Bullish Emirates bets on growth and the need for speed

   Release date: 15/05/2023     Hits: 8918    Comment: 0    
Note: Emirates has made some pretty big announcements this week: SkyCargo has added two 747-400Fs to its fleet and is expectin

Emirates has made some pretty big announcements this week: SkyCargo has added two 747-400Fs to its fleet and is expecting 15 more freighters to join – as well as a lot of belly capacity.

“Over the next decade, Emirates SkyCargo expects to double its existing capacity, add over 20 new destinations to its freighter network and offer … a fleet mix of over 300 widebody aircraft,” it said.

In the words of Nabil Sultan, divisional SVP: “While the current market volatility may cause others to hesitate, Emirates SkyCargo is pushing full-steam ahead with our plans.”

And both Emirates and Lufthansa Cargo are betting on e-commerce, the sector addicted to speed.

The UAE carrier is bullish, and believes some of the benefits that attracted shippers to air cargo during the pandemic will remain.

“Emirates SkyCargo has grown through the pandemic, we picked up a lot of business from the key production markets,” Mr Sultan told The Loadstar at Transport Logistic in Munich on Wednesday.

He added that the current downturn was not relevant to the carrier’s longer-term plans.

“It’s important not to let short-term blips impact the medium to long term. We are doubling capacity over the next decade and it’s clear that demand will grow over the decade – it’s been 3% to 4% annually. We will deal with those periods [of low demand]. But we believe that growth will continue to happen.”

He added that it wasn’t just the freighter fleet expanding: “There is incoming belly capacity too – we’ll have more than 300 widebody aircraft over the next decade.

“The A350s and 777s are like mini-freighters, with daily frequencies, it is substantial capacity.”

During the pandemic, there was a shift from sea to air; not only were sea freight rates far higher than usual, but the shipping lines were facing severe congestion and delays. Forwarders have reported that the business has now returned to sea – but Mr Sultan thinks air freight will continue to have an edge.

“The market is growing. Over the past two to three years there has been a fundamental shift from sea to air, because of the benefit of getting products to market quicker – speed has become the norm.”

Mr Sultan noted that for fast fashion, “the whole cycle has to be airtight and quick to achieve it”. He said: “Airfreight will play a bigger role. That’s the future. Time is paramount.  You need fast, seamless [operations].”

Dubai is now popular as a distribution centre for e-commerce companies “that take advantage of Emirates – we attract a lot of e-commerce in the region”.

While it’s hard to tell exactly what is e-commerce, the carrier – like Lufthansa – says up to 30% of volumes are probably e-commerce, although it varies, depending on the lane. And both carriers are keen to help their e-commerce customers expand.

“If a customer has a specific requirement, then we can extend ancillary services – work out how to assist them, perhaps in last-mile,” said Mr Sultan. “We have ground handling partners around the world very keen to diversify their business, so we can help with that.”

Lufthansa Cargo, meanwhile, says e-commerce growth is at about 10% to 11%, an attractive proposition for the carrier. CEO Ashwin Bhat told The Loadstar the business “is not the highest margin, but a nice base note”.

Like Emirates, it can only really tell what is e-commerce by identifying the provider – whether it’s a fast-fashion client or a marketplace. Lufthansa was keen to promote its wider e-commerce family in Munich – including its Heyworld subsidiary and Customs Broker. Mr Bhat added: “It’s about how you bring it together.”

Lufthansa Cargo is also investing in aircraft, with two new A321Fs joining the fleet in the next two months – “not just for e-commerce, but also speed, it’s a high-quality solution”.

The schedules for the regional aircraft are based on customer requirements – when and where they want. As a result of these consultations, “we are finding customers and trade lanes we didn’t know were there”.

It also has two more 777Fs coming – plus vast swathes of belly capacity across Austrian, Brussels, Swiss – and, potentially, ITA Airways. But Mr Bhat is perhaps less bullish than Mr Sultan.

He said: “I always get intimidated [by the amount of capacity], even during the high season.”


 
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