Episode Transcript
[00:00:00] Speaker A: Welcome to the Lodestar Air Cargo Podcast. This episode is sponsored by Air Charter Service, the aircraft charter broker of choice for thousands of shippers globally. If charter is the answer to your shipment, contact us for a no obligation quote.
[00:00:24] Speaker B: Welcome once more to the Lodestar Air Cargo Podcast with me, Mike King, and me, Alex Lenane.
[00:00:31] Speaker C: As promised, we're looking at the biggest stories in air freight so that those in the business of buying space are equipped for success.
[00:00:37] Speaker B: We'll be tackling the big issues and getting the best interviews and today that means examining the huge shocks we've seen to global supply chains. And we're asking what does this mean for air cargo in the coming months.
[00:00:49] Speaker C: And in fact years? There are big question marks over rates and demand post Lunar New Year. But there are even bigger question marks over how this new US administration is upsetting the best laid plans of shippers everywhere.
[00:01:01] Speaker B: Coming up later, we've got two great friends of the Lodestar podcast who, to be honest, well, Alex is sort of upset in the past.
[00:01:11] Speaker C: Well, not really. They're both grown ups. I'm sure I didn't upset them too much and to be honest, it wasn't just me. But yes. Coming up to talk all things air cargo and forwarding and whether their organisation is serving our industry to the best of its ability are the fantastic juror that is TIAQA Chairman Stephen Polman's and Director General Glyn Hughes. TIAKA is of course, the International Air Cargo association, whose members rather uniquely span shippers, forwarders, carriers and airport interests. Or do they? But that's a question for later.
[00:01:42] Speaker B: We'll be hearing their take on air cargo in 2025, what's coming up from their event. And we'll be asking whether they are too expensive and lacking a bit of diversity among their panelists. Maybe they're ahead of the Trump anti DEI curve. We will find out.
[00:01:59] Speaker C: And we'll be talking about Stephen Palmer's role as Managing director of an air cargo title and whether this is a bit of a conflict of interest for Tiaka or not. I've had my say previously on the Lone Star Podcast, as Mike just mentioned. But today we'll hear Stephen's side.
[00:02:13] Speaker B: But first, Alex, before we get into all that, I can't recall such a chaotic start to a year across modes. What for you have been the main stories across Lodestar's coverage?
[00:02:23] Speaker C: Well, to be honest, Mike, each time I think we've got a big story almost as soon as it's published, everything changes again. It's been an exhausting start to the year, quite frankly. But clearly the key ones at the moment have been tariffs to ING and froing on de minimis and trying very hard to read the tea leaves for the year, but with figures distorted by Chinese New Year data. It's certainly going to be interesting for global supply chains and the freight industry, but the big one for air cargo I think will be the future of de minimis and not just in the.
[00:02:53] Speaker B: Us I'm just going to explain de minimis a little for the listeners as there is some confusion out there and I'm sure it'll crop up a bit later in this podcast. De minimis is a Latin term denoting something that is trifling or of little importance. Basically something that's too minor to be considered or enforced. This sort of the definition. It's a way of enabling shippers to skip import fees on small value shipments. And over 100 countries have de minimis exemptions at various levels. The US level used to be $200, but it rose to $800 in 2016, one of the highest in the world. That was when President Barack Obama signed the Bipartisan Trade Facilitation and Trade Enforcement act just for reference. Across the European Union, the levels around about Euro 150 now de minimis shipments to the US rose from 140 million shipments in 2014 to over a billion in 2023. That's according to the White House. E Commerce shipments from China to the US in 2025 direct to consumers helped fire air cargo markets last year as we've covered on Lodestar podcast frequently. At the start of February, when new 10% U.S. tariffs on imports from China were introduced, the U.S. postal Service announced it would no longer accept inbound mail packages from hon Hong Kong and China as did Minimis. Exemptions were also removed. Alex, what happened next and what's the situation now?
[00:04:21] Speaker C: You know I can't but help hear the words of Air Forwarders Association Brandon Fried in my head. Businesses don't like change that happens without thought and overnight it creates chaos which which is basically exactly what happened here. So USPS said just a few hours later that it would accept in man packages. But then of course they began to pile up in what was the least surprising thing ever. And then naturally they had to put the exemption back until they found out a way to process these packages smoothly and efficiently. So that's where we're at now. We're essentially waiting for someone to work out how to process and tax E.
[00:04:57] Speaker B: Commerce parcels quickly and will it impact Consumer demand?
[00:05:01] Speaker C: Well, there are various schools of thought on this. Most analysts say that Chinese E commerce is so cheap that small extra fees will have little to no impact on consumer demand and that those extra costs could even be absorbed by currency exchange, which is what happened last time. But people do think that slower delivery times, which would be inevitable, are much more likely to impact consumers who still want everything.
[00:05:24] Speaker B: Now I'm over in Asia at the moment actually, and I've been talking to forwarders about this and uncertainty is the word I keep hearing uncertainty in the short term about pricing and demand and in the long term about procurement strategies. Because where exactly in Asia hasn't got a trade deficit with the U.S. let's have a listen to Ramon Krishnan, President of Singapore based the Logistics and Supply Chain Management Society. He's an industry veteran and here he's telling me how all this uncertainty is impacting air cargo demand and what it means for retailer strategies.
[00:05:57] Speaker D: I think the threat of new tariffs can significantly affect the outlook for air cargo demand and general freight volumes, particularly from retailers who have been driving demand. You know you're looking at increased cost, right? New tariffs will lead to higher costs for imported goods, prompting retailers to reassess their supply chain strategies. This may lead to reduced air cargo volumes as companies seek to avoid additional expenses through shifts in sourcing strategy, right? And we're hearing more and more every day about companies looking at nearshoring, reshoring, French shoring, etc etc. We're also potentially going to see some organizations anticipating these tariff changes to happen start to build up inventory. So this could lead to a temporary spike in air cargo demand. But conversely, if tariffs are expected to remain high, retailers may adopt a more cautious approach to inventory and that would reduce overall air freight volumes. Consumer behaviors are going to change because if tariffs lead to increased prices for consumers, demand for those products will decrease, which would subsequently impact the volumes of goods moving through air freight or air cargo. And overall, the uncertainty surrounding tariffs can lead to broader market volatility affecting economic confidence and spending patterns, which in turn influences freight volumes.
[00:07:25] Speaker B: Is there any reason, Alex, why the likes of Temu and Sheen can't just skirt de minimis rule changes and tariffs by setting up in countries that aren't being affected by new fees on their exports?
[00:07:36] Speaker C: Well, both of those companies have have been looking at ways to circumvent this for some time. They knew it was coming. So they're either trying to attract more U.S. sellers and build warehouse capacity there, or by shifting, as you say, to other countries such as India and Vietnam. But we also have to remember that while the US Is capturing all the headlines, there are of course other e commerce consumers around the world. There's a lot more to this than just the US response, and it could well be that E commerce platforms decide to refocus on other countries instead. You have to watch out for China's reaction. And they appear to have forgiven and dusted off Alibaba's Jack Ma. So I'd expect to see some sort of new strategy there. Nevertheless, it is Americans that love to buy, as we all know. And it seems highly likely that the US Administration will look to impose tariffs on other countries too, which shields US.
[00:08:29] Speaker B: E commerce sales until those other countries come into the firing line, presumably. I asked Peter Sundara Swamikanu, who does global freight operations for a large BCO company based out of Singapore. I asked him how this was all playing out in Vietnam, which hasn't been hit by Trump tariffs yet, at least.
[00:08:48] Speaker E: In terms of the shifting trade patterns. One of the things we are seeing now is that due to the potential additional 10% tariff on China, many of the companies overseas are forcing their Chinese suppliers to move to other locations to start manufacturing. So one good example is Vietnam. More and more investments from Chinese companies are moving into Vietnam. Right, to avoid the tariff. But what has happened now is that there is some implication on that. Even though it appears that cargo is being manifested in Vietnam, but the original investment is coming from China, which means the US Government is going to pay more emphasis on cargoes originating from Vietnam because there is a Chinese influence there. So therefore the Vietnamese are also a bit worried now. Right, because they can export more to us, but they will be afraid that they will be under great scrutiny by the US government. That's number one. Number two, in terms of the trade deficit between USA and all the trading companies, Vietnam is one of the top where the US government is facing a trade deficit. So there are going to be potential reciprocal tariff that the US Is going to impose and Vietnam exports coming into the us. So even though there is going to be shifting of trade patterns due to the tariff implemented in China, other countries are also facing uncertainty because they will also be facing greater scrutiny on the cargoes they're generating, exporting to the US and also potential tariff that's going to implement.
[00:10:16] Speaker B: What a mess. So this is casting these big clouds over the market, Alex. Now before we bring in the guys from Tiaka just on rates and demand, there's this real confusion out there and we probably won't get a real picture on this. For a few more weeks post Lunar New Year. But there are early suggestions of a big drop year on year on Trans Pacific freighter operations, down 15% compared to pre Chinese New Year, which means 12 fewer daily freighter flights. Is this temporary while everyone is working out where these tariff wars are going, do you think, or are people you have been interviewing been saying that they're just expecting a much quieter 2025?
[00:10:57] Speaker C: Well, we try to contact Chinese companies regularly and that was one of the major issues over Chinese New Year. In fact, because everyone was holiday, it was really hard to get a sense of what was going on. So anecdotally we've definitely heard of demand for charter flights falling significantly. In general though, I'm sorry to say this, but we're back to uncertainty. It's tough all round. Even if you aren't involved in E commerce, you're still not going to be protected from a fall in demand. Another issue is that passenger flights are now back to pre Covid levels. So there's a bit more belly capacity out there on the Trans Pacific. Gonna know a bit more in a month or so, but I don't know anyone who wants to call it right now. And of course, air freight is the emergency option. It's the mode of last resort essentially. So all you need is a major impact such as strike or bad weather. And I was thinking last night even recalls. Do you remember that year when Japanese airbags were recalled that gave air cargo a nice fillet. So in another certain world, you never know what will keep air freight propped up this year.
[00:11:59] Speaker B: Well, thanks, Alex. That sets up our big interview rather nicely. Stay with us everyone, because coming right up is Tiakas, Stephen Palman and Glyn Hughes.
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Welcome back. As promised, we are now joined by Steven Polmans, former head of cargo at Brussels Airport. And amongst other roles, he's the chairman of Tiaka. How are you, Steven?
[00:12:48] Speaker F: I'm very fine, Mike. Thanks for having us. And it's good to be still referred as the former head of Brussels Airport, knowing that there have been several jobs in between. So must mean I did something good over there.
[00:13:00] Speaker B: You did something amazing, Stephen, but I couldn't list them All. So that was like the mini bio.
[00:13:06] Speaker F: That's a fair point.
[00:13:08] Speaker C: And also welcome to Glyn Hughes, former iata, Global Head of Cargo and now Director General of tiaka. How are you?
[00:13:15] Speaker A: I'm very good, thanks, Alex. Nice to speak with you today.
[00:13:18] Speaker C: So, Glyn, the market this year, now we were discussing before you joined us just how much news there is out there at the moment. You've been in this market for, well, apologies, but quite a long time in various guises. Now it's Yaka, previously IATA. So how would you describe 2025 in terms of how it's impacting your members across the air freight sector?
[00:13:40] Speaker A: Right, that's a great question, Alex. And just for total transparency, it's actually 42 years now that I've been in the industry.
One of the things that those 42 years have kind of taught me is we should never rest on our laurels. This industry is subject to whatever happens in the global economy, whether or not it's from an economic or a geopolitical perspective. And really, 2025, I think, has to be marked with the works of fragile and really kind of delicate.
As you mentioned, we've got things like tariffs, protectionism. We've also got consumer confidence in the U.S. a study came out just two days ago. It's the lowest it's been for eight months. So there is some downside pressure for the industry. But on the positive side, we've actually got a situation of quite strong global economic growth from across the globe. We also have lower inflation than we've had for the last few years. So inflation is continuing to come under control, lower energy costs, and of course, E Commerce is still fueling a lot of the growth in this industry. So it's a mixed bag, I think, for this year. So I think everybody's being very cautious, but we've got to be very aware of political decisions that could be taken in the US which could have a very negative impact very quickly.
[00:14:57] Speaker C: So, Glenn, how big an issue is the de minimis rule change? The more people I speak to, the more opinions I hear on it, no one seems to sort of agree, really. Where do you think it leaves E Commerce as a sort of driver for the industry this year?
[00:15:11] Speaker A: Right. Well, interestingly enough, and I hope I don't add to those variety of opinions that you've got, the de minimis itself is actually not such a big issue because if you're ordering something online, you're usually paying the lowest price that you found, which is why you're ordering it in a certain direction. So if you take the de minimis exemptions away for that E Commerce goods that are coming in from tariff impacted countries, it's not de minimis removal in the US from everywhere. It's only from certain countries where tariffs have been applied. And that's under, I think it's section, I think 301 of the tariff act, which actually allows the exemptions for de minimis to be removed when tariffs are employed on a particular country. So if you're now paying an extra 10% on an item that you were paying $3 for, that extra 30 cents is not really going to make an impact. But it's the clearance, that's where the issue comes in. So if the goods no longer benefit from the exemption of duties and with the new rules about or potentially because it's a new rulemaking proposal that you actually have to have a filing of that entry, that's where the fees can start to rack up because you could then be looking at, you know, 3, 4, 5, 6, $7, whatever the cost may ultimately be to make that submission and that entry in that border crossing. So that's really where the impact could become quite severe for the inbound E Commerce.
[00:16:32] Speaker B: Does it slow things up as well, Glenn?
[00:16:34] Speaker A: Oh, completely. That's actually why, you know, when this tariff was implemented and the exemption was removed, I think within 48 hours we already had severe blockages in New York and LA and other places, which is why the CBP suspended the exemption suspension, as it were. So it's a double suspension. But you know, they are working on tools and systems, different indications. Could be several months, but it's during that period of time people will be taking ulterior measures and looking at ulterior things you could find. For example, if the E Commerce comes via a country that doesn't have a tariff, then of course the de minimis will still apply. But the filing is going to be for all countries. And that proposed rulemaking has not yet been adopted into law. It's still out for public comment.
[00:17:21] Speaker B: So we're talking about weeks, well, maybe months, not weeks in terms of actually having some clarity on any of this.
[00:17:27] Speaker A: I think so, yeah. If you look at the scale, it's 1.4 billion shipments come into the US each year under the de minimis level. That's a huge number of shipments. I mean that's what, 4 million a day?
[00:17:38] Speaker B: It's almost like someone didn't think this through. Stephen that's not the only issue out there, is it? We don't know what's going on in the Red Sea, the shipping diversions away from the area and around southern Africa though they've been boosting air cargo along with this E commerce demand. We also haven't really seen what happens next with other tariffs on other countries. This could be imposed on the EU any day now. For example, we've also got a war in Ukraine and a possible peace deal. How do you view all this? Any positives?
[00:18:08] Speaker F: I think there is always opportunities. If you talk about positives, let's say that opportunities should be positive. And this is part of probably the air cargo industry in general. End of January when we had the World Cargo Summit in Ostend, we had a really great keynote speaker ending the event, which was Peter Hinson. And one of his statements is that he's talking about the new normal. And he very quickly dropped that by saying basically we should talk about the never normal. That's the new standard. Because even the new normal is changing so rapidly that we should get used to not having a normal anymore. And there is two certainties in life. One is that digital will play a bigger role and will go faster all the time. There is no discussion about it. And a second one is change and disruption. Change and disruption will happen more frequently and with higher peaks. And that is something we should get used to. And I think it perfectly reflects on our industry because air cargo has always been exponentially impacted to anything in the world. Being at the economy, being it incidents, being geopolitically situation.
So I think that being agile, being flexible, having that built in into our association, into our organization, into our industry is going to be key for survival. Because any incident the same time, any disruption is going to be at the same time an opportunity as long as we can react very fast and very quick. And I think that has always been the strength of the industry. When we see the problems with the E commerce now with the changing rules, we will see how quickly our industry will be able to adapt. I think the challenge for us will be how can we make sure that we are not always going to be reactive. Things happen, we quickly react, but how can we start being more agile proactively? I think that will be the challenge in future. But I have no doubt that this very disruptive world is going to create an awful lot of opportunities for air cargo. There is no doubt.
[00:20:17] Speaker B: Yeah, I was talking to Scan Global's Mads Dreher and he came up with a good one because I was explaining to him that as journalists we're always talking like you can't keep using black swans and his phrase was perma crisis. So I'm liking that at the moment. It seems to sort of sum up where we've been the last four years and where we're probably going to be the next couple. Just back onto that point, I made to Glyn Steven about speed. We were talking about in the reference to just specific de minimis rules, but we've got these more tariffs, more rules, more friction at borders. There's always been this criticism of air cargo for its lack of speed. Certainly where the integrators aren't involved and you've got multiple parties. Is all of this a concern that you're trying to make things quicker and things are getting. Well, the governments are stopping you doing so?
[00:21:04] Speaker F: Yeah, but okay. Speed is a unique strength of air cargo. Let's be very clear on that one. I think we also have to be careful. Not everything should go as fast. I think we want e Commerce within 24, within 48 hours. I think that integrators need to deliver this service. I know of an awful lot of customers in air cargo who were perfectly happy with five to 10 days, but try to balance it out on a cost level. So I think we have to avoid that. We are not going to make one rule and one set of services within the industry because we have different customers with different needs. And I like to compare it to restaurants. I love to go to a very nice, expensive restaurant from time to time, but I also love to go to McDonald's. And I would really hate if tomorrow there is no more choice. And I think that it's up to us as an industry to make sure that we can indeed deliver to the highest standards. But those companies who are okay to say, guys, I'm okay to be shipped on Wednesday, Thursday, Friday, and you can do it whenever you have capacity available and I get a better price and I'm okay with it, we should make sure we also cater for those customers. So I think that aiming only for speed, I think that would be focusing on our strength. While I think we should focus on our weaknesses and to overcome them and not try to make one standard in speed, I think that would be a mistake.
[00:22:27] Speaker B: I don't know if there's the exact choice. That was an offer there, Stephen, but I have to choose between UPS and a McDonald's breakfast. I know where I'm going every day of the week.
On a separate point, if we can just talk about these tariffs a little bit now, Hong Kong and China outbound in terms of air freight at least could be the big losers. In this trade war between the US and China. Tiaka is hosting an executive summit in Hong Kong in June hosted by Cathay Cargo. Will all of these issues be on the agenda?
[00:22:56] Speaker A: I presume they will be, yeah, absolutely, yeah. I mean, and you're quite right, it's the heart of really E commerce exporting right now is coming from that part of China. We've already seen in the last few weeks. Some of the freighters have been redeployed elsewhere. This is where the industry needs to be most agile. But Mike, forgive me, can I just make one quick comment about Ukraine, because you mentioned it briefly earlier on. I think there's two impacts here that really we need to be looking at from an industry perspective. And of course we do hope that a peace deal is reached because it will stop basically the human suffering that was just needless and pointless from the very beginning. But there's the rebuilding efforts that will in fact create air cargo demand as it does every time after any natural or man made disaster. Rebuilding does require heavy logistics from both maritime, air and rail and road. So that will be an increase in demand there. The second aspect, which is one that we look at from an industry operational perspective, is how quickly could Russian overfly be reintroduced? Now the problem is that's not linked to a peace deal. That's linked to the states that impose sanctions against Russia. So predominantly most of those are the European states who would require an act of parliament. So if a peace deal is not to the European Union or European members liking and support, then that may actually not result in the immediate withdrawal of those sanctions. Without the sanctions being withdrawn, it's unlikely that Russia's going to reduce or reopen its airspace to effectively. It was a reciprocal retaliatory measure. So that side may take longer to reopen from an industry operational perspective. But one hopes the peace accord or ultimately a peace still will be struck, as we say, so that rebuilding can commence.
[00:24:44] Speaker B: So if it's not a just peace, the sanctions might not be removed. But your first point was about investment. If it's not seen as a just peace, that will therefore be a lasting peace. People will be less willing to invest in reconstruction, presumably in our industry and many others.
[00:24:58] Speaker A: Yeah, I mean, but I was thinking about the reinvestment in the state in Ukraine. Rebuilding of those cities that have been demolished, the same as we see in Gaza is the moment there is a peace deal. The sheer impact of modern warfare today, it is quite a scathing impact on the community and infrastructure in terms of even electrical generators, which were some of the first things were attacked in any war, they mostly get flown in or components get flown in because of the need for urgency to get those up and running. So there will be an increase in air cargo demand even if the peace deal isn't meeting with everybody's liking.
[00:25:33] Speaker C: Glenn, I was just going to ask you, won't insurance be an issue with overflight rights? Is it actually, even if there's so called peace, will the insurance companies not be the one that ends up deciding who overflies Russia?
[00:25:45] Speaker A: No, Russia will decide who overflies Russia. First and foremost, their airspace is closed to certain carriers of a flag designation. But you are quite right that when there is an area of conflict, it's quite often even without any airspace restrictions, insurance companies will be first to say, well, we see there's a risk and therefore your hull insurance costs have gone up 100, 200%. If you remember we had this issue when the earthquake in Syria and Turkey, that the humanitarian flights needed exemptions or needed the insurance company to say that we will temporarily suspend the designation as a war risk zone so that they could actually fly in with reasonable insurance costs. So it's actually a combination and you just add another. It's another complexity that even if airspace is reopened, if people feel that, well, there's still a risk, then the insurance companies may still set a higher, you know, level for insurance coverage.
[00:26:46] Speaker C: Right. Okay. So sorry about that little segue. But back to Tiaka. One question I've got for you is on the makeup of your members. Glenn, you told me last year that forwarders make up a decent amount of your number of your members. But at events I tend to see airports, a few more airports, maybe a couple more airports, a couple of airlines and tech companies. That seems to be who comes to TIACRA events. So why do forwarders still seem to be not there? And I know you're going to say we have a lot of really small forwarders and there's networks. I know that. And you get the big forwarders as well. You'll get Shenker and so forth. But what about the vast majority in the middle, the ones I speak to? They don't really know what Tiaka does and they don't really know why they need it. So how do you get to those large section of the air freight industry?
[00:27:39] Speaker A: Great. Well, first of all, on the question of the makeup of the members, I have to say that Stephen wears more makeup than most of our members.
Maybe that subject for a different podcast.
[00:27:49] Speaker F: I only do it because you're asking me to do It But Alex, you.
[00:27:55] Speaker A: Do raise a great question. And our membership is approaching about 470, 480 members now of which as you quite rightly say, forwarders mostly through our great partnership with NAP and others, really is the biggest chunk of freight forwarders. What's interesting about most events is you go to almost every industry event and there is certain sectors there in high numbers, others in less so. We had recently a board discussion which really has challenged us to make sure that we communicate much more with the forwarding community. Particularly addressing the question that you raised, we looked at our membership in terms of the top 25 forwarders. We're probably a bit light there. We've got quite a large percentage of the top 25 airlines, top 25 airports. The forwarders were a bit light. We do need to increase our communication.
We do work closely with FIATA as well. So that that way we're actually making sure that we can keep abreast of the type of challenges that the forwarder is going through. But going forward we would like to see what we can do more to attract them into our events, for example and membership.
[00:29:00] Speaker C: Good. It'd be good to see more there. Brings me quite nicely onto the next bit which is you're now going with a biennial format for your events. Sorry before you're in the every two year format. So you were free from Munich essentially as competition which this year happens in June. So now you've got Air Cargo Forum in Abu Dhabi in November. So are your early bird sales doing okay? Are you a bit worried about the competition from Munich and sort of cannibalizing, you know, the successful nature of your own Air Cargo Forum every two years.
[00:29:35] Speaker F: Before you start about the sales, I would like, I think we all agree and this is an upgrowing topic about the number of events happening in this industry. And again, trust me, it's also a concern that we are having reason why we're doing this B annual event is because we have been looking what is Tiaaka needing? What are our members asking and where do we believe we can make a difference?
On the one hand, there's always competition between all these events. We are not doing this because we want to compete with mass Munich. On the other hand, you could say they start a Miami event, they are more competing with us than we are competing with them. But we are looking at our association when we do events they should serve or need as an association which is a member association for us. It's not purely about the profitability of events. It's not our main Reason of existence as an association. The events support what we have as a goal as an association. And I think that's already a big difference that we should take into account. When we did the event in Miami, we got a comment that you guys are too American focused. We try to be more global. Hence we decided to have another location where we can also have an event. That's why we come to Abu Dhabi. We are also very vulnerable. The past Tiaka really struggled at a certain point because of the ACF going down and we had the COVID So it's also de risking our association by going to an annual event rather than being very depending on an event every two years. But we also notice that we still believe we have a different profile to other events if we see what we do to bring together our members. Also on the event side and the networking side, we believe that we have a different offering to the market and to our members. And for all these reasons, we have decided that we should go as an association to an annual event rather than a B annual event. And that had nothing to do with competition and everything. Did we look at the location and would we not do something in May in Germany? Of course. We are not stupid. And we also do not want to go in direct competition. That's not even our aim. But we do look, where is the business, where do people want us to be? And where can we make a difference as an association for our members and with our members. And that has been the main driver to go on annual event.
[00:31:56] Speaker C: That's a great answer, I have to say.
[00:31:58] Speaker A: But I was going to say, for the first time, I'm saying I can't add anything to what Stephen has said.
[00:32:03] Speaker F: Okay, then I close off, I leave the podcast. I've done what I needed to do.
[00:32:09] Speaker C: Can I just ask about Miami, though? As you know, and as I know, it's painfully expensive. Does it have to be in Miami? I mean, that's the thing. I think that most. The largest amount of feedback that people gave me about the event in November, which was great, by the way, but it was just. It was really expensive. Does it have to be there, lovely as it is, to be in South Beach?
[00:32:30] Speaker A: I mean, that's a great question. And the board, as per Steven's earlier answer, constantly reviews the events. You know, nothing is forever. It's. For now, we've made a commitment for the next event, which is 2026, next year in Miami. When we look at the costs, running an event anywhere in the US brings in certain costs because it's A heavily union, unionized environment. They tend to apply a, I don't want to say a sole supplier approach, but most event locations means that if you want food and beverage, there's only one outlet that you can get that with. There's usually only one outlet that you can actually get certain facilities from, etc. Wi Fi. If I tell you the cost of WI fi in that Entire hall was $70,000 for the, for the three days for the technology that's already in place, that'll just give an illustration of the type of costs that we can encounter. So this is where what we try and do though, and this comes back to your question of Miami, is if we can create a relatively cost relaxed environment around people can walk to the venue. In Miami, there's so many hotels there, the choice and the price points of the hotel meant there is something for everybody. You've got your top class, five star on the beach, but you've also got some more modest motels also within walking distance of the actual venue. So what we did get feedback from people is that the costs of attending lots of flights go in there, some direct, some connections via other places. For example, the costs of the hotels, the cost of local food and local transportation were actually all much lower than if you go to other events around the world where you have to spend a lot to actually just be there. I mean, look at hotel costs in Munich for example. You know, if you hadn't got a hotel now you'll be paying 400, 500 a night and still have a 30 minute journey and an expensive taxi to get to the venue. So we try to put the cost around it, the actual cost of the event. We do try and put as much leverage as we can. As the event grows, obviously our leverage grows in terms of reducing some of those support costs because we do want to keep those down as much as possible.
[00:34:38] Speaker C: Another good answer.
[00:34:40] Speaker F: And Alex, to two points. First of all, Glyn, I don't have a hotel in Munich yet. So can we share rooms again like we did last time?
Thank you.
A second time.
Again, we are a membership driven association. I think that we are more open to any feedback and comment from anybody coming to our events because again, we really do care about what people say, what people think about people feel. And we are confronted with the same level of these discuss and we are really struggling in finding that right balance. And it's really difficult because on the one hand people complain about the cost, especially for the exhibitors. If you want to organize something, like Glen said, if you Want to visit it. It's a very attractive and good place. But at the same time, when we talk to people and if they want to come back, people are really, we have got a very high resigning rate and people agreeing to come back because if they see and they see the improvement that you're making on the event, they also say, as long as we get value for money, we are going to be happy. So I think it's our job to make sure we create the highest value possible so that it makes sense for them to do the investment. That being said, again, the benefit of being in Abu Dhabi as well is that we're going to have a more stable basis. If in future we feel Miami is no longer the right location, we can change. Same with Abu Dhabi. The only thing what we need to avoid and what we should take into account, organizing such an event takes time. There is a reason why some of the very successful events in the industry are the ones who are really building up on the same location every edition after edition. And I think by always changing location and having to start from scratch, it's difficult to create a value for the people visiting. If we see the basis we now have in Miami with, with all the hospitality suites, with the boots, with the social events, we can build on this and make it even better. Again, create value. If you go to a new location, it always is a risk. So changing is something that we are not going to do unnecessarily. But the question that you asked, is Miami the right location? Trust me, we ask that in our board after every event and before we sign any new agreement. This is exactly the kind of discussions we are having. We are not taking anything for granted. We are not doing anything because we have been doing it now in the past. We do question it. And this is all part of our new governance where we as an association really want to be strict on what we do, how we do it, and how we spend the money of our association. So there is no discussion about that.
[00:37:17] Speaker A: And, and if I could add one thing, because we introduced what we called the low, the basically the low cost concept of the Miami event last year, where I think it was probably about 1500 people or 2000, if not more, paid nothing to go there. There was no entrance fee, no nothing. And then we had this Alakart approach to the various functions, etc. And we thought, great, that was going to be well received. We got a lot of feedback that was mixed. Some people said it was great, I loved it. I could just come in for half a Day, no cost. Others said it was awful. I had to choose which event to go to. It was really difficult to get approval for three or four different things from the boss. So they said, can we have an all inclusive price next time? And others said yes. And because you didn't charge us anything to come in, we didn't get the WI fi and all the other stuff, et cetera. So again, the board is looking at that. So we might. Well, we are introducing even third way into Abu Dhabi. So as Stephen said, we very much encourage as much feedback as possible. We get hundreds and hundreds of responses to our survey and we go through all of the feedback, all of the comments and we try and tweak the event. So as Stephen said, it's for the industry, by the industry, to what they need.
[00:38:30] Speaker B: One of the. Yeah, I did have some feedback, I think from Alex, who wrote rather eloquently about this, but I think this is true not of TIAC events. It's probably true of most events in our industry. And almost by raising it, I feel like I'm possibly on the wrong side of history slightly. And that's. That's diversity. It's taking a bit of a blow in the corporate world and in government, especially in the US just recently about whether this is something even positive to pursue. I think it is. I think our industry, as we all know it, tends to be rather male dominated, especially at events and especially among the speakers. There's a lot of work to be done. What's your view on this in terms of the makeup of your panelists and how you go about trying to get that diversity?
[00:39:12] Speaker A: It's a great question, Mike, and I think it's something that we need to do for several reasons. One, because it's the right thing to do, but two, because if we need to create the environment where young women see this industry as a natural career choice, they account for 50% of the global population. I'll give you a couple of stats in a moment of which are really stark and very scary. But when it comes to the event, one of the things I would have to say off the top of the bat is that I've now been putting on events for probably 20 plus years. If I invite a male to participate in a panel, I'm not exaggerating. The average response time is probably about a second to say, great, thanks very much, I'll be there. Without being too general, If I ask 10 females, nine of them come back with a lot more information, have to get approval, and of those nine, quite often they Say, ah, my boss has said, great, thanks for the invite, he'll come instead. So we do have a challenge we do need as an industry to do more. We try and strive every panel, every session to have a diverse approach. And it's not just gender, it's also geographical. It's also young in the industry, older in the industry, different perspectives. As Steven says, large, smaller, different organizations. It's something though that we can't take our eye off the ball. We can't just relax because certain part of the world have said it's not really an issue anymore. I'll just give you a quick statistic. ICAO recently did a study to say that the industry is going to need about another million pilots over the next 20 years. Today the pilot composition is 94% male and 6% female.
That's diabolical. You know, if we want to find those extra million pilots, we've got to do more about reaching out to that next generation of potential applicants. And with air cargo, our challenge is even greater because of course, we're predominantly seen, as you mentioned before, as a male dominated industry.
So it's crucial that we get a higher profile and we're doing absolutely the best we can. We would encourage all of your listeners to help us, give us names. We spend a lot of time working with women in aviation logistics database. I've probably invited most of those people at one time or another and we constantly want to try and bring in new voices to be heard.
[00:41:27] Speaker B: I'll probably echo what you said there, Glyn, to be honest. I started Lodestar podcast with the intention of getting the widest possible variety of voices on it. I failed basically to get enough women on it. I mean, look at this podcast. There's five blokes and Alex. Not for the lack of trying. Even on this particular podcast. There's always a variety of reasons why an interview doesn't happen, whether it's a male or a female, but men do tend to. Yeah, the response time can be very, very quick. Do you want questions? No, no, I'll just. Come on. I'm totally ready for it quite often, but I do find sometimes some of the, some women who've reached the top. I was like, come on and just give an example of where you've reached and how you got there. Inspire some people and I've been slightly disappointed, I must say, that those people haven't stood up. So if anyone out there is listening, they've got any names for me, people in operations, they know the market. Please put me in touch because I would be delighted to have them on the Lodestar podcast.
[00:42:19] Speaker F: Anyway, Mike, you could also say that it needs three blokes to compensate for Alex. Huh? Yeah, that would also make. Make sense.
[00:42:27] Speaker C: I'm not sure about that, Steve.
[00:42:30] Speaker F: But you know what, what I, what I really think is what my concern is that we should try to also avoid that this becomes like a kind of a topic in a sense, that it should not become a negative thing. I really believe that we should create equal opportunities and probably even do some positive discrimination, although the word sounds strange, positive discrimination. But I think we should try to do an effort to get more women on board. But I also do think that we should not start to aim that 50, 50 should be the balance. There's always going to be a difference depending on the jobs, on what people prefer, what people like. What I really am against is that people doesn't matter if it's women, men or certain places in the industry or people should get equal opportunities and equal chances and we should try and to aim that. That is really happening. But like Glyn said, we have to invite four times more women to get half of them compared to the men. That's the effort we need to do. And there's also a certain limit what you can do. So I think, yes, let's try to continue and fight for it, but let's also try to keep the positive message up. I spoke to a few women and one of the comments I got is that they said I don't want to be on a stage having the feeling that the only reason why they start inviting me is because I'm female, because this is becoming such a topic and they're writing me about being a female on stage and not what I have to say. So I think we should really keep that balance also in how we communicate about it, what we are trying to do. It should not become a topic on itself because then we risk that we get the opposite of what we are trying to achieve, meaning more opportunities, more equality and more women as part of the whole discussion and everything what we.
[00:44:20] Speaker B: Are doing and while we're there, less public schoolboys, more people from Liverpool as well. I think that'll be a massive positive. And more bald men. No, no, I'm. I jest, I jest. I think we all agree that we need more women on these stages. Let's go to another historically, I don't know, outdated topic almost. It feels like occasionally the air cargo industry's path to net 0, 20, 50 hinges on reliable data and consistent reporting. Currently we have the international civil aviation organizations UN back standards competing with various regional organizational approaches, plus debates over how to calculate belly cargo emissions. What does TIAKA think is needed to get everyone not just measuring the same way, but actually maybe moving the emissions needle, if that makes sense to you.
[00:45:09] Speaker A: Yeah, and that's a great question. I'd like to tackle the inconsistent measurement approach because this is something that's quite frustrating. You know, icao, which is the global regulatory body for this industry, has for many a year had a formula to apportion weight between passenger and cargo and a combination aircraft. And that weight would then be utilized to establish fuel burn and fuel burn then establishes emissions. So you can effectively use that formula to determine emissions between passenger and cargo. Unfortunately, a few years ago IATA adopted a different standard that actually excluded the weight of the seat. So therefore it transferred a lot more of the weight to cargo. Therefore if more of the weight transfers to cargo in terms of the ratio, then the fuel burn does. So emissions for cargo on a passenger aircraft are disproportionately higher than they would have been under measurement of the ICAO standard. Now we as TIACO don't publish standards. We just try and promote industry fairness and consistency because we need to be transparent because the outside world is looking to attack. So we need to make sure we get our house in order first of all internally, when we don't want to detract away from the fact that there is a lot being done. Airlines, passenger and cargo are investing heavily in modern equipment.
Again there has been some criticism to say, well cargo aircraft are so much older and our view is no cargo aircraft in predominance. If you look at many of the cargo aircraft are conversions, that's an efficient recycling of passenger equipment. If we can extend the life of a heavily carbon intensive asset for an extra 15, 20 years, then that's actually very pro environmental responsibility. So I think the industry is doing a lot, it has to be said the path to net zero is very complex. It's reliant heavily on the use of sustainable aviation fuel that is inadequately levels right now the supply globally. It may not even reach 1 or 2% this year. Europe has got a 2% blend obligation. You mentioned before Corsia, which is a carbon credit type program. You've got EU ets, you've got other emission programs around the world. So it is a very complex environment. And I think at the end of the day the investment is needed into new propulsion systems. But even there if we move to hydrogen based propulsion systems, you then end up with two systems because you've got traditional jet, A1 kerosene aircraft going to be around for the next 50, 60 years. So it then becomes even less environmentally responsible if you've got two different types of systems with two different infrastructures. So it is going to be very complex. But we do need to recognize what the industry is doing. The airports are doing a great job. ACI's carbon accreditation program. A lot of airports got great solar farms, water recycling, a lot of you go in the ground handling facilities. They've got smart buildings, a lot of ground based vehicles, a lot of investment in electrification.
So there's a lot being done. But the challenge is huge. We also have, and forgive me, this is the wrong answer, we need to have a responsibility beyond our own national borders. If you go to Africa, for example, they are desperate to get involved in sustainable aviation fuel production. They've got a lot of agricultural byproduct waste material that would be great source. But they don't have the technology to go through the pathways to convert. So we do need for those states with the technology to transfer help support and assist those states with the feedstock, but not necessarily the technology to convert to sustainable aviation fuel.
[00:48:49] Speaker C: So Glenn, do you actually believe it's possible that zero for 2050? I mean you've said a lot of, there's a lot of words there, but do you think it's going to happen?
[00:48:56] Speaker A: Honestly, Alex, I think it's too early to say no. I think that's too defeatist because technology is, as something that's taught us over the last decades is tomorrow could be the most amazing new technology possible. I'm a very strong believer in that the right level of technology will come through. So I think we have to continue on this path now because this path does show that if we grow the amount of sustainable aviation fuel, we will get there. If there are market based measures in place, it will encourage and promote us to get there. But I do believe we will need to have a seed jump in technology because in the next 10, 15, 20 years there'll be a lot more industries competing for the same green energy that we're trying to produce and use now.
[00:49:41] Speaker C: Glen, one word answer please. Who pays?
[00:49:44] Speaker A: We all do. Oh, we all do. Three word answer.
[00:49:47] Speaker B: That's a tough one to answer with one word.
[00:49:52] Speaker F: Can I give a more black and white answer than Glyn did on the 2015 net? 0? Because I don't think we will make it. I think it's not possible. We are almost 2030. We are still designing and developing aircraft that will fly around for quite some time. SAF will be solving part of the solution and not everything. But can you imagine that if we would go and reduce 80% of our emissions, wouldn't that be amazing compared to other industries? I think that we also have to see that that goal, if it is not ambitious, then I think nothing happens. If we don't create a time, nothing is going to happen. I think that we should be careful. Again, if we would reduce even to 90%, if we said at a 10%, we should not consider that to be failed because once you start with that reduction, then maybe it's going to be 2055, 2060. And I think that is more than certain other industries are doing. If you see the numbers, everybody's complaining about, you know, the aviation, but if you see the fashion, fast fashion fast fashion is creating more emission than the whole aviation industry is doing. But we're not talking about that. How come? So I think we have to be careful not putting ourselves in a corner again where we're being hit and then we do an awful lot of things and then we say, please hit harder. So I think we also have to be positive and I think the ambition of the aviation industry is very high compared to other industries. So let's work on that and embrace that. This is not an aviation or an industry issue. This is a society issue. When we talk about the environment and the emissions, when we create transparency and we start measuring, what we should do is how can we improve and not how we can shift responsibilities.
We are not reducing enough the emissions. You know what, let's split the shift between passengers and cargo. This is not a competition between passenger and cargo. This is not a competition between the airlines and what happens on the ground. We are all in this together and in the end we need to reduce our footprint.
[00:51:53] Speaker B: I reckon we've got that issue covered now. Steven. Before we started, I said there was no way we could do this podcast without addressing the elephant in the room. And that elephant is me and Alex, and not just us, many other people in the supply chain media. I think it's about the first time I've ever been quoted by other media. In fact, we were a bit critical of your decision as a leader of this industry to take a position as Managing director of Air Cargo Week. Just a bit of background for anyone listening. One of the reasons we were critical is because this is now owned by French PR agency Lemon Queen and ECS Group, which also represents many of the companies covered by the magazine and is part of Tiaka Current Lemon Queen clients include ECS, Qatar Airways, WestJet and Challenge Group. I called this incestuous at the time it was announced.
I presume you don't think it is. So my question is this. If it isn't incestuous, how would you describe it?
[00:52:52] Speaker F: First of all, if that elephant is still in the room, I feel sorry for the animal because I think he has lost a lot of weight and I think he should be free.
[00:53:00] Speaker A: It's free.
[00:53:01] Speaker B: Now.
[00:53:02] Speaker F: I think you have mentioned also two elephants that are two different ones and I can't speak for both. You can question about the idea and the investment of, of Lemon Queen and Air Cargo Week, which might create a conflict which is completely separate from my own position on having them having a cargo week as a customer and, and the other things that I'm doing. Look, the only thing I can say is following if I had not a very strong mandate to do it without any interference.
[00:53:31] Speaker B: Sorry, Stephen, I have to stop. If you're managing director of something, the ownership of it is not separate, is it? Or is it?
[00:53:38] Speaker F: I have nothing to do with the ownership at all. Nothing at all. Let's be gravity. I have my own company that I started after leaving Abu Dhabi and today I am hired as an external person to help them, to restructure the company, to bring them to more digital and to get certain things done. And that's my scope. I'm not involved in editorial, in writing in what is that. I'm not, I'm not involved in that one. I have a.
[00:54:07] Speaker B: You involved commercially then with advertising or I mean I should say with my.
[00:54:11] Speaker F: Job, not my job and.
[00:54:13] Speaker B: Right, okay.
[00:54:15] Speaker F: So there is a very clear mandate on what I do or I'm not doing. It's only a part time job. I'm only doing this one, two days a week. So there is a very clear thing what I can do or can't do within that time frame. I think that that is very, very clear. It's also a longer assignment than expected. But this is not, not an indefinite assignment. This is a work that I need to do and that I'm doing. I've been always been in jobs that I had to balance acts. If you are an airport, you are between so many different players. I've been doing Echago, Belgium Pharma, iro, I've been doing Teaca for so long. So there's always this kind of potential conflict of interest. But then I think it comes to integrity. Once I start not being correct or not acting in a very integrity way, people will Use it against me and it's finished.
You can't solve that. I've only had very rarely people trying to accuse me. And even the biggest one was recently. Never, ever there was any sign or any proof or even a sign of a proof that I've not been acting or handling in a very integrity way myself. And that is very important and I will always respect it. And every time when it comes, I always have the feeling that whenever it comes, and only the very few occasions, it always comes from the same angle. And I have the feeling it's a more personal thing with a few people that also really go down quickly. The board is very simple. Today. The board of Tiaaka feels that my role as chairman of Tiaaka is not linkable with what I'm doing outside. They will be able to act and that will be a very easy discussion because it's too important.
[00:55:57] Speaker B: No one's questioning your integrity at all. I looked at a couple of stories about Tiaka and Air Cargo Week just briefly before we came on. I mean, just in November last year. One headline, blue Sky Thinking from Tiaka, another one, success in the Sunshine State. They're not headlines you're going to see in Lodestar. All your press releases are there as a neutral association. You're talking about, you know, maintaining that integrity and being seen to maintain the integrity. Why not just not do the job? So you don't even need to have this conversation with me.
[00:56:29] Speaker F: First of all, I need an income. I'm doing Tiaka for free. That's not paying me, so I need an income. So that, that's why I'm, I'm doing it.
[00:56:36] Speaker B: Fair enough.
[00:56:38] Speaker F: Like I said, when I started doing this, when I created my own company, the idea was to do it in between two jobs. It was never my idea to build up a consultancy company that I'm having now. And I'm not even saying that this will be long term. The only thing is that the in between two jobs is lasting a bit longer than I was expecting. And we will see, we will see what happens. I also, again, if, if, if I was with Brussels Airport, I was probably much. There was a much higher risk of a conflict of interest doing Tiaka and Brussels Airport because the role I could play, the contact I had to airlines would be much more influential. On a business side, nobody ever questioned that because as Tiaka chairman, we have built in a very strong governance that as a chairman you're not having the same impact anymore and the same freedom as you had in the past. This was part of professionalizing the industry. And Mike, if you want to find articles of Glyn in media, I can tell you that Glyn is showing up all the time, all over the place, and probably even less in Air Cargo Week. Glyn speaks to everybody. He's an all the media, so he's not getting a preference. Do we, as Air Cargo Week have a different way of communication than Lodestar is doing? Absolutely, and I fully agree. And I don't want to be the next Lodestar. And I think what Lodestar is doing is absolutely good. When I was at Brussels Airport, I also had a lot of interaction with Lodestar. I supported Lodestar because I do think that we as an industry need a critical voice and need people who are willing to challenge. That's not necessarily what Aircraft Week is doing. One of the changes we do want to do is we, I think that everybody in the industry, same with Tiaka, I think you need to create value proposition for your members, for your customers. So you need to have a clear profile on what you do and won't do. And I think that is absolutely key of the whole process that we are doing.
[00:58:36] Speaker B: Okay, thanks, Stephen. Sorry. Well, I'm going to have to wrap up here, but. And I just want some final thoughts. But I appreciate you answering those questions direct. Glyn, a little bird tells me your time at Teaka may soon be coming to an end. What are your plans if this is correct? And what will you be most proud about of your time at Tiaka?
[00:58:55] Speaker A: Well, I think in the words of Oscar Wilde, the reports of my death are somewhat untimely early. No, I mean, I've been with Tiaka now for four years. It's amazing that time frame. I signed up for an initial five year contract. It's a discussion I'll have with the board.
You know, so it's only really saying that my first contract comes up next year. I mean, it's, it's, you know, you're not going to see me leave just yet, Mike. Don't worry, you know, we'll still be at least two bald men around.
[00:59:22] Speaker F: Yeah.
[00:59:23] Speaker B: More podcasts to come. Glenn. People often bemoan air cargo supply chain inefficiencies. Is the one thing in particular that our industry could relatively easily do to make their customers happy. That you can think of. A quick answer, please.
[00:59:38] Speaker A: Right. Well, I think the industry has done a lot in recent years to increase transparency. If you look at the commercial side, the distribution of rates, tariffs, availability of capacity, far more transparent than we've ever been before. I think the one area we need to look at now is transparency of operations when things go wrong. I think that's the one source of frustration which could be removed relatively quickly.
[01:00:01] Speaker B: Glyn Hughes, director general of TIACA and Stephen Palman's chairman of tiaka, thanks so much for your time today.
[01:00:07] Speaker F: Thank you, Mike. Thank you, Alex.
[01:00:09] Speaker A: Thank you. Thank you, Alex. Thank you.
[01:00:10] Speaker C: Thank you.
[01:00:14] Speaker B: And thank you all for listening. Charlotte will be back next week with her News in Brief podcast on Monday, and we'll both be reporting from TPM25 in Long beach, where I'll be getting a flavor for how the US Is reacting to the shock of this new presidency and what it all means for contract rates. Thanks also to Air Charter Service for sponsoring this podcast, Karen Ball and Tom Matthews for doing all the heavy lifting on production, and you all for listening. Bye for now.
