19th December 1999

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The 21st century is going to be the air cargo century

"The 18th century was the century of the ship - the clipper ship created international shipping; the 19th century was the railroad century; the 20th century was the truckers' century and the 2Ist century is going to be the air cargo century," according to Walter H. Johnson Jr., past president, chairman of education, and member of the executive council of TIACA - The International Air Cargo Association - which has its headquarters in Miami, Florida.

This is "because the global marketplace, which has emerged as the most powerful economic power in the world, is dependent on aircraft," says Johnson. "There cannot be a global marketplace without the air cargo business."

"So that business is going to boom and it is going to prosper extraordinarily in the undeveloped countries of the world which don't have any surface infrastructure like roads and railroads, he suggests. They will be able to leapfrog some of the problems which some of the other countries had as they were growing.

"There will be an incremental growth in western Europe and the United States, but the big growth is going to come in Asia, Latin America and Africa, and to and from those continents," he says.

One consequence of this, Johnson believes, is that "inevitably we are moving towards more pure freighters". The majority of air freight is currently carried in the bellyholds of passenger aircraft, he agrees, and "not only that, but also the whole air freight business is carried in aeroplanes that were designed for passengers - the B747 is essentially a passenger aeroplane, and the only aeroplane in the world that really is designed for freight is the Antonov 124," he says.

"There is a company in Georgia which is developing and has a contract for 50 aeroplanes for Federal Express," he informs. "This is going to be a five to six tonnes capacity aeroplane, with short runway capability, slow speed and it is going to be a perfect aeroplane for serving the less developed portions of all countries." (Ayres Loadmaster LM1000; ACW September 25, p 6).

The aircraft is designed as a pure freighter from the wheels up, Johnson continues. "It is also a turbo-prop aeroplane but, because of the general laws and safety restrictions, it has two engines with a single propeller, capable of operating on either one of the engines. They have one flying, and I think that they are working on the certification of it now."

On the question of the growing dominance of the integrators, Johnson says: "What is happening now is that the world is changing. Panalpina is practically an integrator. They now contract whole aircraft on a five or seven days-a-week basis, and it is just exactly as though they owned them. Emery, too, has long been an integrator and a forwarder. So I think that one of the trends in the business is going to be a movement towards the consolidation of those companies into mega companies that provide the full range of services."

As to how this will leave the scheduled carriers - "I think that one of two things will happen to them. Some of the scheduled passenger carriers are now developing as much as 25 percent of their business from cargo, but when you are down in the 7 or 8 percent bracket, the passenger business wags the dog so much that it really doesn't get all the emphasis it should.

"So, I think that the passenger carriers will be moving towards freighter aircraft and I think we will see more of that done, but I think that they will still carry cargo, because they have tremendous capacity in terms of frequency".

Shipping & Aviation supplement

  • Hanjin HI to build two 6,200-TEU boxships
  • Evergreen to transfer Panama ships to Italy
  • Home and You'99
  • Hanjin HI to build two 6,200-TEU boxships

    Hanjin Heavy Industries of South Korea has decided to build a pair of 6,200-TEU containerships for a German shipowner, the largest boxships to be constructed by the Korean shipyard, informed sources reported.

    Hanjin, which won an order early this year from the German operator for two 5,600-TEU vessels, is building the bigger ships at the request of the owner.

    The Korean builder is to be paid a little over $60 million for each of the containerships for delivery in late 2000 and early 2001, they said.

    To build the larger ships, Hanjin is expected to develop a new ship type with a bigger hold, the sources added.

    Hanjin has been accumulating the technological know-how to build large vessels through the construction of large containerships for Hanjin Shipping. It has delivered as many as 13 ships of 4,000-TEU and seven of 5,300-TEU.

    The last two years have seen the Korean builder construct large boxships for Swiss operator MSC and German owner Conti Reederei. The German order, in particular, involved five ships of 5,600-TEU.

    As for the 6,200-TEU ships, the order insisted on changing them from 5,600 to 6,200-TEU without altering the delivery dates, the sources said.

    Required changes in the ship design called for the 5,600-TEU ship to have additional cargo space to load more containers, they said.

    Hanjin is continuing with the serial construction of 1,200-TEU vessels at its Ulsan shipyard, while its main yard in Pusan has secured its workload by putting 1,600-TEU ships into the building time-table. The addition of 6,200-TEU ships to the mix will keep Hanjin running after new building orders for large containerships, the sources said.

    Evergreen to transfer Panama ships to Italy

    Taiwanese liner giant Evergreen is poised to take a strategic step into Europe with a plan to switch at least 30 Panama -registered vessels to the Italian flag.

    The entire fleet owned by Panama-based Evergreen International is set to be gradually move under the owner ship of Lloyd Triestino, the Italian carrier taken over by the Far Eastern group in October 1998.

    Chang yung-Fa, Ever-green group chairman and founder, appears to have made a personal commitment to the Adriatic city, pledging to consider building new headquarters for Lloyd Triestiono and expanding Trieste airport.

    Mr. Chang may also be considering using Fincantieri's local Montfalcone shipyard to build ships for Evergreen's proposed new cruise venture

    Five vessels have already been switched to the Trieste-based line over the last year.

    This process has seen the Italian carrier's fleet grow by up to 12 vessels.

    Lloyd's List understands that another seven container ships are due to follow next year. News of the substantial fleet switch emerged over the course of two dinners held for Trieste local authorities and hosted by Mr. Chang.

    It is understood all the additional Lloyd Triestino containerships, as well as the existing fleet, will be registered in Trieste under the Italian register for ships deployed on international trades.

    An international register was established by Italy in 1998, enjoying a 7.4% tax rate on profit and reduced social costs for the crew.

    Mr. Chang confirmed that the company policy is to have Italian officers on board, despite Lloyd Triestino experiencing difficulties last year in finding enough Italian officers.

    Since the Evergreen acquisition, Lloyd Triestino has focused on taking it back into profit. On the commercial side, the company has greatly increased its activities.

    The last move was the establishment of a weekly service called CEM , linking China to Mediterranean and North Europe.

    Some seven vessels of between 2,700 teu and 3,000 teu are deployed on the service.

    Lloyd's List understands that three of the vessels are owned by the same operator while the remaining seven are Evergreen's G-type, taken under charter by Lloyd Triestino.

    The Italian carrier retains 34% of the service's capacity the remaining being for other companies that are part of the Evergreen group.

    It is the first time an Evergreen group company has been allowed to call at Chinese ports.

    Home and You'99

    The HSBC stall at the Home and You exhibition organised by Ace Travel and Conventions from October 29 to 31, October 1999 was yet another great success. HSBC was one of the main sponsors of this event, which drew large crowds on all four days. The HSBC staff manning the stall were friendly and professional entirely capable of handling the deluge of inquiries.Their convincing manner managed to sway even the most skeptical of holdouts.

    Many of the visitors were seen talking to the staff on HSBC's unique housing loan scheme which offers flexible interest rates, a 25 year repayment period, pre payment options and the ability to borrow upto 10 million. Many potential customers were seen taking away application forms and product brochures. The staff also marketed personal loans which were approved within 24 hours and other personal banking products.

    Credit Card application forms were in heavy demand throughout the exhibition and all successful applicants will receive a gift from the Card Centre. In addition all new applicants were also entitled to be included in the grand raffle draw held on the 15th of December 1999. He/she could win an exotic all expenses paid holiday for two at four different destinations. The Bank's Card Centre has now issued over 50,000 credit cards.

    NDB launches special project

    National Development Bank (NDB) launched a Special Project for the Development of Dairy Farming (SPDDF), in Yatiyana, Matara recently.

    The inauguration was intended to serve as a focal point for dairy and livestock farmers to come together, become informed about the latest trends in dairy farming, and also avail themselves of the opportunity to take out a special loan at competitive interest rates (11% P/A), arranged by NDB especially for dairy farmers.

    These loans would be utilised for both short-term needs such as buying cattle, building sheds, sourcing technical expertise, obtaining veterinary services and insurance for animals, as well as long-term needs such as for breeding centres, commercial pasture lands, collecting of milk and even beginning dairy-based cottage industries, a company release said.

    Shell Gas signs Shell Live Wire agreement

    Shell Gas Lanka Ltd. has signed an agreement to set up the Shell Live WIRE Trust, a community investment initiative aimed at encouraging young entrepreneurship in the island. The signing makes Sri Lanka the newest destination for Shell LiveWIRE, a program that aims to encourage young people realise that starting a business can be a realistic option for them and provides assistance to those who wish to do so, a news release said.

    Initially, Shell LiveWIRE plans to conduct a Business Start-Up Awards scheme early next year to recognise the achievements of young people who have been in business less than 18 months. An Outreach and Enquiry service to offer an introduction to youth enterprise, targeting those in the 16-30 age ranges will be launched later next year. The Outreach and Enquiry service will consist of resource material, publications and hands-on advice on how to start up a business. The program in Sri Lanka will also be unique, as it is the first time any Shell LiveWIRE program, worldwide, will be executed in three languages in one country.

    Country Chairman/Managing Director, Shell Gas Lanka Ltd., Idris Jala, says the company is pleased, it could introduce a project that will contribute to youth development in Sri Lanka. Mr. Jala says, "We see a great opportunity for this project to prosper, as will those who benefit from it. We hope young Sri Lankans' thinking of starting up in business will avail themselves of the services Shell LiveWIRE has to offer."

    The signing saw the setting up of the Trust, and a Board comprising Partner, Price Waterhouse Coopers, Deva Rodrigo, and two senior executives from Shell Gas Lanka Ltd., appointed to oversee all activities of the programme to ensure it achieves its desired objectives.

    The Shell LiveWIRE programme is presently active in over eight countries, including the United Kingdom, Australia and Oman. Given Shell's commitment to the programme, both here in Sri Lanka and globally, Shell LiveWIRE is set to be a vital link in assisting youth enterprise in this country.

    DHAKA Leather Fair in January

    The 2nd Dhaka International Leather Fair will be held at Pan Pacific Sonargaon Hotel in Dhaka, Bangaladesh from 27 to 29 January, 2000 in co-operation between the Export Promotion Bureau and Bangladesh Finished Leather, Leather Goods and Footwear Exporters. All kinds of Leather, Leather Goods and Footwear would be prominently displayed in this Fair along with related machinery, equipment and chemicals. It may be noted that the first ever International Leather Fair held in Dhaka on 27 to 29 January, 1999 was participated by a number of foreign firms from Germany, Italy, Singapore, Australia, India and Pakistan. More then 300 foreign visitors/buyers/importers from 23 countries of the world attended the Fair.

    Emirates varies New Year schedules

    Emirates Airline has reduced its international and regional schedules during the New Year period, December 31, 1999 to January 1, 2000, due to low demand on some routes.

    Although Emirates is varying its schedules on the two days, there will be services operating to regional points, the Indian sub-continent, Europe, East and South Africa, the Far East and Australia, a news release says.

    Emirates' Chairman, H.H. Sheikh Ahmed bin Saeed Al-Maktoum said, the airline was responding to its customers' obvious desire to travel well beforehand to celebrate the dawn of a new millennium in a place of their choosing, rather than on board an aircraft. "Our bookings remain as strong as ever across the network during most of December and January," he said. "During the transition to the new year, we shall continue to monitor booking trends and amend schedules accordingly".

    Sheikh Ahmed stressed that the decision to reduce flights during the millennium rollover was not related to concerns over the Year 2000 computer problem: "An extensive programme was put in place over three years ago to ensure compliance of all our systems and equipment. "This is virtually complete and, in addition, on October 15, we carried out a Boeing 777 test flight, during which the aircraft's date-driven systems were advanced through December 31 and, as expected, all systems functioned normally."

    Asia shaking off crisis – Nobel economist

    BANGKOK, (Reuters) - Nobel Prize winning economist Amartya Sen says there is every indication Asia is pulling out of its economic crisis and greater democracy would help cushion the effects of future financial upsets. The 1998 laureate told Reuters in an interview in Bangkok,where the crisis began two years ago, that one of its positive effects had been democratic progress in several countries.

    "I think people have learned something from that," he said." The fact the democracy movement became stronger in South Korea and moved dramatically in that direction in Indonesia and became stronger in Thailand too, I think are positive aspects. "The crisis had the effect of bringing out the weakness of the previous argument that democracy was not needed in Asia —that it's against Asian values and it's not needed anyway."I think that argument has been currently busted because when the crisis came, the poor in South Korea and Indonesia did need the voice they didn't have.

    "The Asian meltdown had forced countries to implement reforms to improve financial transparency and accountability and these efforts had borne fruit, he said."As far as the crisis itself is concerned, I think there is every evidence that the entire region is pulling out of it now. But that doesn't mean a crisis of this kind cannot come again in a few years time."Sen, from India, is the first Asian to win the Nobel prize for economics. He is master of Trinity College Cambridge and a professor emeritus at Harvard.

    "One must not fight the past war but at the future war and for that one has to see the ways this crisis could come and how it could be prevented," he said. "My belief is democracy and greater practice of democracy will have a very positive part to play."Asked if he thought recovery might have come too soon for reforms to take proper root, a concern expressed by some economists, he replied: "I don't think it came too soon. Even in the old business cycles in the West, if you go down for a year or two you would expect by the third year to turn around."Asked what could precipitate a future crisis and what form it could take, he said: "I don't know that.

    India govt. says fully ready for Y2K

    New Delhi (Reuters) - India's minister for information technology, Pramod Mahajan, said on Friday the country was fully ready to ensure a smooth transition into the new millennium."We are fully prepared, there is nothing panicky. We have complied (with) everything about Y2K," he told the lower house of parliament, after an opposition leader said India was not prepared for the millennium bug.

    Mahajan said the government would make a detailed statement later during the day."Y2K is a major problem. Only 13 days are left. Thegovernment is not serious. There can be a serious economic crisis," Congress party member of parliament N.D. Tiwari told the lower house. On Thursday, the Indian government's action force on Y2Ksaid 11 critical sectors, including atomic energy, space and defence, were ready for Y2K.

    The other critical sectors are banking and finance, insurance, power, telecommunications, railways, civil aviation,ports, petroleum and natural gas. The government has also set up a special Y2K control room which will be operational from 10:00 a.m (0430 GMT) on December28 until 8:00 p.m (1430 GMT) on January 3, 2000.

    More Chinese ditch cash for card

    BEIJING, (Reuters) - More people in China's overwhelmingly cash economy are settling their bills by debit and credit cards, a senior credit card company official said on Friday."China is traditionally a cash society," Albert Shiung,

    Visa International's chief representative in greater China told Reuters in an interview."People are so used to spending yesterday's money rather than tomorrow's money, which is like paying by credit, and this has been a habit for a thousand years," he said.

    But with China opening up its economy to the outside world and more people adopting western ways of spending, more Chinese are ditching cash for cards, Shiung said.He said the number of debit and credit cards in China was likely to grow about 30 percent annually.

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