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Mar 13, 2018 - This month, IATA released its five-year airfreight de- mand forecast and pro- jected that total airfreigh
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IATA SEES A ROSY FIVE YEARS AHEAD, WITH MODEST AIR CARGO GROWTH THROUGH 2022 By Caryn Livingston This month, IATA released its five-year airfreight demand forecast and projected that total airfreight traffic, measured in freight tonne kilometers (FTKs), will see growth averaging 4.9 percent each year through 2022, on the prospect of continued opportunities arising from e-commerce and other high-demand commodities.

After a wildly successful 2017, it appears that the airfreight business is headed down the same path, not just for this year, but for the next five.

The new forecast represents a slight increase over the actual compound annual growth rate (CAGR) of 4.7 percent at which FTKs grew each year from 2012 to 2017, but a significant decline from the 9 percent average y-o-y increase in FTKs for 2017. However, if, during the fiveyear horizon, trade growth resumes at its pre-global-financial-crisis level, IATA isn’t ruling out the possibility

CARGO IN 2017: IT WAS A VERY GOOD YEAR By Glyn Hughes, Global Head of Cargo, IATA Welcome to Dallas for the 12th World Cargo Symposium (WCS). It’s incredible to think that a full year has passed since we were last together in Abu Dhabi. But what a smashing year it has been for air cargo.

mand grew by 9.0 percent — twice the pace at which world trade expanded (4.3 percent) in 2017. And as capacity only rose by 3.0 percent, we saw significant improvements in load factors, revenues, and yields.

The industry posted its strongest performance since the rebound from the global financial crisis in 2010. De-

Over the same period, air cargo carried 59.9 million metric tonnes of

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[Continued on p5]

that FTK growth could instead average as much as 9.5 percent per year. Historically, the relationship between global gross domestic product (GDP) and goods trade growth has been key to airfreight demand, with global goods trade growing at twice the rate of global GDP. But since the 2008 financial crisis, the 2x multiplier has gone, and global goods trade has only grown in line with global GDP. The global GDP growth that helped support robust airfreight volumes through 2017 is expected to remain steady over the next five years, according to forecasts from the International Monetary Fund (IMF). The IMF predicts 3.1 percent GDP growth between 2018 and 2022, up from 2.8 percent over the past five years. Whether or not growth in global goods trade will return to pre-crisis levels remains to be seen, IATA said, [Continued on p4]

TUESDAY • MARCH 13, 2018

CONTENTS

Careen: Changing Faces, Changing Cargoes

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Tuesday’s Schedule

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Southwest to launch SCS, international routes

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Smart Facilities update

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March 13, 2018

WCS Daily Report

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American Airlines Cargo and the Flight Symbol logo are marks of American Airlines, Inc.

©2018 American Airlines, Inc. All rights reserved.

World Cargo Symposium DALLAS, TX

DAILY REPORT

CHANGING FACES, CHANGING CARGOES By Nick Careen, Senior Vice President Airports, Passenger, Cargo, Security, IATA This year’s 12th World Cargo Symposium (WCS) promises to be bigger and better than ever before in terms of content, discussion, workshops and innovations. Some of 2018’s featured topics at WCS include the transport of dangerous goods (DG), IATA’s new CEIV Live Animals program and the next generation of air cargo leaders. Today, dangerous goods shipments account for around 5 percent of the more than 25 million annual air cargo shipments. With airfreight set to grow at 4.9 percent per year over the next five years, the number of DG shipments is also projected to rise, and add to current challenges dangerous goods pose to the air cargo industry. For the industry to accommodate this growth efficiently, the digitalization of the supply chain must accelerate. In this regard, we have two exciting announcements at this year’s WCS. The first is the launch of DG AutoCheck, which will take place at the IATA booth on Wednesday, March 14, at 10:30 a.m. The second is the launch of e-DGD, which takes place at the end of the Dangerous Goods track later that day at 5:30 p.m. Like dangerous goods, more precious cargo presents its own unique challenges. Animal owners and shippers rely heavily on airlines to transport live animals, and guaranteeing the welfare of these animals as they fly round the world is essential. IATA’s new Center of Excellence for Independent Validators (CEIV) Live Animals program will give stakeholders across the air cargo value chain access to a global certification and common audit process, ensuring that stakeholders operate to the highest standards in the transport of live Subscribe to Air Cargo World at: AirCargoWorld.com/subscribe

animals. The CEIV Live Animals program will launch at the IATA booth on Wednesday, March 14, at 3:30 p.m. Other highlights at this year’s WCS include the latest installment of the FACE (Future Air Cargo Executives) program — which is quickly becoming the place for future industry leaders to connect. CargoIQ will also be

holding a summit to highlight the benefits that quality and dynamic shipment management can bring to the industry’s commercial offering. Get more details on DG and CEIV announcements and the FACE UP finalists in Thursday’s Daily Report. I wish you a successful WCS.

OPENING PLENARY SCHEDULE – TUESDAY, MARCH 13 9:00 – 9:10

• Lucas Kuehner, Global Head of Air Freight, Panalpina Management Ltd Moderated by Glyn Hughes, Global Head of Cargo, IATA

Official WCS 2018 Opening with a Traditional Cultural Performance

9:10 – 9:30

12:30 – 14:00

Host Airline Welcome Jim Butler, President, SVP International and Cargo, American Airlines

Networking Lunch

14:00 – 14:30

CITES: Air cargo and the fight against illegal wildlife trade John Scanlon, Secretary General, CITES

9:30 – 9:50

Keynote Speech Tom Overacker, Executive Director, Office of Field Operations, US CPB

14:30 – 14:45

Spotlight on safety and security Nick Careen, SVP, Airports, Passenger, Cargo and Security Division, IATA

9:50 – 10:10

Cargo: The year in review Glyn Hughes, Global Head of Cargo, IATA

14:45 – 15:00

10:10 – 10:30

Economic outlook: Will the positive growth continue? Brian Pearce, Chief Economist, IATA

10:30 – 11:15

Technology innovation in safety and security screening Jennifer Haigh, Aviation Security Consultant

15:00 – 15:15

Networking Break WCS Exhibition Hall

The advantages of canine screening for air cargo Brandon Fried, Executive Director, The Airforwarders Association

11:15 – 11:35

15:15 – 15:45

Geopolitics and Global Trade: New Realities Brian Clancy, Managing Director of Logistics Capital & Strategy, LLC (LogCapStrat)

11:35 – 11:55

Air Cargo 2017: A record year! Marco Bloemen, Managing Director, Seabury Consulting

11:55 – 12:30

Panel Discission eCommerce: embracing the opportunity • Liam O’Sullivan MILT, Director Operations, International Post Corporation (IPC)

Motivation Speech… Business and pro sports sharing a winning formula Drew Pearson, Dallas Cowboys (Retired)

15:45 – 16:00

Chairman’s closing remarks Glyn Hughes, Global Head of Cargo, IATA

16:00 – 16:45

Networking Break WCS Exhibition Hall

March 13, 2018

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World Cargo Symposium DALLAS, TX

DAILY REPORT

SOUTHWEST TO LAUNCH NEW CARGO SUITE SYSTEM, FLY INTERNATIONAL ROUTES By Caryn Livingston

The airfreight sector, long known for being slow to adopt new technology, is making moves to catch up with the times, carrier by carrier. One example is based right here in Dallas – Southwest Cargo – which plans to not only implement a new point-of-sale system this month, called Southwest Cargo Suite (SCS), but will also begin international cargo service for the first time in its history. The biggest change SCS will introduce to Southwest Cargo’s operations is the ability for cargo customers to book international or domestic cargo shipping space in advance. Advance booking will likely undergo pilot testing first and then be rolled out later. Other offerings with the new SCS will include interline cargo capabilities, with international cargo

transport options beginning in Mexico and expanding from there. “This system will replace a much older system from the 1990s,” said Wally Devereaux, senior director of cargo and charters at Southwest. “This has been an all-hands-on-deck effort.” SCS will also be able to handle electronic air waybills (eAWBs), Devereaux said, meeting IATA’s single-process methodology by completely phasing out paper air waybills. The system should also be ready for the eventual introduction of customer allotments, granting customers the ability to reserve space long-term, after Southwest Cargo completes more testing, he added. As it prepares for the SCS rollout, Southwest said it will educate its customers on the changes.

IATA SEES A ROSY FIVE YEARS AHEAD, WITH MODEST AIR CARGO GROWTH THROUGH 2022 but the potential shown by increases in e-commerce and pharmaceutical airfreight demand in recent years introduces uncertainty that could be a boon for airfreight demand.

The airfreight demand growth experienced by certain specialty cargo categories may eventually lead to “opportunities for airfreight to potentially decouple altogether from the link with global goods trade in future years,” IATA said. Because only a very small portion of overall goods trade volumes are transported by air – about 1 percent by volume, but 35 percent in value, according to IATA – even a minimal increase in that share over a short time would mean impressive overperformance for total FTKs, compared to current forecasts.

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By May, the SCS will be put to the test when the carrier begins serving select cities in Mexico, including Mexico City, Cancun, Cabo San Lucas/Los Cabos and Puerto Vallarta. Southwest also plans to add stops in Mexico and the Caribbean later in 2018. “We already have a large domestic cargo throughput, so the initial volume increase will be small,” Devereaux said. The bigger idea, he added, is to begin these routes now so that in five years or so, international volumes will be a substantial slice of its total cargo throughput. Southwest expects healthy trade on its routes between the U.S. and Mexico, with northbound flights likely moving perishables and southboound flights expected to transport pharma products and e-commerce. The carrier will refresh the SWAcargo. com website later this year to provide better mobile access, and introduce a new customer portal in 2019, adding a channel for online booking, invoice retrieval, eAWBs and more.

[Continued from p1]

“If the share were to rise by just 0.1 percentage points over five years, this would see airfreight growth outperform wider goods trade by around 2 percentage points each year,” the report said.

dustry-wide FTK growth. Get more details on how this outlook will affect airfreight at Tuesday’s Economic Forecast during the Plenary Session.

However, if that shift does not occur within the next five years, factors like economic performance of countries across major trade lanes will have a larger effect on in-

WCS Daily Report

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CARGO IN 2017: IT WAS A VERY GOOD YEAR

[Continued from p1]

goods, representing about 35 percent of global trade by value. That is equivalent to US$5.6 trillion worth of goods, annually, or $15.3 billion worth of goods every day. There can be no arguing with the economic and social benefits that the air cargo industry brings.

plore and agree how best to move the industry forward. Our theme of “Connect, Collaborate, Modernize” truly sets the agenda for what we all must do in order to align with tomorrow’s business and consumer needs.

of participation will be high. In fact, some of the work has already begun – I’d like to thank the industry standards-setting groups that have been here since the weekend and have already started their important work.

I am looking forward to a great week of discussions. As always, the agenda is packed and I am sure that the level

Prepare yourself to be challenged, excited and inspired. Have a great symposium!

In 2017, air cargo reinforced its commitment to modernization, positioning itself as the preferred mode of transport for the global economy’s high value-to-weight manufactured products such as microelectronics, pharmaceuticals, aerospace components and medical devices. A resolution was agreed upon at the 73rd IATA Annual General Meeting to accelerate the modernization and transformation of the air cargo industry. Customers were at the heart of the resolution that recognized the importance of partnerships in driving industry transformation, especially for an activity for which global standards are so vital. And slowly we are beginning to see progress. Industry participants are developing more customer-centric and predictable supply chains and enhancing shipping quality and service. This year, export orders are strong and e-commerce volumes continue to grow. But with growth comes additional challenges, and we anticipate a number of them to grow in significance as we move forward together. Congested airports, slot restrictions, capacity constraints, complex regulations, demanding customer expectations, increasing needs for data digitalization, rapid technology enhancements and the need to attract, retain and develop quality people are just a few of the challenges ahead. This year’s World Cargo Symposium will bring together more than 1,000 senior industry leaders, influencers and experts to challenge, debate, exSubscribe to Air Cargo World at: AirCargoWorld.com/subscribe

March 13, 2018

WCS Daily Report

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World Cargo Symposium DALLAS, TX

DAILY REPORT

CARGO FACILITIES WORKING HARDER, GETTING SMARTER IN E-COMMERCE ERA By Randy Woods Just what will the “Cargo Facility of the Future” look like? It’s a question that goes back a few years and, in this time of transition, it may take a few more years before the vision becomes clear. But the many logistics visionaries gathered here this week in Dallas will undoubtedly play a crucial role in the answer. In 2016, IATA launched its Cargo Facility of the Future initiative, a program tasked with exploring what a cargo facility may look like as air cargo keeps pace with technological changes. The concept came from IATA’s Simplifying the Business (StB) Cargo program, and from findings made by its “Smart Facility” project. Smart Facility aims to assess the current capabilities of cargo handling facilities against industry standards, with the intent to increase the capabilities of the industry through the adoption of best practices. During initial investigations of the Smart Facility program, IATA noted that, while there are some standards related to air cargo material handling, there were “significant variations in the application of these standards,” which led to conflicting understandings of capabilities globally. At the same time, the association concluded that “the industry struggles on the facility front – what equipment to

choose, what level of automation, what customer and goods flows will be important in the coming years.” Last year, IATA dedicated an entire track to the cargo facility of the future at the World Cargo Symposium (WCS), exploring the latest advancements in robotics, automatic identification, augmented reality and artificial intelligence. This year, similar themes of infrastructure, space considerations, new technology and process optimization will be discussed in the Cargo Operations track, to be held Thursday, March 15, at 9 a.m. Cargo Operations begins with an overview of the current state of facilities and the audits, compliance measures and standard practices. With this baseline understanding of standardized cargo operations, the track will explore how Smart Facility can improve transparency and support data-driven decision-making and milestone improvements. The session will include a “fireside chat” with two industry leaders — Dominique Perron of PwC, and Kester Meijer of KLM Cargo — who will explore how global companies with distant customer bases can still deliver airfreight locally. Meanwhile, Delta Air Lines’ Joseph Jensen will discuss how big data, predictive analytics and connected devices can all help improve customer service, safety and airline economics. On the groundhandling side, Victor Chin of WFS will

present a case study on how a global handler was able to implement a comprehensive change program. The session will close with a lively discussion about how the above themes can be combined to deliver the highest air cargo potential, featuring panelists Ashok Rajan with IBS Software Services; Wes Tucker of ACL Airshop; Steven Fox with the U.S. FAA; and David Clark of WFS.

The WCS Daily Report is published by:

Visit us at AirCargoWorld.com

Publisher:

JJ Hornblass • [email protected]

Editors:

Charles Kauffman • [email protected] Randy Woods • [email protected] Caryn Livingston • [email protected]

Contributors:

Katherine Kaczynska, IATA • [email protected]

Evangelia Lilian Spanos, IATA • [email protected] Creative Director:

Michael Archuleta • [email protected]

Advertising:

Tim Lord • [email protected] Chris Cope • [email protected]

Events & Marketing:

Molly Stewart • [email protected]

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WCS Daily Report

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