Maersk and MSC have just announced a mega vessel sharing agreement that will replace their failed P3 alliance early next year. It will be smaller, and compare well in size with the G6 and CKYH alliances – but what about CMA CGM? Maersk and MSC have taken on board China’s objections to the P3 alliance by coming up with a new vessel sharing arrangement called 2M that they hope will be agreed by all regulatory authorities before the beginning of next year. Out has gone CMA CGM, in order to bring the agreement’s market share down to more acceptable levels, and in has come a much simpler joint co-ordination committee to monitor the carriers’ network on a daily basis. The objective remains the same – namely to reduce costs by sweating assets more efficiently between Asia/Europe, Asia/US and Europe/US, but as port rotations and vessel sizes have not yet been clarified, it is not possible to say how their market shares will change, or their undeniable savings compare with that envisaged by P3. Drewry’s analysis shows that on the Asia-North Europe trade route, Maersk and MSC currently have a 32 percent share of all effective westbound vessel capacity, which is more than the 30 percent market share threshold normally allowed under the European Union’s consortium regulation, so will require close scrutiny. Maersk currently provides 21.3 percent on its own, and MSC/CMA CGM provide another 21.2 percent through joint services shared fairly evenly, which would have given the P3 alliance a much bigger share of 42.5 percent. Only six weekly services are planned by 2M instead of nine, but the VSA will still be the trade lane’s largest. On the Asia/USWC route, 2M is planning four weekly services, whereas P3 was expecting to run six. At present, Maersk, MSC and CMA CGM share four weekly schedules. Between Asia and the USEC, two services will be provided, the same as at present, but two less than planned by P3. On the US-North Europe route, 2M will operate three weekly services – the same number planned by P3, which reflects the fact that CMA CGM’s capacity share on the route is relatively small. 2M will probably be the second-largest alliance in the trade lane, after G6, in Drewry’s estimation. As 2M will not include joint marine operations, with each party looking after its own duties, including stowage, voyage planning and port operations, service quality could be very different to that envisaged by P3. Will a shipper loading a container on an MSC ship really get the same schedule reliability as when loading on a Maersk ship, for example, as Drewry has consistently recorded a lower level of reliability for MSC? Maersk will want to continue its Daily Maersk service guarantees between Asia and Northern Europe, which could create further friction between the two new partners. It is not yet known whether 2M will negotiate joint operational contracts. If this does happen, it will be a concern to terminal and intermodal service operators, but an opportunity for the larger operators to secure more market share. A bigger concern will be the future of CMA CGM, as it has been sharing vessels with MSC between Asia and Northern Europe, and with Maersk between Asia and the Mediterranean, since 2011, so will not be able to fill its ULCVs on its own reasonably. The game of musical chairs of the mega-alliances means that CMA CGM will now have to seriously consider a closer East-West vessel-sharing arrangement with someone else, therefore, the most obvious candidates being UASC and CSCL. Both have recently ordered 18,000 teu mega-ships, and have worked with CMA CGM in the past – but there are other options. They may be needed, as CMA CGM has 28 ships of 9,000 teu on order, some of which are more suitable for North-South trades. Drewry believes 2M will become the largest alliance on the Asia-Europe route, if approved. Like other alliances, it will help reduce costs, and should be allowed. (Source: Drewry Maritime Research)
Transporting dangerous goods by air in an increasingly volatile safety and security environment has always been a challenge and this becomes even more challenging as the air cargo industry regulators set new and tougher norms. Trevor Howard, Manager, Cargo Safety and Dangerous Goods Standards, Air Canada Cargo shares what Air Canada Cargo does to be at the forefront of setting impeccable standards in the dangerous goods transportation space. Howard is in fact a current board member on the IATA Dangerous Goods Board and is also an advisor to Canadian Delegation, ICAO Dangerous Goods Panel. In his role, he works actively with industry to ensure safety standards are updated industry-wide.
Has there been a serious reassessment of the way dangerous goods are transported by Air Canada Cargo in the context of rising security and safety concerns globally? If yes, what are they?
As an industry leader in the transport of dangerous goods, Air Canada Cargo has not needed to undergo a reassessment of its standards and procedures. With Safety of our employees, crew, passengers and aircraft being our first priority at Air Canada, we have always produced industry leading training and procedures for our staff which we continue to update to reflect the current reality of today’s ever changing dangerous goods regulations. By being a leader in the transport of dangerous goods, we continue to be at the forefront of any potential or actual changes in the regulations. Additionally, every operating branch within Air Canada (flight crew, airport and ramp employees) have specific training relating to the transport of lithium batteries by air. Internal and external audits are conducted at a minimum bi-annually to ensure compliance of both safety and security procedures of all cargo products.
How does Air Canada Cargo respond to amendments being proposed by ICAO Dangerous Goods Panel which are likely to be enforced by IATA from next year like "carriage of loose lithium metal batteries restricted to cargo aircraft only"?
Air Canada provides a technical consultant to Transport Canada at the ICAO Dangerous Goods Panel, and the same person is a current member of the IATA Dangerous Goods Board, therefore has been involved in all of the discussions surrounding the transport of and the restrictions in transporting lithium batteries. Air Canada Cargo issued an embargo on the transport, on passenger aircraft, of lithium metal batteries in compliance with Packing Instruction 968 (batteries and cells being shipped on their own) since March 2013. Air Canada is one of over 15 major international carriers that has this embargo currently in place for passenger aircraft. Considering that Air Canada currently does not operate any freighter aircraft, this change in the regulations would have very little impact to our commercial operations.
What are some of the new steps being initiated at Air Canada Cargo to fully comply with IATA’s new regulations regarding dangerous goods transportation?
Air Canada Cargo has always produced industry leading training and procedures for our staff which we continue to update to reflect the current reality of today’s ever changing dangerous goods regulations. All training material for all categories of dangerous goods training is updated on a yearly basis to align with the IATA Dangerous Goods Regulations. Air Canada Cargo currently has a member on the IATA Dangerous Goods Training Task Force – DGTTF. Dangerous goods processes and procedures are also updated on an annual basis to ensure alignment with the most current regulations. Both the training and procedures are reviewed and approved by the competent authority of the state of the operator (Transport Canada) on a yearly basis.
How important is to have trained staff to service dangerous cargo and the shippers in the business of dangerous goods?
A dangerous goods training program is critical to a successful and safe operation. This is why Air Canada Cargo trains all of its employees at a minimum every 24 months. Member of the Category 6 (staff accepting dangerous goods) are trained two months prior to the new issuance of the ICAO Technical Instructions for the Safe Transport of Dangerous Goods, which is effective January 1 on odd numbered years. This is to ensure that our staff is current when there are major changes that come into effect at ICAO and which have been adopted in the IATA Dangerous Goods Regulations. On the even numbered years, our Category 6 staff members are provided with an annual update of the IATA Dangerous Goods Regulations, which contains any addendum from previous years as well as any agreed change brought froth at the IATA Dangerous Goods Board. As mentioned previous, due to the fact that Air Canada has representation at both ICAO and IATA dangerous goods meetings, we are able to be at the forefront of any changes, and prepare in advance and have the knowledge of what changes are forthcoming.
How important is the relationship with the shipper? Has the air cargo industry reached a stage where knowing the shipper is not just enough but "know what they ship" is even more important?
The relationship with the shipper and proper and timely communication is the key. Not just knowing who they are but what they ship. When we deal with shippers who own key product niches, whether it be radioactive isotopes, explosives, or vehicles, it is important to work closely with them to ensure they understand the air transport regulations, and to help to ensure there are no difficulties with their shipments being transported to destination. Many of the dangerous goods, whether it be AOG (Aircraft on Ground) parts, radioactive isotopes with short half-lives, or vehicles being shipped for a Grand Prix event, are all time sensitive and must not face delays. Shippers also help us modify our procedures to ensure proper and expedited handling of the dangerous goods being offered for transport. By working together, we have a better understanding of their products and they have a better understanding of the airline operation. Together we ensure safe and efficient transportation of dangerous goods.
At the airport what are the facilities offered by Air Canada Cargo to facilitate smooth movement of dangerous goods shipments from the shipper to forwarder to the carrier?
We do not have any visibility between the shipper and the freight forwarder. We do have dedicated dangerous goods acceptance personnel at most cargo facilities who take care of the acceptance of the dangerous goods. If any irregularities are detected, communication is done directly with the shipper, as only they can modify or amend a shipment of dangerous goods. There are segregated dangerous goods storage facilities including some stations which have dedicated areas for handling and storage of radioactive materials.