By John W. McCurry
Middle-East-based carriers were among the top gainers in the World Air Transport Statistics for 2012. Emirates SkyCargo made one of the most significant advances, rising to the top spot, past FedEx, in the regional category and achieving third overall, behind FedEx and UPS Airlines in total scheduled freight tonnes carried, according to the 57th edition of WATS, which is compiled by the International Air Transport Association.
Emirates is positioning for further growth with addition of 10 new destinations beginning last February and continuing through January 2014. Flights to Warsaw, Algiers and Haneda, Japan, were added during the first half of 2013. Flights to Tripoli were scheduled Sept. 1, and the airline will begin flying to Clark Air Base in the Philippines on Sept. 4. A Milan-to-New-York route will begin Oct. 1, flights to Conakry, Guinea on Oct. 27, Sialkot, Pakistan in November and Kiev in January 2014.
“The markets we are entering all have strong potential for cargo,” Prakash Nair, head of network cargo sales development for Emirates SkyCargo, says.
Nair believes the Middle East and Africa will continue to be big cargo business generators for Emirates.
“The Middle East cargo market is growing with ongoing investment and expansion in the region, which require materials for supporting logistics,” Nair says. “Expansion at airports in the region is also driving growth.”
Hotels in the region require fresh produce and flowers, and there is a thriving consumer society that demands luxury and fashion items and electronics, Nair says. Agricultural products are the main catalyst for growth in Africa, he says.
“Dubai is our hub, strategically located between East and West, and our worldwide network flies to more than 130 destinations in 36 countries across six continents, giving our customer global access for trade,” Nair says. “We have more than 200 wide-body aircraft and a freighter fleet of 10, which gives us the capacity and capability to move all types of cargo across the network.”
Emirates is also building the infrastructure for continued growth. Its new cargo terminal and supporting facilities at Dubai World Central Al Maktoum International Airport is set to become the home of the carrier’s freighter operations beginning May 2014.
In addition to the cargo terminal, various facilities and infrastructure will be built, including 46 truck docks and 80 truck parking spaces. The first section will open next April with full completion scheduled for mid-September 2014.
Etihad Airways, which rose from 23rd to 21st on the total tonnage list, is another Middle East airline experiencing robust cargo growth. Tonnage continues to grow in 2013 with the airline up 23 percent for the first half of the year.
Saudi Arabian Airlines moved up to 23rd from last year’s 26th. The upward trend continues this year with 6 percent growth recorded for the first six months. During that period, Saudia Cargo moved 270,000 tonnes, breaking last year’s record of 250,000. Belly cargo grew by 29 percent, primarily attributable to the U.S. and the UK. During the first half of the year, the carrier increased its freighter capacity from Dhaka, Bangladesh and commenced B747 freighter flights in Mumbai and Kano, Nigeria. It also started operations with its first B747-8F in June, which is scheduled on Riyadh, Saudi Arabia-Hong-Kong-Riyadh-Frankfurt-Saudi-Arabia flight rotations.
Americas results mixed
FedEx and UPS Airlines continued their hold on the top two spots. Tonnage was up slightly for FedEx and down slightly for UPS. Delta Air Lines was the third ranking U.S.-based carrier and 22nd overall. IATA reports that North American airlines were down 1.6 percent overall for the first half of 2013.
Latin American airlines experienced a 3.7 percent growth in cargo volumes, one of the fastest growth rates. The top Latin America-based airline in IATA’s rankings for 2012 was LAN Airlines at the 14th spot, up from 15th in 2011.
Asia remains down
Although its cargo was down slightly for the period, Korean Air remains one of the world’s top carriers, ranking fourth in both international and total cargo. The slight downward trend continued during the second quarter of 2013 as Korean Air Cargo showed a 2.1 percent decrease in fright tonne kilometers compared to last year. Its load factor increased slightly to 78 percent.
Korean Air has three B747-8F and three B777F aircraft with plans to expand to seven B747-8Fs by 2016 and five B777Fs by 2015.
“Korean Air has been trying to utilize cargo belly space of the passenger flight first, and then deploy the right type of freighter by responding efficiently to the demand of the market,” says Byeok Kim Jin, general manager and team leader of the airline’s cargo product marketing team. “For example, B747-8F is deployed in markets with high demand, whereas fuel-efficient B777F in long-haul markets. Korean Air is trying to strengthen its cost competitiveness from efficient aircraft management and effectively making use of fuel-efficient freighters B747-8F and 777F.”
Pharmaceutical sales are up and bode well for the airline in the coming years. The carrier experienced a 162-percent increase in 2012.
“This year, Korean Air expects its performance to improve compared to its previous year since Korean Air Cargo is trying to positively respond to the demand of semi-conductor and other special cargos,” Kim says. “The launch of new IT products in the industry will also help to bring positive results.”
Cathay Pacific Airlines held on to its No. 5 position in both international and overall tonnage, but continues to inch downward this year. Cargo revenue, which includes Dragonair, was down 5.2 percent for the first half of 2013. The trend continued in July, with cargo dropping by 1.9 percent compared to 2012.
Reason for optimism?
Perhaps a glimmer of optimism can be gleaned from IATA’s June figures, which showed a 1.2-percent year-over-year expansion in global airfreight demand. This was a slight improvement over the 0.9-percent growth rate recorded in May.
Looking around the globe, June figures released by the Association of Asia Pacific Airlines (AAPA) showed prolonged weakness in air cargo markets. International air cargo demand, expressed in freight tonne kilometers, was 2.2 percent lower in June compared to the same month last year, reflecting continued weakness in key export markets. Offered freight capacity increased marginally, by 0.3 percent, leading to a 1.7 percentage point fall in the average international air cargo load factor to 66.2 percent.
Air cargo markets, however, remain depressed, AAPA says, with Asian airlines reporting a 2.4-percent decline in freight traffic for the first six months of the year, reflecting persistent weakness in global trade conditions.
An increase in semiconductor sales may bode well for the industry. The U.S.-based Semiconductor Industry Association (SIA) reported that worldwide sales of semiconductors reached US$74.65 billion during the second quarter of 2013, an increase of 6 percent from the first quarter when sales were US$70.45 billion. This marks the largest quarterly increase in three years. Global sales for June 2013 hit US$24.88 billion, an increase of 2.1 percent compared to June 2012 and 0.8 percent higher than the May 2013 total. Regionally, sales in the Americas jumped 8.6 percent in the second quarter compared to the first quarter and 10.6 percent in June 2013 compared to June 2012, marking the region’s largest year-over-year increase of 2013.
“There’s no question the global semiconductor industry has picked up steam through the first half of 2013, led largely by the Americas,” Brian Toohey, SIA’s president and CEO, says. “We have now seen consistent growth on a monthly, quarterly and year-to-year basis, and sales totals have exceeded the latest industry projection, with sales of memory products showing particular strength.”
Lufthansa held onto the No. 10 spot and continues to be the leading Europe-based cargo carrier. While the carrier experienced a 3.5-percent decline for the first half of 2013, the decline is decelerating.
“There are clear signs of the weak performance of the global economy in level of demand,” Karl Ulrich Garnadt, Lufthansa Cargo CEO and chairman, says. “The recent withdrawals of a number of cargo airlines from the market demonstrate the degree to which the airfreight industry is struggling with this. Our strategy of securing the profitability of our routes through high capacity utilization is proving successful in this environment.”
Cargolux, which ranks 18th on the overall list, is adding several destinations. In June, the Luxembourg-based carrier announced it was adding Muscat, Oman, as its 79th destination served with its 747-8 freighter. The Muscat cargo market has increased more than 70 percent since 2008. Cargolux also added Ho Chi Minh City, Vietnam, and Santiago as destinations this year.
The Association of European Airlines (AEA) says cargo products carried both on all-cargo aircraft and in passenger aircraft bellies account for 10 percent of the total commercial revenue of European network carriers. The AEA says recently, monthly trends show signs of improvement.
“European airlines are constantly confronted with challenges that jeopardize their profitability,” Athar Husain Khan, AEA’s acting secretary general, says. “2013 is a crucial year for our members to overcome these challenges with the implemented cost-cuttings, capacity adjustments and revenue improvements.”