Logistics Costs
Critical For BRIC
Block Growth
Anew DHL-sponsored report from the London School of Eco- nomics says logistics costs, not
tariffs, is the biggest barrier to an upturn
in the global economy.
Report authors Tim Leunig, Chris
Minns and Diana Weinhold conclude that
logistics costs exceed tariff levels by a
factor of 9: 1.
The LSE study shows that the cost of
shipping and the availability of review
procedures are critical for future growth
in Brazil, Russia, India and China (BRIC).
Brazil and Russia could increase their
trade volumes by up to 50 percent by
lowering logistics costs to Chinese levels
and adopt OECD standard legal procedures for trade, the study claims.
India could see a trade increase of
over 10 percent by matching Chinese
shipping costs and by almost 20 percent
by adopting OECD standard review procedures.
According to the LSE, China could
grow its trade volume by up to 20 percent as it moves away from low-cost
production to high value added products
that rely on the air express industry for
just-in-time delivery.
Sebastiaan Scholte, Cargolux head of
Marketing and Special Projects is also
looking for growth in the BRIC block.
“In the next 40 years, the world’s
fleet of cars is expected to increase from
around 700m today to nearly three billion. So the potential for growth in the
automotive sector is huge, even though
probably not in the next couple of years.”
Scholte says America has more than
900 cars (including light trucks) for
every 1,000 drivers. In the large European countries and Japan, where public
transport is better and the population is
denser, the figure is a little over 600.
By comparison, Russia has less than
200 cars per 1000 drivers; Brazil about
130; China around 30 and in India less
than ten. ACW
All Cargo – All Risk?
It was about this time last year that the economic tsunami that swept around most of the globe, began to have its impact on the air cargo business.
As Sean Doyle, financial controller
at British Airways World Cargo puts
it: “As of November the numbers
simply stopped coming in.”
A year on and the landscape,
certainly for European carriers, has
changed, seemingly, forever.
Most surprisingly perhaps, it has
been the air cargo heavyweights
that have taken the biggest hit. Most
would have thought that their network reach and sheer traffic volumes
would have carried them through.
Badly bruised, maybe, but certainly
not left reeling.
It is only now, as they begin to roll
out their new strategies do we learn
just what a battering they have taken
and the crucial adjustments they
have to make to ensure their businesses survive.
One thing is certain, no longer will
vast freighter fleets trawl the global
trading lanes, in search of traffic.
Air France-KLM Cargo has effectively drawn up the new route map,
with a draconian 40 percent cutback
in joint freighter operations.
KLM Cargo is handing over its
freighter fleet to Dutch subsidiary
Martinair. The four B747-400F
aircraft, alongside Martinair’s own
MD-11F fleet, will be used to predominantly serve the South American market. Air France Cargo’s fleet
of three B747-400F and two newer
B777Fs will be used only sparingly
in support of belly hold and combi
capacity, which in the future will get
priority.
Says Michael Wisbrun chairman
Air France-KLM Cargo. “We have
seen a 20 percent drop in yields and
a 20 percent fall in traffic, that is
effectively a 40 percent drop in revenues, which is unprecedented.”
It is a similar story at Lufthansa
Cargo. It has had no choice but to
park part of its MD- 11 freighter fleet
for most of the year. The launch of
Aerologic, the joint venture airline
with DHL has only exacerbated the
situation for the German carrier. As
