

LEARNING FROM DUBAI

Central Asia can restore its historic role as an entrepot,says Igor Smirnov, CEO and president of SRXTranscontinental, Inc. based in Hallandale, Florida.

Capt. Smirnov grew up in Uzbekistan and now advisesWestern firms seeking access to the region.“We see opportunity,” Capt. Smirnov says. “We look atthe development in Dubai, another crossroads, andsee ourselves evolving into a trade and logistics centerfor this region.” Central Asia’s fast growing private sec-tor, ample energy, and relative political and economicstability should lead it towards new production andmore exports. It has widespread commercial centers,no efficient surface connections, and only a few majorairlines operating to the region. Moreover, airfreight offers the potential to turn theregion’s weaknesses into strength, adds Capt.Smirnov. “Our predominance of import traffic, slowpace of industrial production, and varied customs pro-cedures can all be offset by developing strong trade. Allof the airports are expanding their infrastructure, airtraffic control, security, and training. They all offer cargofacilities and the authorities understand the importanceof the air cargo business.”

FREE TRADE PROTOCOL

Airlines and forwarders see the central Asian republicsas individual markets. But none of the countries pro-duces enough traffic to support a thriving venture, saysCapt. Smirnov. “When the Soviets were in charge,there was one set of rules. After they left, it was like arevolution, with a new generation managing each gov-ernment according to its own short-term priorities. Ifthe governments would listen to each other, then wewould have success.A group called the Eurasian Economic Community isworking to bring about changes in the transport sector,Capt. Smirnov says. Their work involves creating a sin-gle agency to oversee customs, integrating customsprocedures and preparing a free trade protocolbetween the states. “These countries are young. Theymust absorb 10 years of change. It could take time.But it is another opportunity for air cargo to grow inCentral Asia.”

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■ Baku is an oil city for the ages. Producer of half ofthe world’s oil at the beginning of the 20th century,the city’s flame subsequently flickered as the flow ofoil to Western markets dwindled from the landlockedCaspian Sea. However, it began to soar again in July,when the Baku-Tbilisi-Ceyhan pipeline opened. At fullcapacity, the BTC, as it is known, will carry a millionbarrels a day, about 1% of global demand. A secondpipeline for Caspian natural gas is due to open byyear end along the same route. Western oil and gascompanies started planning these 1,760-km-longpipes in the early 1990s, as Soviet influence in theregion began to wane. By 1999, when the projectsfinally began, many firms were transporting a steadyflow of equipment into Baku on maindeck freighterflights from Europe and America. A regional air cargoinfrastructure emerged to distribute freight throughoutthe region. When conflicts flared in Afghanistan andIraq, Baku was the obvious transit point to provideWestern logistics support for both nations. However, runway conditions aside, no airline couldafford the insurance to fly a B747 freighter into eitherKabul or Baghdad. For a few canny businessmen in2001, this smelled like opportunity.

INTO KABUL AND BAGHDAD

Zaur Akhundov was director of Azal Avia Cargo, asubsidiary of state-owned Azerbaijan Airlines. He hadspent 15 years moving freight between Baku andDubai. Mr. Akhundov thought a private companycould be more reliable and flexible using private facili-ties, and besides, it could get a license free from thegovernment. With money from European investors,Silk Way Airlines began operations in October 2001,

with a single AN-12. It was the first commercial airlineto fly into Afghanistan that year. “A Western airlinewould have paid 20 times more than we did for insur-ance coverage,” says Kamran Gasimov, Silk Way’smanaging director. “Besides, we know the territory.We have Afghan pilots who flew for Ariana AfghanAirlines and, before that, for the mujahadeen duringtheir war with Russia.“But our specialty is distributing cargo,” Mr. Gasimovcontinues: “We take freight arriving in Baku on 747s,re-palletize it, load it onto IL-76s or trucks, and trans-port it throughout the region. Door-to-door transittime is less than 72 hours.” Fifteen offices, called the Euroasian Group ofCompanies, represent Silk Air around the world. TheAzeri cargo airline operates on all continents and hasinterline agreements with most Western carriers flyingto Baku. It operates 500 flights a year to Afghanistan,about one-third of its total activity. Its fleet averages1,000 flight-hours a month. Two years ago, it flew200 tons of freight a month. In 2005, it flew 300 tons,and this year it is averaging 400 tons.Silk Air now owns three AN-12s and five IL-76s,including three delivered new from the TAPO factoryin Tashkent. Two more IL-76s, equipped withAviadvigatel PS-90 engines and the latest avionics,go into operation this year. These aircraft are ICAOStage-4 compliant and can land in any country.Meanwhile, the existing Silk Air IL-76s continue tohave their documents, engines, avionics and airwor-thiness inspected upon arrival in Europe every threemonths.Silk Air’s home base, Baku, is planning formore cargo. When the airport freight terminalexpands next year, it will include a facility for export-ing the profusion of perishables grown in the coun-try’s Mediterranean climate.

■ BishkekICAO Category IRunway: 4,200 x 55 m Cargo terminal: 3,360 m2Ramp: 242,000 m2 Planners regard Mana airport, 35 kmnorth of the Kyrgyzstan capital, morehighly now than they did just two yearsago. Civilian and military logisticsexperts have invested in the groundoperations and the fuel depot. Thefacility is gaining a strong reputation foreffective logistics, unburdened customsprocedures and free-trade zone.However, Bishkek is situated far to theeast, and the surrounding mountainscould be an obstacle for surface trans-portation.

■ AlmatyRunway: 4,400 x 60 m Runway: 4,500 x 45 m Cargo terminal: 28,000 m2 Temporary storage: 5,500 m2 Ramp: 8,560 m2 Kazakhstan is the most business-friend-ly of the five republics. Its new govern-ment consulted with businessmenbefore changing laws and tax codes.The positive climate has improved theinfrastructure and given people a senseof economic success. But Almaty iseven farther from the region’s geograph-ic center than Bishkek.

■ DushanbeRunway: 3,112 x 45 mTransit zone: 800 m2 Cargo terminal: 7,500 m2

The airport in the Tajikistan capital hasbeen a launch point for military andhumanitarian sorties into Afghanistan.Although air services meet ICAOrequirements, the airport equipmentneeds to be updated.

■ TashkentICAO Category II-d Runway: 4,000 x 60 m Runway: 3,905 x 45 m Cargo terminal: 4,500 m2Ramp: 100 ha Uzbekistan is home to a highly skilledscientific labor force and is the manu-facturing hub of Central Asia. The air-port has plenty of cargo capacity,straightforward procedures, and cen-tralized fueling. It has the region’s bestinfrastructure, but there is too muchgovernment influence for good busi-ness.

■ AshgabatRunway: 3,800 x 46 m Runway: 2,989 x 60 mRamp: 16 spaces for Boeing- 747The capital of Turkmenistan lies almoston the Iranian border. The country doeswell because of its natural gas, but ithas a closed economy and its 3 millionpeople are not a big consumer market.

■ ShymkentAbout 100 km north of Tashkent, the air-port is the center of business-friendlyKazakhstan in its most populatedprovince. The area is rich in agricultureand the private airport has room to grow.

IN THE PIPELINE

WHERE WOULD YOU LOCATE A LOGISTICS HUB?

Cargo Turnover at Selected Central Asian Airports

Kazakhstan

Tajikistan

Kyrgyzstan

Uzbekistan

44 000

11 000

14 000

3 000

CaspianSea

AralSea

LakeBalqash

Astana

Tashkent

Dushanbe

Ashgabat

Baku

Tbilisi

Yerevan

Bishkek

Shymkent

Almaty

GEORGIA

T U R K M E N I S T A N

U Z B E K I S T A N

T A J I K I S T A N

K Y R G Y Z S T A N

K A Z A K H S T A N

C H I N A

PA K I S TA NA F G H A N I S TA NI R A N

R U S S I A N F E D E R A T I O N

AZERBAIJANARMENIA

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TRANS-SIBERIAN BAHN

Germany’s enviable and deservedreputation for running railroads isstimulating a round of partner-ships that bear watching as mid-dle and long-term competitors tothe Central Asian airfreight busi-ness. These agreements look toimprove service over the Trans-Siberian railroad and could even-tually offer a cheaper alternativefor some Asia-Europe cargo.

In April, the chairmen of DeutscheBahn and the Russian rail compa-ny RDZ met in Tomsk and agreedto establish a joint logistics sub-sidiary that would link Russia withDeutsche Bahn’s global logisticsnetwork. Presumably, this wouldgive Deutsche Bahn subsidiarySchenker a boost in Russia, eventhough it has been active there formany years with its own nationalcorporations. The agreementcould also produce joint logisticscenters with rail access in Russia. One month later, in May,Deutsche Bahn struck a secondagreement with Chinese Rail thatis intended to increase rail trafficbetween China and Germany byway of the Trans-Siberian railroad.

The route by rail is faster thanthe route by sea. As part of theagreement, Deutsche Bahn willsupport China’s development andoperation of high-speed rail,including operations, passengerinformation and reservation sys-tems, safety management, and marketing.

CARRIERS Asia

ChinaThe frenetic pace of change in the Chinese airfreightmarket is sometimes difficult to follow. But that is hardlya surprise when you consider its 17% annual growthover the past decade. Chinese aviation authorities areencouraging foreign and private investors to createadditional cargo capacity, but China’s major trade

INTERMEDIARIES World

PARISTat Express became the 150th company to join The Technology AssetProtection Association (TAPA), an association of security professionalsformed in 1997 to address security threats to the supply chain. OtherFrench members include Air France Cargo, La Poste, Geodis and STMicroelectronics. TAPA’s Freight Security Requirement is the only globalstandard for supply chain security. It has certified over 300 facilities world-wide.

MEMPHIS — ATLANTAFedEx and UPS both received subpoenas in the ongoing probe by the USand European authorities into possible antitrust violations in the air cargoindustry. The Integrators join Air France-KLM, American Airlines, BritishAirways, Cathay Pacific Airways, Japan Airlines, Korean Air Lines,Lufthansa, Scandinavian Airlines, Singapore Airlines and United Airlines inthe dock as investigators search for evidence of collusion in the surchargesfor fuel and security.

TOKYONYK Group has been busy. It signed a memorandum of understanding inJuly for a 50:50 joint venture with India’s Tata Group. In May, NYK said itwould form a strategic alliance with Japan’s Yamato Group to provide inte-grated logistics to customers in Japan and China. The two Japanese firmssaid they would discuss further collaboration of their airfreight forwardingbusiness in order to expand their customer base.

RANCHO DOMINGUEZCalifornia-based UTi Worldwide Inc. is talking about acquiring controllinginterests in Newlog Ltd. and Transclal Trade Ltd., two providers of freightforwarding services in Israel, the West Bank, and Gaza.

imbalance with Europe and America mean freighters fly full outbound andnearly empty homebound. “It’s hard to make a living when cargo rates arelower than the fuel surcharge,” said one air cargo executive.Even the specter of short-term overcapacity has not cooled a rapaciousdesire to bring home more of the cargo business. Non-Chinese airlines cur-rently fly two-thirds of China’s international cargo shipments. China Southern Airlines operates the country’s largest passenger fleet, buthas no cargo business and thus trails its two largest rivals. Shanghai-basedChina Cargo Airlines was set up in 1998 by China Eastern Airlines andChina Ocean Shipping Group. It currently operates six MD-11 freighters.Beijing-based Air China Cargo was formed by Air China and BeijingInternational Capital in 2003. It now flies four B747-200 freighters.These two cargo operators have themselves been a source of speculation.Shanghai Securities News reported in July that Air China Cargo and ChinaCargo Airlines would merge their fleets and crews while maintaining sepa-rate ownership of their ground facilities. A 50:50 joint venture formed inShanghai by year end would compete better than the individual airlinesagainst foreign carriers. No final decision had been reached by press time,according to a China Cargo Airlines official.Meanwhile, back at the Pearl River Delta, Guangzhou-based ChinaSouthern Airlines was talking about starting a cargo venture with Korean Air,which is seeking access to Mainland China and recently halted its yearlongtalks with China’s Okay Airways. Korean is a SkyTeam member and ChinaSouthern is on track to join the alliance in 2007.

Some of the other cargo players joiningthe market include:

■ Shanghai Airlines Cargo, 45%-owned by subsidiariesof Taiwan’s Evergreen Group, was established in June,with intent to launch cargo flights in October betweenShanghai and Frankfurt.

■ Great Wall Airlines, 25%-owned by Singapore Air-lines Cargo started service in June.

■ Yangtze River Express, the cargo unit of Hainan Air-lines, has attracted investment from Taiwan’s largestcarrier, China Airlines.

■ Jade Cargo, a joint venture between Shenzhen Air-lines and Lufthansa Cargo, takes off in the fall.

Let’s not overlook Cathay Pacific’s deal to take overDragonair. Cathay is intent on increasing its cargocapacity in China. And the latest air services agree-ment between Hong Kong and China includes a provi-sion for each side to name one more airline to operatefreighter services between Hong Kong and 56 cities inChina beginning next March.

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cargovision news around the worldcargovision news around the world

Our quarterly review ofindustry news keeps youabreast of developmentsin key sectors around the world.

China Southern Airlines

TAPA, an association of security professionals

INFRASTRUCTURE Europe

BRUSSELSThe European Commission wants to adopt a logisticsaction plan in 2007, in order to integrate various trans-port modes. It hopes this will give the industry a com-petitive edge as well as diminish the environmentalimpact per unit of freight. Transport accounts for 30%of total energy consumption and 71% of total oil con-sumption in the EU.Commission Vice President in charge of transport,Jacques Barrot said in July: “The EU will continue toboost rail and waterways for long-distance connec-tions. We also need to step up our efforts to make roadtransport and aviation more efficient and greener. I wantto focus on logistics, green propulsion, and intelligenttransport systems that use the latest technologies.”

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ONLINE Europe

BedfordshireTired of stuffing promo rate faxes into that binder?Fuming because this week’s deals weren’t entered intothe system? Hey, 2 million tariffs can’t be that hard tomanage.Forwarders are ignoring published rates, because air-lines are trying harder to fill planes with promotionalrates: discounts to specific destinations, time-limitedoffers and special weight breaks. Promos are so hotthey constitute 80% of the available tariffs in somemarkets. But they prompt forwarders to call airlinesand negotiate every shipment not covered by contract.Telephone traffic has become unmanageable. OAGCargo.com has an effective two-part solution. Thefirst is Inforwarding, an announcement and distributionservice. Airlines pay to send out announcements to for-warders, who register for free to receive them. The sec-ond is AFRA, a rate management application for air-lines to upload rates at no cost and distribute them byemail with PDF attachments in any language.Forwarders can receive the emails for free, but pay anannual license fee to query the rates online.This online system has grown rapidly to 27,000 usersin 22 markets. Italy and Western Canada go online inSeptember. Currently, 512 airline offices and 164 GSAshave uploaded rates. These are accessible to 416 for-warders in 714 remote and 67 headquarters offices. Insome countries, 99% of the airlines have publishedrates on Inforwarding.com.An export manager accessing the AFRA system willsee both contract and promotional rates and preferredcarriers listings in bold face. He sees the latest ratespublished by the airlines. If he is a GFX member, he canview those rates and AFRA will transmit shipmentdetails entered during a query to GFX for booking. Asimilar system is in the works for CPS members. Thesystem identifies the names of the various airlines’ car-go products and lets the agent click through directlyinto some of their systems. He can create queries formultiple destinations and departures, generate quotes

INDUSTRY World

RUSSIA - UKRAINEVolga-Dnepr Airlines and Antonov Airlines are formingRuslan International. The new joint venture follows thecessation of Antonov’s marketing agreement with AirFoyle HeavyLift. Ruslan International will provide the ad-hoc charter clients of Antonov and Volga-Dneprwith aircraft from either fleet, depending on demandand with efficient pricing based on aircraft location. Thetwo airlines will fulfill their existing long-term contracts

individually. Ruslan will manage both fleets, with staffdrawn from experienced executives at both airlines.

TOULOUSEAirbus intends to pay Russian aircraft companiesUS$900 million over the next 10 years to convert A320and A321 passenger jets into freighters. Airbus, alongwith EFW (Elbe Flugzeugwerke GmbH), the EADSfreighter conversion center based in Dresden, signed aletter of intent in May with the Russian aircraft makersMIG and Irkut. The major Airbus shareholder EADS hasa cooperation agreement with the Russian Aviation andSpace Agency Rosaviakosmos, involving US$800 mil-lion and dating from 2001. The new agreement takesthat pact to a new level, according to executives fromAirbus. “The Russians certainly have the engineeringcapability,” says aviation consultant JohannesEinarsson. “Boeing had them do all of the engineeringfor their Large Cargo Freighters that are being modi-fied in Taiwan to transport the B787 fuselage sections.”

COTONOULast December, Benin Airlines paid US$5 million forthe final assembly and exclusive distribution rights inAfrica and certain Middle East markets of the UtilicraftFF-1080-300 ER cargo feeder aircraft. The FF-1080is designed as a high-wing turboprop with a payloadof 10 LD-3s (10 tons) over a 2,000-nmi range andshort takeoff and landing capability. Benin intends toassemble the aircraft from kits supplied by Utilicraftonce the FAA certifies the aircraft, hopefully sometimein 2007. Meanwhile in May, Bahrain said it would hap-pily host the US$25-million base and 250 jobs theproject will create.

GATEWAYS World

LOUISVILLEUPS will spend US$1 billion during the next five years to expand its mainsorting hub by 60% to 487,000 packages per hour. The project will enablethe terminal to accommodate the A380 and B747-400 freighters the com-pany has on order.

KRASNOYARSKWork began in July on a new 4,000-m2 cargo terminal at YemelyanovoAirport. Airbridge Cargo has been flying B747-400 freighters into the airportfor two years. It will now base an IL-76 freighter at its regional headquartersto forward equipment and project cargo to the oil and gas industry onSakhalin Island. Krasnoyarsk lies roughly 3,500 km east of Sakhalin, abouthalf the distance to Moscow.

JEBEL ALIDubai is spending US$8 billion on a second airport to handle 120 millionpassengers and 13 million tons of cargo annually. When the first of six run-ways opens in 2007, JXB and Dubai Logistics City together will be thelargest freight and cargo hub in the world, says Sheikh Ahamed bin SaeedAl Maktoum, chairman of Dubai Aviation Corp. A customs-bonded roadand rail corridor will connect Dubai’s two airports and speed up transferswith Jebel Ali port and free-trade zone.

PARISThe French government intends to sell 30-40% of Aeroports de Paris inorder to raise approximately €500 million for the airport operator and €800million for itself.

for his customers or decide which city to open a new gateway.An airline would use these two programs to publish rates for specific mar-kets in any combination. It can quickly upload rates to AFRA by copyingthem from an excel spreadsheet and they will expire automatically at thecorrect time. The carrier can set effective dates and, with Inforwarding, seewhich agents received its offers and in which offices. It can target promorates to specific forwarders that book specific lane segments.OAGCargo.com eliminates the binder and reduces phone traffic. From theirexperience with these frustrations, Bart Jan Haasbeek and Dirk de Rooij,both Panalpina managers, formed Inforwarding BV in 2001. They sold it toOAG Worldwide in January 2005. http://www.oagcargo.com

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To convert A320 jets into freighters

UPS Louisville expansion

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OPEN SKIES World

NORTH ATLANTICTwo steps back, one step forward. Who dances the waltz of the air servicesagreement better: China and Taiwan, or Europe and America?In July, the US Senate Appropriations Committee blocked a proposal thatwould have given foreign investors more say in US airline operations, threatening the completion of an open skies agreement with the EuropeanUnion. The EU wants the US to ease foreign ownership restrictions before itconsents to the agreement. The committee blocked the rule in partbecause of concerns that foreign investors might try to prevent the trans-portation of US troops on commercial carriers. The regulation also hasdrawn opposition from labor unions, which worry that the influence of for-eign investors would lead to job cuts.

TAIWAN STRAIT Also in July, a China Airlines B747-400 freighter carried a load of electronicsequipment from Taipei to Shanghai. It was the first direct cargo flightbetween the island and China since 1949. The flight detoured throughHong Kong’s airspace rather than traveling directly across the 160-kmstrait, yet still managed a flying time of 90 minutes. China and Taiwanreached an agreement in June to allow their carriers to operate 168roundtrip passenger flights per year and to enable carriers to apply for spe-cial cargo charters to transport equipment used in Taiwan-funded plants onthe mainland.

TRADE World

This summer showed industry observers some earlysigns of diminishing trade and lower profit expectationsfor the transportation industry. Technology PartnerInternational Inc. of Texas said that income from out-sourcing among US firms in 2006 would fall short ofthe US$75 billion figure for 2005. Businesses seemedto want greater flexibility. Although they signed 92 con-tracts during the first half of the year, compared to 58 in2005, the new agreements covered shorter periodsand produced less revenue.When HACL reported 3% growth in exports for June,analysts thought they spotted the first signs of a slow-down in Chinese exports. They pointed to a statementby Lillian Chan, HACTL’s GM of marketing and cus-tomer services, who said that the company anticipatesexport growth rate for 2006 to be below 5%. Exportsduring 2005 grew over 8%. The rising costs of fuel,interest rates, and Chinese labor are all contributing tothe slowdown.Two of the largest ocean shipping companies, APMoller-Maersk and Evergreen say they expect lowerprofits this year. Shipping capacity is forecast to grow17% this year, and demand less than half of that. These Cassandras all received a boost from the failureof the Doha talks. Much of the growth reported byshipping and airfreight companies is based on 20 yearsof trade liberalization -something best not taken forgranted.

MOVING ON World

AMSTERDAMArend de Jong, currently SVP Network for KLM, becomes SVPMarketing and Network for AF-KL Cargo in September, replacingBram Gräber, who moves to the Passenger Business and becomesSVP KLM Benelux. Mr. Gräber was a member of the AF-KL Cargo Joint CargoManagement Committee and played a central role in the integrationof the two airlines’ cargo commercial teams and activities.

STAMFORDGiorgio Laccona, a 30-year logistics industry veteran, becameChairman and CEO of IJS Global, Inc, a US forwarder based inStamford, Connecticut, in July. Cargovision interviewed Mr.Laccona for the December issue last year, while he was president ofItalian-based forwarder Savino Del Bene USA, Inc.

BASELMonika Ribar becomes the new Chief Executive of Panalpina inOctober. Ms. Ribar is a 15-year veteran of the Basel-based for-warder, serving most recently as its Chief Financial Officer. Shetakes over from Board President Gerhard Fischer who has beenacting as Interim CEO since January. At that time, Bruno Sidlerresigned after a veteran manager in the airfreight division wascaught manipulating funds to hide losses. The incident costPanalpina SRF22 million (€14 million).

SHANGHAIDavid Dai was promoted to VP of Corporate Accounts for U-Freight China. Mr. Dai will also remain assistant general manager ofthe U-Freight China Express subsidiary based in Shanghai.An expert in freight forwarding, Mr. Dai has extensive experienceand understanding of the market throughout China. His otherresponsibilities will include training, information handling, networkestablishment, and procuring new business.

SINGAPOREHuang Cheng Eng was appointed Chairman and Director ofSingapore Airlines Cargo. He succeeded Fock Siew Wah, who wasat the helm of Singapore Airlines Cargo since January 2004.Mr. Huang managed Singapore Airlines’ cargo organization before itbecame a subsidiary, and was most recently SIA’s EVP of marketingand the regions.

OCTOBER 10-11 Fourth Annual Air Transport Trade Conference:Wings of Russia, Renaissance Hotel, Moscow.Fax: +7-495-245-4946. Tel: +7-495-926-5329gordenko@infomost.co.ur.

OCTOBER 10-11Sixth Air Cargo Economics Conference, HotelIntercontinental, Madrid. Contact: Euroavia Tel: +46 33 129 841www.euroavia.com.

OCTOBER 15-18Council of Supply Chain Management andProfessionals (CSCMP) Annual Conference,Henry B. Gonzales Convention Center, SanAntonio, Texas. Tel: +1 630 574-0985 membership@cscmp.orgwww.cscmp.org.

OCTOBER 25-27Cargo Facts 2006, Loews Miami Beach Hotel,Miami, FL. Contact: Air Cargo Management GroupFax: 206-587-6540Tel: 206-587-6537kwheeler@cargofacts.com.

NOVEMBER 7-10Airports Council International Annual WorldGeneral Assembly Conference & Exhibition,Cape Town International Convention Centre,Cape Town. www.aciworld.aero.

NOVEMBER 8-9IATA Cargo Revenue Management & PricingConference 2006, Ritz-Carlton, Kuala Lumpur.Fax: +1-514-874-2654Tel: +1-514-874-0202sessenweij@iata.org.

NOVEMBER 16-18Air Cargo India 2006, World Trade Center,Mumbai. Contact: STAT TimesTel: +91 22 2757 0550www.stattimes.com/ACI2006.

DECEMBER 5-6 IATA Cargo in Emerging Markets: India 2006,Taj Mahal Hotel, New Delhi.Fax: +1-514-874-2654Tel: +1-514-874-0202sessenweij@iata.org.

cargovision datelinescargovision news around the world

In 2001, Expeditors merged its two administrativeregions, the Middle East-India and Europe-SouthAfrica. Rommel Saber, president of renamed EMAIR(Europe, Middle East, Africa and India Region), over-sees the operation’s 2,800 staff members from hisoffices in London and Beirut.

How do you manage such a largeterritory?

We subdivided the area into five regions, with a regionalVP in charge of each one. Our man in Dubai managesthe Indian subcontinent and Gulf region. A Regional VPin Beirut manages the Near East and North Africa,including Turkey, Greece, and Egypt. The UK, SouthAfrica, Mauritius and Madagascar are managed fromLondon. We have an RVP in Frankfurt, who is in chargeof Germany, Benelux, and Central and NorthernEurope, and another RVP in Paris, who overseesSouthern Europe. In the African States, we have anagency network that is managed from Johannesburg.

The garment trade is a major part of yourbusiness. What are the latestdevelopments?

We are seeing a shift in the sourcing of garment produc-tion. This business closely follows costs, and labor is thebiggest cost. In general, retailing is odd because thevendors move so quickly. We have seen them fold a fac-tory and relocate the entire operation to another countrysix weeks later. They can do this because their capitalexposure is small. They just pack up their sewingmachines, put them into a sea container and disappear.They simply go wherever labor costs, visas, quotas andduties are most favorable. We saw 500 people lose jobs

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when garment factories folded in Madagascar andmoved elsewhere. I guess the positive side is that 500people elsewhere got new jobs. More specifically, wehave seen a trend among garment customers to usereplenishment programs. Instead of manufacturing500,000 pieces, they make a few test articles in limitedcolors and sizes. If those sell well, then they start manu-facturing more of them. Therefore, they move manufac-turing closer to the sites, to save on stocking, inventoryand management costs. In the case of Europe, you seemore of this production going to Turkey and Egypt,because they are closer than India and China.

How do you capitalize on these trends?

Replenishment involves greater strategic planning thanjust deciding to go manufacture in Asia. I think thatretailers are becoming more efficient and professional.They have tight selling windows and seasons, and thatinvolves a lot of planning. We help them organize theirairfreight to match their selling window. Of course, mostof these goods travel by ocean and we help plan theirsea freight, but their tight selling windows or late pro-duction drive the demand for airfreight.

What do you discuss when you areplanning with retail customers?

Usually, some customers give us hints. They say: “Weexpect a strong quarter” or “We expect a middle growthquarter.” We help them translate that into a percentage ofchange relative to the previous quarter. Other customersgive us very precise estimates for their trends. Then wetalk with the carriers, book the space, and find alternativesolutions if demand exceeds supply or vice versa.

That’s difficult, when manufacturers don’tknow how much capacity they will need.

Yes. We try to encourage customers and vendors tospecify exact demand, but it is hard to look ahead inretail. We have three to five months of productivityplanned, and the space is booked. But if the vendordoes not deliver, the airlines don’t like it. Especiallywhen there is so much demand from areas like Indiaand Pakistan.

Do you have to pay the carrier anyway?

We do have block space agreements, where you paywhether you use the space or not. We prefer confirmedspace, because a block space agreement is an assetat risk. But there is always more demand than supply inthe peak season. However, we really avoid charters.They are expensive and the last thing customers want.Unfortunately, they are sometimes necessary.

How is the garment traffic doing in other regions?

Egypt and Turkey have been doing well over the past18 months, for the reasons I mentioned. India is boom-ing. It’s the next competitor to China. We opened 17offices there, because you have to be in many places tosupport local vendors, who like to deal with local con-tacts. Madagascar, Mauritius and Lesotho have all seenbig slowdowns, particularly with their North Americancustomers, in spite of their duty advantage with AGOA.When the quotas were lifted in January 2005, it hurtthem. In addition, logistics is not easy from those coun-tries, so people shifted production to places with betteruplift. We have not yet seen a trend for manufacturingto return, or for new competition in other areas. And I’mnot sure we will.Jordan is another place that has witnessed a majorboom. It has a duty-free exemption to the US. The onlyproblem I see for Jordan is poor logistics. They haveinsufficient lift from Amman.

EMIR OF EMAIRBY ANDY WESTON

Rommel C. Saber is presidentof Expeditors International’sEMAIR region (Europe, Africa,Middle and Near East andIndian Subcontinent). His previ-ous positions with Expeditorsincluded svp of global air cargoand svp of sales and market-ing. Mr. Rommel establishedExpeditor’s first offices in theMiddle and Near East when hejoined the firm in 1990. EMAIRnow includes 64 offices withover 2,600 staff.

Mr. Rommel was born inLebanon and is a US Citizenwith a degree in finance andeconomics from the Universityof San Francisco. He enjoystennis, volleyball and hunting.

COMPANY PROFILE

Founded as a single-office oceanforwarder in Seattle, Washington,in 1979, Expeditors is currentlyone of the world’s leading globallogistics companies.

Operating through 226 locationsworldwide, Expeditor’s servicesinclude vendor consolidation, airand ocean freight forwarding, customs brokerage, insurance,ocean consolidation, distribution,and value-added services.

With a global workforce in excessof 10,000, the company earnedrevenue to the sum of US$3.9 billion in 2005.

Last year, Expeditors was namedBest Managed TransportationCompany by Forbes, and receivedtwo Quest for Quality awards fromLogistics Management magazine.

The Wall Street Journal listsExpeditors as No. 1 in their share-holder scorecard for DeliveryServices.

For further information, visit www.expeditors.com.

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Westminster Bridge near London Eye (above) and Lionstatue in the Great Court, British

Museum (right).

Fashion retailers rely on airfreight to stock their shelves at the righttime with the most desirable garments. An effective infrastructurefor the garment business has been in place for a long time.However, changes in retailing are forcing carriers, forwarders andmanufacturers to rethink their logistics.

BY KAREN E. THUERMER

■ In the movie “The Devil Wears Prada,” MirandaPriestly, the cynical editor of a top fashion magazine,decides whether a collection succeeds or fails bysimply pursing her lips. In real life, however, time-to-market more often makes or breaks a garment’s suc-cess in the highly competitive fashion industry.If a fashion item arrives in stores just several days toolate, sales are lost and it never achieves its full poten-tial, say industry participants. Reliable air transport istherefore crucial for the garment trade. Yet air cargorequirements can be as complicated and dissimilar asthe two types of retailers the industry serves: high-end and mid-end fashion brands.

FLEXIBLE BUT SECURE

High-end retailers, like Gucci, Prada, Chanel, andHugo Boss, ship new collections each season.“When they ship, they move new ranges from theirproduction centers into their stores during severalweeks for each season,” says Cedric Millet, DirectorCohesion and Fashion Industry at for AF-KL Cargo.These retailers gauge the day of the week when theshipments must move, and then ship in up to 10-tonlots. “Replenishment is not so important,” Mr. Milletsays. “They do not have as many changes of seasonor style as we see with the mid-end fashion brands.”High-end retailers can also be more flexible on ship-ping dates and so look for leeway on rates. Most ofthem produce 80% of their collections in their countryof origin or surrounding countries, i.e. Europe and theUnited States, and only 20% in Asia. Therefore, theydo not encounter the capacity limitations that oftentrouble the mid-end fashion brands. Shipments generally move from distribution centerslocated close to production sites. For example, GucciGroup’s Luxury Goods International manufacturesleather accessories, handbags, belts, shoes, ties,

scarves, ladies wear, and men’s wear in Italy. Gucciwarehouses them nearby, at its Bioggio LogisticCentre in Lugano. “From here it is shipped all over the world,” says LucaMavaro, Luxury Goods International’s GeneralManager. This segment of the retail trade is very demandingwhen it comes to handling quality and security. Thesecompanies invest heavily in the design, materials andcraftsmanship needed to make their top-namebrands. They are likely to select their airfreight suppli-ers based on their ability to protect them from theftand pilferage. For these shippers, the SkyTeam Cargo partners air-lines, including AF-KL Cargo, offer Variation Safe 2, aservice that provides additional security measuresduring acceptance, transit and delivery, includingadded security during aircraft loading and unloading,and dedicated storage in a SkyTeam Cargo partnerairlines warehouse.

EVENT CONTROL

Meanwhile, mid-end fashion brand retailers, likeH&M, the Gap, and Inditex (Zara), focus on improvingtheir supply-chain management by using airfreight toincrease product visibility, to lower costs by reducinginventory, and to secure better margins. Good supply-chain management is important tothese retailers, because they source garments fromlow-cost producers in China, Bangladesh, India, SriLanka, and Vietnam.Inditex, the Spanish clothing retailer, originally pro-duced all of its garments in Portugal and Spain (orsurrounding countries), in a style that closely followsthe trends of the Milan fashion industry. By 2004, thecompany had outsourced more than 20% of this pro-duction to China, Bangladesh, Vietnam, and India,

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SKYTEAM CARGO SKIPPER

ments flown out of Asia were originally sup-posed to be shipped by sea.”

TO CHINA AND BACK

When the World Trade Organization lifted textilequotas on January 1, 2005, fashion retailerssmelled a windfall. So did nations that couldproduce garments at low-cost and in high vol-ume. Previously, quotas placed on low-cost produc-er nations prevented them from exporting toomany garments to developed countries. Nearthe end of the fashion season, this situationwould often cause a retailer to search the globefor a new low-cost producer in a nation with anunfilled quota and the ability to export goods toits customers. “Even though China had a lot of capacity forfashion goods, they were restricted by the quo-tas,” says Mr. Millet.Many countries found ways to get around quo-tas. Some shipped garments to countries inthe Indian Ocean region, where they could belabeled or re-labeled as the country of origin.This loophole disappeared in 2005, however,and countries in and around the Indian Oceansuffered as China, with its boundless supply ofcheap labor, cornered the bulk of the garmentbusiness. “The growth rate for garment production inChina was around 50% in 2005; and Indiastood at 25%,” Mr. Millet recalls. However, as China flooded the market,restraints were introduced again. Garment pro-duction and export appears to be swingingback to Bangladesh, Sri Lanka, Pakistan, andThailand. Revaluation of China’s currency hasraised prices and is contributing to the shift. “So far this year, India’s exports have risenabout 50%, and China’s about 25%,” says Mr.Millet. “Bangladesh is particularly attractivebecause companies do not pay taxes there.” But garment shippers should be wary. There islittle airline capacity from places likeBangladesh, unlike China, which is well served.Many companies operating to these new pro-ducing nations are facing bottlenecks and pay-ing high prices to fly out their products.

service performance is one of the company’stop priorities. “If that service fails, it means a one-day loss insales,” Mr. Magalhaes says. “And the nextround of production will also suffer, owing toreduced supply levels. Our success is basedon fast distribution service. High airfreight costsmust be compensated with high performance.” SkyTeam Cargo’s Cohesion product offers tai-lored logistics solutions to companies makingregular, just-in-time shipments. Customized100% for specific traffic, Cohesion comes witha three-way contract linking the shipper, theforwarder and the airline. “In Europe, we have dedicated teams atCharles de Gaulle and Schiphol to monitoreach shipment and accommodate specificrequirements,” says Mr. Millet. Standards are high for Cohesion’s solutions,because they are tailor-made for the for-warder’s customer. “We have a quality ratio of98% flown as booked,” Mr. Millet says. For traffic coming from Asia, schedules can beuncertain and quota issues may interfere withmovements. In this case, the airline needs tobe flexible in terms of capacity. “There is alwaysa bottleneck,” Mr. Millet says. “Half of the ship-

Jean Claude Toth knows time zones. That’s a necessity for the LiaisonManager in a global organization like SkyTeam Cargo. His workdayspans all continents covered by SkyTeam Cargo members AeroméxicoCargo, Air France Cargo-KLM Cargo, Alitalia Cargo, CSA Cargo, DeltaAir Logistics, Korean Air Cargo, and Northwest Airlines Cargo.

BY MARCIA JEDD

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“MANAGING my agenda to attend allthe various SkyTeam Cargo meetings is one of the mostchallenging parts of my job,” says Jean Claude Toth, “We have so many meetings.” As the only fully dedicatedstaff members on the payroll of SkyTeam Cargo having hisoffice at Paris-Roissy Airport, his main task is to liaiseamong members on all the initiatives and progress madewithin the cargo alliance. He acts as the General Secretaryto the Cargo Excutive Board, organizes the various execu-tive meetings, is the central point of communication andmaintains the library of files necessary to acces and runthe alliance effectively by the members. Mr. Toth supportsthe SkyTeam Cargo executives in the coordination of thealliances three major working groups: 1. Operations &Purchasing, 2. Sales & Distribution, and 3. Marketing &Communications. He monitors progress and performsintra-airline communications among the working groups’goals and achievements as set by the executives. Offeringthe full SkyTeam Cargo product range with special focuson promoting the prime product Equation and newly introduced Variation “Pharma” product.

The SkyTeam Cargo carriers are working on expandingthe Equation network and enhancing electronic bookingand tracking for their entire product portfolio. Thisdemands close coordination. “My job involves workingwith many different cultures, people, and working styles,”Mr. Toth explains. “I find it enriching.” The Liaison Manageris an expert at connecting people, whether by phone or inperson, from Seoul to Prague. Meetings are essential formoving projects forward, so when Mr. Toth joinedSkyTeam Cargo last year, he and his colleagues beganscheduling more sessions to improve their effectiveness.

Apart from their monthly teleconferences, the workinggroups will meet in person at least 10 times this year. Addto this the meetings between the Liaison Manager and theCargo Executive Board, and you get a total of nearly 25,Mr. Toth says. Apart from the Cargo Executive Board andthe three working groups there are also two project teamsactive, meaning a total of 50 people are somehowinvolved or connected with Mr. Toth as the LiaisonManager of which quite a number of them on almost adaily basis. Another component of Mr. Toth’s role is moni-toring overall alliance performance and providing statisticsto the executives. He collects and summarizes the mainindicators during the monthly SkyTeam CargoCoordinators teleconferences and in the quarterly CargoExecutives Board meetings. Mr. Toth has held various cargo positions since he beganworking for Air France Cargo in 1970, most recently asManager Sales Support for the Variation product. His family springs from French, Hungarian, Romanian, and Lebanese lineage, and he was born in Brazzaville,Congo. He speaks his native African dialect, along withFrench, English and Spanish.

and by 2005 had increased outsourcing to over30% in Asia. Even after shifting one-third of its production toAsia, Zara still ships all its goods to its threeSpanish distribution centers in Spain (Arteizo,and Zaragoza for example) from where it isshipped to close to 3,000 stores worldwidetwice a week.

Zara store managers are responsible for re-ordering the clothes. If a garment is selling well,it must be available within 48 hours. CarlosMagalhaes, the Managing Director of Zara’sforwarder, Van Esch Iberica Transitarios, Ida,explains how the company uses a just-in-timelogistics system. Requests from stores arrive by 14:30 onMonday afternoon. The distribution centerprocesses them by 16:00, and ships them outat 03:00 Tuesday morning. The freight arrivesand clears customs on Wednesday morning,and is delivered to the stores the same after-noon.Customers can buy most of Zara’s garments insix colors and seven sizes. The Zara stock-keeping system handles about 300,000 newitems each year. Not surprisingly, airfreight

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“HALF OF THE SHIPMENTS FLOWN OUT OF ASIA WEREORIGINALLY SUPPOSED TO BE SHIPPED BY SEA.”

cated responsibilities for the regions by March andthe first-level country organizations by July.

CULTURE CLASH

In both mergers, the companies involved mustabsorb differences in business cultures and philoso-phies. While Exel’s focus was on supply-chain solu-tions, forwarding was center stage at DHL Danzas.This not only produced different customer profiles,concentrating the large clients at Exel, but also affect-ed accounting and performance metrics. Exel meas-ured profitability on the country level, while DHLmeasured it on products and branches. “Exel has amore integrated sales approach, whereas DHL hasbeen more product-focused,” Mr. Fahy says.

The Schenker-BAX union has little overlap in tradelanes and customers, which could make for an easierintegration in theory, but it still faces a challengemerging corporate cultures. Schenker has fosteredan entrepreneurial style by empowering its employeesover the years. BAX has exerted central control, dueperhaps to the structure of its air and ground networkin North America, Dr. Lieb suggests.Mr. Fahy sees room for different philosophies to co-

exist, but not in terms of process. The merger withExel follows the processes of DHL, rather than mixingthe two companies’ approaches and portfolios. TheDHL Danzas organization and processes form thematrix for DHL Global Forwarding, the name of thecombined DHL-Exel entity. But some decisions areunresolved in Asia, says Mr. Fahy. “Exel was powerfulin Asia. In some countries there, where we were simi-lar in size and strength, we must still define ourapproach.”

IMERGE

On the IT side, the migration is straightforward: Exel isshifting to DHL’s Logis system. This has improved theproductivity of Excel employees by 8%, Mr. Fahysays. Exel will also adopt its partner’s service portfo-lio.The Schenker-BAX axis is also moving towards acommon platform. “There will always be specificbrands in North American or European LTL,” says Dr.Lieb. “However, ‘BAX goes Schenker,’ as the adver-tising slogan says. There will be only one air and onesea freight brand in the end.”Both Schenker-BAX and DHL Global Forwardinghave the muscle to use dedicated freighters. Theysee opportunities, but both Dr. Lieb and Mr. Fahy

stress that working with commercial carriers remaintheir first choice.Both men contemplate closer tieswith preferred carriers. Some adjustments will tran-spire in the months ahead, but they expect their basicstrategies to remain intact, including tie-ins at the cor-porate level. Gateway strategies will also endure, butwith some adjustments over time. “It will take 18 to24 months before we have resolved the gateway set-up,” Mr. Fahy says.Airlines view mega mergers with apprehension: newbuying power may mean adjustment in capacity andrates. Mr. Lieb dismisses such concerns, pointing outthat the Deutsche Post World Net is the only for-warder commanding a double-digit share of airfreightspending.“Both DHL and Exel believed that they didn’t need tobe aggressive on rates,” Mr. Fahy says. “We wereand will continue to be aggressive about perform-ance, security, reliability, and standards.”Senior executives at DHL Danzas and Exel advocat-ed Cargo 2000. Mr. Fahy does not intend to presentcarriers with an ultimatum to meet those standards.Instead, he is looking outside the airline-forwarderaxis for solutions. Being married to an integratedexpress carrier offers him insights into advancingtechnologies like RFID. “If we can’t move ahead withthe industry, we may move ahead by ourselves.”

Mergers are not for the faint of heart, especially whenthey involve multinational corporations and thousands ofemployees and customers. A colorful blending of twologos on a dinner napkin has, in reality, far-reaching andoften unforeseen consequences for customers, staff,and management. Ian Putzger looks at progress in twoof our industry’s active mergers.

BY IAN PUTZGER

■ Combining Exel and DHL Danzas involves 950separate integration projects. Schenker and BAX setup no less than 14 integration teams for cross-func-tional and administrative areas. Nearly all of the board members in these companiesare involved in the steering committees for their glob-al integration, reflecting the need for top managementto lead in process, says Dr. Thomas Lieb, head ofSchenker’s global air and sea freight, and a memberof its management board.Mindful that a focus on integration invites competitorsto poach customers, the wedding parties in thesetwo marriages all want to complete their unionsquickly. It’s not always possible. Besides the planningand execution of a merger, DHL must also develop along-term strategy based on discussions with parentDeutsche Post. “Forwarders do not normally plan a strategy in themiddle of an integration,” says Chris Fahy, ChiefExecutive and President of the DHL forwardingorganization.

Still, after mapping out basic integration strategies,both the DHL-Exel and Schenker-BAX began with asimilar route: they allocated senior managementresponsibilities first. DHL had determined all manage-ment positions by February, while Schenker had allo-

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Thomas Lieb:“Forwarders do notnormally plan a strategyin the middle of anintegration.”

Chris Fahy: “Exel has a more integratedsales approach, whereasDHL has been more product-focused.”

MATCHING

SaturdayDUBAISaturday is the start of the working week inDubai. It usually takes me 10 minutes todrive from my home to the office at the air-port, although it can take half an hour inheavy traffic. I arrive at 07:30, but before I go into the office, I check around the cargovillage just to see what is going on. Once inthe office, my secretary lists my meetingsfor that day, so I can prepare for them. ThenI check my email, before opening my officefor staff to come in and discuss their needs,whatever approvals they require, and so on.Government sector working hours are07:30 to 14:30 so I normally do not take alunch break. When I leave the office, I gohome. I check my email again in the after-noon and evening. Dubai Cargo Villageoperates 24 hours a day.

SundayDUBAIMy first task today is to give instructions tomy staff. I have an offsite meeting with thePolice Department, one of our regular meet-ings with partners at the airport, like thecustoms and immigration departments.Then it is back to the office to receive a del-egation of 20 people from Singapore. Theyare representatives of logistics companieswho have come to see how they can dobusiness in Dubai. Afterwards, it is back tothe office to be interviewed by a journalistwriting a feature about air cargo. Finally, Ihave a meeting in my capacity as Chairmanof the FIATA (International Federation ofFreight Forwarders Associations) 2007

World Congress in Dubai. I meet with themanagement of that event, to discuss thepromotional items we are going to presentto the 2006 World Congress in Shanghaithis September. Then I head home, and lat-er catch up with my email.

Monday DUBAI/ISTANBUL/TUNISFollowing my normal workday routine, Ihave a weekly meeting in the office with allthe other Department of Civil Aviation direc-tors. We discuss business at the airport andfuture developments. Typically, I wouldspend the rest of this day receiving visitorsand dealing with routine business matters.However, today I fly to Tunis for a two-dayFIATA Region Africa Middle East FieldMeeting. I take the four-and-a-half hourflight to Istanbul, where I transfer to the two-and-a-half-hour flight to Tunis.

TuesdayTUNISI spend the day in the RAME meeting with60 delegates from 15 countries. If I were inDubai, I would usually meet with other car-go village managers to keep them informedabout the items discussed at the Mondaydirectors’ meeting. They also report to meabout the day-to-day activities under theirresponsibility.

WednesdayTUNISThis is the second day of the RAME meet-ing. Back in Dubai, this would be a normal

working day in the office, although I wouldalso try to find time to visit colleaguesaround the airport, to keep up with what is going on.

Thursday TUNIS I spend the day talking informally with otherFIATA delegates in Tunis, to keep up thepersonal contacts that are so important inour business. In Dubai, Thursday is the firstday of the weekend, so when I am there Ilike to spend time on personal and familymatters. I have a wife and six children, rang-ing in ages from 6 to 21. I sometimes takemy family out to my small farm in Dubai forthe weekend. Other times, we go swimmingat a club of which I am a member. In thepast, I used to be very busy with work. Then I realized that I needed to change and spend more time with my family.

FridayISTANBUL/DUBAIOn the way back from Tunis, I have tochange planes in Istanbul, so I spend theday there, looking round the city and the air-port cargo village. I take an evening flightback to Dubai and return home. On a nor-mal weekend in Dubai, I would usuallyspend the first part of the morning at homebefore going to the mosque with my chil-dren for Friday prayers. Most of the rest ofthe day would be spent with other membersof my family. Normally, we meet for lunch atthe homes of various family membersaround Dubai, and stay there until sunset,when everyone heads home.

ALI KHALFAN AL JALLAF Ali Khalfan Al Jallaf has been the Director of the Dubai Cargo Village in the United Arab Emirates since 1995. Last year, throughput at this airport facility, which falls under the auspices of the Department of Civil Aviation of the Government of Dubai, totaled 1.3 million tons of cargo; 18% more than in 2004.

by PHILLIP HASTINGS

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■ On October 24, your booking options will doublewith AF-KL Cargo. On that day, your AF-KL Cargocustomer service representative will begin using theUnique-Voice Portal (UVP) to offer you the bestroutes, schedules and prices for your shipment. Thisnew software will offer a combined overview of allchoices available in both the Air France Cargo andKLM Cargo networks. “The first and most important thing our customers willnotice about UVP is improved efficiency,” says Jean-Charles Foucault, SVP of Sales & Distribution at AF-KL Cargo. “It gives our people better information sothey can give customers better answers. It helpsspeed up our handling of their requests or, if thatrequest cannot be fulfilled with one carrier, to immedi-ately offer alternative solutions with the other.”With UVP, your representative can also reviewaccount information, contracts and allocations withyou. In addition, with the aid of new pricing software,he or she can book your shipments in either the AirFrance Cargo or the KLM Cargo reservations system. “Another benefit for customers is that UVP gives theservice representative information on all flights andcapacity,” says Mr. Foucault. “Having access to thisdata during the last few days before departure, willallow him to contact his customers and offer themoptions he knows they want. This is especially useful

for customers who need to access our capacity andfrequencies during the high season.”“We have a proactive relationship with our customersand use the phone for this kind of selling,” Mr. Foucault adds. “But that doesn’t mean we won’tcontinue to develop e-tools and continue using CPSand GFX, giving our customers a choice. E-bookingis still part of our strategy.”

TWO FOR ONE

“UVP is the first result of the AF-KL Cargo integrationthat customers can actually experience,” says ClaudeSereno, SVP of Strategy & Development at AF-KLCargo. “The name signifies our unique voice to eachcustomer, about the way we respond to the requestfor capacity. Still, it is only the tip of the iceberg, thefirst visible part of the AF-KL Cargo integration thatbegan in 2005, and the first result designed andimplemented by our program management organiza-tion.” “UVP will use core modules of the joint future cargoreservation system,” Mr. Sereno continues. “We hadto complete two of these modules first - the ratingand pricing database and the customer database -before we could implement UVP.”

“The new application, called a web portal, is suppliedby Unisys on contract,” explains Mr. Sereno. Portalsuse web technology to gather data from manysources and display them in a single workspace onscreen. When an AF-KL Cargo customer service rep-resentative enters a capacity request, UVP relays it todatabases in both the Air France Cargo and KLMCargo systems. UVP integrates the responses andsorts them into a single schedule. When the repre-sentative enters the customer’s name, UVP adds rat-ing and pricing information from the airline systemsonto the display. Then, after selecting a service, therepresentative uses the UVP screen to access thereservation system of both airlines and book the shipment.

EXPRESS LANE

“UVP is an application that will be used in remotelocations, in any market, offering access to the legacysystems of both carriers,” says Mr. Sereno. “It was amajor challenge to achieve response and perform-ance levels that will satisfy end users wherever theymay be.”Data traveling between the end user and the legacysystems takes a longer path when it goes through

UVP than when it travels over a direct link. Also, someof the data needs translation between formats usingweb technology called XML. Therefore, the airlinesgave considerable attention to avoiding Internet con-gestion and reducing translation time.

The result for your AF-KL Cargo customer servicerepresentative is a responsive system that simplifieshis business with you. It is also an important step for-ward in merging the former Air France Cargo andKLM Cargo organizations into a single team, present-ing one face to the customer.

Forwarders will begin to taste the fruits ofthe integration of the Air France Cargo andKLM Cargo automation systems inOctober. The Unique-Voice Portal will, during a single phone call, give informationon schedules, routing options and ratesfrom the reservation systems of both airlines. This marks the first milestone in the evolution of the joint future cargo reser-vation system for AF-KL Cargo.

BY MARK W. LYON

Claude Sereno:“UVP will use coremodules of the jointfuture cargoreservation system.”

Airport Schiphol, AmsterdamAirport Charles de Gaulle, Paris

Jean-Charles Foucault: “It gives our people better information sothey can give customersbetter answers.”

UNIQUEVOICEPORTAL©

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LIVE■ The Air France-KLM CargoInternet site went live recently,combining information aboutboth airline networks and services in one place and making online searches easier and faster. Merging thetwo airline websites was seenas a milestone in the AF-KLCargo integration. Site access for customers inthe US is redirected automati-cally to a KLM Cargo USA siteor a US Joint Venture site for Air France Cargo.

www.afklcargo.com

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26 cargovision | SEPTEMBER 06 cargovision 27

SEA FREIGHT BENEFITSMs. Aysecan HakverdiogluTurkey Operations Manager Eagle Global Logistics/TurkeyIstanbul

“Some 80% of our airfreight is bound for America,with increasing exports of aero, automotive and com-puter products, compensating for the decline in tex-tiles and garments. Pharmaceuticals, computers andgeneral supplies are the main imports. More of ourclients look for the sea freight cost advantage wherepossible, unwilling to pay ever-increasing air sur-charges. If the trend continues, clients will soon focuson airfreight for long-haul flights and time-sensitiveand domestic deliveries only. I believe, however, thatTurkey’s stability will enable it to be an excellent logis-tics gateway, rivaling Dubai and the Gulf States. I caneven see Istanbul taking over Holland’s present roleas an IT logistics hub.”

INDUSTRY CONCERNSSinan Mutlu, Country ManagerBalship Hava Ve Deniz Tasimacilik Tic. A.S.Istanbul

“Many industry concerns date back to early 2005,when airfreight rates changed from being quoted in

US dollars to euros. The move was inflationary and car-go uplift declined, causing airlines to slash rates andchase after each other’s market share. This is theTurkish airfreight market today, where yield margins arebarely sustainable. A return to stable rates is needed,and we need to stem the loss of production output tocountries like China, which offer incentives to exportmanufacturers. We should do the same by encouraginglocal businessmen to stay at home and invest in east-ern Turkey, where the operating cost base is much low-er than around Istanbul.”

TURBULENT TIMESMehmet Eraltan Local Manager Turkey, Israel, Bulgaria andRomania, Air France Cargo-KLM CargoIstanbul

“Airfreight in Turkey is facing turbulent times. Air exportshave bled due to the loss of manufacturing capacity toChina and other low-cost countries, a strong lira, andlocal exporter production problems. More recently, thesituation has been compounded by working in tempo-rary cargo buildings, the return of inflation, and suddenlira devaluation. Yet out of adversity opportunities areborn. Both Air France Cargo and KLM Cargo havebeen able to stay on a steady course in Turkey throughtrusted service standards, reliability, and, most impor-

tantly, long-standing ties with shippers and forwarders.I am optimistic that Istanbul will meet the conditions tobecome a regional transit and logistics center.”

DOGFIGHT MENTALITYUfuk (Frank) Sumerler Regional Director Airfreight - Middle East, Central Asia & TurkeyKuehne + Nagel Nakliyat Ltd. Sti.Istanbul

“I am hopeful that the catastrophic airport fire will be acatalyst for much needed change. Already, the previ-ously on-hold ‘Cargo Village’ proposal for Istanbul’sAtaturk International Airport has been revived. We con-tinue to serve global customers pragmatically, but wewant to reach out more, particularly in vertically inte-grated sectors such as pharmaceuticals and high-tech.But local industry practices are often restrictive, out-moded, and some are exorbitantly expensive.Progressive industry players are lobbying hard to

change the dogfight mentality. Above all, standardsneed to match Europe.”

ORDERS DELAYEDSuleyman R. TureManaging Director - TurkeyExpeditors InternationalIstanbul

“This summer’s lira devaluation and the return of 12%interest rates are noticeably affecting imports. Localbuyers are delaying orders and adopting a ‘wait-and-see’ attitude. Such market sentiments cut deeply in thiscrowded expeditor marketplace with poor margins.Textiles and garments, a staple Turkish air export toNorth and Central America, is declining. To sustainorganic business growth, we are successfully promot-ing Balkan exports to North America via Istanbul. Weare applying a similar strategy for freight movements toand from the Turkish speaking markets of Uzbekistan,Turkmenistan and Kazakhstan.”

TURKEYBY GERRY BROWN

NEED TO KNOW

■

Turkey: Secular Republicsince 1923. ■

Population: ± 70 million.■

Economy: On October 3,2005, accession talks formallybegan to join the EU. ■

The path to membership isexpected to be long andbumpy. Strong activity in theprivate sector continues toboost the economy and GDPgrowth is expected to remainabove 6% in 2006 and 2007.But recent problems see thereturn of high inflation. To sustain growth the govern-ment has to ensure domesticand international confidencewith credible macro-econom-ic policy and a regulatoryframework that can cope withpotential financial risks.

Sources: OECD and Oxford Business Group

TRAVEL TIPS

■

Personal relationships arehighly rated, and no visitorshould come straight to thebusiness in hand withoutexchanging a few friendlywords first.■

Turks prefer to communicatedirectly, so you are advised tophone rather than write tocontacts.■

In the cities, both men andwomen should dress as theywould under similar condi-tions (social situation, climate)elsewhere in Europe.■

Punctuality is expected andappreciated in Turkey.■

Always allow enough timebetween meetings - 2 to 3hours minimum.■

Hours are likely to vary duringthe month of Ramadan.■

Friday is the Muslim holy day.■

Government office hours aregenerally between08:30/09:00 and 17:30/18:00Monday to Friday.

Source: www.a-zoftourism.com

cargovision country file

Daily life in modern turkey (above & below)

A reflection extends the minarets on Istanbul’s Blue Mosque.

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AIRFREIGHT AND SEA FREIGHT -COMPETING MODES?

■ The first half-year of this year saw slower growth inairfreight Figure 1, although it was still higher than thesame period in 2005. The world’s economy and tradeare feeling higher oil prices and rising interest rates.Most analysts expect growth to lag during the next 18months, especially for the US economy.

■ Airfreight industry growth this year, 4-6%, is concen-trated among airlines Figure 2. Emirates is still thefastest growing airline in the industry, and another air-line from the Middle East, Qatar Airways, is now also inthe top-10. The other airlines that contributed most togrowth are the majors from the top-5, plus FedEx,UPS, and Air China. China still drives airfreight growth,although the Middle East and Africa are now contribu-tors, because of their rising incomes due to oil exports.

■ However, the rapid growth of ocean container ship-ping is also affecting the airfreight business Figure 3.Airfreight grew faster than sea freight until 2000, whenthe situation changed dramatically. Suddenly, Chineseproduction created an enormous demand for oceancontainers to move its export goods to Europe, theUSA, and Japan.

■ The ship-building industry was not slow to respond.Many ocean lines placed large orders for super-sizedcontainer ships. Builders will deliver most of these10,000 twenty-foot-equivalent-unit behemoths duringthe next four years, potentially increasing ocean capac-ity by 50%. The much lower buildup in airfreight capac-ity Figure 4 will expand the gap between sea and air-freight availability, and bring greater pressure on ratesfor both modes.

■ Ocean shipping is highly concentrated Figure 5 andat the same time more liberalized than airfreight. Thereare no state-owned shipping lines. Mergers are notsubject to bilateral treaties and their number is increas-ing. Today, 10 shipping companies hold 66% ofcapacity, but this is likely to concentrate even more inthe future. Amazingly, the largest companies are fromcountries with no ports, like Switzerland, or few ports,like Denmark. European companies are more dominant than in theairfreight industry, and the US, the world’s largestimporter, clearly lags behind in both modes. Twoocean companies also have airfreight interests: Ever-green International Corp. of Taiwan, with EVA Air, andHanjin Group of Korea, with Korean Air.

■ There are similarities in traffic patterns when you com-pare the world’s largest ocean and airports. Figure 6.Asia dominates ports in both top-10 categories. Thisresults from a large export flow from China and from alarge flow of transfer traffic through the ports of Busanin Korea, Kaohsiung in Taiwan, and Singapore. Similartrends are taking place at airports like Singapore andSeoul, but the impact on the total figure may be lower.In Dubai, transfer traffic is a major flow, even betweensea and air. Although Dubai airport was not in the top-10 of 2005, it will be in the future. The inferior positionof the USA is noteworthy in both modes: only oneocean port, Los Angeles at number 10, and no air-ports. The USA’s largest airport for international trafficis Miami, which is its gateway to Latin America.

28 cargovision | SEPTEMBER 06 cargovision 29

cargovision market monitor

Growth in container shipping has been well over 10% since 2000. However, in airfreight, it was below 6%. Manyproducts use both modes. As air transport gets more expensive, forwarders often shift to sea freight to keep costunder control. How will these two modes compete in the near future?

BY DICK VAN DEN BERG AND MARK W. LYON

Major Scheduled Airlines - Global Freight Traffic Growth

-5%

0%

5%

10%

15%

20%

Apr ë06Apr ‘03 Jul ‘03 Oct ‘03 Jan ‘04 Apr ‘04 Jul ‘04 Oct ‘04 Jan ‘05 Apr ‘05 Jul ‘05 Oct ‘05 Jan ‘06

Ann

ual G

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th

Growth - Quarter vs Quarter previous Year

Average Growth of Last 3 Years = 6.9%

Growth - Month vs Month Previous Year

10 Airlines with Largest Increase in FTK1st half 2006 vs 2005

FTK (000)

0 100,000 200,000 300,000 400,000 500,000

UPS

Quatar Airway

Air China

Lufthansa

AF-KL

FedEx

Cathay Pacific

Singapore AL

Korean Air

Emirates

Sea vs Air: Growth of teu’s and FTKIndexed - 1992 = 100Sources: ICAO and John Monroe Consulting

400

350

300

250

200

150

100

Sea Freight (teu)

Air Freight (FTK)

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

Opening up of China

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2007 2008 2009

Sea vs Air Freight - Forecast Growth Sources: IATA (FTK) and BRS (teu)

Air Freight (FTK)

Sea capacity (teu)

Airlines and Shipping Lines - Top 10 in FTK and teu (20%)

Japan Airlines (JP)

British Airways (UK)

Cargolux (LU)

EVA Air (TW)

FedEx (USA)

China Airlines (TW)

Cathay Pacific (HK)

Lufthansa (DE)

Korean Air (KR)

AF-KL (FR-NL)

NYK (JP)

COSCO (CN)

Hanjin-Senator (KR)

NOL-APL (SC-USA)

CSCL (CN)

Hapag Lloyg-CP (DE)

Evergreen (TW)

CMA-CGM (FR)

MSC (CH)

Maersk (DK)

0% 5%

World Market Share

10% 15% 20%

Top 10 airlines in International FTKTop 10 have 49 % market share

Top 10 container shipping lines in teuTop 10 have 65 % market share

Sea Container Ports and Airports - Top-10 in 2005

0 -

5,000

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10,000

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20,000

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Singap

ore

Hong

kong

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hai

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hen

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iung

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gDub

ai

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Kong

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oSeo

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kfurt

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x 1

000

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Sea Container Ports - teu Airports - International tons

Figure 1

Figure 2

Figure 3 Figure 4

Figure 5 Figure 6

Published by

AF-KL Cargo Communication

P.O. Box 7700

1117 ZL Schiphol

The Netherlands

Christelle Dufour Theuws

dufourtheuws@cargovision.org

Kirsten Hemmer

hemmer@cargovision.org

Concept & Realization

vdBJ Communicatie Groep,

Bloemendaal

The Netherlands

vdbj@cargovision.org

www.vdbj.nl

Editor in Chief

Mark W. Lyon

lyon@cargovision.org

Project Manager

Urtha Ririhatuela

ririhatuela@vdbj.nl

Art Direction

Sok Visueel Management

Amsterdam, the Netherlands

Editorial Office

Vijverweg 18

2016 GX Bloemendaal

The Netherlands

Tel: +31(0) 23 541 17 01

Fax: +31(0) 23 541 18 01

Circulation Manager

Herman Brijssinck

Tel: +32 2752 90 51

Fax: +32 2751 77 59

brijssinck@cargovision.org

AF-KL Cargo © SEPT 2006

Volume 21 Number 26

30 cargovision | SEPTEMBER 06 cargovision 31

Cargovision is the management magazine of AF-KL Cargo. Its function is

to disseminate information on transport, distribution, logistics, informa-

tion services, and general business developments. The editorial opinions

expressed in the magazine are not necessarily those of AF-KLM.

Reproduction in whole or in part without written permission is prohibited.

cargovision postscript cargovision information

SUBSCRIBER SERVICES

Cargovision is published quarterly by AF-KL Cargo and mailed to subscribers in almostevery country.

Please visit www.cargovision.organd click on the Subscribe icon. You will be able to:

■ Sign up for a free subscription

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You can also change your address by sending a fax with the subscription number found on the Cargovision mailing label to: +32 27 51 77 59.

H2 OR C2H6O?

■ A tiny hydrogen fuel-cell car, complete with its ownminiature solar-powered refueling station, went on salethis summer in China. Horizon Fuel Cell Technologiesof Shanghai wants your children to see that hydrogenfuel cells are a promising technology that can eventual-ly replace gasoline guzzlers.

Full-scale hydrogen cars exist as prototypes, but noone yet knows how to make them affordable or practi-cal. However, US$ 80 buys you a scale model ofHorizon’s H-Racer and fueling station. The car’s fuelcell uses an electrochemical reaction to produce cur-rent and power the toy’s electric motor. The cell produces electricity, heat, and water. Solarcells in the refueling station produce the electricity toextract hydrogen from water. A small balloon in the carholds the fuel. No word on its speed yet, but the manu-facturer plans to scale up into something you can actu-ally drive.

Meanwhile, in southwest France this summer, a teamof engineering students from the Lycee La Joliverieused an ethanol-powered, home-built vehicle to out-distance a hydrogen-powered vehicle, along with 250other entrants, in this year’s Shell Eco-marathon. Theethanol-powered winner achieved 6,786 mpg, whilethe hydrogen-powered runner-up achieved 6,548mpg. Since both these technologies are more likely to showup in forklifts and airport tugs than they are in aircraftduring our lifetimes, let us propose an airport ground-service vehicle race. We could nominate Dubai to hostthe AGSV event, maybe in conjunction with a golf tour-nament or camel race. Teams from any airport wouldbe eligible, provided they consist entirely of nationalsand vehicles employed in day-to-day work. It wouldgive the manufacturers of this equipment a venue toshow off their wares. But what odds can we get on thecamel? ■

HERO OR GOAT?

■ Nearly 200 firms in Sialkot, in the Jammu-Kashmirof Pakistan, sewed 63 million footballs for the 2006FIFA World Cup. Most of them traveled to Germany bysea, but 10%, about 3,000 tons, deflated and returnedby truck to Lahore and by Lufthansa Cargo flight to thehost country.Did the event really use that many balls? Who has themnow? We know that Argentine president NestorKirchner has the red card that sent Zidane off the fieldin the final. It was an autographed gift from the match’sArgentine referee Horacio Elizondo.It’s possible that Marco Materazzi received a trophy ballas part of the new four-year contract he signed withInter Milan. More likely, Zidane was given some to handout during his three hours of humanitarian work forFIFA.Okay, I was dumbfounded, like everyone else, watch-ing the blow on TV. But decided after a while that aman’s gotta do what a man’s gotta do - one billionviewers and French victory be damned. A fine displayof personal honor, dontcha think? ■

TURKEYS SHOULD NOT FLY

■ ‘T was a hot day in July when a commercial turkey breeder in Canadadelivered 144 boxes of turkey chicks to Northwest Airlines Cargo for ship-ment to another breeder in California. In spite of instructions to split theshipment between two aircraft, cargo handlers put all of the fowl on a singleflight to San Francisco. Only 1,900 of the 11,500 chicks did not succumb toheat stroke or suffocation during the four-and-a-half hour flight.

To make up for the loss, the Canadian breeder sent another 9,000 chicksthe following week. This time, he ordered them sent on three Air Canadafights. One of those planes had to land in Las Vegas, and the birds spentthe afternoon on the tarmac in the 108F heat. Eventually, they took anAmerica West flight to San Francisco, but by then 2,200 were either deador dying, and wound up in a trash compactor.

The consignee filed a $107,000 claim against Northwest. Northwest apolo-gized to the shipper and said it was taking steps to educate its handlersand avoid similar mishaps in the future. The local branch of the Society forthe Prevention of Cruelty to Animals is pondering whether to file animal cru-elty charges against Northwest. Meanwhile, 40 confused turkey chicks arelooking for homes in the San Francisco area. ■

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32 cargovision | SEPTEMBER 06