Issue 7 2017 - FBJNA

Air cargo markets continue to surprise

An improving world economy seems to be having an impact on air cargo volumes. The International Air Transport Association’s

(IATA) data for

global air freight markets shows global demand grew by 10.4% in first-half 2017 compared to first- half 2016 -- the strongest first half-year performance since air cargo’s rebound from the Global Financial Crisis in 2010. The data is nearly triple the industry’s average growth rate of 3.9% over the last five years. IATA also reported that year-on-year (YOY) demand growth in June increased 11% compared to June 2016. Freight capacity grew 5.2% YOY in June. A report by WorldACD Market

Data For over half a year, air cargo volumes have been growing strong. Year-over-year (YoY) and US-yields have stopped their 2015-2016 free fall. “This trend did not show the slightest tendency of tapering off

in June, on the contrary,” reports WorldACD Market Data. “The volume increase YoY for the month was 10.5%, accompanied by an increase in Direct Ton Kilometers of 12%, showing that the average distance between origin and destination of shipments continues to increase. And yield worldwide, measured in USD, was 7% higher, a big bonus for airlines and a development we have not been able to report since the recovery of 2010-2011.” In terms of volume growth,

the second quarter of 2017 was the best quarter for the industry in almost seven years. The origins Germany and Hong Kong grew most in absolute kilograms. The markets from Turkey to the Middle East & South Asia, from Belgium to Asia Pacific and from Belgium to North America showed the highest volume increase in percentages: 54%, 50% and 46% respectively. In

general, load factors increased, as capacity growth was clearly lower than the increase in volumes in all regions. “Whereas the first quarter

showed stable YoY yields, Q2 surprised with

a remarkable

yield improvement YoY of 5.4% in USD, and of 8.1% in Euros,” WorldACD Market reports. It states: Yield improvements in Q2 were particularly visible in markets with an origin in Asia Pacific. Yields ex China grew even harder than those from other countries in the region. Interestingly, positive yield and volume developments seemed to go hand in hand: from Asia Pacific to North America, growth of each was around 20%, and from Asia Pacific to Europe around 15%. A prominent element in the growth of both volumes and yields between Asia and North America was the modest capacity increase... WorldACD Market Data

executives contend that the YoY yield performance in Q2 may be explained partly by movements in fuel prices & surcharges: fuel prices were about 10%

OOCL takes delivery of 2nd 21,000 TEU vessel

OOCL has taken delivery of its 21,413 TEU vessel dubbed the OOCL Germany. This mega containership is the second of the six 21,000 thousand TEU class vessels on order at the shipyard. OOCL regards them as an important part to enhancing the competitiveness and efficiency of its modern fleet. OOCL christened its first 21,000

TEU vessel in May 2017 and has four more on order. The OOCL Germany will be

serving the Asia-Europe trade lane on the LL1 service and her port rotation is: Shanghai, Ningbo, Xiamen, Yantian, Singapore, via Suez Canal, Felixstowe, Rotterdam,

L to R: D Y Park, president & CEO, Samsung Heavy Industries; A. Moue, sponsor; Nozomi Moue, managing executive officer, Shinsei Bank and Guest of Honor; A. Tung, CEO, OOCL.

Gdansk, Wilhelmshaven, Felixstowe, via Suez Canal, Singapore, Yantian, Shanghai in a 77-day round trip.

As reported in an OOCL

press release, the new ship was constructed at the Samsung Heavy Industries shipyard on Geoje

higher YoY. “Past experience has taught the air cargo world that yields usually react to fuel price developments with a time delay,” they say. “Since the 2016 fuel prices increased strongly between Q1 and Q2, Q2-yields in 2016 could be said to have been relatively low as the rising fuel prices had not yet been fully factored in. Given the increasing practice of net pricing, more research needs to be done on this subject, however.” The month of June also

showed how air cargo and geopolitics can be intertwined as the transport of perishables to Qatar increased well beyond the overall growth pattern of this sector of the business. “As a matter of fact, June confirmed the trend we reported earlier, which shows general cargo growing faster than most specific product categories; only pharma grows faster than general cargo,” WorldACD Market Data states. “It also confirmed that the average shipment size is growing YoY: by more than 8% in June and by almost 7% for the first half of the year.”

Island and will be deployed on the Asia-Europe trade lane, operating the LL1 service on a 77-day round trip.

The OOCL Germany, and

her sister vessels, are designed with many advanced green features that can help meet future environmental requirements. For instance, the energy efficiency of these containerships not only satisfies the current Energy Efficiency Design Index (EEDI) baseline requirement, but is 48% better than the EEDI level required by the International Maritime Organization in 2025. “The state-of-the-art

technologies in these newbuildings are truly pushing boundaries,” said Mr. Andy Tung, CEO of OOCL, during his commemorative remarks at the naming ceremony. “As a ship owner, meeting

///NEWS News Roundup

American Trucking Associations and Drivers Legal Plan, a national legal firm dedicated to protecting the rights of truck drivers and the trucking industry, announced the renewal of Drivers Legal Plan’s ATA Featured Product agreement. Drivers Legal Plan’s legal representation is dedicated to the defense of a driver’s record and a motor carrier’s safety profile and rating. Since the advent of the CDL, the firm has handled over 350,000 cases in essentially every jurisdiction in the country. Maintaining a one-of-a-kind database of cases involving moving or non-moving violations, citations and accidents, Drivers Legal Plan is one of the largest filers of DataQ challenges in the country.

Ryder System, Inc., announced that toy maker Mattel has selected Ryder to staff and operate its new distribution center in Jonestown, Penn., which spans 1 million square feet. Ryder also supports the new Mattel distribution center – which warehouses Mattel, Mega, and eventually Fisher-Price products – with transportation management solutions, from network design and optimization to planning, procurement, and tracking shipments.

Kansas City Southern and Bulkmatic Transport Company announced on August 30 a memorandum of understanding to form a 50/50 joint venture investment which will facilitate and expand the exportation of liquid fuels from the United States to Mexico. The project will include the construction of a unit train liquid fuels terminal located in Salinas Victoria near Monterrey, Nuevo Leon. The facility will be served by Kansas City Southern de Mexico, S.A. de C.V. (KCSM).

Canadian Pacific Railway Limited announced the launch of the most direct rail transportation service between Vancouver and Detroit, a service that extends CP’s reach and increases optionality and access to key markets for shippers. Leveraging CP’s newest transload facility in Vancouver and its innovative live-liſt operation at Portal, North Dakota to accelerate cross-border shipments, this new service can cut transit times from the West Coast to Detroit by as much as 48 hours compared with our nearest competitors.

CSX has revised the way it calculates three key service metrics – Train Velocity, Terminal Dwell and Cars Online – to more accurately reflect the company’s operational performance. “CSX is transitioning to Precision Scheduled Railroading, which focuses heavily on service to customers and asset utilization,” said E. Hunter Harrison, CSX president and chief executive officer. “These revised service metrics give us a more accurate understanding of how we are performing and where there are additional opportunities for improvement. That clarity is essential to achieving our highest potential performance, which will benefit our customers, our employees and our shareholders.”

environmental requirements are important considerations when working with the shipyard to ensure that we can make the vessel as ‘future proof’ as possible,

particularly how we are seeing environmental standards and requirements becoming more and more stringent in the industry over the years.”

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