Eric Joiner's Freightdawg.com - The Logistics and Supply Chain Blog!

Old School Air Cargo

Once upon a time, back in the 1960's, my grandmother, my granddad and my father all worked for Lockheed Georgia Company in Marietta, Georgia.  In those days the premier products coming out of Lockheed Georgia were the C-130 and the C-141.  By 1970 that also included the mammoth C-5A.

The Vietnam War was raging and Lockheed couldn't produce enough airplanes.  The parking lot at what had been the "Bell Bomber Plant" in the 40's, and became "Air Force Plant No.6", was full. 

My father worked in international aircraft sales.  Amongst the derivative products of the C-130 was the L-100.  The L-100 was a civilian version of the venerable and well proven C-130 Hercules.  I loved it as a kid.  Simple reason.  Dad had a desk model of the L-100 in Delta colors.  Any airplane I could play with had to be cool.

Delta and Alaska Airlines operated the L-100 along with Southern Air, which had its connections to the CIA.  I wish I still had that desk model...

At the time the L-100 was introduced with Delta, the main customers were "Aerospace customers". Guess what?   The main customers that would have fit Delta's route structure then would have been Lockheed California Company and Lockheed Georgia. The CEO of both Lockheed companies was Dan Houghton.  My Grandmother happened to be his executive secretary.  (she was a bar certified lawyer to boot.)

What is ironic is that Delta abandoned specialized air cargo aircraft when they developed belly capacity in then new, wide body aircraft like the 747, L1011 and DC-10.  Delta abandoned the 747 in  1976 because it didn't fit their network.  The L-1011 was a workhorse and handled the majority of domestic air cargo.

Today, airlines are using regional jets and smaller commercial jets to service longer distances.  This has killed the domestic air cargo market because there is no excess belly space for freight.  Perhaps an aircraft like the L-100 would have found a niche today?

As for "Air Force Plant No. 6"... Lockheed produces a new product called the F-22.  Along side the C-130J!

clipped from blog.delta.com Forty-two years ago this month, on September 15, 1966, Delta launched the world’s first scheduled service of the all-cargo, turbo-prop Lockheed L-100 Hercules.  It was the commercial version of the military C-130 Hercules, famous its ability to land on unimproved short strips, yet carry bulky loads and vehicles. This photo of the rear of the boxy L-100 fuselage shows the loading system.  Cargo pallet transporters, pulled in a train by a tug, were wisked from the Delta freight facility to the Hercules.  The palletized freight was then moved over the roller bed surfaces of the transporters and the floor of the plane.  Here, you see a T-shape option for complex loading/unloading where the pallets are moving from side position onto the main line of loading.  According to Delta press releases from 1966, three men could unload and load a full Hercules–45,000 pounds–in less than 30 minutes. The Hercules was suited to Delta’s relatively short haul, small shipment operation in the 1960s.  With this plane, we offered the first single-carrier cargo service between California and the Southeast, filling a big gap between the aerospace industries in those regions. When our first widebody passenger jets–the Boeing 747 and Douglas DC-10–arrived with their speed and large underfloor “belly bin” capacity, we did not need a fleet of specialized cargo aircraft any longer.  Delta’s last L-100 flight operated thirty-five years ago this month, on September 1, 1973.

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AeroLogic signs with Boeing for after market services

AeroLogic is a joint venture company between DHL and Lufthansa Using a fleet of Boeing 777-200F freighters, they will jointly serve markets in Europe, North America, Asia and other destinations as needed starting in 2009.

AeroLogic is based in Leipzig Germany, which is a joint freighter hub for both carriers. Their fleet will eventually consist of 11 x 777-200F freighters.

Boeing will provide after market support.

clipped from www.marketwatch.com Boeing and AeroLogic Partner to Streamline Carrier's Maintenance Operations MADRID, Spain, Sept 25, 2008 - Boeing announced today at MRO Europe that AeroLogic has adopted the airplane manufacturer's Web-based solutions, Maintenance Performance Toolbox and Airplane Health Management, as foundations for the carrier's 777 Freighter maintenance documentation platform when deliveries begin in 2009. Maintenance Performance Toolbox, including the Library and Authoring modules, will help AeroLogic, based in Leipzig/Halle, Germany, streamline an array of maintenance activities, including managing technical publications and training and customizing online maintenance manuals. A total of 14 European carriers now use this innovative maintenance tool. AeroLogic will use Boeing's Airplane Health Management to monitor its 777 Freighters, giving the airline a real-time fault management tool to identify maintenance needs and communicate with ground teams to enable proactive, planned and timely maintenance operations and address potential issues. AeroLogic GmbH is jointly owned by DHL Express and Lufthansa Cargo AG, with each company holding a 50 percent stake. The airline, which was founded in September 2007, developed from the joint venture set up by the two partners in 2004. AeroLogic's cargo capacities will be used primarily by DHL Express and Lufthansa Cargo. The two partners also will be responsible for sales and warehouse handling.

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Job Hunter: You NEED to Read This.

97 Job Search Tips

Career advice for Desperate Job Seekers

Whether you work in transportation and logistics, or any other field that happens to land you at freightdawg.com, there are certain special sites on the web that simply require a bookmark.   I've had this link available in the left side bar of my site for some time, but think it needs special highlighting given our current economic climate.  The US economy is a mess. Jobs are dear and household costs are brutal. 

My brother, Harry Joiner, is a highly successful executive search consultant with his own practice. He specializes in e-commerce and on-line marketing.  Harry also is committed to helping people improve themselves. In this regard he has published a brilliant reference article called "97 job search tips".   

The purpose of the list is to give job hunters a no BS list of what to do and how to do it, regarding looking for that next position, how to work with a head hunter, how to interview and generally how to do combat in what is a damn tough job market.

No Cost. Free of Charge. This is information you NEED to READ whether you are in the job market now, or thinking about your career future.

I, and others, have told Harry the information is simply so frank, and so honest that it ought to be a book.

(Folks, this isn't an advertisement. Read the information!)

Eric

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DAL/NWA Merger Takes Next Step

Back in April of this year Delta and Northwest Airlines announced their intent to merge their two airlines into a single entity still called Delta.

Today, the FAA approved a transitional plan to merge the air operations of the two airlines into a single network. Ultimately that will result in a single operating certificate. The process should take about 18 months.

Delta is holding its annual shareholders meeting in New York this week.  Delta Shareholders are expected to approve issuance of new shares to buy Northwest.  Northwest Shareholders will be asked to approve the acquisition.  DAL hopes this whole thing is done and dusted by the end of the year.

As a long time Delta passenger, native Atlantan, former DAL summer employee, and general fan of the airline, I'm not so sure this whole thing works to my benefit as a passenger.  However, as a freight carrier, Delta will clearly benefit from Northwests experience in cargo operations and extensive Asian routes. (at least the ones they haven't killed off yet.) Professionally I like that.

We will see. 

clipped from minnesota.publicradio.org FAA approves transition plan for Delta, NWA merger September 22, 2008 Atlanta — (AP) - The Federal Aviation Administration has approved a transition plan designed to combine the operations of Delta Air Lines and Eagan-based Northwest Airlines, and to achieve a single operating certificate after they merge. Airlines are required to have an operating certificate, which means they must prove to the FAA that they have the financing and management expertise to run an airline. Delta and Northwest each have their own operating certificate right now. The plan they submitted to the FAA outlines the methodology, processes, tools and timing they will employ to maintain the safety of their day-to-day operations during the transition period. The FAA's seal of approval for that plan means the two airlines can move forward with the transition process. Their goal is to achieve a single operating certificate over the next 15 to 18 months.

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Patrick Dixon Discusses Virtual Fulfillment

Dr. Patrick Dixon MD is a world famous futurist, business consultant and speaker. Here he discusses the future of supply chain and logistics relative to on-line order fulfillment.  While I think Dr. Dixon sometimes has his "hair on fire" relative to what the future may hold, many of his ideas and observations are spot on.

Dr. Dixon comments here on virtual fulfillment of retail orders placed on-line and the challenge that fulfillment presents for federal postal authorities as well as integrators such as UPS, DHL and FedEx.

I will say that Dr. Dixon is plenty lucky if he can place an order today and reasonably expect it tomorrow. There are not many warehouse operations who can execute same day order execution on a volume basis.  Also many online retail operations choose the cheapest method of product movement in order to stay price competitive with local shops, which means shipment by ground.  That's a 3-7 day fulfillment right there in the US at least.

In Germany, which is the venue in which Dr. Dixon is speaking, one day fulfillment may well be possible if the warehouse can pick and ship the goods same day.

Dixon also talks about having dozens of vendors sharing a common warehouse.   That's likely never  gonna happen if they have to sign the same warehousing contract.  I've been involved with VMI operations in the past where just getting 10 vendors to agree to the same shrinkage allowance is next to impossible!   The warehouse operator would have to take title to the goods.   When that happens.  You have AMAZON.COM.   The rest is just choosing the fastest mode available that still allows you to be competitive.

Dr. Patrick Dixon's website is www.globalchange.com

Eric

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Supply Chain and Food Trading: AJC International

This article is about a story I have personally observed for over 35 years.   It is a story about my Dad and his company. Eric J. Joiner, Sr. is vice chairman of AJC International. 

Founded in 1973, AJC is a food trading company whose business has grown from 3 guys in a small office to a billion dollar company with a dominant position in the international trading of protein products. With headquarters in Atlanta, Georgia, today AJC has 11 offices located all over the world and does business in over 140 countries.

Proteins consist primarily of frozen poultry, but beef, pork and other products are also traded. Key markets include Europe, China and Russia. Emerging markets such as India and Africa are targets but lack the cold chain infrastructure to support the demand.

Check out this podcast!

Recently Dad did a radio interview with a local Atlanta radio station.  The content of that interview can be listened to here.   

The interview is potentially interesting to the freightdawg.com audience because not only did the company founders come from transportation backgrounds but the key competitive differentiators for AJC today are in supply chain.   

Trading companies are fundamentally supply chain based.   This interview gives some excellent insight into that fact.  It also discusses the current international environment that trading companies must deal with.

For those who are interested in entering the international food trading environment for a career, significant insight is given on how these markets work and the personal prerequisites needed.

Eric

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Airline Fuel Hedging is Risky Business

Airlines buy fuel hedges in an effort to balance current cost of fuel against what they think the price of fuel will be in the future. That's an excellent strategy when the price of fuel goes up.  Southwest Airlines and Alaska Airlines are both famous for doing this very well.  In a number of fiscal quarters SWA has claimed that the only reason they made money was that they had a competitive advantage in the price of fuel because they hedged well.

Typically airlines hedge by buying forward contracts on kerosene, or home heating oil because Jet fuel isn't actually a traded commodity.  Kerosene however moves at about the same price levels as Jet Fuel.

Now, while aviation fuel remains high, the price for crude oil is falling.  United, Northwest and Delta are feeling the pinch and stand to lose money on their hedges.   Hurricane Ike took a number of refineries off line so supply is keeping the price of Jet A high even while the kerosene or heating oil the airlines used for hedges falls. 

clipped from seattletimes.nwsource.com By JOSHUA FREED The Associated Press MINNEAPOLIS — Airline bets that oil prices would rise looked like a no-brainer this summer. But with oil prices falling, those hedges against rising fuel costs are getting expensive. United Airlines said today it is on track to lose $544 million on fuel hedges this quarter. That included $72 million in realized losses and another $472 million in unrealized losses. Those positions forced United to put $400 million into restricted cash for the parties on the other side of its oil price bets. Other airlines have not disclosed their hedging losses or gains for the third quarter, but it is likely that United was not alone in underestimating oil's dramatic fall. Oil settled at $97.16 a barrel on the New York Mercantile Exchange today, down from a July peak of $147. Northwest Airlines said in July that its hedges require it to pay if crude falls below $108. Its hedge for 10 percent of its fuel for next year requires it to pay if crude falls below $112. Of course, rallying oil prices could make those hedges look smart again. And — importantly — even if United loses money on fuel hedges, it will save money because the fuel itself is cheaper. JPMorgan analyst Jamie Baker wrote in a note that oil's fall over the space of just one week will save airlines $3 billion. Fuel has become the biggest expense at the big airlines. United's 2007 fuel bill was $5 billion, which was reduced slightly by an $83 million hedging gain. "Yes, hedgers are under water on their hedges, but they are seeing some relief on the cash market side. That's how it should work," said Jonathan Leak, a senior vice president for risk management at World Fuel Services, which puts together fuel-hedging programs for airlines. However, fuel prices have not fallen as much as crude in the short run because refiners are at capacity. Hurricane Ike made that worse because 12 of the 14 jet fuel refineries in its path are still shut down because the power is out, Leak said. Those 14 refineries make 19 percent of the nation's jet fuel.

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Cessna Prototype LSA C-162 Crashes

Late news that the prototype of the Cessna 162 Skycatcher has crashed in an apparent accident. The pilot managed to survive the crash. Cessna has sold a at least 1000 of these light sport aircraft so far, with the first to be delivered in 2009.   

Here is a link to an article I wrote on July 28th, 2007 on the Cessna roll out of the Skycatcher.   This is one scwheet little airplane.  I hope the crash doesn't delay the delivery of the first production models too much!   

clipped from www.avweb.com Federal investigators are on their way to Douglass, Kansas to investigate the crash of a Cessna Skycatcher LSA prototype Thursday. The pilot of the test aircraft was able to parachute to safety and was reportedly taken to hospital with minor injuries. Cessna media relations personnel were unable to immediately respond to AVweb's request for more detailed information, but KAKE Television is reporting the aircraft crashed into a treeline near the boundary of Butler and Cowley Counties. The television station is quoting witnesses as saying they heard a loud pop and then saw sparks and the plane spiraling down. The pilot landed in a field about 400 yards from the aircraft. The TV station quoted a Cessna spokesman as saying the crash aircraft had about 150 hours on it.

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Good News! JoC Online is now Free!

Just a quick post to point everybody to The Journal of Commerce Online web site.  Stuart Chirls, Editor of the JoC online wrote me the other day to tell me that the JoC online is now FREE.   This previously was a subscription service.   

The JoC is has great content and has long been the definitive source for transportation news, especially maritime news.  I love the fact that its now free, because I can now link to their content and comment on it. I've been reading the JoC for 25 years.   Back in the days before the internet, it was common to read the newspaper of our industry cover to cover.   

Eric

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Port of Houston survives Ike.

The good news is that the Port of Houston sustained minimal damage from Hurricane Ike, which did considerable damage to the city of Houston and surrounding areas. The impact seems contained to the port area and major assets like port cranes survived without significant damage.

Port operations will resume with permission of the Port Captain once an inspection is complete.

clipped from www.logisticsmgmt.com Ocean cargo: Port of Houston well on way to recovery Patrick Burnson -- Logistics Management, 9/15/2008 12:50:00 PM HOUSTON— The Port of Houston Authority (PHA) is in “an asset assessment and operation recovery mode” in the wake of Hurricane Ike said port spokesmen. “The welfare of PHA’s employees, customers and neighbors is our first concern,” said Argentina James, the port’s director of public affairs. Based on preliminary assessments, the PHA facilities have limited negative impact from the hurricane, he added. “As is most of the Houston Area, we are without electricity and we are operating with limited temporary power from generators,” stated spokesmen. In a voicemail message, press officers noted that phone service was still unreliable to the region, advising shippers to contact PHA via email. Meanwhile, containerized shipping movements in and out of the vital Gulf gateway are expected to resume on a case-by-case basis. “We rely on the captain of the port to make that determination,” said spokesmen. “At this time, that determination has not been made. We will continue to coordinate communication and assessment efforts with the local and regional port coordination team.” Initial assessments of the PHA terminals revealed minimal wind damage that knocked down a few fences, containers and electrical lines, said officials, who added facilities and its assets are in “good shape” considering the magnitude and strength of the hurricane.

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