May 2009 | News | Global Logistics

Global Logistics

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"Not in my backyard" posturing has become a familiar obstacle to economic development interests wrestling with local citizenry over infrastructure projects.

Recently, Canadian National's nationally publicized and locally ostracized acquisition of the Elgin, Joliet, and Eastern Railroad, and intention to reroute rail traffic around Chicago to alleviate congestion, drew criticism and legal action from affected communities.

Farther afield in Germany, Frankfurt's night skies have become another contentious battleground, pitting national interests against local politics. German airline Lufthansa and mail and logistics group Deutsche Post have filed lawsuits over restrictions to night flights linked to the future expansion of Frankfurt airport.

The litigation comes as Fraport, the operator of Frankfurt Airport, begins a (US) $5.2-billion project to expand Europe's third-largest airport, adding a fourth runway and a third terminal. Development is necessary as aircraft takeoffs and landings are expected to approach 700,000 by 2020, up from 489,000 in 2006, and cargo and mail tonnage is forecast to eclipse 3.5 million tons during the same period.

Environmental groups, local councils, and residents had sued to halt the expansion project over concerns that night flights would impact quality of life in the area. The Hesse state government recently stepped in, after an initial all-out ban on night flights, to allow 17 flights per day between 11 p.m. and 5 a.m. Still, they would be prohibited on the new runway.

"Without night flights, our business model, which is dependent on the Frankfurt hub, will not work," explains Carsten Spohr, CEO, Lufthansa Cargo, in exclusive comments to Inbound Logistics. "A ban on night flights would jeopardize our existence. The overnight transport—with takeoffs and landings during night hours—is the major advantage of air freight.

"Huge parts of the manufacturing industry rely on the fact that shipments arrive in the United States the next morning, ready for further processing—or, in the case of Asia, the day after," he adds. "We live by goods being produced during the day and transported at night."

The ramifications for Lufthansa Cargo and its global customers are considerable. The airline has established a second airfreight base in Leipzig, but 90 percent of its freight takes off, lands, or transits through the Frankfurt hub.

Equally important, an essential element of Lufthansa's business model is transporting freight in the belly holds of passenger aircraft, which, in turn, depends on an international hub where passenger and cargo flights are synchronized.

"Talk about moving to airports such as Hahn or Leipzig, which are open for night flights, is nothing but a laymen's discussion," adds Spohr. "In the future, freight that arrives in Frankfurt on a passenger flight from Delhi bound for Chicago would have to be trucked to Hahn or Leipzig, then flown to the United States. That means longer transshipment and transport times, higher costs, and, above all, appreciably more heavy-truck traffic on the roads."

Lufthansa is currently caught in the middle of this fray and has tabled capital investments until it secures a suitable resolution.

The International Air Transport Association (IATA) has also weighed in on the legal brouhaha. While the trade association welcomes approvals for adding a fourth runway and a new terminal at Frankfurt Airport, it's also aggrieved by the proposed restriction on night flights.

"Frankfurt is a global hub that needs global connectivity," notes IATA Director General and CEO Giovanni Bisignani. "Severe restrictions on night flights constrain international cargo operations and will hurt economic growth."

The aviation industry takes its environmental and social responsibilities seriously, he adds, with aircraft now 70 percent more fuel-efficient and 75 percent quieter than 40 years ago.

Restricting night flights could have unforeseen social consequences beyond concerns raised by antagonists, Spohr cautions. Cargo activity spread out over fewer hours will increase congestion and throughput concerns, which will inevitably force businesses, carriers, forwarders, and other transportation and logistics intermediaries to take their jobs elsewhere. An independent study suggests 2,100 jobs would be threatened at Lufthansa Cargo alone, and that number would be far greater taking into account the loss of future job growth.

"We're not talking about the percentage of cargo flown at night, we're talking about the very existence of Frankfurt as a logistics base. In the future, freight would then be flown from Amsterdam, Luxembourg, or Paris. That would weaken Frankfurt—to the delight of Lufthansa's competitors," concludes Spohr.

TNT Primes Asia Network

Despite global economic doldrums and cause for capital discretion, TNT is marching to the beat of its own drum as it parades a new $20-million regional hub in Singapore. Southeast Asia remains a ripe market for expansion as consumption in the region's developing countries drives demand for time-sensitive service. TNT's new facility serves as an important terminus and feeder into its Asia Road Network.

The Netherlands-based global mail and express delivery company has been heavily investing in its Asia Road Network over the past few years. The integrated road network, which debuted in 2005, links China with more than 125 cities across 3,100 miles in Vietnam, Thailand, Singapore, Malaysia, and Laos. TNT's door-to-door and day-definite distribution services are less expensive than air and three times faster than ocean.

The Singapore hub will enable faster turnaround times, and process higher volumes of time-sensitive road and air cargo passing through Singapore. A new materials handling system, more loading and unloading bays, and increased warehouse space will facilitate sorting, storage, and transfer of express freight from aircraft directly to the road, and vice versa.

The timing of TNT's new opening is not without reason. The pending China-ASEAN Free Trade Area could drive bilateral trade between China and ASEAN countries to (US) $250 billion, up from (US) $160 billion in 2006. TNT's Asia Road Network and Singapore hub are well-positioned to offer global shippers more secure and cost-effective delivery services.

Canal Turns Tables

While the timetable for completing the Panama Canal expansion project is years away, the turntable for the Gatun Locks rail system is in place. The Panama Canal Authority's (ACP) track and turntable system continuously transports locomotives through the locks to assist transiting vessels. Previously, vessels stopped midway through the locks to exchange locomotives, increasing the time it takes a ship to navigate the Canal.

The new system enables additional Panamax vessels to transit the waterway every day. Vessels can now pass through the Gatun Locks with the set of locomotives, saving significant time. The ACP has undertaken a number of renovations to enhance efficiency during the expansion project including the rebuilding of the entire return track, replacing both turntables, and creating additional locomotive parking space.

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