One less barrier to recovery: German tax changes

Different national tax regimes in the EU prevent a level playing field in air freight. However, this may gradually change after the German government decided to modify the tax laws for
imports from third countries, streamlining them with those existing in neighboring states.

According to the reform, tax payments will not be due immediately when shipments arrive but can be paid later.
This step was long overdue because in contrast to Germany, other EU countries have more generous taxation regulations, siphoning off traffic flows from Frankfurt, Munich, or Cologne. One
of the questions we put to Fraport’s Head of Cargo, Max Conrady, was whether the new fiscal regulation will create a level playing field for air freight in the EU.

CFG: The news on fiscal changes announced by the Berlin government must have pleased you, correct? 
MC: I can confirm that the current tax regime on import turnover tax does have a negative effect on cargo carriers deciding between handling goods via German airports or alternative airports.
However, the intended changes in the taxation of cargo imports does not automatically create a “level playing field” compared to fiscal regulations in neighboring European countries. Yet thanks
to the announced changes in taxation, we see great potential, which we hope will now be exploited in a first step.

Turning to the current situation: Freight volumes in Frankfurt have declined sharply since the outbreak of the corona pandemic. Can you give us a few figures?
From March 2020 to the end of May 2020, around 450,000 tons of air freight were handled in FRA. The import share was exceptionally high, reaching around 60%. In week 22 (the last week in May),
figures declined slightly, reaching 55%. As far as transfers are concerned, we have seen a steep decline since March.

The reason for the upswing of imports is presumably the transport of medical and hygiene goods from China to Germany. Is this steep curve already beginning to level off, or do you expect
the imbalance between imports and exports to continue?

There are already signs of a slight decline in the volume of imports of protective equipment (PPE), albeit still at a high level. In the medium term, however, we currently expect a shift back
towards an export-oriented ratio.

Max Conrady is Head of Cargo at airport operator Fraport AG since November 2018  -  courtesy: t-online
Max Conrady is Head of Cargo at airport operator Fraport AG since November 2018 – courtesy: t-online


Do you anticipate that the stabilization package of 130 billion euros announced by the German government last Wednesday will have an impact on the air freight business in the coming

Since the decisions taken are declarations of intent, which have yet to be implemented as laws, regulations, etc., it is not possible at this stage to make any well-founded forecasts regarding
the effects on air freight. In principle, we welcome any project that contributes to mastering a crisis in the best possible way, also with regard to its economic effects. The air freight
business in particular is highly dependent on the general economic situation.

In your latest press release, you speak of increased workloads in cargo handling and delivery. Could you elaborate on that please?
The higher, partly also manual, workload is a result of the changes in cargo structure. For example, some ground handlers report that shipment figures have doubled or even tripled. At the same
time, the number of loose packages has increased significantly as they fly in the cabins of passenger aircraft converted to freighters. In addition, we saw many more importers and collectors
coming to the airport to pick their goods up directly; some of them were not acquainted with the process because they were doing this for the very first time.

Airlines such as Frankfurt’s home carrier Lufthansa, but also Emirates, Qatar Airways, Singapore Airlines, ANA, and others have announced that they will gradually be increasing their
passenger business again during the course of June. Do you expect that cargo turnover will recover quickly because more lower deck capacity comes into play, or will it take 2 or even 3 years to
reach the pre-corona level in cargo, as some market observers have indicated?

With the slow recovery of passenger air traffic, more capacity will become available again in scheduled services. In addition, destinations that were not served non-stop from FRA in recent weeks,
will be served again. This will also benefit the air freight business. Due to the strong dependence of the cargo market on global market development and economic recovery, predictions at this
point in time would be premature.

Which fundamental lessons could the local cargo industry at FRA learn from the corona crisis? What could be done better, perhaps more efficiently in a similar pandemic

Each individual actor in FRA has taken away specific “lessons learned” for his own business and processes. In addition, and this applies to all of them, the outstanding value of the cargo
community at FRA became clear. In situations where a high degree of flexibility and joint action is required, the community has proven to be a resilient platform.

Herr Conrady, thank you for the interview.


Heiner Siegmund

Source: Cargoforwarder

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