Hapag-Lloyd revamps reefer services

As a result, all staff from managers to labourers, have undergone intensive training in order to improve their performance. Perishables and other sensitive cargoes will be given added attention, while a new monitoring system has been introduced for the extra protection of delicate shipments./

The attitude is now focused on prevention rather than cure, and every member of staff has been trained accordingly. Added to this, an advice manual has been produced that includes procedures, repair processes, product characteristics, intermodal affairs, critical control points and documentation. For unexpected setbacks, a reefer focal point has been set up at the Piscataway, New Jersey, USA office. 

Olympics set to boost Australasian air market

Around the same time, the Netherlands-based postal express, express and logistics service provider TNT Post Group (TPG)signed an agreement to sell its 50 per cent stake in Ansett Worldwide Aviation Service, based in Sydney to MSDW Aircraft Holdings, a subsidiary of Morgan Stanley Dean Witter.

A few months earlier, at the back end of 1999, the UK-based Virgin group announced plans to set up a domestic airline in Australia. Shortly afterwards, the group's established international airline, Virgin Atlantic Airways, revealed a tie-up with Singapore Airline (SIA), one of the leading foreign carriers operating international flights into Australia and New Zealand.

Both Australia and New Zealand are also seeing new developments in the area of cargo handling services and facilities. 

Sydney is one of a number of Australasian airports currently developing new cargo facilities.Others planning expansion in that sector include Brisbane and Auckland.

Commenting on its move last month to take over full ownership of Ansett Holdings by acquiring the 50 per cent stake previously held by News Corporation, Air New Zealand says it was "the first step towards creating a new, globally competitive, Australasian airline group".

That group will in fact have a fleet of 110 passenger jet aircraft, plus a significant number of turboprops, and a route network covering more than 100 airports.

The new group would continue to operate Ansett Australia and Air New Zealand under their own brands in their respective markets, says ANZ.

New blood invigorates Spanish cargo market 

While recognizing the great strides made in the development of the local air cargo market in recent years, Escolar is becoming increasingly frustrated by much of the support structure that he sees around him. "We have got to attract more direct freighter links with destinations such as the Far East and Middle East," he says. "In order to do that, we have got to be competitive on price, offer the correct infrastructure and be as flexible in our approach as possible." 

Although welcoming the huge amounts of investment made in recent years, Escolar is still critical of the overall plan for air cargo development in Spain. "I do not believe Spanish airport policy has been particularly well handled," he muses. "AENA (Aeropuertos Espanoles Y Navigation Aerea) does not seem to have a very clear idea of what it is trying to do. 

"It is really a problem of definition: should Spanish airports be competing against one another, or should they be looking at attracting cargo from airports in neighboring countries?". If the latter course is to be followed then Spanish service providers have still a long way to go before they reach acceptable levels of international service quality, he argues. 

The problem is highlighted by what Escolar views as the failure of the new Aldeasa/Ogden cargo terminal operation in both Madrid and Barcelona to improve greatly on the service that former monopoly holder, Iberia, once offered. "Iberia's service has improved, but that was a reaction to the loss of clients to Ogden. Competition between the two has also brought down prices. But we have got to see a profound change in operating philosophies, as well as better training and motivation of staff," says Escolar, who last year moved all GenAir's off-line clients at Madrid's Barajas airport to the recently installed third handler, SFS Airport Services.

Nevertheless, in his opinion, it would be better to have three handlers offering height quality services, rather than four or five cutting prices to the bone, but without actually doing anything to upgrade services to the customer. 

The arrival of Ogden in Spain followed on from the 1995 decision to deregulate the domestic handling market. Bids were invited to run cargo terminals at both Madrid and Barcelona airports. with the Ogden/Aldeasa joint venture awarded the eventual concession. The new operator commenced operations on 1 April, 1996 in direct competition with incumbent Iberia. With clients that include KLM, Lufthansa, Continental, Aeromexico, Pluna, Avensa, Cargolux and VASP, Concha Moya, Ogden's operations director, claims that airlines have switched to Ogden mostly because of the company's "more flexible approach to the business and because we are able to offer them something which they were not getting from Iberia. But it is not simply a question of price." 

According to Moya, Ogden's present facilities in Madrid are due to be expanded in line with the increase in traffic, although the main priority at the moment is the construction of the long promised perishables terminal, which is being promoted by Clasa (Centros Logisticos Aeroportuarios SA) and the handling agents. 

"Everybody accepts that we need a perishables centre here in Barajas," emphasises Concha, "Madrid is a major fish importing centre. Under normal circumstances, our terminal does have sufficient cold storage capacity to handle most shipments, but at weekends and on public holidays we are stretched to the limit." Plans for the centre are currently undergoing a feasibility study and a pronouncement is promised soon. 

Lufthansa Cargo is one of Ogden's present clients. 

Air Foyle penetrates Japanese market

The Japanese market has traditionally used ocean frieght for transporting outsize and heavy loads, but since appointing a GSA in Japan the first three months have produced charter flight revenues in excess of $5.7 million, much of it related to the automotive industry. 

Among the new business is the airlifting of about 600 tonnes of automotive manufacturing equipment from Osaka to Louisville in the US, involving a programme of six AN-124 flights starting in February, carrying three television outside-broadcasting trucks from Osaka to Istanbul in Turkey, 75 tonnes of pipes from Osaka to Tunisia and100 tonnes of car moulds from Osaka to Chicago O'Hare in the US. 

Most recently, Air Foyle has received a contract to carry body press moulds from Osaka to Barcelona in Spain. Air Foyle is currently awaiting the outcome of its bid for the UK Ministry of Defence contract for the Short Term Strategic Airlift (STSA) service solution for worldwide deployment of the Joint Rapid Reaction Force (JRRF) in periods of crisis and war. 

Bird believes that Air Foyle's case for deploying the AN-124 for this work has been strengthened by a demonstration of its capabilities in carrying four Puma helicopters to Mozambique for flood relief operations earlier this month. 

Flag-carriers review their performance 

Traffic between Spain and the Americas rose by 9.6 percent but revenue by only 0.8 percent. Much of the new growth came on the North Atlantic market, although trade with Central and South America is said to have been worse than expected. 

More cargo could have been carried, if pilots had not continued their industrial dispute to obtain better terms and conditions for flying new aircraft. 

Iberia Handling clocked up 117,045 tonnes of third-party traffic from its operations in Madrid, Barcelona, Las Palmas and Tenerife. This was a drop of 4.8 percent and reflects losses to second operators in the various airports. In-house handling went up by 2.7 percent to 284,486 tonnes. 

TAP's cargo and mail director, R. Fragoso, supplied written answers to ACW, being unavailable for direct comment because of restructuring associated with the recent 34 percent equity purchase of TAP by SAir group. In the short term, he did not believe that the entry of TAP into the Qualifier group would have any serious impact on cargo handled. 

In descending order of importance, he identified Portugal, France the UK, the US, Brazil and Italy as TAP's main markets, with fresh fish, fruit and vegetables, shoes, textiles, steel moulds, chemicals, medicines and spare parts for the automotive industry the main products carried. 

ICF traffic down

The total number of TEU carried last year was expected to be 1,040,000, almost 17% less than in the previous year. 

The prinicipal explanations for this drop in traffic were unsatisfactory standards of service provided by ICF's suppliers combined with sharp price rises, and economic difficulties in the CIS and the automobile industry. Other factors included existing traffic flows lost to rival railways, the increase from 38 to 41 tonnes in HGV laden weights in the UK, and the Kosovo crisis. Poor quality of service and prices out of phase with market conditions have sparked the defection of larger traffic volumes, for example car industry spares between Spain and Germany, which have gone over to the roads. Other customers have transferred their traffic from the railways to feeder shipping for cost reasons. ICF expects volumes to stagnate in 2000 and TEU-kilometres to increase by around 3%. 

ICF is keen to strengthen its position as the leading operator for multi-network long haul traffic, thereby more than offsetting the decline in short haul traffic. 

Operating results for 1999 are estimated at 0.2 million euros, according to Mark Smith, director and member of the ICF Executive. 

Together with the extraordinary profit obtained from the sale of one of the company's buildings, net profit is expected to amount to 5.2 million euros. For the coming year, ICF has budgeted on an operating profit of 4 million euros. 

ICF chairman and managing director Rene Hellinghausen said: "After some difficult years, we have successfully steered the company back into the profit zone and raised company equity from 3.7 million euros (1999) to an expected 15.9 million at the end of 2000." 

Minds Bozell are now Minds FCB

FCB Worldwide is not a complete stranger to Minds Bozell as its parent, Bozell Worldwide was among the many communications brands owned by True North Communications including FCB Worldwide. In November 1999, these two global agencies became a single global force, FCB Worldwide, operating in 92 countries. 

Joint Managing Director, Ryan Jayatunga said with the expertise and experience of FCB Worldwide in servicing top-notch tech companies and other multi nationals, Minds FCB would be able to offer its local clientele a wider variety of services. Ryan said that the company would especially concentrate on taking their clientele into cyber space. 

He believes that FCB Worldwide's experience with companies like AOL and Amazon.com would guide them in this task. 

Ryan said that their clean sweep of all three medals for their television advertisement for Sri Lanka Telecom in the IT/telecom/Office Automation and Business Support services was a sure indication of their commitment to take the industry into the future. 

Growth 10% if not for war, says IFC rep

The Bank's private sector lending window, the International Finance Corporation (IFC), said it believed Sri Lanka could achieve a GDP growth rate of 10 percent if not for the conflict.

"The confidence of foreign investors in the country is very low. 

People who have not visited here will not come in substantial numbers," warned Bernard Pasquier, IFC's director for South Asia. 

"Peace and security are preconditions for people to come and it is very important for Sri Lanka to understand this." 

He said, however, that those who already have investments in the country were unlikely to leave. 

The IFC hoped to increase its portfolio in Sri Lanka from the current 85 million dollars to about 200 million dollars in the next 12 to 18 months, he said, adding he was optimistic the investments would materialise. 

He noted the current large scale outflows of money from the tiny Colombo Stock Exchange were due to "problems of confidence.'' "People here may know what is happening, but someone sitting in London is guided by headlines," Pasquier said. "When you have headlines like planes crashing and fighting, you have the feeling that you should sell."

Even as Pasquier was visiting the capital Colombo on a two-day visit, heavy fighting raged in the north of the country between government forces and Tamil Tiger guerrillas who are seeking to establish an independent Tamil homeland. 

Pasquier said the country's political situation needed to improve for the ecomomy to attract more investment and realise its full potential. 

The ecomomic fundamentals of Sri Lanka appeared good despite the seemingly unending Tamil separatist campaign, but the country could not afford to sit back as the region was set to grow at a much faster rate than the island's 4.0 percent , he added.

Vanik and Monash to set up IT university

The Board of Investment aims to promote three technology parks and 25 IT centres across the island and invited proposals for the Pugoda site, Chief Executive Officer, Vanik, Justin Meegoda has said in the press release. We are encouraged by this vision and believe that such a momentous effort is necessary to promote the IT industry in Sri Lanka , he added. A delegation from Monash University is to visit Sri Lanka soon.

The Vanik proposal which will transform Pugoda into a college town, was submitted to the BOI. It proposes to generate more than 1600 graduates each year, with degrees awarded abroad. The proposal aims to award full scholarships for 20 per cent of the intake with a part of the scholarships sourced from the private sector. A programme to bridge the education of Advanced level students to university requirements will also be conducted.

The campus will have a university environment with residential facilities for 2000 students, a sports complex, cricket grounds, swimming pool, theatre as well as clubs and societies for students to experience the culture of a university. Infrastructure such as roads, telecommunication, commercial banks and shops will also be developed.

The proposal also includes a plan to develop a 200,000 square foot software park complex at the site to create a dynamic environment that offers synergies to students and IT participants.

At present the state universities in Sri Lanka produce less than 150 IT graduates each year while private educational institutes which offer IT degrees from affiliated foreign universities produce 500 to 600 graduates a year. These numbers are inadequate to fulfil the needs of the existing IT industry much less attracting foreign IT companies to Sri Lanka.

In comparison the worlds leading IT companies including Microsoft, IBM and Lucent Technologies have set up operations in India. India produces 100,000 IT graduates each year and its IT industry revenue is forecasted to reach US$ 100 bn and exports US$ 50 bn by year 2008.

The 75 acre site of the former Pugoda Textile Mills on which the campus is to be housed, is located one hour away from Colombo. The site has structures that cover 20 acres with 58 houses to accommodate staff and infrastructure that includes roads, a cricket ground, power and water supply, water treatment plants and a lake. 

Monash University already operates an overseas campus in Malaysia and is scheduled to open another in South Africa next year. Monash has the global vision of introducing its quality educational standards in all parts of the world and ultimately facilitating an environment where students can exchange campuses to experience the culture of another part of the global village. Monash university which has the largest IT faculty in Australia attracts students from Singapore, Malaysia, Hong Kong, India and Sri Lanka. The degrees offered in Sri Lanka will be charged at competitive local market rates.

Vanik has received expressions of interest from several other foreign universities. With the support of the BOI, Vanik hopes to promote other campuses in the South, East and North of the country where higher education needs are most acute.

Grants notched 42 on April 1st

Grant Advertising was established by Mr. Reggie Candappa, the well-known doyen of advertising in Sri Lanka.

Grant Advertising entered into a strategic alliance with McCann-Erickson Worldwide in 1993, marking a very important milestone in the history of the agency. 

McCann- Erickson is a world leader in both advertising and marketing communication disciplines. It is present in 127 countries with worldwide billings of US $20 billion.

Recently McCann - Erickson Worldwide was named, "Agency of the Year" for two consecutive years by four separate leading advertising industry publications.

Today Grant McCann-Erickson, Sri Lanka services over 40 prestigious local and multinational Clients in diverse industries.

At the recently concluded SLIM Awards 2000, Grant McCann- Erickson won 7 gold awards in various categories.

Speaking on Grant McCann-Erickson's performance at the SLIM Awards, Neela Marikkar expressed her gratitude to the Clients who had the confidence in the Agency's abilities to produce winning advertisements. According to her, "These awards are won not just by us but by each of our Clients. Without their support it would not have been possible for us to create compelling and memorable ideas." 

Grant McCann-Erickson enters its 42nd year with focus on developing technology and training.

Upgradation in technology infrastructure will include setting up of a dedicated Intranet site, dedicated lease lines and comprehensive computerisation.

Among the agencies, Grant McCann-Erickson has the largest number of expatriates working in Sri Lanka, the release says.

The Agency's Creative team will also be strengthened further with more people coming on board.

Emirates flies to Milan from April

Milan, Emirates second city in Italy after Rome, the 52nd in the passenger network and 53rd cargo destination is now served three times a week from Dubai via Rome, a news release said. 

All flights are operated with Emirates' brand-new A330-200, configured in two classes of 34 Business and 251 Economy Class seats. 

The new Milan service, routed via Rome, has increased Emirates' weekly frequency to the Italian capital to six a week. 

Emirates has been operating an offline office in Milan since 1992. The new direct service presents a strong potential for trade and tourism. Milan, the economic centre of Italy and capital of the Lombardy province, is renowned for its cuisine, luxury fashion goods, textiles, manufacturing industries, trade, hotels, banking and insurance. 

Shell ready to sell more

Shell Terminal Lanka (Pvt) Limited situated in Kerawalapitiya is a wholly owned subsidiary of the Anglo Dutch based Shell Company. The terminal comprises of four storage spheres. With a storage capacity of 2000 tonnes of LPG in each sphere, a company release said. 

A 5.5. kilometre long, 10 metre underground pipeline attached to a Conventional Buoy Mooring System (CBM/3.5 kilometre offshore) will feed the terminal facility. In effect, LPG ships will connect to the mooring system (CBM), then the LPG will be discharged from the ship and into the storage spheres via the pipeline, with state- of-the-art safety measures.

This will bring to an end the current practice of unloading LPG ships into a fleet of road tankers/bowsers at the Port of Colombo, which then transport the LPG to our depots. Under this system, a 2000 tonne LPG load takes approximately 5-6 days to unload. Under the new system, a similar tanker moored at the offshore unloading point will be able to discharge in less than a day. 

Mr. Idris Jala, Managing Director/Country Chairman of Shell Gas Lanka Limited said, in a news release that the opening of this new terminal facility, shows Shell's investment and long term plan towards growing the LPG business and improving the standards to provide an efficient services towards its customers. 

"The problem we have always faced here has been the limited amount of storage capacity on the island and the time taken to unload a ship. Since Shell arrived in Sri Lanka in December 1995, the LPG market has expanded to around 67% Mr. Idris Jala said. 

"With the terminal in place, Shell Gas Lanka Limited will not only be able to better serve the needs of our dealers, distributors and existing domestic and commercial customers, but will also focus on expanding the market even further." 

Ceybank Unit Trust beats market by 10% 

The Unit Trust has announced a dividend of 50 cents per unit. The Fund has earned Rs. 27 million by way of dividend & Rs. 29 million as interest income in the FY99/00. After netting off Rs. 14 million of expenses. and with the brought forward - undistributed income of Rs. 42 million the fund had Rs. 82 million for distribution. The Manager has decided to utilize Rs. 67 million for distribution for FY 99/00, and keep Rs. 15 million for future distribution. 

The Fund was launched in March 1992 by the UTMCL when the ASI was at 800 levels. Bank of Ceylon, Merchant Bank of Sri Lanka, Carson Cumberbatch, Unit Trust of India, and HSBC Asset Management promoted the UTMCL. After the rally in 1994 the market ran into a bear phase, and the situation got worsened as the emerging markets lost its glamour with the South Asian currency turmoil. As a result of it the Colombo market lost more than half of its value, and the performance of Ceybank Unit Trust fell short of investor expectations.

In light of this a comprehensive restructuring program of the equity portfolio of the fund has been initiated, and explained to all the unit holders in detail in the last annual report. 

Furthermore the Fund has written down some of the fundamentally weak holdings to prices at ASI 535 level, which was on 31st March 1999. 

This aggressive strategy paid-off in the first year itself as shown by the exceptional performance. The ASI depreciated by 40 points (7.5%) while Ceybank bid price appreciated by 14 cents (2.7%) during the FY99/00.

With the intention of balancing the portfolio to provide regular distribution to their investors, asset allocation to fixed income securities has been increased. Ceybank Unit Trust fixed income portfolio consists of treasury bonds, Corporate debentures. commericial papers, asset backed notes and promissory notes. The yield on the fixed income portfolio is 14%, 2% above the current T-bill rate. The cash equivalent consists of bank deposits and repurchase agreements on T-bills. 

Ceybank Unit Trust is heavily weighted towards Banking. Diversified and Manufacturing sectors in line with the market and selectively overweight on several fundamentally strong sectors. At the same time, the Fund is well diversified among the sectors. The equity portfolio is heavily weighted on to blue chip shares in the market. Eventhough these shares have taken a serious beating in the last few months due to heavy foreign selling they are expected to rebound due to strong fundamentals. 

At present the market is trading at 6xFY00 earnings and at a steep discount to regional and historic valuations. However the market performance will be totally dependent on the ability of the government to attract foreign investors and the international placement of Telecom shares is going to play a major role. Furthermore the government has to work towards an early political settlement for the conflict and decisively implement key economic growth programs. India and other key global equity markets are doing well and can expect fresh allocation of funds from foreign institutional investors to Sri Lanka in the third quarter of 2000. 

In that context Ceybank Unit Trust is well placed to take advantage of any market movement. 

With the expected return of FII's they would find the blue chip stocks attractive given their sensitivity to economic upturn, superior liquidity, high market capitalization and lower valuation. Ceybank Unit Trust will be a beneficiary as 75% of its equity portfolio is in 20 stocks which are primarily blue chips. 

FY                      ASI (% )                   Ceybank Bid Price(%) 

96/97                   -5.9                            -1.5
97/98                +11.8                            +9.5
98/99                 -25.0                          -24.9
99/00                  -7.5                           +2.7

Asset Allocation as at 31/3/2000

                               Rs. Mns            %

Equity-listed                471.6
          unlisted      9.5   481.1             66
Fixed Income              129.2             18

Cash
Equivalents                 113.9             16
Net Assets                 724.1            100

New chairman at Kahatagaha Graphite Lanka Limited 

He holds a Bachelor of Arts Degree (B.A) from the University of Ceylon, Peradeniya as well as a Bachelor of Laws Degree (LL.B) from the Open university of Sri Lanka. He holds a post Graduate Diploma in International Affairs (P.G.Dip. I.A) from the Bandaraniake Centre for International Studies (BCIS) and M.A.Q. For Political Science from Peradeniya University. 

He has followed the Community Development Management course at the Manitoba University in Canada and the Strategic Management Course at the Lahore University of Management Sciences in Pakistan. He has attended the Top forum of Labour Management in Japan, and Advanced Seminar for Chief Executives in the National University of Singapore in Singapore.

New directors at JKH

Managing Directors

Keells Aquariums (Pvt) Limited Mr. Srilal Samarasekera, Keells Food Products Limited, Mr. Yasa Nadaraja

Directors

Ceylon Cold Stores (Distributors) Limited, Mr. Anura Goonewardena- Mr. Nihal de Mel

John Keells Office Automation (Pvt) Limited, Mr. Shivantha Kahawela

Keells Aquariums (Pvt) Limited, Mr. Hemantha Perera, Mr. Dushantha Wickremesinghe, Mr. Suranjith Gunawardena 

Mack Air Limited, Mr. Dihan Dedigama,

Mackinnons & Keells Financial Services Limited, Mr. Dian Gunatilake

Return to Business Contents