A Bronx Cheer For The New Year! Every year, an organization known as the International Logistics Quality Institute conducts a survey of international shippers in regard to service by freight forwarders. And every year, as regularly as the tides, the most important quality shippers claim for their forwarders is "service reliability." Price always comes in a distant second in these surveys. Let me give a Keeling Bronx cheer for the new year to these results. Shippers may tell the Logistics Institute what they want to hear, but when customers sit down with forwarders across the table to negotiate new contracts, there is one component that looms above all else--price. Indeed, price has become so important, freight forwarding is in danger of becoming a commodity. All other factors; customer service, network coverage, transit time, technical and administrative services are being thrown out of the window because of shippers' obsession with rates. To be fair, we forwarders must share in the rush to the bottom of the barrel rates that economists euphemistically call "non competitive." In our eagerness to get shippers to sign on the dotted line, we have given away the store. Too many of us agree to rates that we know are below our costs, irrationally hoping to make up the difference some time in the future. Unfortunately, that future never seems to come. Let's not sell one dollar for ninety cents. Let's never forget that airfreight remains a premium service, and never a commodity. We should charge what our efforts are worth. Back to Top

Atlas Delays Bankruptcy Filing But Is End Inevitable Atlas Air, the company that seems to have more lives than the proverbial cat, has again postponed a bankruptcy filing until February 1 from its earlier date of December 15. Atlas is a classic example of a company whose time has come--and gone. Its core business of outsourced, so-called ACMI (aircraft, crew, maintenance and insurance) freighters flying primarily for foreign airlines has collapsed together with the boom in orders for new aircraft. At the height of the aircraft recession a year ago, Atlas couldn't give their planes away. But Atlas' story doesn't end with a decrepit, all red ink balance sheet. In its Polar cargo division as well as its own 747 aircraft, Atlas has provided substantial international lift for forwarders. Despite old aircraft and spotty service, Polar has been a major factor in moving forwarders' cargo--particularly to the increasingly important Asian market. We all would be in a tough spot if the Atlas threat of ceasing operations and selling all of its assets actually becomes a reality. A few obscure cargo airlines have started up in the past 24 months, but none of these entries has the route structure and number of aircraft as Polar. Let's hope that Atlas, despite hitting tremendous turbulence in the aircraft market, can survive with a pre-packaged bankruptcy plan in not only providing massive lift, but in keeping rates low. Perhaps if founder and supreme salesman Michael Chowdry had not died in a plane crash two years ago, Atlas would not be in its present state. We never will know. Back to Top

Tom Ridge & Homeland Security Places U.S. Back On Red Alert Those alert announcements remind me of a child's toy, the yo-yo. They keep bouncing back from yellow to orange to red and back again. As far as I'm concerned, most of us know where terrorist threats are coming from. We all are aware of the origins of the people involved. Let's concentrate on weeding out those bogus "students" who invade our shores under our still liberal standards. Many of them certainly are not in America to learn about capitalism or wanting to become U.S. citizens. If we concentrated on people like these, our homeland security would eradicate most of the internal threat that exists. Two nations in Europe with liberal immigration laws; the U.K. and Germany, also are hotbeds for transplanted Middle East radicals. If the U.S., Great Britain and Germany worked together more effectively, put political correctness aside and faced reality, we could remove these cancerous cells forever. This greater talk about security in the corridors of the Executive Branch and the Capitol is directly impacting air cargo security. I can understand how our politicians want to leave no stone unturned, no missed opportunity to clamp down on terrorism. They want all the missing gaps filled. But we have a business to run. And our business directly affects the health of the U.S. economy. If trade is stifled in the name of increased security, we would have won the battle and lost the war. Our government must be very, very careful in issuing security rules and regulations that could impede the free flow of exports. I am convinced our industry is well aware of its obligations towards homeland security. Overwhelmingly, the U.S. transport industry acts responsibly and is accountable to the government for cargo security. But airfreight is built on speed. Airlines and forwarders do not have the luxury of time and space to hold cargo for security purposes. We are like air passengers in that our industry would fall victim to any changes in the law. Unlike passengers, however, who may be inconvenienced for an extra hour or so, many of us could be put out of business if new rules made it impossible to deliver cargo when and where promised. What form of transportation would benefit if security rules become too onerous? Why, our old friends, the shipping companies. Ocean freight is just about one-tenth the cost of air cargo and delays of a day or so does not mean nearly as much in a two week ocean voyage as a 48-hour delivery schedule. Back to Top

For Boeing, It’s Now Or Never Boeing, which until a few years ago, totally dominated the world civil aircraft market, is falling on hard times. Airbus is eating its lunch. Its CEO has resigned under fire. Its 767-tanker lease program for the U.S. Air Force is under severe scrutiny. And to heighten the turbulence surrounding the aircraft maker, Boeing now is in the throes of pondering whether to launch the 7E7, the company's first new commercial program in 13 years. Projected cost; $7 billion. Some timid members of Boeing's Board of Directors have said the company should not go ahead with building the 7E7. "Shareholder value" would be impacted and short-term earnings would suffer. "Let's just build stuff for the government," they say. But the aviation industry is all about visions of the future. The most widely sold piston-engined airliner, the DC-3, was started with a phone call from C.R. Smith, President of American Airlines to Donald Douglas back in 1932. "Build me 20 of these new planes," said Smith and the modern age of civil aviation was born. If Boeing loses that vision, it is finished no matter how much assorted equipment it sells to the military. The company does face serious obstacles. It must start developing an expensive aircraft in a very soft market; it must trust its sales staff to sell it against heavy competition from Airbus; and it must have faith in its engineers to build it within cost estimates. In short, Boeing must believe in itself all over again, The launch of the 7E7 will mean no less than Boeing remaining in the civil aircraft business. It is an investment in the company's commercial future. The 7E7 also will prove that one of America's greatest examples of industrial power will remain a great international company in spite of fierce competition from Europe and Asia. Back to Top