18


Issue 5 2012


Greeks find a way out of the crisis All is not doom and gloom in the Greek airfreight industry, argues the cargo boss of the country’s largest airport


Life in Greece may be tough, but that does not mean that all business life – or the freight industry – has ground to a halt, says Alexis Sioris. The head of cargo development at Athens Airport says that the biggest problem is not the financial situation or the austerity programme but confidence. “We Greeks need to regain our confidence. We cannot change the world, but we can develop new business, streamline our processes and work together as one force,” he told FBJ. Synergy – that word so beloved of


management executives and which in fact derives from Greek – has been given a new twist by the Athens freight community. The airport freight community’s ‘SEANAIRGY’ project to bring the different players at Athens together to develop sea-air traffic is still going ahead, as is the scheme to develop air-road services to and from Greece’s Balkan neighbours.


Alexis Sioris


successful, particularly with Israeli- made exports of perishables and clothing to North America, although strikes have tarnished Athens’ image somewhat since. “This has made Greek forwarders a little afraid to take on risks, which is a shame,” says Sioris. Nevertheless, he is not undaunted


and is also now promoting the air- truck concept, with Athens as the entry-point for neighbouring Balkan states such as Bulgaria, Serbia and Fyrom (Former Yugoslavian Republic


include the customs authority in the improvement process. “Making airport customs feel like a true partner can be quite a challenge,” says Sioris, “but red tape is a lot better now and relations have strengthened a lot. If we need to take an issue to a higher level at customs HQ, we bring our airport customs partners with us – rather than bypass them – so we don’t kill the relationship we have with them.” The airport cannot exist in


isolation from the wider economy though. Whether Greece should stay in the Euro has been hotly debated throughout the country, of course, but Sioris believes that the single currency is very important – vital to the country’s future, in fact. While there is an argument that returning to the Drachma might help boost exports, the corollary of that is that imports would become very expensive and in today’s world, in order to export, you need to import too – so any gains from a cut-price currency might prove illusory. Now though,


hopes have Alexis Sioris though is not


understating the gravity of the economic situation in his country, where unemployment is 20% and rising. “Yes, it is true that with less consumer spending, imports have gone down and whereas our total cargo (import and export) was 122,000 tonnes in 2008, it’s now only about 86,000t.” Other modes of transport like truck


or, in the case of the Greek islands, fast sea craft, are cheaper and this matters even more when money is tight. Exports have increased somewhat of late, partly thanks to the airport cargo community’s efforts to encourage new exporters or urge existing ones to sell more, but it has to be recognised that Greece’s export base is, ultimately, limited. Transit


cargo is therefore an


effective way of boosting traffic out of Athens and to this end the airport community has been trying


to


develop multimodal transport. In the past there were MoUs with the two main seaport operators in the area – Chinese-owned Cosco and the still state-owned port of Piraeus - to guarantee


sea-to-air transhipment times which were for a time very


of Macedonia.) As Sioris says, “Cargo leaders


here, members of the airport cargo committee (ACCC) are putting their heads together continuously


not


only to find ways of reducing costs and increasing efficient flows through the airport, but also working hard on identifying new potential cargo opportunities.” The cargo community is also


promoting itself through ‘road show’ type initiatives to promote exports through chambers of commerce, embassies and commercial departments as well as the exporters themselves and the ACCC is a regular attendee at the Air Cargo Europe conference in Munich. The community has also


developed its own unique set of key performance indicators (KPIs) to measure its efficiency. As well as measures of time – how long it takes for cargo to arrive at the terminal, to break pallets down and so on – it also considers factors such as security or environmental performance. “We cannot afford to abandon our standards because of the economic situation,” declares Sioris. Steps have also been taken to


increased that Greece will somehow weather the storm and emerge with its Euro membership intact. Many reforms are needed, not least the elimination of the shadow economy, though many areas of public life have been reformed, Sioris argues, not least the conduct of customs officers. Gone are the days when traders had to bribe officers to speed up customs clearance. “We’ve moved a long way – the mentality has changed completely,” he says.


Perhaps one of the airport’s most


pressing concerns is flown cargo capacity. With Greeks not flying abroad in the numbers they once did and with the tourist trade muted by economic woes in other parts of the world, many carriers that used to provide bellyhold freight capacity have stopped or reduced their services. This is frustrating for the cargo people, as in many cases these flights were successful as far as freight was concerned. Major carriers such as Thai and Singapore International have discontinued service to Athens or are about to do so and in October the airport will not have any regular flights to the US until summer schedules restart next year. Emirates and Etihad though are continuing to increase their flight programme and seem to be getting stronger all the time. The four main integrators – UPS, TNT, DHL and Fed-Ex - are regular operators at Athens, and Lufthansa Cargo also has its own freighters, although the fact remains, says Sioris, “is that we are a passenger-driven airport and if there are not sufficient passengers, cargo also dies.” That said, there is no shortage of freight capacity overall at Athens, given current depressed cargo volumes. So, while the Greek airfreight


industry is not exactly booming, it is not as hopeless as media reports might suggest. There are opportunities to develop new traffic flows and the main problem is not lack of money or infrastructure, but psychological.


///NEWS


Light at the end of the tunnel?


Lefteris Kaltsas, president and managing director of local forwarder Greek Air Cargo, says that the past two years have been grim, but there are a few signs of hope. There is no doubt that imports have


been hit. “There is no consumption; people haven’t got the money and there’s also the psychological factor, which means that they don’t go and spend money.” Banks,


too, have


been unwilling or unable to lend to corporations and, with outsiders fearful of not getting paid, importers have been forced to pay at the time of ordering and then waiting 3-5 months before they themselves receive the money from their customer. And with the banking system still not fully functioning, there is little prospects of companies being able to obtain loans to bridge the gap – and even if they were available, interest rates would be sky-high. It’s hardly surprising, then that,


according to Mr Kaltsas’ estimates, imports are down by 30-40%. But, on other hand, he continues,


“with Greek producers unable to sell into the local market, they have been forced to find other markets outside the country so we are seeing a slight but steady increase in exports of maybe 10- 15%. So I’m a little more optimistic.” Companies in general may be


having a hard time, but Greek Air Cargo has good relations with its agents abroad and has maintained its credit lines. IATA’s CASS system is still functioning in Greece, although that offers only 30 days’ credit in a market where many customers are only paying after 80-90 days.


“Besides, as a company, we don’t


depend a lot on bank loans, which has helped keep us alive. But a lot of other forwarders do depend on loans and with interest rates going up from 3% to 8-9%, you can imagine what the cost to them is. And in any case the banks don’t trust the companies enough to lend the money in the first place.” Quite a few Greek forwarders


have gone out of business or into administration, including two or three of the larger ones, along with many of the smaller firms. Looking on the bright side again, that gives more opportunities to those that remain, though Kaltsas is concerned that margins will be cut as companies reduce rates simply to keep the cash flowing in. “But I am a bit more optimistic,” he repeats. “If we weren’t, we’d all just go home. And in any case, I think we may have reached bottom – I don’t see it getting any worse.” But for there to be a sustained the EU needs to


improvement,


recapitalise not only Greece but the other troubled economies such as Spain, and quickly, says Kaltsas. As for Greece exiting the Euro, it’s something he “doesn’t even dare think about” - not that he believes it to be a serious possibility anyway. Exiting the Euro would drive the price of raw materials and fuel through the roof and put the economy into meltdown. Greek Air Cargo was one of the


pioneers of transhipment cargo at Athens 15 years ago he adds, with truck connections from neighbouring Balkan countries and sea shipments from North Africa and Israel, mostly destined for North America.


Agents add value to grow export prospects


Produce exports have come to the rescue of the Greek airfreight industry, says Yiannis Lentzakis, owner of international forwarder and general sales and service agent, Freight Plus. “Many Greek producers are now tending to sell outside Greece, to neighbouring countries but even to Asia, China, Australia and New Zealand,” he explains. Exports by air of some commodities have gone up by 500% in the past two years, he asserts. True, this was often from a low base, but many of the goods concerned “weren’t even on the list in 2010.” Fresh fish has led the pack, along


with fruit and veg, flowers and smaller quantities of olive oil, organic milk and cheese. They all command good prices in overseas markets and they have also benefited from lower airfreight charges out of Greece – 40% below the levels of two years ago, and in a market where rates have


historically been well below the European average, says


Lentzakis.


“Right now, we probably have the second- or third-cheapest rates in Europe.” And with the continuous rise in worldwide airfreight rates having at last relented, air has become affordable again for a wide range of produce. Greek industry can turn its four-


year losing streak to its advantage, Lentzakis argues. “The crisis made the Greeks understand that they can sell to other countries.” The supermarket industry has started to develop outlets in places like the Middle East, and these will also provide a opportunity for Greek growers to sell into new overseas markets. So, “the crisis made entrepreneurs


understand the need to go outside Greece’s borders” - but how could these usually small family farms and producers tackle exporting for the first


time? Most had little or no business development or overseas marketing expertise, but the entrepreneurial Greek forwarders themselves have stepped into the breach, says Lentzakis. “It’s been a very important opportunity for forwarders to expand their portfolio into being more than just a transporter but to act as market finders,


trade facilitators – doing


anything possible in fact to help exporters, if the final outcome will be an airfreight shipment.” Smaller and medium-sized local


forwarders are in a better position to do this than the big multinationals, he believes. Many of the latter have cut staff numbers and in any case may lack the skills and agility to offer added-value functions. A special sub-committee of the


airport cargo committee has also been set up to help and encourage would-be exporters.


Freight Plus is also a GSSA,


and again it is a matter of finding additional services to offer in order to survive in an extremely tough airfreight market, with carriers cancelling flights or even going out of business altogether. True, government regulations don’t always make it easy for agents to diversify – the ‘one stop shop’ GSSA as opposed to GSA is relatively unknown in Greece - but it is vital that they strive to do so, argues Lentzakis. He also points out that Freight Plus has operated as a GSSA since its inception, so it can be done. Freight Plus is in fact turning down


many offline agreements being offered by airlines, mainly because the cost of trucking to distant airports such as Milan is too high and, despite the cancellation of many flights, there is still excess capacity in the market.


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