Australasia: A thriving market for air cargo: March 2014

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In recent years, an important feature of the Australasian freight landscape is the increased ability of freight to be moved using different modes. Sea and air are critical components in the movement of Australasia’s diverse freight task, mainly in international trade. Hence, they are driven largely by the international freight supply chain. Melbourne Airport, the second busiest airport in Australia, recently embarked upon a two-year private infrastructure investment program worth AU$1-billion. In a press statement, Chris Woodruff, the airport’s CEO, said, “By keeping Victoria connected, we’re also providing invaluable opportunities for our exporters, particularly for time-sensitive, high-value products such as fresh seafood and meat, which are key export products to our growth markets including the Middle East and Asia,” Woodruff said. “To support the state government’s vision of becoming Asia’s food bowl, we’re also investing in our freight and logistics facilities, including increasing freight apron capacity and facilities in our business park, where we are proud to have five of the top 10 global freight companies as tenants.” Increasing demand all over the globe for beef offers great opportunity to the air freight industry of the predominantly beef-exporting nations of Australia and New Zealand. Talking about the island continent in specific, Australia’s bulk commodity exports and container imports are expected to grow two-fold every ten years, according to reports. Meat and Livestock Australia reported that in the past 15 years, Australian red meat exports via air freight have increased more than three-fold, from 25,610 tonnes swt in 1997-98, to 82,416 tonnes swt in 2012-13. More recently, air freight meat exports have taken off – up 33 percent year-on-year in 2012-13. Air freight meat exports to the Middle East in 2012-13 increased 68 percent year-on-year, to 51,131 tonnes swt, largely driven by greater demand for chilled Australian lamb. Approximately 85 percent of chilled lamb destined for the Middle East in 2012-13 was air freighted, due to stringent shelf life restrictions on chilled meat imports. Air freighted lamb exports to the region more than doubled in the 2012-13 fiscal year, totalling 36,478 tonnes swt. Russia has become a rapidly developing export market for Australian chilled beef, underpinned by the recent growth in demand for chilled cuts into the food service sector. Air Menzies International (AMI) is the leading trade-only freight wholesaler in Australasia. “We are active here in airfreight and express and (unlike our other operations elsewhere) in ocean freight,” says Geoff Young, vice president – Oceania, Air Menzies International. AMI was originally founded in the UK in the 1970s, and Australia was its first overseas operation and, for many years, its most important route. Today, AMI has branches in Sydney, Melbourne, Brisbane, Perth and Darwin Australia, and Auckland and Christchurch in New Zealand. AMI’s current size in this market was achieved largely by acquiring its Australian partner, UAC, in 2007. “Despite factors beyond our control, such as the continuing soft market resulting from the global financial crisis, the growth of internet shopping, the strong Australian Dollar and some consolidation and takeovers within our customer base, AMI has held up well. Things are looking more positive for 2014, with signs of recovery in many markets, our own expansion and development agenda, and the recent success of our online, all-inclusive, Australian click2ship product,” Young adds. Qantas Freight, a subsidiary company of Qantas - the flag carrier airline of Australia, is responsible for the air cargo operations of the Qantas group and regularly carries cargo for AMI. “Qantas Freight markets the freight capacity on Qantas and Jetstar passenger aircraft as well as operating a fleet of eleven dedicated freighters to supplement capacity on key domestic and international routes. Qantas Freight directly services 80 domestic and 50 international destinations and is the market leader in Australia and a significant air freight provider in the wider Asia Pacific region,” said Mitch Wild, Head of Freight Sales and Customer Service Qantas Freight. Qantas Freight’s 21 Australian freight terminals processed more than 850,000 tonnes last year. After a successful year, the company is optimistic about the year ahead. “Overall we’re certainly seeing signs of stronger air freight market conditions for 2014, but right now, there is still excess capacity in the international market and the strong Australian dollar continues to have a flow on impact on Australian exports,” Wild added. Talking about Qantas Freight’s future plans, Wild goes on to say, “Over the coming 18 months, Qantas Freight has an exciting plan of work that will see us leverage the benefits of further technologies in our domestic and international operations. We’re keen to use technology to make it as easy as possible to do business with Qantas Freight.” Qantas Freight regards technology as a key enabler for the business, using it to differentiate itself in a largely un-differentiated industry. After introducing the web based iCargo operating platform in 2011, it has been quick to utilise this platform to cost effectively introduce new technologies that offer value to customers. This includes rolling out a revolutionary ‘express check’ import collection process in Qantas Freight’s Australian international freight terminals. Using self-service kiosks, delivery drivers can confirm their import delivery collection list in under 60 seconds. These kiosks are linked in real time to a warehouse solution, expediting the delivery process. This system has not only improved customer satisfaction but is also improving service accuracy and providing timely data on service performance. Meanwhile, AMI has a sophisticated online quote, booking and tracking system in place, designed to make doing business as easy and fast as possible for its agent customers. “We are now working on developing our IT system to achieve solutions for agents serving e-fulfilment clients, by enhancing our connectivity to our customers’ systems,” Young added. We work in an industry which still suffers overcapacity on many routes, leading to soft rates and reduced margins. We cannot survive by focusing on rates alone: we therefore also provide our agent customers with added value services that enhance their own offerings, as well as enabling them to work more efficiently – for example, making it possible to collect from or deliver to our single location, instead of performing time-consuming multiple drops or pickups from different airline transit sheds. AMI continues to invest in its business both in Australasia and elsewhere. Recently, it opened a satellite office in Christchurch, extending its services to a wider market. Its latest Australian office opening is Darwin, in response to the launch of the Inpex mining project. This new base will provide a local presence for those of its customers who don’t currently have their own physical facilities there – their own “feet on the ground”. “From our UK origins, we have successfully developed the AMI trade-only wholesale concept so that we now have 24 bases in the UK, USA, Germany, Australasia, Asia and South Africa. We have grown far beyond our original price focus - adding value, improving choice, providing new products and strengthening reliability so that our agent customers can compete more effectively with the larger multi-nationals and win more business. The AMI model is proven and highly successful, and we believe we have a strong future in Australasia,” says Young confidently. According to Boeing, total air traffic in the Australasian region is forecast to grow at the current annual rate of 4.8 percent over the next 20 years as connections to the neighbouring Asia Pacific region and other world regions improve. Airlines within Australasia continue to evolve in response to economic conditions and competition. Over the next 20 years, Australasia is expected to need 1,010 new airplanes to be delivered, of which 730 will be single-aisle airplanes needed to transport people within the region or to nearby Southeast Asia. 

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