Etihad Airways, the Abu Dhabi-based national airline of the United Arab Emirates, and American Airlines announced recently that they will build on their existing codeshare relationship by offering their passengers the opportunity to earn frequent flyer miles on flights booked on each other’s flights.

Starting June 1, members of Etihad Airways Etihad Guest frequent flyer programme will be able to earn miles on eligible American Airlines flights. Likewise, members of American Airlines AAdvantage® programme will be able to earn miles on eligible Etihad Airways flights. The airlines plan to expand this agreement later this year to include mileage redemption across the two airline’s networks.

The codeshare agreement between Etihad and American, in place since August 2009, delivers a combined codeshare network of more than 50 destinations worldwide.

James Hogan, Etihad Airways Chief Executive Officer, said: "A key strength in Etihad’s growth has been the strategic development of our network of airline partners. American Airlines has a wide-reaching destination network and a highly loyal customer base, making them an ideal partner for us in expanding our global reach beyond the destinations we serve directly.

"Through this new frequent flyer programme agreement, I look forward to providing a more seamless and enjoyable travel experience for AAdvantage members on our network, as well as offering more opportunities to earn miles for the loyal members of Etihad Guest."

"We are very pleased to announce our frequent flyer partnership with Etihad, an airline that offers our customers the choice of flying to destinations across the Middle East," said Virasb Vahidi, American’s Chief Commercial Officer.

PepsiCo, one of the world’s leading producers of convenience foods and beverages, has awarded a 10-year contract to Kuehne + Nagel for its Dutch warehousing and distribution activities. Kuehne + Nagel’s solution exploits synergies to secure a faster and environmentally friendly supply chain.

PepsiCo decided to outsource its warehousing, freight management and distribution operations in the Netherlands to achieve three main goals: The global food and beverages corporation wanted to improve customer service by responding even quicker to changing market demands while at the same time reducing supply chain costs as well as the environmental impact of its transportation activities.

“We have chosen Kuehne + Nagel due to the company’s in-depth knowledge of the FMCG industry,” said Erwin Rosens, Supply Chain Director at PepsiCo Netherlands. “They provide us with an integrated and flexible solution that copes with the daily patterns and seasonality of the food industry.”

Within the scope of the contract, Kuehne + Nagel provides a supply chain solution tailored to PepsiCo’s specific needs. By integrating PepsiCo into Kuehne + Nagel’s Dutch distribution network, fewer kilometres will be needed to transport salty snacks, cereals and nuts from Belgian and Dutch manufacturing sites to the distribution centre in Utrecht and further to retailers throughout the Netherlands. In addition, Kuehne + Nagel will develop a new state-of-the-art, multi-user FMCG (Fast Moving Consumer Goods) campus in Utrecht, equipped with high bay storage and automatic layer picking during the first year of the agreement.

“We are delighted that PepsiCo has trusted us to increase the efficiency of its warehousing and supply chain activities in the Benelux. It is a confirmation that we provide optimal service to FMCG customers,” said Tim Beckmann, Director Contract Logistics at Kuehne + Nagel Netherlands.

Italy’s all-cargo carrier, Cargoitalia, has joined the long list of airlines who have stepped in to help the giant relief airlift for Haiti.

Cargoitalia says it has so far operated two MD11SF flights: the first from Brindisi to Port au Prince, followed by a second flight from Milan and Rome to Santo Domingo, in the neighbouring Dominican Republic. The two flights carried a total of 135,000 kilograms of first aid equipment, medical kits and food on behalf of the Italian Government and international relief organisations.

Both flights required complex routings, with last minute changes, due to restrictions on civil flights into Port au Prince, and the lack of fuel at several other airports in the area.

“We maintain dedicated slots for charter operations in our schedules, so we were thankfully able to respond to the urgent plea for capacity at very short notice, and with two aircraft,” says Commercial Director Roberto Gilardoni.

“Despite the widely-reported air traffic and airport congestion throughout the region, we operated on time and had no problems on the ground. Everything went surprisingly smoothly.”

“We were very pleased that we were able to play a modest part in this huge operation, and we sincerely hope that the situation in Haiti will improve in the days to come,” he concludes.

According to Jawad Kamel, founder and CEO of Istanbul-based project forwarder Advance International Transport, project cargo forwarding has been on a roll in the last few years, but for those forwarders that rely on air freight movements, there are a number of challenges on the horizon that may very well impact on their business model within the next decade.

“The first challenge is the future of outsize, maindeck capacity. This appears to have hit a brick wall,” he says. “Since the AN-124 burst on the Western freight market in the early 1990s, we have come to rely completely on its gigantic capacity. My company, alone, handled and chartered more than 100 AN-124 and AN-225 flights in a three month peak period after the end of war in Iraq.

“A replacement for the AN-124 will be required by 2025 or serious maindeck capacity beyond the B747F or any Airbus freighter capacity will vanish. Items which fly now will no longer be flown.”

The second challenge to air freight heavy lift operations is a resurgent heavy lift maritime sector, according to Kamel. How long will clients allow forwarders to charter expensive aircraft movements when an equally good but lower-cost sea alternative is available?

“As a forwarder, I have to say that the sea option is not one to be ignored. Heavy lift shipping lines are investing millions in ships that can handle everything that can go by air,” he says. “Air supporters will say that this means journeys that take hours by air will take weeks by sea. But I wonder how important the speed air offers really is to our clients?

‘As long as we educate our clients about the slower surface speeds at sea, then most will able to factor in the longer lead time to their building schedules.

‘Of course, I understand that aircraft such as AN-124 and AN-225 are proven to be of excellent value for delayed and emergency shipments which can’t be moved in time by other modes. They are also of critical importance for landlocked countries to which it is sometimes very difficult, if not impossible to serve overland from the sea port to construction jobsite.”

He says there can be advantages to channelling heavy lift and project cargo through seaports instead of airports.

“Many ports welcome heavy lift consignments while many airports shun them. Getting access to a quayside or in and out of a port is often much easier than getting airside on anything other than a dedicated freight airport,” he says. “Many heavy lift lines now operate liner services so there is great certainty that a consignment loaded on a ship for a particular port will reach that port and not be diverted.”

In light of recent news that production is about to resume on an upgraded new generation of AN-124s Mr Kamel appealed for words to be put into action.
“I call on the governments of Russia and Ukraine to develop a new production cycle for a new aircraft,” he said. “The economies of scale might be difficult, especially for aircraft with such low volume production as heavy lift maindeck capacity. However, without this investment in time and money now, in less than two decades we could see the heavy lift air freight sector grounded.”

For many logisticians, nirvana may be considered as automation in the world of efficient warehouses. How, I ask, can a more cost effective nirvana be achieved without automation?

Given the proper time commitment for planning, selection of vendors, manufacturing, through to implementation, automation can work very well and offer a short to medium term payback. But I would also argue that there are many retro fit possibilities within existing racking and operational areas that still offer the ultimate in flexibility and picking benefits. I believe it can be easier and quicker to go this way, as adaptations within existing systems are relatively straightforward with minimal need for downtime or maintenance.

My intention is not to show automation as being secondary, as it is certainly not. When done properly, automaton can reap huge benefits for a business. My point here is that a great    Stewart Arbuckle
deal of upside benefits can be had by making the most of your existing system without using automation.

Thoughts to consider before jumping into automation include:
- How much room for improvement is there latent in my existing facility?
- When was the last time I evaluated the efficiency of my system in a measured way?
- How much space can I free up?
- How limited is my budget?
- How much pressure am I under to improve and save?

What can be done? The fundamental approach is to be clear on the objectives that best benefit your operation and to focus on how these areas can be improved. For example, if your objective is to case pick more, you can look at creating pedestrian pick level walkways within sections of your racking. You can place pallets for convenient picking, or totes and/or cartons themselves in carton live storage lanes. Here pickers can do their job in a dedicated area far more effectively. Although some pick trolleys may suffice, adding a gravity or powered belt conveyor to each level of the warehouse may speed up the process even more. This improvement is made using the existing racking, within the same floor space and with minimum disruption.

A warehouse management system will always dictate best practice, but perhaps you can add voice picking technology or wireless pick-to-light systems. Now you have a very clever pick environment that will get the most out of your staff. Both of these methods mean that staff skill levels need not be so high, as the system either guides them with voice commands or a path of lights.

An objective might be to value add, co-pack, stretch wrap, box and seal. This can be done through an efficiently laid out co-pack area that can be adjacent to or within the rack environment itself, or on a cleverly placed mezzanine.

Another objective might be to create more floor space. If this is the case, then look to move up, not out! In this case, releasing dead or unused valuable headroom by installing a mezzanine floor is often the best option. The additional space can be used for offices as well as increased storage and production space.

In summary, a huge range of retro fit or hybrid solutions can bring many efficiencies to an existing operation, and be more economical, easier and quicker to implement than automation. However, once volumes become excessive, automation becomes more of a requirement, particularly if main drivers such as staff costs, utility costs and land costs are increasing. But, in the meantime, be innovative and creative from within and you may be surprised at how many improvements can be had.

The International Air Transport Association (IATA) announced that Cathay Pacific Airways CEO Tony Tyler started his one-year term as the Chairman of the IATA Board of Governors. Tyler succeeds Samer Majali, CEO of Royal Jordanian Airlines, who served as Chairman from June 2008.

Tyler is a 32-year veteran of the air transport industry who has served as Cathay Pacific CEO since 2007. He worked for Cathay Pacific and the Swire Group in many cities across the globe and has been on the airline’s leadership board since 1996. During that time he helped navigate the airline through several challenges including the Asian financial crisis, the SARS outbreak, and the post September 11-recovery. Tyler takes on the IATA Chairman duties at a difficult time as the airline industry works to weather a global economic recession, which has affected passenger and cargo demand.

“The global economic meltdown is hitting the aviation industry hard. A toxic combination of low fares, a large drop in premium travel, and weak cargo loads is hitting the bottom line hard. IATA has some critical roles to play. It must protect the US$350 billion in industry cash flowing through its financial systems. It must also find even more efficiency gains—not just by airlines but throughout the industry value chain,” Tyler said.

Tyler noted that 2009 will be a critical year in the environmental debate. “As we move towards the climate change treaty negotiations in Copenhagen in December, our industry’s united four-pillar strategy on climate change makes us part of the solution. The industry is committed to achieving carbon-neutral growth by 2020, but to achieve this, we need to focus on bringing governments on board. That means turning their support for improved technology, effective operations and efficient infrastructure into action, as well as reaching agreement on a global sectoral approach to economic measures in a post-Kyoto climate framework,” Tyler said.

Giovanni Bisignani, IATA’s Director General and CEO said, “First, we must thank Samer Majali for a job well done. His leadership over the past year helped us navigate the industry through many challenges from record high fuel prices to today’s economic crisis. Under Samer’s leadership we had some major achievements. The deadline for IOSA registration was met by 225 IATA airlines and we built an even stronger consensus and commitment on the environment. I look forward to working closely with Tony in the coming year to meet our growing challenges with continued strong industry leadership.”

IATA also announced that the Board of Governors agreed to appoint David Bronczek, President and Chief Executive of FedEx Express, to serve as Chairman following Tyler. Bronczek will bring a unique perspective from the air cargo industry when his term commences in June 2010.

The announcements were made as the 65th IATA Annual General Meeting and World Air Transport Summit in Kuala Lumpur. The 500 industry leaders gathered for the event discussed the industry’s most important issues, with executive briefing sessions on the environment and ways to manage through the crisis.

As part of a public-private partnership to increase the commercial availability and use of alternative fuel vehicles, today announced its first purchases of a little-known technology – the hydraulic hybrid vehicle – that promises dramatic fuel savings and environmental benefits.

The technology, originally developed in a federal laboratory of the Environmental Protection Agency, stores energy by compressing hydraulic fluid under pressure in a large chamber. UPS was the only company in its industry asked to road-test the technology two years ago and now becomes the first delivery company to place an order for hydraulic hybrid vehicles (HHV).

"There is no question that hydraulic hybrids, although little known to the public, are ready for prime time use on the streets of America," said David Abney, UPS’s chief operating officer. "We are not declaring hydraulic hybrids a panacea for our energy woes, but this technology certainly is as promising as anything we’ve seen to date."

Disclosing the results of its road testing on Detroit routes for the first time, UPS and the U.S. Environmental Protection Agency (EPA) said the prototype vehicle had achieved a 45-to-50 percent improvement in fuel economy compared to conventional diesel delivery trucks. UPS believes similar fuel economy improvements and a 30 percent reduction in CO2 are achievable in daily, real-world use. The EPA believes the technology can perform equally well in other applications such as shuttle and transit buses and refuse pick-up trucks.

Abney was joined by representatives of the EPA, the Eaton Corporation (NYSE:ETN) and Navistar (NYSE:NAV) at a news conference in Atlanta’s Centennial Park in announcing UPS’s decision to place an order for seven of the hydraulic hybrids.

UPS will deploy the first two of the new HHV’s in Minneapolis during the first quarter of 2009. Eaton, which helped develop and refine the vehicle’s hydraulic hybrid power system, will monitor the vehicle’s fuel economy performance and emissions in the Minneapolis area. The additional five HHV’s will be deployed later in 2009 and early 2010.

With a diesel "series" hydraulic hybrid of the type being purchased by UPS, a high-efficiency diesel engine is combined with a unique hydraulic propulsion system, replacing the conventional drivetrain and transmission. The vehicle uses hydraulic pumps and hydraulic storage tanks to capture and store energy, similar to what is done with electric motors and batteries in a hybrid electric vehicle. In this case, the diesel engine is used to periodically recharge pressure in the hydraulic propulsion system. Fuel economy is increased in three ways: vehicle braking energy is recovered that normally is wasted; the engine is operated more efficiently, and the engine can be shut off when stopped or decelerating.

The EPA estimates that when manufactured in high volume, the added costs of the hybrid components can be recouped in less than three years through lower fuel and brake maintenance costs.

Eaton began working with the EPA in October 2001 under a Cooperative Research and Development Agreement involving hydraulic hybrid systems and components. As part of Eaton’s role in designing and developing hybrid technologies, the company’s engineers were co-located at the EPA’s Ann Arbor facility. Eaton also earned a number of hybrid power system patents and continues to work on a number of other hybrid vehicles initiatives with UPS and others.

"We continue to be pleased with the progress and potential of the hydraulic hybrid system," Eaton Chairman and CEO Alexander M. Cutler said at the press conference. "The market for this technology is truly global, and it can provide significant improvements in fuel economy and emission reductions for trucks, buses and off-road vehicles of many shapes and sizes."

"EPA and our partners are not just delivering packages with these UPS trucks, we’re delivering environmental benefits to the American people," said EPA Administrator Stephen L. Johnson. "With this investment in fuel-efficient technology, UPS is doing what is good for our environment, good for our economy, and good for our nation’s energy security."

"The diesel hydraulic hybrid vehicle has the potential to offer our truck customers something very unique – performance and reduced emissions with dramatic improvements in fuel economy," said Steve Guillaume, Navistar General Manager, Medium Trucks.

UPS’s current "green fleet" totals more than 1,600 low-carbon vehicles, including all-electric, hybrid electric, compressed natural gas (CNG), liquefied natural gas (LNG) and propane-powered trucks.

In addition to the hydraulic hybrid, UPS has road-tested hydrogen fuel cell delivery trucks. UPS began deploying alternative fuel vehicles in the 1930′s with a fleet of electric trucks in New York City.

The HHV vehicle order follows the May 2008 purchase of 500 hybrid electric and CNG vehicles and the April 2008 deployment of 167 new CNG vehicles in Atlanta, Dallas, Los Angeles, Ontario, San Ramon, Fresno and Sacramento. With UPS’s new purchases, the company’s "green fleet," already the largest private fleet in the transportation industry, will total more than 2,100 vehicles.