The Cargo Letter
Section A: Trade, Financial & Inland News | Section
B: FF World Air News |
Section C: FF World Ocean News | Section
D: FF in Cyberspace |
Section E: The Forwarder Broker World
- Domestic No -- Int'l Si ........ as the Air
Transport Association (ATA) announced that cargo
carried system-wide by the U.S. scheduled airlines declined
4.0% in March. The decline in cargo traffic was solely U.S. domestic,
falling 8.2%. But Int'l cargo increased 0.4%.
- Seattle Says Bye Bye Boeing .......... as it has
finally succeeded in
finding a home town for its new headquarters: Chicago -- but manufacturing will
remain where it is -- at Seattle. The Chicago, Dallas-Fort Worth, &
Denver metro areas were considered as potential locations for
the new world headquarters. By Sept. 4, Boeing plans to
begin operations in new headquarters at 100 N. Riverside
Plaza in Chicago. More, Boeing will open a new research
& tech center in Madrid, Spain, with an initial investment of around
US$10M. Boeing is also establishing a research relationship with the Polytechnical
Univ. of Catalonia in Barcelona.
- EU Cargo Warning ....... as on May 15 the European
Commission sent a legal warning to the Int'l Air
Transport Assn. (IATA) over airlines' system of
consulting each other on cargo tariffs which it considers anticompetitive.
Airlines claim they need to consult each other on prices to
enable them to perform "interlining" -- when
a piece of cargo is carried by different companies on
the same move. But the EU's competition watchdog is unconvinced.
"It is the Commission's preliminary view that IATA cargo
tariff conferences restrict price competition,"
it said. "Until now IATA has not succeeded in demonstrating
that this restrictive system is indispensable to provide customers
with efficient interlining services within the EEA (European Economic
Area)," the Commission said. In Feb. the Commission extended airlines'
exemption from EU competition rules to allow them to continue consulting
on prices for passenger tickets. Air freight used to enjoy a similar
exemption from competition rules but as this no longer exists IATA had
applied to the EU to allow its tariff consultation system. IATA has 2
months to respond to the EU's statement of objections.
- UPS Finger Against DHL --Continues Pointing
......... as Deutsche Post (DP), the German postal
service, won a major battle for DHL against packagedelivery rivals when the
U.S. Dept. of Transportation denied a petition thismonth to revoke its
freight forwarder license. DOT ruled that it would notlaunch a formal probe
of the ownership by DP of U.S.-based DHL Airways. ButUnited Parcel Service
says it was disappointed by DOT's decision allowing DHLWorldwide Express to
operate as a foreign freight forwarder in the U.S. Atthe same time, UPS
welcomed the DOT's decision to allow raising the issue inthe future should
evidence warrant such action. UPS challenged the license ongrounds that DHL
was controlled by DP. UPS said DP has a history of "abusingits monopoly
position through cross subsidies." Last March, the EU ruledthat DP
abused its monopoly power on 1st-class mail. UPS's challenge raisedpublic
awareness "of the unfair competitive practices of Deutsche Post,"
UPSsaid. UPS says a portion of the DOT's ruling showed the DOT agreed with
UPSover the risk of market distortion & unfair trading activity when
agovernment-owned entity attempts to compete against private companies. The
petition to revoke the Foreign Air Freight Forwarding License
(FAFF) of DHL Worldwide Express was urged by UPS, as
well as FedEx, the Transportation Trades Dept. of the
AFL-CIO, the Int'l Brotherhood of Teamsters, the American Trucking
Assns., the U.S. Chamber of Commerce & 291 members of Congress (calling
for either license revocation or reconsideration).
- Delta Pilot Strike Avoided ....... as the
operational threat ended this month, Frederick W.
Reid, currently Ex. V.P. - chief marketing officer, has
been named president & COO.
- Lufthansa Strike Continuing? ........ as carrier
& pilots union hold more talks about pay dispute
that has led to a very disruptive pair of 1 day strikes.
The parties have now agreed to arbitration -- strike "on hold."
- Atlas Air Start Up ........ as it has become a
minority investor in new UK-based cargo airline known
as Global Supply Systems Ltd. (Global) -- set up with
entrepreneur John Porter. The company will initially provide ACMI (aircraft,
crew, maintenance & insurance) leases of B-747 freighters to airlines
in the UK, out of London's Stanstead Airport. Global will commence in
late 2001 -- with initial customer British Airways, with a wet lease two
B-747-400s under a multiyear agreement. But -- as a darker
sign of the times, Atlas Air has cut 105 crew from
it's payroll this month, citing the current economic
downturn & weaker air cargo demand.
- Polar Air Cargo Slow Down ........ as it is reducing
costs across the board in response to weak world
market conditions. The company is reducing personnel
by about 10% -- reduction-in-force includes a furlough of approximately
24 crew members. In late word, Mike Snyder -- a 17 year vet & former
FedEx VP has become COO of Polar.
- Eagle Soars Lower As Sign of Times ........ as EGL
Eagle Global Logistics,
the Houston-based publicly traded forwarder, said May 13 that U.S.
shipment volumes in
March declined from a year 2000 & warned it will not reach
earlier volume & profit targets for this year. "Traditionally,
reflected a sharp increase in activity as compared to Jan. or Feb. by as
much as 20% in the
last 2 years," but this year's shipment activity did not reflect
that. EGL also indicated that some customers began converting shipments
from air to ground during the quarter. Priority shipments in N.
America declined 7%
in the 1st quarter from a year ago, while deferred shipments
increased 7%. March reflected a 2% decline in N. American priority
shipments compared to
- The China Cargo Merge ....... as perviously
reported in The Cargo Letter
forced consolidation has berthed an airline organization amalgamating
Shanghai Airlines, Shenzhen Airlines, Sichuan Airlines, Wuhan
Airlines & China Postal Airlines. The new group, to be called
Aviation Enterprises Group," will have assets of US$3.6B, operate 100
service over 500 routes. Last year these airlines achieved combined
sales of US$964M. This new arrangement allows airlines concerned to
retain identity while
working together in areas such as code sharing & transport
of mail. Look to the new line as a player in the PRC express &
- But Unrest For The Rest ....... as continuing
efforts to merge China's aviation
industry may be easier said than done. Critics cite flaws in the plan
by the Civil Aviation Administration of China (CAAC) to create 3 main
airline groups by condensing the
current 10 airlines that vie for trade in China.
The CAAC suggests that Air China, China Southern & China Eastern airlines
become the flag carriers of the groups. China Southern would take China
Northern & Xinjiang airlines; China Eastern would team with China
Northwest, Yunnan & Great Wall
airlines, while Air China would be merged with China
Southwest & Zhejiang airlines. Sweeping overhaul of the industry is
aimed at boosting regional
competitiveness in a market with 1.3 billion potential
customers. CAAC wants the new structure before China's entry into the
WTO. That may prove difficult due to lingering doubts over effectiveness
of the plan. Some of the lines,
particularly Xinjiang & Yunnan, are partly owned
by local governments which will make mergers more complex since, if the
essence of the plan is to make the
lines more profitable, the part owners will
be reluctant to give up their share of a potentially money making venture.
Another obstacle is in branding of new groups, as the lines are reluctant
to give up their own livery in favor of untried brand names. Seven carriers
would lose identities under the plan, which would see China Southern become
the country's leading airline with a fleet of 180 aircraft.
- Who Would Carry THAT Fatal Cargo? ......... as the
FAA has proposed a US$95,000
fine against KLM for violating U.S. Dept. of Transportation Haz Mat
alleged that KLM improperly offered, accepted & transported
as cargo an oxygen
generator & protective breathing equipment -- but did not class,
describe, package, mark or label the shipment as Haz Mat. Shipment was
flown from Amsterdam
to Los Angeles on Sept. 26., then was offered to FedEx for
transport by air from LAX to Seattle. The shipment was delivered to the
Distribution Center, where it was opened & the presence of
disclosed to the FAA. An oxygen generator is believed the cause
of an explosion which downed a ValuJet aircraft in the Florida
Everglades in 1996,
- Double 1st Class .......... as United has cleared
its new business jet subsidiary
for takeoff. The world's 2nd-biggest carrier behind American expects
to have a fleet of about 200 executive jets in the air by 2005.
- Ivan The Biggest ....... as the world's largest
plane took to the air in
Ukraine on May 7, successfully completing a short test flight & fueling
hopes for a recovery Russia's
struggling aviation & airfreight industries. The
giant Antonov-225, a heavily reworked version of a plane originally launched
in 1988 to carry the former Soviet Union's Buran space shuttle, took off
from Hostomel airport outside Kiev & flew for 15 minutes. Experts say
the An-225, dubbed Mriya
(Dream), can carry up to 250 tons, with a wingspan of a staggering
88.4 meters. Cargo bay is 43 meters long, 6.4 meters wide, & 4.4 meters
deep & could house 80 cars or 16 universal freight containers. Wow!
The plane, which may appear in June
at aviation industry airshow at Le Bourget,
France. The plane can carry 200 tons for up to 4,000 km at its cruising
speed of 750-850 kph. With a lower payload of 150 tons, the range extends
to 7,000 km. Wow! And ...... Antonov Airlines has received an indirect
inquiry from the U.S. government about the possible charter of an Antonov
An-124-100 freighter to remove the grounded U.S. Navy EP-3 plane from
China. The An-124-100 can carry up
to 120 tons & is the largest freighter in commercial
- Chief Ivan Passes ......... as Alexei Tupolev,
designer of the Tupolev 144,
passed away on May 12 at the age of 75. This aircraft was supposed to
compete with the
British-French supersonic Concorde, but this failed. Tupulev 144
did take off in 1968 a few days before the Concorde, but after crashes in
1973 & 1977
flights between Moscow & Almaty were stopped. Forget the energy
crisis -- men with
such vision are far less expendable than the fuel for their
inventions. We mourn.
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Written from wire stories, the Associated
Press, Reuters, Hong Kong Shipping News Lloyds & other world sources.