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August 20 2018

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14 The Journal of Commerce | August 20 2018 International Maritime facing lengthy delays getting out of China and through Asia's freight hub airports. Sebastiaan Scholte, chairman of The International Air Cargo Associa- tion (TIACA) and also CEO of Jan De Rijk Logistics, said the industry ex- pects "a good peak season this year," with solid demand for air freight despite the geopolitical trade risks. "Last year the sudden surge in volume in the second half caught many off guard. This time, the market is better prepared, and capacity has been secured through additional charters and block space agreements," he told The Journal of Commerce. "Therefore, we expect capacity to be more in line with demand than last year." THIS YEAR'S PEAK-SEASON air cargo market will be better prepared to handle the expected strong demand and avoid the chronic space constraints that sent freight rates sky high in late 2017 and in the run-up to the Chinese New Year factory shutdowns. This may help alleviate concerns of shippers hurt by a lack of space last year, shippers that saw cargo Andrew Herdman, director gen- eral of the Association of Air Pacific Airlines (AAPA), agreed. "The air cargo industry has responded to the growth in demand for air freight by offering additional capacity, includ- ing belly space in growing numbers of passenger aircraft on major routes, as well as dedicated freighter operations, where daily utilization has also increased," he said. "The slightly slower rate of growth in air cargo demand in recent months has corresponded with a small decline in cargo load factors, suggesting that capacity is well matched to serve the expected level of demand as we move into the coming peak season," he said. However, shippers should still expect some robust peak-season pricing from airlines seeking to ex- tend their profitability that grew at a strong rate in the first quarter even as jet fuel prices surged 55 percent. While much of the profitability is from the passenger side of the business, carriers have also been suc- cessful in maintaining higher year- over-year freight rates following the levels reached during the peak November-December period. Average air freight rates have re- mained stable for the three months up to the end of June, with Freightos reporting rates of $2.80 to $6.00 per kilogram (about $1.30 to $2.72 per pound) in the China-Europe trade, COSCO SHIPPING WAS able to contain the damage from a July cyber attack to its operations in the Americas, but even in the United States, Canada, and South America, cargo handling at its marine terminals was largely unaffected because Cosco isolated its internal networks across its global operations. "There is reason to think that Cosco was aware of what happened to Maersk and they took steps to minimize their risk. They didn't have everything on one server," said Susan Kohn Ross, a Los Angeles attorney who specializes in cyber security. The cyber attack on Cosco caused a failure in its networks in the United States, Canada, Panama, Argentina, Brazil, Peru, Chile, and Uruguay. "All of the areas have been totally recovered," Cosco stated in a Q&A document. The notice to customers included specific instructions for submitting cargo booking requests, booking confirmations, and booking amendments, as well as shipping pro- cedures such as bill of lading instruc- tions, cargo tracking, arrival notices, and the pickup of empty containers. The relatively manageable impact of the cyber attack on Cosco followed by less than a year a more extensive attack on the Maersk Group that the company stated cost it $300 million in its global operations and lasted for more than two weeks. The NotPetya virus forced Maersk to shut down all communications with its customers and within the company, and affected not only Maersk Line but also APM Ter- Minimizing exposure Cosco Shipping's pre-cyber attack efforts limit impact of attack on global operations By Bill Mongelluzzo A balancing act 2018 peak-season air cargo capacity seen more in line with demand By Greg Knowler The cyber attack impacted networks in the United States, Canada, Panama, Argentina, Brazil, Peru, Chile, and Uruguay. Importing & Exporting | Ports | Carriers | Breakbulk | Global Logistics

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